Ericsson Lm Telephone Co 6-K, filed Oct 20, 2022
Ericsson Lm Telephone Co (ERIC)
About this 6-K
Ericsson Lm Telephone Co filed this 6-K on October 20, 2022.
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
October 20, 2022
Commission File Number
000-12033
LM ERICSSON TELEPHONE COMPANY
(Translation of registrant’s name into English)
Torshamnsgatan 21, Kista
SE-164 83, Stockholm, Sweden
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Announcement of LM Ericsson Telephone Company, October 20, 2022 regarding “Third quarter report 2022”.
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TELEFONAKTIEBOLAGET LM ERICSSON (publ) | ||
| By: | /s/ STELLA MEDLICOTT | |
| Stella Medlicott | ||
| Senior Vice President, | ||
| Chief Marketing and Communications Officer | ||
| By: | /s/ CARL MELLANDER | |
| Carl Mellander | ||
| Senior Vice President, Chief Financial Officer | ||
Date: October 20, 2022
Table of Contents
Third quarter report 2022
Stockholm, Oct 20, 2022
Third quarter highlights
| • | Group organic sales1 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. |
| • | Gross margin was 41.4% (44.0%) impacted by lower IPR revenues of SEK -1.1 b YoY, supply chain costs and larger share of services following footprint expansion in Networks. |
| • | EBITA amounted to SEK 7.6 (9.3) b. with an EBITA margin of 11.2% (16.5%). EBITA was primarily impacted by increased investments in technology, selling expenses in segment Enterprise (mainly from consolidation of Vonage) and one-off costs of SEK -0.5 b. |
| • | EBIT amounted to SEK 7.1 (8.8) b. with an EBIT margin of 10.5% (15.7%). |
| • | Significant contracts with further increased geographic footprint have been signed. These and earlier signed contracts will continue to increase sales in Q4 and are expected to contribute with considerable volumes in 2023. |
| • | Net income was SEK 5.4 (5.8) b. |
| • | Free cash flow before M&A was SEK 2.5 (13.0) b. Cash flow was lower mainly due to working capital buildup. Net cash on September 30, 2022, was SEK 13.4 b. compared with SEK 70.3 b. on June 30, 2022. |
| • | Vonage transaction completed on July 21. Vonage EBITA was positive, excluding one-off acquisition cost and acquisition accounting. |
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
QoQ change |
Jan-Sep 2022 |
Jan-Sep 2021 |
YoY change |
||||||||||||||||||||||||
| Net sales |
68.0 | 56.3 | 21 | % | 62.5 | 9 | % | 185.6 | 161.0 | 15 | % | |||||||||||||||||||||
| Sales growth adj. for comparable units and currency ² |
— | — | 3 | % | — | — | — | — | 3 | % | ||||||||||||||||||||||
| Gross margin ² |
41.4 | % | 44.0 | % | — | 42.1 | % | — | 41.9 | % | 43.4 | % | — | |||||||||||||||||||
| EBIT |
7.1 | 8.8 | -19 | % | 7.3 | -3 | % | 19.2 | 19.9 | -4 | % | |||||||||||||||||||||
| EBIT margin ² |
10.5 | % | 15.7 | % | — | 11.7 | % | — | 10.3 | % | 12.4 | % | — | |||||||||||||||||||
| EBITA ² |
7.6 | 9.3 | -18 | % | 7.5 | 2 | % | 20.0 | 21.0 | -4 | % | |||||||||||||||||||||
| EBITA margin ² |
11.2 | % | 16.5 | % | — | 12.0 | % | — | 10.8 | % | 13.0 | % | — | |||||||||||||||||||
| Net income |
5.4 | 5.8 | -7 | % | 4.7 | 15 | % | 12.9 | 12.8 | 1 | % | |||||||||||||||||||||
| EPS diluted, SEK |
1.56 | 1.73 | -10 | % | 1.35 | 16 | % | 3.80 | 3.79 | 0 | % | |||||||||||||||||||||
| Measures excl. restructuring charges ² |
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| Gross margin excluding restructuring charges |
41.4 | % | 44.0 | % | — | 42.2 | % | — | 41.9 | % | 43.5 | % | — | |||||||||||||||||||
| EBIT excluding restructuring charges |
7.2 | 8.8 | -19 | % | 7.4 | -2 | % | 19.3 | 20.0 | -3 | % | |||||||||||||||||||||
| EBIT margin excluding restructuring charges |
10.6 | % | 15.7 | % | — | 11.8 | % | — | 10.4 | % | 12.4 | % | — | |||||||||||||||||||
| EBITA excluding restructuring charges |
7.7 | 9.3 | -17 | % | 7.5 | 2 | % | 20.2 | 21.0 | -4 | % | |||||||||||||||||||||
| EBITA margin excluding restructuring charges |
11.3 | % | 16.5 | % | — | 12.0 | % | — | 10.9 | % | 13.1 | % | — | |||||||||||||||||||
| Free cash flow before M&A |
2.5 | 13.0 | -80 | % | 4.4 | -43 | % | 5.3 | 18.6 | -71 | % | |||||||||||||||||||||
| Net cash, end of period |
13.4 | 55.7 | -76 | % | 70.3 | -81 | % | 13.4 | 55.7 | -76 | % | |||||||||||||||||||||
| 1 | Sales adjusted for comparable units and currency |
| 2 | Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
| 1 | Ericsson | Third quarter report 2022 |
Table of Contents
CEO comments
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.
Group Net Sales1 in the quarter grew by 3% organically, driven by strong performance from Networks. EBITA2 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.
Our Networks business saw strong organic sales1 growth of 7% excluding IPR (4% including IPR), with growth driven by our market leading portfolio primarily in North America where operators continue to forcefully drive 5G deployment. After expected record operator capex in 2022 in North America, we anticipate RAN capex to hold up well in 2023, albeit at a lower level than this year. We continue to further strengthen our position by increasing our global footprint which we expect will lead to overall growth in 2023. As previously observed, footprint gains with large-scale projects in early stages tend to have a dilutive impact on gross margins. However, the growing gross income will allow continued investment for technology leadership. We are excited by the opportunities presented by our network offering underscored by our portfolio strength.
To fully benefit from the performance and features of 5G it is crucial to leverage on mid-band frequencies. The global 5G build-out is still in its early stages with less than a quarter of global LTE nodes upgraded with mid-band. We expect to see many new use cases for 5G where we already see Fixed Wireless Access gaining increasing traction. The broader consumer and enterprise applications of 5G will also boost demand for network performance, hence we predict a longer investment cycle than for previous mobile generations.
One cornerstone in our expansion into Enterprise is Vonage. 5G offers unique capabilities such as high speed and low latency. We expect to see these capabilities be exposed, consumed and paid for through network APIs. We are intensively working with frontrunner operators to enable further monetization of their network investments through our global network platform. More broadly, we expect the acquisition to be highly accretive, enabling us to help customers accelerate their digital transformations while also significantly shaping how 5G networks are monetized. This will give the operators new revenue sources driving further investments in the network. In the Enterprise Wireless Solutions business, we have almost doubled sales in Q3 compared with Q3 2021.
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. We have an ambition to unleash the great potential that we believe is present in this business. Our new management team is taking further actions to turn around the business and establish a satisfactory profitability. This includes strong focus on driving down costs, including realizing synergies from combining two business areas, while solidifying our technology and market leadership position. Improvements in performance will be gradual.
In the current inflationary environment, we are making pricing adjustments as well as leveraging product substitution to manage margins. We are also simplifying operations across the company and will continue to be proactive in reviewing options to reduce costs, whilst continuing to develop best-in-class products and services. We are fundamentally strengthening cost competitiveness through an intense focus on internal end-to-end efficiency gains and structural costs. We are dedicated to our long-term target of EBITA margin of 15-18% no later than 2024 and we will take out costs to secure delivery of this target. In order to deliver on the cost reductions, we expect restructuring costs to increase and be more in line with our long-term guidance of 1% of net sales, albeit varying by quarter. Cost efficiency is also crucial to allow investments in technology leadership and to strengthen our resilience in an uncertain market.
Strengthening the Ericsson culture is a key part of our strategic priorities. We are dedicated to acting with integrity in everything we do and have taken significant steps in developing our ethics and compliance program, while enhancing our risk management framework. We have changed, but we have more to do. We continue to engage with the Department of Justice and the Securities and Exchange Commission in relation to the 2019 Iraq investigation report and the DPA breach notices and are fully committed to cooperating with government authorities.
In summary, the focused strategy, which is built on the strength of our mobile networks business and supported by investment in R&D driving technology leadership, is leading to increased market share and delivery of robust financial performance. This is complemented by our high-growth Enterprise market strategy.
I want to thank all of our fantastic team around the world for their hard work and dedication. We look forward to discussing our strategy and execution at our upcoming Capital Markets Day in December.
Börje Ekholm
President and CEO
| 1 | Sales adjusted for comparable units and currency |
| 2 | Excluding restructuring charges |
| 2 | Ericsson | Third quarter report 2022 | CEO comments |
Table of Contents
Financial highlights
Net sales Segments
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
YoY adj.¹ |
Q2 2022 |
QoQ change |
Jan-Sep 2022 |
Jan-Sep 2021 |
YoY change |
YoY adj.¹ |
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| Networks |
48.1 | 40.6 | 19 | % | 4 | % | 46.0 | 5 | % | 134.8 | 116.7 | 16 | % | 5 | % | |||||||||||||||||||||||||
| Cloud Software and Services |
14.2 | 13.6 | 4 | % | -5 | % | 14.0 | 1 | % | 40.3 | 38.3 | 5 | % | -3 | % | |||||||||||||||||||||||||
| Enterprise |
5.2 | 1.6 | 231 | % | 21 | % | 1.9 | 175 | % | 8.8 | 4.4 | 98 | % | 17 | % | |||||||||||||||||||||||||
| Other |
0.5 | 0.5 | 3 | % | -1 | % | 0.6 | -12 | % | 1.6 | 1.5 | 5 | % | 0 | % | |||||||||||||||||||||||||
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| Total |
68.0 | 56.3 | 21 | % | 3 | % | 62.5 | 9 | % | 185.6 | 161.0 | 15 | % | 3 | % | |||||||||||||||||||||||||
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| 1 | Sales growth adjusted for comparable units and currency. Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
Net sales Market Areas
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
YoY adj.¹ |
Q2 2022 |
QoQ change |
Jan-Sep 2022 |
Jan-Sep 2021 |
YoY change |
YoY adj.¹ |
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| South EastAsia, Oceania and India |
7.9 | 6.5 | 23 | % | 13 | % | 8.0 | -1 | % | 21.7 | 20.2 | 7 | % | 1 | % | |||||||||||||||||||||||||
| North EastAsia |
5.6 | 5.7 | -2 | % | -6 | % | 7.3 | -24 | % | 18.3 | 19.3 | -5 | % | -9 | % | |||||||||||||||||||||||||
| North America |
26.5 | 20.2 | 32 | % | 9 | % | 22.8 | 16 | % | 70.1 | 55.2 | 27 | % | 10 | % | |||||||||||||||||||||||||
| Europe and Latin America |
15.3 | 14.4 | 6 | % | 0 | % | 15.3 | 0 | % | 45.9 | 41.0 | 12 | % | 6 | % | |||||||||||||||||||||||||
| Middle East and Africa |
5.7 | 5.0 | 14 | % | 3 | % | 5.2 | 9 | % | 15.2 | 13.8 | 10 | % | 1 | % | |||||||||||||||||||||||||
| Other² |
7.0 | 4.6 | 53 | % | — | 3.8 | 86 | % | 14.3 | 11.4 | 26 | % | — | |||||||||||||||||||||||||||
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| Total |
68.0 | 56.3 | 21 | % | 3 | % | 62.5 | 9 | % | 185.6 | 161.0 | 15 | % | 3 | % | |||||||||||||||||||||||||
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| 1 | Sales growth adjusted for comparable units and currency. |
| 2 | Market area “Other” includes primarily IPR licensing revenues and a major part of segment Enterprise. |
Sales breakdown by market area by segment is available at the end of this report.
Segments
Group sales were SEK 68.0 (56.3) b. Sales adjusted for comparable units and currency increased by 3% YoY, driven primarily by Networks.
Networks sales adjusted for comparable units and currency increased by 4% YoY. Sales growth was driven primarily by North America. Networks accounted for 71% (72%) of total sales.
Cloud Software and Services sales adjusted for comparable units and currency decreased by -5% YoY, primarily due to a decrease in IPR licensing revenues and a decrease in managed services sales, as a result of rescoping and renegotiations of contracts. Cloud Software and Services share of total sales was 21% (24%).
Enterprise sales adjusted for comparable units and currency increased by 21% YoY driven by Cradlepoint and iconectiv. Vonage sales were SEK 2.9 b. in the quarter. Enterprise share of total sales was 8% (3%).
IPR licensing revenues decreased to SEK 1.6 (2.6) b. impacted by expired patent license agreements due for renewal. Q3 2021 was positively impacted by retroactive revenues for unlicensed periods prior to Q3. With current contracts, IPR revenues are estimated to be SEK 1.0–1.5 b. in Q4.
Market Areas
Sales adjusted for comparable units and currency increased in three of the five market areas.
In market area South East Asia, Oceania and India, significant contracts with resulting market share gains were signed in the quarter. These will support growth in the market area going forward.
Sales in market area North America continued to grow driven by strong 5G demand. Operator capex investments are expected to reach record levels in 2022, and some operators are guiding for lower capex in 2023.
In market area Europe and Latin America, the orderly withdrawal from the Russian market impacted sales by SEK -0.8 b. YoY and organic sales growth by -6.5 percentage points.
Market area Other primarily includes IPR licensing revenues and a major part of segment Enterprise. Growth was driven mainly by the consolidation of Vonage, more than offsetting the decline in IPR licensing revenues.
| 3 | Ericsson | Third quarter report 2022 | Financial highlights |
Table of Contents
Income and margin development
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
QoQ change |
Jan-Sep 2022 |
Jan-Sep 2021 |
YoY change |
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| Net sales |
68.0 | 56.3 | 21 | % | 62.5 | 9 | % | 185.6 | 161.0 | 15 | % | |||||||||||||||||||||
| Gross income |
28.1 | 24.8 | 14 | % | 26.3 | 7 | % | 77.7 | 69.9 | 11 | % | |||||||||||||||||||||
| Gross margin |
41.4 | % | 44.0 | % | — | 42.1 | % | — | 41.9 | % | 43.4 | % | — | |||||||||||||||||||
| Research and development (R&D) expenses |
-11.9 | -10.2 | — | -11.5 | — | -34.1 | -30.2 | — | ||||||||||||||||||||||||
| Selling and administrative expenses |
-9.4 | -6.2 | — | -7.9 | — | -23.9 | -19.3 | — | ||||||||||||||||||||||||
| Impairment losses on trade receivables |
0.0 | 0.0 | — | 0.0 | — | -0.1 | -0.1 | — | ||||||||||||||||||||||||
| Other operating income and expenses |
0.2 | 0.5 | -53 | % | 0.4 | -40 | % | -0.4 | -0.1 | — | ||||||||||||||||||||||
| Share in earnings of JV and associated companies |
0.0 | -0.1 | — | 0.0 | — | 0.0 | -0.3 | — | ||||||||||||||||||||||||
| EBIT |
7.1 | 8.8 | -19 | % | 7.3 | -3 | % | 19.2 | 19.9 | -4 | % | |||||||||||||||||||||
| of which Networks |
9.6 | 9.6 | 0 | % | 8.9 | 8 | % | 26.1 | 25.5 | 2 | % | |||||||||||||||||||||
| of which Cloud Software & Services |
-0.8 | -0.4 | — | -0.7 | — | -2.4 | -2.8 | — | ||||||||||||||||||||||||
| of which Enterprise |
-1.7 | -0.8 | — | -0.8 | — | -3.3 | -2.2 | — | ||||||||||||||||||||||||
| of which Other |
0.0 | 0.5 | — | 0.0 | — | -1.2 | -0.6 | — | ||||||||||||||||||||||||
| EBIT margin ¹ |
10.5 | % | 15.7 | % | — | 11.7 | % | — | 10.3 | % | 12.4 | % | — | |||||||||||||||||||
| EBITA ¹ |
7.6 | 9.3 | -18 | % | 7.5 | 2 | % | 20.0 | 21.0 | -4 | % | |||||||||||||||||||||
| EBITA margin ¹ |
11.2 | % | 16.5 | % | 12.0 | % | 10.8 | % | 13.0 | % | ||||||||||||||||||||||
| Financial income and expenses, net |
-0.5 | -0.6 | — | -0.8 | — | -1.9 | -1.6 | — | ||||||||||||||||||||||||
| Income tax |
-1.2 | -2.5 | — | -1.9 | — | -4.3 | -5.5 | — | ||||||||||||||||||||||||
| Net income |
5.4 | 5.8 | -7 | % | 4.7 | 15 | % | 12.9 | 12.8 | 1 | % | |||||||||||||||||||||
| Restructuring charges |
-0.1 | 0.0 | — | 0.0 | — | -0.2 | -0.1 | — | ||||||||||||||||||||||||
| Measures excl. restr. charges and other items affecting comparability ¹ |
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| Gross margin excluding restructuring charges |
41.4 | % | 44.0 | % | — | 42.2 | % | — | 41.9 | % | 43.5 | % | — | |||||||||||||||||||
| EBIT excluding restructuring charges |
7.2 | 8.8 | -19 | % | 7.4 | -2 | % | 19.3 | 20.0 | -3 | % | |||||||||||||||||||||
| EBIT margin excluding restructuring charges |
10.6 | % | 15.7 | % | — | 11.8 | % | — | 10.4 | % | 12.4 | % | — | |||||||||||||||||||
| EBITA excluding restructuring charges |
7.7 | 9.3 | -17 | % | 7.5 | 2 | % | 20.2 | 21.0 | -4 | % | |||||||||||||||||||||
| EBITA margin excluding restructuring charges |
11.3 | % | 16.5 | % | — | 12.0 | % | — | 10.9 | % | 13.1 | % | — | |||||||||||||||||||
| 1 | Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
Gross income
Gross income increased by SEK 3.4 b. to SEK 28.1 b. driven by sales growth in Networks and Enterprise (mainly Vonage). Gross margin was 41.4% (44.0%). Networks gross margin decreased, mainly impacted by lower IPR revenues of SEK -0.9 b. YoY, increased component costs and investments in supply chain resilience. Gross margin decreased in Cloud Software and Services mainly impacted by lower IPR revenues of SEK -0.2 b. YoY and by deployment costs for the cloud native 5G Core portfolio.
Sequentially, gross income increased by SEK 1.8 b. with increases in Networks and Enterprise (mainly Vonage). Gross margin declined to 41.4% from 42.1%, primarily due to a higher share of services and lower share of software in the sales mix.
Research and development (R&D) expenses
R&D expenses amounted to SEK -11.9 (-10.2) b. including a negative currency effect of SEK -0.6 b. R&D expenses increased primarily in Networks due to further investments in Cloud RAN and in Ericsson Silicon (ASICs). R&D expenses were also impacted by the consolidation of Vonage and increased investments to expand the Enterprise Wireless Solutions portfolio.
Selling and administrative (SG&A) expenses
SG&A expenses were SEK -9.4 (-6.2) b. including a negative currency effect of SEK -0.7 b. The increase is mainly related to consolidation of Vonage (SEK -1.8 b., including amortization of SEK -0.3 b. and a one-off M&A related transaction cost of SEK -0.3 b.). Furthermore, there were higher SG&A expenses due to higher compliance and legal costs as well as investments in the go-to-market organization in Enterprise Wireless Solutions.
Other operating income and expenses
Other operating income and expenses was SEK 0.2 (0.5) b. following a positive fair market revaluation of Ericsson Ventures investments of SEK 0.2 (0.5) b.
Restructuring charges
Restructuring charges amounted to SEK -0.1 (0.0) b.
EBITA
EBITA decreased to SEK 7.6 (9.3) b. corresponding to an EBITA margin of 11.2% (16.5%). EBITA was primarily impacted by increased investments in R&D, selling expenses in segment Enterprise (mainly from consolidation of Vonage) as well as one-off costs of SEK -0.5 b.
EBIT
EBIT decreased to SEK 7.1 (8.8) b. EBIT margin was 10.5% (15.7%).
Sequentially, EBIT decreased to SEK 7.1 b. from SEK 7.3 b. primarily due to lower EBIT in Enterprise.
EBIT margin rolling four quarters was 12.1%.
Financial income and expenses, net
Financial net was SEK -0.5 (-0.6) b. The strengthened USD to SEK resulted in a negative currency hedge effect of SEK -0.4 (-0.3) b.
Sequentially, financial net changed to SEK -0.5 b. from SEK -0.8 b. The currency hedge effect was SEK -0.4 b. in the quarter, versus SEK -0.5 b. in previous quarter. The USD strengthened against the SEK between June 30, 2022 (SEK/USD rate 10.31) and September 30, 2022 (SEK/USD rate 11.18).
Income tax
Taxes were SEK -1.2 (-2.5) b. Effective tax rate in Q3 was 25%, as a result of utilization of tax assets. Tax rate in Q3 2021 was 30%.
Net income
Net income declined to SEK 5.4 (5.8) b. The decrease in EBIT was partly offset by lower income tax. EPS diluted decreased to SEK 1.56 (1.73).
Employees
The number of employees on September 30, 2022, was 104, 490 compared with 101, 459 on June 30, 2022. The increase is related mainly to Vonage.
| 4 | Ericsson | Third quarter report 2022 | Financial highlights |
Table of Contents
Financial highlights, year to date (Jan-Sep) development
Sales increased by 15% to SEK 185.6 b., where Vonage contributed SEK 2.9 b. Sales adjusted for comparable units and currency increased by 3% driven primarily by sales in market area North America and in market area Europe and Latin America. Networks sales adjusted for comparable units and currency increased by 5%, Cloud Software and Services declined by -3%, and Enterprise grew by 17%.
Gross income increased to SEK 77.7 (69.9) b. as a result of higher sales. Gross margin decreased to 41.9% (43.4%) as a result of lower IPR licensing revenues, increased component costs, investments in supply chain resilience and a larger share of services in the sales mix following expansion of market share in Networks.
R&D expenses increased by SEK -3.9 b. to SEK -34.1 (-30.2) b., including a currency effect of SEK -1.4 b. R&D expenses increased primarily in Networks as a result of further investments in Cloud RAN and in Ericsson Silicon (ASICs) as well as in Enterprise, with consolidation of Vonage and increased investments in Enterprise Wireless Solutions.
