ERIC

Telefonaktiebolaget LM Ericsson stock has delivered a strong 3 year share price gain, while both an intrinsic value estimate and market multiples currently point to the shares trading below what those models suggest as fair value. The question for you is whether that apparent discount correctly reflects Ericsson's long term cash flow potential and risk profile. Over the past 3 years, Ericsson shares are up about 91.4%, which puts extra focus on whether the current price still leaves a margin between market value and estimated intrinsic value. Future cash flow from mobile networks and related services can support the case for upside. However, execution risks around network investment cycles and pricing pressure may limit how much of that value is ultimately realized. Across a range of checks, including a Discounted Cash Flow intrinsic value estimate and earnings based multiples, the broader picture leans cheap. The company scores a high 5 out of 6 on value. The issue now is whether the current discount to intrinsic value for Telefonaktiebolaget LM Ericsson offers enough compensation for the business and cash flow risks that come with the stock. Compare Ericsson's current pricing gap to other potential opportunities by scanning 262 high quality undervalued stocks, which also show a similar disconnect between market price and estimated value. The Discounted Cash Flow (DCF) approach here focuses on what Telefonaktiebolaget LM Ericsson can generate in free cash flow over time in SEK. The model uses the latest twelve month free cash flow of about SEK30.0b and assumes cash flows that broadly grow from current levels rather than surge or fall away. On that basis, the 2 Stage Free Cash Flow to Equity model points to an estimated intrinsic value of around SEK131 per share. That intrinsic value sits above the current share price, which implies a discount of roughly 26.2%. For you as an investor, the key question is whether Ericsson’s ability to keep producing sizeable free cash flows, and the risks around those cash flows, justifies that gap. On this DCF view, Telefonaktiebolaget LM Ericsson stock appears undervalued relative to this estimate of its cash flow based worth. Our Discounted Cash Flow (DCF) analysis suggests Telefonaktiebolaget LM Ericsson is undervalued by 26.2%. Track this in your watchlist or portfolio, or discover 262 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Telefonaktiebolaget LM Ericsson. P/E is a reasonable lens for Telefonaktiebolaget LM Ericsson because earnings are a central driver of how investors usually value established communications equipment companies. Ericsson currently trades on a P/E of about 12.9x. This sits below the communications industry average P/E of around 34.5x and below a peer group average of roughly 27.9x. A tailored fair P/E ratio for Ericsson of about 21.7x, which factors in its profitability profile, market position and risk level, is also well above the present multiple. That gap suggests the market is pricing Ericsson at a discount relative to what these models imply for comparable earnings power. If the company can maintain its earnings base in SEK and manage the usual swings in network investment and pricing, the current P/E may allow for a higher multiple within this framework. On the P/E yardstick, Telefonaktiebolaget LM Ericsson stock appears undervalued compared with both industry benchmarks and its modelled fair ratio. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Telefonaktiebolaget LM Ericsson pick up where the valuation work leaves off and explain what future growth, margin and earnings paths would need to look like for the stock to be worth materially more or materially less than today’s price, using the Community page as the hub. Each narrative links its figures to a clear view of how Telefonaktiebolaget LM Ericsson's growth, profitability and risk profile might evolve, which you can revisit as new information appears. The community is split on Telefonaktiebolaget LM Ericsson, with bullish and bearish narratives drawing very different lines on what current pricing reflects. Bull case: 26% undervalued Read the full Bull Case to see why Telefonaktiebolaget LM Ericsson could be undervalued Bear case: 42% overvalued Read the full Bear Case to see why Telefonaktiebolaget LM Ericsson could be overvalued Do you think there's more to the story for Telefonaktiebolaget LM Ericsson? Head over to our Community to see what others are saying! Telefonaktiebolaget LM Ericsson screens as undervalued on both the Discounted Cash Flow (DCF) intrinsic value estimate and earnings based multiples, which is a relatively consistent signal. The key debate for you is whether Ericsson can keep converting its position in mobile networks into steady free cash flow without margin pressure eroding that picture. If you think cash generation and pricing can hold up through future network cycles, the current discount looks like a potential opportunity. If you are more concerned about competitive pressure and capital intensity, the gap to intrinsic value may be closer to a value trap than a clear mispricing. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ERIC-B.ST. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. AT&T stock has more than doubled over the past three years, yet recent weakness over the last year and a mixed shorter term picture leave investors asking whether the current price around US$24.25 still represents value or if the easy gains are behind it. The broader valuation checks lean cheap, so the recent pullback now sits against a relatively supportive set of metrics. AT&T has returned about 101.4% over the past three years, which puts recent share price softness into the context of a strong multi year run. Ongoing network modernization with Ericsson can support cash flow expectations, while the prospect of fresh competition from SpaceX’s planned Starlink Mobile service may pressure growth assumptions and margins over time. AT&T screens as undervalued on most of Simply Wall St’s checks, with the stock passing 5 out of 6 valuation tests, which suggests the broader metrics still lean toward a discount rather than a premium. The issue now is whether that apparent discount is enough to compensate for competitive and execution risks that could affect AT&T’s earnings power in the years ahead. Find out why AT&T's -10.6% return over the last year is lagging behind its peers. The P/E ratio is a useful way to compare what you pay for each dollar of AT&T’s earnings with what the market pays for other telecom stocks. AT&T currently trades on a P/E of about 7.7x, compared with a Telecom industry average of roughly 16.9x and a peer average near 11.3x. That is a sizeable gap between AT&T and both its direct peers and the broader sector. The fair P/E ratio that blends AT&T’s size, margins, sector and risk profile is estimated at about 13.2x. Against the current 7.7x, that suggests the market is pricing the stock at a discount to what this framework indicates could be reasonable. Despite pressure on sentiment after SpaceX set out plans for a rival Starlink Mobile network by 2027, the present multiple still sits below both peers and this tailored fair value marker. On the P/E multiple alone, AT&T stock appears undervalued compared with both telecom peers and its own fair ratio estimate. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where the P/E discussion for AT&T leaves off and explain which combinations of growth, margins and earnings would need to hold for the stock to be worth materially more or less than today’s price. Each Narrative is framed as a specific thesis about AT&T’s business that can be revisited over time so you can see how the underlying assumptions hold up as new information emerges on the Community page. The AT&T community splits into two very different camps on what the current price is really reflecting. Bull case: 16% undervalued Read the full Bull Case to see why AT&T could be undervalued Bear case: 14% overvalued Read the full Bear Case to see why AT&T could be overvalued Do you think there's more to the story for AT&T? Head over to our Community to see what others are saying! AT&T screens as undervalued on market multiples, and the broader valuation checks lean supportive rather than stretched. The gap between its current P/E and the fair ratio estimate suggests investors are still pricing in meaningful execution and competitive risk. The key question now is whether cost savings and cash generation from network upgrades can offset pressure from new and existing competitors. That tension, between a discounted valuation and the risk that the business underdelivers on earnings power, is what separates the bull view from the bear view on AT&T at today’s price. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include T. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Telefonaktiebolaget LM Ericsson stock has more than doubled over the past three years, and current checks still point to a discount, with the Discounted Cash Flow (DCF) intrinsic value estimate and market multiples both suggesting the shares trade below what the fundamentals imply. Telefonaktiebolaget LM Ericsson has returned 103.6% over the last three years, which puts extra focus on whether the current price still leaves room for more value to be realised. The recent Tampa Electric agreement for a private LTE network can support long term cash flow expectations, while execution risks around large network projects may affect how confidently investors price those cash flows. The stock screens as undervalued in 5 of 6 valuation checks, so the broader framework leans toward the shares still looking cheap. The issue now is whether Telefonaktiebolaget LM Ericsson's current price of SEK 96.7 offers enough discount to the intrinsic value estimate to appeal to value focused investors. Telefonaktiebolaget LM Ericsson delivered 37.7% returns over the last year. See how this stacks up to the rest of the Communications industry. The Discounted Cash Flow (DCF) model values Telefonaktiebolaget LM Ericsson by projecting the cash the business could return to shareholders in future and discounting it back to today. On this view, Ericsson generated roughly SEK 30.0b in free cash flow over the last twelve months, and the model assumes that cash flows broadly grow from here before settling into a more modest phase. On these inputs, the DCF points to an intrinsic value of about SEK 132 per share, compared with the current price of SEK 96.70. This implies the stock screens around 26.8% undervalued. The recent Tampa Electric private LTE contract is a clear example of how long term network projects can underpin those cash flow expectations, although execution on similar deals remains an important watchpoint for investors. Overall, the DCF workup suggests Telefonaktiebolaget LM Ericsson stock currently looks undervalued relative to the cash flows it is expected to generate. Our Discounted Cash Flow (DCF) analysis suggests Telefonaktiebolaget LM Ericsson is undervalued by 26.8%. Track this in your watchlist or portfolio, or discover 252 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Telefonaktiebolaget LM Ericsson. P/E suits Telefonaktiebolaget LM Ericsson because investors often focus on earnings for established, cash generating telecom equipment companies. On this measure, Ericsson trades on a P/E of 12.9x, compared with a wider Communications industry average of about 39.4x and a peer group average near 35.1x. That is a sizeable gap at face value and suggests the market is placing a lower earnings multiple on Ericsson than on many sector peers. The internal model points to a fair P/E ratio of about 21.7x for Telefonaktiebolaget LM Ericsson, based on its profile relative to peers. Versus the current 12.9x, this implies the shares trade at a discount to what that framework would expect for the earnings they currently generate. The Tampa Electric private LTE contract announced earlier provides one example of earnings related work in the pipeline that investors may weigh against this discount. On the P/E multiple, Telefonaktiebolaget LM Ericsson stock appears undervalued relative to both its fair ratio and the wider Communications industry. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Telefonaktiebolaget LM Ericsson sit between the valuation work above and the assumptions that would need to hold for a very different share price. Each narrative sets out its own view of Telefonaktiebolaget LM Ericsson's future growth, margins and earnings and, rather than relying on a single multiple or model output, it lays out the inputs behind that fair value so you can track those against results over time on the Community page. Community views on Telefonaktiebolaget LM Ericsson sit far apart, with one camp seeing structural upside potential and another focused on pressure on costs and margins. Bull case: 26% undervalued Read the full Bull Case to see why Telefonaktiebolaget LM Ericsson could be undervalued Bear case: 42% overvalued Read the full Bear Case to see why Telefonaktiebolaget LM Ericsson could be overvalued Do you think there's more to the story for Telefonaktiebolaget LM Ericsson? Head over to our Community to see what others are saying! For Telefonaktiebolaget LM Ericsson, both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings multiple work in the same direction, which points to an undervalued stock rather than a mixed signal. The key question is whether the cash flows and earnings implied by recent contracts, such as the Tampa Electric private LTE deal, can be delivered with enough consistency to close that gap. The crux for investors is whether the current discount reflects mispricing or an appropriate cushion for execution risk on large network projects and margin pressure highlighted in the bear case. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ERIC-B.ST. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Ericsson ERIC delivered a mixed set of second-quarter results, demonstrating resilient profitability despite weaker revenue performance. While softer operator spending and lower licensing revenue weighed on sales, disciplined execution and continued cost management helped the company maintain healthy margins. The latest results provide investors with a clearer picture of Ericsson's near-term challenges and long-term opportunities. Ericsson's earnings highlighted the effectiveness of its ongoing efficiency initiatives. The company reported an adjusted gross margin of 48.4%, slightly higher than the year-ago level of 48%, supported by disciplined operational execution and improved profitability within its Mobile Networks business. Cost-reduction measures, pricing actions to offset component inflation, and continued operational efficiency also helped protect earnings despite softer revenues. Cloud Software and Services delivered improved adjusted margins, further supporting overall profitability. Image Source: Zacks Investment Research Revenue trends remained challenging during the quarter. Reported sales declined 6% year over year to SEK 52.7 billion, while organic sales slipped 1%, primarily because of lower IPR licensing revenue following a non-recurring licensing settlement recorded last year. Demand also remained uneven across geographic markets as wireless carriers continued to moderate network investment, limiting equipment sales despite pockets of regional growth. Image Source: Zacks Investment Research One encouraging development was the continued momentum in Cloud Software and Services. The segment delivered 5% organic sales growth and improved adjusted profitability, benefiting from ongoing 5G core network upgrades and software deployments. Alongside Cisco Systems CSCO and Nokia NOK, Ericsson continues investing in AI-enabled networking, enterprise connectivity and automation technologies that could diversify its revenue base beyond traditional mobile infrastructure over time. Management expects network activity to remain supported by seasonal rollout projects but also cautioned that higher volumes of deployment work could pressure Networks gross margins in the third quarter. Ericsson plans to continue pricing actions and internal cost initiatives to offset component inflation while maintaining investments in AI-driven connectivity. At the same time, restructuring efforts, cautious carrier spending and ongoing macroeconomic uncertainty remain important factors that could influence results in coming quarters. The stock currently carries a Zacks Rank #3 (Hold), reflecting a balanced view of Ericsson's investment outlook. While its attractive Value Score highlights reasonable valuation, weaker Growth characteristics and average Momentum indicate that revenue recovery remains a key watchpoint. Taken together, the current Zacks Rank and Style Scores suggest the earnings report demonstrates solid operational execution, but investors may still prefer to see stronger top-line growth before becoming more constructive on the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ericsson (ERIC) : Free Stock Analysis Report Nokia Corporation (NOK) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The AI buildout has resulted in an unanticipated casualty distant from Silicon Valley: telecom equipment manufacturers, who now compete with hyperscalers for the same memory chips. Three major companies, SK Hynix, Samsung, and Micron, control more than 95% of worldwide DRAM production, and as AI data centers use an increasing share of that output, memory chips used in telecom base stations become scarcer and more expensive as a direct result. That is the mechanism behind Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC)'s worst single-day stock reaction in nearly three years. The company's shares plunged about 12% on July 14, reaching their lowest level since February, after Ericsson warned that growing component costs, particularly memory chips, will affect margins in the future. Looking into Ericsson’s Q2 2026 results, the market’s harsh reaction was more about forward guidance rather than a breakdown in existing operational execution. Adjusted EPS was SEK 1.22 (~$0.13), which was in line with market expectations. Adjusted gross margin increased to 48.4%, a two-percentage-point year-over-year rise after normalizing for a prior-period IPR licensing settlement. Meanwhile, reported net sales declined 6% to SEK 52.7 billion ($5.62 billion), missing the SEK 53.71 billion forecast, while organic sales excluding currency and one-offs remained essentially flat. What worried investors was guidance and cash flow, not the print itself. Free cash flow before M&A fell to SEK 0.4 billion from SEK 2.6 billion a year ago, owing to increased inventories being accumulated ahead of scheduled third-quarter deliveries. Management forecasted Q3 Networks adjusted gross margin to a range of 48% to 50%, a slight decrease from Q2 levels, noting a higher share of lower-margin network rollout projects and component inflation developing "gradually" during the second half of 2026 and into 2027. Jefferies, which rated the stock at a Hold with a target price of 98 Kronor, framed the sales miss as being centered primarily on delayed India deliveries within the Networks division as opposed to broad-based demand weakness, and noted Ericsson is forecasting a stronger-than-seasonal third quarter as those delayed deliveries arrive. The sudden selloff has generated an attractive valuation gap for long-term investors. Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) is currently trading at a 14.45x forward P/E multiple, representing a significant discount to key infrastructure rivals such as Nokia, which trade on similar 5G-cycle and edge-connectivity theses. The market's knee-jerk reaction appears to regard temporary component inflation as a permanent weakening of Ericsson's earnings potential, resulting in a clear disparity between price and underlying value. Short interest and hedge fund positioning support a bullish counter outlook. Short interest in Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) sits at a modest 2.1% of the float, suggesting bears aren't piling into short positions to bet on further structural downside. In addition, notable hedge fund managers were gathering shares ahead of the company's results. According to Insider Monkey’s Q1 2026 database, 19 hedge funds had long positions in ERIC as of the end of the quarter, versus 15 funds in Q4 2025. Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) is experiencing a manageable, short-term margin headwind from AI-driven memory chip competition, rather than a fundamental weakening of its cellular network trademark. With core gross margins holding strong and inventory accumulation preparing the company for a comeback in Q3 deliveries, the 12% drop marks an appealing entry point. While we acknowledge the risk and potential of ERIC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ERIC and that has 10,000% upside potential, check out our report about this cheapest AI stock. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years Disclosure: None.

