Oct 15, 2026 earnings call — AI, component costs and organization changes
Organic sales grew 7% this quarter and gross margin was 47.7%.
Revenue $6.0B (est $5.6B) · EPS $0.18 (est $0.14)
Key quotes
"The industry is entering a period of higher input costs and the financial impact will continue to build up in the coming quarters."
"I know we've been trying to optimize it. And now replacing that with an AI model, we get 10% gain in spectrum efficiency. Today, we have that deployed commercially, commercial deployment with 3 operators, and we have more than 60,000 base stations running this functionality."
"We are therefore making changes to enterprise wireless solutions to capture these R&D synergies, drive product innovation and accelerate the growth with both CSPs and enterprise customers."
Analyst Q&A 15
satellite and terrestrial networks
Q (Simon Granath · ABG): He asked if satellite operators building terrestrial networks is an opportunity for Ericsson and whether operators are changing CapEx priorities.
A: Ericsson discusses satellite with most customers and sees satellite as a great addition to terrestrial networks. They warned indoor coverage is a challenge and are consolidating indoor R&D into Networks. Overall they view more connectivity players as positive but say terrestrial coverage remains needed.
"First of all, for the end user, satellite communication will be a fantastic addition to terrestrial networks." — Per Narvinger (CEO)
demand outlook and cost mitigation
Q (Andreas Joelsson · DNB): He asked how to view sales and demand into 2027 and what further actions Ericsson will take to offset higher component costs.
A: They said Q3 sales were strong but component costs are a headwind. In the short term they use tactical actions like upselling and product substitution, and in the longer term they expect to raise prices when contracts renew — 2027 could be a transition year.
"So we have products with a better cost profile in what we are selling." — Per Narvinger (CEO)
Q3 strength: market share?
Q (Sandeep Deshpande · JPMorgan): He asked if the better-than-seasonal Q3 implies Ericsson gained share or if other factors explain it.
A: They said Q2 was weak and Q3 stronger, and year-to-date Networks are about 4% up. They cautioned one quarter is too short to claim market share gains, though they see improvements in prioritized markets like Japan.
"And to measure share gains in just one single quarter, I think that is too short term to think like that." — Lars Sandstrom (CFO)
enterprise restructuring and profitability
Q (Daniel Djurberg · Handelsbanken): He asked what actions are being taken in Enterprise and when the Global Communication platform will show profitability.
A: They will dissolve the Enterprise Wireless Solutions business area but keep the portfolio. Neutral host and EP5G are moved to Networks to strengthen R&D and speed profitability; Cradlepoint stays standalone and is approaching profitability, and Vonage has new leadership with a cost focus.
"We are taking what we call neutral host and EP5G, and we are actually then moving them to networks where we believe we can get a better R&D muscle, and we can then also accelerate the journey towards profitability." — Per Narvinger (CEO)
size of customer pull-ins
Q (Jakob Bluestone · BNP): He asked how large the pull-ins were from customers buying ahead of price hikes and how much they contributed to growth.
A: They said pull-ins are present but not quantified and not a large driver for 2027. The quarter had three growth drivers and year-to-date Networks growth of around 4% gives a fuller picture.
"And -- but it's not that it's a big material impact going for 2027 from 1 quarter or this." — Lars Sandstrom (CFO)
products upsold to offset costs
Q (Felix Henriksson · Nordea): He asked which products they successfully upsold and how sustainable upselling is to offset component inflation.
A: They said frame agreements run 3 or 5 years so new products can be priced correctly as they appear. Tactical moves include selling newer products with better cost profiles, steering sales to lower-cost items, and upselling software — but those measures are not permanent solutions.
"And of course, you can always try to have find upsell or do upselling, trying to find, I don't know, opportunities on software side or in other areas that will actually help the margin." — Per Narvinger (CEO)
OpEx direction and control
Q (Francois-Xavier Bouvignies · UBS): He asked directionally how OpEx should be seen next quarter and into next year given cost control efforts.
A: They expect normal Q4 seasonality and continue to manage salary-driven inflation. The company aims to offset salary increases and will continue restructuring and other measures to keep OpEx under control while the RAN market stays flat.
