ERIC · Telefonaktiebolaget LM Ericsson (publ)

Ericsson's second quarter 2026 results reflect a mixed performance. Reported net sales declined 6% year-over-year to SEK 52.7 billion, with organic sales down 1% primarily due to lower IPR licensing revenues following a non-recurring benefit in the prior-year period. However, excluding IPR, organic sales would have been broadly stable. Adjusted gross margin improved to 48.4% from 48.0%, supported by solid operational execution and improved margins in Mobile Networks, partly offset by currency headwinds. Net income fell 12% to SEK 4.1 billion, and diluted EPS decreased to SEK 1.22 from SEK 1.37. Segment performance varied: Networks sales declined 8% (organic -4%), yet its adjusted EBITA margin remained resilient at 17.7%. Cloud Software and Services grew sales 3% (organic +5%) with improving margins. Enterprise sales fell 19% due to the divestment of iconectiv, but organic growth was 3%. Free cash flow before M&A was SEK 0.4 billion, down from SEK 2.6 billion a year ago, impacted by higher inventories. The company maintained a strong balance sheet with net cash of SEK 59.8 billion. A major corporate development was the announcement of CEO Börje Ekholm's retirement, effective September 30, 2026. Per Narvinger, an internal executive, will succeed as President and CEO. Ericsson also appointed David Hammarwall as head of Networks. Looking ahead, Ericsson expects Networks sales growth in Q3 to be above the 3-year average seasonal pattern, and Networks adjusted gross margin to be in the range of 48% to 50%. Cloud Software and Services sales are expected to follow typical seasonality. Restructuring charges for 2026 are expected to remain elevated. The company continues to focus on capturing AI-driven connectivity opportunities and strengthening its portfolio.