SG&A expenses increased by SEK -4.6 b. to SEK -23.9 (-19.3) b. including a currency effect of SEK -1.4 b. The increase is mainly related to consolidation of Vonage (SEK -1.8 b., including a one-off M&A-related transaction cost of SEK -0.4 b.), continued investments in Enterprise Wireless Solutions and increases in compliance and legal expenses.
EBITA decreased to SEK 20.0 (21.0) b. YoY corresponding to an EBITA margin of 10.8% (13.0%). Higher gross income was offset by higher operating expenses.
EBIT decreased to SEK 19.2 (19.9) b. YoY, corresponding to an EBIT margin of 10.3% (12.4%).
Net income improved to SEK 12.9 (12.8) b. positively impacted by lower taxes.
| 5 | Ericsson | Third quarter report 2022 | Financial highlights |
Table of Contents
Segment results
Mobile Infrastructure –
Segment Networks
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
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| Net sales |
48.1 | 40.6 | 19 | % | 46.0 | |||||||||||
| Of which IPR licensing revenues |
1.3 | 2.1 | -40 | % | 1.2 | |||||||||||
| Sales growth adj. for comparable units and FX |
— | — | 4 | % | — | |||||||||||
| Gross income |
21.4 | 19.4 | 10 | % | 20.7 | |||||||||||
| Gross margin |
44.4 | % | 47.8 | % | — | 45.1 | % | |||||||||
| EBIT |
9.6 | 9.6 | 0 | % | 8.9 | |||||||||||
| EBIT margin |
19.9 | % | 23.7 | % | — | 19.3 | % | |||||||||
| EBITA |
9.6 | 9.6 | 0 | % | 8.9 | |||||||||||
| EBITA margin |
20.0 | % | 23.8 | % | — | 19.3 | % | |||||||||
| Restructuring charges |
0.0 | 0.0 | — | 0.0 | ||||||||||||
| Measures excl. restructuring charges |
||||||||||||||||
| Gross margin excl. restructuring charges |
44.4 | % | 47.8 | % | — | 45.2 | % | |||||||||
| EBIT excl. restructuring charges |
9.6 | 9.6 | 0 | % | 8.9 | |||||||||||
| EBIT margin excl. restructuring charges |
20.0 | % | 23.7 | % | — | 19.4 | % | |||||||||
| EBITA excluding restructuring charges |
9.7 | 9.6 | 0 | % | 8.9 | |||||||||||
| EBITA margin excl. restructuring charges |
20.0 | % | 23.8 | % | — | 19.4 | % | |||||||||
Breakdown of sales into products, services and IPR licensing is available in note 3.
| • | Sales growth of 4% adjusted for comparable units and currency, and 7% adjusted for IPR. |
| • | Continued market share gains. |
| • | EBIT margin 2022 expected to somewhat exceed target range of 16–18%. |
Net sales
Sales adjusted for comparable units and currency increased by 4% YoY with continued momentum in 5G. Sales growth was driven primarily by North America. Market areas South East Asia, Oceania and India as well as Middle East and Africa also reported double-digit growth. Excluding lower IPR licensing revenues, sales growth was 7%. Reported sales increased by 19% YoY. Sequentially, sales increased by 5%, driven primarily by North America.
After expected record operator capex in 2022 in North America, RAN capex is anticipated to hold up well in 2023, albeit at a lower level than in 2022. Initial adjustment to lower levels in North America is expected in Q4 this year. At the same time, revenues from market share gains are expected to accelerate during Q4 compensating for potentially lower sales in North America.
Gross income
Gross income increased by SEK 2.0 b. to SEK 21.4 b. driven by increased sales following market share gains. Gross margin decreased to 44.4% (47.8%). The margin was impacted by lower IPR licensing revenues, increased component costs, continued investments in supply chain resilience and a larger share of services in the sales mix following expansion of market share. Sequentially, gross income increased by SEK 0.6 b. while gross margin decreased mainly as a result of a larger share of services in the sales mix than in the previous quarter.
Market share gains across various geographies with large-scale projects in early stages tend to have a dilutive impact on gross margins. In Q4, revenues from market share gains are expected to contribute to improved gross income, while gross margins will be diluted. It is anticipated that component cost and inflation will continue to negatively impact margins in the coming quarters.
EBIT
EBIT was stable at SEK 9.6 b. with an EBIT margin of 19.9% (23.7%). EBIT margin was impacted by lower gross margin and increased operating expenses, primarily due to investments in R&D in Cloud RAN and in Ericsson Silicon (ASICs). Sequentially, EBIT increased to SEK 9.6 b. from SEK 8.9 b. driven primarily by higher sales and gross income.
Net sales rolling four quarters were SEK 185.9 b. and EBIT margin rolling four
quarters was 20.3%. EBIT margin for full-year 2022 is expected to somewhat exceed Networks financial target range of
16–18% excluding restructuring charges.
Mobile Infrastructure –
Segment Cloud Software and Services
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
||||||||||||
| Net sales |
14.2 | 13.6 | 4 | % | 14.0 | |||||||||||
| Of which IPR licensing revenues |
0.3 | 0.5 | -40 | % | 0.3 | |||||||||||
| Sales growth adj. for comparable units and FX |
— | — | -5 | % | — | |||||||||||
| Gross income |
4.5 | 4.6 | -1 | % | 4.7 | |||||||||||
| Gross margin |
31.8 | % | 33.6 | % | — | 33.5 | % | |||||||||
| EBIT (loss) |
-0.8 | -0.4 | — | -0.7 | ||||||||||||
| EBIT margin |
-5.6 | % | -3.3 | % | — | -5.2 | % | |||||||||
| EBITA (loss) |
-0.8 | -0.3 | — | -0.7 | ||||||||||||
| EBITA margin |
-5.4 | % | -2.3 | % | — | -5.1 | % | |||||||||
| Restructuring charges |
-0.1 | 0.0 | — | 0.0 | ||||||||||||
| Measures excl. restructuring charges |
||||||||||||||||
| Grossm argin excl. restructuring charges |
32.1 | % | 33.7 | % | — | 33.5 | % | |||||||||
| EBIT (loss) excl. restructuring charges |
-0.7 | -0.4 | — | -0.7 | ||||||||||||
| EBIT margin excl. restructuring charges |
-5.2 | % | -3.3 | % | — | -5.2 | % | |||||||||
| EBITA (loss) excluding restructuring charges |
-0.7 | -0.3 | — | -0.7 | ||||||||||||
| EBITA margin excl. restructuring charges |
-5.0 | % | -2.3 | % | — | -5.1 | % | |||||||||
Breakdown of sales into products, services and IPR licensing is available in note 3.
| • | Sales decline of -5% adjusted for comparable units and currency, and -4% adjusted for IPR. |
| • | Gross income stable YoY. |
| • | EBIT loss for FY 2022 is expected to be in line with FY 2021. |
Net sales
Sales adjusted for comparable units and currency decreased by -5% YoY primarily due to lower IPR licensing revenues and contract descoping and renegotiations in managed services. Market area South East Asia, Oceania and India reported growth. Reported sales increased by 4% YoY.
Sequentially, sales increased by 1%, driven primarily by North America.
Gross income
Gross income was stable YoY. Gross margin was 31.8% (33.6%). Gross margin continues to be impacted by a lower share of IPR licensing revenues and deployment costs for cloud native 5G Core contracts.
Sequentially, gross income and gross margin declined in the quarter, primarily due to higher share of services in the sales mix from deployment of 5G Core contracts.
EBIT (loss)
EBIT (loss) was SEK -0.8 (-0.4) b. with an EBIT margin of -5.6% (-3.3%). EBIT was negatively impacted mainly by higher operating expenses, primarily for investments in the cloud native 5G portfolio.
Sequentially, EBIT was SEK -0.8 b. compared with SEK -0.7 b. in Q2, impacted by lower gross income.
Net sales rolling four quarters were SEK 58.3 b. and EBIT margin rolling four quarters was -3.0%.
EBIT loss, excluding restructuring charges, for full-year 2022 is expected to be in line with full-year 2021.
| 6 | Ericsson | Third quarter report 2022 | Segment results |
Table of Contents
Enterprise –
Segment Enterprise
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
||||||||||||
| Net sales |
5.2 | 1.6 | 231 | % | 1.9 | |||||||||||
| Of which Global Comms Platform (Vonage) |
2.9 | — | — | — | ||||||||||||
| Of which Enterprise Wireless Solutions |
0.8 | 0.4 | 93 | % | 0.6 | |||||||||||
| Sales growth adj. for comparable units and FX |
— | — | 21 | % | — | |||||||||||
| Gross income |
2.4 | 0.8 | 216 | % | 0.8 | |||||||||||
| Gross margin |
46.5 | % | 48.8 | % | — | 45.0 | % | |||||||||
| EBIT (loss) |
-1.7 | -0.8 | — | -0.8 | ||||||||||||
| EBIT margin |
-32.4 | % | -52.6 | % | — | -44.7 | % | |||||||||
| EBITA (loss) |
-1.2 | -0.5 | — | -0.7 | ||||||||||||
| EBITA margin |
-23.7 | % | -32.4 | % | — | -39.0 | % | |||||||||
| Restructuring charges |
0.0 | 0.0 | — | 0.0 | ||||||||||||
| Measures excl. restructuring charges |
||||||||||||||||
| Gross margin excl. restructuring charges |
46.5 | % | 48.8 | % | — | 45.0 | % | |||||||||
| Of which Global Comm. Platform (Vonage) |
42.4 | % | — | — | — | |||||||||||
| Of which Enterprise Wireless Solutions |
57.6 | % | 60.0 | % | — | 52.9 | % | |||||||||
| EBIT (loss) excl. restructuring charges¹ |
-1.7 | -0.8 | — | -0.8 | ||||||||||||
| EBIT margin excl. restructuring charges¹ |
-32.4 | % | -52.5 | % | — | -44.5 | % | |||||||||
| EBITA (loss) excluding restructuring charges¹ |
-1.2 | -0.5 | — | -0.7 | ||||||||||||
| Of which Global Comms Platform (Vonage) |
-0.5 | — | — | — | ||||||||||||
| Of which Enterprise Wireless Solutions |
-0.5- | -0.3 | — | -0.5 | ||||||||||||
| EBITA margin excl. restructuring charges¹ |
-23.7 | % | -32.3 | % | — | -38.8 | % | |||||||||
| 1 | Common costs are included at segment level only (not distributed within the segment). |
| • | Sales growth driven by the Vonage acquisition. |
| • | Organic sales growth driven by Cradlepoint. |
| • | Vonage EBITA (loss) impacted primarily by one-off acquisition costs. |
Net sales
Sales adjusted for comparable units and currency increased by 21% YoY driven by Cradlepoint. Reported sales increased by SEK 3.6 b. YoY driven by the Vonage acquisition (SEK 2.9 b.).
Gross income
Gross income increased by SEK 1.6 b. to SEK 2.4 b., driven by the Vonage acquisition. Gross margin decreased to 46.5% (48.8%) due to Vonage. Vonage’s gross income was negatively impacted by SEK -0.1 b. from the preliminary Vonage PPA (purchase price allocation), corresponding to a margin impact of -2.5 percentage points. Gross margin excluding Vonage increased by 3 percentage points.
Sequentially gross income increased by SEK 1.6 b. driven by Vonage. Gross margin increased to 46.5% from 45.0%.
EBITA (loss)
EBITA (loss) was SEK -1.2 (-0.5) b. The decline is mainly due to the consolidation of Vonage (SEK -0.5 b.) primarily from one-off acquisition costs of SEK -0.4 b. and SEK -0.1 b. from the preliminary PPA. Excluding these items, Vonage EBITA was positive. At the same time investments in developing network APIs continue. The quarter was also impacted by growth investments in Enterprise Wireless Solutions.
EBIT (loss)
EBIT (loss) was SEK -1.7 (-0.8) b. impacted by amortization of intangible assets from acquired businesses.
Sequentially, EBIT (loss) increased to SEK -1.7 b. from SEK -0.8 b.
Cradlepoint applies an “as-a-service” business model, with billing (invoiced sales) and cash collection upfront, and revenues recognized over the contract period as services are delivered (3 years on average). Billings in the quarter are therefore substantially higher than reported Net Sales in Enterprise Wireless Solutions.
Segment Other
| SEK b. |
Q3 2022 |
Q3 2021 |
YoY change |
Q2 2022 |
||||||||||||
| Net sales |
0.5 | 0.5 | 3 | % | 0.6 | |||||||||||
| Sales growth adj. for comparable units and FX |
— | — | -1 | % | — | |||||||||||
| Gross income |
-0.1 | 0.0 | — | 0.0 | ||||||||||||
| Gross margin |
-27.9 | % | 7.9 | % | — | 5.4 | % | |||||||||
| EBIT (loss) |
0.0 | 0.5 | — | 0.0 | ||||||||||||
| EBIT margin |
-3.9 | % | 95.0 | % | — | 3.2 | % | |||||||||
| EBITA (loss) |
0.0 | 0.5 | — | 0.0 | ||||||||||||
| EBITA margin |
-3.7 | % | 95.0 | % | — | 3.2 | % | |||||||||
| Restructuring charges |
0.0 | 0.0 | — | 0.0 | ||||||||||||
| Measures excl. restructuring charges |
||||||||||||||||
| Gross margin excl. restructuring charges |
-27.9 | % | 7.9 | % | — | 5.4 | % | |||||||||
| EBIT (loss) excl. restructuring charges |
0.0 | 0.5 | — | 0.0 | ||||||||||||
| EBIT margin excl. restructuring charges |
-3.9 | % | 95.0 | % | — | 3.2 | % | |||||||||
| EBITA (loss) excluding restructuring charges |
0.0 | 0.5 | — | 0.0 | ||||||||||||
| EBITA margin excl. restructuring charges |
-3.7 | % | 95.0 | % | — | 3.2 | % | |||||||||
Net sales
Sales adjusted for comparable units and currency decreased by -1% YoY. Sales in the media business were stable. Reported sales increased by 3% YoY.
Sequentially, sales declined by -12% due to project timing in the media business.
Gross income
Gross income decreased by SEK -0.2 b. due to one-off costs related to a market exit (SEK -0.2 b.). For this reason, gross margin decreased to -27.9% (7.9%).
Sequentially gross margin decreased to -27.9% from 5.4% mainly due to one-off costs (SEK -0.2 b.) for a market exit.
EBIT (loss)
EBIT (loss) was SEK 0.0 (0.5) b., with an EBIT margin of -3.9% (95%). EBIT was negatively impacted by lower gross income and materially lower revaluation of Ericsson Ventures investments compared with Q3 2021.
Sequentially, EBIT (loss) was stable.
| 7 | Ericsson | Third quarter report 2022 | Segment results |
Table of Contents
Cash flow and financial position
| Free cash flow bridge, SEK b. |
Q3 2022 |
Q3 2021 |
Q2 2022 |
Jan-Sep 2022 |
Jan-Sep 2021 |
|||||||||||||||
| EBIT excl. restructuring charges |
7.2 | 8.8 | 7.4 | 19.3 | 20.0 | |||||||||||||||
| Depreciation, amortization and impairment losses |
2.6 | 2.4 | 2.2 | 7.0 | 6.4 | |||||||||||||||
| Restructuring charges |
-0.1 | 0.0 | 0.0 | -0.2 | -0.1 | |||||||||||||||
| Changes in working capital 1) |
-3.3 | 4.9 | -1.3 | -10.1 | 1.3 | |||||||||||||||
| Interest paid/received, taxes paid, and other |
-1.8 | -1.4 | -1.9 | -5.1 | -3.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Cash flow from operating activities |
4.7 | 14.7 | 6.3 | 11.0 | 23.9 | |||||||||||||||
| Capex net and other investing activities |
-1.4 | -1.2 | -1.3 | -3.8 | -3.6 | |||||||||||||||
| Repayment of lease liabilities |
-0.7 | -0.6 | -0.6 | -1.8 | -1.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Free cash flow before M&A |
2.5 | 13.0 | 4.4 | 5.3 | 18.6 | |||||||||||||||
| M&A |
-51.4 | -0.1 | 0.1 | -51.2 | -0.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Free cash flow after M&A |
-48.9 | 12.9 | 4.6 | -45.9 | 18.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Cash flow from operating activities |
4.7 | 14.7 | 6.3 | 11.0 | 23.9 | |||||||||||||||
| Cash flow from investing activities |
-58.9 | -9.1 | 21.9 | -22.5 | -17.2 | |||||||||||||||
| Cash flow from financing activities |
-5.3 | -2.5 | -14.5 | -12.0 | -4.4 | |||||||||||||||
| SEK b. |
Sep 30 2022 |
Sep 30 2021 |
Jun 30 2022 |
|||||||||
| Gross cash |
45.8 | 88.2 | 100.4 | |||||||||
| -Borrowings, current |
5.4 | 10.2 | 3.7 | |||||||||
| -Borrowings, non-current |
27.0 | 22.3 | 26.4 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net cash |
13.4 | 55.7 | 70.3 | |||||||||
| Equity |
136.8 | 95.6 | 127.8 | |||||||||
| Total assets |
361.2 | 290.5 | 332.5 | |||||||||
| Capital turnover (times) |
1.3 | 1.3 | 1.2 | |||||||||
| Return on capital employed (% ) |
13.2 | % | 15.9 | % | 12.8 | % | ||||||
Vonage transaction
| Purchase price paid on acquisition |
USD b. | SEK b. | ||||||
| Enterprise value |
6.3 | 64.1 | ||||||
| Net debt (including FTC provision) |
N/A | 7.1 | ||||||
| Acquired net assets |
N/A | 56.9 | ||||||
| Deferred consideration |
N/A | 2.0 | ||||||
| Purchase price for shares |
N/A | 55.0 | ||||||
| Cash flow hedge release |
N/A | 3.7 | ||||||
| Purchase price paid on acquisition |
N/A | 51.3 | ||||||
Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.
| 1 | Defined as Changes in operating net assets |
| • | Free cash flow before M&A was SEK 2.5 (13.0) b. |
| • | Vonage was acquired with cash on hand for USD -5.4 b. |
(SEK -51.3 b.) including support from a cash flow hedge release.
| • | Large buildup of working capital. |
Cash flow from operating activities
Cash flow from operating activities was SEK 4.7 (14.7) b. Cash flow was negatively affected mainly by buildup of SEK -3.3 (4.9) b. of working capital and by lower EBIT YoY. Compared with Q3 2022, Q3 2021 was supported by a higher share of customer prepayments and lower payments to suppliers. Inventory of components increased to ensure supply chain resilience; however, the inventory level is expected to decrease towards the end of the year. As a result of market share gains, working capital is expected to remain at a high level.
As mentioned, when announcing the closing of the acquisition, Vonage has been in discussions with the US Federal Trade Commission (FTC) to resolve an investigation initiated in 2020 into historic consumer practices. Resolution is subject to the approval of the FTC. The estimated impact is in the range of approximately USD 100 m. A provision for this matter was made in the Vonage opening balance, and we therefore do not expect any P&L impact to occur. Depending on the timing of the closure of the settlement, a final settlement amount could become payable in Q4 and thereby impact Q4 cash flow. This legal matter is pending and there can be no assurance as to the final outcome.
Free cash flow
Free cash flow before M&A was SEK 2.5 (13.0) b. and, on a rolling 12-month basis, SEK 18.8 b. or 7.3% in relation to sales. Capex net and other investing activities were SEK -1.4 (-1.2) b. The increase is related to product development. Cash flow from M&A activities was SEK -51.4
b. driven mainly by the acquisition of Vonage in the quarter. Free cash flow after M&A was SEK -48.9 (12.9) b.
Cash flow from investing activities
Cash flow from investing activities was SEK -58.9 (-9.1) b. following the Vonage acquisition. Adjusted for a positive cash flow hedge release of SEK 3.7 b. the acquisition amounted to SEK -51.3 b.
Cash flow from financing activities
Cash flow from financing activities was SEK -5.3 (-2.5) b. following the acquisition of Vonage, debt of USD -0.6 b. (SEK -5.9 b.) was repaid. Proceeds from issuance of long-term debt were SEK 1.7 (0.0) b.
Financial position
Positive cash flow from operating activities in the quarter supported the cash position. Gross cash declined by SEK -54.6 b. QoQ, to SEK 45.8 b. from SEK 100.4 b. due to the payment for Vonage shares and debt. Net cash decreased by SEK -57.0 b. QoQ, to SEK 13.4 b. from SEK 70.3 b. The average maturity of long-term borrowings as of September 30, 2022, was 4.1 years, an increase from 3.8 years 12 months earlier.
Liabilities for post-employment benefits decreased to SEK 25.1 b. from SEK 25.3 b. in the quarter, due to increase in discount rates. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the yields of Swedish government bonds. If the discount rate had been based on Swedish covered mortgage bonds, the liability for post-employment benefits would have been approximately SEK 6.4 b. (SEK 18.7 b. lower than current DBO).
Return on capital employed (ROCE) was 13.2% (15.9%), reflecting the increase in capital employed as well as lower EBIT YoY.
| 8 | Ericsson | Third quarter report 2022 | Cash flow and financial position |
Table of Contents
Key data points
Market
The global RAN equipment market is estimated to grow by 5% (5%) in 2022. North America is expected to grow by 12% (8%), Europe by 1% (5%) and Mainland China by 4% (4%).
Source: Dell’Oro Mobile RAN 5-year forecast, July 2022. Numbers in brackets from Dell’Oro Mobile RAN outlook report February 2022.
Ericsson
Net sales (excluding Vonage)
Reported average seasonality last 3 years (2019–2021), %
| Q4®Q1 | Q1®Q2 | Q2®Q3 | Q3®Q4 | |||||||||||||
| Networks |
-22 | % | +12 | % | +3 | % | +19 | % | ||||||||
| Cloud SW & Svcs |
-34 | % | +10 | % | +4 | % | +29 | % | ||||||||
Net sales may show large variations between quarters, including currency changes.
Operating expenses excluding restructuring (excluding Vonage)
Reported average seasonality last 3 years (2019–2021), SEK b.
Positive numbers = decrease in operating expenses.
Negative numbers = increase in operating expenses.
| Q4®Q1 | Q1®Q2 | Q2®Q3 | Q3®Q4 | |||||||||||||
| Ericsson Group |
+3.2 | -1.4 | +1.3 | -3.1 | ||||||||||||
Operating expenses may show large variations between quarters, including currency changes.
