Ericsson Recorded Sales Decline and Net Loss in 2Q24

The second quarter of 2024 was a period of lower overall sales for Ericsson, higher net loss, and a continued justification of a $6.2 billion purchase of Vonage in 2022. An upturn in business from North America provided a glimmer of light in an otherwise tricky second quarter for the Swedish vendor.

In earnings documents, Ericsson bosses pointed to an improving gross margin and solid free cash flow of SEK7.6 billion ($721.2 million), excluding merger and acquisition numbers. Net loss grew from SEK600 million in 2Q23 to SEK11 billion, albeit this counts as an impairment. Sales of SEK59.8 billion were down 7%. Ericsson president and CEO Borje Ekholm said the company maintained a leading market position during Q2, pointing to a return to growth in North America alongside the cash flow and margin figures. Ekholm added Ericsson remained focused on matters in their control, pointing to optimization efforts in a challenging market marked by unsustainably low industry investment levels.

Ekholm defended Vonage as foundational to efforts to deliver a global platform for network APIs. The company recently revealed the cloud unit accounted for the bulk of a SEK11.4 billion impairment charge booked for the quarter, the second big hit relating to the business within the past 12 months. Ekholm explained the latest charge was caused by a slowdown in Vonage’s current business, but appeared to argue there is a long-term payoff to be had as APIs become a critical element in enterprise and consumer digitalization moves, and so drive future growth in the telecoms industry.

India was another factor impacting Ericsson’s sales, with Ekholm stating operator spending slowed. Operators in the nation are being stretched by various regulatory and infrastructure investment factors, as evidenced by tepid uptake for 5G-suitable spectrum in an auction during June. Ekholm expects little in the way of recovery from India in the second half of 2024, tipping contract deliveries in North America to take up the slack.