STOCKHOLM, July 12, 2024 /PRNewswire/ --

Strategic highlights - taking proactive action in a challenging market environment

Delivering on network technology leadership strategy; externally recognized as 5G leader for 4th consecutive year.
Further progress to build out Global Network Platform for network APIs; two additional partnerships in Q2.
New 5G patent licensing agreement signed; on track to deliver the SEK 12-13 b. IPR revenue target for 2024.

Financial highlights - strong gross margin expansion, partly offset by targeted R&D investments

Sales declined -7%* YoY, but market area North America grew by 14%*. Reported sales were SEK 59.8 (64.4) b.
Adjusted^[1] gross income increased to SEK 26.3 (24.7) b. driven by strong gross margin expansion. Reported gross income was SEK 25.8 (24.1) b.
Adjusted^[1] gross margin was 43.9% (38.3%) supported by higher IPR licensing revenue and cost actions. Networks adjusted gross margin was 46.1% (39.3%). Reported gross margin was 43.1% (37.4%).
Adjusted^[1] EBITA was SEK 4.1 (3.7) b. with a 6.8% (5.7%) margin, with higher gross income partly offset by increased R&D investments in Networks for technology leadership. EBITA was SEK 2.4 (0.5) b.
Net income (loss) was SEK -11.0 (-0.6) b., including a SEK -11.4 b. impairment impact. EPS diluted was SEK -3.34 (-0.21).
Free cash flow before M&A was SEK 7.6 (-5.0) b. benefiting from a strong improvement in working capital.

Börje Ekholm, President and CEO, said: "In Q2, we maintained our leading market position, returned to growth in North America, and delivered strong gross margin expansion and free cash flow. We remained focused on matters in our control, to optimize our business amid a challenging market environment, with industry investment levels unsustainably low.

Vonage remains foundational to build out a global platform for network APIs. This is critical for the digitalization of enterprises and society, and will drive future growth in the telecoms industry. We recorded an impairment charge in Q2, as market growth in the current business has slowed, and we must now refocus on improving performance.

Our results highlight our competitiveness, and we will continue to take proactive steps to position the business for longer-term success. We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America."


            SEK b.                                                                                                                  
            Q2            Q2            YoY            Q1   QoQ       Jan-Jun    Jan-Jun     YoY

                                                                                                                                            2024           2023             change       2024    change       2024        2023      change



            Net sales                                                                                                                    59.848         64.444               -7 %     53.325      12 %    113.173     126.997       -11 %



            
               Organic sales growth[2]                                                                                               -                            -7 %                                                -10 %



            Gross margin[2]                                                                                                              43.1 %        37.4 %                       42.5 %              42.8 %     38.0 %



            EBIT (loss)                                                                                                                 -13.519         -0.312                         4.100               -9.419       2.734



            EBIT margin[2]                                                                                                              -22.6 %        -0.5 %                        7.7 %              -8.3 %      2.2 %



            EBITA[2]                                                                                                                      2.426          0.542              348 %      4.893     -50 %      7.319       4.390        67 %



            EBITA margin[2]                                                                                                               4.1 %         0.8 %                        9.2 %               6.5 %      3.5 %



            Net income (loss)                                                                                                           -10.999         -0.597                         2.613               -8.386       0.978



            EPS diluted, SEK                                                                                                              -3.34          -0.21                          0.77                -2.57        0.25



            Free cash flow before M&A                                                                                                     7.595         -4.992                         3.671     107 %     11.266     -13.008



            Net cash, end of period                                                                                                      13.133          1.892                        10.807      22 %     13.133       1.892



    Adjusted financial measures[2]



            Adjusted gross margin                                                                                                        43.9 %        38.3 %                       42.7 %              43.4 %     39.0 %



            Adjusted EBIT (loss)                                                                                                        -11.891          2.821                         4.305               -7.586       6.847



            Adjusted EBIT margin                                                                                                        -19.9 %         4.4 %                        8.1 %              -6.7 %      5.4 %



            Adjusted EBIT excluding impairments[3]                                                                                        3.229          2.821               14 %      4.305     -25 %      7.534       6.847        10 %



            Adjusted EBIT margin excluding impairments[3]                                                                                 5.4 %         4.4 %                        8.1 %               6.7 %      5.4 %



            Adjusted EBITA                                                                                                                4.054          3.675               10 %       5.10     -20 %      9.152       8.503         8 %



            Adjusted EBITA margin                                                                                                         6.8 %         5.7 %                        9.6 %               8.1 %      6.7 %



            *Sales adjusted for the impact of acquisitions and divestments and effects of foreign currency fluctuations.


            [1] Adjusted metrics are adjusted to exclude restructuring charges. This is a change in nomenclature only, compared with previous reports.


            [2] Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statement.


            [3] Excluding the non-cash impairment recorded in the second quarter 2024, relating to the impairment of intangible assets mainly attributed to the Vonage acquisition.

NOTES TO EDITORS

You find the complete report with tables in the attached PDF or on https://www.ericsson.com/en/investors/financial-reports/interim-reports

Video webcast for analysts, investors and journalists

President and CEO Börje Ekholm and CFO Lars Sandström will comment on the report and take questions at a video webcast at 10:00 AM CEST (9:00 AM BST London, 4:00 AM EDT New York).

Join the webcast or please go to www.ericsson.com/investors

To ask a question: Access dial-in information here

The webcast will be available on-demand after the event and can be viewed at www.ericsson.com/investors.

FOR FURTHER INFORMATION, PLEASE CONTACT

Contact person
Daniel Morris, Head of Investor Relations
Phone: +44 7386657217
E-mail: investor.relations@ericsson.com

Additional contacts

Stella Medlicott, Senior Vice President, Marketing and Corporate Relations
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com

Investors
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Alan Ganson, Director, Investor Relations
Phone: +46 70 267 27 30
E-mail: alan.ganson@ericsson.com

Media
Ralf Bagner, Head of Media Relations
Phone: +46 76 128 47 89
E-mail: ralf.bagner@ericsson.com

Media relations
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com

This is information that Telefonaktiebolaget LM Ericsson is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:00 CEST on July 12, 2024.

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