Telefonaktiebolaget LM Ericsson (ERIC) 6-K Current report (foreign)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

January 20, 2023

Commission File Number 000-12033

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 21, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F   ☒ Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Announcement of LM Ericsson Telephone Company, January 20, 2023 regarding “Fourth quarter and full-year report 2022”.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TELEFONAKTIEBOLAGET LM ERICSSON (publ)
By:	/s/STELLAMEDLICOTT
	Stella Medlicott
	Senior Vice President,
	Chief Marketing and Communications Officer
By:	/s/CARLMELLANDER
	Carl Mellander
	Senior Vice President, Chief Financial Officer

Date: January 20, 2023

Fourth quarter and full-year report 2022

Stockholm, Jan 20, 2023

Fourth quarter highlights

• The quarter was impacted by an IPR agreement resulting in total IPR revenues of SEK 6.0 (2.4) b. and previously announced charges of SEK -4.0 b., including DOJ provision, IoT divestment and Cloud Software and Services contract and portfolio exits.

• Group organic sales¹ grew by 1% YoY., of which IPR revenues contributed with 5 percentage points. Reported sales were SEK 86.0 (71.3) b. of which Vonage contributed SEK 4.1 b.

• Gross income increased to SEK 35.6 (30.8) b., while gross margin decreased to 41.4% (43.2%) primarily due to business mix change in Networks and previously announced charges for contract exits and portfolio adjustments in Cloud Software and Services.

• EBITA excluding restructuring charges amounted to SEK 9.3 (12.8) b. with an EBITA margin of 10.8% (17.9%). EBITA was impacted by the previously announced charges.

• Free cash flow before M&A was SEK 16.9 (13.5) b. mainly driven by reduced inventory and high cash collection including IPR collection.

• Return on capital employed was 15.4% (26.6%) driven by lower EBIT.

Full-year highlights

• Group organic sales¹ grew by 3%, driven by a 4% increase in Networks and 16% in Enterprise. Reported sales were SEK 271.5 (232.3) b.

• Gross income increased to SEK 113.3 (100.7) b. with increases in segments Networks, Cloud Software and Services, and Enterprise.

• EBITA amounted to SEK 29.1 (33.3) b. with an EBITA margin of 10.7% (14.3%). EBITA was negatively impacted by previously announced charges of SEK -5.5 b., partly compensated by increased IPR licensing revenues.

• EBIT margin excl. restructuring charges was 10.1% (13.9%). Excluding Vonage and previously announced charges during the year, EBIT margin was 12.9%, reaching the 2022 target of 12-14%.

• Net income was SEK 19.1 (23.0) b. EPS diluted was SEK 5.62 (6.81).

• Free cash flow before M&A amounted to SEK 22.2 (32.1) b. Net cash was SEK 23.3 (65.8) b. at year-end 2022.

• Return on capital employed was 14.0% (18.4%) driven by higher capital employed and lower EBIT.

• A dividend for 2022 of SEK 2.70 (2.50) per share will be proposed to the AGM by the Board of Directors.

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		86.0	��		71.3			21	%		68.0			26	%		271.5			232.3			17	%
Sales growth adj. for comparable units and currency ²		—			—			1	%		—			—			—			—			3	%
Gross margin ²		41.4	%		43.2	%		—			41.4	%		—			41.7	%		43.4	%		—
EBIT		7.9			11.9			-34	%		7.1			10	%		27.0			31.8			-15	%
EBIT margin ²		9.1	%		16.6	%		—			10.5	%		—			10.0	%		13.7	%		—
EBITA ²		9.0			12.3			-26	%		7.6			19	%		29.1			33.3			-13	%
EBITA margin ²		10.5	%		17.2	%		—			11.2	%		—			10.7	%		14.3	%		—
Net income		6.2			10.1			-39	%		5.4			15	%		19.1			23.0			-17	%
EPS diluted, SEK		1.82			3.02			-40	%		1.56			17	%		5.62			6.81			-17	%
Measures excl. restructuring charges²
Gross margin excluding restructuring charges		41.5	%		43.5	%		—			41.4	%		—			41.8	%		43.5	%		—
EBIT excluding restructuring charges		8.1			12.3			-34	%		7.2			12	%		27.4			32.3			-15	%
EBIT margin excluding restructuring charges		9.4	%		17.3	%		—			10.6	%		—			10.1	%		13.9	%		—
EBITA excluding restructuring charges		9.3			12.8			-27	%		7.7			21	%		29.5			33.8			-13	%
EBITA margin excluding restructuring charges		10.8	%		17.9	%		—			11.3	%		—			10.9	%		14.6	%		—
Free cash flow before M &A		16.9			13.5			25	%		2.5			—			22.2			32.1			-31	%
Net cash, end of period		23.3			65.8			-65	%		13.4			74	%		23.3			65.8			-65	%

¹ Sales adjusted for comparable units and currency

²  Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements

1    Ericsson | Fourth quarter and full year report 2022

CEO comments

With our fourth quarter result we are on track to deliver on our long-term EBITA target of 15-18% by 2024. We remain fully committed to our strategic ambitions and have full confidence in the long term. During the quarter, we made measurable progress towards achieving these ambitions, against a backdrop of broad macroeconomic headwinds. As we said during our Capital Markets Day, there are near-term uncertainties, however, we are still in the early phase of global 5G rollout and widespread enterprise digitalization.

Our strategy remains rooted in driving sustainable growth and maximizing value across all stakeholders. We are confident that we have the right team and strategy in place to extend our leadership in mobile networks; achieve profitability in Cloud Software and Services; execute in our high growth Enterprise segment; shape the industry landscape by becoming a platform company leveraging the 5G innovation platform; and continue our unwavering commitment to a culture of integrity.

This quarter, we signed a multiyear IPR patent license agreement with a major licensee. This positive outcome positions us well to capture further 5G patent license agreements among handset manufacturers and in new areas such as consumer electronics and IoT. We expect significant IPR revenue growth over the coming 18-24 months.

Group Net Sales¹ grew by 1% YoY, of which IPR revenues contributed with 5 percentage points. EBITA² of SEK 9.3 (12.8) b. corresponds to a margin² of 10.8% (17.9%). The positive impact from higher IPR revenues was offset by expected business mix shift and previously announced charges of SEK -4 b. We executed on our ambition to reduce inventory contributing to our free cash flow before M&A of SEK 16.9 (13.5) b.

Our Networks business grew in India on the back of significant market share gains. As anticipated, the growth from share gains in several markets could not fully compensate for reduced operator capex and inventory reductions in other markets, including North America. Gross margin² was 44.6% (46.4%), negatively impacted by this business mix shift including a higher share of services sales from large network rollout projects. The IPR patent license agreement had positive margin impact.

During the quarter, we were able to largely offset the impact of high inflation with commercial activities, including product substitution. We continue to invest in technology to enhance performance and cost leadership, expand our global footprint and improve productivity and capital efficiency across the supply chain.

In Cloud Software and Services, organic sales¹ decreased by -2% excluding IPR revenues. Sales growth in North America – mainly from 5G Core contracts – was offset by a decline in other market areas. We remain committed to improving profitability and are on a clear path to reaching operating profit break-even for full-year 2023 by limiting subscale software development, accelerating automation, and changing focus from market share gains to profitability. In Q4, we decided to exit certain subscale business, with a one-off charge.

Within Enterprise, we continue to leverage our strength in mobile networks to accelerate our business. Organically, sales¹ grew by 15%. Our Enterprise strategy is underpinned by two pillars: First, our Enterprise Wireless Solutions business, focused on capturing the multi-billion-dollar enterprise market opportunity for 5G optimized networking and security solutions. Second, through the Global Communication Platform business, we will enable new ways of monetizing 5G by transforming how network features such as speed and latency are globally exposed, consumed and paid for. Enterprise is a growth engine for the company, and we continue to fine-tune our portfolio to maximize profitability. To this end, we announced the divestment of our loss-making IoT business in Q4. We continue to invest to strengthen our enterprise go-to-market channel and broaden our enterprise product portfolio. In addition, we are increasing our investments in developing the network APIs that will underpin the long-term growth in Global Communication Platform. From 2024 and beyond our enterprise business will be a major driver of Ericsson’s long-term growth and profitability, however, these investments will weigh on profitability during 2023.

