Strong Organic Revenue Growth
Net sales totaled SEK 49.3 billion with organic sales growth of 6% year‑on‑year, and all segments contributed to organic growth.
Telefonaktiebolaget LM Ericsson
· ERIC
April 17th, 2026
Summary
- Earnings Call Date:
- 2026-04-17
- Change Since:
- -1.85%
- Next Earnings Date:
- 2026-07-14
Earnings Call Sentiment
PositiveThe call presents a constructive operational picture: healthy organic growth (6%), robust gross margins (group 48.1%, Networks 50.4%), improving software margins, strong cash generation (net cash SEK 68.1bn) and a sizable SEK 15bn buyback. These positives are tempered by material FX headwinds (reported sales down 10% and SEK 7.8bn FX impact), an unacceptable Enterprise loss (adjusted EBITA -SEK 1.4bn) and looming input cost pressure from semiconductors/memory that may hit in H2. Management emphasized supply‑chain resilience, margin levers (pricing, product substitution, service efficiencies) and ongoing cost programs, but some cost savings will show with a delay. Overall, operational momentum and financial flexibility outweigh the near‑term headwinds, though risks remain from currency, component inflation and elevated restructuring costs.
Company Guidance
Guidance: For Q2 Ericsson assumes no tariff changes and the exchange rates stated in the report; it expects Networks sales to be broadly in line with the company’s 3‑year average quarter‑on‑quarter seasonality while Cloud Software & Services sales should grow above that 3‑year average q/q, with Networks adjusted gross margin guided to 49–51%; restructuring charges for 2026 are expected to be elevated (a fairly large part already in Q1) and management flagged stronger‑than‑normal seasonality in Q2 as some deals were pushed from Q1, while reiterating long‑term targets of mid‑single‑digit revenue growth and EBITA margins of 15–18% (and commencing a SEK 15 billion share buyback).
Operationally Robust Gross Margins
Group adjusted gross margin was 48.1%; Networks adjusted gross margin was 50.4%; Cloud Software & Services adjusted gross margin improved to 43.2% (up >300 basis points YoY).
Healthy Adjusted EBITA and Segment Profitability
Adjusted EBITA for the group was SEK 5.6 billion (margin 11.3%). Networks adjusted EBITA was SEK 6.4 billion with a 13.3% margin; Cloud Software & Services adjusted EBITA increased to SEK 0.6 billion (5.3% margin).
Solid Cash Generation and Strong Net Cash Position
Cash flow before M&A was SEK 5.9 billion in Q1; net cash position increased to SEK 68.1 billion (up SEK 6.9 billion sequentially). Rolling 4‑quarter cash-to-net-sales was 13%, above the 9%–12% target.
Capital Return Program Approved
AGM approved an increased dividend and a share buyback program of up to SEK 15 billion, with repurchases set to start shortly.
Broad-based Geographic Strength (India, Japan, Latin America)
Three market areas delivered double-digit organic growth; Networks saw strong organic growth in India and Japan, and Latin America showed strong growth within the Americas region.
Cloud Software & Services Margin Momentum
Rolling 4‑quarter metrics for Cloud Software & Services show gross margin around 44% and adjusted EBITA margin around 12% — described as new high levels and evidence of improving delivery efficiency and favorable mix.
Supply Chain Resilience and Delivery Capability
Management highlighted diversified supply chain and flexible production/distribution (including mitigation during Middle East disruption), enabling delivery continuity despite geopolitical and tariff headwinds.
Daniel Morris
Hello, everyone, and welcome to the presentation of Ericsson's First Quarter 2026 Results. Joining us by video today is Borje Ekholm, our President and CEO and in the studio, I'm joined by Lars Sandstrom, our Chief Financial Officer. As usual, we'll have a short presentation followed by Q&A. [Operator Instructions] Details can be found in today's earnings release and on the Investor Relations website as well. Please be advised that today's call is being recorded, and today's presentation may include forward-looking statements. These statements are based on our current expectations and certain planning assumptions, which are subject to risks and uncertainties. Actual results may differ materially due to factors mentioned in today's press release and discussed in the conference call. We encourage you to read about these risks and uncertainties in our earnings report as well as in our annual report.
I'll now hand the call over to Borje and Lars for their introductory comments.
Borje Ekholm
Thanks, Daniel, and good morning, everyone, and thanks for joining us today. Q1 was a solid start of the year and with the results that reflects our continued execution against our operational and strategic priorities. We saw a very large currency headwind during the quarter, probably one of the toughest quarters from a comp ratio as the Swedish krona strengthened towards almost all currencies compared to last year. So this, of course, materially impacted every line of our financial statements with reporting sales falling 10%. At the same time, we performed well operationally realizing strong organic gro...
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