Image source: The Motley Fool. Tuesday, July 14, 2026 at 3:00 a.m. ET President and Chief Executive Officer - Börje Ekholm Head of Networks and Incoming Chief Executive Officer - Per Narvinger Senior Vice President and Chief Financial Officer - Lars Sandström Vice President and Head of Investor Relations - Daniel Morris Daniel Morris: Hello, everyone, and welcome to the presentation of Ericsson's Second Quarter 2026 Results. Joining us today, we have Börje Ekholm, our President and CEO, and Per Narvinger, Head of Networks, who will be assuming the CEO role in October. A little later, Lars Sandström, our Chief Financial Officer, will also join us. As usual, we will have a short presentation followed by Q&A. In order to ask a question, you will need to join the conference by phone. Details can be found in today's earnings release and on the investor relations website. Please be advised that today's call is being recorded and that 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 will now hand the call over to Börje and to Per for some introductory comments. Börje Ekholm: Thanks, Daniel, good morning, everyone, and thanks for joining us today. Before we get into the quarter, I wanted to take a moment to talk about the leadership transition we announced in June. After almost 10 years as CEO of Ericsson and actually 20 years as a member of the board, this will be my last quarterly results call. Since I stepped into the role in 2017, we have transformed Ericsson into a leader in our industry. I will always be proud of the progress Team Ericsson has made in strengthening our technology leadership, improving our operational execution, and positioning us for long-term success now that AI actually moves into the physical world, which I think will provide us with a lot of growth opportunities going forward. I also want to express my gratitude to the board, the leadership team, and all the colleagues in Team Ericsson. It is really the quality of our people that defines our success. It has been a privilege and honor to be a team member of Team Ericsson for the last almost 10 years. I am also pleased to report a solid Q2, where we continue to execute against our operational and strategic priorities. We remain focused on serving our customers, strengthening our technology leadership, and driving disciplined execution across our business. Before going into some key takeaways from the quarter, I would like to introduce Per Narvinger, who will be succeeding me as CEO, as Daniel said and you all know, and he can join me today. Per has spent almost 30 years at Ericsson and brings a broad experience across the telco industry. He has been in research, standardization, development, product management, and sales. He's led some of Ericsson's most important businesses, most recently, of course, Networks, but before that, leading the turnaround of Cloud Software and Services. I've had the privilege to work very closely with Per for many years now, and I've seen firsthand his deep understanding of our technology, our customers, and our industry. What has actually impressed me is really his ability to execute. Yes, you can rest assured he consistently delivers on what he says he will do. Simply put, he's an excellent choice to lead Ericsson into the next chapter. Over the next two, three months, Per and I will spend a lot of time together working closely to ensure a smooth transition. Please, Per, I leave the word over to you. Per Narvinger: Thank you, Börje. It's of course a great honor to take over as CEO of the company from October 1st. As Börje says, I have been in the company, in the industry for quite a few years. I truly enjoyed being back in the Networks business, where I spent a lot of my career. I was heading up the largest segment now for a year and a half. I have to say, Börje, you handed me quite a challenge when we formed Cloud Software and Services. It's great to see that business is now progressing. I also think we are at a very interesting point in time now with AI really coming in a big way. Of course, how we build our products, how we deliver to our customers, and of course, all the traffic we're gonna see on AI in our networks. I also have to say a big thank you to you, Börje. You're handing over a company in a very strong position, strong on the market position, strong in the portfolio, and it's truly been a privilege working with you, Börje, and great fun as well. Of course, you and I will now meet a lot of customer partners to make sure we have a smooth transition here. Of course, I'm looking forward also to engaging with everyone in this forum going forward. Yeah. Thank you. Börje Ekholm: Yeah, you'll have a lot of exciting quarterly calls ahead of you. Thank you, Per. Per, of course, has been part of my leadership team for many years. I think it's fair to give him some time to chart out the strategy for the future. He will not take part of the Q&A today and therefore save your questions for the future quarterly reports when he can talk much more about the future. Now, let's look at today's results. I would say overall, we executed well in the second quarter, and we saw continued strong margin delivery. Looking at the top line, we saw a 1% organic decline. Underlying, it's actually a slight growth if we adjust for the back royalty portion of the IPR settlement last year. Gross margin came in at 48%, which is actually up 2 percentage points if we exclude the benefits from the one-off IPR settlement last year. EBITDA margin came in at 13.1%, which is in line with last year's results. All in all, these results demonstrate the strength of our portfolio, our disciplined execution, and how we strengthen the company operationally. The actions we've taken over the recent years have made Ericsson much more resilient and it's actually enabling us to sustain healthy margins in varying market conditions. The external environment continues to be rather challenging as the AI boom is driving up component costs. We are taking, I would say, two sorts of actions to mitigate this. First, we do some near-term adjustments, accelerating costs out, but we're also increasing sales with product substitutions or sales of additional products. We're also started to take longer-term structural actions, which of course, include raising prices where appropriate. First step is to adjust on new tenders, but we're also implementing price increases with current customers. Discussions to broaden price increases are ongoing, and we're also redesigning products. All of these actions will help us mitigate longer-term effects from component inflation. While we're not immune to these external factors, we're in a strong position strategically and operationally. To make sure that we keep this position, we're continuing to strengthen our technology leadership in our core mobile Networks business. This includes continued R&D investments in our leading high-performing programmable networks. Building on our strong position in mobile Networks, we're also pursuing a number of growth initiatives. This includes what we do on Enterprise with enterprise connectivity, our API business network powered solutions, but also the growth opportunities in mission-critical networks and different defense applications. Here, we continue to see good progress. Our strategy over the last few years has focused on positioning us for the next phase of AI adoption or the AI race, and that is when AI moves into the industrial and physical world. In this world, connectivity will be more important and uplink will dimension mobile networks. We will also see increasing demand of low latency. Actually, this is what 5G was designed for. I would say Ericsson today is well-positioned to capture this next wave of AI-driven connectivity. With this, I like to leave the word over to Lars to go through some of the numbers more in detail. Lars Sandström: All right. Thank you, Börje. I will begin with some additional comments on the group before moving on to the segments. If you look at net sales in Q2, they totaled SEK 52.7 billion with organic sales declining 1% year-on-year. Excluding the one-off IPR settlement in Q2 2025, organic sales grew by 1%. Sales in all market areas grew with the exception of Americas, which reported a slight decline of 1%. In Americas, sales grew in Latin America, but were lower in North America, reflecting strong deliveries in the prior year period. In the other market areas, sales were driven by Japan, India, the Middle East and Africa. Networks sales declined in two of the four market areas. Networks sales grew in Northeast Asia, driven by Japan and Southeast Asia, Oceania and India, driven by timing on deliveries in Southeast Asia. Europe declined due to the completion of modernization projects in some markets, while Middle East and Africa grew. North America declined, partly offset by higher sales in Latin America. Cloud Software and Services, they grew in all market areas. Enterprise delivered its third quarter of organic growth. Reported sales decreased by 6%, impacted by negative currency effect of SEK 1.8 billion. IPR revenues were SEK 3.4 billion, down by SEK 1.5 billion year-over-year. This was mainly due to the one-off settlement in Q2 2025. The current IPR run rate is approximately SEK 13.5 billion, including the agreements signed in July 2026, which will benefit from Q3. Adjusted gross income was SEK 25.5 billion, with a negative currency impact of SEK 0.8 billion. Adjusted gross margin was 48.4%, a slight increase from last year with improvement in Networks and Cloud Software and Services. On the cost side. Operating expenses excluding