We remain positive on the long-term outlook for our business. However, the near-term outlook, as we also described at our Capital Markets Day, remains uncertain. We expect operators to continue to sweat assets in response to macroeconomic headwinds. In addition, we expect operators to adjust inventory levels as supply situation eases. These trends started to impact Networks in Q4 and we expect them to continue at least during the first half of 2023. At the same time, we expect good growth from market share wins, albeit not fully offsetting the near-term headwinds. In the longer-term, capex is driven by traffic growth. Given near-term macroeconomic headwinds, we expect Enterprise to grow somewhat slower than during 2022.

While the quarter saw the easing of supply chain related challenges, the inflationary environment persisted. We remain focused on navigating near-term headwinds through our commercial initiatives but also by making Ericsson more cost-effective. We expect to start seeing the effect of our SEK 9 b. cost savings activities during the second quarter of 2023. We anticipate declining margins in Networks during the first half of 2023 due to changing business mix. In Q1 we expect the EBITA² for the Group to be somewhat lower than EBITA² last year, with improvements during the year.

We remain focused on reaching a resolution with the US authorities regarding the previously announced Deferred Prosecution Agreement (DPA) breach notices received by the company. In this regard, we have this quarter booked a SEK 2.3 b. (approx. USD 220 million) provision as we are now in a position to make a sufficiently reliable estimate of the financial penalty (and additional monitoring costs) associated with a breach resolution.

2    Ericsson | Fourth quarter and full year report 2022 CEO comments

Separately, and with respect to the past matters described in the company’s 2019 Iraq investigation report, we continue to thoroughly investigate the facts in full cooperation with the DOJ and the SEC to determine if there is any merit to the allegations.

Building a culture of ethics and integrity remains a top priority, and I am convinced that best-in-class compliance will give our company a competitive advantage. Both the company’s resolution with the DOJ and the SEC in 2019 and the ongoing investigation into past conduct in Iraq clearly highlight the importance of intelligent decision-making and effective risk management.

In conclusion, I would like to thank all my colleagues for their diligence and efforts to deliver long-term stakeholder value as they continue to execute on our strategy. The commitment and passion of our team is what inspires me the most as we redefine both our company and our industry. The actions we have taken have positioned us to be a true industry leader.

Börje Ekholm

President and CEO

¹  Sales adjusted for comparable units and currency

²  Excluding restructuring charges

Financial highlights

Net sales Segments

SEK b.	Q4 2022		Q4 2021		YoY change			YoY adj.¹			Q3 2022		QoQ change			Jan-Dec 2022		Jan-Dec 2021		YoY change			YoY adj.¹
Networks		58.6		51.1		15	%		1	%		48.1		22	%		193.5		167.8		15	%		4	%
Cloud Software and Services		20.2		18.0		13	%		2	%		14.2		42	%		60.5		56.2		8	%		-1	%
Enterprise		6.6		1.8		265	%		15	%		5.2		28	%		15.4		6.2		147	%		16	%
Other		0.6		0.5		18	%		10	%		0.5		8	%		2.2		2.0		8	%		3	%
Total		86.0		71.3		21	%		1	%		68.0		26	%		271.5		232.3		17	%		3	%

¹  Sales growth adjusted for comparable units and currency. Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.

Net sales Market Areas

SEK b.	Q4 2022		Q4 2021		YoY change			YoY adj.¹			Q3 2022		QoQ change			Jan-Dec 2022		Jan-Dec 2021		YoY change			YoY adj.¹
South East Asia, Oceania and India		11.2		8.6		31	%		21	%		7.9		42	%		33.0		28.8		14	%		7	%
North East Asia		8.4		9.8		-14	%		-16	%		5.6		50	%		26.7		29.1		-8	%		-11	%
North America		25.3		22.3		14	%		-7	%		26.5		-5	%		95.4		77.5		23	%		5	%
Europe and Latin America		20.9		19.2		9	%		0	%		15.3		36	%		66.8		60.3		11	%		4	%
Middle East and Africa		7.4		6.9		6	%		-4	%		5.7		30	%		22.6		20.8		9	%		-1	%
Other²		12.8		4.5		186	%		—			7.0		81	%		27.1		15.9		71	%		—
Total		86.0		71.3		21	%		1	%		68.0		26	%		271.5		232.3		17	%		3	%

¹ Sales growth adjusted for comparable units and currency.

² ”Other” includes primarily IPR licensing revenues and the major part of segment Enterprise.

Sales breakdown by market area by segment is available at the end of this report.

Fourth quarter comments

Segments

Group reported sales increased by 21% YoY to SEK 86.0 b. Sales adjusted for comparable units and currency grew by 1% YoY, of which IPR revenues contributed with 5 percentage points.

IPR licensing revenues increased to SEK 6.0 (2.4) b. Revenues in the quarter were impacted by retroactive revenues for unlicensed periods, from a new contract with one licensee signed in the quarter.

Networks sales adjusted for comparable units and currency grew by 1%, of which IPR revenues contributed with 6 percentage points. Double-digit growth in market area South East Asia, Oceania and India was offset by decline in the other market areas. Networks reported sales were SEK 58.6 b., accounting for 68% (72%) of Group sales.

Cloud Software and Services sales adjusted for comparable units and currency grew by 2%, of which IPR licensing revenues contributed with 4% percentage points. Sales growth in market area North America was not fully offset by decline in other market areas. Cloud Software and Services reported sales were SEK 20.2 b., accounting for 23% (25%) of Group sales.

Enterprise sales adjusted for comparable units and currency increased by 15%, primarily driven by Enterprise Wireless Solutions. Enterprise reported sales were SEK 6.6 b. accounting for 8% (3%) of Group sales. Vonage sales were SEK 4.1 b.

3    Ericsson | Fourth quarter and full year report 2022 CEO comments

Market Areas

Sales adjusted for comparable units and currency increased in market area South East Asia, Oceania and India, while sales were stable in Europe and Latin America. Sales declined in the other market areas, mainly due to reduction in operator capex investments in light of macroeconomic pressures. In addition, especially front-runner operators reduced purchases as inventories were optimized due to supply chain constraints easing.

In market area South East Asia, Oceania and India, sales adjusted for comparable units and currency increased by 21% primarily driven by 5G market share gains in India. However, a slowdown of investment in certain countries in South East Asia negatively impacted sales in the quarter.

In market area North East Asia, sales adjusted for comparable units and currency declined, after elevated 5G investment levels during the first three quarters of the year.

Sales adjusted for comparable units and currency declined in market area North America, after accelerated capex investments in prior quarters. Some operators are guiding for reduction in capex investments and are also optimizing inventory in the near-term as supply chain constraints ease.

Market area Other primarily includes IPR licensing revenues and a major part of segment Enterprise. Growth was driven mainly by acquisition of Vonage, impacting the quarter by SEK 4.1 b. and retroactive IPR licensing revenues for unlicensed periods.

4    Ericsson | Fourth quarter and full year report 2022 Financial highlights

Full-year comments

Segments

Reported sales increased by 17% to SEK 271.5 (232.3) b. Networks sales increased by SEK 25.6 b. to SEK 193.5 b. Cloud Software and Services sales increased by SEK 4.3 b. to SEK 60.5 b. Enterprise sales increased by SEK 9.1 b. to SEK 15.4 b. Sales in segment Other increased by SEK 0.2 b., to SEK 2.2 b. Sales adjusted for comparable units and currency increased by 3%.

IPR licensing revenues increased to SEK 10.4 (8.1) b. primarily as a result of a new patent license agreement including 5G.

Networks sales adjusted for comparable units and currency increased by 4% YoY. Market areas North America, Europe and Latin America and South East Asia, Oceania and India reported mid-single digit organic growth while sales in North East Asia and Middle East and Africa declined. Reported sales grew by 15%. Networks accounted for 71% (72%) of Group sales.

Cloud Software and Services sales adjusted for comparable units and currency decreased by -1% YoY. Sales growth in North America and in IPR licensing revenues was more than offset by sales decline in other market areas. Reported sales grew by 8%. Cloud Software and Services accounted for 22% (24%) of Group sales.

Enterprise sales adjusted for comparable units and currency grew by 16% YoY driven primarily by business area Enterprise Wireless Solutions. Reported sales grew by 147%. Enterprise accounted for 6% (3%) of Group sales. Vonage sales were SEK 7.0 b.

The share of hardware in the sales mix was 44% (46%), software 20% (20%) and services 36% (34%).

Market Areas

Sales adjusted for comparable units and currency increased in three of the five market areas.

Currency adjusted sales increased by 7% YoY in South East Asia, Oceania and India, driven by increased volumes in India on the back of significant market share gains, which compensated for lower investment levels in certain countries in the market area.

Currency adjusted sales in North East Asia decreased by -11% YoY as operators in several markets have finalized the first build-out phase of 5G.

