Telefonaktiebolaget L M Ericsson (ERIC) Q2 2025 Earnings Call Highlights:

• Organic Sales Growth: 2% year-over-year.

• Gross Margin: 48%, up from 43.9% in Q2 last year.

• EBITA Margin: 13.2%, a three-year high.

• Net Sales: SEK 56.1 billion, with a reported decline of 6% due to currency impact.

• IPR Revenue: Increased to SEK 4.9 billion from SEK 3.2 billion in Q1.

• Operating Expenses: SEK 20 billion, around SEK 3 billion lower than last year.

• Free Cash Flow Before M&A: SEK 2.6 billion.

• Networks Sales: Decreased by 5% year-on-year to SEK 35.7 billion.

• Networks Adjusted Gross Margin: 49.5%.

• Cloud and Software Services Sales: Declined by 5% year-on-year to SEK 14.4 billion.

• Enterprise Sales: Decreased by 14%, with organic sales down 6%.

• Net Cash: Decreased by SEK 2.6 billion compared to the previous quarter.

Release Date: July 15, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

• Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) reported a 2% organic sales growth in Q2 2025, with significant contributions from the Americas and IPR segments.

• The company achieved a three-year high in EBITA margin at 13.2%, demonstrating strong execution against operational and strategic priorities.

• Gross margin improved to 48%, with broad-based margin improvements across all segments.

• The company successfully signed up all three operators in Japan for its joint venture Aduna, expanding its market coverage.

• Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) is investing in AI and 5G stand-alone networks, which are expected to drive future growth and innovation in connectivity solutions.

• Sales in Southeast Asia, Oceania, and India decreased by 22% year over year, primarily due to temporary pauses in network investments in India.

• The company faced a negative currency impact of SEK4.7 billion due to the strengthening of the Swedish krona against the US dollar and other currencies.

• Sales in Northeast Asia declined by 15%, attributed to reduced customer investments in some 5G front-runner markets.

• Free cash flow before M&A was SEK2.6 billion, down compared to last year, partly due to lower inventory levels and completion of large-scale rollout projects.

• Restructuring costs are expected to remain elevated during the year, impacting overall financial performance.

Q: Can you explain the dynamics behind the robust gross margin guidance for the network’s business in the next quarter? Are there specific deals or mix shifts contributing to this? A: The margin outlook is based on the current product and market mix, not related to IPR. It’s more about the underlying margins we see coming into the quarter. We don’t have high expectations for India in Q3 due to the temporary pause in investments.