restructuring charges dropped to SEK 19 billion, around SEK 1 billion lower year-over-year, driven by cost reductions, currency, as well as the divestment of iconectiv. Wage pressures continued to be offset by cost reductions driven by headcount as well as efficiency measures. There was limited financial impact in Q2 from the component prices, helped by our resilient supply chain. The EBITDA margin was 13.1%. Adjusted EBITDA was SEK 6.9 billion, down by SEK 0.5 billion. EBITDA was impacted by a negative currency effect of SEK 0.6 billion. In Q2 2025 also benefited from the IPR settlement and included iconectiv. Excluding these, adjusted EBITDA would have improved by SEK 1.8 billion. Cash flow before M&A was SEK 0.4 billion, driven by earnings and impacted by higher inventories. I will come back to this later. Let's move to the segments. Networks, reported sales decreased by 8% year-on-year to SEK 33 billion, with a negative currency impact of SEK 1.2 billion. Organic sales decreased by 4%, mainly reflecting IPR one-offs last year. Organic sales grew in Northeast Asia and Southeast Asia, Oceania, and India, while sales declined in Europe, Middle East and Africa, and Americas. Networks' adjusted gross margin was 50.4%, stable compared to last quarter, and adjusted gross income decreased to SEK 16.6 billion due to the lower sales and the negative currency impact. Adjusted EBITDA was SEK 5.8 billion, down from SEK 6.5 billion last year, mainly impacted by a negative currency effect of SEK 0.5 billion. Adjusted EBITDA margin was 17.7%, down slightly year-on-year, and this was partly due to the IPR one-off in Q2 last year, and partly due to lower sales, including the negative FX impact. Moving to segment Cloud Software and Services. Reported sales increased by 3% to SEK 14.7 billion, including a negative currency impact of SEK 0.4 billion. Organically, sales grew by 5% with growth in all market areas, and growth was broad-based across the commodities. Adjusted gross margin came in at 44.1%, an improvement from 43.2% last year, supported by improved delivery efficiency. Adjusted gross income increased to SEK 6.5 billion. Adjusted EBITDA increased to SEK 1.8 billion with a margin of 14.2%. Lower operating expenses benefited from efficiencies and currency. Looking at the right-hand graph, the rolling four quarter adjusted gross margin was around 44% and adjusted EBITDA margin around 13%, a new high level. Going to Enterprise. Reported sales decreased by 19%, impacted by the sale of iconectiv and currency. On an organic basis, Enterprise grew by 3% with growth in Global Communications Platform and Enterprise Wireless Solutions. Adjusted gross margin declined to 50.9%, reflecting the impact of the divestment of iconectiv and a change in product mix. Adjusted EBITDA landed at SEK -0.8 billion, where the impact of the divestment of iconectiv was partly offset by cost reductions. EBITDA improved compared to Q1, benefiting from lower operating expenses. Q1 was also impacted by some small negative one-offs. Turning to free cash flow, which was SEK 0.4 billion before M&A in the quarter. Cash flow generation was supported by earnings, but impacted by increased operating net assets, mainly inventories. As you might remember, we had a very strong Q1 due to a stronger than normal seasonal reduction in operating net assets. In Q2, we had a build-up in inventories, in part preparing for planned Q3 delivery. We delivered a cash flow to net sales of 12% for the rolling four quarters at the upper end of our 9%-12% target. Net cash decreased sequentially by SEK 8.3 billion to SEK 59.8 billion, reflecting dividend payments and share repurchase. Next, I will cover the outlook. Global uncertainty remains elevated given the broad geopolitical and macroeconomic environment, including the global semiconductor situation. As mentioned last quarter, we are not immune to these disturbances. As a matter of fact, input costs increased further in Q2. The financial impact from this will start to build up gradually in the coming quarters. We are taking near-term actions across the businesses, including commercial measures, for example, product substitution as well as supply chain actions and targeted cost initiatives. At the same time, we are starting to implement longer term structural actions that will be needed to more sustainably offset these impacts. We are adjusting pricing in current tenders and discussions to broaden price increases with current customers are continuing, as Börje already mentioned. Turning to the Q3 outlook. The outlook assumes the exchange rate specified in the report. For Networks, we expect sales growth to be above the three-year average quarter-on-quarter seasonality. For Cloud Software and Services, we expect sales growth to be broadly similar to the three-year average quarter-on-quarter seasonality. We expect Networks adjusted gross margin to be in the range of 48%-50%, down slightly compared to Q2 due to a change in mix. We expect also a higher share of Networks rollout projects in Q3. Restructuring charges for 2026 are expected to be at an elevated level, with a fairly large part already seen in the first half. With that, I hand back to you, Börje. Börje Ekholm: Thanks, Lars. Ericsson enters the future from a position of strength. With the external environment continuing to be challenging, I'm very happy that Ericsson today is in a great spot and leading the industry in the AI era. The next phase of AI will require high-performing mobile connectivity to scale. We expect this to be a key driver for our industry over time. With our leading portfolio, Ericsson is well-positioned to capitalize on this future and this future development. I believe this is an exciting time that can bring Ericsson back to growth. As this is my last earnings call as CEO of Ericsson, and possibly the last as a CEO, I'd like to thank all our customers. Ericsson has long believed that connectivity is a basic human need, and together with you, our customers and partners, we've continued to expand mobile connectivity and continued to create opportunities for people throughout the world. This is an amazing achievement and something we should all be really proud of. Finally, I'd like to give a big thank you to all my Ericsson colleagues. You are all the reason to why Ericsson today is leading the industry. You're truly amazing and have made these years so rewarding. Thank you, team. With this, I believe it's time to move on to some final, for me at least, Q&A. Daniel Morris: Thanks, Börje. We'll move on to Q&A now with Börje and Lars. To ask a question, please could you press star one and one on your phone and wait for your name to be announced? If you're streaming the webcast, could we ask that you mute the audio on the webcast while asking a question to avoid any feedback. As usual, if I can request one question per participant, please, so we have time to hear from as many of you as possible. Operator, we're ready for the first question. Thank you. The first question today is going to come from the line of Simon Granath at ABG. Please go ahead, Simon. Simon Granath: Morning. Initially, just congrats on a very successful career at Ericsson, Börje. Best of luck in the future. On to my question, which is a bit broader. I have been in detail tracking your mobility report and note that you have finally made some positive revisions on data traffic estimates after several years of downgrades. Could you give us your perspective of demand for RAN in light of this, balancing it with the introduction of uplink-related applications, and also the fact that Dell'Oro still only expects the market to grow 1% per year for the foreseeable future. Is the latter conservative in your view? Thank you. Börje Ekholm: Yeah. Thanks, Simon, first of all. No, it's a good question. We're doing the revisions because what we are starting to see is an emerging demand for uplink. I can't really point to exactly what type of applications. It's a broad base. It's really starting to see that the demand for AI is starting to shape traffic. That's why I think there is an upside case here, which will be much more positive for our industry when uplink becomes what dimensions the networks going forward. I think there is a real case to start to be a bit more optimistic about our industry and the RAN market. At the same time, I want to also say, when we plan and for our own planning perspective, we like to think it is rather flattish. When the demand happens, we need to make sure that we have the right products, the right cost structure, and not build on speculation in advance of that happening. When you ask the question, yes, I'm personally very excited about that future, but I want us also to be disciplined in the way we execute and the way we plan our cost structure. Therefore, we're cautious. I think when you look out in a few years' time, it's going to be better to take this discussion. The purchase decisions ultimately will be in the hands of our customers. When they see the demand happening, I also think they will start to buy. Until then, let's continue to plan for a flattish market. Simon Granath: Thank you so much. Daniel Morris: Thanks for the question, Simon. Moving to the next question, please, operator. The next question is going to come from the line of Erik Lindholm-Röjestål from SEB. Please go ahead, Erik. Erik Lindholm-Röjestål: Yes. Good morning, Börje and Lars. Thanks for taking my question. I'll start with perhaps a question on GPUs in the radio unit. It's been a hot topic recently. NVIDIA revealed its entry into this area. You obviously operate mainly on Ericsson silicon, which is purpose-built. Can you elaborate a bit, perhaps, on the benefits and the possible risks of going with purpose-built and how capable do you think GPUs are as an option in radio units? Thanks. Börje Ekholm: Yeah. I think, first of all, it's actually, in a way, confirmation of the importance of AI in the RAN, right? We start to see other players wanting to enter here with GPUs. I think it kind of confirms what we have been talking about for quite some time, that AI will be what drives the networks going forward. We have picked a strategy of being, in that sense, agnostic from a hardware point