Currency adjusted sales in North America increased by 5% YoY, driven by 5G network deployments and growth in 5G Core and cloud native solutions. Operator capex investments reached record levels in 2022, and some operators are guiding for reduction in capex investments and inventory optimization as supply chain constraints ease.

Currency adjusted sales in Europe and Latin America increased by 4% YoY with increases in both Europe and in Latin America. Sales in Networks increased as a result of high investment levels during the year and market share gains, partly offset by the decline in Russia.

Market area Other reported sales grew by 71%, driven by the acquisition of Vonage as well as increased IPR licensing revenues of SEK 10.4 (8.1) b. primarily as a result of a new patent license agreement including 5G.

5    Ericsson | Fourth quarter and full year report 2022 Financial highlights

Income and margin development

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		86.0			71.3			21	%		68.0			26	%		271.5			232.3			17	%
Gross income		35.6			30.8			15	%		28.1			26	%		113.3			100.7			12	%
Gross margin		41.4	%		43.2	%		—			41.4	%		—			41.7	%		43.4	%		—
Research and development (R&D) expenses		-13.2			-11.9			—			-11.9			—			-47.3			-42.1			—
Selling and administrative expenses		-11.8			-7.6			—			-9.4			—			-35.7			-27.0			—
Impairment losses on trade receivables		0.1			0.1			—			0.0			161	%		0.0			0.0			—
Other operating income and expenses		-2.8			0.4			—			0.2			—			-3.3			0.4			—
Share in earnings of JV and associated companies		0.0			0.0			—			0.0			—			0.0			-0.3			—
EBIT		7.9			11.9			-34	%		7.1			10	%		27.0			31.8			-15	%
of which Networks		12.5			11.8			6	%		9.6			30	%		38.5			37.3			3	%
of which Cloud Software & Services		0.7			0.6			14	%		-0.8			—			-1.7			-2.2			—
of which Enterprise		-2.9			-0.8			—			-1.7			—			-6.2			-3.0			—
of which Other		-2.3			0.3			—			0.0			—			-3.6			-0.3			—
EBIT margin ¹		9.1	%		16.6	%		—			10.5	%		—			10.0	%		13.7	%		—
EBITA ¹		9.0			12.3			-26	%		7.6			19	%		29.1			33.3			-13	%
EBITA margin ¹		10.5	%		17.2	%		—			11.2	%					10.7	%		14.3	%
Financial income and expenses, net		-0.5			-0.9			—			-0.5			—			-2.4			-2.5			—
Income tax		-1.2			-0.8			—			-1.2			—			-5.5			-6.3			—
Net income		6.2			10.1			-39	%		5.4			15	%		19.1			23.0			-17	%
Restructuring charges		-0.2			-0.5			—			-0.1			—			-0.4			-0.5			—
Measures excl. restr. charges and other items affecting comparability1
Gross margin excluding restructuring charges		41.5	%		43.5	%		—			41.4	%		—			41.8	%		43.5	%		—
EBIT excluding restructuring charges		8.1			12.3			-34	%		7.2			12	%		27.4			32.3			-15	%
EBIT margin excluding restructuring charges		9.4	%		17.3	%		—			10.6	%		—			10.1	%		13.9	%		—
EBITA excluding restructuring charges		9.3			12.8			-27	%		7.7			21	%		29.5			33.8			-13	%
EBITA margin excluding restructuring charges		10.8	%		17.9	%		—			11.3	%		—			10.9	%		14.6	%		—

¹  Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.

Fourth quarter comments

Gross income

Gross income increased by SEK 4.7 b. to SEK 35.6 b. with increases in all segments. Gross margin declined to 41.4% (43.2%). The new patent license agreement including 5G had a positive margin impact in Networks and Cloud Software and Services. Gross margin in Networks decreased to 44.4% (46.3%) primarily as a result of a business mix shift on the back of market share gains in several geographies, resulting in a higher share of services sales in large rollout projects that are contributing to gross profit but are gross margin dilutive. In Cloud Software and Services gross margin declined to 33.0% (35.4%) negatively impacted by the previously announced cost for the exit of subscale agreements and product offerings as well as a less favorable business mix. Enterprise gross margin declined to 43.5% (46.2%) mainly due to the addition of Vonage with a slightly lower gross margin than the rest of the Enterprise segment.

Research and development (R&D) expenses

R&D expenses increased by SEK -1.4 b. and amounted to SEK -13.2 (-11.9) b. including a negative YoY currency effect of SEK -0.7 b. R&D expenses increased primarily in Networks due to further investments in Cloud RAN and in Ericsson Silicon (ASICs). R&D expenses were also impacted by the acquisition of Vonage and increased investments to expand the Enterprise Wireless Solutions portfolio.

Selling and administrative (SG&A) expenses

SG&A expenses increased by SEK -4.2 b. to SEK -11.8 (-7.6) b. including a negative YoY currency effect of SEK -0.6 b. The increase is mainly related to acquisition of Vonage, which impacted SG&A by SEK -2.5 b. including amortization of intangible assets of SEK -0.9 b. The increase was also due to higher compliance and legal costs as well as investments in the go-to-market organization in Enterprise Wireless Solutions.

Other operating income and expenses

Other operating income and expenses was SEK -2.8 (0.4) b. The quarter was negatively impacted by a provision of SEK -2.3 b. related to a potential DPA breach resolution with U.S. Department of Justice, including estimated expenses for the previously announced extended monitorship, and by SEK -1.0 b. due to the announced charges related to the divestment of IoT and other portfolio adjustments.

Restructuring charges

Restructuring charges amounted to SEK -0.2 (-0.5) b. in the quarter, mainly due to the announced charges related to the divestment of IoT.

EBITA

EBITA declined to SEK 9.0 (12.3) b. EBITA was impacted by previously announced charges of SEK -4.0 b. (including restructuring charges) as well as by increased operating expenses with higher R&D and increased SG&A expenses in segment Enterprise. EBITA margin declined to 10.5% (17.2%) as a result of higher charges and lower gross margin.

6    Ericsson | Fourth quarter and full year report 2022 Financial highlights

EBIT

EBIT decreased to SEK 7.9 (11.9) b. corresponding to an EBIT margin of 9.1% (16.6%). EBIT was impacted by SEK -1.2 (-0.4) b. of amortization of intangible assets, mainly related to Vonage.

Financial income and expenses, net

Financial net was SEK -0.5 (-0.9) b. The weakened USD to SEK resulted in a positive currency hedge effect of SEK 0.3 (-0.3) b.

Taxes

Taxes were SEK -1.2 (-0.8) b. Taxes were positively impacted by SEK 0.6 b. as a result of the utilization of previously impaired withholding tax assets in Sweden.

Net income

Net income decreased to SEK 6.2 (10.1) b. and EPS diluted declined to SEK 1.82 (3.02).

Employees

The number of employees on December 31, 2022, was 105,529 compared with 104,490 on September 30, 2022. The increase is mainly due to increases in service delivery for large roll-out projects.

Full-year comments

Gross income

Gross income increased to SEK 113.3 (100.7) b. with increases in all segments. Gross margin decreased to 41.7% (43.4%) negatively impacted mainly by increased component cost, inflationary pressure and large-scale projects from market share gains in Networks, as well as an impact from initial 5G Core deployment costs in Cloud Software and Services, partly offset by retroactive IPR licensing revenues.

Research and development (R&D) expenses

R&D expenses increased by SEK -5.2 b. to SEK -47.3 (-42.1) b. including a currency effect of SEK -2.1 b. R&D expenses increased primarily in Networks as a result of further investments in Cloud RAN and in Ericsson Silicon (ASICs) as well as in Enterprise, with acquisition of Vonage and increased investments in Enterprise Wireless Solutions.

Selling and administrative (SG&A) expenses

SG&A expenses increased by SEK -8.7 b. to SEK -35.7 (-27.0) b. including a currency effect of SEK -1.7 b. The increase is mainly related to acquisition of Vonage (SEK -4.3 b.), investments in go-to-market organization for Enterprise Wireless Solutions and increases in compliance and legal expenses.

Other operating income and expenses

Other operating income and expenses was SEK -3.3 (0.4) b. impacted by SEK -2.3 b. due to a provision in relation to a potential DPA breach resolution with U.S. Department of Justice, including estimated expenses for the previously announced extended monitorship, and by SEK -1.0 b. due to the announced charges related to the divestment of IoT and other portfolio adjustments.

Share in earnings of JVs and associated companies was SEK 0.0 (-0.3) b.

