Windstream Parent Inc
For the period ended May 2, 2025. Filed May 2, 2025.
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May 2, 2025 · Filed May 2, 2025
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Contents
EX-99.2 · MANAGED SERVICES
MANAGED SERVICES
We manage as one business our mid-market and large business customers located within our CLEC markets. Products and services consist of software solutions and network connectivity offerings. Software solutions include Secure Access Service Edge (“SASE”), Unified Communications as a Service (“UCaaS”), OfficeSuite UC®, Software Defined Wide Area Network (“SD-WAN”) and associated network access products and services. Network connectivity offerings consist of dynamic Internet protocol, dedicated Internet access, multi-protocol label switching services, integrated voice and data, long distance and other managed services, and certain surcharges assessed to customers. Managed Services also include TDM voice and data services. Product sales include high-end data and communications equipment which facilitate the delivery of advanced data and voice services to business customers.
For our Managed Services business, our focus remains on converting customers to our software solutions and network connectivity offerings as part of our TDM exit strategy to migrate the majority of our CLEC customers off of the TDM network. Accordingly, we expect to see continued declines in TDM and other revenues, including end user surcharges, while maintaining stability in revenues derived from our software solutions and network connectivity offerings.
The following table reflects the Managed Services segment results of operations:
| Three Months Ended March 31, · Increase (Decrease) | ||||
|---|---|---|---|---|
| (Millions) | 2025 | 2024 | Amount | % |
| Revenues and sales: | ||||
| Service revenues: | ||||
| Managed Services (a) | $210.1 | $239.0 | $(28.9) | (12) |
| TDM (a) | 20.6 | 32.6 | (12.0) | (37) |
| End user surcharges | 8.8 | 11.7 | (2.9) | (25) |
| Total service revenues | 239.5 | 283.3 | (43.8) | (15) |
| Product sales | 0.2 | 0.3 | (0.1) | (33) |
| Total revenues and sales | 239.7 | 283.6 | (43.9) | (15) |
| Compensation expense (b) | (15.6) | (25.2) | (9.6) | (38) |
| Non-compensation managed expenses | (1.8) | (1.4) | 0.4 | 29 |
| Revenue-driven costs (c) | (33.8) | (40.9) | (7.1) | (17) |
| Customer access (d) | (50.4) | (62.5) | (12.1) | (19) |
| Direct margin | $138.1 | $153.6 | $(15.5) | (10) |
| (a) | Decrease was primarily due to higher customer churn for legacy services as we continue to transition customers off of TDM services. As a result, service revenues reflect reductions in traditional voice, long-distance and data and integrated services, as well as declines in long-distance usage. |
|---|---|
| (b) | Decrease was primarily attributable to reduced internal labor costs due to workforce reductions. |
| (c) | Decrease was consistent with the overall reduction in service revenues primarily attributable to customer churn and the corresponding reductions in third-party commissions, bad debt expense and federal and state USF fees. |
| (d) | Decrease was consistent with the overall decline in interconnect costs attributable to cost improvements from the continuation of network efficiency projects, increased legacy customer churn, and lower long-distance usage. |
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