Ericsson reported a robust second quarter for 2025, achieving its highest adjusted EBITA margin in three years at 13.2%, driven by operational efficiencies and increased intellectual property rights (IPR) licensing revenues. Adjusted EBITA surged 83% year-over-year to SEK 7.4 billion, despite reported net sales declining 6% to SEK 56.1 billion due to currency headwinds and reduced investment activity in India. Sales grew organically by 2%, led by gains in the Americas and IPR settlements, while Europe showed signs of stabilization.
The company’s adjusted gross margin rose to 48%, up from 43.9% a year earlier, supported by performance across all business segments. Ericsson’s Cloud Software and Services division delivered strong profitability, reflecting the company’s strategic shift towards software-centric solutions. Net income reached SEK 4.6 billion, reversing a SEK 11 billion loss in Q2 2024 that had been impacted by a major impairment charge. Free cash flow before M&A came in at SEK 2.6 billion, down from a high base last year.
CEO Börje Ekholm emphasized Ericsson’s ongoing investment in AI to support both product innovation and internal efficiency, including efforts through the Sweden AI factory consortium. He also highlighted global Fixed Wireless Access (FWA) growth, now exceeding 160 million customers, and stressed the importance of 5G Standalone to enable AI-driven edge services. “Our Q2 results demonstrate solid execution of our strategic and operational priorities,” said Ekholm. “We have structurally lowered our cost base and are strongly focused on delivering further efficiencies.”
Financial Highlights:
- Net sales: SEK 56.1 billion (US$5.33 billion), down 6% YoY
- Adjusted gross margin: 48% (up from 43.9%)
- Adjusted EBITA: SEK 7.4 billion (up 83%)
- Adjusted EBITA margin: 13.2%
- Net income: SEK 4.6 billion (vs. -SEK 11.0 billion)
- Free cash flow before M&A: SEK 2.6 billion (down 66% YoY)
- Net cash at quarter-end: SEK 36 billion, up 174% YoY