Restructuring charges

Restructuring charges decreased to SEK -0.4 (-0.5) b.

EBITA

EBITA declined to SEK 29.1 (33.3) b. with an EBITA margin of 10.7% (14.3%). EBITA was impacted by previously announced charges of SEK -5.5 b. during the year (of which SEK -4.0 b. in Q4) and increased operating expenses with higher R&D as well as increased SG&A expenses in segment Enterprise, mainly from acquisition of Vonage.

EBIT

EBIT decreased to SEK 27.0 (31.8) b. YoY with an EBIT margin of 10.0% (13.7%). EBIT was impacted by SEK -2.1 (-1.4) b. of amortization of intangible assets, mainly related to Vonage.

Financial income and expenses, net

Financial net improved by SEK 0.1 b. to SEK -2.4 (-2.5) b., mainly due to foreign exchange revaluation effects. The currency hedge effect impacted financial net by SEK -0.9 (-0.8) b. The USD strengthened against the SEK between December 31, 2021 (SEK/USD rate 9.05) and December 31, 2022, (SEK/USD rate 10.38).

Taxes

Taxes were SEK -5.5 (-6.3) b. positively impacted by utilization of previously impaired withholding tax assets in Sweden. The effective tax rate in 2022 was 22%, compared with 21% in 2021.

Net income

Net income declined to SEK 19.1 (23.0) b. EPS diluted was SEK 5.62 (6.81) and Adjusted EPS was SEK 6.16 (7.26).

Employees

The number of employees on December 31, 2022, was 105,529, a total increase of 4,207 employees compared with December 31, 2021. The increase is mainly driven by the acquisition of Vonage and increases in service delivery.

7    Ericsson | Fourth quarter and full year report 2022 Financial highlights

Mobile Networks – Segment Networks

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		58.6			51.1			15	%		48.1			22	%		193.5			167.8			15	%
Of which IPR licensing revenues		4.9			1.9			152	%		1.3			284	%		8.5			6.7			28	%
Sales growth adj. for comparable units and FX		—			—			1	%		—			—			—			—			4	%
Gross income		26.1			23.6			10	%		21.4			22	%		86.4			78.9			10	%
Gross margin		44.4	%		46.3	%		—			44.4	%		—			44.6	%		47.0	%		—
EBIT		12.5			11.8			6	%		9.6			30	%		38.5			37.3			3	%
EBIT margin		21.2	%		23.0	%		—			19.9	%		—			19.9	%		22.2	%		—
EBITA		12.6			11.8			7	%		9.6			30	%		38.7			37.4			4	%
EBITA margin		21.4	%		23.1	%		—			20.0	%		—			20.0	%		22.3	%		—
Restructuring charges		-0.1			-0.3			—			0.0			—			-0.1			-0.3			—
Measures excl. restructuring charges
Gross margin excl. restructuring charges		44.6	%		46.4	%		—			44.4	%		—			44.7	%		47.0	%		—
EBIT excl. restructuring charges		12.5			12.0			4	%		9.6			30	%		38.7			37.5			3	%
EBIT margin excl. restructuring charges		21.4	%		23.6	%		—			20.0	%		—			20.0	%		22.4	%		—
EBITA excluding restructuring charges		12.6			12.1			5	%		9.7			31	%		38.8			37.6			3	%
EBITA margin excl. restructuring charges		21.5	%		23.6	%		—			20.0	%		—			20.1	%		22.4	%		—

Breakdown of sales into products, services and IPR licensing is available in the back-end tables.

Fourth quarter comments

• Organic sales growth of 1%, of which IPR revenues contributed with 6 percentage points.

• Continued market share gains.

• Gross margin excluding restructuring charges in Q4 was 44.6% and is expected to be 40-42% in Q1 2023.

Net sales

Sales adjusted for comparable units and currency grew by 1%, of which IPR revenues contributed with 6 percentage points. Double-digit growth in South East Asia, Oceania and India, on the back of market share gains, was offset by lower operator capex and impact of initial reduction of inventory levels, primarily in front-runner 5G markets. Reported sales increased by 15%.

After fast build-out of 5G in 2022, some of Ericsson’s customers are guiding for lower capex in light of macroeconomic headwinds. In addition, operators are expected to continue to reduce inventories as supply chain constraints are easing. This adjustment started in Q4 and is expected to last a few quarters. Consequently, near-term outlook is uncertain especially for the first half of 2023. In the longer-term, capex is driven by traffic growth, and thus is expected to normalize. The typical seasonality decline in sales between Q4 and Q1 is expected to be more pronounced in 2023, even when adjusting for the retroactive IPR licensing revenues in Q4.

Gross income

Gross income increased by SEK 2.4 b. to SEK 26.1 b. primarily driven by retroactive IPR licensing revenues. Gross margin decreased to 44.4% (46.3%). The decrease in gross margin was caused by a business mix shift, following slowdown in front-runner markets, in combination with market share gains in several geographies. The market share gains contribute to gross profit but are gross margin dilutive in the early stages. Inflationary cost pressure continued but was largely offset by commercial initiatives like product substitution. The new patent license agreement including 5G had a positive margin impact.

It is anticipated that the high inflation impact on cost remains in the coming quarters but will be largely mitigated by commercial initiatives. The change in business mix, resulting from market share gains, will continue during the first half of 2023 and gross margin in the first quarter is expected to be in the range of 40-42%. Market share gains with large-scale projects in early stages tend to have a dilutive impact on gross margins while contributing to increased gross income.

EBIT

EBIT increased to SEK 12.5 (11.8) b. with a decrease in EBIT margin to 21.2% (23.0%).

Operating expenses increased by SEK -1.8 b. to SEK -13.7 b. (including a negative currency impact of SEK -0.7 b.), primarily due to higher investments in R&D in Cloud RAN and in Ericsson Silicon (ASICs).

Full-year comments

Net sales

Reported sales increased by 15% in 2022, to SEK 193.5 (167.8) b. Growth was driven primarily by market share gains in North America, Europe and Latin America, South East Asia, Oceania and India as well as by increased IPR licensing revenues. Sales adjusted for comparable units and currency increased by 4%.

Gross income

Gross income increased by SEK 7.5 b. to SEK 86.4 b. while gross margin decreased to 44.6% (47.0%). Gross margin was impacted by increased component cost, inflationary pressure, and investment in supply chain resilience, partly offset by higher share of IPR licensing revenues in the sales mix and commercial activities. Large scale projects from market share gains had a dilutive impact on the gross margin.

EBIT

EBIT increased to SEK 38.5 (37.3) b., with a decrease in EBIT margin to 19.9% (22.2%), impacted by lower gross margin.

Operating expenses increased by SEK -6.4 b. to SEK -48.3 b. (including a negative currency impact of SEK -2.0 b.), primarily due to higher investments in R&D in Cloud RAN and in Ericsson Silicon (ASICs). Networks EBIT margin exceeded the 2022 target of 16-18%.

8    Ericsson | Fourth quarter and full year report 2022 Segment results

Mobile Networks – Segment Cloud Software and Services

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		20.2			18.0			13	%		14.2			42	%		60.5			56.2			8	%
Of which IPR licensing revenues		1.1			0.4			152	%		0.3			284	%		1.9			1.5			28	%
Sales growth adj. for comparable units and FX		—			—			2	%		—			—			—			—			-1	%
Gross income		6.7			6.4			5	%		4.5			48	%		20.1			18.8			7	%
Gross margin		33.0	%		35.4	%		—			31.8	%		—			33.2	%		33.5	%		—
EBIT (loss)		0.7			0.6			14	%		-0.8			—			-1.7			-2.2			—
EBIT margin		3.3	%		3.3	%		—			-5.6	%		—			-2.8	%		-4.0	%		—
EBITA (loss)		0.7			0.9			-19	%		-0.8			—			-1.6			-1.6			—
EBITA margin		3.4	%		4.8	%		—			-5.4	%		—			-2.6	%		-2.8	%		—
Restructuring charges		0.0			-0.2			—			-0.1			—			-0.1			-0.3			—
Measures excl. restructuring charges
Gross margin excl. restructuring charges		33.0	%		36.1	%		—			32.1	%		—			33.3	%		33.9	%		—
EBIT (loss) excl. restructuring charges		0.7			0.7			-8	%		-0.7			—			-1.6			-2.0			—
EBIT margin excl. restructuring charges		3.4	%		4.2	%		—			-5.2	%		—			-2.6	%		-3.5	%		—
EBITA (loss) excluding restructuring charges		0.7			1.0			-30	%		-0.7			—			-1.5			-1.3			—
EBITA margin excl. restructuring charges		3.5	%		5.7	%		—			-5.0	%		—			-2.4	%		-2.4	%		—

Breakdown of sales into products, services and IPR licensing is available in the back-end tables.