"I think the direction is that we need to continue to offset any salary increases." — Lars Sandstrom (CFO)
passing costs to customers and suppliers
Q (Stephane Houri · ODDO): He asked how much pricing can be passed to operators in a flat RAN market and whether suppliers are updating prices frequently.
A: They said 2027 is likely a transition year and over time costs must be passed on to customers, who will in turn pass them to end users. They also said supply and sourcing teams are having an intense year and sometimes commit volumes to ensure supply resilience.
"Our view is that over time, we need to pass on this cost and our customers in the end will have to pass on the cost, the increased CapEx they get to their end users." — Per Narvinger (CEO)
CEO priorities and fixes
Q (Sami Sarkamies · Danske Bank): He asked where Ericsson needs the most improvement under the new CEO and what changes are being implemented.
A: Per said the core business is strong but the enterprise segment needs more work. They announced structural changes, market area adjustments, a leaner executive team to be faster, and focus on growth via market share, new use cases, adjacencies, and improving enterprise performance.
"The area where we, of course, have more work to do is in the enterprise segment." — Per Narvinger (CEO)
GPUs vs custom silicon strategy
Q (Robert Sanders · Deutsche Bank): He asked if Ericsson has ruled out GPUs in the baseband or could reconsider if GPUs deliver big efficiency gains.
A: They said they're not philosophically against any platform and have disaggregated software and hardware for flexibility. Today their own ASICs are an extraordinary asset for speed and cost, and AI gains like AI-native link adaptation are already deployed commercially.
"Having said that, right now, we see that it's an extraordinary asset to have your own ASICs." — Per Narvinger (CEO)
inventory buildup and IPR cash timing
Q (Ulrich Rathe · Bernstein): He asked about inventory buildup tied to deliveries and component costs, and whether IPR catch-up revenue was already collected in free cash flow.
A: They said the IPR cash is not in this quarter but will come in coming quarters. Inventory has built up over the year partly due to building inventories and component cost increases, and longer lead times in some markets are also a factor.
"We have been talking about component cost increases, and they are impacting inventories as well." — Lars Sandstrom (CFO)
AI RAN revenue and hardware choice
Q (Oliver Wong · BofA): He asked how much AI RAN drives revenues today and whether customers care about custom silicon versus GPUs.
A: They said AI RAN is a revenue opportunity and an upsell because it creates measurable value for customers. The example features can run on current custom-silicon basebands deployed today, so customers can get benefits now without replacing site hardware.
"The feature I mentioned earlier today, that one can be executed on basebands out there deployed today already." — Per Narvinger (CEO)
6G: hardware refresh or software upgrade
Q (Sébastien Sztabowicz · Kepler Cheuvreux): He asked if 6G will cause a normal hardware refresh cycle or be mainly a software upgrade given operators' CapEx reluctance.
A: They discuss 6G with customers but final shape depends on standards and services. The ambition is most of their portfolio should be upgradable to 6G so basebands and radios can be reused, though some new radios will be needed for new spectrum bands.
"Our ambition for sure is that most of our portfolio should be upgradable to 6G, meaning, of course, that you can reuse basebands, you can reuse radios also for 6G." — Per Narvinger (CEO)
programmable networks and slicing trend
Q (Daniel Djurberg · Handelsbanken): He asked whether the trend toward programmable networks and slicing is materializing and where use cases are.
A: Per said the trend is happening: some customers use 5G standalone functions but not yet at volume. He expects AI agents will drive demand for guaranteed access and network slicing, and mission-critical networks are already a clear business today.
"I'm convinced that we will have people so dependent on AI agents that you will want to be guaranteed that you have access to that agent always." — Per Narvinger (CEO)
gross margin impact if no mitigation
Q (Andreas Joelsson · DNB): He asked how much gross margin would be hit in 2027 if Ericsson fails to mitigate component price increases.
A: Per declined to give numbers and pointed to the server business to show the scale of memory cost increases. He said there would be a significant dilution if they do not take action, and they will work to minimize the effect.
"But otherwise, I'll just say you can look at just on the server business to get a feel for how much the memory cost increase, I mean, we're talking about." — Per Narvinger (CEO)