- Q4 net sales beat expectations, driven largely by EMEA and selective growth in Asia
- Cost cuts, divestments and a stronger balance sheet allowed Ericsson to return cash to shareholders
What happened: Ericsson beat fourth-quarter sales expectations as growth in Europe, the Middle East and Africa offset weaker conditions in other markets
Ericsson announced its sales performance in the fourth quarter of 2025, which exceeded the expectation, and its net sales reached 69.3 billion SEK, exceeding analysts’ expectations, bringing a successful end to a challenging year in the telecommunications equipment market.
Quarterly sales increased by 6% year-on-year, with Europe, the Middle East and Africa (EMEA) contributing the most. Although the growth of some markets slowed down, Ericsson’s extensive regional layout once again proved that it played an important role in balancing global demand. Southeast Asia and India also contributed to growth in the quarter.
In addition to traditional wireless services, cloud software and services have also achieved double-digit growth. As operators and enterprises no longer only focus on wireless upgrading, cloud software and service business occupy an increasingly important position in Ericsson’s product portfolio. The outstanding performance of this business segment highlights the company’s determination to diversify its revenue and reduce its dependence on cyclical radio access network (RAN) expenditure.
Some of the performance improvements reflect the company’s initial unpopular decisions. Cost cutting measures and the sale of iconectiv business have translated into higher profit margins and stronger cash flow. Ericsson has realized the year-on-year growth of adjusted EBITA profit margin for nine consecutive quarters, which is a significant achievement in the depressed telecom market.
With the increase of cash level, the company has started to give back to shareholders, launched a share buyback plan and said it would increase dividends – which shows that its balance sheet is much healthier than in recent years.
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Why it’s important
Ericsson’s performance is particularly outstanding, because at this time, the global wireless access network (RAN) market as a whole presents a gentle trend. Its growth is not due to the rebound of 5G large-scale deployment, but thanks to the more precise focus on mission critical networks, 5G core networks and enterprise deployment. The demand in these areas is often more stable and has less cyclical fluctuations.
Sustained R & D investment is still the core of its strategy. Ericsson gives priority to the development of native AI, secure and more independent network technology, and believes that the long-term differentiation advantage will come from software, intelligence and reliability, not just wireless hardware.
Looking forward to 2026, the management expects that the traditional ran expenditure will continue to be weak, while the enterprise and private networks have greater growth potential. Changes in the political and regulatory environment, especially the trend of phasing out so-called “high-risk” suppliers in Europe, may also be conducive to Ericsson’s development.
However, the recovery has not been smooth. The layoffs in Sweden also show that the road to recovery is still under way. Even so, Ericsson maintained a strong momentum of development at the end of the year – although there was no explosive growth, it made real progress in the difficult market.
