Strategic Momentum Highlights:
The company emphasized solid momentum in extending its technology leadership, focusing on an expanded portfolio of high-performing and energy-efficient products. A key strategic development was the announcement of its first major programmable networks partnership in the Asia Pacific region with Australian operator Telstra. Further strengthening its position in network capabilities, the company also confirmed the deployment of its network API fraud detection solution by all three major mobile operators in the United States, alongside additional partnerships with Aduna.
Q1 Financial Performance:
While organic sales remained stable year-over-year, reported Q1 sales saw a slight increase to SEK 55.0 billion, compared to SEK 53.3 billion in the same period last year.
The standout financial success was in profitability metrics:
- Gross Income & Margin: Adjusted gross income rose significantly to SEK 26.7 billion (from SEK 22.8 billion YoY), boosting the adjusted gross margin to an impressive 48.5% (up from 42.7% YoY). Reported gross income was SEK 26.5 billion with a margin of 48.2%. This improvement was attributed to strong operational execution across all segments.
- EBITA & Margin: Adjusted EBITA (Earnings Before Interest, Taxes, and Amortization) increased to SEK 6.9 billion (from SEK 5.1 billion YoY), leading to an adjusted EBITA margin of 12.6% (up from 9.6% YoY). Reported EBITA was SEK 6.7 billion. The quarter's results included a one-time gain of SEK 1.9 billion.
- Net Income: Net income for the quarter grew substantially to SEK 4.2 billion, compared to SEK 2.6 billion in Q1 of the previous year. Diluted Earnings Per Share (EPS) followed suit, rising to SEK 1.24 from SEK 0.77.
- Cash Flow: Free cash flow before Mergers & Acquisitions (M&A) was SEK 2.7 billion, a decrease from SEK 3.7 billion in the prior year's Q1.
- Regional Performance: Sales performance varied geographically, with strong growth reported in the Americas market area helping to offset declines in other regions.
CEO Outlook
Börje Ekholm, President and CEO, commented on the results: “We sustained solid momentum in Q1, despite a challenging and fast changing macro backdrop, and our results highlight our competitiveness. Our solid execution contributed to a strong 48.5% adjusted gross margin and 12.6% adjusted EBITA margin.”
He added, "We extended our technology leadership position further and are on track to offer a portfolio of 130 radios this year that support programmable networks. In Q1, we announced the first Asia Pacific programmable network, including deployment of 5G Advanced, with Telstra."
Looking forward, Ekholm expressed confidence in the company's position, stating, "We remain confident of our strong position in Mobile Networks and expect Enterprise to stabilize during 2025... We continue to focus on controlling what we can control and delivering to our customers. We are not immune, but we are resilient, with well diversified production close to the customer and the flexibility to adapt to changing conditions over time.”
Overall, the Q1 results indicate the company is successfully leveraging its technological edge and operational discipline to enhance profitability amidst a complex global economic landscape.
