ERIC

Q1 was a solid start with reporting sales falling 10% due to currency headwind, but organic growth of 6% with all segments contributing. We've balanced geographic mix less sensitive to it, network gross margin 50.4%, cloud software services gross margin up over 300 basis points year over year. EBITDA 5.6 billion kronor, margin 11.3%, cash flow 5.9 billion kroner, net cash 68.1 billion. In AI phase, high-performance mobile connectivity important, mission-critical networks and 5G-based sensing showing momentum.

Q2 outlook: networks sales growth similar to three-year average quarter-on-quarter seasonality, cloud software services sales growth above three-year average. Network adjusted gross margin expected in range of 49-51%, restructuring charges for 2026 at elevated level with large part seen in Q1.

Net sales in Q1 totaled 49.3 billion, with organic sales growing 6%. Network sales decreased 8% year-on-year to 32.9 billion, having a negative currency impact of 5.2 billion, but organic sales increased by 7%, and networks adjusted gross margin decreased slightly to 50.4%. Cloud software services sales decreased 9% to 11.8 billion, including a negative currency impact of 1.6 billion, with organic sales growing by 4%, and adjusted gross margin came in at 43.2%. Enterprise sales reported decreased 30% impacted by sale of iConnective and Currency, with organic growth of 4%, and adjusted EBITDA landed at minus 1.4 billion.

Global uncertainty remains elevated given broad geopolitical and macroeconomic environment, including global semiconductor situation, component price inflation poses headwind.

Q: Simon Granath on memory and cost inflation, A: When it comes to Outlook, we give Outlook for next quarter. MISI memory cost and other semiconductor costs have a headwind, we work with suppliers and customers to mitigate, but too early to say impact in second half.

Q: Andrew Gardner on North American revenue trends, A: Development in Q1 similar to year, less exposed to North America from geographic mix perspective, investments to diversify mix, India and Japan show healthy growth.

Q: Erik Lindholm on OPEX and cost savings, A: OPEX down organically, inflation related to people costs, continuous work on cost savings, measures will show more in second half and next year.

Q: Andreas Jolsen on COGS and gross margin, A: Work on prices, product substitution through technology development to lower cost, take costs out on service delivery.

Q: Richard Kramer on AI and sales growth, A: Exposure to AI from applications, not directly from data center expansions, benefit from overall migration of applications towards AI.

Q: Felix Hendrickson on cloud software services margin, A: Aim to reach stable double-digit margin, growth led by 5G core demand, have good market position.

Q: Ulrik on FX matching and hedging, A: Separate between gross margin and EBITDA margin, FX mix impacts beta more than gross margins, hedging levels low, not big impact going forward.

Q: Sandy on 5G and 5G core outside North America, A: Operators migrating to 5G SA and 5G advanced, providing opportunity for us as operators upgrade, invested in 5G core positioning.

Q: Daniel Djerberg on network margins and markets, A: Network across margins good despite mix, outlook for Q2 networks 49-51, signals stability.

Q: Sebastian Stabovitz on defense market opportunity, A: Defense market opportunity near term, reception from customers positive, expect materialize over next 9-18 months.

Q: Sami on input cost and operator agreements, A: Discussions with customers on price increases, energy costs impact TCO, customers focusing on energy efficiency.

Q: Oliver on logistics and transportation cost, A: Logistical impact limited, flexible supply chain to manage disturbances.

Q: Daniel Djerberg on Latin America and competition, A: Can't talk about specific customers, but compete well with Chinese competitors on product performance.