Ericsson’s Q3 Report Highlights Strong Margin Growth and Strategic Partnerships

Ericsson’s Q3 2024 report showcases significant advancements in strategic and operational priorities, including growth in programmable networks and mobile network contract wins across multiple markets. A notable development was the establishment of a joint venture with leading mobile network operators to secure a global supply of Network APIs. Additionally, Ericsson signed further 5G patent licensing agreements, with projected intellectual property rights (IPR) revenues expected to reach at least SEK 13 billion in 2024.

Financially, Ericsson reported a slight year-over-year sales decline of 1%, totaling SEK 61.8 billion, despite a robust 55% increase in North America. Adjusted gross income rose to SEK 28.6 billion, supported by a significant increase in Networks segment gross margin to 48.7%. The reported gross margin improved to 45.6%, reflecting effective cost management and a favorable market mix.

The adjusted EBITA reached SEK 7.8 billion, with a 12.6% margin, benefiting from cost reduction initiatives. Net income improved to SEK 3.9 billion, compared to a loss of SEK 30.5 billion in the previous year, with diluted earnings per share (EPS) at SEK 1.14. Free cash flow before mergers and acquisitions was strong at SEK 12.9 billion, highlighting effective inventory management.

Q3 marks a period of laser-focus on execution of our strategic plan. We see increasing customer momentum around programmable networks that deliver differentiated performance, and expect further traction, supported by the JV we have announced with 12 of the world’s largest telecom operators. The JV will aggregate network APIs, accelerating commercialization and generating new opportunities for network monetization.  

We see signs that the overall market is stabilizing with North America, as an early adopter market, returning to growth. While the market development is ultimately in the hands of our customers, we are working to deliver operational excellence regardless of market conditions. Our Q3 results demonstrate our progress, with strong gross margin expansion and free cash flow, benefiting from our commercial discipline and operational efficiency actions.   

We expect our Networks sales to stabilize year-on-year during Q4, driven by continued good growth in North America. However, we anticipate further near-term sales pressure in Enterprise as we focus on profitable segments. We launched a new private 5G enterprise product portfolio in Q3 to support performance improvement, which remains a key priority.

Börje Ekholm, President and CEO, Ericsson