ERICSSON LM TELEPHONE CO (ERIC): Financial results for Q3 2026
ERICSSON LM TELEPHONE CO (ERIC) furnished an SEC Form 6-K — earnings release. Ericsson | Third quarter report 2026 . October 15, 2026 . 1 Third quarter report 2026 Strategic highlights – executing well in a challenging environment – Solid customer demand in strategic markets, combined with near-term commercial actions, supported organic growth of 7%*. – Cu
How this was made
The 30-second read
Why it matters
The earnings release shows mixed performance: revenue up modestly, but profit and margins down sharply, likely prompting a negative market reaction.
Market read
First‑report earnings for a large‑cap telecom firm; new numbers are material for investors and may drive short‑term price movement.
What to watch
Cost‑discipline measures and AI‑enabled features may improve future margins, offsetting short‑term weakness.
Q3 reported sales rose 6% to SEK 59.5 b., while adjusted EBITA was SEK 10.1 b. and free cash flow before M&A was SEK 4.9 b.
Organic sales growth of 7% and higher Networks profitability were offset in reported profit comparisons by the prior-year SEK 7.6 b. iconectiv divestment gain, elevated restructuring charges and a lower group gross margin.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 net salesother | SEK 59.5 b. | 13 % | 6 % |
| Q3 organic sales growthnon-GAAP | 7 % | – | 7 % |
| Q3 gross incomeother | SEK 28.0 b. | 16 % | 5 % |
| Q3 gross marginother | 47.1% | – | – |
| Q3 adjusted gross incomenon-GAAP | SEK 28.4 b. | 11 % | 5 % |
| Q3 adjusted gross marginnon-GAAP | 47.7% | – | – |
| Q3 research and development (R&D) expensesother | SEK -11.8 b. | 13 % | 3 % |
| Q3 selling and administrative expensesother | SEK -7.4 b. | -4 % | -6 % |
| Q3 EBITother | SEK 8.9 b. | 50 % | -41 % |
| Q3 EBIT marginother | 14.9% | – | – |
| Q3 adjusted EBITnon-GAAP | SEK 9.8 b. | 50 % | -37 % |
| Q3 adjusted EBIT marginnon-GAAP | 16.4% | – | – |
| Q3 EBITAother | SEK 9.2 b. | 47 % | -41 % |
| Q3 EBITA marginother | 15.5% | – | – |
| Q3 adjusted EBITAnon-GAAP | SEK 10.1 b. | 47 % | -36 % |
| Q3 adjusted EBITA marginnon-GAAP | 17.0% | – | – |
| Q3 net incomeother | SEK 5.8 b. | 42 % | -49 % |
| Q3 diluted EPSother | SEK 1.77 | 45 % | -47 % |
| Q3 free cash flow before M&Anon-GAAP | SEK 4.9 b. | – | -26 % |
| Jan-Sep 2026 net salesother | SEK 161.5 b. | – | -4 % |
| Jan-Sep 2026 organic sales growthnon-GAAP | 4 % | – | 4 % |
| Jan-Sep 2026 net incomeother | SEK 10.8 b. | – | -47 % |
| Jan-Sep 2026 diluted EPSother | SEK 3.24 | – | -45 % |
| Jan-Sep 2026 free cash flow before M&Anon-GAAP | SEK 11.2 b. | – | -6 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| NetworksGrowth was driven by higher sales in North East Asia, South East Asia, Oceania and India, and Europe, Middle East and Africa, as well as higher IPR licensing revenues including retroactive revenue related to previously unlicensed periods. | SEK 38.7 b. | 17 % | 9 % |
| Cloud Software and ServicesGrowth in Americas, Europe, Middle East and Africa, and North East Asia was supported by accelerated project deliverables and the delivery of project milestones in Japan. | SEK 15.8 b. | 7 % | 3 % |
| EnterpriseReported sales reflected the divestment of iconectiv in Q3 2025, while organic sales increased by 1% driven by Technologies and New Businesses. | SEK 4.6 b. | 2 % | -10 % |
| OtherReported sales were stable at SEK 0.4 ( 0.4 ) b. | SEK 0.4 b. | -7 % | -4 % |
Q4 2026 outlook
- Gross marginNetworks adjusted gross margin in Q4 2026 is expected to be in the range of 49% to 51%.
