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Ericsson Reports Fourth Quarter and Full-Year Results for 2025

Ericsson has announced its fourth quarter financial results and a comprehensive overview of its performance for the year 2025, showcasing substantial growth and operational achievements that reflect its strategic priorities. The company reported organic sales growth in all three segments during Q4, notably achieving a remarkable 12% increase in the Cloud Software and Services segment.

Fourth Quarter Highlights

In the fourth quarter, Ericsson saw sales increase by 6% year-over-year. Particularly significant performance was noted in the market areas of Europe, the Middle East, Africa, and Southeast Asia, Oceania, and India, while the Americas maintained a stable trajectory. However, Northeast Asia encountered a decline. The total reported sales amounted to SEK 69.3 billion, down from SEK 72.9 billion in the previous year.

Despite challenging currency fluctuations that tempered some revenue gains, the adjusted gross income for this quarter stood at SEK 33.2 billion, slightly down from SEK 33.7 billion year-over-year. Nevertheless, operational execution fueled improvements in the gross margin, which rose to 48.0%, compared to 46.3% the previous year. The reported gross margin maintained a solid level at 47.2%, up from 44.9%.

Moreover, the adjusted EBITA for Q4 reached SEK 12.7 billion, representing an 18.3% margin, with a substantial increase driven by elevating segment margins particularly in Mobile Networks. The reported EBITA was SEK 11.6 billion with a corresponding margin of 16.7%, significantly improved from 11.8% in the previous quarter.

Net income soared to SEK 8.6 billion, equating to an earnings per share (EPS) of SEK 2.57, a notable increase from SEK 1.44 as reported for Q4 of 2024. Free cash flow before mergers and acquisitions was reported at SEK 14.9 billion, showcasing Ericsson’s strong cash generation capabilities.

Full-Year Performance Overview

The full-year numbers reflect a 2% increase in sales, attributed to growth across both the Networks and Cloud Software and Services segments. The total reported annual sales amounted to SEK 236.7 billion, down from SEK 247.9 billion. Meanwhile, adjusted gross income for the entire year grew to SEK 113.9 billion, despite enduring a substantial SEK -7.2 billion from currency headwinds.

The adjusted gross margin improved to 48.1%, compared to 44.9% the previous year, indicating sustained operational focus on high-margin segments. Furthermore, the adjusted EBITA for 2025 reached SEK 42.9 billion, reflecting an impressive EBITA margin of 18.1%, compared to 11.0% the previous year, notably during the backdrop of divesting from iconectiv.

Net income for 2025 reached SEK 28.7 billion, up significantly from SEK 0.4 billion in 2024, resulting in an EPS of SEK 8.51. Free cash flow before M&A totaled SEK 26.8 billion, contributing to a cash flow to net sales ratio of 11.3%. By year-end, Ericsson reported net cash at SEK 61.2 billion, a robust increase from SEK 37.8 billion in 2024, equating to a return on capital employed of 24.1%.

Future Outlook

Börje Ekholm, President and CEO, remarked on the results, stating, "Our Q4 outcomes affirm the successful implementation of our strategic priorities. Despite a relatively stable RAN market environment, we achieved organic growth due to persistent efforts in mission-critical networks and 5G core services."

Looking towards 2026, Ekholm anticipates a flat RAN market while expressing confidence in growth within mission-critical and enterprise sectors, where Ericsson holds a competitive edge. The company plans to enhance investments in defense while continuing to optimize costs to bolster margins and cash flow generation.

In conclusion, Ericsson's solid performance in 2025, marked by sustained revenue growth and improved margins, positions the company well for the future as it navigates the dynamics of the telecommunications market. As a further commitment to shareholder value, a proposed dividend of SEK 3.00 per share alongside a SEK 15 billion share buyback program underscores its financial strength and commitment to returning value to its investors.