QWEST CORPCTBB
QWEST CORP Revenue Disclosure
Note 4—Revenue Recognition
As of December 31, 2025, we categorize our revenue derived from our operations based on the customers we serve, as follows: (i) revenue derived from serving our Mass Markets customers, are categorized primarily within the first three categories listed below, (ii) revenue derived from servicing our Business customers are categorized primarily in the 'Harvest', 'Nurture' and 'Grow' categories listed below, and (iii) revenue derived from servicing our affiliates are categorized in the 'Affiliate Services' category listed:
•Other Broadband: Under which we provide primarily lower speed broadband services to residential and small business customers utilizing our copper-based network infrastructure;
•Voice and Other: Under which we derive revenues from (i) providing local and long-distance services, professional services, and other ancillary services, (ii) federal broadband and state support payments, and (iii) equipment, IT solutions and other services;
•Fiber Broadband: Under which we provide high speed broadband services to residential and small business customers utilizing our fiber-based network infrastructure;
•Harvest: Includes our legacy services managed for cash flow, including Time Division Multiplexing voice and private line services;
•Nurture: Includes our more mature offerings, including primarily ethernet;
•Grow: Includes existing and emerging products and services in which we are significantly investing, including our dark fiber and wavelengths services; and
•Affiliate Services: Includes (i) communications services that we provide to our affiliates and also provide to external customers and (ii) application development and support services that we provide to our affiliates, as described further in Note 14—Affiliate Transactions.
Reconciliation of Total Revenue to Revenue from Contracts with Customers
The following tables provide our total revenue by product and service category as well as the amount of revenue that is not subject to ASC 606, "Revenue from Contracts with Customers" ("ASC 606"), but is instead governed by other accounting standards:
| Year Ended December 31, 2025 | |||||||||||||||||
| Total Revenue | Adjustments for Non-ASC 606 Revenue(1) | Total Revenue from Contracts with Customers | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Other Broadband | $ | 763 | (68) | 695 | |||||||||||||
| Voice and Other | 442 | (2) | 440 | ||||||||||||||
| Fiber Broadband | 314 | (12) | 302 | ||||||||||||||
| Harvest | 834 | (117) | 717 | ||||||||||||||
| Nurture | 330 | (9) | 321 | ||||||||||||||
| Grow | 130 | (8) | 122 | ||||||||||||||
| Affiliate Services | 1,935 | (47) | 1,888 | ||||||||||||||
| Total revenue | $ | 4,748 | (263) | 4,485 | |||||||||||||
| Timing of revenue | |||||||||||||||||
| Goods and services transferred at a point in time | $ | 10 | |||||||||||||||
| Services performed over time | 4,475 | ||||||||||||||||
| Total revenue from contracts with customers | $ | 4,485 | |||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||
| Total Revenue | Adjustments for Non-ASC 606 Revenue(1) | Total Revenue from Contracts with Customers | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Other Broadband | $ | 933 | (79) | 854 | |||||||||||||
| Voice and Other | 516 | (14) | 502 | ||||||||||||||
| Fiber Broadband | 377 | (12) | 365 | ||||||||||||||
| Harvest | 942 | (118) | 824 | ||||||||||||||
| Nurture | 357 | (8) | 349 | ||||||||||||||
| Grow | 134 | (6) | 128 | ||||||||||||||
| Affiliate Services | 2,249 | (48) | 2,201 | ||||||||||||||
| Total revenue | $ | 5,508 | (285) | 5,223 | |||||||||||||
| Timing of revenue | |||||||||||||||||
| Goods and services transferred at a point in time | $ | 13 | |||||||||||||||
| Services performed over time | 5,210 | ||||||||||||||||
| Total revenue from contracts with customers | $ | 5,223 | |||||||||||||||
| Year Ended December 31, 2023 | |||||||||||||||||
| Total Revenue | Adjustments for Non-ASC 606 Revenue(1) | Total Revenue from Contracts with Customers | |||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Other Broadband | $ | 1,111 | (95) | 1,016 | |||||||||||||
| Voice and Other | 587 | (16) | 571 | ||||||||||||||
| Fiber Broadband | 473 | (12) | 461 | ||||||||||||||
| Harvest | 1,049 | (139) | 910 | ||||||||||||||
| Nurture | 393 | (8) | 385 | ||||||||||||||
| Grow | 143 | — | 143 | ||||||||||||||
| Affiliate Services | 2,159 | (45) | 2,114 | ||||||||||||||
| Total revenue | $ | 5,915 | (315) | 5,600 | |||||||||||||
| Timing of revenue | |||||||||||||||||
| Goods and services transferred at a point in time | $ | 23 | |||||||||||||||
| Services performed over time | 5,577 | ||||||||||||||||
| Total revenue from contracts with customers | $ | 5,600 | |||||||||||||||
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(1)Includes regulatory revenue and lease revenue not within the scope of ASC 606.