Fourth quarter comments

• Organic growth of 2%, of which IPR licensing revenues contributed with 4% percentage points.

• EBIT impacted by SEK -0.8 b. of previously announced charges.

• Targeting to reach EBIT break-even full-year 2023.

Net sales

Sales adjusted for comparable units and currency grew by 2%, of which IPR licensing revenues contributed with 4% percentage points. Sales grew in market area North America, while sales in the other market areas declined due to timing of project milestones as well as contract descoping and renegotiations in managed services. Reported sales increased by 13%.

Typical seasonality decline in sales between Q4 and Q1 is expected, when adjusting for the retroactive IPR licensing revenues in Q4.

Gross income

Gross income increased by SEK 0.3 b., while gross margin declined to 33.0% (35.4%). Gross margin was negatively impacted by the previously announced charges for the exit of subscale agreements and product offerings in line with the revised strategy for the segment. In addition, there was a negative impact by a less favorable business mix, partly offset by retroactive IPR licensing revenues.

EBIT

EBIT was SEK 0.7 (0.6) b. with a stable EBIT margin of 3.3%. EBIT was impacted by the previously announced charges of SEK -0.8 b. as a result of continued execution of the Cloud Software and Services revised strategy.

Operating expenses increased by SEK -0.2 b. to SEK -6.0 b. including a negative currency impact of SEK -0.3 b.

Full-year comments

Net sales

Reported sales increased by 8% to SEK 60.5 b. in 2022. Sales adjusted for comparable units and currency decreased by -1%. Sales growth in market area North America and higher IPR licensing revenues, were offset by sales decline in managed networks services business as a result of descoping and contract exits.

Gross income

Gross income increased by SEK 1.3 b. to SEK 20.1 b. Gross margin was stable at 33.2% (33.5%). Positive impact from higher share of IPR licensing revenues in the sales mix was offset by initial 5G Core deployment costs.

EBIT (loss)

EBIT was SEK -1.7 (-2.2) b. with an EBIT margin of -2.8% (-4.0%). EBIT was negatively impacted by a previously announced cost of SEK -0.8 b. as a result of continued execution of the Cloud Software and Services revised strategy. The strategy includes limiting subscale software development, accelerating automation to reduce deployment and maintenance efforts, and changing focus from market share gains to profitable business.

Operating expenses increased by SEK -0.7 b. to SEK -21.9 b. (including a negative currency impact of SEK -1.0 b.).

9    Ericsson | Fourth quarter and full year report 2022 Segment results

Segment Enterprise

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		6.6			1.8			265	%		5.2			28	%		15.4			6.2			147	%
Of which Global Comms Platform (Vonage)		4.1			—			—			2.9			40	%		7.0			—			—
Of which Enterprise Wireless Solutions		0.9			0.5			79	%		0.8			11	%		2.7			1.6			75	%
Sales growth adj. for comparable units and FX		—			—			15	%		—			—			—			—			16	%
Gross income		2.9			0.8			244	%		2.4			19	%		6.9			2.9			140	%
Gross margin		43.5	%		46.2	%		—			46.5	%		—			45.2	%		46.4	%		—
EBIT (loss)		-2.9			-0.8			—			-1.7			—			-6.2			-3.0			—
EBIT margin		-44.7	%		-42.7	%		—			-32.4	%		—			-40.5	%		-47.5	%		—
EBITA (loss)		-1.9			-0.6			—			-1.2			—			-4.5			-2.3			—
EBITA margin		-28.6	%		-35.2	%		—			-23.7	%		—			-29.3	%		-36.1	%		—
Restructuring charges		-0.1			0.0			—			0.0			—			-0.2			0.0			—
Measures excl. restructuring charges
Gross margin excl. restructuring charges		43.9	%		46.5	%		—			46.5	%		—			45.3	%		46.4	%		—
Of which Global Comm. Platform (Vonage)		42.9	%		—			—			42.4	%		—			42.7	%		—			—
Of which Enterprise Wireless Solutions		56.6	%		55.4	%		—			57.6	%		—			56.2	%		55.8	%		—
EBIT (loss) excl. restructuring charges¹		-2.8			-0.7			—			-1.7			—			-6.1			-2.9			—
EBIT margin excl. restructuring charges¹		-42.5	%		-41.2	%		—			-32.4	%		—			-39.5	%		-47.3	%		—
EBITA (loss) excluding restructuring charges¹		-1.7			-0.6			—			-1.2			—			-4.3			-2.2			—
Of which Global Comms Platform (Vonage)		-0.1			—			—			-0.5			—			-0.6			—			—
Of which Enterprise Wireless Solutions		-0.7			-0.4			—			-0.5			—			-2.2			-1.4			—
EBITA margin excl. restructuring charges¹		-26.4	%		-33.7	%		—			-23.7	%		—			-28.2	%		-35.8	%		—

¹  Common costs are included at segment level only (not distributed within the segment)

Fourth quarter comments

• Enterprise business represented 8% of Ericsson sales in Q4.

• Organic sales grew in all business areas.

• EBITA (loss) impacted by previously announced charges related to the divestment of IoT business and other portfolio adjustments as well as higher investments in Enterprise Wireless Solutions.

Net sales

Sales adjusted for comparable units and currency increased by 15% YoY, with growth in all business areas. Reported sales increased by SEK 4.8 b. YoY driven primarily by Vonage contributing SEK 4.1 b., and by organic growth in Enterprise Wireless Solutions.

The Vonage Communications Platform (VCP) grew by 13% in USD YoY. We continue to invest in line with our strategic imperative to build the Global Communication Platform.

Gross income

Gross income increased by SEK 2.0 b. to SEK 2.9 b. driven mainly by the Vonage acquisition. Gross margin decreased to 43.5% (46.2%) mainly due to the addition of Vonage with slightly lower gross margin than the rest of the Enterprise segment.

EBITA (loss)

EBITA (loss) was SEK -1.9 (-0.6) b. The decline is mainly due to the announced charges related to the divestment of IoT and other portfolio adjustments impacting EBITA by SEK -1.0 b., and growth investments in Enterprise Wireless Solutions.

EBIT (loss)

EBIT (loss) was SEK -2.9 (-0.8) b. impacted by amortization of intangible assets of SEK -1.1 b., from acquired businesses.

Amortization of intangible assets is expected to be around SEK -0.8 b. related to segment Enterprise.

Full-year comments

Net sales

Sales adjusted for comparable units and currency increased by 16% in 2022, driven mainly by Enterprise Wireless Solutions. Reported sales increased by 147% YoY driven by the acquired Vonage business. Reported sales growth exceeded 70% YoY in Enterprise Wireless Solutions.

Gross margin

Gross margin decreased to 45.2% (46.4%) mainly due to the dilutive effect of Vonage.

EBITA (loss)

EBITA (loss) was SEK -4.5 (-2.3) b. The decline is mainly due to announced charges related to the divestment of IoT and other portfolio adjustments as well as increased growth investments in Enterprise Wireless Solutions and Vonage acquisition related costs.

EBIT (loss)

EBIT (loss) was SEK -6.2 (-3.0) b. impacted by amortization of intangible assets from acquired businesses.

10    Ericsson | Fourth quarter and full year report 2022 Segment results

Segment Other

SEK b.	Q4 2022			Q4 2021			YoY change			Q3 2022			QoQ change			Jan-Dec 2022			Jan-Dec 2021			YoY change
Net sales		0.6			0.5			18	%		0.5			8	%		2.2			2.0			8	%
Sales growth adj. for comparable units and FX		—			—			10	%		—			—			—			—			3	%
Gross income		0.0			0.0			—			-0.1			—			-0.1			0.2			—
Gross margin		-2.3	%		-3.3	%		—			-27.9	%		—			-5.7	%		7.9	%		—
EBIT (loss)		-2.3			0.3			—			0.0			—			-3.6			-0.3			—
EBIT margin		-414.4	%		59.4	%		—			-3.9	%		—			-164.2	%		-14.2	%		—
EBITA (loss)		-2.3			0.3			—			0.0			—			-3.6			-0.3			—
EBITA margin		-412.6	%		59.4	%		—			-3.7	%		—			-163.7	%		-14.2	%		—
Restructuring charges		0.0			0.0			—			0.0			—			0.0			0.0			—
Measures excl. restructuring charges
Gross margin excl. restructuring charges		-2.3	%		-3.3	%		—			-27.9	%		—			-5.7	%		8.3	%		—
EBIT (loss) excl. restructuring charges		-2.3			0.3			—			0.0			—			-3.6			-0.3			—
EBIT margin excl. restructuring charges		-414.4	%		59.4	%		—			-3.9	%		—			-164.2	%		-13.4	%		—
EBITA (loss) excluding restructuring charges		-2.3			0.3			—			0.0						-3.6			-0.3
EBITA margin excl. restructuring charges		-412.6	%		59.4	%		—			-3.7	%		—			-163.7	%		-13.4	%		—

Fourth quarter comments

Net sales

Sales adjusted for comparable units and currency increased by 10% YoY. Reported sales increased by 18% YoY to SEK 0.6 b.