- Tax rateA tax rate of 28% is expected for the full year.
- NoteNetworks sales growth in Q4 2026 is expected to be broadly similar to 3-year average seasonality.
- NoteCloud Software and Services sales growth in Q4 2026 is expected to be broadly similar to 3-year average seasonality.
- NoteThe Q4 2026 outlook assumes currency rates of USD:SEK 10.0, EUR:SEK 11.3.
- NoteRestructuring charges for 2026 are expected to be at elevated levels.
- NoteDell’Oro estimates that the global RAN equipment market will remain stable in 2026.
- NoteComponent costs are a headwind to gross margin next year.
Capital returns
- SEK 4.8 b. of share repurchases in Q3 2026.
- Ericsson repurchased 49,225,701 Class B shares for a total consideration of SEK 4.8 b. during the quarter.
- Repurchases year-to-date amounted to 78,761,682 Class B shares for SEK 8.1 b.
- The proposed dividend for 2025 of SEK 3.00 per share was approved by the AGM on March 31, 2026.
- The first of two equal dividend payments of SEK 1.50 per share was made on April 9, 2026, and the second was made on October 2, 2026.
What drove it
- Organic sales increased by 7% YoY, primarily driven by Networks.
- IPR licensing revenues increased to SEK 3.9 ( 3.1 ) b., partly driven by retroactive revenue related to previously unlicensed periods.
- Networks adjusted gross margin was 50.3% ( 50.1% ), including a positive impact from product mix and retroactive IPR licensing revenues.
- Cost-reduction actions offset salary increases in R&D, while SG&A declined as a result of cost-reduction actions.
- Adjusted EBITA in Networks increased to SEK 9.0 ( 7.2 ) b., driven by higher sales.
- Cloud Software and Services adjusted EBITA increased to SEK 2.0 ( 1.9 ) b., supported by higher sales.
Concerns
- Reported EBITA and net income comparisons were affected by the SEK 7.6 b. capital gain from the divestment of iconectiv in the prior-year period.
- Gross margin declined to 47.1% ( 47.6% ), reflecting higher restructuring charges and the impact of the divestment of iconectiv.
- Restructuring charges were SEK -0.9 ( -0.3 ) b.
- Enterprise reported sales declined by -10% and adjusted EBITA was SEK -0.5 ( 7.0 ) b.
- Financial income and expenses were SEK -0.9 ( -0.2 ) b., negatively affected by provisions related to interest expenses associated with the resolution of tax matters and a currency hedge effect.
- Working capital increased, with higher inventories reflecting timing of project deliveries and higher component prices.
- The company cited elevated geopolitical uncertainty and component costs as a headwind to gross margin next year.
What to watch
- Whether Q4 Networks sales growth is broadly similar to 3-year average seasonality.
- Networks adjusted gross margin against the Q4 2026 range of 49% to 51%.
- The effect of higher component costs on gross margin next year.
- The pace and cost of restructuring charges, which are expected to remain at elevated levels during 2026.
- Enterprise profitability following the divestment of iconectiv and ongoing efficiency measures.
- Demand trends in the Americas, where Q3 organic sales declined by -1%.
Balance sheet and cash flow
- Cash flow from operating activities was SEK 6.5 b., compared with SEK 7.9 b.
- Cash flow from investing activities was SEK 1.2 b., compared with SEK 3.2 b.
- Cash flow from financing activities was SEK 0.4 b., compared with SEK -1.2 b.
- Gross cash was SEK 98.0 b. as of September 30, 2026, compared with SEK 91.3 b. as of June 30, 2026.
- Borrowings, current were SEK 9.5 b. and borrowings, non-current were SEK 27.8 b. as of September 30, 2026.
- Net cash was SEK 60.7 b. as of September 30, 2026, compared with SEK 59.8 b. as of June 30, 2026.
- Equity was SEK 111.3 b. and the equity ratio was 36.9 % as of September 30, 2026.
- Cash flow from financing activities included SEK 4.5 b. of share repurchases and SEK 5.5 b. of proceeds from new borrowings, reflecting a EUR 500 m. bond issuance in September.
