Windstream Parent, Inc.
For the period ended Jul 31, 2025. Filed Jul 31, 2025.
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Jul 31, 2025 · Filed Jul 31, 2025
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Contents
EX-99.2 · MANAGED SERVICES
MANAGED SERVICES
Overview
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 · Increase · Six Months Ended · Increase | ||||||||
|---|---|---|---|---|---|---|---|---|
| June 30, · (Decrease) · June 30, · (Decrease) | ||||||||
| (Millions) | 2025 | 2024 | Amount | % | 2025 | 2024 | Amount | % |
| Revenues and sales: | ||||||||
| Service revenues: | ||||||||
| Managed Services (a) | $196.2 | $218.4 | $(22.2) | (10) | $406.3 | $457.4 | $(51.1) | (11) |
| TDM (a) | 12.6 | 28.2 | (15.6) | (55) | 33.2 | 60.8 | (27.6) | (45) |
| End user surcharges | 8.2 | 10.3 | (2.1) | (20) | 17.0 | 22.0 | (5.0) | (23) |
| Intersegment revenues | 1.2 | 1.2 | — | — | 2.5 | 2.4 | 0.1 | 4 |
| Total service revenues | 218.2 | 258.1 | (39.9) | (15) | 459.0 | 542.6 | (83.6) | (15) |
| Product sales | 0.5 | 0.4 | 0.1 | 25 | 0.7 | 0.7 | — | — |
| Total revenues and sales | 218.7 | 258.5 | (39.8) | (15) | 459.7 | 543.3 | (83.6) | (15) |
| Compensation expense (b) | (14.2) | (22.5) | (8.3) | (37) | (30.4) | (48.6) | (18.2) | (37) |
| Non-compensation managed expenses | (0.8) | (1.2) | (0.4) | (33) | (2.6) | (2.6) | — | — |
| Revenue-driven costs (c) | (32.4) | (41.3) | (8.9) | (22) | (65.9) | (82.0) | (16.1) | (20) |
| Customer access (d) | (46.8) | (58.7) | (11.9) | (20) | (97.2) | (121.2) | (24.0) | (20) |
| Intersegment costs and expenses (e) | (12.8) | (15.6) | (2.8) | (18) | (26.4) | (31.8) | (5.4) | (17) |
| Direct margin | $111.7 | $119.2 | $(7.5) | (6) | $237.2 | $257.1 | $(19.9) | (8) |
| (a) | Decreases were 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. |
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| (b) | Decreases were primarily attributable to reduced internal labor costs due to workforce reductions. |
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| (c) | Decreases were 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. |
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| (d) | Decreases were 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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| (e) | Decreases were consistent with the overall decline in intercompany billings from Kinetic primarily for resale access services as previously discussed. |
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