Ericsson (NASDAQ:ERIC) Announces Earnings Results, Hits Expectations

Key Points

• Ericsson met earnings expectations for the quarter, reporting EPS of $0.13 in line with analyst estimates. The company also posted a net margin of 10.80% and return on equity of 22.17%.
• Operations were solid but sales softened, with gross margin at 48% and EBITDA margin at 13.1%, while organic sales fell 1% year over year. Management said reported sales were also hurt by currency headwinds and a prior-year one-off IPR settlement.
• Cost pressure is emerging, as Ericsson warned that AI-related component inflation could weigh on future results. The company plans to offset this through pricing actions, product redesigns, substitutions, and supply-chain measures.

Ericsson (NASDAQ:ERIC - Get Free Report) announced its quarterly earnings data on Tuesday. The communications equipment provider reported $0.13 earnings per share for the quarter, meeting analysts' consensus estimates of $0.13, Zacks reports. Ericsson had a net margin of 10.80% and a return on equity of 22.17%.

Here are the key takeaways from Ericsson's conference call:

• Ericsson said Q2 execution was solid, with gross margin of 48% and EBITDA margin of 13.1%, highlighting continued disciplined cost control and operational resilience.
• Organic sales declined 1% year over year, but management said underlying growth was roughly flat excluding last year’s one-off IPR settlement. Reported sales were also pressured by currency headwinds.
• The company’s IPR revenue run rate is about SEK 13.5 billion, including new agreements signed in July 2026. Ericsson said these deals strengthen the value of its patent portfolio going forward.
• Ericsson warned that component cost inflation tied to the AI boom is rising and will gradually weigh on results in coming quarters. The company is responding with pricing actions, product redesigns, substitutions, and supply-chain measures.
• Management said the company is positioned to benefit from AI-driven growth in mobile connectivity, especially uplink-intensive and low-latency applications. It also sees opportunity in enterprise connectivity, APIs, mission-critical networks, and defense-related use cases.

Ericsson Price Performance

Shares of NASDAQ:ERIC traded down $1.40 during trading on Tuesday, reaching $10.32. The stock had a trading volume of 7,201,071 shares, compared to its average volume of 10,309,468. The company has a debt-to-equity ratio of 0.21, a quick ratio of 0.93 and a current ratio of 1.12. Ericsson has a 1-year low of $7.16 and a 1-year high of $13.77. The stock has a market cap of $34.79 billion, a PE ratio of 13.15, a PEG ratio of 1.99 and a beta of 0.93. The business has a fifty day moving average price of $12.09 and a 200-day moving average price of $11.33.

Analyst Ratings Changes

Several analysts recently commented on the company. Citigroup reaffirmed a "neutral" rating on shares of Ericsson in a report on Tuesday, April 28th. Weiss Ratings reiterated a "buy (b)" rating on shares of Ericsson in a research report on Tuesday, June 2nd. Finally, Wall Street Zen lowered Ericsson from a "buy" rating to a "hold" rating in a report on Saturday, April 25th. One equities research analyst has rated the stock with a Buy rating, six have issued a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat.com, Ericsson presently has a consensus rating of "Reduce" and an average target price of $11.00.

Trending Headlines about Ericsson

Here are the key news stories impacting Ericsson this week:

• Negative Sentiment: Ericsson reported mixed second-quarter results, with lower sales and profit tied to weak Networks and Enterprise performance, and the company guided for softer Networks margins in the third quarter. Article Title
• Negative Sentiment: The company cautioned that rising component costs are pressuring profitability, with North America sales also declining and Networks margins expected to slip next quarter. Article Title
• Negative Sentiment: Market commentary said Ericsson saw one of its worst post-earnings reactions in nearly three years as investors reacted to margin pressure from higher memory-chip and other input costs. Article Title
• Negative Sentiment: Analysts published a bearish take on the quarter, arguing that the dip may not be a buying opportunity after the earnings release. Article Title
• Neutral Sentiment: Ericsson and AT&T showcased 5G network-sensing technology, and the company also announced a new legal hire at Ericsson Federal, but these developments are unlikely to move the stock on their own. Article Title Article Title
• Neutral Sentiment: The company continued buying back shares in July, which supports capital returns but is being overshadowed by the weaker earnings and outlook. Article Title

Hedge Funds Weigh In On Ericsson

Several hedge funds and other institutional investors have recently modified their holdings of the business. Lazard Asset Management LLC increased its position in shares of Ericsson by 197.2% during the 2nd quarter. Lazard Asset Management LLC now owns 1,242,381 shares of the communications equipment provider's stock worth $10,534,000 after purchasing an additional 824,287 shares during the last quarter. Marshall Wace LLP increased its holdings in Ericsson by 234.2% in the 3rd quarter. Marshall Wace LLP now owns 1,078,145 shares of the communications equipment provider's stock valued at $8,916,000 after purchasing an additional 755,587 shares during the last quarter. Van ECK Associates Corp increased its holdings in Ericsson by 434.3% in the 3rd quarter. Van ECK Associates Corp now owns 380,372 shares of the communications equipment provider's stock valued at $3,146,000 after purchasing an additional 309,183 shares during the last quarter. Geode Capital Management LLC raised its position in Ericsson by 2.7% in the fourth quarter. Geode Capital Management LLC now owns 257,021 shares of the communications equipment provider's stock valued at $2,480,000 after purchasing an additional 6,667 shares during the period. Finally, AQR Capital Management LLC raised its position in Ericsson by 7.5% in the first quarter. AQR Capital Management LLC now owns 134,891 shares of the communications equipment provider's stock valued at $1,049,000 after purchasing an additional 9,362 shares during the period. 7.99% of the stock is owned by hedge funds and other institutional investors.

About Ericsson

Ericsson AB is a Swedish multinational telecommunications equipment and services company headquartered in Stockholm. Founded in 1876 by Lars Magnus Ericsson, the company designs, develops and sells infrastructure, software and services that enable mobile and fixed-line networks worldwide. Ericsson serves a global customer base that includes mobile network operators, enterprise customers and public-sector organizations across Europe, the Americas, Asia-Pacific, the Middle East and Africa.

The company's core activities center on building and modernizing network infrastructure, with a particular focus on radio access networks (RAN), core network software, cloud-native solutions and network management systems.

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