Currency exposure
Rule of thumb: A change by 10% of SEK to USD would have an impact of approximately +/-5% on net sales and approximately +/-1 percentage point on EBIT margin.
| 9 | Ericsson | Third quarter report 2022 | Key data points |
Table of Contents
Parent Company
Income after financial items January–September 2022, was SEK 20.2 (7.3) b.
At the end of the quarter, gross cash (cash, cash equivalents, short-term investments and interest-bearing securities, non-current) amounted to SEK 29.9 (74.8) b.
There was a decrease in intercompany lending of SEK 6.9 b. and in intercompany borrowing of SEK 1.8 b. in the third quarter.
The holding of treasury stock on September 30, 2022, was 4,009,306 Class B shares.
| 10 | Ericsson | Third quarter report 2022 | Parent Company |
Table of Contents
Other information
Legal proceedings
On October 4, 2021, Ericsson asked the U.S. District Court for the Eastern District of Texas for a declaration that Ericsson has, in its negotiations with Apple, complied with its FRAND commitment and all other applicable laws and policies that would affect the terms of Ericsson’s and Apple’s prospective license. On December 17, 2021, Apple filed a responsive case against Ericsson in the U.S. District Court for the Eastern District of Texas alleging, among other things, that Ericsson breached obligations associated with the licensing of its standard essential patents under FRAND terms.
Ericsson and Apple were not able to renew the now expired patent license agreement between the parties in a timely manner. On January 18, 2022, Ericsson filed three complaints with the US International Trade Commission (ITC) alleging infringement of 12 patents by certain Apple products. In addition, Ericsson filed companion lawsuits in the Western District of Texas alleging infringement of the same 12 patents.
On January 19, 2022 Apple responded by filing a complaint against Ericsson in the ITC alleging that certain Ericsson products infringe three Apple patents. In January of 2022, Ericsson also filed lawsuits in several jurisdictions in Europe (Germany, the Netherlands, and Belgium) and South America (Brazil and Colombia) alleging that certain Apple products infringe Ericsson patents. Apple likewise filed lawsuits in Germany and China alleging that certain Ericsson products infringe Apple patents and utility models. In the following months, Ericsson made further filings in the United Kingdom, the Netherlands, and Brazil alleging Apple products infringe additional Ericsson patents. Apple filed further lawsuits in Germany alleging Ericsson products infringe additional Apple patents.
As previously disclosed, on March 3 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of investors in Ericsson securities in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9 2022, which added a former Ericsson officer as defendant. The amended complaint alleges violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and anti-corruption policies and obligations and the conduct of its business in Iraq.
In August 2022, a civil lawsuit was filed in the United States District Court for the District of Columbia against Telefonaktiebolaget LM Ericsson and Ericsson Inc. The lawsuit was brought by US military service members and employees of US government contractors who were killed or injured in terrorist attacks in Iraq, Afghanistan and Syria from 2005 to 2021, as well as by their family members. The lawsuit asserts claims against Ericsson under the US Anti-Terrorism Act alleging that Ericsson made payments that ultimately aided the terrorist organizations that committed, planned or authorized the attacks.
PRESS RELEASES
July 15, 2022 | Ericsson receives regulatory approval to complete acquisition of Vonage
Ericsson (NASDAQ: ERIC) today announced that it has received clearance from the Committee on Foreign Investments in the United States (CFIUS) to complete its acquisition of Vonage Holdings Corp. (NASDAQ: VG) (“Vonage”). This represents the final requisite approval to complete the deal. The parties now expect the Merger to close no later than July 21, 2022, as provided for in the Merger Agreement.
https://www.ericsson.com/en/press-releases/2022/7/
ericsson-receives-regulatory-approval-to-complete-acquisition-of-vonage
July 21, 2022 | Ericsson completes acquisition of Vonage
Ericsson (NASDAQ: ERIC) has completed its acquisition of Vonage Holdings Corp. (Vonage) (NASDAQ: VG), supporting Ericsson’s strategy to leverage technology leadership to grow its mobile network business and expand into enterprise. The acquisition provides Ericsson with access to powerful building blocks to offer a full suite of communications solutions including, Communications Platform as a Service (CPaaS), UCaaS and CCaaS.
By leveraging the Vonage CPaaS offering, Ericsson aims to transform the way advanced 5G network capabilities are exposed, consumed and paid for. This will provide the global developer community, including Vonage’s more than one million registered developers, with easy access to 4G and 5G network capabilities via open Application Program Interfaces (APIs).
For communications service providers (CSPs), global network APIs - such as location and quality of service APIs - provide new opportunities to expand their profit pools to monetize 5G network capabilities. For Ericsson, global APIs provide a new material growth opportunity. The existing market for communications APIs – such as video, voice and SMS – is currently growing at 30 percent annually and projected to reach USD 22 billion by 2025.
Accessing network capabilities in an open, intuitive, and programmable ways via global APIs will enable developer communities to create applications for any device that benefits from connection to the 5G network. Developers can utilize network characteristics such as user authentication, bandwidth, responsiveness, energy efficiency, security, identification and reliability - or network information such as device information or predictive coverage.
These new and innovative consumer and enterprise applications will further drive the rollout of 5G and network Capex.
To accelerate growth in Vonage’s UCaaS and CCaaS solutions, Ericsson intends to increase R&D investments and offer these solutions to CSPs, enabling Ericsson’s existing customers to sell through their own brands, and accelerate growth. Ericsson will also complement existing communications offerings to small and medium sized companies with the Vonage UCaaS and CCaaS solutions which will form a strong part of Ericsson’s offerings to both CSPs and enterprises.
Börje Ekholm, President and CEO, says: “We are excited to welcome Vonage as part of Ericsson. With Vonage’s suite of communications solutions – UCaaS, CCaaS and Communications APIs – Ericsson will further expand its offerings into the enterprise space. In the future, network capabilities will be consumed and paid for through open network APIs, creating the opportunity for unparalleled innovation. We have already launched the first network API, Dynamic End-user Boost, based on existing 4G infrastructure. With Vonage, we will now develop and commercialize these new APIs. We are already seeing great progress with frontrunner CSPs, and we aim to launch the first 5G network APIs in the coming year. We will continue to create new, enhanced applications and services for enterprises, while driving continued innovation on Vonage’s UCaaS and CCaaS applications, helping businesses create new digital experiences for better communications, connections and engagement.
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“By linking the network world with the global developer community, we’re creating a paradigm shift that will put the network at the center, allowing the CSPs a new monetization opportunity supporting increasing investments in high-performance networks.”
“4G was the platform that allowed the consumer to digitalize. It opened new business models and created some of the fastest-growing companies in history. With 5G, we have an innovation platform, unlike anything we’ve seen before, offering almost limitless opportunities to develop super-fast, highly reliable, low-latency and mission-critical services. With 5G, we will see accelerated digitalization of enterprises with Vonage’s UCaaS and CCaaS suite being a solid growth platform.”
Vonage was recently named the leader in the Omdia Universe: Selecting a CPaaS Platform 2022 report, ranked in top positions on customer experience and solutions capability. It currently serves over 120,000 business customers, has a global community of more than one million registered developers and a highly scaled platform with a combined 25 billion messages and minutes per year. This, combined with Ericsson’s deep network expertise, industry-leading portfolio and global scale, is expected to enable Ericsson to seed and accelerate the market for global network APIs. CSPs will benefit from global reach, beyond national or regional setups.
The acquisition will also further strengthen Ericsson’s presence and long-term commitment to the United States, where it has a 120-year history of conducting business.
Rory Read, Vonage CEO, says: “Vonage was born out of innovation and is today a global leader in business cloud communications. This partnership will strengthen our offerings to businesses across the globe by leveraging Ericsson’s leadership in 5G, global market presence and strong R&D capabilities. With the demand for UCaaS, CCaaS and Communications APIs growing rapidly, the combined expertise, talent and innovation is good news for our customers and partners.”
He adds “The way we work, shop, learn, see a doctor, exercise and entertain is fundamentally changing. Together, Ericsson and Vonage will be at the heart of the next wave of the digital transformation, providing enterprises, CSPs and end users with innovative applications and services that will change how business gets done. We will drive deeper connections and engagement among employees and across customer touchpoints, making for exceptional experiences.”
Additional information about the transaction
The transaction is expected to be accretive to Ericsson’s EPS (excluding non-cash amortization impacts) and free cash flow before Mergers & Acquisitions (M&As) from 2024 onwards.
Vonage will become a separate business area within the Ericsson Group - called Business Area Global Communications Platform (BGCP). Rory Read, current CEO of Vonage, is appointed Senior Vice President and Head of Business Area Global Communications Platform and a member of Ericsson’s Executive Team.
With the completion of the transaction, Vonage will continue to operate under its existing name and brand being part of the Ericsson Group.
As of the closing date, Vonage’s financial performance will be reported in Segment Enterprise along with Business Area Enterprise Wireless Solutions and Business Area Technologies & New Businesses as of the third quarter 2022.
Vonage common stock has ceased trading and will no longer be listed on the Nasdaq Global Select Market.
The acquisition was funded with cash on hand. The USD amount has been hedged with both external transactions and internal netting of Ericsson’s ongoing USD inflows.
The transaction is expected to deliver near-term revenue synergy opportunities, including CSPs selling through their own brands and cross-selling of the combined product portfolio estimated to contribute USD 0.4 billion by 2025. Ericsson also expects to achieve some cost efficiencies now that the deal is complete.
Vonage has a strong track record of growth and margin evolution. Sales were USD 1.4 billion in the 12-month period to 31 March 2022 and, over the same period, the company delivered an adjusted EBITDA margin of 13 percent and free cash flow of USD 93 million.
Ericsson remains committed to the previously communicated long-term financial targets of an EBITA margin of 15-18 percent and Free Cash Flow before M&A of 9-12 percent of sales; as well as the 2022 EBIT margin target of 12-14 percent for the Ericsson Group excluding Vonage.
Vonage is currently engaged with the U.S. Federal Trade Commission to resolve an investigation into historic consumer practices which was initiated in 2020.
https://www.ericsson.com/en/press-releases/2022/7/
ericsson-completes-acquisition-of-vonage
Other important information published on Ericsson.com
Connectivity in an increasingly complex world
Since our founding over 145 years ago, Ericsson has been driven by the belief that access to communications is a basic human need. We are committed to providing people with continuous global connectivity, information and all that flows from this. After all, in today’s world, communications drive the way we socialize, shapes politics and commerce, is relied on for healthcare and emergency networks, and increasingly shapes how people learn and what they believe. Digital connectivity creates immeasurable opportunities for society, yet one-third of the world’s population currently does not have access to the Internet. We believe every person should have safe and affordable wireless communications – enabling inclusion, education and job opportunities, and a means for everyone to be better connected.
In this context, we have over the years expanded our global operations and are today present in over 180 markets. This is a leadership position that comes with great responsibility, which we take seriously. Today’s world is highly unpredictable and doing business across diverse and complicated operating environments is challenging. We are thoughtful about where we work and who we work with, always striving to fulfil our mission responsibly and with integrity. This means doing business with our eyes open, living up to our values and, importantly, putting people first by ensuring the safety of our employees as well as respecting and supporting the communities in which we work. If, as part of our continuous assessment, we conclude that our operations conflict with our fundamental principles and core values, we will change how we operate and exit if appropriate.
In the past, the company has not always lived up to the high expectations that we all have for our company and that is unacceptable - it does not represent who we are or what we stand for and we remain committed to being a positive force and to operate ethically at all times. We won’t compromise our values or the safety of our people.
As a global company, changing circumstances may require or lead us to exit a market. In some instances, this happens under sudden, unplanned, and complex circumstances. However, exiting any market
| 12 | Ericsson | Third quarter report 2022 | Other information |
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is not straightforward. People will always need access to communications and this is a core principle for us. Recent global events underscore the importance of digital connectivity. The importance for people to communicate freely with each other, and with the wider world, has never been clearer. When conflict or natural disaster strike, connectivity becomes a lifeline. Without access to the Internet, mobile networks and other methods of digital communication, vital information flow is slowed down or even halted entirely. This leaves people without an opportunity to communicate with loved ones, share what is happening locally with the world, obtain real-time sources of accurate information, access remote learning, and more. This is why many governments promote the development of digital infrastructure, even in geopolitically sensitive regions. Accordingly, we always look to honor our responsibility to provide civilian connectivity in times when societies may need it most.
If we make a decision to leave we will take every measure to exit in a responsible manner; compliant with the law, adhering to sanctions requirements, aligned with our Code of Business Ethics and corporate values and, most importantly, ensuring the safety of our people and respecting the community we are leaving.
Importantly, as a critical infrastructure provider, we take pride in and will continue to deploy our resources for humanitarian purposes. This is a duty we take seriously. For 20 years, Ericsson Response has been at the forefront of the UN Emergency Telecommunications Cluster – using our telecoms skills and technology to bring together the aid organizations that help alleviate affected populations in disasters and other humanitarian emergencies. It is vital work like this that underpins Ericsson’s engagements across several of the complex markets in which we operate.
Summary
Ericsson has a long tradition of global engagement and today is present in 180 countries. As a cornerstone principle, Ericsson is committed to the development and maintenance of sustainable communications networks, guided by our core values of integrity, respect, professionalism and perseverance. Importantly, we are committed to being a positive force in the communities in which we operate – in line with the UN Sustainable Development Goals. Given our global presence and the ever-changing geopolitical situation, we continuously assess our presence, work and impact in countries and regions to ensure that our operations have not become impossible or intolerable to our core values. This includes a constant assessment of the safety and security of our people and contractors, the respect for the rule of law in the areas where we work, and the respect for human rights. As we decide to enter or exit a market, we will consider all these matters in the broad context of Ericsson’s long held principles and foundational belief that access to communications is a basic human need.
https://www.ericsson.com/en/newsroom/ericsson-comments
/connectivity-in-an-increasingly-complex-world
| 13 | Ericsson | Third quarter report 2022 | Other information |
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Risk factors
Ericsson is exposed to a number of risks in its activities. To stimulate identification and support cross-functional treatment within the Ericsson Group, risks are grouped in a number of categories, including for example risks relating to technology, IPR, compliance, project execution, operations, products and services, treasury and accounting, the geopolitical environment, M&A, cyber security and occupational health and safety.
Ericsson’s risk management is embedded into strategy development and operational processes and is a part of the Ericsson Group Management System to ensure accountability, effectiveness, efficiency, business continuity and compliance. Risks are defined in both a short-term and long-term perspective and are related to long-term objectives as per the strategic direction as well as to short-term objectives.
Risk factors and uncertainties of relevance to Ericsson are described in the Annual Report 2021 and in the Annual Report on Form 20-F 2021 (in the following the “Annual Report 2021”). Updates to these risk factors and uncertainties observed by Ericsson that are deemed of short-term relevance include, but are not limited to, the following risks described below:
Deferred Prosecution Agreement with the United States Department of Justice
In December 2019, Ericsson entered into a deferred prosecution agreement (DPA) with the United States Department of Justice (DOJ). The DPA has a three-year term and includes a guilty plea by our Egyptian subsidiary to a criminal violation of the FCPA’s anti-bribery provisions. We admitted to conduct described in the DPA’s statement of facts, and the DOJ agreed to defer prosecution of Ericsson for the DPA’s three-year term if Ericsson does not violate the terms of the DPA. In October 2021, the DOJ notified us of its determination that we breached our obligations under the DPA by failing to provide required information to the DOJ.
In March 2022, the DOJ informed Ericsson that, before entering into the DPA, the Company provided insufficient information to the DOJ about the Company’s 2019 internal investigation into conduct in Iraq. The DOJ also determined that the Company breached the DPA by failing to inform the DOJ about the investigation post-DPA. The DOJ’s determination that the Company violated the DPA allows the DOJ, in its sole discretion, to commence prosecution for criminal violations, including the charged conspiracy to violate the FCPA’s anti-bribery, books and records and internal controls provisions referenced in the DPA. In doing so, the DOJ could rely upon Ericsson’s DPA admissions and would benefit from Ericsson’s waiver of certain procedural and evidentiary defenses. The DOJ also may, in its sole discretion, extend the term of the DPA.
The Company is in communication with the DOJ regarding the facts and circumstances of the breach determinations and is committed to co-operating with the DOJ to resolve the matters. While the length of the process cannot be determined, the resolution of these matters could result in a range of actions by DOJ, including criminal prosecution, civil or criminal penalties and additional monetary fines or penalties, the magnitude of which cannot at this time be reliably estimated. Accordingly, no provisions have been recorded for such potential exposure.
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We are subject to certain US and other anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations. Ericsson may be subject to further adverse consequences under the DPA with the DOJ and the injunction issued in connection with the settlement with the SEC, both from 2019, and other investigations by governmental authorities
The Company is required to comply with anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations in jurisdictions where Ericsson does business. As previously disclosed, the Company has not complied with all such laws, rules and regulations in the past and faces exposure to possible past, present and future violations, which could lead to significant civil or criminal liability that would materially harm the Company, including its reputation, business, financial condition, results of operations (EBIT), cash flows, and prospects.
In February 2022, the Company publicly disclosed that an internal investigation in 2019 included a review of the conduct of Ericsson employees, vendors and suppliers in Iraq during 2011–2019. The investigation found serious breaches of compliance rules and the Company’s Code of Business Ethics and identified evidence of corruption-related misconduct and other serious violations, including payments to intermediaries and the potential use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes. The investigation also identified payment schemes and cash transactions that potentially created the risk of money laundering. The company took remedial actions and is continuing to work to identify additional measures to take.
In June 2022, the SEC informed us that it opened an investigation concerning matters described in the Company’s 2019 Iraq investigation report. Under Ericsson’s consent judgment with the SEC, we are permanently enjoined from violating the FCPA’s anti-bribery, books and records and internal controls provisions. Violations of the injunction or consent judgment could subject us to new civil and criminal penalties as well as a new enforcement action.
Ericsson is committed to cooperating with the DOJ and the SEC to resolve these matters, the outcome of which we are unable to predict. We also face other negative consequences from these matters, including matters under review as part of our ongoing and future communications with governmental authorities to comply with our obligations under the DPA. Governmental authorities in the US and elsewhere are investigating us for possible violations of applicable anti-corruption (including anti-bribery, anti-money laundering, sanctions, terror finance and anti-terrorism) laws, rules or regulations, and we currently face litigation related to these matters (including the matters described below). Any criminal prosecution or civil or criminal penalties imposed as a result of non-compliance for any reason with the DPA or consent judgment could materially harm Ericsson, including our reputation, business, financial condition, results of operations (EBIT), cash flows, or prospects.
Ericsson is involved in lawsuits, legal proceedings and investigations which, if determined unfavorably, could require the Company to pay substantial damages, fines and/or penalties
As previously disclosed, on March 3, 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of investors in Ericsson securities in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9, 2022, which added a former Ericsson officer as a defendant. The amended complaint alleges violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and anti-corruption policies and obligations and the conduct of its business in Iraq.
In August 2022, a civil lawsuit was filed in the United States District Court for the District of Columbia against Telefonaktiebolaget LM Ericsson and Ericsson Inc. The lawsuit was brought by US military service members and employees of US government contractors who were killed or injured in terrorist attacks in Iraq, Afghanistan and Syria from 2005 to 2021, as well as by their family members. The lawsuit asserts claims against Ericsson under the US Anti-Terrorism Act alleging that Ericsson made payments that ultimately aided the terrorist organizations that committed, planned or authorized the attacks.
Business in Russia
As mentioned in the Annual Report 2021, including in the risk factor 1.1 and 3.2, conducting business throughout the world makes Ericsson subject to the effects of general global economic conditions as well as conditions unique to specific countries or regions. In addition to the risk factors described in the Annual Report 2021 and the provision recorded by the Company in Q1 and Q2 2022, the large uncertainties relating to the Russian market, including the applicable and changed sanctions landscape, lead to large uncertainties relating to other potential costs and consequences that may follow. All of the above could have a material adverse effect on the Company, including its reputation, business, financial condition, results of operations (EBIT), cash flows, or prospects.
Stockholm, October 20, 2022
Telefonaktiebolaget LM Ericsson
Börje Ekholm, President and CEO
Org. No. 556016-0680
Date for next report: January 20, 2023
| 15 | Ericsson | Third quarter report 2022 | Risk factors |
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Editor’s note
Media and analyst briefing
Ericsson invites media, investors and analysts to a conference call and live video webcast at 9:00 AM CEST on October 20, 2022.
Link to the webcast, dial-in to audio conference, supporting material and replay will be available at:
www.ericsson.com/investors and
www.ericsson.com/newsroom
For further information, please contact:
Carl Mellander, Senior Vice President, Chief Financial Officer
Phone: +46 72 583 88 70
E-mail: investor.relations@ericsson.com or
media.relations@ericsson.com
Stella Medlicott, Senior Vice President, Chief Marketing and
Communications Officer
Phone: +46 73 095 65 39
E-mail: investor.relations@ericsson.com or
media.relations@ericsson.com
Telefonaktiebolaget LM Ericsson
Org. number: 556016-0680
Torshamnsgatan 21
SE-164 83 Stockholm
Phone: +46 10 719 00 00
www.ericsson.com
Investors
Peter Nyquist, Vice President,
Head of Investor Relations
Phone: +46 70 575 29 06
E-mail: peter.nyquist@ericsson.com
Lena Häggblom, Director,
Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director,
Investor Relations
Phone: +46 70 986 02 27
E-mail: stefan.jelvin@ericsson.com
Alan Ganson, Director,
Investor Relations
Phone: +46 70 267 27 30
E-mail: alan.ganson@ericsson.com
Media
Kristoffer Edshage, Director of Corporate Media
Phone: +46 72 220 44 46
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
| 16 | Ericsson | Third quarter report 2022 | Editor’s note |
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Forword-looking statements
This report includes forward-looking statements, including statements reflecting management’s current views relating to the growth of the market, future market conditions, future events, financial condition, and expected operational and financial performance, including, the following:
| • | Our goals, targets, strategies, planning assumptions and operational or financial performance expectations, such as the investor day key messages and our targets and strategies as described in the introductory bullets, the CEO comments, the Segment descriptions and in Other information |
| • | Industry trends, future characteristics and development of the markets in which we operate |
| • | Our future liquidity, capital resources, capital expenditures, cost savings and profitability |
| • | The expected demand for our existing and new products and services as well as plans to launch new products and services including research and development expenditures |
| • | The ability to deliver on future plans and to realize potential for future growth |
| • | The expected operational or financial performance of strategic cooperation activities and joint ventures |
| • | The time until acquired entities and businesses will be integrated and accretive to income |
| • | Technology and industry trends including the regulatory and standardization environment in which we operate, competition and our customer structure. |
The words “believe,” “expect,” “foresee,” “anticipate,” “assume,” “intend,” “likely,” “projects,” “may,” “could,” “plan,” “estimate,” “forecast,” “will,” “should,” “would,” “predict,” “aim,” “ambition,” “seek,” “potential,” “target,” “might,” “continue,” or, in each case, their negative or variations, and similar words or expressions are used to identify forward-looking statements. Any statement that refers to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
We caution investors that these statements are subject to risks and uncertainties many of which are difficult to predict and generally beyond our control that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
Important factors that could affect whether and to what extent any of our forward-looking statements materialize include, but are not limited to, the factors described in the section “Risk Factors”, and in “Risk Factors” in the Annual Report 2021.