Gross income

Gross income remained stable with a slight loss. Gross margin was -2.3% (-3.3%).

EBIT (loss)

Reported EBIT (loss) was SEK -2.3 (0.3) b. impacted by a provision of SEK -2.3 b. in relation to potential DPA breach resolution with U.S. Department of Justice, including estimated expenses for the previously announced extended monitorship.

EBIT in Q4 2021 was positively impacted by SEK 0.4 b. related to a gain from divestment of a data center in the Netherlands and revaluation of Ericsson Ventures investments.

Full-year comments

Net sales

Sales adjusted for comparable units and currency increased by 3% compared to 2021. Sales in the media business were stable. Reported Sales increased by 8%.

Gross income

Gross income decreased by SEK -0.3 b. primarily due to the previously announced charges related to a market exit (SEK -0.2 b.). For this reason, gross margin decreased to -5.7% compared to 7.9% in 2021.

EBIT (loss)

Reported EBIT (loss) was SEK -3.6 (-0.3) b. impacted by a provision of SEK -2.3 b. in relation to potential DPA breach resolution with U.S. Department of Justice including estimated expenses for the previously announced extended monitorship. Furthermore, there was an impact of SEK -0.9 b for a provision in Q1, related to exit from operations in Russia and a previously announced market exit cost of SEK -0.2 b in Q3.

11    Ericsson | Fourth quarter and full year report 2022 Segment results

Cash flow

	Q4		Q4		Q3		Jan-Dec		Jan-Dec
Free cash flow bridge, SEK b.	2022		2021		2022		2022		2021
EBIT excl. restructuring charges		8.1		12.3		7.2		27.4		32.3
Depreciation, amortization and impairment losses		3.5		2.6		2.6		10.5		9.0
Restructuring charges		-0.2		-0.5		-0.1		-0.4		-0.5
Changes in working capital1)		10.7		2.7		-3.3		0.6		4.0
Interest paid/received, taxes paid, and other		-2.2		-1.9		-1.8		-7.3		-5.7
Cash flow from operating activities		19.9		15.2		4.7		30.9		39.1
Capex net and other investing activities		-2.3		-1.1		-1.4		-6.1		-4.6
Repayment of lease liabilities		-0.8		-0.6		-0.7		-2.6		-2.4
Free cash flow before M&A		16.9		13.5		2.5		22.2		32.1
M&A		-0.4		0.2		-51.4		-51.7		0.1
Free cash flow after M&A		16.4		13.7		-48.9		-29.5		32.1
Cash flow from operating activities		19.9		15.2		4.7		30.9		39.1
Cash flow from investing activities		-11.9		-2.7		-58.9		-34.4		-19.9
Cash flow from financing activities		-3.9		-4.9		-5.3		-15.9		-9.3

Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.

¹  Defined as Changes in operating net assets

Fourth quarter comments

• Inventory reduced by SEK -7.2 b. QoQ to SEK 45.8 b.

• Free cash flow before M&A was SEK 16.9 (13.5) b. in the quarter, supported by a decrease in working capital partly offset by lower EBIT.

Cash flow from operating activities

Cash flow from operating activities was SEK 19.9 (15.2) b. Cash flow was supported by a decrease in working capital, driven by reduction in inventory, high cash collection from customers and a retroactive IPR payment as a result of a new contract with one licensee in Q4. The positive effect was partly offset by lower EBIT and a settlement with the US Federal Trade Commission (FTC) on historic consumer practices in Vonage with a negative cash effect of SEK -1.1 b. Taxes paid were SEK -1.9 (-1.2) b.

Free cash flow

Free cash flow before M&A was SEK 16.9 (13.5) b. Capex net and other investing activities was SEK -2.3 (-1.1) b., mainly related to investment in test equipment and capitalization of development expenses. Repayment of lease liabilities was SEK -0.8 (-0.6) b. M&A activities were SEK -0.4 (0.2) b. and Free cash flow after M&A was SEK 16.4 (13.7) b.

Cash flow from investing activities

Cash flow from investing activities was SEK -11.9 (-2.7) b. mainly as a result of purchases of interest-bearing securities.

Cash flow from financing activities

Cash flow from financing activities was SEK -3.9 (-4.9) b. including repayment of lease liabilities. Dividends paid amounted to SEK -4.2 (-3.4) b. and were related to the second installment (SEK 1.25 per share) of dividend for 2021.

Full-year comments

Cash flow from operating activities

Cash flow from operating activities was SEK 30.9 (39.1) b., following an increase in working capital mainly as a result of a decision to strengthen the supply chain resilience in view of global component shortage. In addition, the lower EBIT and higher taxes paid affected cash flow negatively compared with 2021.

Accounts receivable days of sales outstanding decreased to 61 (71) days while inventory turnover days increased to 93 (88) and payable days decreased to 85 (94). This resulted in an increase in working capital days to 69 (65) days.

Free cash flow

Free cash flow before M&A was SEK 22.2 (32.1) b. or 8.2% (13.8%) in relation to sales, compared with the long-term target of 9-12%. Capex net and other investing activities was SEK -6.1 (-4.6) b. Repayment of lease liabilities was SEK -2.6 (-2.4) b. The increase is related to higher interest rates for property leases.

Free cash flow after M&A was SEK -29.5 (32.1) b. The decrease is primarily a result of the acquisition of Vonage in July 2022.

Cash flow from investing activities

Cash flow from investing activities was SEK -34.4 (-19.9) b. due to the acquisition of Vonage with a purchase price paid of SEK -51.3 b., partly compensated by disposal of interest-bearing securities.

Cash flow from financing activities

Cash flow from financing activities was SEK -15.9 (-9.3) b. including repayment of lease liabilities. During the year, dividends of SEK -8.4 (-6.9) b. were paid to shareholders. The net impact on cash flow from issuance and repayment of long-term debt, including repayment of debt related to Vonage, was SEK -5.3 b.

12    Ericsson | Fourth quarter and full year report 2022 Cash flow

Financial position

SEK b.	Dec 31 2022			Dec 31 2021			Sep 30 2022
Gross cash		56.2			97.6			45.8
- Borrowings, current		6.0			9.6			5.4
- Borrowings, non-current		26.9			22.2			27.0
Net cash		23.3			65.8			13.4
Equity		133.3			107.1			136.8
Total assets		349.5			305.6			361.2
Capital turnover (times)		1.4			1.3			1.3
Return on capital employed (%)		14.0	%		18.4	%		13.2	%

Fourth quarter comments

• Net cash position was SEK 23.3 (65.8) b.

• The average maturity of long-term borrowings as of December 31, 2022, was 3.8 years.

• Ericsson established a Green Financing Framework.

On the back of solid operating cash flow generation, net cash increased by SEK 9.9 b. QoQ to SEK 23.3 b., including payment of remaining part of dividends of SEK -4.2 b.

Gross cash increased by SEK 10.4 b. QoQ to SEK 56.2 b.

Liabilities for post-employment benefits increased to SEK 27.4 b. from SEK 25.1 b. in the quarter, due to changes in demographic assumptions and experience adjustments. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the yields of Swedish government bonds. If the discount rate had been based on Swedish covered mortgage bonds, the liabilities for post-employment benefits would have been approximately SEK 10.9 b. (SEK 16.5 b. lower than the reported liabilities).

In the quarter, Ericsson established a Green Financing Framework to enable financing of investments in energy-efficient technologies, such as 4G, 5G and future 6G, and renewable energy solutions. See press release in section Other information.

Full-year comments

Gross cash decreased to SEK 56.2 (97.6) b. due to the acquisition of Vonage, repayment of Vonage debt and dividends paid to Ericsson shareholders. The decrease was partly compensated by positive free cash flow. Net cash was SEK 23.3 (65.8) b.

