Ericsson(US:ERIC)2025-10-14 18:06Financial Performance - Net sales decreased by 9% YoY to SEK 56.2 billion, with a currency impact of SEK -4.2 billion[13]. - EBIT increased by 162% YoY to SEK 15.2 billion, resulting in an EBIT margin of 26.9%[9][12]. - Net income rose to SEK 11.3 billion, a 191% increase YoY, with diluted EPS of SEK 3.33[9][12]. - Free cash flow before M&A was SEK 6.6 billion, a decrease of 49% YoY[9][12]. - Adjusted gross income decreased to SEK 27.0 billion, with an adjusted gross margin of 48.1%[9][17]. - Reported sales decreased by 4% to SEK 167.4 billion, with Networks sales declining by 4% to SEK 106.8 billion and Enterprise sales down by 12% to SEK 16.5 billion[29]. - Adjusted EBITA rose to SEK 15.8 billion from SEK 7.8 billion, with an adjusted EBITA margin of 28.1%, including a currency impact of SEK -1.2 billion[23]. - Total comprehensive income for Q3 2025 was SEK 16,005 million, compared to SEK 2,871 million in Q3 2024[118]. - The company reported a net income of SEK 11,300 million for Q3 2025, up from SEK 4,626 million in Q2 2025[166]. Sales and Revenue - Cloud Software and Services sales grew by 9%*, while Networks sales declined by 11% to SEK 35.4 billion[4][13]. - Sales in the Americas market area declined by 15% year-over-year, while sales in Europe, Middle East, and Africa grew by 3%[37]. - Cloud Software and Services sales increased by 3% to SEK 15.3 billion, with a gross margin of 42.1%[51]. - Year-to-date net sales for 2025 reached SEK 167,396 million, a decrease of 4% compared to the same period in 2024[134]. - Total net sales for Q3 2025 reached SEK 56,239 million, showing a 0% sequential change from Q2 2025 and a decrease of 9% year-over-year[137]. - The Enterprise segment reported a significant EBIT loss of SEK 6,649 million in Q3 2025, compared to a loss of SEK 1,201 million in Q3 2024[136]. Cost Management - R&D expenses decreased to SEK 11.5 billion, reflecting cost-reduction actions[18]. - SG&A expenses declined to SEK 7.9 billion, benefiting from prior cost-reduction measures[19]. - Adjusted gross margin increased to 43.6% from 38.7%, with adjusted gross income rising to SEK 6.7 billion from SEK 5.8 billion despite a SEK -0.3 billion currency impact[54]. - Total restructuring charges for Q3 2025 were SEK 303 million, down from SEK 656 million in Q2 2025[166]. Cash Flow and Liquidity - Free cash flow before M&A for Q3 2025 was SEK 6,631 million, representing 11.8% of net sales[184]. - Gross cash increased to SEK 88.4 billion, driven by proceeds from the divestment of iconectiv and positive free cash flow[71]. - Net cash increased to SEK 51.9 billion, reflecting a sequential increase of SEK 15.8 billion[72]. - Cash flow from operating activities for Q3 2025 was SEK 7,939 million, down from SEK 14,397 million in Q3 2024[120]. Divestments and Strategic Actions - The company completed the sale of iconectiv on August 22, 2025, as part of its strategic divestments[102]. - The company reported a gain of SEK 7.6 billion from the divestment of iconectiv in the first nine months of 2025[117]. - The Board plans to present a final proposal for shareholder approval regarding increased distributions at the 2026 AGM[87]. Employee and Operational Metrics - The number of employees decreased to 89,898 from 91,937 in the previous quarter[28]. - The company has implemented a new market area structure effective from Q1 2025, merging several regions to enhance operational efficiency[130]. - Operating working capital improved to 11,169 million in Q3 2025, compared to 8,642 million in Q2 2025[182]. Market and Segment Performance - The company anticipates continued challenges in the Enterprise segment, with a focus on improving profitability through strategic initiatives[136]. - The Networks segment generated SEK 35,424 million in Q3 2025, down 1% sequentially and down 11% year-over-year[134]. - Cloud Software and Services achieved a gross margin of 43.6% in Q3 2025, up from 38.7% in Q3 2024, reflecting enhanced operational performance[194].