These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events, whether as a result of new information, future events or otherwise, except as required by applicable law or stock exchange regulation.
| 17 | Ericsson | Third quarter report 2022 | Forword-looking statements |
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Auditors’ Review Report
Introduction
We have reviewed the condensed interim financial information (interim report) of Telefonaktiebolaget LM Ericsson (publ.) as of September 30, 2022, and the nine months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in
Sweden. The procedures performed in a review do not enable us to obtain assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, October 20, 2022
Deloitte AB
Thomas Strömberg
Authorized Public Accountant
| 18 | Ericsson | Third quarter report 2022 | Auditors’ Review Report |
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Financial statements and other information
| 19 | Ericsson | Third quarter report 2022 | Financial statements and other information |
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Financial statements (unaudited)
Condensed consolidated income statement
| Q3 | Jan-Sep | |||||||||||||||||||||||
| SEK million |
Note | 2022 | 2021 | Change | 2022 | 2021 | ||||||||||||||||||
| Net sales |
3 | 68,040 | 56,263 | 21 | % | 185,566 | 160,982 | |||||||||||||||||
| Cost of sales |
-39,905 | -31,487 | 27 | % | -107,840 | -91,054 | ||||||||||||||||||
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|
|
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| Gross income |
3 | 28,135 | 24,776 | 14 | % | 77,726 | 69,928 | |||||||||||||||||
| Research and development expenses |
-11,880 | -10,155 | 17 | % | -34,081 | -30,211 | ||||||||||||||||||
| Selling and administrative expenses |
-9,441 | -6,177 | 53 | % | -23,901 | -19,337 | ||||||||||||||||||
| Impairment losses on trade receivables |
38 | -27 | -241 | % | -139 | -139 | ||||||||||||||||||
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|
|
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| Operating expenses |
-21,283 | -16,359 | 30 | % | -58,121 | -49,687 | ||||||||||||||||||
| Other operating income and expenses 1) |
234 | 500 | -53 | % | -438 | -66 | ||||||||||||||||||
| Share in earnings of JV and associated companies |
29 | -82 | -135 | % | 0 | -256 | ||||||||||||||||||
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|
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| Earnings before financial items and income tax (EBIT) |
3 | 7,115 | 8,835 | -19 | % | 19,167 | 19,919 | |||||||||||||||||
| Financial income and expenses, net |
-535 | -598 | -11 | % | -1,937 | -1,585 | ||||||||||||||||||
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|
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| Income after financial items |
6,580 | 8,237 | -20 | % | 17,230 | 18,334 | ||||||||||||||||||
| Income tax |
-1,220 | -2,471 | -51 | % | -4,308 | -5,500 | ||||||||||||||||||
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| Net income |
5,360 | 5,766 | -7 | % | 12,922 | 12,834 | ||||||||||||||||||
| Net income attributable to: |
||||||||||||||||||||||||
| Owners of the Parent Company |
5,214 | 5,752 | 12,658 | 12,618 | ||||||||||||||||||||
| Non-controlling interests |
146 | 14 | 264 | 216 | ||||||||||||||||||||
| Other information |
||||||||||||||||||||||||
| Average number of shares, basic (million) |
8 | 3,330 | 3,330 | 3,330 | 3,329 | |||||||||||||||||||
| Earnings per share, basic (SEK) 2) |
1.56 | 1.73 | 3.80 | 3.79 | ||||||||||||||||||||
| Earnings per share, diluted (SEK) 3) |
1.56 | 1.73 | 3.80 | 3.79 | ||||||||||||||||||||
| 1) | Jan-Sep 2022 includes a provision of SEK -0.9 billion (-0.9 b. in Q1) for impairment of assets and other one-time costs due to the suspension of affected business in Russia, and the impact of Ericsson Ventures investments of SEK 0.0 billion (-0.3 b. in Q1, 0.1 b. in Q2 and 0.2 b. in Q3). |
| 2) | Based on net income attributable to owners of the Parent Company. |
| 3) | Potential ordinary shares are not considered when their conversion to ordinary shares would improve earnings per share. |
Condensed statement of comprehensive income (loss)
| Q3 | Jan-Sep | |||||||||||||||
| SEK million |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income |
5,360 | 5,766 | 12,922 | 12,834 | ||||||||||||
| Other comprehensive income |
||||||||||||||||
| Items that will not be reclassified to profit or loss |
||||||||||||||||
| Remeasurements of defined benefits pension plans in class etceiling |
-204 | -3,025 | 14,265 | 3,616 | ||||||||||||
| Revaluation of borrowings due to change in credit risk |
-289 | -158 | 1,691 | -174 | ||||||||||||
| Cash flow hedge reserve |
||||||||||||||||
| Gains/losses arising during the period |
-648 | — | 3,703 | — | ||||||||||||
| Transfer to good will |
-3,677 | — | -3,677 | — | ||||||||||||
| Tax on items that will not be reclassified to profit or loss |
1,068 | 582 | -3,124 | -744 | ||||||||||||
| Items that have been or may be reclassified to profit or loss |
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| Cash flow hedge reserve |
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| Gains/losses arising during the period |
-1,716 | -200 | -2,890 | -354 | ||||||||||||
| Reclassification adjustments on gains/losses included in profit or loss |
42 | -24 | 127 | -72 | ||||||||||||
| Translation reserves |
||||||||||||||||
| Changes in translation reserves |
8,679 | 856 | 14,431 | 2,101 | ||||||||||||
| Reclassification to profit and loss |
4 | 14 | -30 | 5 | ||||||||||||
| Share of other comprehensive income of JV and associated companies |
33 | 3 | 73 | 34 | ||||||||||||
| Tax on items that have been or may be reclassified to profit or loss |
345 | 46 | 569 | 88 | ||||||||||||
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| Total other comprehensive income (loss), net of tax |
3,637 | -1,906 | 25,138 | 4,500 | ||||||||||||
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| Total comprehensive income |
8,997 | 3,860 | 38,060 | 17,334 | ||||||||||||
| Total comprehensive income attributable to: |
||||||||||||||||
| Owners of the Parent Company |
8,957 | 3,919 | 38,090 | 17,271 | ||||||||||||
| Non-controlling interests |
40 | -59 | -30 | 63 | ||||||||||||
| 20 | Ericsson | Third quarter report 2022 | Financial statements |
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Condensed consolidated balance sheet
| Sep 30 | Dec 31 | |||||||||||
| SEK million |
Note | 2022 | 2021 | |||||||||
| Assets |
||||||||||||
| Non-current assets |
||||||||||||
| Intangible assets |
||||||||||||
| Capitalized development expenses |
3,412 | 3,528 | ||||||||||
| Goodwill |
10 | 92,933 | 38,204 | |||||||||
| Intellectual property rights, brands and other intangible assets |
10 | 27,701 | 3,830 | |||||||||
| Property, plant and equipment |
14,319 | 13,580 | ||||||||||
| Right-of-use assets |
8,193 | 7,948 | ||||||||||
| Financial assets |
||||||||||||
| Equity in JV and associated companies |
1,121 | 941 | ||||||||||
| Other investments in shares and participations |
5 | 2,152 | 2,258 | |||||||||
| Customer finance, non-current |
5 | 453 | 568 | |||||||||
| Interest-bearing securities, non-current |
5 | 2,423 | 30,626 | |||||||||
| Other financial assets, non-current |
5 | 7,962 | 6,217 | |||||||||
| Deferred tax assets |
23,705 | 23,109 | ||||||||||
|
|
|
|
|
|||||||||
| 184,374 | 130,809 | |||||||||||
| Current assets |
||||||||||||
| Inventories |
53,019 | 35,164 | ||||||||||
| Contract assets |
12,060 | 10,506 | ||||||||||
| Trade receivables |
5 | 45,266 | 45,399 | |||||||||
| Customer finance, current |
5 | 4,278 | 2,719 | |||||||||
| Current tax assets |
8,451 | 6,379 | ||||||||||
| Other current receivables |
10,329 | 7,656 | ||||||||||
| Interest-bearing securities, current |
5 | 6,640 | 12,932 | |||||||||
| Cash and cash equivalents |
5 | 36,749 | 54,050 | |||||||||
|
|
|
|
|
|||||||||
| 176,792 | 174,805 | |||||||||||
|
|
|
|
|
|||||||||
| Total assets |
361,166 | 305,614 | ||||||||||
| Equity and liabilities |
||||||||||||
| Equity |
||||||||||||
| Stockholders’ equity |
138,607 | 108,775 | ||||||||||
| Non-controlling interest in equity of subsidiaries |
-1,787 | -1,676 | ||||||||||
|
|
|
|
|
|||||||||
| 136,820 | 107,099 | |||||||||||
| Non-current liabilities |
||||||||||||
| Post-employment benefits |
25,131 | 36,050 | ||||||||||
| Provisions, non-current |
4 | 4,511 | 3,722 | |||||||||
| Deferred tax liabilities |
10 | 8,025 | 884 | |||||||||
| Borrowings, non-current |
5 | 26,994 | 22,241 | |||||||||
| Lease liabilities, non-current |
7,209 | 7,079 | ||||||||||
| Other non-current liabilities |
791 | 1,587 | ||||||||||
|
|
|
|
|
|||||||||
| 72,661 | 71,563 | |||||||||||
| Current liabilities |
||||||||||||
| Provisions, current |
4 | 6,051 | 5,782 | |||||||||
| Borrowings, current |
5 | 5,437 | 9,590 | |||||||||
| Lease liabilities, current |
2,666 | 2,224 | ||||||||||
| Contract liabilities |
41,105 | 32,834 | ||||||||||
| Trade payables |
5 | 40,864 | 35,684 | |||||||||
| Current tax liabilities |
5,008 | 2,917 | ||||||||||
| Other current liabilities |
50,554 | 37,921 | ||||||||||
|
|
|
|
|
|||||||||
| 151,685 | 126,952 | |||||||||||
|
|
|
|
|
|||||||||
| Total equity and liabilities |
361,166 | 305,614 | ||||||||||
| 21 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Condensed consolidated statement of cash flows
| Q3 | Jan-Sep | |||||||||||||||||||
| SEK million |
Note | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| Operating activities |
||||||||||||||||||||
| Net income |
5,360 | 5,766 | 12,922 | 12,834 | ||||||||||||||||
| Adjustments for |
||||||||||||||||||||
| Taxes |
1,307 | 2,824 | 4,079 | 5,638 | ||||||||||||||||
| Earnings/dividends in JV and associated companies |
-17 | 159 | 79 | 347 | ||||||||||||||||
| Depreciation, amortization and impairment losses |
6 | 2,638 | 2,385 | 7,008 | 6,417 | |||||||||||||||
| Other |
-19 | 24 | 1,225 | 840 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| 9,269 | 11,158 | 25,313 | 26,076 | |||||||||||||||||
| Changes in operating net assets |
||||||||||||||||||||
| Inventories |
-3,564 | -3,877 | -13,638 | -5,813 | ||||||||||||||||
| Customer finance, current and non-current |
-872 | -1,419 | -861 | -746 | ||||||||||||||||
| Trade receivables and contract assets |
4,595 | 8,833 | 8,846 | 6,778 | ||||||||||||||||
| Trade payables |
-1,817 | 1,733 | -1,864 | -1,635 | ||||||||||||||||
| Provisions and post-employment benefits |
-58 | -130 | 590 | -1,068 | ||||||||||||||||
| Contract liabilities |
-2,623 | -3,388 | 2,916 | 5,669 | ||||||||||||||||
| Other operating assets and liabilities, net |
1,052 | 3,168 | -6,048 | -1,905 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| -3,287 | 4,920 | -10,059 | 1,280 | |||||||||||||||||
| Interest received |
156 | 42 | 217 | 112 | ||||||||||||||||
| Interest paid |
-196 | -120 | -844 | -664 | ||||||||||||||||
| Taxes paid |
-1,291 | -1,276 | -3,659 | -2,935 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash flow from operating activities |
4,651 | 14,724 | 10,968 | 23,869 | ||||||||||||||||
| Investing activities |
||||||||||||||||||||
| Investments in property, plant and equipment |
6 | -1,104 | -1,040 | -2,975 | -2,962 | |||||||||||||||
| Sales of property, plant and equipment |
74 | 40 | 173 | 81 | ||||||||||||||||
| Acquisitions/divestments of subsidiaries and other operations, net |
10 | -51,412 | -55 | -51,243 | -119 | |||||||||||||||
| Product development |
6 | -414 | -190 | -1,003 | -660 | |||||||||||||||
| Purchase of interest-bearing securities |
-437 | -9,670 | -1,474 | -26,557 | ||||||||||||||||
| Sale of interest-bearing securities |
978 | 1,801 | 39,752 | 13,050 | ||||||||||||||||
| Other investing activities |
-6,537 | -4 | -5,732 | -9 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash flow from investing activities |
-58,852 | -9,118 | -22,502 | -17,176 | ||||||||||||||||
| Financing activities |
||||||||||||||||||||
| Proceeds from issuance of long-term debt |
1,666 | — | 9,454 | 7,881 | ||||||||||||||||
| Repayment of long-term debt |
-5,915 | — | -15,908 | -5,752 | ||||||||||||||||
| Dividends paid |
-79 | -161 | -4,243 | -3,494 | ||||||||||||||||
| Repayment of lease liabilities |
-658 | -580 | -1,828 | -1,745 | ||||||||||||||||
| Other financing activities |
-277 | -1,807 | 535 | -1,316 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash flow from financing activities |
-5,263 | -2,548 | -11,990 | -4,426 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Effect of exchange rate changes on cash |
2,595 | 145 | 6,223 | 597 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Net change in cash and cash equivalents |
-56,869 | 3,203 | -17,301 | 2,864 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash and cash equivalents, beginning of period |
93,618 | 43,273 | 54,050 | 43,612 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| Cash and cash equivalents, end of period |
36,749 | 46,476 | 36,749 | 46,476 | ||||||||||||||||
| 22 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Condensed consolidated statement of changes in equity
| Jan-Sep | ||||||||
| SEK million |
2022 | 2021 | ||||||
| Opening balance |
107,099 | 85,177 | ||||||
| Total comprehensive income |
38,060 | 17,334 | ||||||
| Sale/repurchase of own shares |
— | 42 | ||||||
| Long-term variable compensation plans |
66 | 64 | ||||||
| Dividends to shareholders ¹) |
-8,406 | -6,863 | ||||||
| Transactions with non-controlling interests |
1 | -126 | ||||||
|
|
|
|
|
|||||
| Closing balance |
136,820 | 95,628 | ||||||
| 1) | Includes accrual of SEK 4,163 (3,335) million in Jan-Sep for the dividend approved by the Annual General Meeting on March 29, 2022. SEK 1.25 per share of the total SEK 2.50 per share of the dividend has been paid out in Q4 2022. |
Condensed consolidated income statement – isolated quarters
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| Cost of sales |
-39,905 | -36,163 | -31,772 | -40,511 | -31,487 | -31,084 | -28,483 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross income |
28,135 | 26,302 | 23,289 | 30,821 | 24,776 | 23,857 | 21,295 | |||||||||||||||||||||
| Research and development expenses |
-11,880 | -11,496 | -10,705 | -11,863 | -10,155 | -10,480 | -9,576 | |||||||||||||||||||||
| Selling and administrative expenses |
-9,441 | -7,872 | -6,588 | -7,620 | -6,177 | -6,972 | -6,188 | |||||||||||||||||||||
| Impairment losses on trade receivables |
38 | 3 | -180 | 99 | -27 | 100 | -212 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating expenses |
-21,283 | -19,365 | -17,473 | -19,384 | -16,359 | -17,352 | -15,976 | |||||||||||||||||||||
| Other operating income and expenses 1) |
234 | 393 | -1,065 | 428 | 500 | -579 | 13 | |||||||||||||||||||||
| Share in earnings of JV and associated companies |
29 | -22 | -7 | -4 | -82 | -103 | -71 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Earnings before financial items and income tax (EBIT) |
7,115 | 7,308 | 4,744 | 11,861 | 8,835 | 5,823 | 5,261 | |||||||||||||||||||||
| Financial income and expenses, net |
-535 | -759 | -643 | -945 | -598 | -454 | -533 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Income after financial items |
6,580 | 6,549 | 4,101 | 10,916 | 8,237 | 5,369 | 4,728 | |||||||||||||||||||||
| Income tax |
-1,220 | -1,899 | -1,189 | -770 | -2,471 | -1,469 | -1,560 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income |
5,360 | 4,650 | 2,912 | 10,146 | 5,766 | 3,900 | 3,168 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net income (loss) attributable to: |
||||||||||||||||||||||||||||
| Owners of the Parent Company |
5,214 | 4,504 | 2,940 | 10,076 | 5,752 | 3,679 | 3,187 | |||||||||||||||||||||
| Non-controlling interests |
146 | 146 | -28 | 70 | 14 | 221 | -19 | |||||||||||||||||||||
| Other information |
||||||||||||||||||||||||||||
| Average number of shares, basic (million) |
3,330 | 3,330 | 3,330 | 3,330 | 3,330 | 3,329 | 3,328 | |||||||||||||||||||||
| Earnings per share, basic (SEK) 2) |
1.56 | 1.36 | 0.88 | 3.03 | 1.73 | 1.10 | 0.96 | |||||||||||||||||||||
| Earnings per share, diluted (SEK) 3) |
1.56 | 1.35 | 0.88 | 3.02 | 1.73 | 1.10 | 0.96 | |||||||||||||||||||||
| 1) | Q3 2022 includes revaluation of Ericsson Ventures investments of SEK 0.2 billion. Q2 2022 includes revaluation/disposals of Ericsson Ventures investments of SEK 0.1 billion. Q1 2022 includes a provision of SEK -0.9 billion for impairment of assets and other one-time costs due to the suspension of the affected business in Russia, and revaluation of Ericsson Venture investments of SEK -0.3 billion. Q4 2021 includes a gain from divestment of a data center and revaluation of Ericsson Ventures investments of SEK 0.4 billion. Q3 2021 includes an Ericsson Ventures investment revaluation of SEK 0.5 billion. Q2 2021 includes cost of SEK -0.8 billion as a result of the Nokia settlement related to the 2019 resolutions with SEC and DOJ. |
| 2) | Based on net income attributable to owners of the Parent Company. |
| 3) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
| 23 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Condensed consolidated statement of cash flows – isolated quarters
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Operating activities |
||||||||||||||||||||||||||||
| Net income |
5,360 | 4,650 | 2,912 | 10,146 | 5,766 | 3,900 | 3,168 | |||||||||||||||||||||
| Adjustments for |
||||||||||||||||||||||||||||
| Taxes |
1,307 | 1,751 | 1,021 | 938 | 2,824 | 1,230 | 1,584 | |||||||||||||||||||||
| Earnings/dividends in JV and associated companies |
-17 | 88 | 8 | 13 | 159 | 112 | 76 | |||||||||||||||||||||
| Depreciation, amortization and impairment losses |
2,638 | 2,224 | 2,146 | 2,552 | 2,385 | 2,097 | 1,935 | |||||||||||||||||||||
| Other |
-19 | 345 | 899 | 398 | 24 | 631 | 185 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 9,269 | 9,058 | 6,986 | 14,047 | 11,158 | 7,970 | 6,948 | ||||||||||||||||||||||
| Changes in operating net assets |
||||||||||||||||||||||||||||
| Inventories |
-3,564 | -4,728 | -5,346 | 248 | -3,877 | -701 | -1,235 | |||||||||||||||||||||
| Customer finance, current and non-current |
-872 | 134 | -123 | 780 | -1,419 | 454 | 219 | |||||||||||||||||||||
| Trade receivables and contract assets |
4,595 | 3,350 | 901 | -5,227 | 8,833 | -4,034 | 1,979 | |||||||||||||||||||||
| Trade payables |
-1,817 | 1,324 | -1,371 | 3,020 | 1,733 | 744 | -4,112 | |||||||||||||||||||||
| Provisions and post-employment benefits |
-58 | -321 | 969 | 950 | -130 | -1,461 | 523 | |||||||||||||||||||||
| Contract liabilities |
-2,623 | -721 | 6,260 | -1,655 | -3,388 | 4,603 | 4,454 | |||||||||||||||||||||
| Other operating assets and liabilities, net |
1,052 | -333 | -6,767 | 4,606 | 3,168 | 608 | -5,681 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| -3,287 | -1,295 | -5,477 | 2,722 | 4,920 | 213 | -3,853 | ||||||||||||||||||||||
| Interest received |
156 | -17 | 78 | -104 | 42 | 2 | 68 | |||||||||||||||||||||
| Interest paid |
-196 | -437 | -211 | -310 | -120 | -384 | -160 | |||||||||||||||||||||
| Taxes paid/received |
-1,291 | -1,022 | -1,346 | -1,159 | -1,276 | -1,861 | 202 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cash flow from operating activities |
4,651 | 6,287 | 30 | 15,196 | 14,724 | 5,940 | 3,205 | |||||||||||||||||||||
| Investing activities |
||||||||||||||||||||||||||||
| Investments in property, plant and equipment |
-1,104 | -1,053 | -818 | -701 | -1,040 | -1,007 | -915 | |||||||||||||||||||||
| Sales of property, plant and equipment |
74 | 61 | 38 | 34 | 40 | 17 | 24 | |||||||||||||||||||||
| Acquisitions/divestments of subs, and other operations, net |
-51,412 | 123 | 46 | 178 | -55 | -69 | 5 | |||||||||||||||||||||
| Product development |
-414 | -301 | -288 | -302 | -190 | -266 | -204 | |||||||||||||||||||||
| Purchase of interest-bearing securities |
-437 | -1,037 | — | -8,858 | -9,670 | -13,207 | -3,680 | |||||||||||||||||||||
| Sale of interest-bearing securities |
978 | 22,747 | 16,027 | 7,064 | 1,801 | 7,408 | 3,841 | |||||||||||||||||||||
| Other investing activities |
-6,537 | 1,384 | -579 | -122 | -4 | — | -5 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cash flow from investing activities |
-58,852 | 21,924 | 14,426 | -2,707 | -9,118 | -7,124 | -934 | |||||||||||||||||||||
| Financing activities |
||||||||||||||||||||||||||||
| Proceeds from issuance of long-term debt |
1,666 | — | 7,788 | 1 | — | 7,804 | 77 | |||||||||||||||||||||
| Repayment of long-term debt |
-5,915 | -9,993 | — | -39 | — | -510 | -5,242 | |||||||||||||||||||||
| Dividends paid |
-79 | -4,164 | — | -3,395 | -161 | -3,328 | -5 | |||||||||||||||||||||
| Repayment of lease liabilities |
-658 | -577 | -593 | -623 | -580 | -617 | -548 | |||||||||||||||||||||
| Other financing activities |
-277 | 243 | 569 | -825 | -1,807 | 940 | -449 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cash flow from financing activities |
-5,263 | -14,491 | 7,764 | -4,881 | -2,548 | 4,289 | -6,167 | |||||||||||||||||||||
| Effect of exchange rate changes on cash |
2,595 | 3,042 | 586 | -34 | 145 | -375 | 827 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net change in cash and cash equivalents |
-56,869 | 16,762 | 22,806 | 7,574 | 3,203 | 2,730 | -3,069 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cash and cash equivalents, beginning of period |
93,618 | 76,856 | 54,050 | 46,476 | 43,273 | 40,543 | 43,612 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Cash and cash equivalents, end of period |
36,749 | 93,618 | 76,856 | 54,050 | 46,476 | 43,273 | 40,543 | |||||||||||||||||||||
| 24 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Condensed Parent Company income statement
| Q3 | Jan-Sep | |||||||||||||||
| SEK million |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net sales |
— | — | — | — | ||||||||||||
| Cost of sales |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross income |
— | — | — | — | ||||||||||||
| Operating expenses |
-390 | -158 | -955 | -503 | ||||||||||||
| Other operating income and expenses |
672 | 670 | 1,925 | 1,106 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBIT |
282 | 512 | 970 | 603 | ||||||||||||
| Financial net |
1,905 | 1,131 | 19,211 | 6,724 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income after financial items |
2,187 | 1,643 | 20,181 | 7,327 | ||||||||||||
| Transfers to (-) / from untaxed reserves |
— | — | — | — | ||||||||||||
| Income tax |
-216 | -163 | -516 | -426 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
1,971 | 1,480 | 19,665 | 6,901 | ||||||||||||
Condensed Parent Company statement of comprehensive income (loss)
| Q3 | Jan-Sep | |||||||||||||||
| SEK million |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| Net income |
1,971 | 1,480 | 19,665 | 6,901 | ||||||||||||
| Revaluation of borrowings due to change in credit risk |
-289 | -158 | 1,691 | -174 | ||||||||||||
| Cash flow hedge reserve |
||||||||||||||||
| Gains/losses arising during the period |
-648 | — | 3,703 | — | ||||||||||||
| Transfer to investments |
-3,677 | — | -3,677 | — | ||||||||||||
| Tax on items that will not be reclassified to profit or loss |
951 | 33 | -348 | 36 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other comprehensive income, net of tax |
-3,663 | -125 | 1,369 | -138 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total comprehensive income |
-1,692 | 1,355 | 21,034 | 6,763 | ||||||||||||
| 25 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Condensed Parent Company balance sheet
| SEK million |
Sep 30 2022 |
Dec 31 2021 |
||||||
| Assets |
||||||||
| Fixed assets |
||||||||
| Intangible assets |
5 | 8 | ||||||
| Tangible assets |
398 | 413 | ||||||
| Financial assets 1) |
151,657 | 120,605 | ||||||
|
|
|
|
|
|||||
| 152,060 | 121,026 | |||||||
| Current assets |
||||||||
| Receivables |
31,550 | 27,364 | ||||||
| Short-term investments |
6,312 | 12,722 | ||||||
| Cash and cash equivalents |
21,208 | 37,128 | ||||||
|
|
|
|
|
|||||
| 59,070 | 77,214 | |||||||
|
|
|
|
|
|||||
| Total assets |
211,130 | 198,240 | ||||||
| Stockholders ’equity, provisions and liabilities |
||||||||
| Equity |
||||||||
| Restricted equity |
48,164 | 48,164 | ||||||
| Non-restricted equity |
47,736 | 34,984 | ||||||
|
|
|
|
|
|||||
| 95,900 | 83,148 | |||||||
| Provisions |
225 | 293 | ||||||
| Non-current liabilities |
26,878 | 22,406 | ||||||
| Current liabilities |
88,127 | 92,393 | ||||||
|
|
|
|
|
|||||
| Total stockholders ’equity, provisions and liabilities |
211,130 | 198,240 | ||||||
| 1) Of which interest-bearing securities, non-current |
2,385 | 30,615 | ||||||
| 26 | Ericsson | Third quarter report 2022 | Financial statements |
Table of Contents
Accounting policies and Explanatory notes (unaudited)
The group
This condensed consolidated interim financial report for the quarterly reporting period ended September 30, 2022, has been prepared in accordance with Accounting Standard IAS 34 “Interim Financial Reporting”. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2021 and should be read in conjunction with that annual report. There are no amendments of IFRS during 2022 that are estimated to have a material impact on the result and financial position of the Company.
