1. Company in brief

Ericsson develops and sells radio equipment, core network software, and mobile network services, primarily to telecom operators and on a smaller scale to enterprises and the public sector. The company is a B2B telecom infrastructure provider with customers in over 175 countries, and around half of all mobile traffic outside China is carried on networks supplied by Ericsson.

Ericsson was founded in 1876, when Lars Magnus Ericsson opened a telegraph instrument workshop in Stockholm, and the shares were listed on the Stockholm Stock Exchange in 1919. From telephones and exchanges, the company moved into mobile networks via NMT, GSM, and later 3G–5G. Its current structure has been shaped by the acquisition of Vonage in 2022, reported within the Enterprise segment, and the divestment of iconectiv in 2025. The Class A and Class B shares are listed on Nasdaq Stockholm (Large Cap), and the Class B share also trades as ADS (American Depositary Shares) on Nasdaq New York under the ticker ERIC.

2. Business model – how the company makes money

Revenue comes from network equipment, software, and services, typically under multi-year framework agreements with operators. Networks (64% of 2025 revenue) sells RAN (Radio Access Network), antennas, and transport networks at a gross margin of 49.7%. Cloud Software and Services (26%) delivers core networks, support systems, and the operation of customer networks; here the share of services and third-party products is higher and the gross margin lower, at 41.7%. Enterprise (9%) includes the Vonage communication platform with network APIs (Application Programming Interfaces), wireless WAN, and private 5G networks. Alongside these sits patent licensing (IPR, Intellectual Property Rights), with recurring revenue of ~13.5 BSEK on an annualized basis as of Q3'26 following new agreements in July 2026. Of licensing revenue, 82% is recognized in Networks and the remainder in Cloud Software and Services. The customer base is concentrated: the ten largest customers accounted for 46% of 2025 revenue and the largest for ~14%.

The major investment goes into research and development, which is mostly expensed as incurred (48.9 BSEK in 2025, just over 20% of revenue), while capital expenditure on property, plant, and equipment corresponds to 1–2% of revenue. Cash flow is therefore driven primarily by operating profit and working capital, which fluctuates with major rollout projects. Sales, earnings, and cash flow are typically lowest in Q1 and highest in Q4 on customer purchasing patterns: on average over 2023–2025, 23% of annual sales fell in Q1 and 29% in Q4, and revenue moved from 69.3 BSEK in Q4'25 to 49.3 BSEK in Q1'26.

3. Latest report – financial and operational overview

Revenue grew 6% to 59.5 BSEK in Q3'26, or 7% organically (adjusted for currency and divestments). Growth was driven primarily by Networks, the company’s largest segment, which grew 9%, while Enterprise declined following the iconectiv divestment. The company attributes the growth to strong demand in strategic markets and its own short-term commercial initiatives. Patent revenue rose to 3.9 BSEK (Q3'25: 3.1), partly on one-off payments for prior periods, which supported the Networks margin.

EBIT fell 41% to 8.9 BSEK (Q3'25: 15.2), as the comparison quarter included a 7.6 BSEK one-off gain from the iconectiv divestment. Excluding that gain, adjusted EBITA rose from around 8.2 to 10.1 BSEK, supported by higher gross profit and lower costs. Net income fell 49% to 5.8 BSEK – a steeper decline than EBIT – primarily on provisions for interest expenses related to tax matters.

Free cash flow before M&A was 4.9 BSEK (Q3'25: 6.6), as more capital was tied up in working capital during the quarter. Net cash stood at 60.7 BSEK as of September 30, 2026, after share buybacks of 4.8 BSEK during the quarter, leaving the company with no net debt.

Looking ahead, management describes the RAN market as unchanged and expects higher component costs to weigh on gross margin in 2027, which the company is countering with pricing actions and efficiency measures. During the quarter, Per Narvinger succeeded Börje Ekholm as CEO. Alongside the report, the company also announced a simplified organization from 2027, with fewer market areas and a smaller executive team.

4. Market and trends

The mobile network infrastructure market is effectively split in two: China, where domestic suppliers dominate, and the rest of the world, where Ericsson estimates it holds around 37% of the RAN market. A small number of suppliers — primarily Ericsson, Nokia, Huawei, ZTE, and Samsung — sell to a limited number of large operators with significant bargaining power. After several years of declining capital expenditure, management describes the RAN market as unchanged in Q3'26.

The dominant structural driver for Ericsson is the transition to 5G standalone — networks with their own 5G core, capable of selling guaranteed, differentiated performance. At the end of 2025, around 370 operators had launched 5G, but only 90 had introduced or trialed 5G standalone in public networks. It is in this upgrade, rather than in more base stations, that the company sees growth in an otherwise stagnant RAN market.

• Geopolitics and supplier choice: Restrictions on Chinese suppliers in 5G networks in many countries shape operators’ decisions, while demands for local production and R&D are increasing. Ericsson is building local presence in the US, India, and Japan.
• AI traffic: AI-driven devices require more uplink capacity and lower latency, which the company argues necessitates networks with guaranteed performance.
• Operator consolidation and network sharing: Fewer and larger buyers, and shared networks, can reduce equipment needs.
• New use cases: Mission-critical networks for public safety and defense, FWA (Fixed Wireless Access), which reached over 150 million households in 2025, and network APIs.
• 6G: Expected before 2030. Standardization affects the patent position and the next investment cycle.

