Ericsson's Q4 Revenue, Core Profit Surge on US Demand Recovery

Ericsson, a leading global provider of telecommunications equipment and services, reported a strong fourth quarter (Q4) 2024, with revenue and core profit rising significantly on the back of a recovery in US demand. The Swedish tech giant's sales increased by 2% year-over-year (YoY), driven primarily by the 54% growth in the North American market area. This growth can be attributed to several strategic priorities and operational excellence initiatives implemented by the company.

One of the key strategic priorities for Ericsson has been maintaining leadership in programmable networks. The company launched new 5G Advanced software in October 2024, which includes seven new products designed to empower communications service providers (CSPs) with high-performing programmable networks. These innovations aim to elevate performance, enhance user experience, and drive revenue growth and operational efficiency. The seven new 5G Advanced products or subscriptions, including Real-time AI-powered automation, Outdoor Positioning, Mission Critical Services, RAN Differentiated Connectivity, Energy Efficiency and Management, Premium Network Performance, and Device Battery Performance, have contributed to the growth in US demand for Ericsson's products and services.



Another strategic priority for Ericsson has been growing interest in network APIs. The growing demand for financial fraud protection and Quality on Demand applications has opened up new possibilities for the industry, allowing CSPs to monetize new services and enhance their network performance. By integrating these cutting-edge solutions, CSPs like AT&T can enhance their network performance and achieve operational efficiencies, contributing to their overall success and Ericsson's Q4 performance.

Operational excellence initiatives, such as commercial discipline and supply chain efficiency actions, have also played a significant role in Ericsson's Q4 performance. The company's adjusted gross margin increased to 46.3% (41.1%) driven by supply chain efficiency actions, commercial discipline, and market mix. This is a 5.2 percentage point improvement compared to the prior year. Additionally, Ericsson's adjusted EBITA margin improved to 14.1% (11.4%) benefiting from higher gross income and cost actions, partly offset by bonus accruals which were above target level. This is a 2.7 percentage point improvement compared to the prior year.

In conclusion, Ericsson's Q4 revenue and core profit surge can be attributed to the recovery in US demand, driven by strategic priorities such as maintaining leadership in programmable networks and growing interest in network APIs. Operational excellence initiatives, such as commercial discipline and supply chain efficiency actions, have also contributed to the company's strong Q4 performance. With a 2% YoY increase in organic sales growth and an adjusted EBITA margin improvement to 14.1%, Ericsson is well-positioned to continue its growth trajectory in the coming years.