New segment structure implemented in Q3
As announced in May 2022, Ericsson starts to report its financials according to its new segment structure as of Q3 2022. The four new segments are:
Networks – including Radio Access Networks, Transport Solutions, Site Solutions, Network Rollout & Tuning and Customer Support.
Cloud Software and Services – including Core Network and Automation, Managed Services, Services Orchestration and Telecom BSS.
Enterprise – including Enterprise Wireless Solutions, Technologies & New Businesses, Global Communication Platform (Vonage – reported from Q3 2022) and Global Network Platform.
Other – including media businesses, Ericsson Ventures and one-offs.
To facilitate year-on-year comparisons, the financial reporting by segment has been restated for the first two quarters of 2022, each quarter of 2021 and full-year 2020.
Note 2 – Critical accounting estimates and judgements
Russia
In the first quarter 2022, Ericsson recorded a SEK 0.9 billion provision for impairment of assets and other exceptional costs related to its decision to wind down operations in Russia. The provision is recorded in Other operating expenses in Segment Other.
| 27 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Note 3 – Segment information *)
Net sales by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
48,147 | 45,983 | 40,712 | 51,097 | 40,591 | 39,876 | 36,274 | |||||||||||||||||||||
| Of which Products |
35,763 | 35,299 | 31,131 | 39,963 | 31,078 | 30,415 | 27,495 | |||||||||||||||||||||
| Of which Services |
12,384 | 10,684 | 9,581 | 11,134 | 9,513 | 9,461 | 8,779 | |||||||||||||||||||||
| Cloud Software and Services |
14,213 | 14,014 | 12,087 | 17,955 | 13,610 | 12,949 | 11,710 | |||||||||||||||||||||
| Of which Products |
4,752 | 4,675 | 3,631 | 7,133 | 4,590 | 3,977 | 3,567 | |||||||||||||||||||||
| Of which Services |
9,461 | 9,339 | 8,456 | 10,822 | 9,020 | 8,972 | 8,143 | |||||||||||||||||||||
| Enterprise |
5,161 | 1,875 | 1,762 | 1,802 | 1,558 | 1,600 | 1,276 | |||||||||||||||||||||
| Other |
519 | 593 | 500 | 478 | 504 | 516 | 518 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Sequential change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
5 | % | 13 | % | -20 | % | 26 | % | 2 | % | 10 | % | — | |||||||||||||||
| Of which Products |
1 | % | 13 | % | -22 | % | 29 | % | 2 | % | 11 | % | — | |||||||||||||||
| Of which Services |
16 | % | 12 | % | -14 | % | 17 | % | 1 | % | 8 | % | — | |||||||||||||||
| Cloud Software and Services |
1 | % | 16 | % | -33 | % | 32 | % | 5 | % | 11 | % | — | |||||||||||||||
| Of which Products |
2 | % | 29 | % | -49 | % | 55 | % | 15 | % | 11 | % | — | |||||||||||||||
| Of which Services |
1 | % | 10 | % | -22 | % | 20 | % | 1 | % | 10 | % | — | |||||||||||||||
| Enterprise |
175 | % | 6 | % | -2 | % | 16 | % | -3 | % | 25 | % | — | |||||||||||||||
| Other |
-12 | % | 19 | % | 5 | % | -5 | % | -2 | % | 0 | % | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
9 | % | 13 | % | -23 | % | 27 | % | 2 | % | 10 | % | -28 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year over year change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
19 | % | 15 | % | 12 | % | — | — | — | — | ||||||||||||||||||
| Of which Products |
15 | % | 16 | % | 13 | % | — | — | — | — | ||||||||||||||||||
| Of which Services |
30 | % | 13 | % | 9 | % | — | — | — | — | ||||||||||||||||||
| Cloud Software and Services |
4 | % | 8 | % | 3 | % | — | — | — | — | ||||||||||||||||||
| Of which Products |
4 | % | 18 | % | 2 | % | — | — | — | — | ||||||||||||||||||
| Of which Services |
5 | % | 4 | % | 4 | % | — | — | — | — | ||||||||||||||||||
| Enterprise |
231 | % | 17 | % | 38 | % | — | — | — | — | ||||||||||||||||||
| Other |
3 | % | 15 | % | -3 | % | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
21 | % | 14 | % | 11 | % | 3 | % | -2 | % | -1 | % | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
134,842 | 86,695 | 40,712 | 167,838 | 116,741 | 76,150 | 36,274 | |||||||||||||||||||||
| Of which Products |
102,193 | 66,430 | 31,131 | 128,951 | 88,988 | 57,910 | 27,495 | |||||||||||||||||||||
| Of which Services |
32,649 | 20,265 | 9,581 | 38,887 | 27,753 | 18,240 | 8,779 | |||||||||||||||||||||
| Cloud Software and Services |
40,314 | 26,101 | 12,087 | 56,224 | 38,269 | 24,659 | 11,710 | |||||||||||||||||||||
| Of which Products |
13,058 | 8,306 | 3,631 | 19,267 | 12,134 | 7,544 | 3,567 | |||||||||||||||||||||
| Of which Services |
27,256 | 17,795 | 8,456 | 36,957 | 26,135 | 17,115 | 8,143 | |||||||||||||||||||||
| Enterprise |
8,798 | 3,637 | 1,762 | 6,236 | 4,434 | 2,876 | 1,276 | |||||||||||||||||||||
| Other |
1,612 | 1,093 | 500 | 2,016 | 1,538 | 1,034 | 518 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year over year change, percent |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
16 | % | 14 | % | 12 | % | 1 | % | — | — | — | |||||||||||||||||
| Of which Products |
15 | % | 15 | % | 13 | % | 5 | % | — | — | — | |||||||||||||||||
| Of which Services |
18 | % | 11 | % | 9 | % | -11 | % | — | — | — | |||||||||||||||||
| Cloud Software and Services |
5 | % | 6 | % | 3 | % | -6 | % | — | — | — | |||||||||||||||||
| Of which Products |
8 | % | 10 | % | 2 | % | -5 | % | — | — | — | |||||||||||||||||
| Of which Services |
4 | % | 4 | % | 4 | % | -6 | % | — | — | — | |||||||||||||||||
| Enterprise |
98 | % | 26 | % | 38 | % | 30 | % | — | — | — | |||||||||||||||||
| Other |
5 | % | 6 | % | -3 | % | 0 | % | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
15 | % | 12 | % | 11 | % | 0 | % | -1 | % | -1 | % | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| *) | Net sales by segment has been restated for the first two quarters of 2022, each quarter 2021 and for the full year 2020. Comparisons against isolated quarters 2020 are not available by segment. |
| 28 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Gross income by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
21,366 | 20,735 | 18,211 | 23,643 | 19,401 | 19,111 | 16,714 | |||||||||||||||||||||
| Cloud Software and Services |
4,516 | 4,692 | 4,234 | 6,362 | 4,575 | 3,959 | 3,933 | |||||||||||||||||||||
| Enterprise |
2,398 | 843 | 843 | 832 | 760 | 765 | 534 | |||||||||||||||||||||
| Other |
-145 | 32 | 1 | -16 | 40 | 22 | 114 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
28,135 | 26,302 | 23,289 | 30,821 | 24,776 | 23,857 | 21,295 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
60,312 | 38,946 | 18,211 | 78,869 | 55,226 | 35,825 | 16,714 | |||||||||||||||||||||
| Cloud Software and Services |
13,442 | 8,926 | 4,234 | 18,829 | 12,467 | 7,892 | 3,933 | |||||||||||||||||||||
| Enterprise |
4,084 | 1,686 | 843 | 2,891 | 2,059 | 1,299 | 534 | |||||||||||||||||||||
| Other |
-112 | 33 | 1 | 160 | 176 | 136 | 114 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
77,726 | 49,591 | 23,289 | 100,749 | 69,928 | 45,152 | 21,295 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
EBIT (loss) by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
9,597 | 8,861 | 7,601 | 11,757 | 9,624 | 8,645 | 7,240 | |||||||||||||||||||||
| Cloud Software and Services |
-792 | -733 | -837 | 590 | -449 | -1,158 | -1,217 | |||||||||||||||||||||
| Enterprise |
-1,670 | -839 | -781 | -770 | -819 | -649 | -727 | |||||||||||||||||||||
| Other |
-20 | 19 | -1,239 | 284 | 479 | -1,015 | -35 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
7,115 | 7,308 | 4,744 | 11,861 | 8,835 | 5,823 | 5,261 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
26,059 | 16,462 | 7,601 | 37,266 | 25,509 | 15,885 | 7,240 | |||||||||||||||||||||
| Cloud Software and Services |
-2,362 | -1,570 | -837 | -2,234 | -2,824 | -2,375 | -1,217 | |||||||||||||||||||||
| Enterprise |
-3,290 | -1,620 | -781 | -2,965 | -2,195 | -1,376 | -727 | |||||||||||||||||||||
| Other |
-1,240 | -1,220 | -1,239 | -287 | -571 | -1,050 | -35 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
19,167 | 12,052 | 4,744 | 31,780 | 19,919 | 11,084 | 5,261 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 29 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Net sales by market area by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| South East Asia, Oceania and India |
7,914 | 7,962 | 5,836 | 8,604 | 6,450 | 7,099 | 6,676 | |||||||||||||||||||||
| North East Asia |
5,597 | 7,319 | 5,421 | 9,816 | 5,691 | 7,123 | 6,491 | |||||||||||||||||||||
| North America |
26,517 | 22,849 | 20,727 | 22,264 | 20,161 | 17,950 | 17,081 | |||||||||||||||||||||
| Europe and Latin America ¹) 2) |
15,298 | 15,325 | 15,290 | 19,236 | 14,378 | 14,011 | 12,647 | |||||||||||||||||||||
| Middle East and Africa |
5,668 | 5,223 | 4,301 | 6,948 | 4,985 | 4,459 | 4,393 | |||||||||||||||||||||
| Other ¹) 2) |
7,046 | 3,787 | 3,486 | 4,464 | 4,598 | 4,299 | 2,490 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 1) Of which in Sweden |
833 | 950 | 678 | 1,078 | 478 | 404 | 389 | |||||||||||||||||||||
| ²) Of which in EU |
8,242 | 8,511 | 8,611 | 10,181 | 7,069 | 7,256 | 6,801 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Sequential change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| South East Asia, Oceania and India |
-1 | % | 36 | % | -32 | % | 33 | % | -9 | % | 6 | % | -32 | % | ||||||||||||||
| North East Asia |
-24 | % | 35 | % | -45 | % | 72 | % | -20 | % | 10 | % | -49 | % | ||||||||||||||
| North America |
16 | % | 10 | % | -7 | % | 10 | % | 12 | % | 5 | % | -11 | % | ||||||||||||||
| Europe and Latin America ¹) 2) |
0 | % | 0 | % | -21 | % | 34 | % | 3 | % | 11 | % | -26 | % | ||||||||||||||
| Middle East and Africa |
9 | % | 21 | % | -38 | % | 39 | % | 12 | % | 2 | % | -33 | % | ||||||||||||||
| Other ¹) 2) |
86 | % | 9 | % | -22 | % | -3 | % | 7 | % | 73 | % | -42 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
9 | % | 13 | % | -23 | % | 27 | % | 2 | % | 10 | % | -28 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 1) Of which in Sweden |
-12 | % | 40 | % | -37 | % | 126 | % | 18 | % | 4 | % | 7 | % | ||||||||||||||
| ²) Of which in EU |
-3 | % | -1 | % | -15 | % | 44 | % | -3 | % | 7 | % | -23 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year over year change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| South East Asia, Oceania and India |
23 | % | 12 | % | -13 | % | -12 | % | -17 | % | 8 | % | 13 | % | ||||||||||||||
| North East Asia |
-2 | % | 3 | % | -16 | % | -23 | % | -35 | % | -9 | % | 66 | % | ||||||||||||||
| North America |
32 | % | 27 | % | 21 | % | 17 | % | 10 | % | -2 | % | -5 | % | ||||||||||||||
| Europe and Latin America ¹) 2) |
6 | % | 9 | % | 21 | % | 12 | % | 8 | % | 7 | % | 3 | % | ||||||||||||||
| Middle East and Africa |
14 | % | 17 | % | -2 | % | 7 | % | -10 | % | -18 | % | -25 | % | ||||||||||||||
| Other ¹) 2) |
53 | % | -12 | % | 40 | % | 4 | % | 26 | % | 0 | % | -37 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
21 | % | 14 | % | 11 | % | 3 | % | -2 | % | -1 | % | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| ¹) Of which in Sweden |
74 | % | 135 | % | 74 | % | 197 | % | 92 | % | 42 | % | 71 | % | ||||||||||||||
| ²) Of which in EU |
17 | % | 17 | % | 27 | % | 15 | % | 0 | % | 0 | % | 9 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| South East Asia, Oceania and India |
21,712 | 13,798 | 5,836 | 28,829 | 20,225 | 13,775 | 6,676 | |||||||||||||||||||||
| North East Asia |
18,337 | 12,740 | 5,421 | 29,121 | 19,305 | 13,614 | 6,491 | |||||||||||||||||||||
| North America |
70,093 | 43,576 | 20,727 | 77,456 | 55,192 | 35,031 | 17,081 | |||||||||||||||||||||
| Europe and Latin America ¹) 2) |
45,913 | 30,615 | 15,290 | 60,272 | 41,036 | 26,658 | 12,647 | |||||||||||||||||||||
| Middle East and Africa |
15,192 | 9,524 | 4,301 | 20,785 | 13,837 | 8,852 | 4,393 | |||||||||||||||||||||
| Other ¹) 2) |
14,319 | 7,273 | 3,486 | 15,851 | 11,387 | 6,789 | 2,490 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| ¹) Of which in Sweden |
2,461 | 1,628 | 678 | 2,349 | 1,271 | 793 | 389 | |||||||||||||||||||||
| ²) Of which in EU |
25,364 | 17,122 | 8,611 | 31,307 | 21,126 | 14,057 | 6,801 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, year over year change, percent |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| South East Asia, Oceania and India |
7 | % | 0 | % | -13 | % | -4 | % | 0 | % | 10 | % | 13 | % | ||||||||||||||
| North East Asia |
-5 | % | -6 | % | -16 | % | -13 | % | -6 | % | 16 | % | 66 | % | ||||||||||||||
| North America |
27 | % | 24 | % | 21 | % | 5 | % | 1 | % | -4 | % | -5 | % | ||||||||||||||
| Europe and Latin America ¹) 2) |
12 | % | 15 | % | 21 | % | 8 | % | 6 | % | 5 | % | 3 | % | ||||||||||||||
| Middle East and Africa |
10 | % | 8 | % | -2 | % | -11 | % | -18 | % | -21 | % | -25 | % | ||||||||||||||
| Other ¹) 2) |
26 | % | 7 | % | 40 | % | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
15 | % | 12 | % | 11 | % | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| ¹) Of which in Sweden |
94 | % | 105 | % | 74 | % | 109 | % | 67 | % | 55 | % | 71 | % | ||||||||||||||
| ²) Of which in EU |
20 | % | 22 | % | 27 | % | 6 | % | 2 | % | 4 | % | 9 | % | ||||||||||||||
| 30 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Net sales by market area by segment
| Q3 2022 | Jan-Sep 2022 | |||||||||||||||||||||||||||||||||||||||
| SEK million |
Networks | Cloud Software and Services |
Enterprise | Other | Total | Networks | Cloud Software and Services |
Enterprise | Other | Total | ||||||||||||||||||||||||||||||
| South East Asia, Oceania and India |
5,561 | 2,338 | 15 | 0 | 7,914 | 15,194 | 6,486 | 32 | 0 | 21,712 | ||||||||||||||||||||||||||||||
| North East Asia |
4,748 | 797 | 52 | 0 | 5,597 | 15,499 | 2,677 | 161 | 0 | 18,337 | ||||||||||||||||||||||||||||||
| North America |
23,157 | 3,333 | 27 | 0 | 26,517 | 61,237 | 8,789 | 67 | 0 | 70,093 | ||||||||||||||||||||||||||||||
| Europe and Latin America |
10,194 | 4,979 | 125 | 0 | 15,298 | 30,969 | 14,600 | 344 | 0 | 45,913 | ||||||||||||||||||||||||||||||
| Middle East and Africa |
3,083 | 2,485 | 100 | 0 | 5,668 | 7,982 | 6,962 | 248 | 0 | 15,192 | ||||||||||||||||||||||||||||||
| Other ¹) |
1,404 | 281 | 4,842 | 519 | 7,046 | 3,961 | 800 | 7,946 | 1,612 | 14,319 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
48,147 | 14,213 | 5,161 | 519 | 68,040 | 134,842 | 40,314 | 8,798 | 1,612 | 185,566 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Share of total |
71 | % | 21 | % | 7 | % | 1 | % | 100 | % | 72 | % | 22 | % | 5 | % | 1 | % | 100 | % | ||||||||||||||||||||
| 1) | Includes primarily IPR licensing revenues and a major part of segment Enterprise. |
| Q3 2022 | ||||||||||||||||||||
| Sequential change, percent |
Networks | Cloud Software and Services |
Enterprise | Other | Total | |||||||||||||||
| South East Asia, Oceania and India |
-3 | % | 5 | % | 36 | % | — | -1 | % | |||||||||||
| North East Asia |
-24 | % | -25 | % | -2 | % | — | -24 | % | |||||||||||
| North America |
17 | % | 13 | % | 59 | % | — | 16 | % | |||||||||||
| Europe and Latin America |
0 | % | -2 | % | 13 | % | — | 0 | % | |||||||||||
| Middle East and Africa |
14 | % | 2 | % | 37 | % | — | 9 | % | |||||||||||
| Other |
7 | % | 5 | % | 201 | % | -12 | % | 86 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
5 | % | 1 | % | 175 | % | -12 | % | 9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Q3 2022 | Jan-Sep 2022 | |||||||||||||||||||||||||||||||||||||||
| Year over year change, percent |
Networks | Cloud Software and Services |
Enterprise | Other | Total | Networks | Cloud Software and Services |
Enterprise | Other | Total | ||||||||||||||||||||||||||||||
| South East Asia, Oceania and India |
27 | % | 13 | % | 150 | % | — | 23 | % | 6 | % | 11 | % | 19 | % | — | 7 | % | ||||||||||||||||||||||
| North East Asia |
0 | % | -11 | % | 8 | % | — | -2 | % | -5 | % | -4 | % | -6 | % | — | -5 | % | ||||||||||||||||||||||
| North America |
34 | % | 19 | % | 80 | % | — | 32 | % | 28 | % | 18 | % | 10 | % | — | 27 | % | ||||||||||||||||||||||
| Europe and Latin America |
9 | % | 2 | % | 30 | % | — | 6 | % | 19 | % | 0 | % | 14 | % | — | 12 | % | ||||||||||||||||||||||
| Middle East and Africa |
24 | % | 2 | % | 61 | % | — | 14 | % | 11 | % | 8 | % | 40 | % | — | 10 | % | ||||||||||||||||||||||
| Other |
-38 | % | -43 | % | 264 | % | 3 | % | 53 | % | -22 | % | -26 | % | 115 | % | 5 | % | 26 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Total |
19 | % | 4 | % | 231 | % | 3 | % | 21 | % | 16 | % | 5 | % | 98 | % | 5 | % | 15 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|||||||||||||||||||||
| 31 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Top 5 countries in sales
| Q3 | Jan-Sep | |||||||||||||||
| Country, percentage of net sales ¹) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
| United States |
44 | % | 37 | % | 40 | % | 35 | % | ||||||||
| China |
3 | % | 5 | % | 4 | % | 4 | % | ||||||||
| United Kingdom |
3 | % | 4 | % | 4 | % | 3 | % | ||||||||
| Japan |
3 | % | 4 | % | 3 | % | 6 | % | ||||||||
