On Tuesday, Ericsson Nikola Tesla published its results for the first nine months of 2026. Sales revenue rose 23.3% YoY to EUR 204.2m, with growth in all three business segments, and contracted orders increased to EUR 231.5m from EUR 196.4m. Operating profit grew 11.6% to EUR 17.9m and net profit 9.0% to EUR 14.7m, while operating cash flow strengthened to EUR 23.6m. Most of the acceleration came in the third quarter, when sales reached EUR 73.2m, up 33.6% YoY and the highest quarterly figure since Q4 2024, although higher selling and administrative costs kept Q3 operating profit at last year’s level.
Breaking down revenue by market, domestic sales rose 61.7% YoY to EUR 69.2m (9M 2025: EUR 42.8m), making the domestic market the main source of growth. In Q3 alone, domestic sales reached EUR 30.1m, about twice the EUR 14.8m recorded a year earlier, driven by deliveries on the e-HZMO project for the Croatian Pension Insurance Institute. Deliveries also continued under the multi-year agreements with Hrvatski Telekom covering the radio access network, microwave equipment and the dual-mode 5G core, and under the new five-year contract with A1 Hrvatska, signed in Q2, under which Ericsson NT remains the sole supplier of A1’s radio access network and its maintenance provider. Sales to Ericsson grew 6.9% YoY to EUR 112.1m, while other export markets rose 27.2% to EUR 22.9m, with network expansion and modernisation work for HT Mostar, Crnogorski Telekom, Telekom Kosova and IPKO.
Ericsson NT quarterly sales revenue by market (Q1 2025 – Q3 2026, EURm)
Source: Company data, InterCapital Research
By business segment, Software Engineering and Services, which covers R&D for Ericsson and services for Ericsson’s customers worldwide, remained the largest at EUR 112.1m (+6.9% YoY). The R&D centre took on additional responsibility for RAN Layer 1 and Layer 2 software development, extending its role in 5G and future 6G radio access networks. Telecom Solutions grew 33% to EUR 61.3m, and Digital Society more than doubled, rising 110% to EUR 30.8m. Digital Society recorded EUR 19.0m of sales in Q3 alone, against EUR 6.5m a year earlier, which makes the timing of the e-HZMO deliveries the largest single factor behind the quarter. Work on public sector projects in healthcare and land administration also continued, including the land registry information system in Cyprus.
Ericsson NT sales by business segment (9M 2025 vs 9M 2026, H1 and Q3, EURm)
Source: Company data, InterCapital Research
Looking at profitability, gross profit rose 30.8% YoY to EUR 27.4m, lifting the gross margin to 13.4% from 12.6% on a higher share of high value-added work, with margins improving in Telecom Solutions and Software Engineering and Services. Selling and administrative costs rose to EUR 11.7m, or 5.7% of sales, reflecting stronger sales activity, investment in organisational capacity and the introduction of AI tools across the business. Operating profit increased 11.6% to EUR 17.9m, but the operating margin declined to 8.8% from 9.7%. In Q3, operating profit amounted to EUR 4.5m, broadly unchanged from EUR 4.6m a year earlier even as sales rose by a third, so the quarterly operating margin fell to 6.2% from 8.5%. Net financial income declined to EUR 0.2m from EUR 0.5m, and net profit rose 9.0% to EUR 14.7m, implying a return on sales of 7.2%.
Ericsson NT key financials (9M 2025 vs 9M 2026, EURm)
Source: Company data, InterCapital Research
On the balance sheet, operating cash flow rose to EUR 23.6m from EUR 13.7m, supported by the collection of receivables and the timing of new contracts. The Company repaid the remaining EUR 7.4m of borrowings and paid a dividend of EUR 13.52 per share, or EUR 17.8m in total, in July. Cash and cash equivalents, including short-term financial assets, stood at EUR 48.1m at the end of September (28.6% of total assets), against EUR 51.9m at the end of 2025, and the equity ratio was 40.2%. Working capital days lengthened to 53 from 43 a year earlier, as inventories rose to EUR 14.8m from EUR 10.8m at the end of 2025 on more complex customer projects, which remains the main item to monitor.
The domestic market data support continued network investment. According to HAKOM, 5G connections accounted for 47.7% of mobile broadband lines in Croatia in Q2 2026, up from 29.3% a year earlier, and mobile data traffic grew 35.1% YoY to 506 PB in the quarter. Hrvatski Telekom and A1 Hrvatska both have multi-year radio network agreements with Ericsson NT, which ties a large part of the Telecom Solutions pipeline to the continued 5G build-out.
Croatian mobile broadband lines by technology (Q1 2023 – Q2 2026, m, left), 5G share (%, right)
Source: HAKOM, InterCapital Research
Looking ahead, management will focus in the final quarter on delivering contracted work and developing new business, in line with the ENT2030 strategy. Contracted orders of EUR 231.5m exceed nine-month sales by 13%, which gives good visibility into Q4 and 2027. The comparison base becomes tougher in Q4, when sales reached EUR 73.0m in 2025, against EUR 54.8m in Q3 2025. On the cost side, the factors to watch are the higher SG&A base, personnel costs, which rose 10.5% YoY to EUR 104.8m with around 2,900 employees, and working capital.
From a market perspective, ERNT shares have risen 16.5% over the past 12 months to EUR 219, while the CROBEX10 gained 24.1% over the same period. The shares went ex-dividend on 15 June. At the current price, ERNT trades at about 15x trailing twelve-month earnings and offers a dividend yield of 6.2% based on the EUR 13.52 dividend paid in July.
ERNT share price development vs CROBEX10 (October 2025 – October 2026, rebased to 100)
Source: ZSE, InterCapital Research