Ericsson Q4 Earnings Beat Estimates Despite Lower Revenues

Ericsson ERIC reported strong fourth-quarter 2025 results, with both the earnings and revenues beating the Zacks Consensus Estimate. However, ERIC’s top line was affected by weakness in the North East Asia, and Americas regions. Focus on improving operational efficiency, cost optimization and a robust portfolio boosted the gross margin.

Net Income

Ericsson recorded a net income of SEK 8.6 billion ($0.91 billion) or SEK 2.57 (27 cents) per share compared to a net income of SEK 4.9 billion or SEK 1.44 per share in the prior-year quarter. Lower selling and administrative expenses, research and development expenses supported the net income growth. The bottom line beat the Zacks Consensus Estimate of 23 cents.

For 2025, the company reported a net income of SEK 28.7 billion or SEK 8.51 compared to SEK 0.4 billion or SEK 0.01 per share in 2024. Capital gain from the iconective divestiture and lower operating expenses boosted the net income.

Revenues

Ericsson generated SEK 69.3 billion ($7.36 billion) in revenues, down 5% year over year. However, it grew 6% year over year at a organic basis. Weakness in North East Asia and Americas impacted the sales growth. The top line beat the Zacks Consensus Estimate of $7.03 billion.

For 2025, the company reported revenues of SEK 236.7 billion, down 5% year over year.

Segment Results

Networks segment generated SEK 44.2 billion ($4.69 billion), down 6% from the year-ago quarter’s tally of SEK 46.8 billion. The segment’s adjusted gross margin improved to 49.6% from 49.1% in the year-ago quarter. It benefited from cost reduction and improved operational efficiency. However, the negative impact of a product mix offset this trend. Sales declined in the Americas and North East Asia. Sales growth in Vietnam, Europe, the Middle East and Africa partially reversed this trend.

Cloud Software and Services revenues increased 3% year over year to SEK 20 billion ($2.12 billion). Adjusted gross margin improved to 44.3% from 39% in the prior-year quarter. Sales grew in multiple regions.

Enterprise segment generated SEK 4.6 billion ($489 million), down 25% from the year-ago quarter’s tally of SEK 6.1 billion, owing to declining sales in the Global Communication Platform and disinvestment of iconective. Adjusted gross margin was 52.1% compared with 54.3% in the year-ago quarter.

Other revenues were SEK 0.4 billion ($43 million), down from SEK 0.6 billion in the year-ago quarter.

Region-wise, South-East Asia, Oceania and India registered revenues of SEK 8.98 billion ($955 million), up from SEK 8.44 billion in the prior-year quarter. Revenues from North East Asia decreased to SEK 5.2 billion ($553 million), down from SEK 7.1 billion a year ago. Net sales from the Americas were SEK 22.9 billion ($2.44 billion), down 11% year over year.

Europe, Middle East and African markets witnessed 7% year-over-year growth to SEK 23.4 billion ($2.48 billion). Revenues from other regions decreased to SEK 8.8 billion ($1 billion) from SEK 9.7 billion in the prior-year quarter.

Other Details

Gross income, excluding restructuring charges, declined to SEK 33.2 billion ($3.53 billion) from the year-ago figure of SEK 33.7 billion. Adjusted gross margin was 48% compared with 46.3% in the year-earlier quarter.

Cash Flow and Liquidity

Ericsson generated SEK 16.5 billion ($$1.75) cash from operating activities during the quarter. In 2025, the company generated SEK 33 billion in cash from operations, down from SEK 46.3 billion in 2024.

As of Dec. 31, 2025, the company had net cash of SEK 61.2 billion ($6.5 billion) and SEK 18.6 billion in liabilities for post-employment benefits.

Outlook

For the first quarter of 2026, revenues from the Networks segment are expected to be broadly similar to the three-year average seasonality, while revenues from Cloud Software and Services are expected to be below the three-year average seasonality. The gross margin in the Networks segment is likely to be in the range of 49-51%. Restructuring charges are projected to remain at elevated levels.

ERIC’s Zacks Rank & Stocks to Consider

Ericsson currently has a Zacks Rank #3 (Hold).

Ubiquiti Inc. UI has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 39.52%. Ubiquiti spends significantly on research and development (R&D) 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. In the last reported quarter, it delivered an earnings surprise of 1.52%.

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.

Motorola Solutions, Inc. MSI currently carries a Zacks Rank #2. In the last reported quarter, it delivered an earnings surprise of 5.45%.

As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem.

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This article originally published on Zacks Investment Research (zacks.com).

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