| India |
4 | % | 3 | % | 3 | % | 3 | % | ||||||||
| 1) | Based on Jan-Sep 2022. Includes IPR licensing revenues. |
IPR licensing revenues by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
1,282 | 1,186 | 1,142 | 1,949 | 2,146 | 1,904 | 671 | |||||||||||||||||||||
| Cloud Software and Services |
281 | 261 | 250 | 428 | 471 | 418 | 147 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
1,563 | 1,447 | 1,392 | 2,377 | 2,617 | 2,322 | 818 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
3,610 | 2,328 | 1,142 | 6,670 | 4,721 | 2,575 | 671 | |||||||||||||||||||||
| Cloud Software and Services |
792 | 511 | 250 | 1,464 | 1,036 | 565 | 147 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
4,402 | 2,839 | 1,392 | 8,134 | 5,757 | 3,140 | 818 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Provisions
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Opening balance |
9,668 | 10,197 | 9,504 | 8,813 | 9,232 | 11,045 | 10,466 | |||||||||||||||||||||
| Additions |
351 | 547 | 1,583 | 1,738 | 316 | 616 | 1,753 | |||||||||||||||||||||
| Utilization |
-533 | -893 | -1,173 | -643 | -408 | -2,179 | -979 | |||||||||||||||||||||
| Of which restructuring |
-70 | -51 | -67 | -193 | -95 | -161 | -336 | |||||||||||||||||||||
| Reversal of excess amounts |
-236 | -316 | -452 | -603 | -66 | -170 | -339 | |||||||||||||||||||||
| Reclassification, translation difference and other ¹) |
1,312 | 133 | 735 | 199 | -261 | -80 | 144 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Closing balance |
10,562 | 9,668 | 10,197 | 9,504 | 8,813 | 9,232 | 11,045 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Of which restructuring |
595 | 579 | 604 | 637 | 732 | 807 | 950 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Opening balance |
9,504 | 9,504 | 9,504 | 10,466 | 10,466 | 10,466 | 10,466 | |||||||||||||||||||||
| Additions |
2,481 | 2,130 | 1,583 | 4,423 | 2,685 | 2,369 | 1,753 | |||||||||||||||||||||
| Utilization |
-2,599 | -2,066 | -1,173 | -4,209 | -3,566 | -3,158 | -979 | |||||||||||||||||||||
| Of which restructuring |
-188 | -118 | -67 | -785 | -592 | -497 | -336 | |||||||||||||||||||||
| Reversal of excess amounts |
-1,004 | -768 | -452 | -1,178 | -575 | -509 | -339 | |||||||||||||||||||||
| Reclassification, translation difference and other ¹) |
2,180 | 868 | 735 | 2 | -197 | 64 | 144 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Closing balance |
10,562 | 9,668 | 10,197 | 9,504 | 8,813 | 9,232 | 11,045 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Of which restructuring |
595 | 579 | 604 | 637 | 732 | 807 | 950 | |||||||||||||||||||||
| 1) | Includes provisions from acquired business, for more information see note 10 “Business combinations”. |
| 32 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Note 5 – Financial risk management
There have been no changes to the classification of financial instruments or fair value hierarchy categorization from that presented in the latest Annual Report. Where Level 2 and Level 3 fair value hierarchies apply, the inputs and valuation methods used remained unchanged. The book values and fair values of financial instruments are as follows:
Financial instruments
| SEK billion |
Sep 30 2022 |
Dec 31 2021 |
||||||||||||||||||||||||||||||
| Fair value hierarchy level | Fair value hierarchy level | |||||||||||||||||||||||||||||||
| Assets at fair value through profit or loss |
Carrying value |
Level 1 | Level 2 | Level 3 | Carrying value |
Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||
| Customer finance ¹) |
4.7 | — | — | 4.7 | 3.3 | — | — | 3.3 | ||||||||||||||||||||||||
| Interest-bearing securities |
8.4 | 8.4 | — | — | 43.3 | 43.3 | — | — | ||||||||||||||||||||||||
| Cash equivalents ²) |
11.3 | — | 11.3 | — | 26.0 | — | 26.0 | — | ||||||||||||||||||||||||
| Other financial assets |
2.1 | 0.1 | — | 2.0 | 2.3 | 0.6 | — | 1.7 | ||||||||||||||||||||||||
| Other current assets |
0.5 | — | 0.5 | — | 0.3 | — | 0.3 | — | ||||||||||||||||||||||||
| Assets at fair value through OCI |
||||||||||||||||||||||||||||||||
| Trade receivables |
45.3 | — | — | 45.3 | 45.4 | — | — | 45.4 | ||||||||||||||||||||||||
| Assets at amortized costs |
||||||||||||||||||||||||||||||||
| Interest-bearing securities |
0.7 | — | — | — | 0.3 | — | — | — | ||||||||||||||||||||||||
| Cash equivalents ²) |
3.3 | — | — | — | 4.0 | — | — | — | ||||||||||||||||||||||||
| Other financial assets |
0.7 | — | — | — | 0.5 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total financial assets |
77.0 | 125.4 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Financial liabilities at designated FVTPL |
||||||||||||||||||||||||||||||||
| Parent company borrowings |
-29.7 | -16.0 | -13.7 | — | -31.4 | -19.5 | -11.9 | — | ||||||||||||||||||||||||
| Financial liabilities at FVTPL |
||||||||||||||||||||||||||||||||
| Other current liabilities |
-6.0 | — | -6.0 | — | -0.8 | — | -0.8 | — | ||||||||||||||||||||||||
| Liabilities at amortized cost |
||||||||||||||||||||||||||||||||
| Trade payables |
-40.9 | — | — | — | -35.7 | — | — | — | ||||||||||||||||||||||||
| Borrowings |
-2.7 | — | — | — | -0.4 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total financial liabilities |
-79.3 | -68.3 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 1) | Year to date movements of customer finance receivables are as follows: additions of SEK 25.9 billion, disposals and repayments of SEK 25.0 billion and revaluation gain of SEK 0.6 billion. |
| 2) | Total Cash and cash equivalent is SEK 36.7 (54.1) billion, of which SEK 14.6 (30.0) billion relating to Cash equivalents are presented in the table above. |
Exchange rates used in the consolidation
| Jan-Sep | Jan-Dec | |||||||||||
| 2022 | 2021 | 2021 | ||||||||||
| SEK/EUR -closing rate |
10.91 | 10.18 | 10.24 | |||||||||
| SEK/USD -closing rate |
11.18 | 8.80 | 9.05 | |||||||||
| 33 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Information on investments
Investments in assets subject to depreciation, amortization, impairment and write-downs
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Additions |
||||||||||||||||||||||||||||
| Property, plant and equipment |
1,104 | 1,053 | 818 | 701 | 1,040 | 1,007 | 915 | |||||||||||||||||||||
| Capitalized development expenses |
414 | 301 | 288 | 302 | 190 | 266 | 204 | |||||||||||||||||||||
| IPR, brands and other intangible assets |
2 | 2 | 2 | 123 | 3 | 1 | 4 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
1,520 | 1,356 | 1,108 | 1,126 | 1,233 | 1,274 | 1,123 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Depreciation, amortization and impairment losses |
||||||||||||||||||||||||||||
| Property, plant and equipment |
1,100 | 1,074 | 964 | 1,134 | 954 | 910 | 874 | |||||||||||||||||||||
| Capitalized development expenses |
387 | 403 | 401 | 396 | 394 | 329 | 224 | |||||||||||||||||||||
| Goodwill, IPR, brands and other intangible assets |
499 | 159 | 198 | 435 | 464 | 294 | 283 | |||||||||||||||||||||
| Right-of-use assets |
652 | 588 | 583 | 587 | 572 | 564 | 554 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
2,638 | 2,224 | 2,146 | 2,552 | 2,384 | 2,097 | 1,935 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Additions |
||||||||||||||||||||||||||||
| Property, plant and equipment |
2,975 | 1,871 | 818 | 3,663 | 2,962 | 1,922 | 915 | |||||||||||||||||||||
| Capitalized development expenses |
1,003 | 589 | 288 | 962 | 660 | 470 | 204 | |||||||||||||||||||||
| IPR, brands and other intangible assets |
6 | 4 | 2 | 131 | 8 | 5 | 4 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3,984 | 2,464 | 1,108 | 4,756 | 3,630 | 2,397 | 1,123 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Depreciation, amortization and impairment losses |
||||||||||||||||||||||||||||
| Property, plant and equipment |
3,138 | 2,038 | 964 | 3,872 | 2,738 | 1,784 | 874 | |||||||||||||||||||||
| Capitalized development expenses |
1,191 | 804 | 401 | 1,343 | 947 | 553 | 224 | |||||||||||||||||||||
| Goodwill, IPR, brands and other intangible assets |
856 | 357 | 198 | 1,477 | 1,041 | 577 | 283 | |||||||||||||||||||||
| Right-of-use assets |
1,823 | 1,171 | 583 | 2,277 | 1,690 | 1,118 | 554 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
7,008 | 4,370 | 2,146 | 8,969 | 6,416 | 4,032 | 1,935 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Note 7 – Contingent liabilities and Assets pledged as collateral
Contingent liabilities and Assets pledged as collateral
| SEK million |
Sep 30 2022 |
Dec 31 2021 |
||||||
| Contingent liabilities |
3,452 | 1,614 | ||||||
| Assets pledged as collateral |
7,238 | 6,873 | ||||||
In December 2019, Ericsson entered into a Deferred Prosecution Agreement (DPA) with the United States Department of Justice (DOJ). In October 2021, Ericsson received correspondence from the DOJ stating its determination that the Company had breached its obligations under its DPA by failing to provide required information to the DOJ. In March 2022, the DOJ informed Ericsson that, before entering the DPA, the Company provided insufficient information to the DOJ about the Company’s 2019 internal investigation into conduct in Iraq. The DOJ also determined that the Company breached the DPA by failing to inform the DOJ about the investigation post-DPA. The Company is in communication with the DOJ regarding the facts and circumstances of the breach determinations and is committed to co-operating with the DOJ to resolve the matters. While the length of the process cannot be determined, the resolution of these matters could result in a range of actions by DOJ , including criminal prosecution, civil or criminal penalties and additional monetary fines or penalties, the magnitude of which cannot at this time be reliably estimated. Accordingly, no provisions have been recorded for such potential exposure.
On March 3, 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of investors in Ericsson securities in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9, 2022, which added a former Ericsson officer as a defendant. The amended complaint alleges violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and disclosure policies and obligations and the conduct of its business in Iraq.
| 34 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Number of shares and earnings per share
| Q3 | Jan-Sep | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Number of shares, end of period (million) |
3,334 | 3,334 | 3,334 | 3,334 | ||||||||||||
| Of which class A-shares (million) |
262 | 262 | 262 | 262 | ||||||||||||
| Of which class B-shares (million) |
3,072 | 3,072 | 3,072 | 3,072 | ||||||||||||
| Number of treasury shares, end of period (million) |
4 | 4 | 4 | 4 | ||||||||||||
| Number of shares outstanding, basic, end of period (million) |
3,330 | 3,330 | 3,330 | 3,330 | ||||||||||||
| Numbers of shares outstanding, diluted, end of period (million) |
3,334 | 3,333 | 3,334 | 3,333 | ||||||||||||
| Average number of treasury shares (million) |
4 | 4 | 4 | 5 | ||||||||||||
| Average number of shares outstanding, basic (million) |
3,330 | 3,330 | 3,330 | 3,329 | ||||||||||||
| Average number of shares outstanding, diluted (million) ¹) |
3,334 | 3,333 | 3,334 | 3,332 | ||||||||||||
| Earnings per share, basic (SEK) ²) |
1.56 | 1.73 | 3.80 | 3.79 | ||||||||||||
| Earnings per share, diluted (SEK) ¹) |
1.56 | 1.73 | 3.80 | 3.79 | ||||||||||||
| 1) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
| 2) | Based on net income attributable to owners of the Parent Company. |
The proposed dividend of SEK 2.50 per share was approved by the AGM on March 29, 2022. The dividend will be paid in two equal installments; SEK 1.25 per share was paid out in Q2 2022 and SEK 1.25 per share was paid out in October 2022.
Number of employees
| 2022 | 2021 | |||||||||||||||||||||||||||
| End of period |
Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | |||||||||||||||||||||
| South East Asia, Oceania and India |
26,844 | 26,127 | 26,255 | 26,369 | 26,363 | 26,325 | 26,123 | |||||||||||||||||||||
| North East Asia |
13,219 | 13,077 | 12,999 | 13,091 | 14,111 | 14,043 | 14,033 | |||||||||||||||||||||
| North America |
11,706 | 10,501 | 10,327 | 10,344 | 10,371 | 10,256 | 10,161 | |||||||||||||||||||||
| Europe and Latin America ¹) |
48,144 | 47,240 | 46,994 | 47,064 | 46,903 | 46,616 | 46,482 | |||||||||||||||||||||
| Middle Eastand Africa |
4,577 | 4,514 | 4,492 | 4,454 | 4,455 | 4,384 | 4,314 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
104,490 | 101,459 | 101,067 | 101,322 | 102,203 | 101,624 | 101,113 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| ¹) Of which in Sweden |
14,444 | 14,564 | 14,195 | 14,183 | 13,908 | 13,626 | 13,379 | |||||||||||||||||||||
| 35 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Note 10 – Business combinations
Acquisition Vonage - Preliminary PPA
| SEK billion |
2022 | |||
| Purchase price paid on acquisition ¹) |
51.3 | |||
| Tax effect on hedge release |
0.8 | |||
| Deferred consideration |
2.0 | |||
|
|
|
|||
| Total consideration |
54.0 | |||
|
|
|
|||
| Net assets acquired |
||||
| Intangible assets |
21.9 | |||
| Property, plant and equipment |
0.2 | |||
| Right-of-use assets |
0.3 | |||
| Trade receivables |
1.1 | |||
| Cash and cash equivalents |
0.5 | |||
| Other assets |
3.8 | |||
| Provisions |
-1.1 | |||
| Deferred tax liabilities |
-5.8 | |||
| Borrowings |
-6.5 | |||
| Lease liabilities |
-0.4 | |||
| Other liabilities |
-3.7 | |||
|
|
|
|||
| Total identifiable net assets |
10.3 | |||
|
|
|
|||
| Goodwill |
43.7 | |||
|
|
|
|||
| Total |
54.0 | |||
|
|
|
|||
| Acquisition-related costs ²) |
0.4 | |||
| 1) | Purchase price to acquire shares outstanding net of hedge release of SEK 3.7 billion. |
| 2) | Year to date acquisition-related costs are included in Selling and administrative expenses in the consolidated income statement. |
On July 21, 2022, the Company acquired, in an all cash transaction, all of the shares in Vonage Holdings Corp – a US-based global provider of cloud-based communications. This acquisition provides Ericsson with an opportunity to access a complementary, substantial and high growth segment. With increasing investments in 4G and 5G - and a flourishing ecosystem of new applications and use cases leveraging the power of modern networks - demand from enterprises for programmable networks has been accelerating. CPaaS technologies democratize network access by offering API enabled communications services. The CPaaS market is expected to reach USD 22 billion by 2025, growing at 30% annually3). In addition, Ericsson’s global leadership in 5G technology is expected to provide access to the developing space for open network APIs, which is expected to reach at least USD 8 billion3) by the end of the decade with a strong growth profile. CSP (Cloud Solution Providers) customers will also benefit from monetizing their network investments, optimizing the user experience and stimulating additional growth opportunities with new and advanced global network APIs and access to Vonage’s unified communications and contact center solutions. Goodwill in this transaction represents future customers, technology, and synergies and is not expected to be deductible for tax purposes. The intangible assets mainly relate to customer relationships. The fair values of the assets acquired and liabilities assumed, at the acquisition date and as presented in Q3 2022, are preliminary pending the receipt of the final valuations for those assets and liabilities, see table above.
Vonage’s net sales and EBIT (loss) for the period, from acquisition date, amounts to SEK 2.9 billion and SEK -0.8 billion respectively.
| 3) | Source: “IDC Worldwide Communications Platform as a Service Forecast, 2021-2025” and “IDC - Network-as-a-Platform Market Opportunity”, September 2021 |
| 36 | Ericsson | Third quarter report 2022 | Accounting policies and Explanatory notes |
Table of Contents
Alternative performance measures (unaudited)
In this section, the Company presents its Alternative Performance Measures (APMs), which are not recognized measures of financial performance under IFRS. The presentation of APMs has limitations as analytical tools and should not be considered in isolation or as a substitute for related financial measures prepared in accordance with IFRS.
APMs are presented to enhance an investor’s evaluation of ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of results between periods.
Management uses these APMs to, among other things, evaluate ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of certain performance-based compensation. APM’s should not be viewed as substitutes for income statement or cash flow items computed in accordance with IFRS.
This section also includes a reconciliation of the APMs to the most directly reconcilable line items in the financial statements. For more information about non-IFRS key operating measures, see Ericsson Annual Report 2021.
