On Tuesday, Ericsson Nikola Tesla published its full-year 2025 business performance and financial results. 2025 also marks a management transition, as Siniša Krajnović succeeded Gordana Kovačević as CEO on 1 November 2025. While top-line pressure persisted, driven by softer domestic demand and slightly lower export activity, the Company managed a meaningful bottom-line recovery, supported by a lower tax burden.

Starting with total sales revenue, it amounted to EUR 238.6m, down 4.4% YoY, mostly because of lower export market sales, which fell from EUR 42.4m in 2024 to EUR 30.5m, noting a decrease of 28% YoY. The decline in export sales revenue was partially offset by growing sales revenue from Ericsson Services, which grew 1.9% YoY to EUR 143.4m, up from EUR 140.7m in 2024.

Ericsson NT sales breakdown by market (FY 2021 – FY 2025, EURm)

Source: Ericsson Nikola Tesla, InterCapital Research

Breaking down revenue by market, domestic market revenue amounted to EUR 64.7m, a 2.6% YoY decline from EUR 66.4m in 2024. Despite the modest decline, ENT maintained strong strategic partnerships on the domestic front, extending its strategic partnership with Hrvatski Telekom, with a new five-year exclusive agreement for the supply of microwave equipment, which was signed in Q1 2025. 5G core and radio network modernization activities continued under multi-year frameworks with both HT and A1, and the Digital Society segment signed new contracts with the Ministry of the Interior, the State Geodetic Administration, the Ministry of Justice, the Ministry of Tourism and HZMO, reaffirming the Company’s growing footprint in public sector digitalization.

In the export markets (excluding services to Ericsson), revenue amounted to EUR 30.5m, a 28% YoY decrease due to the modernization projects on the Kosovo market. Cooperation with regional operators continued, with HT Mostar on LTE and VoLTE expansion, BH Telecom on microwave transport systems modernisation, Crnogorski Telekom on dual-mode 5G Core implementation, and both Telekom Kosovo and IPKO on ongoing 4G/5G radio and transport network upgrades. Additionally, activities in Cyprus on the modernisation of the land registry information system continued during the year.

In the Ericsson market, revenue amounted to EUR 143.4m, an increase of 1.9% YoY, with a strong year for the ENT R&D Centre, which hired 120 new engineers, significantly increasing the development capacity for key network technologies, consolidating its position as one of the key contributors to Ericsson’s global portfolio.

Ericsson NT key financials (FY 2025 vs FY 2024, EURm)

Source: Ericsson Nikola Tesla, InterCapital Research

Looking at profitability, gross profit held flat YoY, at EUR 28.3m versus last year’s EUR 28.4m, with gross margin improving by 0.5 p.p. to 11.9%, reflecting a more favourable sales mix and the company’s ongoing cost optimisation efforts. Operating profit declined 5.6% YoY to EUR 20.9m, with the operating margin nearly unchanged at 8.8%. The net financial result amounted to EUR 0.6m, softening due to lower interest income as market rates declined. Taking everything into account, net income grew 13.8% YoY to EUR 17.7m, as a one-off tax adjustment in 2024 inflated last year’s tax charge to EUR 7.7m versus EUR 3.7m in 2025. Consequently, Return on Sales improved by 1.1 p.p. to 7.4%.

On the balance sheet, the Company remains on a solid footing. Cash and cash equivalents, including short-term financial assets, stood at EUR 51.9m at year-end (30.5% of total assets), down from EUR 63.1m at the end of 2024, partly reflecting the dividend outflow and treasury share buybacks. Operating cash flow strengthened to EUR 17.5m, compared to EUR 10.3m in 2024, driven by better receivables collection and active liquidity management. One area to monitor is the extension of working capital days from 38 to 47, due to more capital-intensive projects and elongated collection dynamics across all markets.

Looking ahead, Ericsson Nikola Tesla remains focused on consolidating its domestic leadership while expanding its portfolio and footprint. Management continues to emphasize technological leadership in 5G/6G development and public sector digitalization, while the R&D and Solutions Centre is increasingly incorporating AI technology into software tools for mobile network management and optimisation. The ENT 2030 long-term strategy is currently in preparation and is expected to outline the company’s medium-term growth and transformation roadmap. Near-term margin headwinds from rising personnel costs and a higher SG&A ratio remain factors to watch, though the gross margin improvement achieved in FY2025 despite lower revenues suggests cost optimisation efforts are gaining traction.

The Board has proposed a dividend of EUR 13.52 per share, up from EUR 10.54 paid in July 2025, continuing the company’s track record of returning capital to shareholders. In the graph below, we are bringing you a historical overview of the company’s dividend per share and dividend yield. Note that the yields were calculated based on the closing price the day before the initial dividend proposal.

Ericsson NT dividends per share (2013 – 2026, EUR, left), dividend yield (2013 – 2026, %, right)

Source: Ericsson Nikola Tesla, InterCapital Research

From a market perspective, ERNT’s share price has remained broadly flat over the past 12 months, while the CROBEX10 index advanced roughly 30%, a divergence that reflects the challenging revenue environment the company navigated during the year.

Ericsson NT share price development (January 2025 – 2026 YTD)

Source: Bloomberg, InterCapital Research