The Swedish telecom equipment manufacturer Ericsson reported a significant decline in profitability for the first quarter of 2026 due to a reversal in the North American market, which had previously boosted the company’s results. The adjusted earnings before interest, tax, and amortization (EBITA), Ericsson’s main metric for underlying profitability, decreased by 20% to SEK 5.6 billion, resulting in a margin of 11.3%, down from 12.6% in Q1 2025, and slightly below analyst expectations.
Including restructuring charges related to workforce reductions, EBITA fell by 73% to SEK 1.8 billion. Revenue in Networks, Ericsson’s largest segment, fell 8% to SEK 32.9 billion. The Americas region experienced a decline following multiple quarters of increased investment by US telecom operators, which had boosted Ericsson’s results through 2025, and was further impacted by market operator consolidation.
The comparison to Q1 2025 was challenging, as the Americas had experienced a 26% rise year-on-year, with North America alone up 20%, due to targeted network investment from major US clients. These operators have since reduced spending.
The adjusted gross margin decreased slightly from 48.5% in Q1 2025 to 48.1%, with pressures in the Networks segment partly offset by improved delivery efficiency in Cloud Software and Services.
CEO Börje Ekholm highlighted the increased input costs, emphasizing semiconductors affected by AI demand as a key factor. Ericsson, along with other technology companies, faces competition for semiconductor supplies from hyperscalers building AI infrastructure, driving component prices up.
The results also continue to reflect the effects of Ericsson’s restructuring program intended to reduce its cost base, with plans to cut around 1,200 jobs in Sweden in 2025 and anticipating further restructuring charges in 2026.
Ericsson expects the global radio access network equipment market to remain stable in 2026 based on Dell’Oro Group data, with growth expected in mission-critical communications and enterprise sectors. Outside of North America, sales increased in Europe, the Middle East, Africa, South East Asia, Oceania, India, and North East Asia, somewhat counterbalancing the decline in the Americas.
Ericsson’s Cloud Software and Services segment recorded improved margins through better delivery efficiency. For the entirety of 2025, the adjusted EBITA margin was 18.1%, with net income at SEK 28.7 billion, marking a recovery from 2024’s low point when the net income was SEK 0.4 billion. Although the Q1 2026 dip halted this margin expansion, Ekholm emphasized the company’s resilience, asserting, “We are not immune, but we are resilient.”