Sales growth adjusted for comparable units and currency
Sales growth adjusted for the impact of acquisitions and divestments as well as the effects of foreign currency fluctuations. Also named organic sales.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, year over year change |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Reported net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| Acquired business |
-2,925 | — | — | -124 | -402 | -450 | -225 | |||||||||||||||||||||
| Net FX impact |
-7,437 | -5,034 | -4,008 | -385 | 1,196 | 5,455 | 5,341 | |||||||||||||||||||||
| Comparable net sales, excluding FX impact |
57,678 | 57,431 | 51,053 | 70,823 | 57,057 | 59,946 | 54,894 | |||||||||||||||||||||
| Comparable quarter net sales adj. for acq/div business |
56,263 | 54,941 | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||||||||
| Sales grow the adjusted for comparable units and currency (%) |
3 | % | 5 | % | 3 | % | 2 | % | -1 | % | 8 | % | 10 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, year over year change |
Jan-Sep |
Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Reported net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| Acquired business |
-2,925 | — | — | -1,201 | -1,077 | -675 | -225 | |||||||||||||||||||||
| Net FX impact |
-16,479 | -9,042 | -4,008 | 11,607 | 11,992 | 10,796 | 5,341 | |||||||||||||||||||||
| Comparable net sales, excluding FX impact |
166,162 | 108,484 | 51,053 | 242,720 | 171,897 | 114,840 | 54,894 | |||||||||||||||||||||
| Comparable quarter net sales adj. for acq/div business |
160,982 | 104,719 | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||||||||
| Sales growth adjusted for comparable units and currency (%) |
3 | % | 4 | % | 3 | % | 4 | % | 6 | % | 9 | % | 10 | % | ||||||||||||||
| 37 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Items excluding restructuring charges
Gross income, operating expenses, and EBIT are presented excluding restructuring charges and, for certain measures, as a percentage of net sales.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Gross income |
28,135 | 26,302 | 23,289 | 30,821 | 24,776 | 23,857 | 21,295 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| Gross margin (%) |
41.4 | % | 42.1 | % | 42.3 | % | 43.2 | % | 44.0 | % | 43.4 | % | 42.8 | % | ||||||||||||||
| Gross income |
28,135 | 26,302 | 23,289 | 30,821 | 24,776 | 23,857 | 21,295 | |||||||||||||||||||||
| Restructuring charges included in cost of sales |
55 | 42 | 2 | 199 | 6 | 6 | 62 | |||||||||||||||||||||
| Gross income excluding restructuring charges |
28,190 | 26,344 | 23,291 | 31,020 | 24,782 | 23,863 | 21,357 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| Gross margin excluding restructuring charges (%) |
41.4 | % | 42.2 | % | 42.3 | % | 43.5 | % | 44.0 | % | 43.4 | % | 42.9 | % | ||||||||||||||
| Operating expenses |
-21,283 | -19,365 | -17,473 | -19,384 | -16,359 | -17,352 | -15,976 | |||||||||||||||||||||
| Restructuring charges included in R&D expenses |
7 | 4 | 33 | 140 | -2 | -1 | — | |||||||||||||||||||||
| Restructuring charges included in selling and administrative expenses |
19 | 3 | 6 | 124 | 1 | -1 | 15 | |||||||||||||||||||||
| Operating expenses excluding restructuring charges |
-21,257 | -19,358 | -17,434 | -19,120 | -16,360 | -17,354 | -15,961 | |||||||||||||||||||||
| EBIT |
7,115 | 7,308 | 4,744 | 11,861 | 8,835 | 5,823 | 5,261 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| EBIT margin (%) |
10.5 | % | 11.7 | % | 8.6 | % | 16.6 | % | 15.7 | % | 10.6 | % | 10.6 | % | ||||||||||||||
| EBIT |
7,115 | 7,308 | 4,744 | 11,861 | 8,835 | 5,823 | 5,261 | |||||||||||||||||||||
| Total restructuring charges |
81 | 49 | 41 | 463 | 5 | 4 | 77 | |||||||||||||||||||||
| EBIT excluding restructuring charges |
7,196 | 7,357 | 4,785 | 12,324 | 8,840 | 5,827 | 5,338 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| EBIT margin excluding restructuring charges (%) |
10.6 | % | 11.8 | % | 8.7 | % | 17.3 | % | 15.7 | % | 10.6 | % | 10.7 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Gross income |
77,726 | 49,591 | 23,289 | 100,749 | 69,928 | 45,152 | 21,295 | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| Gross margin (%) |
41.9 | % | 42.2 | % | 42.3 | % | 43.4 | % | 43.4 | % | 43.1 | % | 42.8 | % | ||||||||||||||
| Gross income |
77,726 | 49,591 | 23,289 | 100,749 | 69,928 | 45,152 | 21,295 | |||||||||||||||||||||
| Restructuring charges included in cost of sales |
99 | 44 | 2 | 273 | 74 | 68 | 62 | |||||||||||||||||||||
| Gross income excluding restructuring charges |
77,825 | 49,635 | 23,291 | 101,022 | 70,002 | 45,220 | 21,357 | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| Gross margin excluding restructuring charges (%) |
41.9 | % | 42.2 | % | 42.3 | % | 43.5 | % | 43.5 | % | 43.2 | % | 42.9 | % | ||||||||||||||
| Operating expenses |
-58,121 | -36,838 | -17,473 | -69,071 | -49,687 | -33,328 | -15,976 | |||||||||||||||||||||
| Restructuring charges included in R&D expenses |
44 | 37 | 33 | 137 | -3 | -1 | — | |||||||||||||||||||||
| Restructuring charges included in selling and administrative expenses |
28 | 9 | 6 | 139 | 15 | 14 | 15 | |||||||||||||||||||||
| Operating expenses excluding restructuring charges |
-58,049 | -36,792 | -17,434 | -68,795 | -49,675 | -33,315 | -15,961 | |||||||||||||||||||||
| EBIT |
19,167 | 12,052 | 4,744 | 31,780 | 19,919 | 11,084 | 5,261 | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| EBIT margin (%) |
10.3 | % | 10.3 | % | 8.6 | % | 13.7 | % | 12.4 | % | 10.6 | % | 10.6 | % | ||||||||||||||
| EBIT |
19,167 | 12,052 | 4,744 | 31,780 | 19,919 | 11,084 | 5,261 | |||||||||||||||||||||
| Total restructuring charges |
171 | 90 | 41 | 549 | 86 | 81 | 77 | |||||||||||||||||||||
| EBIT excluding restructuring charges |
19,338 | 12,142 | 4,785 | 32,329 | 20,005 | 11,165 | 5,338 | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| EBIT margin excluding restructuring charges (%) |
10.4 | % | 10.3 | % | 8.7 | % | 13.9 | % | 12.4 | % | 10.7 | % | 10.7 | % | ||||||||||||||
| 38 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges
Earnings before interest, taxes, amortizations, write-downs of acquired intangibles and excluding restructuring charges also expressed as a percentage of net sales.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Net income |
5,360 | 4,650 | 2,912 | 10,146 | 5,766 | 3,900 | 3,168 | |||||||||||||||||||||
| Income tax |
1,220 | 1,899 | 1,189 | 770 | 2,471 | 1,469 | 1,560 | |||||||||||||||||||||
| Financial income and expenses, net |
535 | 759 | 643 | 945 | 598 | 454 | 533 | |||||||||||||||||||||
| Am ortizations and write-downs of acquired intangibles |
498 | 158 | 199 | 436 | 464 | 294 | 283 | |||||||||||||||||||||
| EBITA |
7,613 | 7,466 | 4,943 | 12,297 | 9,299 | 6,117 | 5,544 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| EBITA margin (%) |
11.2 | % | 12.0 | % | 9.0 | % | 17.2 | % | 16.5 | % | 11.1 | % | 11.1 | % | ||||||||||||||
| Restructuring charges |
81 | 49 | 41 | 463 | 5 | 4 | 77 | |||||||||||||||||||||
| EBITA excluding restructuring charges |
7,694 | 7,515 | 4,984 | 12,760 | 9,304 | 6,121 | 5,621 | |||||||||||||||||||||
| EBITA margin excluding restructuring charges (%) |
11.3 | % | 12.0 | % | 9.1 | % | 17.9 | % | 16.5 | % | 11.1 | % | 11.3 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Net income |
12,922 | 7,562 | 2,912 | 22,980 | 12,834 | 7,068 | 3,168 | |||||||||||||||||||||
| Income tax |
4,308 | 3,088 | 1,189 | 6,270 | 5,500 | 3,029 | 1,560 | |||||||||||||||||||||
| Financial income and expenses, net |
1,937 | 1,402 | 643 | 2,530 | 1,585 | 987 | 533 | |||||||||||||||||||||
| Am ortizations and write-downs of acquired intangibles |
855 | 357 | 199 | 1,477 | 1,041 | 577 | 283 | |||||||||||||||||||||
| EBITA |
20,022 | 12,409 | 4,943 | 33,257 | 20,960 | 11,661 | 5,544 | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| EBITA margin (%) |
10.8 | % | 10.6 | % | 9.0 | % | 14.3 | % | 13.0 | % | 11.1 | % | 11.1 | % | ||||||||||||||
| Restructuring charges |
171 | 90 | 41 | 549 | 86 | 81 | 77 | |||||||||||||||||||||
| EBITA excluding restructuring charges |
20,193 | 12,499 | 4,984 | 33,806 | 21,046 | 11,742 | 5,621 | |||||||||||||||||||||
| EBITA margin excluding restructuring charges (%) |
10.9 | % | 10.6 | % | 9.1 | % | 14.6 | % | 13.1 | % | 11.2 | % | 11.3 | % | ||||||||||||||
Rolling four quarters of net sales and EBIT margin excluding restructuring charges (%)
Net sales, EBIT margin and restructuring charges as a sum of last four quarters.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Rolling four quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Net sales |
256,898 | 245,121 | 237,597 | 232,314 | 230,572 | 231,781 | 232,418 | |||||||||||||||||||||
| EBIT |
31,028 | 32,748 | 31,263 | 31,780 | 30,927 | 30,735 | 28,763 | |||||||||||||||||||||
| Restructuring charges |
634 | 558 | 513 | 549 | 78 | 403 | 1,082 | |||||||||||||||||||||
| EBIT excl. restr. charges |
31,662 | 33,306 | 31,776 | 32,329 | 31,005 | 31,138 | 29,845 | |||||||||||||||||||||
| EBIT margin excl. restr. charges (%) |
12.3 | % | 13.6 | % | 13.4 | % | 13.9 | % | 13.4 | % | 13.4 | % | 12.8 | % | ||||||||||||||
| 39 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Gross cash and net cash, end of period
Gross cash: Cash and cash equivalents plus interest-bearing securities (current and non-current).
Net cash: Cash and cash equivalents plus interest-bearing securities (current and non-current) less borrowings (current and non-current).
| 2022 | 2021 | |||||||||||||||||||||||||||
| SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Cash and cash equivalents |
36,749 | 93,618 | 76,856 | 54,050 | 46,476 | 43,273 | 40,543 | |||||||||||||||||||||
| + Interest-bearing securities, current |
6,640 | 3,715 | 12,292 | 12,932 | 15,016 | 12,855 | 4,599 | |||||||||||||||||||||
| + Interest-bearing securities, non-current |
2,423 | 3,061 | 15,022 | 30,626 | 26,668 | 20,998 | 23,477 | |||||||||||||||||||||
| Gross cash, end of period |
45,812 | 100,394 | 104,170 | 97,608 | 88,160 | 77,126 | 68,619 | |||||||||||||||||||||
| - Borrowings, current |
5,437 | 3,686 | 10,403 | 9,590 | 10,155 | 11,737 | 2,353 | |||||||||||||||||||||
| - Borrowings, non-current |
26,994 | 26,363 | 28,599 | 22,241 | 22,282 | 21,673 | 23,299 | |||||||||||||||||||||
| Net cash, end of period |
13,381 | 70,345 | 65,168 | 65,777 | 55,723 | 43,716 | 42,967 | |||||||||||||||||||||
Total assets less non-interest-bearing provisions and liabilities.
| 2022 | 2021 | |||||||||||||||||||||||||||
| SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Total assets |
361,166 | 332,453 | 323,935 | 305,614 | 290,527 | 281,045 | 270,319 | |||||||||||||||||||||
| Non-interest-bearing provisions and liabilities |
||||||||||||||||||||||||||||
| Provisions, non-current |
4,511 | 4,020 | 4,498 | 3,722 | 2,471 | 1,922 | 2,337 | |||||||||||||||||||||
| Deferred tax liabilities |
8,025 | 1,250 | 1,012 | 884 | 909 | 975 | 1,049 | |||||||||||||||||||||
| Other non-current liabilities |
791 | 762 | 1,070 | 1,587 | 1,605 | 1,596 | 1,326 | |||||||||||||||||||||
| Provisions, current |
6,051 | 5,648 | 5,699 | 5,782 | 6,342 | 7,310 | 8,708 | |||||||||||||||||||||
| Contract liabilities |
41,105 | 41,547 | 39,875 | 32,834 | 33,869 | 36,621 | 32,054 | |||||||||||||||||||||
| Trade payables |
40,864 | 39,539 | 35,316 | 35,684 | 31,877 | 29,638 | 29,135 | |||||||||||||||||||||
| Current tax liabilities |
5,008 | 6,703 | 5,701 | 2,917 | 5,409 | 4,676 | 4,761 | |||||||||||||||||||||
| Other current liabilities |
50,554 | 40,346 | 41,919 | 37,921 | 36,025 | 32,477 | 35,761 | |||||||||||||||||||||
| Capital employed |
204,257 | 192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | |||||||||||||||||||||
Annualized net sales divided by average capital employed.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Net sales |
68,040 | 62,465 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | |||||||||||||||||||||
| Annualized net sales |
272,160 | 249,860 | 220,244 | 285,328 | 225,052 | 219,764 | 199,112 | |||||||||||||||||||||
| Average capital employed |
||||||||||||||||||||||||||||
| Capital employed at beginning of period |
192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | 161,990 | |||||||||||||||||||||
| Capital employed at end of period |
204,257 | 192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | |||||||||||||||||||||
| Average capital employed |
198,448 | 190,742 | 186,564 | 178,152 | 168,925 | 160,509 | 158,589 | |||||||||||||||||||||
| Capital turnover (times) |
1.4 | 1.3 | 1.2 | 1.6 | 1.3 | 1.4 | 1.3 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Net sales |
185,566 | 117,526 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | |||||||||||||||||||||
| Annualized net sales |
247,421 | 235,052 | 220,244 | 232,314 | 214,643 | 209,438 | 199,112 | |||||||||||||||||||||
| Average capital employed |
||||||||||||||||||||||||||||
| Capital employed at beginning of period |
184,283 | 184,283 | 184,283 | 161,990 | 161,990 | 161,990 | 161,990 | |||||||||||||||||||||
| Capital employed at end of period |
204,257 | 192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | |||||||||||||||||||||
| Average capital employed |
194,270 | 188,461 | 186,564 | 173,137 | 167,005 | 163,910 | 158,589 | |||||||||||||||||||||
| Capital turnover (times) |
1.3 | 1.2 | 1.2 | 1.3 | 1.3 | 1.3 | 1.3 | |||||||||||||||||||||
| 40 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
The annualized total of EBIT as a percentage of average capital employed.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| EBIT |
7,115 | 7,308 | 4,744 | 11,861 | 8,835 | 5,823 | 5,261 | |||||||||||||||||||||
| Annualized EBIT |
28,460 | 29,232 | 18,976 | 47,444 | 35,340 | 23,292 | 21,044 | |||||||||||||||||||||
| Average capital employed |
||||||||||||||||||||||||||||
| Capital employed at beginning of period |
192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | 161,990 | |||||||||||||||||||||
| Capital employed at end of period |
204,257 | 192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | |||||||||||||||||||||
| Average capital employed |
198,448 | 190,742 | 186,564 | 178,152 | 168,925 | 160,509 | 158,589 | |||||||||||||||||||||
| Return on capital employed (%) |
14.3 | % | 15.3 | % | 10.2 | % | 26.6 | % | 20.9 | % | 14.5 | % | 13.3 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| EBIT |
19,167 | 12,052 | 4,744 | 31,780 | 19,919 | 11,084 | 5,261 | |||||||||||||||||||||
| Annualized EBIT |
25,556 | 24,104 | 18,976 | 31,780 | 26,559 | 22,168 | 21,044 | |||||||||||||||||||||
| Average capital employed |
||||||||||||||||||||||||||||
| Capital employed at beginning of period |
184,283 | 184,283 | 184,283 | 161,990 | 161,990 | 161,990 | 161,990 | |||||||||||||||||||||
| Capital employed at end of period |
204,257 | 192,638 | 188,845 | 184,283 | 172,020 | 165,830 | 155,188 | |||||||||||||||||||||
| Average capital employed |
194,270 | 188,461 | 186,564 | 173,137 | 167,005 | 163,910 | 158,589 | |||||||||||||||||||||
| Return on capital employed (%) |
13.2 | % | 12.8 | % | 10.2 | % | 18.4 | % | 15.9 | % | 13.5 | % | 13.3 | % | ||||||||||||||
Equity expressed as a percentage of total assets.
| 2022 | 2021 | |||||||||||||||||||||||||||
| SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Total equity |
136,820 | 127,799 | 109,879 | 107,099 | 95,628 | 91,695 | 88,124 | |||||||||||||||||||||
| Total assets |
361,166 | 332,453 | 323,935 | 305,614 | 290,527 | 281,045 | 270,319 | |||||||||||||||||||||
| Equity ratio (%) |
37.9 | % | 38.4 | % | 33.9 | % | 35.0 | % | 32.9 | % | 32.6 | % | 32.6 | % | ||||||||||||||
Annualized net income attributable to owners of the Parent Company as a percentage of average stockholders’ equity.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Net income attributable to owners of the Parent Company |
5,214 | 4,504 | 2,940 | 10,076 | 5,752 | 3,679 | 3,187 | |||||||||||||||||||||
| Annualized |
20,856 | 18,016 | 11,760 | 40,304 | 23,008 | 14,716 | 12,748 | |||||||||||||||||||||
| Average stockholders’ equity |
||||||||||||||||||||||||||||
| Stockholders’ equity, beginning of period |
129,620 | 111,701 | 108,775 | 97,323 | 93,331 | 89,782 | 86,674 | |||||||||||||||||||||
| Stockholders’ equity, end of period |
138,607 | 129,620 | 111,701 | 108,775 | 97,323 | 93,331 | 89,782 | |||||||||||||||||||||
| Average stockholders’ equity |
134,114 | 120,661 | 110,238 | 103,049 | 95,327 | 91,557 | 88,228 | |||||||||||||||||||||
| Return on equity (%) |
15.6 | % | 14.9 | % | 10.7 | % | 39.1 | % | 24.1 | % | 16.1 | % | 14.4 | % | ||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Net income attributable to owners of the Parent Company |
12,658 | 7,444 | 2,940 | 22,694 | 12,618 | 6,866 | 3,187 | |||||||||||||||||||||
| Annualized |
16,877 | 14,888 | 11,760 | 22,694 | 16,824 | 13,732 | 12,748 | |||||||||||||||||||||
| Average stockholders’ equity |
||||||||||||||||||||||||||||
| Stockholders’ equity, beginning of period |
108,775 | 108,775 | 108,775 | 86,674 | 86,674 | 86,674 | 86,674 | |||||||||||||||||||||
| Stockholders’ equity, end of period |
138,607 | 129,620 | 111,701 | 108,775 | 97,323 | 93,331 | 89,782 | |||||||||||||||||||||
| Average stockholders’ equity |
123,691 | 119,198 | 110,238 | 97,725 | 91,999 | 90,003 | 88,228 | |||||||||||||||||||||
| Return on equity (%) |
13.6 | % | 12.5 | % | 10.7 | % | 23.2 | % | 18.3 | % | 15.3 | % | 14.4 | % | ||||||||||||||
| 41 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Adjusted earnings per share, diluted, excluding amortizations and write-downs of acquired intangible assets and excluding restructuring charges.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Earnings per share, diluted |
1.56 | 1.35 | 0.88 | 3.02 | 1.73 | 1.10 | 0.96 | |||||||||||||||||||||
| Restructuring charges |
0.02 | 0.01 | 0.01 | 0.11 | 0.00 | 0.00 | 0.02 | |||||||||||||||||||||
| Amortizations and write-downs of acquired intangibles |
0.12 | 0.03 | 0.05 | 0.10 | 0.09 | 0.07 | 0.06 | |||||||||||||||||||||
| Adjusted earnings per share |
1.70 | 1.39 | 0.94 | 3.23 | 1.82 | 1.17 | 1.04 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Earnings per share, diluted |
3.80 | 2.23 | 0.88 | 6.81 | 3.79 | 2.06 | 0.96 | |||||||||||||||||||||
| Restructuring charges |
0.04 | 0.02 | 0.01 | 0.13 | 0.02 | 0.02 | 0.02 | |||||||||||||||||||||
| Amortizations and write-downs of acquired intangibles |
0.19 | 0.08 | 0.05 | 0.32 | 0.22 | 0.13 | 0.06 | |||||||||||||||||||||
| Adjusted earnings per share |
4.03 | 2.33 | 0.94 | 7.26 | 4.03 | 2.21 | 1.04 | |||||||||||||||||||||
Free cash flow before M&A / Free cash flow after M&A
Free cash flow before M&A: Cash flow from operating activities less net capital expenditures, other investments (excluding M&A) and repayment of lease liabilities.
Free cash flow after M&A: Cash flow from operating activities less net capital expenditures, other investments and repayment of lease liabilities.