Analysis
Ericsson delivered Q3 reported sales of SEK 59.5 b., up 6% YoY and 13% sequentially, with organic sales growth of 7%. The demand profile was led by Networks, where sales rose 9% to SEK 38.7 b. Growth was concentrated in North East Asia, South East Asia, Oceania and India, and Europe, Middle East and Africa. The Americas posted stable reported sales and a -1% organic decline, with lower Latin America sales offsetting a slight increase in North America. Higher IPR licensing revenues, including retroactive revenue from previously unlicensed periods, also supported sales and gross income.
Profitability improved materially from Q2 but reported YoY comparisons remain distorted by the prior-year SEK 7.6 b. iconectiv divestment gain. Q3 EBITA was SEK 9.2 b. and adjusted EBITA was SEK 10.1 b., compared with SEK 15.5 b. and SEK 15.8 b., respectively. The adjusted EBITA margin was 17.0%, up from 13.1% in Q2 but below 28.1% a year ago. Excluding the prior-year capital gain, the company said adjusted EBITA increased. Gross income rose to SEK 28.0 b., though the reported gross margin declined to 47.1% from 47.6% due to higher restructuring charges and the divestment of iconectiv.
Networks was the main earnings contributor. Its adjusted EBITA rose to SEK 9.0 b. from SEK 7.2 b., with adjusted EBITA margin increasing to 23.1% from 20.3%. Its adjusted gross margin reached 50.3%, helped by product mix and retroactive IPR revenues, partly offset by increased component costs. Cloud Software and Services delivered modest sales growth and an adjusted EBITA increase to SEK 2.0 b. Enterprise had organic sales growth of 1%, but reported sales fell 10% following the iconectiv divestment and its adjusted EBITA loss was SEK -0.5 b. Segment Other recorded an adjusted gross income loss of SEK -0.3 b. related to a non-cash impairment charge for Red Bee Media.
Cash generation was positive but below the prior-year quarter. Free cash flow before M&A was SEK 4.9 b. versus SEK 6.6 b., as operating cash flow declined to SEK 6.5 b. from SEK 7.9 b. The company attributed the reduction to lower earnings and increased operating net assets, including higher inventories tied to delivery timing and higher component prices. Ericsson ended the period with SEK 98.0 b. of gross cash and SEK 60.7 b. of net cash, while issuing a EUR 500 m. bond in September and repurchasing SEK 4.8 b. of shares during the quarter.
For Q4, Ericsson expects Networks and Cloud Software and Services sales growth to be broadly similar to their respective three-year average seasonal patterns. It guides to a Networks adjusted gross margin of 49% to 51%. Management continues to expect elevated restructuring charges during 2026 and a full-year tax rate of 28%. The outlook assumes USD:SEK 10.0 and EUR:SEK 11.3, while management identifies a stable global RAN market, elevated geopolitical uncertainty and component costs as the principal external conditions affecting the near-term outlook.
Management, verbatim
We delivered strong third-quarter results, supported by focused execution, the strength of our portfolio, and the trust customers place in Ericsson.
Per Narvinger, President and CEO
Looking ahead, the RAN market is flat, geopolitical uncertainty remains elevated and component costs are a headwind to gross margin next year.
Per Narvinger, President and CEO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Q4 2026 consolidated revenue guidance was not provided.
- Q4 2026 operating-expense guidance was not provided.
- Non-GAAP net income and non-GAAP EPS were not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Ericsson filed its Q3 2026 earnings via a Form 6‑K, providing the first public disclosure of its quarterly results.
Ticker impact
Q3 2026 sales rose 6% YoY to SEK 59.5B, but net income fell 49% to SEK 5.8B and adjusted EBITA dropped 36% YoY.
likely pressure as investors price in weaker profit and EBITA decline
Revenue growth was modest while earnings fell sharply, indicating lower profitability and prompting potential sell‑off.
Market effects
Telecom equipment sector may see broader pressure from Ericsson's margin decline.
European markets could be affected as Ericsson is a key player in the region.
Limited global impact beyond telecom sector, but may influence investor sentiment on network‑gear stocks.
Counterpoint
Despite earnings decline, continued 7% organic sales growth could support a longer‑term rebound.
Key entities
- CompanyEricsson
Swedish telecom equipment provider listed in the US as ERIC.
