Kate Johnson
President and Chief Executive Officer at Lumen Technologies
Good afternoon, everyone and thanks for joining us. I'm excited to have a chance to share Lumen's turnaround progress with all of you. As you know, our strategy is focused on empowering enterprises with next gen on demand connectivity solutions powered by our fiber network. Effectively, we're cloudifying telecom to meet our customers need for blazing fast speed, ultra-low latency and dynamic capacity to support the immense expansion in data workloads, all in a secure and hybrid world.
But before I get into the transformation update, I want to address our 2024 first quarter financial performance. As we shared last quarter, the debt restructuring in the second half of 2023 created uncertainty for our customers and partners, which translated into softer sales during that period. As a result, we saw weaker 2024 Q1 revenue and EBITDA results.
Now, despite these pressures, we did maintain sequential and year-over-year revenue growth in Q1 within our North America enterprise Grow product portfolio, and we also made material traction in driving customer adoption of our flagship digital offering, network as a service or Lumen NaaS, both important components of our turnaround story.
Now that we've successfully executed the TSA agreement with a broad group of our creditors, our balance sheet is significantly stronger. When we unveiled our transformation plans at our mid 2023 Investor Day, it would have been hard to imagine the level of financial flexibility we would achieve through this agreement that addressed over $15 billion of our debt, extending over $10 billion of our maturities due over the next four years in 2029 and beyond, while securing access to over $2.3 billion in new liquidity. We're pleased with the runway this deal created for our transformation, and you can expect us to continue to find ways to strengthen our balance sheet and return value to shareholders.
Additionally, we're continuing to reshape and right size our business through automation and AI, continuously redeploying resources to the highest impact growth priorities and taking cost out in the form of people and vendor spend reductions. As such, we materially reduced our cost base in early Q2. These actions were a direct result of our transformation programs and were already contemplated in our 2024 EBITDA guidance.
Okay. Moving on to the transformation update, I'll start with our enterprise business focused on driving commercial excellence. This is about better sales execution, securing the base of traditional telecom customers to reduce churn, and delighting our customers with quick, secure and effortless digital experiences. We had excellent sales performance in the first quarter, with North American enterprise sales up 27% year-over-year, our strongest first quarter performance in some time. Additionally, new logo sales increased by 21% and total contract value for all sales nearly doubled year-over-year.
A great example is within our public sector business, where we recently won a $73 million contract to transform the U.S. Government Accountability Office's network, data, voice and video connectivity, so the agency can better serve Congress and the American people. Overall, we're excited by these significantly improved sales results, as they should be a leading indicator for improved revenue performance.
I also want to note that we're seeing a dramatic rise in demand for high capacity, low latency network and edge services, often requested in the form of custom private networks. We believe this is driven by the advent of Gen AI and the complexity of hybrid multicloud architectures. We've established a dedicated team focused on capturing this demand, and we are confident this will be an important tailwind for our turnaround. It is a spike in demand, perhaps a once in a lifetime kind of opportunity to leverage what we do best at Lumen.
Okay. On to securing the base, a crucial program that is all about five key levers, including installs, renewals, migrations, usage and disconnects. While our Q1 sequential install trends were affected by the TSA related uncertainty that I mentioned earlier, we did see strong results in the other secure the base levers. Specifically, renewals were up 5%, disconnects improved by nearly 5%, and migrations were up double-digit percentages benefiting from a large deal.
If we double click on our migration performance, we see signs of better execution closing deals with compelling economics, as customers transition from legacy services to next gen solutions in our Grow product portfolio. We are focused on securing the base because when we transition customers from legacy systems like TDM and voice to digital first solutions like NaaS and IP, we're not only supporting our customers growth, but also our own. That said, this part of our transformation is the most challenging because of well-known secular headwinds, as well as complex and unpredictable pricing dynamics across on net and off net peering partnerships.
Negative growth in these areas masks the progress we are making in selling and delivering the more modern capabilities in our portfolio. As such, we will not only continue to adjust our resourcing here to ensure the highest returns on our transformation program spend, but we will also make those investments and results more transparent to you.
A foundational part of our pivot to growth involves a relentless focus on enhancing customer experience. We're delighting customers with process optimization and a truly digital platform, giving them better visibility to their orders with real-time status updates. And as a result, we're meeting and exceeding customer expectations more consistently.
