Abstract
LM Ericsson Telephone will release its quarterly results on January 23, 2026 Pre-Market, with consensus pointing to revenue of 7.10 billion US dollars and adjusted EPS of 0.24, while investors look for confirmation of margin stability, operating leverage from cost actions, and clearer signals on near-term order conversion into revenue.Market Forecast
Consensus for the upcoming quarter indicates revenue of 7.10 billion US dollars, up 2.46% year over year, adjusted EPS of 0.24, up 17.50% year over year, and EBIT of 1.13 billion US dollars, up 15.99% year over year. Forecast margins were not specified in the dataset; investors will gauge gross profit and net profit trends from management’s narrative and the composition of revenue. The core revenue engine continues to be the Network business, supported by a steady mix of hardware and software deliveries; Cloud Software and Services remains a meaningful contributor with multiyear contracts that can smooth quarter-to-quarter volatility. The Enterprise segment is the most notable area for incremental growth potential, supported by last quarter revenue of 0.53 billion US dollars and a growing pipeline of deployments across key accounts.Last Quarter Review
In the prior quarter, LM Ericsson Telephone delivered revenue of 5.92 billion US dollars (-0.30% year over year), a gross profit margin of 48.09%, GAAP net profit attributable to the parent company of 1.17 billion US dollars (net profit margin 19.82%), and adjusted EPS of 0.36 (+133.55% year over year). A notable highlight was the quarter-on-quarter net profit improvement of 144.12%, reflecting stronger operating leverage and a favorable mix versus the preceding period. Main business contributions were led by Network at 3.73 billion US dollars (approximately 62.99% of revenue), followed by Cloud Software and Services at 1.61 billion US dollars (27.29%), Enterprise at 0.53 billion US dollars (8.99%), and Other at 0.04 billion US dollars (0.73%).Current Quarter Outlook (with major analytical insights)
Networks: Revenue cadence, margin mix, and delivery phasing
The Network business remains the company’s primary revenue driver and the largest determinant of quarterly variability. This quarter’s setup centers on whether the shift in delivery phasing observed last quarter extends, which would influence both revenue recognition and gross margin structure. With consensus calling for total revenue of 7.10 billion US dollars and EBIT of 1.13 billion US dollars, the pathway to meeting expectations rests on the cadence of hardware shipments, the mix of software features attached to installed bases, and deal timing across a handful of large accounts. Pricing discipline and cost efficiencies are the key levers for protecting gross margin near last quarter’s 48.09% baseline; the extent of software attach can further buttress margins, while any heavier-than-expected hardware skew would put pressure on unit margins but could boost volume and operating leverage. Operating expense control, which supported the 144.12% quarter-on-quarter rebound in net profit, will again be scrutinized; sustained expense discipline would help translate modest top-line growth into proportionally larger EBIT and EPS gains.Within Networks, execution around contract milestones is a decisive factor for both revenue linearity and quarter-end margin quality. Slippage of even a small number of milestones can defer revenue into subsequent quarters, whereas on-time completions can support a sequential uplift against a seasonally mixed backdrop. Investors will pay close attention to signals on backlog conversion speed and any commentary on order intake stability, since these dynamics directly inform visibility into the first half of 2026. A favorable mix of software, services, and feature upgrades on the installed base could offset any softness in new project starts, helping keep margin momentum intact even if hardware volumes fluctuate.
Enterprise: Visibility, scale-up curve, and contribution to earnings quality
Enterprise is positioned as the most promising growth contributor over the medium term, having delivered 0.53 billion US dollars last quarter and benefitting from multi-site rollouts with key customers. The quarter’s central question is how quickly enterprise deployments can scale from pilot or early rollout stages into broader, repeatable implementations with durable maintenance and software revenue. This matters for two reasons: first, recurring revenue streams typically carry favorable gross margins; second, they improve predictability of earnings and cash flow, which is critical when consensus EPS is set at 0.24 (+17.50% year over year) on modest revenue growth of 2.46%. If the Enterprise pipeline converts at or above plan, it could provide a small-but-meaningful uplift to consolidated gross margins and EBIT above the 1.13 billion US dollars consensus anchor.Commercial velocity in Enterprise also influences working capital and free cash flow dynamics. Faster cycle times from order to revenue recognition can reduce inventory days and improve receivables collections, supporting cash generation and lowering near-term risk premiums. Conversely, elongated customer acceptance timelines can weigh on reported revenue and defer cash inflows even when the order book is healthy. This quarter, watch for qualitative detail on deal progression and any data points on renewal rates or upsell opportunities; those indicators will help assess how quickly Enterprise can evolve from an emerging contributor into a steady margin and cash flow enhancer.