We do not have any single external customer that comprises more than 10% of our total consolidated operating revenue. Substantially all of our consolidated revenue comes from customers located in the United States.
Customer Receivables and Contract Balances
The following table provides balances of customer receivables, contract assets and contract liabilities, net of amounts classified as held for sale:
December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Dollars in millions) | |||||||||||
Customer receivables, less allowance of $30 million and $23 million(1)(2) | $ | 221 | 205 | ||||||||
Contract liabilities(3) | 225 | 244 | |||||||||
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(1)Customer receivables includes affiliate receivables.
(2)As of December 31, 2025, this amount excluded $11 million of customer receivables, net associated with the disposal group classified as held for sale.
(3) As of December 31, 2025, this amount excluded $6 million of contract liabilities associated with the disposal group classified as held for sale.
Contract liabilities consist of consideration we have received from our customers or billed in advance of providing goods or services promised in the future. We defer recognizing this consideration as revenue until we have satisfied the related performance obligation to the customer. Contract liabilities include recurring services billed one month in advance and installation and maintenance charges that are deferred and recognized over the actual or expected contract term, which ranges from to five years depending on the service. Contract liabilities are included within deferred revenue in our consolidated balance sheets. During the years ended December 31, 2025 and December 31, 2024, we recognized $176 million and $175 million, respectively, of revenue that was included in contract liabilities of $244 million and $269 million as of January 1, 2025 and 2024, respectively.
Performance Obligations
As of December 31, 2025, we expect to recognize approximately $1.7 billion of revenue in the future related to performance obligations associated with existing customer contracts that are partially or wholly unsatisfied. As of December 31, 2025, the transaction price related to unsatisfied performance obligations that are expected to be recognized in 2026, 2027, and thereafter was $752 million, $490 million, and $461 million, respectively.
These amounts exclude:
•the value of unsatisfied performance obligations for contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed (for example, uncommitted usage or non-recurring charges associated with professional or technical services to be completed);
•contracts that are classified as leasing arrangements that are not subject to ASC 606; and
•the value of unsatisfied performance obligations for contracts which relate to the disposal group.
Contract Costs
The following tables provide changes in our contract acquisition costs and fulfillment costs:
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | ||||||||||||||||||||||
| Acquisition Costs | Fulfillment Costs | Acquisition Costs | Fulfillment Costs | ||||||||||||||||||||
| (Dollars in millions) | (Dollars in millions) | ||||||||||||||||||||||
| Beginning of period balance | $ | 51 | 46 | 58 | 46 | ||||||||||||||||||
| Costs incurred | 20 | 43 | 32 | 34 | |||||||||||||||||||
| Amortization | (30) | (34) | (39) | (34) | |||||||||||||||||||
Change in contract costs held for sale | (6) | (7) | — | — | |||||||||||||||||||
End of period balance(1) | $ | 35 | 48 | 51 | 46 | ||||||||||||||||||
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(1) The ending balance for the year ended December 31, 2025 excluded acquisition costs and fulfillment costs associated with the disposal group classified as held for sale of $6 million and $7 million, respectively.
