Ericsson's shares experienced a sharp drop on Thursday after the company reported that Q3 Group Net Sales grew by 3% organically to SEK 68.0 billion (approx. US$6.031 billion), driven by strong performance from Networks.
Börje Ekholm, President and CEO of Ericsson, stated: "We see robust underlying performance and strong momentum in the business as we continue to execute on our strategy. This includes leadership in mobile networks by growing market share. Since 2017 we have increased RAN market share, excluding Mainland China, from 33% to 39% and we have had multiple contract wins across geographies in this quarter. We continue to solidify our strong position in 5G to capture the considerable opportunities presented by the fastest scaling mobile generation. Our expansion into the exciting high-growth Enterprise space is gaining momentum with the acquisition of Vonage, providing us with access to a powerful range of cloud communication services."
Some highlights
- EBITA of SEK 7.7 b. corresponded to a margin of 11.3%, where higher gross income from business growth was offset by increased technology investments and the consolidation of Vonage with acquisition accounting and one-time acquisition costs.
- Group organic sales grew by 3% YoY driven primarily by Networks in North America. Reported sales were SEK 68.0 (56.3) b., of which Vonage contributed SEK 2.9 b. since July 21.
- Gross income increased to SEK 28.1 (24.8) b. driven by higher sales primarily in Networks, and the consolidation of Vonage.
- The Networks business saw strong organic sales growth of 7% excluding IPR (4% including IPR), with growth driven by North America where operators continue to forcefully drive 5G deployment. After expected record operator capex in 2022 in North America, Ericsson anticipatea RAN capex to hold up well in 2023, albeit at a lower level than this year.
- In the new Cloud Software & Services segment, revenues were impacted by lower managed services sales and IPR revenues. Gross income was stable after offsetting ongoing 5G Core deployment costs.
- In the current inflationary environment, Ericsson is making pricing adjustments as well as leveraging product substitution to manage margins.