Cloud Software and Services: Durability of recurring revenue and margin stabilization
Cloud Software and Services, which accounted for 1.61 billion US dollars last quarter, plays an important role in smoothing quarter-to-quarter results due to its contract-driven revenue and services mix. This quarter’s performance hinges on the trajectory of recurring revenue, the level of project completions, and the balance between consulting-heavy engagements and higher-margin software elements. The margin profile of this segment can vary based on delivery mix and the timing of large program transitions; maintaining a stable delivery mix tends to support consolidated gross margins and predictability. Given the consolidated EBIT target of 1.13 billion US dollars and the prior quarter’s robust 1.63 billion US dollars, a steady contribution from this segment will help sustain operating leverage even if Networks’ hardware mix fluctuates.From a risk management perspective, Cloud Software and Services also influences receivables and contract assets. Clear progress on delivery milestones, with limited deferrals, would improve working capital and enhance the quality of earnings, reinforcing EPS durability around the 0.24 consensus. Commentary on backlog health and renewal activity in this segment will be instrumental for framing the first half of 2026 earnings run-rate. If the company demonstrates continued control over project execution and margin mix, it could underpin a constructive view on consolidated gross margin resilience relative to the 48.09% mark reported last quarter.
Stock-price drivers this quarter: Margins, cash conversion, and book-to-bill visibility
This quarter’s equity narrative coalesces around three measurable pillars. The first is margin trajectory: absent explicit gross margin guidance in consensus, investors will triangulate gross profit progression from segment mix, the balance of software versus hardware, and commentary around pricing discipline and cost-out execution. The second is cash conversion: given last quarter’s strong net profit and adjusted EPS outcomes, confirmation of healthy working capital dynamics—particularly in inventories and receivables—would validate earnings quality and reduce volatility in valuation multiples. The third is order visibility: disclosures about order intake and the timing of major program deliveries can tighten the range of revenue scenarios for the next two quarters, anchoring expectations near the 7.10 billion US dollars consensus and informing whether EBIT can land at or above 1.13 billion US dollars.A constructive setup would show stable or improving gross margins relative to last quarter’s 48.09%, continued operating expense control that preserves the prior quarter’s operating leverage, and clear signs that backlog conversion is proceeding without material deferrals. Any deviation—such as a heavier hardware mix without offsetting software attach, or project slippages—could exert pressure on the consolidated margin structure and EPS relative to the 0.24 consensus. The share price response is likely to be asymmetric around margins and cash conversion; solid execution on these fronts could be more impactful than minor top-line variances, especially given the modest 2.46% revenue growth expectation.
Analyst Opinions
Within the period from January 01, 2026 to January 16, 2026, there were no new widely circulated previews or rating changes identified that would enable a reliable bullish-versus-bearish ratio specific to the upcoming report. As a result, there is no clear majority stance to present exclusively. The market’s baseline appears anchored to the company’s quantitative setup: revenue of 7.10 billion US dollars (+2.46% year over year), EBIT of 1.13 billion US dollars (+15.99% year over year), and adjusted EPS of 0.24 (+17.50% year over year). Against that backdrop, the analytical emphasis has coalesced around three themes: whether consolidated gross margin can hold near the 48.09% level seen last quarter, whether operating discipline supports incremental EBIT expansion even on moderate revenue growth, and whether cash conversion validates earnings quality.Interpreting these themes for the upcoming print, the crux of the majority commentary style—where available—revolves around execution consistency rather than directional calls on top-line acceleration. The prior quarter’s 144.12% quarter-on-quarter net profit surge provides a high bar for sequential comparisons, making the cadence of delivery milestones and segment mix especially relevant for margins and EPS. The most common framework for tracking upside versus downside risk frames Networks as the determinant of revenue variance, Enterprise as the incremental margin enhancer if deployments scale, and Cloud Software and Services as the stabilizer that can support EBIT durability through recurring elements and orderly project execution. In the absence of fresh, directional upgrades or downgrades in the defined period, the prudent interpretation is that consensus sits in wait-and-verify mode, with a bias to reward confirmation of margin stability and cash strength more than slight deviations in revenue.
Given the quantitative hurdles and mix dynamics, the earnings day setup will likely turn on how management characterizes delivery timing over the next quarter or two, the visibility into order intake translating into shipments, and the sustainability of cost measures that supported last quarter’s EPS inflection to 0.36. If management demonstrates that these elements are intact and likely to persist, it would support the case for upside versus the 1.13 billion US dollars EBIT consensus and provide investors with firmer confidence in the 2026 earnings run-rate. Conversely, lacking clear evidence on these fronts, the market may default to a conservative stance, holding near current consensus levels until additional datapoints emerge on margin and order momentum.
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