of view. We can run our RAN stack on being an x86 or a GPU, or our purpose-built silicon. When we look at what you need in the radio, it's of course, in reality, very high performance, very energy efficient, and it's a lot of calculations and a very demanding compute environment. At the same time, it's actually not a need for very large models. Where this market is going to end up is always a bit uncertain. We see a demand for that compute in the radio going forward that we can offer with the purpose-built. As I said, our RAN stack is agnostic, so we can be on what type of infrastructure ultimately wins. It's actually not an either/or question. We are simply saying, let's see where the market shapes up. Today, there are clear performance benefits in the purpose-built. You see that on cost, you see it on energy efficiency, you see it on performance in field. There is no doubt there is room for the purpose-built, and then how it's going to look like over time. We're not going to place the bets yet. We're simply keeping that an open topic. What I think is an important element in your comment is actually the deployment of AI in the RAN. That is, of course, going to be really important, and we are determined to lead. You saw us announce at Mobile World Congress, a couple of applications where we use AI in the radio as well. I'm convinced we are at the beginning of that journey, and we are determined to lead like we are today. Erik Lindholm-Röjestål: All right. Thank you, and good luck on your future endeavors, Börje. Börje Ekholm: Thank you. Daniel Morris: Thanks for the question, Erik. Moving to the next question, please. The next question is going to come from the line of Sébastien Sztabowicz at Kepler Cheuvreux. Please go ahead, Sébastien. Your line's open. Sébastien Sztabowicz: Yeah. Hi, everyone, and thanks for taking my question. Could you please quantify the component cost inflation impact on your Networks gross margin for this year? What do you expect in terms of impact? Regarding the price increase, what has been done already? Have you been already able to renegotiate some existing contract with higher prices? Thanks a lot. Thank you. Daniel Morris: Maybe Börje, starting with you with the discussions and then Lars, the final. Börje Ekholm: Yeah, I can take the latter part. Yes, we have done that. It is not impacting Q2, but it will gradually be visible, those type of renegotiations. Of course, I think it is also important to remember we have rather long-term contracts in the industry. When you enter into these type of discussions, you need to be thoughtful as well. It takes a bit of time. Where we have done it, we are actually seeing that customers also understand that we need to find ways to share the burden of the industry if this industry will be competitive going forward. I actually think we have the opportunity ahead of us here to do more. We, of course, take all the other actions, product substitutions, make sure that we design products in a, call it, a way that minimizes the cost inflation. We are trying to do all these. I think we are not going to be immune. We were not immune from tariffs either about a little more than a year ago, you also know that it did not, at the end of the day, impact. Can't guarantee that now. I think we see a lot of mitigating actions that will help us position us well for the future. Maybe you want to take the details, Lars. Lars Sandström: I think when it comes to the cost impact, we do not share that kind of details. As we said, already coming out of Q1, we will see gradual impact during the second half and into next year. We are doing mitigation activities already now. How big the impact will be depends on a little bit the phasing of the cost increases that are coming and the phasing on the mitigating activities. We can do quite a bit in short term, in the longer term, it is really about how we cannot take this all alone. It is really on what we can do together with customers here and to really ensure we get the best performing solution to the customers, but also at the right price point. Sébastien Sztabowicz: Thank you, and congrats, Börje, for all your career at Ericsson. Börje Ekholm: Thank you. Daniel Morris: Thanks for the question, Sébastien. Moving to the next question, please. The next question is going to come from the line of Andreas Joelsson at DNB. Please go ahead, Andreas. Andreas Joelsson: Thank you. Good morning, everyone. First of all, Börje, congratulations, also, I know you will miss these calls tremendously, but we're only a phone call away if you want further questions. Secondly, further on the gross margin and the other side of the equation, the volumes that you see will increase going forward. How should we see those rollout projects? Will they be for longer and therefore have an impact on the gross margin for longer? What's the pattern usually look like in situations like this? Thanks. Börje Ekholm: Thanks, Andreas. Yeah, I will truly miss the questions. I try to fill my time with something else instead. I'll figure out if it's equally rewarding. Let's put it that way. That will be hard to beat. Anyhow, it's a good question. There isn't really a typical project, to be honest. If you want to generalize a bit, what we see in rollout projects is the first few quarters tend to be the most challenging. After that, it gradually recovers to be quite good after a period of time. That's what we have seen every time we have those type of contracts. The exactly how the impact is varies. Sometimes, the initial is actually negative. Sometimes it's just less positive below group average margins, so to say. We're very disciplined in taking contracts that are, I call them, accretive over time. That means it's challenging in the beginning, but better over time. We don't guide per se on margins a year out, right? That's on that purpose. That's why we guide per quarter, and we see this impact in the third quarter. Of course, you also should expect bigger volumes. When you look at the numbers, you have to play a little bit yourself there. I feel quite good about the volume, and then it will be a bit more challenging, short-term on margins. Andreas Joelsson: Perfect. Thanks a lot. Daniel Morris: Thanks for the question, Andreas. Moving to the next question, please. Next question will come from the line of Richard Kramer at Arete. Please go ahead, Richard. Richard Kramer: Thanks. Börje, I'm not sure you're going to miss this question, but if we just focus on measures of shareholder value creation, I'm sure you'd benchmark yourself against really the leading global tech companies. Since 2017, Ericsson's underperformed the NASDAQ-100 by 67% and also underperformed comm equipment indices. You've taken SEK 30 billion of restructuring charges and about SEK 60 billion of write-offs. Given Ericsson's continued reliance now on telcos for the vast majority of sales, do you think you could have been bolder in efforts to shift focus, for example, towards the massive investment boom, which we see happening now in data center builds? Is there anything you think, in terms of the strategy you might adjust so that you could tap into this huge wave of spending? Thanks. Börje Ekholm: I think it's a great question, Richard. For sure it's a relevant question, fair to ask. I think we have elected to be in a different part of the value chain for AI. Really where you see the big performance elsewhere is actually AI-driven. I think the next phase of AI is actually going to benefit our industry quite substantially. I think it's a bit too early to decide where we are on that journey when you're before really rolling out AI into the mass applications. Do I think we could have done differently? For sure, we could have. Any other answer would be, I think, inaccurate. That we could for sure have done. I think we're also done what we can to position the strength of Ericsson in the best possible way, where the market will be in the future. We are convinced that we will see AI move into distributed applications. Call it's going to be anything from, of course, glasses. It's going to be humanoids. It's going to be robots. When you start to see that, you will demand mobile connectivity, and you will start to demand high performance mobile connectivity with solid indoor coverage and with high uplinks. That's where we exactly have invested. Let's see where the physical AI develops in the future. That's when I think you'll see where we have a chance to outperform, and that's what we try to position ourselves for. Richard Kramer: Okay. Thanks and good luck. Börje Ekholm: Thank you. Daniel Morris: Thanks for the question, Richard. Moving to the next question, please. The next question is going to come from the line of François Bouvignies from UBS. Please go ahead, François. Your line is open. François Bouvignies: Thank you very much. Good luck for Börje as well. Just a quick question on gross margin. Again, I think you mentioned in Q3 that you will have a mixed rollout impact on the gross margin. I thought in the past that you did actually very good work on the mixed side rollout versus non-rollout, that the gross margin actually is not that impactful. We have seen that during AT&T rollout phase. We didn't see much impact there. Why is it different this time that the rollout is dilutive again, at least on the gross margin side? As we look into your price actions or maybe your component cost, can you give more details on how much is the pressure on your cost that we see happening? Is it fair to say that this pressure is more from Q4 onwards? Because Q3, you don't talk about inflation impact. It's more the rollout mix. Thank you. Lars Sandström: Sure. Börje Ekholm: I can just start on the rollout question. The reality is we're in the project business. Quarterly, it shifts a bit all the time, right? It's a bit larger portion, rollout projects during Q3 that impacts margins. That's what we're guiding for. That will periodically happen. I think when you look at our track record over time, as you note, we've been able to manage across geographic mix. That's actually been our focus, to reduce the dependence on geographic mix. We have always said we have a mixed dependence on products. Of course, it's very