Lumen Technologies capped off a quarter where revenues languished with news it plans to acquire Alkira to push into east-west connectivity.

The firm’s first fiscal quarter (Q1) of 2026 results saw $2.9 billion in revenues, a 9% year-on-year (YoY) decrease from the $3.1 billion reported in Q1 2025. Business revenue was also down 3% YoY, though it was strategic revenue that was the standout figure this time out, up 9% YoY to $1.246 billion and accounting for 51% of business revenue.

Despite revenue dips, Lumen looks to be flush with cash, with free cash flow standing at $756 million – more than double the $354 million it had a year ago. The vendor’s sale of its mass market fiber-to-the-home unit to AT&T for $5.75 billion back in February helped drive the cash-flow surge.

But the headline announcement from its earnings was that it plans to acquire Alkira in an all-cash deal for $475 million. The move will see Lumen integrate software with its fiber network as it looks to capture ever-growing demand from the cloud-to-cloud and data center-interconnect space.

Lumen CEO Kate Johnson told investors the move would extend Lumen’s efforts into “the fastest-growing segment of the enterprise networking market” and establish a “control plane for cloud connectivity.”

“After close, our combined capabilities will enable us to provide comprehensive coverage of north-south and east-west connectivity, whether on-net or off-net, with game-changing innovation, including direct cloud on-ramps and multicloud gateway, and all of this in a single programmable system,” Johnson said.

From Viptella to Lumen: Alkira's founder has form

Alkira was founded in 2018 by Amir Khan, who had previously founded SD-WAN pioneer Viptella, which he sold to Cisco for $610 million in 2017.

The firm’s Network Infrastructure-as-a-Service (NIaaS) platform abstracts away the complexity of networking that customers would otherwise have to manage individually with each cloud provider. Its unified cloud networking fabric lets enterprises spin up multicloud or hybrid networks without managing physical hardware or software.

While Lumen’s own Network-as-a-Service (NaaS) business focuses on premises-to-cloud, or north-south connectivity, Alkira would let it orchestrate connectivity beyond the vendor’s existing network. The deal is expected to close in the third quarter of 2026, subject to regulatory approvals.

“After we close the Alkira transaction, it will be the bridge between east-west and north-south traffic, giving our customers the feeling of one network, any cloud, total control globally,” Johnson told investors.

The CEO was bullish about the play, describing its Alkira move as “a bullseye in terms of strategic alignment and value creation.”

“We expect [Alkira] to dramatically accelerate our roadmap execution from years to months. It will reduce execution risk,” Johnson added. “It will give us an injection of talent and it will give us a partner platform that’s expected to be marketplace-ready on day one.”

Commenting on his second sale to a networking giant, Khan, who serves as CEO of Alkira, said: “We built Alkira on a single conviction: enterprise networking had to be reinvented for the cloud and AI era – programmable, on-demand, consumed not built.”

“By joining Lumen, we will pair our cloud-native orchestration with one of the world's most expansive fiber networks and a proven commercial engine, setting a new standard for how enterprises build and run networks in a multicloud and AI world,” Khan added.

Lumen's homegrown NaaS is already pulling in new logos

While Lumen's commercial engine looks to be getting an Alkira-shaped boost in the coming months, the firm’s existing services appear strong.

Johnson informed investors during the earnings call that the company's NaaS platform is attracting a significant number of new clients, with more than 20% of first-time adopters being new logos for Lumen. Growth was further supplemented by existing Lumen customers who also began utilizing the NaaS service for the first time.

Lumen now has around 2,500 NaaS customers, with more than 30% of them being repeat purchasers.

“We’re continuing to see strong adoption of our NaaS services, with strength in off-net and large enterprise adoption this quarter,” Lumen reported. “In the first quarter specifically, customer adoption grew 25% quarter-over-quarter, active ports grew 35% quarter-over-quarter, and active services grew 32% quarter-over-quarter.”

With its proposed Alkira transaction, Lumen will look to push its NaaS platform even further, with a view to targeting direct connections into software-as-a-service (SaaS) providers as well as east-west cloud interconnects.

“Our customers will get the value they deserve, ample bandwidth, control, simplicity, and accelerated time to value. Our investors will get what they deserve: better economics across the board from Lumen,” Johnson said. “Lumen has firmly entered a growth phase, and our future is very bright.”