Segment Information

6 Months Ended

Jun. 30, 2024

Segment Reporting [Abstract]

Segment Information

Segment Information

We report our results within two segments: Business and Mass Markets.

Under our Business segment we provide products and services to meet the needs of our enterprise and wholesale customers under five distinct sales channels: Large Enterprise, Mid-Market Enterprise, Public Sector, Wholesale, and International and Other. For Business segment revenue, we report the following product categories: Grow, Nurture, Harvest, and Other, in each case through the sales channels outlined above. The Business segment included the results of our EMEA business prior to its sale on November 1, 2023.

Under our Mass Markets Segment, we provide products and services to residential and small business customers. We report the following product categories: Fiber Broadband, Other Broadband, and Voice and Other.

See detailed descriptions of these product and service categories in Note 3—Revenue Recognition.

As described in more detail below, our segments are managed based on the direct costs of providing services to applicable customers and directly associated selling, general and administrative costs (primarily salaries and commissions). Shared costs are managed separately and included in "other unallocated expense" in the table included below under the heading "— Revenue and Expenses". As referenced above, we reclassified certain prior period amounts to conform to the current period presentation. See Note 1— Background for additional detail on these changes.

The following tables summarize our segment results for the three and six months ended June 30, 2024 and 2023, based on the segment categorization we were operating under at June 30, 2024.

	Three Months Ended June 30, 2024			Six Months Ended June 30, 2024
	Business		Mass Markets	Business	Mass Markets
	(Dollars in millions)
Segment revenue	$	2,577	691	5,168	1,390
Segment expenses:
Cost of services and products	761		20	1,500	37
Selling, general and administrative	457		308	954	614
Total segment expense	1,218		328	2,454	651
Total segment adjusted EBITDA	$	1,359	363	2,714	739

	Three Months Ended June 30, 2023			Six Months Ended June 30, 2023
	Business		Mass Markets	Business	Mass Markets
	(Dollars in millions)
Segment revenue	$	2,908	753	5,876	1,523
Segment expenses:
Cost of services and products	773		21	1,603	42
Selling, general and administrative	570		339	1,113	674
Total segment expense	1,343		360	2,716	716
Total segment adjusted EBITDA	$	1,565	393	3,160	807

Revenue and Expenses

Our segment revenue includes all revenue from our two segments as described in more detail above. Our segment revenue is based upon each customer's classification. We report our segment revenue based upon all services provided to that segment's customers. Our segment expenses include specific cost of service expenses incurred as a direct result of providing services and products to segment customers, along with selling, general and administrative expenses that are directly associated with specific segment customers or activities. We have not allocated assets or debt to specific segments.

The following items are excluded from our segment results, because they are centrally managed and not monitored by or reported to our chief operating decision maker by segment:

•network expenses not incurred as a direct result of providing services and products to segment customers and centrally managed expenses such as Finance, Human Resources, Legal, Marketing, Product Management and IT, all of which are reported as "other unallocated expense" in the table below;

•depreciation and amortization expense;

•goodwill or other impairments;

•interest expense;

•stock-based compensation; and

•other income and expense items.

The following table reconciles total segment adjusted EBITDA to net (loss) income for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,			Six Months Ended June 30,
	2024		2023	2024	2023
	(Dollars in millions)
Total segment adjusted EBITDA	$	1,722	1,958	3,453	3,967
Depreciation and amortization	(743)		(746)	(1,491)	(1,479)
Goodwill impairment	—		(8,793)	—	(8,793)
Other unallocated expense	(847)		(831)	(1,771)	(1,703)
Stock-based compensation credit (expense)	3		(9)	(11)	(23)
Operating income (loss)	135		(8,421)	180	(8,031)
Total other (expense) income, net	(176)		(269)	(119)	21
(Loss) income before taxes	(41)		(8,690)	61	(8,010)
Income tax expense	8		46	53	215
Net (loss) income	$	(49)	(8,736)	8	(8,225)