Ericsson's Q1 Earnings Match Estimates, Revenues Decline Y/Y

Ericsson ERIC reported mixed first-quarter 2026 results, with revenues missing the Zacks Consensus Estimate while earnings matching the same. ERIC’s top line was affected by soft demand trends across multiple verticals. However, growing network investment in Europe, The Middle East and India reversed this trend. Restructuring costs are straining margin.

Net Income

Ericsson recorded a net income of SEK 0.9 billion ($0.09 billion) or SEK 0.27 (3 cents) per share compared to a net income of SEK 4.2 billion or SEK 1.24 per share in the prior-year quarter. Restructuring charges and forex movement impacted the net income. Adjusted earnings came at 13 cents, matching the Zacks Consensus Estimate.

Revenues

Ericsson generated SEK 49.3 billion ($5.39 billion) in revenues, down 10% year over year. However, it grew 6% year over year on an organic basis. The decline was due to weakness across all verticals. The top line fell short of the Zacks Consensus Estimate of $5.69 billion.

Networks segment generated SEK 32.9 billion ($3.59 billion), down 8% from the year-ago quarter’s tally of SEK 35.6 billion. Sales grew 7% year over year on an organic basis. The segment’s adjusted gross margin decreased to 50.4% from 51% in the year-ago quarter. Sales declined in the Americas. However, healthy demand in India, Europe, Middle East and Africa reversed the declining trend.

Cloud Software and Services revenues decreased 9% year over year to SEK 11.8 billion ($1.29 billion). However, sales grew 4% year over year on an organic basis. Adjusted gross margin improved to 43.2% from 39.9% in the prior-year quarter. Sales grew in multiple regions.

Enterprise segment generated SEK 4.2 billion ($459 million), down 30% from the year-ago quarter’s tally of SEK 5.9 billion. Sales grew 4% in an organic basis, owing to growth in the Global Communications Platform. Adjusted gross margin was 49% compared with 56.2% in the year-ago quarter.

Other revenues were SEK 0.4 billion ($44 million), down from SEK 0.5 billion in the year-ago quarter.

Region-wise, South-East Asia, Oceania and India registered revenues of SEK 6.9 billion ($755 million), down from SEK 7.2 billion in the prior-year quarter. Revenues from North East Asia decreased to SEK 3.1 billion ($339 million), down from SEK 3.2 billion a year ago. Net sales from the Americas were SEK 17.1 billion ($1.87 billion), down 18% year over year.

Europe, Middle East and African markets witnessed a 1% year-over-year decline to SEK 14.3 billion ($1.56 billion). Revenues from other regions decreased to SEK 7.9 billion ($864 million) from SEK 9.3 billion in the prior-year quarter.

Other Details

Gross income, excluding restructuring charges, declined to SEK 23.7 billion ($2.59 billion) from the year-ago figure of SEK 26.7 billion. Adjusted gross margin was 48.1% compared with 48.5% in the year-earlier quarter.

Cash Flow and Liquidity

Ericsson generated SEK 7.4 billion ($809 million) cash from operating activities during the quarter. As of March 31, 2026, the company had net cash of SEK 68.14 billion ($7.16 billion) and SEK 18.2 billion in liabilities for post-employment benefits.

ERIC’s Zacks Rank & Stocks to Consider

Ericsson currently has a Zacks Rank #3 (Hold).

Ubiquiti Inc. UI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 38.08%. Ubiquiti spends significantly on research and development (R&D) activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help it increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.

Corning Incorporated GLW currently carries a Zacks Rank #2 (Buy). In the last reported quarter, it delivered an earnings surprise of 2.86%.

Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.

Nokia NOK currently carries a Zacks Rank #2. In the last reported quarter, it delivered an earnings surprise of 23.53%.

Nokia is well-positioned for the ongoing technology cycle given the strength of its end-to-end portfolio. The company’s deal win rate is encouraging with notable successes in the key 5G markets of the United States and China. Its installed base of high-capacity AirScale product, which enables customers to quickly upgrade to 5G, is growing fast. 

Note: SEK 1 = $0.109362 (period average from Jan 1, 2026 to Mar. 31, 2026); SEK 1 = $0.105007 (as of Mar. 31, 2026).

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This article originally published on Zacks Investment Research (zacks.com).

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