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Cash flow from operating activities |
4,651 | 6,287 | 30 | 15,196 | 14,724 | 5,940 | 3,205 | |||||||||||||||||||||
| Net capital expenditures and other investments (excl M&A) |
||||||||||||||||||||||||||||
| Investments in property, plant and equipment |
-1,104 | -1,053 | -818 | -701 | -1,040 | -1,007 | -915 | |||||||||||||||||||||
| Sales of property, plant and equipment |
74 | 61 | 38 | 34 | 40 | 17 | 24 | |||||||||||||||||||||
| Product development |
-414 | -301 | -288 | -302 | -190 | -266 | -204 | |||||||||||||||||||||
| Other investments 1) |
-1 | 23 | -27 | -122 | -4 | — | -5 | |||||||||||||||||||||
| Repayment of lease liabilities |
-658 | -577 | -593 | -623 | -580 | -617 | -548 | |||||||||||||||||||||
| Free cash flow before M&A |
2,548 | 4,440 | -1,658 | 13,482 | 12,950 | 4,067 | 1,557 | |||||||||||||||||||||
| Acquisitions/ divestments of subs and other operations, net |
-51,412 | 123 | 46 | 178 | -55 | -69 | 5 | |||||||||||||||||||||
| Free cash flow after M&A |
-48,864 | 4,563 | -1,612 | 13,660 | 12,895 | 3,998 | 1,562 | |||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Cash flow from operating activities |
10,968 | 6,317 | 30 | 39,065 | 23,869 | 9,145 | 3,205 | |||||||||||||||||||||
| Net capital expenditures and other investments (excl M&A) |
||||||||||||||||||||||||||||
| Investments in property, plant and equipment |
-2,975 | -1,871 | -818 | -3,663 | -2,962 | -1,922 | -915 | |||||||||||||||||||||
| Sales of property, plant and equipment |
173 | 99 | 38 | 115 | 81 | 41 | 24 | |||||||||||||||||||||
| Product development |
-1,003 | -589 | -288 | -962 | -660 | -470 | -204 | |||||||||||||||||||||
| Other investments 1) |
-5 | -4 | -27 | -131 | -9 | -5 | -5 | |||||||||||||||||||||
| Repayment of lease liabilities |
-1,828 | -1,170 | -593 | -2,368 | -1,745 | -1,165 | -548 | |||||||||||||||||||||
| Free cash flow before M&A |
5,330 | 2,782 | -1,658 | 32,056 | 18,574 | 5,624 | 1,557 | |||||||||||||||||||||
| Acquisitions/ divestments of subs and other operations, net |
-51,243 | 169 | 46 | 59 | -119 | -64 | 5 | |||||||||||||||||||||
| Free cash flow after M&A |
-45,913 | 2,951 | -1,612 | 32,115 | 18,455 | 5,560 | 1,562 | |||||||||||||||||||||
| 1) | Other investments is part of the line item Other investing activities in the Consolidated cash flow statement. The differences are movements in other interest-bearing assets and the cash flow hedge reserve gain, which are not to be part of the definition of Free cash flow. |
| 42 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Sales growth by segment adjusted for comparable units and currency *)
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarter, year over year change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
4 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Cloud Software and Services |
-5 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Enterprise |
21 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Other |
-1 | % | — | — | — | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3 | % | 5 | % | 3 | % | 2 | % | -1 | % | 8 | % | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, year over year change, percent |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
5 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Cloud Software and Services |
-3 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Enterprise |
17 | % | — | — | — | — | — | — | ||||||||||||||||||||
| Other |
0 | % | — | — | — | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3 | % | 4 | % | 3 | % | 4 | % | 6 | % | 9 | % | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| *) | Sales growth adjusted for comparable units and currency has not been restated by segment for the first two quarters of 2022 and for each quarter in 2021. |
Sales growth by market area adjusted for comparable units and currency
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarter, year over year change, percent |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| South East Asia, Oceania and India |
13 | % | 6 | % | -17 | % | -13 | % | -16 | % | 14 | % | 21 | % | ||||||||||||||
| North East Asia |
-6 | % | -1 | % | -20 | % | -22 | % | -33 | % | 1 | % | 78 | % | ||||||||||||||
| North America |
9 | % | 12 | % | 9 | % | 15 | % | 13 | % | 11 | % | 10 | % | ||||||||||||||
| Europe and Latin America |
0 | % | 4 | % | 15 | % | 12 | % | 9 | % | 14 | % | 12 | % | ||||||||||||||
| Middle East and Africa |
3 | % | 8 | % | -9 | % | 5 | % | -8 | % | -10 | % | -16 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3 | % | 5 | % | 3 | % | 2 | % | -1 | % | 8 | % | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, year over year change, percent |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| South East Asia, Oceania and India |
1 | % | -5 | % | -17 | % | -1 | % | 4 | % | 17 | % | 21 | % | ||||||||||||||
| North East Asia |
-9 | % | -10 | % | -20 | % | -8 | % | 1 | % | 27 | % | 78 | % | ||||||||||||||
| North America |
10 | % | 10 | % | 9 | % | 12 | % | 11 | % | 11 | % | 10 | % | ||||||||||||||
| Europe and Latin America |
6 | % | 9 | % | 15 | % | 12 | % | 12 | % | 13 | % | 12 | % | ||||||||||||||
| Midle East and Africa |
1 | % | 0 | % | -9 | % | -7 | % | -12 | % | -13 | % | -16 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
3 | % | 4 | % | 3 | % | 4 | % | 6 | % | 9 | % | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 43 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Gross margin by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
44.4 | % | 45.1 | % | 44.7 | % | 46.3 | % | 47.8 | % | 47.9 | % | 46.1 | % | ||||||||||||||
| Cloud Software and Services |
31.8 | % | 33.5 | % | 35.0 | % | 35.4 | % | 33.6 | % | 30.6 | % | 33.6 | % | ||||||||||||||
| Enterprise |
46.5 | % | 45.0 | % | 47.8 | % | 46.2 | % | 48.8 | % | 47.8 | % | 41.8 | % | ||||||||||||||
| Other |
-27.9 | % | 5.4 | % | 0.2 | % | -3.3 | % | 7.9 | % | 4.3 | % | 22.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
41.4 | % | 42.1 | % | 42.3 | % | 43.2 | % | 44.0 | % | 43.4 | % | 42.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
44.7 | % | 44.9 | % | 44.7 | % | 47.0 | % | 47.3 | % | 47.0 | % | 46.1 | % | ||||||||||||||
| Cloud Software and Services |
33.3 | % | 34.2 | % | 35.0 | % | 33.5 | % | 32.6 | % | 32.0 | % | 33.6 | % | ||||||||||||||
| Enterprise |
46.4 | % | 46.4 | % | 47.8 | % | 46.4 | % | 46.4 | % | 45.2 | % | 41.8 | % | ||||||||||||||
| Other |
-6.9 | % | 3.0 | % | 0.2 | % | 7.9 | % | 11.4 | % | 13.2 | % | 22.0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
41.9 | % | 42.2 | % | 42.3 | % | 43.4 | % | 43.4 | % | 43.1 | % | 42.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
EBIT margin by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
19.9 | % | 19.3 | % | 18.7 | % | 23.0 | % | 23.7 | % | 21.7 | % | 20.0 | % | ||||||||||||||
| Cloud Software and Services |
-5.6 | % | -5.2 | % | -6.9 | % | 3.3 | % | -3.3 | % | -8.9 | % | -10.4 | % | ||||||||||||||
| Enterprise |
-32.4 | % | -44.7 | % | -44.3 | % | -42.7 | % | -52.6 | % | -40.6 | % | -57.0 | % | ||||||||||||||
| Other |
-3.9 | % | 3.2 | % | -247.8 | % | 59.4 | % | 95.0 | % | -196.7 | % | -6.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
10.5 | % | 11.7 | % | 8.6 | % | 16.6 | % | 15.7 | % | 10.6 | % | 10.6 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
19.3 | % | 19.0 | % | 18.7 | % | 22.2 | % | 21.9 | % | 20.9 | % | 20.0 | % | ||||||||||||||
| Cloud Software and Services |
-5.9 | % | -6.0 | % | -6.9 | % | -4.0 | % | -7.4 | % | -9.6 | % | -10.4 | % | ||||||||||||||
| Enterprise |
-37.4 | % | -44.5 | % | -44.3 | % | -47.5 | % | -49.5 | % | -47.8 | % | -57.0 | % | ||||||||||||||
| Other |
-76.9 | % | -111.6 | % | -247.8 | % | -14.2 | % | -37.1 | % | -101.5 | % | -6.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
10.3 | % | 10.3 | % | 8.6 | % | 13.7 | % | 12.4 | % | 10.6 | % | 10.6 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 44 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Restructuring charges by function
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Cost of sales |
-55 | -42 | -2 | -199 | -6 | -6 | -62 | |||||||||||||||||||||
| Research and development expenses |
-7 | -4 | -33 | -140 | 2 | 1 | 0 | |||||||||||||||||||||
| Selling and administrative expenses |
-19 | -3 | -6 | -124 | -1 | 1 | -15 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
-81 | -49 | -41 | -463 | -5 | -4 | -77 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Cost of sales |
-99 | -44 | -2 | -273 | -74 | -68 | -62 | |||||||||||||||||||||
| Research and development expenses |
-44 | -37 | -33 | -137 | 3 | 1 | 0 | |||||||||||||||||||||
| Selling and administrative expenses |
-28 | -9 | -6 | -139 | -15 | -14 | -15 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
-171 | -90 | -41 | -549 | -86 | -81 | -77 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Restructuring charges by segment
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
-26 | -45 | -10 | -278 | 1 | -8 | 23 | |||||||||||||||||||||
| of which cost of sales |
-3 | -44 | -10 | -77 | 1 | -1 | 24 | |||||||||||||||||||||
| of which operating expenses |
-23 | -1 | 0 | -201 | 0 | -7 | -1 | |||||||||||||||||||||
| Cloud Software and Services |
-55 | 0 | -25 | -158 | -5 | -4 | -87 | |||||||||||||||||||||
| of which cost of sales |
-52 | 2 | 8 | -116 | -7 | -2 | -82 | |||||||||||||||||||||
| of which operating expenses |
-3 | -2 | -33 | -42 | 2 | -2 | -5 | |||||||||||||||||||||
| Enterprise |
0 | -4 | -6 | -27 | -1 | 11 | 1 | |||||||||||||||||||||
| of which cost of sales |
0 | 0 | 0 | -6 | 0 | 1 | 0 | |||||||||||||||||||||
| of which operating expenses |
0 | -4 | -6 | -21 | -1 | 10 | 1 | |||||||||||||||||||||
| Other |
0 | 0 | 0 | 0 | 0 | -3 | -14 | |||||||||||||||||||||
| of which cost of sales |
0 | 0 | 0 | 0 | 0 | -4 | -4 | |||||||||||||||||||||
| of which operating expenses |
0 | 0 | 0 | 0 | 0 | 1 | -10 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
-81 | -49 | -41 | -463 | -5 | -4 | -77 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Net works |
-81 | -55 | -10 | -262 | 16 | 15 | 23 | |||||||||||||||||||||
| of which cost of sales |
-57 | -54 | -10 | -53 | 24 | 23 | 24 | |||||||||||||||||||||
| of which operating expenses |
-24 | -1 | 0 | -209 | -8 | -8 | -1 | |||||||||||||||||||||
| Cloud Software and Services |
-80 | -25 | -25 | -254 | -96 | -91 | -87 | |||||||||||||||||||||
| of which cost of sales |
-42 | 10 | 8 | -207 | -91 | -84 | -82 | |||||||||||||||||||||
| of which operating expenses |
-38 | -35 | -33 | -47 | -5 | -7 | -5 | |||||||||||||||||||||
| Enterprise |
-10 | -10 | -6 | -16 | 11 | 12 | 1 | |||||||||||||||||||||
| of which cost of sales |
0 | 0 | 0 | -5 | 1 | 1 | 0 | |||||||||||||||||||||
| of which operating expenses |
-10 | -10 | -6 | -11 | 10 | 11 | 1 | |||||||||||||||||||||
| Other |
0 | 0 | 0 | -17 | -17 | -17 | -14 | |||||||||||||||||||||
| of which cost of sales |
0 | 0 | 0 | -8 | -8 | -8 | -4 | |||||||||||||||||||||
| of which operating expenses |
0 | 0 | 0 | -9 | -9 | -9 | -10 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
-171 | -90 | -41 | -549 | -86 | -81 | -77 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 45 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
Gross income and gross margin excluding restructuring charges by segment
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
21,369 | 20,779 | 18,221 | 23,720 | 19,400 | 19,112 | 16,690 | |||||||||||||||||||||
| Cloud Software and Services |
4,568 | 4,690 | 4,226 | 6,478 | 4,582 | 3,961 | 4,015 | |||||||||||||||||||||
| Enterprise |
2,398 | 843 | 843 | 838 | 760 | 764 | 534 | |||||||||||||||||||||
| Other |
-145 | 32 | 1 | -16 | 40 | 26 | 118 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
28,190 | 26,344 | 23,291 | 31,020 | 24,782 | 23,863 | 21,357 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
44.4 | % | 45.2 | % | 44.8 | % | 46.4 | % | 47.8 | % | 47.9 | % | 46.0 | % | ||||||||||||||
| Cloud Software and Services |
32.1 | % | 33.5 | % | 35.0 | % | 36.1 | % | 33.7 | % | 30.6 | % | 34.3 | % | ||||||||||||||
| Enterprise |
46.5 | % | 45.0 | % | 47.8 | % | 46.5 | % | 48.8 | % | 47.8 | % | 41.8 | % | ||||||||||||||
| Other |
-27.9 | % | 5.4 | % | 0.2 | % | -3.3 | % | 7.9 | % | 5.0 | % | 22.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
41.4 | % | 42.2 | % | 42.3 | % | 43.5 | % | 44.0 | % | 43.4 | % | 42.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
60,369 | 39,000 | 18,221 | 78,922 | 55,202 | 35,802 | 16,690 | |||||||||||||||||||||
| Cloud Software and Services |
13,484 | 8,916 | 4,226 | 19,036 | 12,558 | 7,976 | 4,015 | |||||||||||||||||||||
| Enterprise |
4,084 | 1,686 | 843 | 2,896 | 2,058 | 1,298 | 534 | |||||||||||||||||||||
| Other |
-112 | 33 | 1 | 168 | 184 | 144 | 118 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
77,825 | 49,635 | 23,291 | 101,022 | 70,002 | 45,220 | 21,357 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
44.8 | % | 45.0 | % | 44.8 | % | 47.0 | % | 47.3 | % | 47.0 | % | 46.0 | % | ||||||||||||||
| Cloud Software and Services |
33.4 | % | 34.2 | % | 35.0 | % | 33.9 | % | 32.8 | % | 32.3 | % | 34.3 | % | ||||||||||||||
| Enterprise |
46.4 | % | 46.4 | % | 47.8 | % | 46.4 | % | 46.4 | % | 45.1 | % | 41.8 | % | ||||||||||||||
| Other |
-6.9 | % | 3.0 | % | 0.2 | % | 8.3 | % | 12.0 | % | 13.9 | % | 22.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
41.9 | % | 42.2 | % | 42.3 | % | 43.5 | % | 43.5 | % | 43.2 | % | 42.9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 46 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
EBIT and EBIT margin excluding restructuring charges by segment
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
9,623 | 8,906 | 7,611 | 12,035 | 9,623 | 8,653 | 7,217 | |||||||||||||||||||||
| Cloud Software and Services |
-737 | -733 | -812 | 748 | -444 | -1,154 | -1,130 | |||||||||||||||||||||
| Enterprise |
-1,670 | -835 | -775 | -743 | -818 | -660 | -728 | |||||||||||||||||||||
| Other |
-20 | 19 | -1,239 | 284 | 479 | -1,012 | -21 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
7,196 | 7,357 | 4,785 | 12,324 | 8,840 | 5,827 | 5,338 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
20.0 | % | 19.4 | % | 18.7 | % | 23.6 | % | 23.7 | % | 21.7 | % | 19.9 | % | ||||||||||||||
| Cloud Software and Services |
-5.2 | % | -5.2 | % | -6.7 | % | 4.2 | % | -3.3 | % | -8.9 | % | -9.6 | % | ||||||||||||||
| Enterprise |
-32.4 | % | -44.5 | % | -44.0 | % | -41.2 | % | -52.5 | % | -41.3 | % | -57.1 | % | ||||||||||||||
| Other |
-3.9 | % | 3.2 | % | -247.8 | % | 59.4 | % | 95.0 | % | -196.1 | % | -4.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
10.6 | % | 11.8 | % | 8.7 | % | 17.3 | % | 15.7 | % | 10.6 | % | 10.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
26,140 | 16,517 | 7,611 | 37,528 | 25,493 | 15,870 | 7,217 | |||||||||||||||||||||
| Cloud Software and Services |
-2,282 | -1,545 | -812 | -1,980 | -2,728 | -2,284 | -1,130 | |||||||||||||||||||||
| Enterprise |
-3,280 | -1,610 | -775 | -2,949 | -2,206 | -1,388 | -728 | |||||||||||||||||||||
| Other |
-1,240 | -1,220 | -1,239 | -270 | -554 | -1,033 | -21 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
19,338 | 12,142 | 4,785 | 32,329 | 20,005 | 11,165 | 5,338 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
19.4 | % | 19.1 | % | 18.7 | % | 22.4 | % | 21.8 | % | 20.8 | % | 19.9 | % | ||||||||||||||
| Cloud Software and Services |
-5.7 | % | -5.9 | % | -6.7 | % | -3.5 | % | -7.1 | % | -9.3 | % | -9.6 | % | ||||||||||||||
| Enterprise |
-37.3 | % | -44.3 | % | -44.0 | % | -47.3 | % | -49.8 | % | -48.3 | % | -57.1 | % | ||||||||||||||
| Other |
-76.9 | % | -111.6 | % | -247.8 | % | -13.4 | % | -36.0 | % | -99.9 | % | -4.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
10.4 | % | 10.3 | % | 8.7 | % | 13.9 | % | 12.4 | % | 10.7 | % | 10.7 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Rolling four quarters of net sales by segment *)
| 2022 | 2021 | |||||||||||||||||||||||||||
| Rolling four quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
185,939 | 178,383 | 172,276 | 167,838 | — | — | — | |||||||||||||||||||||
| Cloud Software and Services |
58,269 | 57,666 | 56,601 | 56,224 | — | — | — | |||||||||||||||||||||
| Enterprise |
10,600 | 6,997 | 6,722 | 6,236 | — | — | — | |||||||||||||||||||||
| Other |
2,090 | 2,075 | 1,998 | 2,016 | — | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
256,898 | 245,121 | 237,597 | 232,314 | 230,572 | 231,781 | 232,418 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| *) | Rolling four quarters of net sales by segment has not been restated for the first three quarters of 2021. |
Rolling four quarters of EBIT margin excluding restructuring charges by segment (%) *)
| 2022 | 2021 | |||||||||||||||||||||||||||
| Rolling four quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
20.5 | % | 21.4 | % | 22.0 | % | 22.4 | % | — | — | — | |||||||||||||||||
| Cloud Software and Services |
-2.6 | % | -2.2 | % | -2.9 | % | -3.5 | % | — | — | — | |||||||||||||||||
| Enterprise |
-38.0 | % | -45.3 | % | -44.6 | % | -47.3 | % | — | — | — | |||||||||||||||||
| Other |
-45.7 | % | -22.0 | % | -74.5 | % | -13.4 | % | — | — | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
12.3 | % | 13.6 | % | 13.4 | % | 13.9 | % | 13.4 | % | 13.4 | % | 12.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| *) | Rolling four quarters of EBIT margin excluding restructuring charges by segment has not been restated for the first three quarters of 2021. |
| 47 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin by segment by quarter
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
9,624 | 8,889 | 7,629 | 11,787 | 9,643 | 8,679 | 7,274 | |||||||||||||||||||||
| Cloud Software and Services |
-769 | -710 | -783 | 861 | -318 | -1,035 | -1,097 | |||||||||||||||||||||
| Enterprise |
-1,223 | -732 | -664 | -635 | -505 | -512 | -598 | |||||||||||||||||||||
| Other |
-19 | 19 | -1,239 | 284 | 479 | -1,015 | -35 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
7,613 | 7,466 | 4,943 | 12,297 | 9,299 | 6,117 | 5,544 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
20.0 | % | 19.3 | % | 18.7 | % | 23.1 | % | 23.8 | % | 21.8 | % | 20.1 | % | ||||||||||||||
| Cloud Software and Services |
-5.4 | % | -5.1 | % | -6.5 | % | 4.8 | % | -2.3 | % | -8.0 | % | -9.4 | % | ||||||||||||||
| Enterprise |
-23.7 | % | -39.0 | % | -37.7 | % | -35.2 | % | -32.4 | % | -32.0 | % | -46.9 | % | ||||||||||||||
| Other |
-3.7 | % | 3.2 | % | -247.8 | % | 59.4 | % | 95.0 | % | -196.7 | % | -6.8 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
11.2 | % | 12.0 | % | 9.0 | % | 17.2 | % | 16.5 | % | 11.1 | % | 11.1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
26,142 | 16,518 | 7,629 | 37,383 | 25,596 | 15,953 | 7,274 | |||||||||||||||||||||
| Cloud Software and Services |
-2,262 | -1,493 | -783 | -1,589 | -2,450 | -2,132 | -1,097 | |||||||||||||||||||||
| Enterprise |
-2,619 | -1,396 | -664 | -2,250 | -1,615 | -1,110 | -598 | |||||||||||||||||||||
| Other |
-1,239 | -1,220 | -1,239 | -287 | -571 | -1,050 | -35 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total |
20,022 | 12,409 | 4,943 | 33,257 | 20,960 | 11,661 | 5,544 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
19.4 | % | 19.1 | % | 18.7 | % | 22.3 | % | 21.9 | % | 20.9 | % | 20.1 | % | ||||||||||||||
| Cloud Software and Services |
-5.6 | % | -5.7 | % | -6.5 | % | -2.8 | % | -6.4 | % | -8.6 | % | -9.4 | % | ||||||||||||||
| Enterprise |
-29.8 | % | -38.4 | % | -37.7 | % | -36.1 | % | -36.4 | % | -38.6 | % | -46.9 | % | ||||||||||||||
| Other |
-76.9 | % | -111.6 | % | -247.8 | % | -14.2 | % | -37.1 | % | -101.5 | % | -6.8 | % | ||||||||||||||
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| Total |
10.8 | % | 10.6 | % | 9.0 | % | 14.3 | % | 13.0 | % | 11.1 | % | 11.1 | % | ||||||||||||||
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| 48 | Ericsson | Third quarter report 2022 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin excluding restructuring charges by segment
| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, SEK million |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
9,650 | 8,934 | 7,639 | 12,065 | 9,642 | 8,687 | 7,251 | |||||||||||||||||||||
| Cloud Software and Services |
-714 | -710 | -758 | 1,019 | -313 | -1,031 | -1,010 | |||||||||||||||||||||
| Enterprise |
-1,223 | -728 | -658 | -608 | -504 | -523 | -599 | |||||||||||||||||||||
| Other |
-19 | 19 | -1,239 | 284 | 479 | -1,012 | -21 | |||||||||||||||||||||
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| Total |
7,694 | 7,515 | 4,984 | 12,760 | 9,304 | 6,121 | 5,621 | |||||||||||||||||||||
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| 2022 | 2021 | |||||||||||||||||||||||||||
| Isolated quarters, as percentage of net sales |
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||||
| Networks |
20.0 | % | 19.4 | % | 18.8 | % | 23.6 | % | 23.8 | % | 21.8 | % | 20.0 | % | ||||||||||||||
| Cloud Software and Services |
-5.0 | % | -5.1 | % | -6.3 | % | 5.7 | % | -2.3 | % | -8.0 | % | -8.6 | % | ||||||||||||||
| Enterprise |
-23.7 | % | -38.8 | % | -37.3 | % | -33.7 | % | -32.3 | % | -32.7 | % | -46.9 | % | ||||||||||||||
| Other |
-3.7 | % | 3.2 | % | -247.8 | % | 59.4 | % | 95.0 | % | -196.1 | % | -4.1 | % | ||||||||||||||
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| Total |
11.3 | % | 12.0 | % | 9.1 | % | 17.9 | % | 16.5 | % | 11.1 | % | 11.3 | % | ||||||||||||||
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| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date, SEK million |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
26,223 | 16,573 | 7,639 | 37,645 | 25,580 | 15,938 | 7,251 | |||||||||||||||||||||
| Cloud Software and Services |
-2,182 | -1,468 | -758 | -1,335 | -2,354 | -2,041 | -1,010 | |||||||||||||||||||||
| Enterprise |
-2,609 | -1,386 | -658 | -2,234 | -1,626 | -1,122 | -599 | |||||||||||||||||||||
| Other |
-1,239 | -1,220 | -1,239 | -270 | -554 | -1,033 | -21 | |||||||||||||||||||||
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| Total |
20,193 | 12,499 | 4,984 | 33,806 | 21,046 | 11,742 | 5,621 | |||||||||||||||||||||
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| 2022 | 2021 | |||||||||||||||||||||||||||
| Year to date ,as percentage of net sales |
Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||||||||
| Networks |
19.4 | % | 19.1 | % | 18.8 | % | 22.4 | % | 21.9 | % | 20.9 | % | 20.0 | % | ||||||||||||||
| Cloud Software and Services |
-5.4 | % | -5.6 | % | -6.3 | % | -2.4 | % | -6.2 | % | -8.3 | % | -8.6 | % | ||||||||||||||
| Enterprise |
-29.7 | % | -38.1 | % | -37.3 | % | -35.8 | % | -36.7 | % | -39.0 | % | -46.9 | % | ||||||||||||||
| Other |
-76.9 | % | -111.6 | % | -247.8 | % | -13.4 | % | -36.0 | % | -99.9 | % | -4.1 | % | ||||||||||||||
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| Total |
10.9 | % | 10.6 | % | 9.1 | % | 14.6 | % | 13.1 | % | 11.2 | % | 11.3 | % | ||||||||||||||
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| Q3 | Jan-Sep | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Days sales outstanding |
— | — | 76 | 79 | ||||||||||||
| Inventory turnover days |
115 | 95 | 112 | 95 | ||||||||||||
| Payable days |
92 | 89 | 97 | 96 | ||||||||||||
| 49 | Ericsson | Third quarter report 2022 | Alternative performance measures |