Ericsson Q3 Earnings Beat Estimates Despite Lower Revenues

Core Insights - Ericsson reported mixed third-quarter 2025 results, with adjusted earnings exceeding estimates while revenues fell short due to regional weaknesses [1][3][10] Financial Performance - Net income for Ericsson was SEK 11.3 billion ($1.19 billion), translating to SEK 3.33 (35 cents) per share, a significant recovery from a loss of SEK 3.9 billion in the prior-year quarter [2] - Adjusted earnings were 16 cents, surpassing the Zacks Consensus Estimate of 13 cents [2] - Total revenues amounted to SEK 56.2 billion ($5.8 billion), down 9% year over year, missing the Zacks Consensus Estimate of $5.89 billion [3] Segment Results - The Networks segment generated SEK 35.4 billion ($3.72 billion), an 11% decline from SEK 40 billion in the previous year, missing revenue estimates [4] - Cloud Software and Services revenues increased by 3% year over year to SEK 15.3 billion ($1.6 billion), slightly exceeding estimates [5] - The Enterprise segment reported revenues of SEK 5.1 billion ($536 million), down 20% from the prior year, missing revenue estimates [6] Regional Performance - South-East Asia, Oceania, and India revenues decreased to SEK 7.1 billion ($746 million) from SEK 7.7 billion in the prior-year quarter [7] - North East Asia revenues fell 4% year over year to SEK 3.8 billion ($399 million) [7] - Revenues from the Americas were SEK 19.8 billion ($2.08 billion), down 15% year over year [7] - Europe, Middle East, and Africa markets saw a 1% decline to SEK 16.72 billion ($1.75 billion) [8] Operational Efficiency - Gross margin improved to 48.1% from 46.3% year over year, driven by cost optimization and operational efficiency [10][11] - The Networks segment's gross margin rose to 50% from 48.3% in the previous year [4] Cash Flow and Liquidity - Ericsson generated SEK 7.9 billion ($830 million) in cash from operating activities during the quarter [12] - As of September 30, 2025, the company had net cash of SEK 51.9 billion ($5.51 billion) [12] Outlook - For Q4 2025, revenues from the Networks and Cloud Software and Services segments are expected to align with historical seasonal averages, with gross margins projected between 49-51% [13]