different if we sell software versus if we sell services for a rollout project. That's going to be different, and that's what you see impacting Q3. It's actually less geographic dependence that we've taken away, but the product dependent and product mix dependence, that we will not be able to take away because it's simply lower margin structurally on services than it is on software. Lars Sandström: I think when it comes to impact from cost, we will see some already in Q2, but as we said, they're on the mitigate activities. We see that we will have those supporting, offsetting that during the third quarter. It is an increase in cost pressure that we have. That will, of course, put a bit pressure more coming out of the year and into next year. The activities that we're doing will take a bit, the short term they will work with, and the longer terms that we will see how that plays out. It's really on the discussions that we have and negotiations that we will have towards customers as well. That's why it's a bit different in the phasing. François Bouvignies: Thank you very much. Daniel Morris: Thanks, François. Moving to the next question, please. Next question is going to come from the line of Jakob Bluestone at BNP. Please go ahead, Jakob. Jakob Bluestone: Thanks, Daniel, and congrats and best wishes to Börje as well. Just to stay on the topic of the memory cost inflation, can you maybe just explain to us what is actually the mechanism in your current contracts passing on price inflation? Do you have automatic pass-through, or do you have to go back and renegotiate every contract individually? Just to help us understand what's actually in your current contracts for protecting. Börje Ekholm: We've been very clear on this over time, Jakob, that we don't have automatic pass-throughs. The reason why our contracts are not designed that way is actually that they are rather long-term, and just because the contract is long-term doesn't mean it's exactly the same products being shipped the whole time. It would simply not be workable to have those type of adjustments in there. That's why the contracts don't typically not include that. Some do, but that's typically very small and much shorter term contracts. There is nothing automatic in this. That's why we talk about the mitigating actions, and you see us take that on a cost side. We take it on product substitution, we take it on new product introduction, and we of course take it on price increases. Some part is renegotiation. We've done that successfully already. We know it can be done, so we're going to continue with that. We also change the prices, of course, in tenders we enter into. Overall, we're not immune, even though we don't have it written into the contract, but we also know that we're able to mitigate a large part by taking those type of actions. Is it easy? No, it's not. It shows also our performance that it actually can be done. Jakob Bluestone: Understood. Thank you, and best wishes. Börje Ekholm: Thank you. Daniel Morris: Thanks for the question, Jakob. Moving to the next question, please. The next question is going to come from the line of Daniel Djurberg at Handelsbanken. Please go ahead, Daniel. Daniel Djurberg: Thank you, Daniel, good morning, Börje and Lars. Börje, thanks for a great contribution and all good meetings during the years. If you really miss the raw discussions, you're always welcome back to Edsbruk, where I have a newly refurbished apartment available. Nevertheless, I would like to ask on the net worth gross margin and the guidance here 48%-50%, which in my view wouldn't be a bad number given what you talked about here on rollouts and on price inflation and so on. We also know that you have some kind of IPR catch up from Trenchant here in Q3. I guess some of the uncertainties there is based on this, how is this impacting this guidance? Should we be even more conservative after this, or given that there is some impact from Trenchant in this? Börje Ekholm: Not to comment explicitly on Trenchant, Daniel. I would say it's a marginal impact from that. That has not been assumed to be a positive contributor during Q3. These type of contracts on the IPR depends on exactly how they look like. I think the key here is the agreement we strike increases the value. We're at SEK 13.5 billion run rate now. That's the most important part. It positions the value of our IPR portfolio for the future. The contribution is actually marginal during Q3. Otherwise, I may take you up on a coffee in Edsbruk. Daniel Djurberg: Yeah, that's great. Always welcome. Börje Ekholm: Thank you. Daniel Morris: Thanks for the question, Daniel. Moving to the next question, please. The next question is going to come from the line of Sandeep Deshpande at J.P. Morgan. Please go ahead, Sandeep. Sandeep Deshpande: Yeah. Hi, thank you for letting me on, and all the best for your future endeavors, Börje. Just a quick question on the Enterprise business of Ericsson. Over the last five years, this business has consistently been loss-making. Is there a time horizon over which the intention of the company is to make this business profitable? It has, on average, been 10% impact on your EBITDA reported for the year. It has been a consistent negative. Will this change in the next few years? Börje Ekholm: It will. The answer, Sandeep, is, of course it cannot be consistently loss-making. Instead, it has to be value accretive to the group. We clearly have a plan in place that we're executing upon. It comes from a couple of elements, and you already now start to see our Wireless WAN business to actually contribute, not to reported numbers, but the way we see sales growth on bookings, et cetera. It's actually quite positive. The challenge in Enterprise has been the, call it the private networks, where we've actually not had attractive, neither growth nor profitability. That is something we're working to address and starting to see progress on that. You all know the business of Vonage has not been contributing. We put in place a plan to change the trajectory of that business that we're executing upon. It will take a little bit more time, you will start to see improved performance in the reported numbers. You've seen it from Q1 to Q2, and you'll see it continuing throughout the year. Clearly, the ambition is here to turn this around and make it value accreting in the future. I'm not going to put a timeline on it, as I'm not the one to deliver on it, so it feels a bit unfair to do. I would say the plan is in place, and we're executing on that, and over time, it should be value accretive. Sandeep Deshpande: Thank you, Börje. Daniel Morris: Thanks, Sandeep. Moving to the next question, please. The next question is going to come from the line of Sami Sarkamies at Danske Bank. Please go ahead, Sami. Your line's open. Sami Sarkamies: Thanks. First of all, I want to thank Börje for good cooperation over the years. I think you can be proud of the achieved margin turnaround during the past 10 years. Just curious, what do you think will be the biggest challenges, or questions your successor will need to address going forward? Börje Ekholm: Thanks, Sami. I think it's a bit unfair to my successor to put something on his table. What we have been focused on the last few years is that we have recognized that the core mobile Networks business, in reality, is a flattish market. To get into growth, which I actually think is critical for long-term value creation of a company, is actually to find new use cases of our technology. We've done that in trying to do that in Enterprise. We're not there yet. We're actually doing it in mission-critical, including defense, and there we're starting to see that it contributes to overall growth. When we look at this, I think the one thing which now I'm answering this much more from what we have actually been focusing on the past few years, is to drive growth into the company without being, in that sense, pursuing a number of initiatives and from a blue sky thinking. We've rather tried to be disciplined in the way we enter areas, trying to invest to capture that potential and trying to get into growth. I think that's where the next step of the journey is. I'm actually a big believer that AI will move into the physical world. When that happens, we're going to be very well-positioned with the initiatives we have taken. I am sure that my successor will take new initiatives and ideas and change some to capture this potential. I think there are a lot of opportunities. Not saying it's easy, it's a lot of opportunities where we can capitalize on our position. Sami Sarkamies: Thanks. Daniel Morris: Thanks for the question, Sami. Moving to the next question, please, which will come from the line of Felix Henriksson at Nordea. Please go ahead, Felix. Felix Henriksson: Thanks for taking my question. Again, congrats and all the best for the future, Börje. My first one is on the inventory. You tied up around SEK 4.6 billion in inventory during the quarter. I was just wondering if you could dissect this a little bit, how much of this is attributed to the memory cost inflation, and how much is attributed to a strong sales quarter you see in Q3, relating to the timing of deliveries? I think in the IR chats in the morning, there was some discussion about delayed deliveries from Q2 to Q3. If you could just unpack the inventory build-up a little bit and how we should read into it. Thanks. Lars Sandström: Yeah. When you look at the inventory build-up here, it's around SEK 5 billion in the quarter. The majority of that is finished goods that is then to be delivered in Q3 and going forward on this phasing, as you mentioned. There is also a portion of that connected to the higher component cost that we see coming in. It's not the majority. It's a smaller part of the SEK 5 billion that is connected to the component cost increases. This will continue a bit. That will be the challenge going forward here to really address the working capital and the capital turnover rate here in the coming quarters. It's important also that we have the right levels here so we have ability to deliver on time to our customers and the commitments we have with our customers. Felix Henriksson: Great. Thank you. Daniel Morris: Thanks