Liabilities for post-employment benefits decreased to SEK 27.4 (36.1) b. primarily due to higher discount rates. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the yields of Swedish government bonds. If the discount rate had been based on Swedish covered mortgage bonds, the liabilities for post-employment benefits would have been approximately SEK 10.9 b. (SEK 16.5 b. lower than the reported liabilities).

The average maturity of long-term borrowings was 3.8 years as of December 31, 2022, an increase from 3.5 years 12 months earlier.

In February 2022, Ericsson issued a EUR 750 m. (SEK 7.8 b.) bond maturing in February 2027. In May 2022, Ericsson repaid its USD -1.0 b. (SEK -10.0 b.) bond.

In July 2022, Ericsson completed the acquisition of Vonage. The cash effect on the day of the acquisition amounted to SEK -51.3 b., adjusted by a positive cash flow hedge release of SEK 3.7 b. Following the acquisition, a Vonage debt of USD -0.6 b. (SEK -5.9 b.) was repaid.

Ericsson has an unutilized revolving credit facility of USD 2.0 b., linked to two of Ericsson’s long-term sustainability goals. The facility is set to expire in 2027 with a one-year extension option.

Ericsson has established a commercial paper program for short-term borrowing. The program is a complement to Ericsson funding and has not yet been utilized.

Standard & Poor’s (S&P) and Fitch both have a long-term BBB- rating on Ericsson with developing outlook from S&P and a stable outlook with Fitch. Moody’s has a Ba1 rating with stable outlook.

The capital turnover increased to 1.4 (1.3) times, while Return on Capital Employed (ROCE) decreased to 14.0% (18.4%) as a result of higher capital employed and lower EBIT.

13    Ericsson | Fourth quarter and full year report 2022 Financial position

Key data points

Market related

The global RAN equipment market is estimated to decline by -1% (0%) in 2023. North America is expected to decline by -7% (-5%), Europe by 0% (4%) and Mainland China by -4% (-2%). Source: Dell’Oro Mobile RAN 5-year forecast, Jan 2023. Numbers in parenthesis are from Dell’Oro Mobile RAN 5-year forecast, July 2022.

Ericsson related

Net sales

Reported average seasonality last 3 years (2020–2022), %

	Q4èQ1			Q1èQ2			Q2èQ3			Q3èQ4
Networks		-23	%		+12	%		+4	%		+22	%
Cloud Software & Services		-35	%		+12	%		+2	%		+35	%

Net sales may show large variations between quarters, including currency changes.

Operating expenses excluding Vonage and restructuring

Reported average seasonality last 3 years (2020–2022), SEK b.

Positive numbers = decrease in operating expenses.

Negative numbers = increase in operating expenses

	Q4èQ1		Q1èQ2		Q2èQ3		Q3èQ4
Ericsson Group		+3.3		-1.5		+0.7		-2.4

Operating expenses may show large variations between quarters, including currency changes.

Amortization of intangible assets

Amortization of intangible assets is expected to continue to be around SEK -0.9 b. per quarter, based on currency rates

December 31, 2022, for Ericsson group in 2023, of which around SEK -0.8 b. related to segment Enterprise.

Currency exposure

Rule of thumb: A change by 10% of SEK to USD would have an impact of approximately +/-5% on net sales and approximately +/-1 percentage point on EBIT margin.

14    Ericsson | Fourth quarter and full year report 2022 Key data points

Parent Company

Income after financial items January–December 2022, was SEK 18.4 (9.3) b.

At the end of the year, gross cash (cash and cash equivalents plus interest-bearing securities, current and non-current) amounted to SEK 41.4 (80.5) b.

There was a decrease in intercompany lending of SEK 2.5 b. and an increase in intercompany borrowing of SEK 0.3 b. in the fourth quarter.

A provision was made in the quarter of SEK -2.3 billion (approx. USD 220 million) in relation to a potential resolution with the U.S. Department of Justice (DOJ) regarding previously announced, non-criminal, alleged breaches under its 2019 Deferred Prosecution Agreement (DPA). This provision also includes estimated expenses for the previously announced independent Compliance Monitorship extension.

The holding of treasury stock on December 31, 2022, was 4,009,306 Class B shares.

15    Ericsson | Fourth quarter and full year report 2022 Parent Company

Dividend, AGM, and Annual Report

Dividend proposal

The Board of Directors proposes to the Annual General Meeting a dividend to the shareholders of SEK 2.70 (2.50) per share for the financial year 2022, representing a total dividend of approximately SEK 9.0 (8.3) b. The dividend is proposed to be paid in two installments, SEK 1.35 per share with the record date March 31, 2023, and SEK 1.35 per share with the record date September 29, 2023. Should the Annual General Meeting decide in favor of the proposal, payment of the dividend is expected to be made on April 5, 2023, and on October 4, 2023. The dividend considers this year’s earnings and balance sheet structure, as well as coming years’ business plans and expected economic development.

Ericsson Annual General Meeting

The Annual General Meeting of shareholders will be held on March 29, 2023. Additional information about the Annual General Meeting of shareholders will be made available on Ericsson’s website.

Annual Report

The annual report will be made public and available on the Ericsson website www.ericsson.com in the first week of March.

16    Ericsson | Fourth quarter and full year report 2022 Dividend, AGM and Annual Report

Other information

Legal proceedings

On December 9, 2022, Ericsson and Apple reached a multi-year, global patent license agreement between the two companies. The agreement includes a cross-license relating to patented cellular standard-essential technologies and grants certain other patent rights. Furthermore, Ericsson and Apple have mutually agreed to strengthen their technology and business collaboration, including in technology, interoperability and standards development. This settlement ends the lawsuits filed by both companies in several countries, including in the United States District Court of the Eastern District of Texas, as well as the complaints filed before the United States International Trade Commission (USITC).

On March 3, 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of investors in Ericsson securities in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9, 2022, which added a former Ericsson officer as defendant. The amended complaint alleges violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and anti-corruption policies and obligations and the conduct of its business in Iraq. In December 2022, Ericsson filed a motion to dismiss the complaint.

In August 2022, a civil lawsuit was filed in the United States District Court for the District of Columbia against Telefonaktiebolaget LM Ericsson and Ericsson Inc. The lawsuit was brought by US military service members and employees of US government contractors who were killed or injured in terrorist attacks in Iraq, Afghanistan and Syria from 2005 to 2021, as well as by their family members. The lawsuit asserts claims against Ericsson under the US Anti-Terrorism Act alleging that Ericsson made payments that ultimately aided the terrorist organizations that committed, planned or authorized the attacks. In November 2022, Ericsson filed a motion to dismiss the complaint. On December 20 2022, plaintiffs filed an amended complaint, which added additional plaintiffs, named Ericsson AB, CEO Börje Ekholm and a former employee as additional defendants and also asserted additional allegations and claims.

As part of its defense to a now settled patent infringement lawsuit filed by Ericsson in 2013 in the Delhi High Court against Indian handset company Micromax, Micromax filed a complaint against Ericsson with the Competition Commission of India (CCI). The CCI decided to refer the case to the Director General’s Office for an in-depth investigation. The CCI opened similar investigations against Ericsson in January 2014 based on claims made by Intex Technologies (India) Limited and, in 2015, based on a now settled claim from iBall. Ericsson has challenged CCI’s jurisdiction in these cases before the Delhi High Court and is awaiting a decision on the appeal of the first instance court’s decision.

In April 2019, Ericsson was informed by China’s State Administration for Market Regulation (SAMR) Anti-monopoly bureau that SAMR has initiated an investigation into Ericsson’s patent licensing practices in China. Ericsson is cooperating with the investigation, which is still in a fact-finding phase. The next steps include continued fact finding and meetings with SAMR in order to facilitate the authority’s assessments and conclusions.

In addition, the Company continues to negotiate with the DOJ in relation to a potential resolution regarding previously announced, non-criminal, alleged breaches under the DPA, as further described in Note 5 (Provisions) on page 41 of the Report.

In addition to the proceedings discussed above, the Company is, and in the future may be, involved in various other regulatory investigations, lawsuits, claims and proceedings incidental to the ordinary course of business. For information on risks e.g. relating to internal investigations, lawsuits, claims and proceedings, see the chapter Risk factors.

Press releases

Dec 7, 2022, | Aeris to acquire IoT business from Ericsson

Ericsson (NASDAQ: ERIC) and Aeris Communications, a leading provider of Internet of Things (IoT) solutions based in San Jose, California, have signed an agreement for the transfer of Ericsson’s IoT Accelerator and Connected Vehicle Cloud businesses.

