Ericsson (ERIC) Q3 2025 Results: Improved Profitability, 5G Demand Stabilizing
Key Points
- Revenue: SEK 65.8 billion, down 4% year over year, as North America stabilizes after prior declines.
- Gross margin: 43.3% (up from 41.5% a year ago).
- EBITA margin: 11.5%; EBITA (excluding restructuring): SEK 7.6 billion.
- Free cash flow before M&A: SEK 9.7 billion (vs. SEK 3.2 billion in Q3 2024).
- EPS: SEK 1.17 (vs. SEK 0.58 in Q3 2024).
- Cost savings: On track to exceed SEK 12 billion in annual run-rate savings for 2025.
- Networks division: Margins improved to 17% with reduced inventory and better mix.
- Cloud Software and Services: Returned to profitability.
- Dividend: No change announced; full-year review to occur after Q4.
- Stock reaction: Shares closed up $1.68 (+20.56%) at $9.84 following the earnings release.
Quarter Highlights
- Group sales: SEK 65.8 billion (SEK 68.0 billion in Q3 2024).
- Gross income: SEK 28.5 billion, representing a 43.3% gross margin.
- Operating income: SEK 7.6 billion, with EBITA margin at 11.5%.
- Networks: SEK 43.2 billion in revenue, up 2% year over year; improved profitability driven by supply-chain normalization and operational efficiencies.
- Cloud Software and Services: SEK 14.0 billion in revenue, with segment EBITA at SEK 0.9 billion, reflecting operational turnaround.
- Enterprise division: SEK 8.6 billion in revenue, supported by continued growth in Enterprise Wireless Solutions and Global Communications Platform.
- Free cash flow before M&A: SEK 9.7 billion, driven by improved working capital and lower inventory.
- Net income: SEK 4.1 billion (vs. SEK 2.0 billion a year earlier).
CEO Statement and Outlook
“We delivered solid profitability in the quarter with improved gross margins and strong cash flow. The transformation of our Cloud Software and Services business is yielding results, and we are now positioned to benefit from renewed investments in 5G networks as operators look to expand capacity and deploy new use cases,” said Börje Ekholm, President and CEO of Ericsson.
“While the market environment remains mixed, we expect Networks activity in North America to stabilize at current levels, with a gradual recovery in 2026. We remain fully focused on execution, cash generation, and achieving our cost-saving target of more than SEK 12 billion by year-end.”
Financial Summary
| Metric | Q3 2025 | Q3 2024 |
|---|---|---|
| Sales | SEK 65.8 B | SEK 68.0 B |
| Gross Margin | 43.3% | 41.5% |
| EBITA (excl. restructuring) | SEK 7.6 B | SEK 6.2 B |
| EBITA Margin | 11.5% | 9.1% |
| Net Income | SEK 4.1 B | SEK 2.0 B |
| EPS (Basic) | SEK 1.17 | SEK 0.58 |
| Free Cash Flow (before M&A) | SEK 9.7 B | SEK 3.2 B |
| Networks Revenue | SEK 43.2 B | SEK 42.4 B |
| Cloud Software & Services Revenue | SEK 14.0 B | SEK 15.6 B |
| Enterprise Revenue | SEK 8.6 B | SEK 8.3 B |
Capital Return
- No new dividend or buyback announcements in Q3.
- The company will revisit shareholder returns after the fiscal year-end.
About Ericsson
Ericsson (NASDAQ: ERIC) is a leading global provider of telecommunications equipment and services, enabling communication service providers and enterprises to deliver 5G, cloud, and IoT solutions worldwide. Headquartered in Stockholm, Sweden, Ericsson operates in more than 180 countries and employs over 95,000 people globally.