for the question, Felix. Moving to the next question, please. Next question is going to come from the line of Janardan Menon at Jefferies. Please go ahead, Janardan. Janardan Menon: Hi. Good morning. Thanks for taking the question. Congratulations, Börje, from my side as well. I think you've done a great job on the profitability side. The company you inherited was struggling with profitability, and now the company is maintaining consistently high levels of gross margins on the Networks side. My question is really on the competitive dynamics of your mitigation aspects. When you are redesigning products to account for higher component prices or you're increasing prices, are you seeing similar kind of an approach from your competitors? That's both your Chinese competitors, who are able to possibly source components like DRAM at an easier level or lower prices from Chinese vendors than you can. Are you seeing any competitive effect from these actions which could have an impact on your market share? Börje Ekholm: You actually make implicit in your question, Janardan, is actually an important part here. There may be, as you say, a little bit lower cost inflation in the Chinese ecosystem. As you know, we cannot rely on that ecosystem to export to a number of countries we're in. That forces us to look at the product design in a different way. We're seeing all vendors otherwise under some sort of similar cost inflation pressure. We're not the only one going through this. What we are doing is, of course, spending maybe a little bit more effort on product design to actually optimize our products for the performance needed, in order to balance component cost. This takes six, nine months to do. It doesn't really come through in the short term. Longer term, it will help us. I expect everyone to do something similar. We're probably going to see that in other parts of the AI value chain as well, that companies do the same thing because it's simply a way to optimize performance and cost of your product. I don't think the vendors, whether they come from China or from elsewhere, are under any other way of operating. Janardan Menon: Understood. Thank you very much. Daniel Morris: Thanks for the question, Janardan. Moving to the next question. The next question will come from the line of Stéphane Houri at ODDO. Please go ahead, Stéphane. Stéphane Houri: Yes, good morning. Actually, I wanted to speak about the Cloud Software and Services margin, where your margins went really above the expectations, 12.4%. I just want to know how much of this improvement is structural, like cost reduction, efficiency mix, and how much is a one-off, and what is a reasonable run rate margin to expect going forward. Thank you. Lars Sandström: When it comes to Cloud Software and Services, we try to emphasize the EBITA margin, since there can be a bit of volatility depending on the product mix in Cloud Software and Services. We had a good quarter this quarter, for sure. You also see the impact when we get a bit higher revenues, that there is a leverage also supporting the margin here. It's a mix of the leverage and the product mix. It is, as I said, a good quarter here in Q2. We have said that we are aiming for double-digit Cloud Software and Services EBITA margin, and we are there now and above. The task is for us to maintain and drive this going forward. There is also, of course, the connection with the RAN market demand. It's not separate Life of that business, of course. The challenge we see in the RAN market is also there for the Cloud Software and Services. Having said that, we see some good progress in capturing a bit of growth here that we have seen. If you look more on the rolling base, it's actually been a bit better than the pure RAN market here, and we intend to keep focused on that going forward as well. Börje Ekholm: It's fair to say there's no one-time effects that actually come into the quarter. It's kind of business as usual, to be honest. Yeah, at least the turnaround plan that was put in place several years ago. Commercial discipline, work on the cost side, focus the product portfolio, et cetera, that's giving the benefits here. Sometimes there is a bit of lag until you see it in the numbers. It's the same thing that we discussed on the Enterprise side. A lot of the actions that have been taken the last one, two years will start to come through in the future, that's what you see on the CSS. A lot of the actions taken. It was a few years back that now is building a solid base. We've said we need to be double-digit margin. That's been, I think, a minimum requirement. Call it a decency level. If you look at what a business like this should be, I've often said it should at least be mid-teens and above, because that's the reality of the value we provide should warrant that. It takes time. Not going to commit to a timing of reaching that. Of course, the ambition is to make this a more profitable business than it is today. I think it's the timing effect of action. When you take them, it takes a few quarters before you see it come through. Stéphane Houri: Very clear. Thank you very much. Daniel Morris: Great. Thanks for the question, Stéphane. I see we are just coming up on time, We will need to conclude today's conference call there. Thanks for joining us. Thanks, Börje. Thanks, Lars, and also to Per. Börje Ekholm: Thanks, everyone, Good luck in your work. Before you buy stock in Telefonaktiebolaget Lm Ericsson (publ), consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Telefonaktiebolaget Lm Ericsson (publ) wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Ericsson (ERIC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Net Sales: SEK52.7 billion, with a 1% organic decline year on year. Gross Margin: 48%, up 2 percentage points excluding last year's IPR settlement benefit. EBITDA Margin: 13.1%, consistent with last year's results. Adjusted Gross Margin: 48.4%, a slight increase from last year. Operating Expenses: SEK19 billion, approximately SEK1 billion lower year on year. Cash Flow Before M&A: SEK0.4 billion, impacted by higher inventories. Networks Sales: SEK33 billion, an 8% decrease year on year. Cloud Software and Services Sales: SEK14.7 billion, a 3% increase year on year. Enterprise Organic Growth: 3%, despite a 19% decrease in reported sales. Net Cash: SEK59.8 billion, a sequential decrease of SEK8.3 billion. Warning! GuruFocus has detected 3 Warning Signs with ERIC. Is ERIC fairly valued? Test your thesis with our free DCF calculator. Release Date: July 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) reported a solid Q2 with continued strong margin delivery, demonstrating the strength of its portfolio and disciplined execution. The company achieved a gross margin of 48%, up 2 percentage points from the previous year, excluding one-off benefits from an IPR settlement. Cloud Software and Services segment saw a 5% organic sales growth, with improvements in delivery efficiency and adjusted gross margin. Enterprise segment delivered its third consecutive quarter of organic growth, driven by Global Communications platform and Enterprise Wireless Solutions. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) is well-positioned to capture future growth opportunities in AI-driven connectivity, leveraging its strong position in mobile networks and continued R&D investments. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) experienced a 1% organic sales decline, with a slight growth only after adjusting for the previous year's IPR settlement. The external environment remains challenging, with the AI boom driving up component costs, impacting the company's cost structure. The Networks segment reported an 8% year-on-year sales decrease, with organic sales declining by 4% due to IPR one-offs last year. Enterprise segment reported a 19% decrease in sales, impacted by the sale of iconectiv and currency fluctuations. The company faces ongoing challenges in renegotiating contracts to address component cost inflation, as existing contracts do not have automatic pass-through mechanisms. Q: Could you give us your perspective on the demand for RAN in light of positive revisions on data traffic estimates and the introduction of uplink-related applications? A: Borje Ekholm, President and CEO, explained that there is an emerging demand for uplink driven by AI, which is shaping traffic. While there is potential for growth in the RAN market, Ericsson plans conservatively for a flattish market to ensure they have the right products and cost structure when demand increases. Q: Can you elaborate on the benefits and risks of using purpose-built silicon versus GPUs in radio units? A: Borje Ekholm noted that Ericsson's strategy is hardware agnostic, allowing their RAN stack to run on x86, GPU, or purpose-built silicon. While purpose-built silicon offers performance and energy efficiency benefits, the company remains open to market developments and emphasizes the importance of AI in RAN. Q: How is Ericsson addressing component cost inflation and price increases with existing contracts? A: Borje Ekholm stated that Ericsson has renegotiated some contracts to share the burden of cost inflation with customers. The company is also taking actions like product substitutions and redesigns to mitigate costs. Lars Sandstrom, CFO, added that the impact of cost inflation will be gradual, with mitigation efforts ongoing. Q: What is the outlook for Ericsson's Enterprise business, which has been loss-making? A: Borje Ekholm acknowledged the need for the Enterprise business to become value accretive. He mentioned progress in the Wireless WAN business and efforts to address challenges in private networks and Vonage. The plan is to improve performance and make the business profitable over time. Q: How is Ericsson managing inventory build-up and its impact on cash flow? A: Lars Sandstrom explained that the inventory build-up is mainly due to finished goods for Q3 deliveries, with a smaller portion related to higher component costs. The company aims to manage working capital effectively while ensuring timely customer deliveries. