Ericsson Shares Rise 8.44% as Third-Quarter Sales Beat Forecasts Despite Profit Decline
Key Takeaways
- •Ericsson's third-quarter net sales reached 59.5 billion Swedish crowns, up 6% year over year and above the 55.4 billion analysts polled by LSEG had forecast.
- •Adjusted EBITA fell 36% to 10.1 billion crowns from 15.8 billion a year earlier but still exceeded the 7.87 billion forecast, with the margin narrowing to 17.0%.
- •Networks sales grew 9% to 38.7 billion crowns, accounting for about 65% of group revenue, while Enterprise was the weakest unit with a 10% decline to 4.6 billion crowns, partly due to the iconectiv divestment.
- •Ericsson warned that rising component costs, including higher memory chip prices driven by surging AI-related demand, will pressure gross margins next year.
- •The company guided fourth-quarter adjusted gross margin to 49% to 51% and expects the global RAN equipment market to remain stable, rather than rebound, in 2026.
Ericsson (ERICb) shares rose 8.44% on Thursday after the telecom equipment maker reported third-quarter sales above analyst expectations, even as adjusted EBITA fell 36% from a year earlier.
Telefonaktiebolaget LM Ericsson (publ) reported net sales of 59.5 billion Swedish crowns, up 6% year over year and above the 55.4 billion crowns expected by analysts polled by LSEG. Organic sales growth was 7%.
Sales in North America increased slightly, helped by project phasing. Networks, Ericsson’s largest business unit, reported a 9% increase in sales to 38.7 billion crowns, about 65% of group revenue. Cloud Software and Services sales rose 3% to 15.8 billion crowns.
Enterprise was the weakest-performing division. Sales declined 10% to 4.6 billion crowns, partly because of the divestment of iconectiv.
Profit Falls but Beats Forecasts
Adjusted EBITA declined to 10.1 billion crowns from 15.8 billion crowns a year earlier. The result nevertheless exceeded the 7.87 billion crowns forecast by analysts.
The adjusted EBITA margin narrowed to 17.0% from 28.1%, but remained above the 14.2% estimate. Ericsson said efficiency measures supported the result and that it would continue reducing costs and simplifying its operating structure.
The company’s third-quarter figures included earnings per share of SEK 1.77 and an adjusted gross margin of 47.7%, compared with the 47.3% estimate. Adjusted EBITA was SEK 10.121 billion, versus the SEK 7.87 billion forecast.
Wall St Engine posted the following earnings highlights on X:
ERICSSON $ERIC Q3’26 EARNINGS HIGHLIGHTS 🔹 Net Sales: SEK 59.478 b. (Est. SEK 55.40 b.) 🟢 🔹 EPS: SEK 1.77 🔹 Adj. Gross Margin: 47.7% (Est. 47.3%) 🟢 🔹 Adj. EBITA: SEK 10.121 b. (Est. SEK 7.87 b.) 🟢 Other Q3 Metrics: 🔹 Adj. EBITA Margin: 17.0% (Est. 14.2%)🟢 🔹 Organic… pic.twitter.com/hxNuytekRS — Wall St Engine (@wallstengine) October 15, 2026
X post: https://x.com/wallstengine/status/2110596730580312065?ref_src=twsrc%5Etfw
Component Costs Weigh on Outlook
Ericsson said component costs increased during the quarter and warned that they would pressure gross margins next year. The company had previously raised the issue in July, when it said that higher memory chip costs, driven by surging demand related to artificial intelligence, were squeezing the business.
New CEO Per Narvinger reiterated the concern in the earnings statement.
“The RAN market is flat, geopolitical uncertainty remains elevated and component costs are a headwind to gross margin,” he said.
Ericsson expects the global radio access network equipment market to remain stable in 2026. The outlook indicates a flat market backdrop rather than a rebound, while geopolitical uncertainty remains elevated.
For the fourth quarter, the company expects Networks sales growth to be broadly in line with normal seasonal patterns. Ericsson guided to an adjusted gross margin of 49% to 51%, a range that sits above the 47.7% recorded this quarter; the fourth-quarter outcome against that range will serve as a concrete checkpoint for the component-cost pressure management has flagged.