5. Growth drivers and risks

6. Financial development – KPIs

7. Financial targets

• Adjusted EBITA margin of 15–18% (formal long-term target): Within range at 15.3% LTM as of Q3'26. Full-year 2025 was 18.1%, of which 3.2pp stemmed from the iconectiv gain (~14.9% excluding it).
• Free cash flow before M&A of 9–12% of revenue (formal long-term target): Within range at 11.3% for full-year 2025 and 11.3% LTM as of Q3'26.
• Dividend (principle: stable to growing ordinary dividend): SEK 3.00 per share for 2025 (2024: 2.85), paid in two installments in 2026.
• Surplus capital to shareholders: Share buybacks of up to 15 BSEK until the 2027 Annual General Meeting. Around 8.0 BSEK was executed during Q2–Q3'26, and treasury shares increased from 38 million to 114 million between September 30, 2025, and September 30, 2026. Shares outstanding stood at 3,257 million as of September 30, 2026 (3,333 million a year earlier).
• Credit rating and net cash (ambition): The target is an investment-grade credit rating and a net cash position over time. The rating was BBB− from S&P and Fitch and Ba1 from Moody’s as of the 2025 Annual Report, with net cash of 60.7 BSEK as of September 30, 2026.
• Short-term guidance: No quantitative forecast. Qualitatively, component costs are expected to weigh somewhat on gross margin in 2027.

8. Potential triggers (next 6–12 months)

• Q4'26 report: Whether the 7% organic growth in Q3'26, which partly stemmed from short-term commercial activity, holds in the seasonally largest quarter; the first signs of component costs in the adjusted gross margin (47.7% in Q3'26); and the Board’s dividend proposal for 2026.
• New group structure from January 1, 2027: The APAC merger and the reallocation of Enterprise Wireless Solutions are expected by the company to deliver greater efficiency over time, with the outcome visible in operating expenses.
• New CEO: Per Narvinger’s first full year, with potential adjustments to priorities or capital allocation.
• Share buyback program: Around 7 BSEK of the 15 BSEK framework remains until the 2027 Annual General Meeting; the question is whether a new program will be proposed.
• IPR agreements: Renewals and new agreements determine whether the ~13.5 BSEK recurring licensing revenue grows. Retroactive one-off amounts can make individual quarters volatile.
• Legal proceedings: The US Department of Justice (DOJ) investigation linked to Iraq, and compliance work surrounding Vonage’s security agreement in the US, are ongoing. The company notes that the outcome and timing are uncertain.

9. Frequently asked questions from investors

10. What does the bull say? / What does the bear say?

Glossary – abbreviations and concepts

• 5G standalone: A 5G network with a dedicated 5G core instead of a 4G core. Required for guaranteed performance and network slicing, and the upgrade Ericsson views as the next growth cycle.
• 6G: The next generation of mobile technology, expected before 2030. Influences future patent revenue and the next investment cycle.
• ADS (American Depositary Shares): Depositary receipts allowing the B share to be traded in the US. One ADS corresponds to one B share.
• Adjusted EBITA: Operating profit before amortization of acquired intangible assets, excluding restructuring costs. Ericsson’s primary profitability metric and the basis for its margin target.
• APAC (Asia-Pacific): A new market area from 2027, merging Northeast Asia with Southeast Asia, Oceania, and India.
• DOJ: The US Department of Justice, which is investigating matters related to Ericsson’s past operations in Iraq.
• Free cash flow before M&A: Cash flow from operations less capital expenditure and lease payments, before acquisitions and divestments. One of Ericsson’s two formal financial targets.
• FWA (Fixed Wireless Access): Fixed wireless broadband delivered to households over the mobile network; a use case that increases traffic in operators’ networks.
• IPR (Intellectual Property Rights): Revenue from licensing Ericsson’s patents, primarily to smartphone manufacturers.
• LTM: Last twelve months, i.e. the sum of the last four quarters, which smooths seasonal effects.
• M&A (Mergers & Acquisitions): Acquisitions and divestments of companies.
• Network API (Application Programming Interface): An interface allowing developers to use network functions, such as fraud protection, in their applications. A new revenue stream through Vonage.
• Organic growth: Sales growth adjusted for currency, acquisitions, and divestments, showing underlying performance.
• RAN (Radio Access Network): The radio portion of the mobile network, i.e. base stations and antennas. Ericsson’s largest product area.

Sources

• Ericsson, Q3'26 report, October 15, 2026 (group earnings, sales by segment and market area, patent and licensing revenue, costs, restructuring, net financial items, tax, employees, cash flow, financial position, currency exposure, and share information). ericsson.com/en/investors/financial-reports/interim-reports
• Ericsson, press release: "Ericsson announces simplification of group structure and changes to Executive Team", October 15, 2026. ericsson.com/en/newsroom
• Ericsson, Q2'26 report, July 14, 2026 (inventory build-up in Q2'26, the IPR agreements in July 2026, and CEO change). ericsson.com/en/investors/financial-reports/interim-reports
• Ericsson, Q3'25 report, October 2025 (quarterly data for 2024). ericsson.com/en/investors/financial-reports/interim-reports
• Ericsson, Annual Report 2025 (CEO comment, strategy, segments, targets and outcomes, report of the Board of Directors, risk factors, history, and share information). ericsson.com/en/investors/financial-reports/annual-reports
• Inderes, historical fundamental data (quarterly revenue and EBIT) and closing price for the B share on Nasdaq Stockholm as of October 14, 2026 (SEK 97.10). The market value is calculated based on 3,257 million outstanding shares as of September 30, 2026.