How LUMN (Lumen Technologies) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a telecommunications provider like LUMN makes money is essential for investors and anyone interested in the business of telecom services. In this post, we break down LUMN's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick LUMN Overview

LUMN operates as a telecommunications company providing broadband, voice, and other connectivity services primarily in the U.S. Revenue comes from consumer and business services including fiber broadband, voice, and other legacy telecom offerings. The company focuses on transitioning to high-speed fiber networks amid a competitive landscape.

Revenue Breakdown

• Total Revenue (Q4 2025): $3.041B (-8.7% YoY)
  • No detailed segment breakdown available in the data.
  • Growth is powered by efforts to expand fiber broadband services, though overall revenue declined due to legacy service pressures and market competition.

Gross Profit and Margins

• Gross Profit: $1.335B (43.9% gross margin)
  • Cost of Revenue: $4.376B (0.0% YoY)
  • LUMN maintains robust margins due to a mix of scalable fiber infrastructure and operational efficiencies in network maintenance.
• Most costs come from network operations, equipment depreciation, and service delivery in cost of revenue.

Operating Income and Expenses

• Operating Income: $0.428B (+177.9% YoY, 14.1% margin)
• Operating Expenses: $1.763B (0.0% YoY)
  • R&D: Not disclosed
  • SG&A: $0.940B (+25.5% YoY, 30.9% of revenue) — Covers sales efforts, general administration, and customer support amid business expansion.
  • LUMN continues to prioritize innovation in fiber deployment while maintaining efficiency in core operations despite rising SG&A.

Net Income

• Pre-Tax Income: $0.509B (0.0% YoY, 16.7% margin)
• Income Tax: Not disclosed
• Net Income: $2.000B (0.0% YoY, 0.1% net margin)
• LUMN converts a moderate portion of sales into profit due to efficiency in operations offset by high interest and other expenses.

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What Drives LUMN's Money Machine?

• Broadband and Voice Services: Primary revenue driver from consumer and business connectivity.
• Fiber Network Expansion: Key metric with investments supporting long-term growth despite current revenue headwinds.
• Operational Efficiency: Strategic investments in network upgrades to reduce churn and improve service quality.
• Business Services: Potential future growth areas in enterprise connectivity, though legacy segments face declines.

Visualizing LUMN's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 0.1% of revenue drops to the bottom line.

Key Takeaways

• LUMN's money comes overwhelmingly from broadband and telecom services
• High gross and net margins illustrate the power of LUMN's scalable network infrastructure
• Heavy investment in SG&A, balanced by efficiency in operating costs
• Ongoing growth is driven by fiber expansion and operational improvements

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FAQ About LUMN's Income Statement

1. What is the main source of LUMN's revenue in 2025?

LUMN generates revenue primarily from broadband, voice, and business connectivity services. No specific segment exceeds detailed disclosure, but telecom services form the core.

2. How profitable is LUMN in Q4 2025?

LUMN reported net income of $2.000B in Q4 2025, with a net margin of approximately 0.1%, reflecting moderate profitability driven by strong gross margins offset by high expenses and other items.

3. What are the largest expense categories for LUMN?

The biggest expenses on LUMN's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs. SG&A investment reached $0.940B in Q4 2025, as LUMN prioritizes sales expansion and administration.

4. Why does [segment/division] operate at a loss?

Data does not specify a particular segment operating at a loss. Overall, the company shows operating income positivity due to gross profit exceeding expenses.

5. How does LUMN's effective tax rate compare to previous years?

LUMN's effective tax rate in Q4 2025 was not disclosed. Other items like net interest ($0.280B expense) and other expenses $0.657B impacted pretax to net income flow.