Ericsson  reported a resilient financial performance for the second quarter of 2026, maintaining strong profitability despite a decline in sales, as disciplined execution and improved operational efficiency helped offset market headwinds. The company said its adjusted gross margin rose to 48.4%, supported by stronger margins in its Mobile Networks business, while it continued to invest in future growth and return capital to shareholders.

Net sales for the quarter fell 6% year-on-year to SEK 52.7 billion from SEK 56.1 billion. On an organic basis, sales declined 1%, primarily due to lower intellectual property rights (IPR) licensing revenue following a non-recurring benefit from a partial settlement recorded in the same period last year. Despite this, Ericsson achieved organic sales growth in three of its four market areas.

Adjusted gross income declined 5% to SEK 25.5 billion, while adjusted gross margin improved slightly to 48.4% from 48.0% a year earlier. Reported gross margin stood at 45.8%, compared with 47.5% in the second quarter of 2025. The company attributed the margin resilience to solid operational execution and improved profitability in its Networks and Cloud Software and Services businesses.

Adjusted EBITA was SEK 6.9 billion, representing a margin of 13.1%, compared with SEK 7.4 billion and a 13.2% margin in the corresponding period last year. Reported EBITA came in at SEK 6.3 billion with an 11.9% margin. Net income declined 12% year-on-year to SEK 4.1 billion, while diluted earnings per share fell to SEK 1.22 from SEK 1.37.

Free cash flow before mergers and acquisitions dropped sharply to SEK 385 million from SEK 2.6 billion a year earlier. However, Ericsson maintained a strong net cash position of SEK 59.8 billion at the end of the quarter, enabling it to return SEK 8.2 billion to shareholders during the period, including SEK 3.2 billion through share repurchases.

Beyond its financial results, Ericsson highlighted progress in AI-enabled connectivity, demonstrating AI-powered drone sensing and tracking using existing cellular towers at a stadium in Texas during a major global sporting event. The company said the demonstration showcased how its mobile network infrastructure can support emerging AI-driven applications in the physical world.

Commenting on the results, President and CEO Börje Ekholm said the company’s second-quarter performance reflected the strength of its portfolio and disciplined execution, noting that adjusted gross margin improved by two percentage points after accounting for last year’s one-off IPR settlement benefit.

Ekholm said Ericsson had taken action during the quarter to mitigate rising component costs and would continue implementing internal efficiency measures and pricing actions in the coming quarters. He added that the company expects some pressure on Networks adjusted gross margin in the third quarter due to higher volumes of network rollout projects.

Looking ahead, Ericsson said it is well positioned to capitalize on the next phase of AI-driven connectivity, having strengthened its portfolio over recent years. The company believes its leadership in mobile networks, combined with expansion into new growth areas, positions it to benefit as artificial intelligence increasingly extends into real-world infrastructure and connected environments.