Ericsson reported a stronger-than-expected second-quarter 2025 adjusted operating profit of 7.0 billion Swedish crowns ($728.5 million), a significant turnaround from a loss of 11.9 billion crowns in the prior year and exceeding the mean forecast of 6.1 billion crowns. Net sales declined by 6% to SEK 56.1 billion due to currency headwinds of SEK 4.7 billion, but organic sales grew by 2%.
The adjusted gross margin reached 48% in Q2 2025, up from 43.9% in Q2 2024, driven by higher Intellectual Property Rights (IPR) revenue, a favorable product mix, and ongoing cost-reduction initiatives. Operating expenses, excluding restructuring charges, decreased by approximately SEK 3 billion year-over-year to SEK 20 billion.
The company achieved a three-year high in adjusted EBITA margin at 13.2%, with adjusted EBITA increasing by SEK 3.4 billion to SEK 7.4 billion. Ericsson also reduced its total number of employees by about 6% or 6,000 over the last year, demonstrating effective cost actions.
The Networks segment reported 3% organic sales growth and a 49.5% adjusted gross margin. The Cloud Software & Services segment achieved its fifth consecutive quarter of positive EBITA, with a strong 43.2% adjusted gross margin. IPR revenue increased to SEK 4.9 billion in Q2 2025, with a run rate of approximately SEK 13 billion exiting the quarter.
Ericsson announced it would increase investments into AI, recognizing its fundamental role in network design and operation. The company experienced an approximate 1 percentage point tariff impact on gross margin in Q2 2025, with similar levels expected in Q3 2025.
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