Ericsson Q4 Earnings: Sales Climb 1%, North America Shines, Dividend Raise, Guidance And More

Ericsson (NASDAQ: ERIC) reported fourth-quarter fiscal 2024 results on Friday.

The Swedish telecom equipment maker’s sales grew 1% year-over-year to 72.9 billion Swedish Krona, driven by 54% growth in the North American market. In USD, sales of $6.77 billion missed the analyst consensus estimate of $6.93 billion.

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Group organic sales grew by 2% Y/Y. Adjusted gross margin improved to 46.3% from 41.1% Y/Y, driven by substantial expansion in Networks.

Adjusted EBIT margin was 13.1% versus 10.3% Y/Y due to a non-cash impairment loss relating to the Vonage acquisition. Adjusted EBITA margin improved to 14.1% from 11.4% a year ago, benefiting from higher gross income and cost actions.

Ericsson reported an EPS of SEK 1.44 versus SEK 1.02 Y/Y. In USD, EPS of $0.13 missed the analyst consensus estimate of $0.19.

Free cash flow before M&A was SEK 15.82 billion in the quarter, benefiting from the operational improvements.

As of December 31, 2024, net cash stood at SEK 37.8 billion.

Dividend: Ericsson board will propose a 2024 dividend per share of SEK 2.85 (up from SEK 2.70 Y/Y).

CEO Börje Ekholm noted further signs that the overall RAN market is stabilizing, with strong growth in North America supporting a return to Networks sales growth in the fourth quarter. However, the company has yet to accomplish its long-term EBITA goal. 

Outlook: Ericsson expects first-quarter sales growth for Networks and Cloud Software and Services to be similar to the 3-year average seasonality and a first-quarter adjusted gross margin for Networks of 47%- 49%.

Ericsson and rivals grappled with a weak telecom equipment market as operators postponed expensive network upgrades. This prompted companies like Ericsson to adopt cost-cutting measures and pivot to markets like the U.S. and India.

Ericsson stock surged over 57% in the last 12 months. Investors can gain exposure to the stock through Defiance Connective Technologies ETF SIXG and Global X Artificial Intelligence & Technology ETF AIQ.

Price Action: ERIC stock is down by 8.20% at $8.17 premarket at last check Friday.

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