While Network sales declined by 13%, Enterprise sales grew by a 20%, and in total, Ericsson reported $6.3 billion) in sales
Ericsson reported a loss of $65.2 million in its second quarter and shares slid down 8.7%., but said its overall results are “in line with expectations.” Further, Ericsson President and CEO Börje Ekholm foresees the market experiencing a “gradual recovery” in late 2023, followed by a notable improvement in 2024.
While network sales declined by 13%, enterprise sales grew by a 20%, and in total, Ericsson reported SEK 64.4 billion ($6.3 billion) in sales. Despite the decline in network sales, the segment saw “strong execution with record build-out speed in India,” according to Ekholm. “Sales growth in India partly offset the expected softening we saw in other markets, notably in North America, where build-out pace moderated and customer inventory levels were reduced. Despite the business mix change and several large rollout contracts, networks had a gross margin of over 39%.”
Further, the company’s gross income in enterprise increased, mainly driven by the consolidation of Vonage, which Ericsson acquired last year. In total, gross income was SEK 24.1 billion ($2.4 billion), reported the company.
In cloud software and services, Ekholm said that Ericsson is on track to deliver an EBITDA of at least break-even for the full year 2023.
Ekholm also revealed that the company has landed another “important” 5G licensing agreement with an unnamed device vendor, which he said further validates the company’s portfolio strength. “As we look ahead, a fundamental driver of network capex is the continued rapid data traffic growth,” he said, adding that Ericsson forecasts 5G subscriptions to top 1.5 billion by end-2023 and reach 4.6 billion by 2028 and expects Fixed Wireless Access (FWA) to grow quickly, driving further traffic growth.
“Ericsson is shaping the industry landscape by leveraging the full value of 5G and creating the world’s most powerful innovation platform,” he said. “We remain focused on three priorities: 1) bolstering our leadership in mobile networks; 2) growing our enterprise business; and 3) driving our cultural transformation.” He added that a similar market mix and trends are expect in Q3 as was seen in Q2 and that the vendor is focused on reaching the lower end of the 15-18% EBITA margin long-term target range in 2024.