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Ericsson ERIC reported second-quarter 2026 results, wherein earnings met the Zacks Consensus Estimate, while revenues missed the same. Adjusted earnings were SEK 1.22 (13 cents) per share, in line with the consensus estimate. Revenues were SEK 52.7 billion ($5.62 billion), down 6% year over year and 2.56% below the Zacks Consensus Estimate of $5.77 billion.Organic sales declined 1% year over year primarily due to lower IPR licensing revenues following a non-recurring benefit in the prior-year quarter. However, the company delivered a solid adjusted gross margin of 48.4%, reflecting disciplined execution and improved profitability in its core businesses. Ericsson price-consensus-eps-surprise-chart | Ericsson Quote ERIC generated SEK 52.7 billion ($5.62 billion) in revenues compared with SEK 56.1 billion in the year-ago quarter. Currency headwinds and lower IPR licensing revenues weighed on reported sales, although organic growth remained relatively resilient.Adjusted gross income declined to SEK 25.5 billion ($2.72 billion) from SEK 27 billion a year ago. Nevertheless, the adjusted gross margin improved to 48.4% from 48%, supported by improved margins in Networks and Cloud Software and Services, partly offset by unfavorable currency movements. The Networks segment generated SEK 33 billion ($3.52 billion), down 8% year over year on a reported basis. Organic sales declined 4%, mainly reflecting lower IPR licensing revenues. Excluding IPR licensing, organic sales were broadly stable as growth in North East Asia and South East Asia, Oceania and India partly offset weakness in other regions. The adjusted gross margin improved to 50.4% from 49.5%.Cloud Software and Services revenues increased 3% year over year to SEK 14.7 billion ($1.57 billion). Organic sales rose 5%, driven by growth across all market areas, including higher software demand and core network upgrades. The adjusted gross margin expanded to 44.1% from 43.2%, while adjusted EBIT increased 33% to SEK 1.8 billion ($192 million). Enterprise revenues declined 19% year over year to SEK 4.5 billion ($480 million), primarily reflecting the divestment of iconectiv completed in 2025. On an organic basis, however, sales increased 3%, supported by growth in Global Communications Platform and Enterprise Wireless Solutions.The adjusted gross margin narrowed to 50.9% from 54.9%, reflecting the portfolio change following the divestment and shifts in product mix. The adjusted EBITA loss widened to SEK 0.8 billion ($85 million) from SEK 0.5 billion despite ongoing cost-reduction efforts. The Americas remained Ericsson's largest market, generating SEK 18.8 billion ($2 billion) in sales, down 5% year over year, while organic sales slipped 1%. Europe, Middle East and Africa posted stable reported sales of SEK 16.3 billion ($1.74 billion), with organic growth of 2%, supported by ongoing 5G deployments and core network upgrades.South East Asia, Oceania and India reported SEK 5.4 billion ($576 million) in revenues, down 2% on a reported basis but up 4% organically due to project delivery timing. North East Asia generated SEK 3.7 billion ($395 million) in revenues, with organic growth of 8% driven by stronger deliveries in Japan. Adjusted EBITA totaled SEK 6.9 billion ($736 million), down 7% year over year, while the adjusted EBITA margin remained largely stable at 13.1% compared with 13.2% a year ago. Lower operating expenses resulting from ongoing efficiency initiatives partly offset weaker gross income and currency headwinds.The free cash flow before mergers and acquisitions declined to SEK 0.4 billion ($43 million) from SEK 2.6 billion a year earlier, mainly because of lower earnings and higher inventories ahead of planned third-quarter deliveries. Ericsson ended June 30, 2026, with net cash of SEK 59.8 billion, equivalent to $6.15 billion using the quarter-end exchange rate. During the quarter, the company returned SEK 8.2 billion to shareholders, including SEK 3.2 billion through share repurchases.Management noted that component cost inflation remains a near-term challenge and expects some pressure on Networks' adjusted gross margin during the third quarter due to higher network rollout activity. However, the company believes that its strengthened portfolio and continued investments in AI-driven connectivity position it well to capture growth opportunities. Ericsson currently has a Zacks Rank #4 (Sell).HubSpot HUBS currently sports a Zacks Rank #1 (Strong Buy). It delivered an earnings surprise of 4.97% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. Management expects platform consolidation and AI adoption trends to remain key long-term growth drivers.Ubiquiti Inc. UI has a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 22.021%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.Corning Incorporated GLW currently carries a Zacks Rank #2. It delivered an earnings surprise of 2.41% in the trailing four quarters.Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ericsson (ERIC) : Free Stock Analysis Report Corning Incorporated (GLW) : Free Stock Analysis Report HubSpot, Inc. (HUBS) : Free Stock Analysis Report Ubiquiti Inc. (UI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Return on Equity Target: 10% over the business cycle. Property Disposal Profit: SEK750 million from the sale of nine properties to AP7. Share Repurchase: 24 million shares repurchased during the quarter. Administrative Cost Reduction: SEK100 million lower compared to the first quarter last year. Net Leasing: SEK82 million, with SEK72 million from Ericsson in Hagastaden. Property Portfolio Value: SEK138 billion. Income and Net Operating Income: Both down by 3% compared to Q1 last year. Central Administration Costs: SEK24 million this quarter, down from SEK66 million last quarter. Interest Costs: Reduced by SEK10 million. Contribution from Entra: Improved by SEK17 million. Occupancy Rate: 88.0%, slightly lower than the last quarter. Net Investments: SEK679 million, with SEK886 million in existing properties and SEK214 million from property sales. Like-for-Like Income Decrease: SEK47 million, a 2% decrease. Like-for-Like Property Costs Increase: SEK45 million, with SEK38 million due to higher heating and snow costs. Leasing Renegotiation: 14% of leases renegotiated with a 7.1% average negative change in rent. Property Value Increase: SEK416 million, or 0.3%. Loan-to-Value Ratio: 37.5%. Interest Coverage Ratio (ICR): 3.2 times. Average Debt Maturity: 4.5 years. Share Buyback Program: SEK3.4 billion total, with SEK2.7 billion acquired so far. Energy Consumption Reduction: 4% decrease in the like-for-like portfolio. Warning! GuruFocus has detected 5 Warning Signs with CWQXF. Is CWQXF fairly valued? Test your thesis with our free DCF calculator. Release Date: April 24, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Castellum AB (CWQXF) achieved a profit of SEK750 million from the disposal of nine properties to AP7. The company repurchased almost 24 million shares, demonstrating a commitment to returning capital to shareholders. Administrative costs were reduced by SEK100 million compared to the first quarter of the previous year. Positive net leasing of SEK82 million was achieved, with a significant contribution from a lease to Ericsson. The company maintains a high sustainability focus, with a 4% reduction in energy consumption in its like-for-like portfolio. Income and net operating income both decreased by approximately 3% compared to the previous year, primarily due to higher vacancies and direct property costs. Occupancy rates decreased to 88.0%, slightly lower than the previous quarter. The company experienced a negative change in rent of 7.1% during lease renegotiations. Property costs increased by SEK45 million, with SEK38 million attributed to higher heating and snow costs due to a colder winter. The company faces a slow leasing market, with only modest positive net leasing figures. Q: Can you quantify the proportion of your portfolio that doesn't meet your return requirements? A: It's difficult to provide a specific figure as it depends on achievable prices. A significant portion can achieve the 10% return, some are borderline, and others may not meet the requirement. However, no exact figure can be given at this time. - Pal Ahlsen, CEO Q: How does your view on return requirements impact your decision on projects? A: It's uncommon to promise tenants long-term ownership. Completed projects with long leases to stable tenants may be sold depending on market demand and interest rates. Decisions are made on a case-by-case basis. - Pal Ahlsen, CEO Q: Are there any specific regions or categories related to your renegotiations? A: No, the renegotiations involve various underlying rental agreements across different categories and geographies. - Christoffer Stroembaeck, Acting Head - Transactions and CFO Q: Is the current level of administrative expenses expected to continue in future quarters? A: Yes, the current level is expected to continue, with no seasonal variations or one-offs affecting the figures. - Christoffer Stroembaeck, Acting Head - Transactions and CFO Q: What is the status of your share buyback program, and does it require more property divestments? A: We do not plan for additional divestments to complete the buyback program. The program is progressing with SEK2.7 billion acquired so far. - Christoffer Stroembaeck, Acting Head - Transactions and CFO Q: Can you provide more color on the value decline in markets with lower expected cash flows? A: The decline is broadly across the portfolio with no specific concentration in regions or asset classes. - Christoffer Stroembaeck, Acting Head - Transactions and CFO Q: How well are you hedged against potential surges in electricity prices? A: We have a more classic hedging strategy now, covering 80%, 60%, 40%, and 20% over several years, providing better protection against price surges. - Christoffer Stroembaeck, Acting Head - Transactions and CFO Q: What changes have been made to the occupancy definition in your reporting? A: We now report occupancy as an end-of-period figure rather than for the full period, which we believe is more accurate. - Christoffer Stroembaeck, Acting Head - Transactions and CFO For the complete transcript of the earnings call, please refer to the full earnings call transcript.