Acquisition costs include commission fees paid to employees as a result of obtaining contracts. Fulfillment costs include third-party and internal costs associated with the provision, installation and activation of communications services to customers, including labor and materials consumed for these activities.
We amortize deferred acquisition and fulfillment costs based on the transfer of services on a straight-line basis over the average contract life of 47 months for Mass Markets customers and average contract life of 34 months for Business customers, respectively. We include amortized fulfillment costs in cost of services and products and amortized acquisition costs are included in selling, general and administrative expenses in our consolidated statements of operations. We include the amount of these deferred costs that are anticipated to be amortized in the next 12 months in Other current assets, net and the deferred costs expected to be amortized beyond the next 12 months in Other assets, net on our consolidated balance sheets. We assess deferred acquisition and fulfillment costs for impairment on a quarterly basis.
Governmental Funding
Lumen participates in various U.S. federal and state programs under which government support payments are received to offset costs associated with providing services in targeted locations such as unserved or underserved high-cost or rural areas, or for certain types of customers, including non-profit organizations, educational institutions and local governmental bodies. In certain instances, support payments are conditioned on specified infrastructure buildouts by milestone deadlines or provision of services at specified locations and speed requirements. Commitments may be made annually, on a multi-year basis ranging from one to 10 years or be on-going subject to periodic change or termination. Consistent with customary practice and as referenced in ASC 832 Government Assistance, Lumen applies a grant model of accounting by which it accounts for these transactions as non-ASC 606 revenue over the periods in which the costs for which the funding is intended to compensate are incurred. This non-ASC 606 revenue is included in operating revenue in our consolidated statements of operations. Corresponding receivables are recorded when services have been provided to the customers and costs incurred, but the cash has not been received. These amounts are included in our accounts receivable, less allowance in our consolidated balance sheets. Certain programs are subject to audits of compliance with program commitments and, subject to the outcomes of those assessments, Lumen may be required to reimburse the government entity for cash previously received, or, in some cases, pay a penalty. Lumen evaluates each program and establishes a liability under the principles of ASC 450 if it is probable support payments will be recaptured or a penalty will be imposed.
For the year ended December 31, 2025 and 2024, we recorded non-customer revenue of $28 million and $31 million, respectively, under , of which 44% and 29%, respectively, was associated with state universal service fund support programs.
The federal government has introduced several programs to expand broadband access, including the Rural Digital Opportunity Fund (“RDOF”) program, an FCC initiative that provides federal financial support to fund broadband deployment in rural America. For the first phase of this program, RDOF Phase I, the FCC ultimately awarded $6.4 billion in support payments to be paid in equal monthly installments over 10 years. In the third quarter of 2024, we relinquished rights to develop certain RDOF census blocks in four states, which resulted in (i) a reduction of our anticipated RDOF Phase I support payments and (ii) an expectation of payment to the federal government. In the second quarter of 2025, we voluntarily relinquished the remainder of our RDOF awards. As a result, we will no longer receive funding through the RDOF program and recognized a reduction to revenue of $11 million in our consolidated statements of operations in the second quarter of 2025. We also incurred of $12 million which are reflected in our operating expenses within our consolidated statements of operations. In January 2026, we paid the $23 million of revenue and fees summarized above, along with an additional $3 million relating to our 2024 relinquishment as repayment of funds previously received and remittance of the fees incurred.
We participate in two state sponsored programs for broadband deployment in unserved and underserved areas for which the states have state universal service funds sourced from fees levied on telecommunications providers and passed on to consumers. During the year ended December 31, 2025 and 2024, we participated in these types of programs in the states of Nebraska and New MexicoHistorical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Mar 3, 2021 | |
| 2019 | Mar 5, 2020 | |
| 2018 | Mar 22, 2019 | |
| 2017 | Mar 12, 2018 | |
| 2016 | Mar 2, 2017 | |
| 2015 | Mar 1, 2016 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.