In the first quarter, I'm super excited to tell you that every one of our customer segments showed dramatic year-over-year improvements across all products and customer satisfaction, as measured by net promoter scores or NPS. And specifically, large enterprise NPS rose by 24% [Phonetic], wholesale NPS rose by 35 points, and mid markets and public sector NPS' rose by more than 50 points each. We look at these improvements in customer experience, as the cornerstone for continued momentum in sales, churn reduction and ultimately revenue growth.
Alongside commercial excellence, we're driving disruption and building our future by delivering next gen networking capabilities to our customers. Our Lumen digital team has been hard at work empowering enterprise customers with on demand access to cloud with direct control of network bandwidth, connectivity and latency paths. Lumen is enabling customers to design, price, order and consume networking and security services online with a truly digital, low friction customer experience.
It all started with Lumen NaaS, which we launched in Q3 of 2023, and since then the team has delivered 14 new NaaS innovations, including native DDOS and automated transport in a family of secure, composable services that span our network and edge locations. Through Q1, we saw diversity in NaaS adoption with activated customers across over 20 industries and the customer feedback is fantastic. For example, Avaya is using Lumen's NaaS to establish Internet connectivity in minutes rather than the traditional service model, taking weeks, improving their operational agility.
Norwegian Cruise Lines recently shared that with Lumen's NaaS, they've reduced the time to establish Internet connectivity from weeks to minutes, which is great for their customer experience. And speaking of delighting customers, Arena operating company delighted fans with a bump in bandwidth, while hosting the Florida Panthers NHL playoff game thanks to Lumen NaaS.
All right, let's talk about ExaSwitch. We created this award winning, high-capacity optical switching platform to meet the demands of hyperscaler peering, while also functioning as a high capacity on ramp to the public cloud for enterprises. Now, the need to reimagine multicloud connectivity has never been more important as AI, autonomous systems and exploding data growth redefined enterprise networking and security needs, every millisecond counts. That's why ExaSwitch use cases are extending far beyond hyperscaler peering into things like AI exchanges because it's the only optical switching platform of its kind that can rise to today's performance and security challenges.
Finally, we're taking a major step forward in security innovation by launching an exciting new subscription service that leverages patented AI powered IP based threat detection and prevention capabilities from Lumen's very own Black Lotus Labs. In the second half of 2024, this security service, called Lumen Defender will be broadly available on our NaaS and VIA [Phonetic] connections, enabling enterprise customers to have more secure connectivity, as we help identify and block threats at the network level.
Let's look at our mass markets business now. We continue to execute our strategy to deploy capital, where we see the greatest opportunities for growth, and we're on track to deliver more than 500,000 new fiber enabled locations this year, and we're optimizing our presales motions to drive penetration into those assets as quickly as possible.
Our strong fiber sales momentum from late last year continued, highlighted by our Q1 quarterly fiber net adds being the best we've ever reported. This was achieved with our sales, marketing and retention efforts, including improved results converting existing copper customers to our best-in-class quantum fiber product. And look, it's not me saying it's best-in-class, it's our customers. They're saying it too. We're continuing to deliver amazing net promoter scores with quantum fiber hitting positive 67 in Q1, once again rising sequentially and year-over-year.
Finally, I'll wrap with a comment on people and culture. I said that we will rebuild Lumen from the people up and this focus on culture is enabling our transformation and it's creating a company that continues to get external recognition. In fact, we've won 11 awards for superior culture in the past few months alone. More importantly, it helps us continue to attract amazing talent.
On our last earnings call, I spoke about our key innovation hires, including Satish Lakshmanan, as Chief Product Officer and Dave Ward, as our new Chief Technology Officer. And since that time, we've made three important talent additions to our team. Jim Breen, our new SVP of Investor Relations, is with us on this call, and as many of you know, he brings more than 25 years of tech and telecom equity research experience and will lead our efforts to clearly communicate our transformation progress to all of you.
Ryan Asdourian, our new EVP and Chief Marketing Officer, joins us from Microsoft and will play a critical role in raising visibility around our game changing innovations, as we disrupt traditional telecom.
And finally, Diankha Linear, a tech company CEO with an amazing track in tech, military leadership, retail and logistics, joined our Board of Directors. The team is gelling. We're executing really well, and our customers are seeing our progress. I'm confident that Lumen's future is very bright.
And with that, I'm going to turn the call over to Chris.