Ericsson IoT Accelerator is used by over 9,000 enterprises to manage more than 95 million connected devices with 22 million eSIM connections globally. These enterprises and connections leverage Ericsson’s growing ecosystem of over 35 communications service provider partners for global IoT cellular connectivity. Connected Vehicle Cloud is the most complete connected car platform on the market today, with frontrunners in automotive IoT using it to connect six million vehicles and counting across 180 countries.

Founded in 1996, Aeris is an expert in the IoT field, providing businesses with intelligent IoT cellular connectivity. Its solution stack is being brought to the market through an ecosystem of channel partners, communications service providers and direct sales organizations. Aeris’ Intelligent IoT Network, targeting industry verticals such as transportation, energy, automotive and healthcare, gives communications service providers the opportunity to monetize new services on top of connectivity enabled by the IoT Accelerator. The company has already teamed up with several leading communication service providers including Softbank, AT&T, T-Mobile, and Vodafone, and is also working with leading automotive original equipment manufacturers.

Together, Aeris’ and Ericsson’s IoT platforms will connect over 100 million IoT devices worldwide, covering 190 countries. For customers, this provides the stability, reliability and global scale needed to support the full lifecycle of IoT programs across multiple industries, use cases and geographies. Through the transaction, Aeris will become a market leader in IoT, generate strong market synergies, and further simplify IoT for 9,400 enterprises by providing them with a global, feature rich platform with secure, reliable, and intelligent IoT solutions. To communications service providers, the transaction of Ericsson’s IoT businesses to Aeris will result in a strong partner that continues to provide their customers with a leading IoT connectivity platform, while also offering new value-added services to help grow IoT revenue streams.

Åsa Tamsons, Head of Business Area Technologies & New Businesses at Ericsson, says: “Aeris has been successful in extending its IoT solution offering beyond connectivity and has the right focus, assets, and capabilities to realize the full value creation potential of Ericsson’s IoT business and its strong market presence. Despite significant investments to address the fragmentation of the IoT market, Ericsson has only tapped into a limited part of the value chain, limiting the returns of such investments. The combined business will offer an unparalleled IoT platform for enterprises and new revenue streams for communication service providers, ultimately benefiting Ericsson’s customers. Aeris is a good home for our IoT business.”

With the cellular IoT market being a rather fragmented sector, a consolidation of two industry leading players is expected to accelerate the IoT market overall. IoT will be a fundamental and growing part of the 4G and 5G market.

Marc Jones, President and CEO of Aeris, says: “Building the best technology to support the success of our customers and drive innovation in the IoT space have always been at the forefront for Aeris. Our intelligent, software defined IoT network and Ericsson’s leading connectivity management platform will provide the leading IoT technology stack in the industry. We look forward to bringing these new, transformational IoT solutions and Ericsson’s IoT Accelerator and Connected Vehicle Cloud products to our customers.”

17    Ericsson | Fourth quarter and full year report 2022 Other information

The transaction includes the transfer of Ericsson’s assets and employees in its IoT business to Aeris. In addition, Ericsson intends to support Aeris with transition services and will acquire a small stake in the company. The transaction is expected to close in the first quarter of 2023.

The IoT business, with 2022 full year forecasted net sales of SEK 0.8 billion, has been the key driver of the losses in Business Area Technologies and New Businesses in the Enterprise segment. The transaction will eliminate quarterly losses of SEK 0.25 billion. The divestment, related cost and other portfolio optimizations will lead to a negative one-time EBIT impact of SEK 1.1 billion in Q4 2022, of which 80 percent being cash and the majority occurring in Q1 2023. The IoT business will be transferred to Segment Other in Q1 2023 in anticipation of closing of the transaction, with an expected EBIT loss of SEK 0.25 billion during the first quarter.

More information about Aeris Communications

Aeris to acquire IoT business from Ericsson

Dec 9, 2022 | Changes to Ericsson’s Nomination Committee

Effective December 9, 2022, Niko Pakalén will replace Jonas Synnergren as representative for Cevian Capital Partners Limited in Ericsson’s (NASDAQ:ERIC) Nomination Committee.

The Nomination Committee now consists of:

Johan Forssell, Investor AB;

Karl Åberg, AB Industrivärden;

Anders Oscarsson, AMF – Tjänstepension och Fonder;

Niko Pakalén, Cevian Capital Partners Limited; and

Ronnie Leten, the Chair of the Board of Directors

Johan Forssell is the Chair of the Nomination Committee.

Changes to Ericsson’s Nomination Committee

Dec 9, 2022 | Ericsson and Apple sign global patent license agreement

Ericsson (NASDAQ: ERIC) and Apple have reached a multi-year, global patent license agreement between the two companies. The agreement includes a cross-license relating to patented cellular standard-essential technologies and grants certain other patent rights.

Furthermore, Ericsson and Apple have mutually agreed to strengthen their technology and business collaboration, including in technology, interoperability and standards development.

This settlement ends the lawsuits filed by both companies in several countries, including in the United States District Court of the Eastern District of Texas, as well as the complaints filed before the United States International Trade Commission (USITC).

Ericsson’s IPR licensing revenues continue to be affected by several factors, including expired patent license agreements pending renewal, the technology shift from 4G to 5G, and possible currency effects and geopolitical impact going forward. Including effects of the agreement with Apple covering sales from January 15, 2022, and including ongoing IPR business with all other licensees, Ericsson estimates the fourth quarter 2022 IPR licensing revenues will be SEK 5.5-6.0 b.

Christina Petersson, Chief Intellectual Property Officer at Ericsson says: “We are pleased to settle the litigations with Apple with this agreement, which is of strategic importance to our 5G licensing program. This will allow both companies to continue to focus on bringing the best technology to the global market.”

Over several decades, Ericsson has been a leading contributor to 3GPP and to the development of global mobile standards for the benefit of consumers and enterprises everywhere. The value of Ericsson’s patent portfolio of more than 60,000 granted patents is strengthened by our

leading position as 5G vendor, and annual investments of more than USD 4 b in R&D. The company is confident of growing its IPR revenues with new 5G agreements and by expanding into other licensing areas long term.

Ericsson and Apple sign global patent license agreement

Dec 14, 2022 | Ericsson Announces Extension of Compliance Monitorship

Ericsson (NASDAQ: ERIC) announces that it has agreed with the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) to extend the term of the Company’s Independent Compliance Monitor for one year, to June 2024.

In 2019 Ericsson entered into a Deferred Prosecution Agreement (DPA) with the DOJ and a Consent Judgment with the SEC to resolve violations of the FCPA. As part of the resolution, Ericsson agreed to engage an independent compliance monitor for a period of three years while the Company strengthened its culture and established a rigorous anti-corruption, compliance and controls program.

This extension will allow the company, under the monitorship, to further embed best in class governance, risk management and compliance frameworks across the organization.

The Company remains committed to cooperating with the DOJ in connection with the resolution of the breach notification.

Börje Ekholm, President and CEO, says: “This extension is consistent with our commitment to continuous improvement of Ericsson’s Ethics and Compliance program. We have made significant progress in changing our culture and implementing an enhanced compliance framework and system of internal controls, and we will use this additional time to ensure these improvements are ingrained in our organization, our daily interactions and the way we do business. We want to get this right and, to be a true industry leader, we have to conduct our business in the right way.”

Ronnie Leten, Chair of the Board of Directors, says: “We are dedicated to acting with integrity in everything we do and continuing to align business operations with strengthened internal controls, governance and risk management processes. Our work with the monitor has meaningfully advanced our Ethics and Compliance program, and we welcome this extension of our engagement with the monitor.”

Ericsson Announces Extension of Compliance Monitorship

Dec 15, 2022 | Ericsson Capital Markets Day 2022

Ericsson (NASDAQ: ERIC) hosts a Capital Markets Day on December 15, 2022. Executives from across the company join President and Chief Executive Officer, Börje Ekholm, to share insights on the company’s strategic priorities for extending its leadership in mobile infrastructure, executing on its ambitions in the high-growth enterprise segment, and driving continued cultural change.

Ericsson’s strategy is to leverage leadership in mobile networks, drive focused expansion in enterprise, lead the industry with critical innovations, and capture strategic business opportunities

Ericsson continues to execute on its Enterprise strategy organized around two pillars, each leveraging the Company’s strength in mobile networks: First, Enterprise Wireless Solutions, where Ericsson is driving business transformation through seamless secure network solutions addressing the multi-billion dollar opportunity of enterprise 5G. Second, the Global Network Platform, where Ericsson will be able to monetize 5G in new ways by transforming how network features such as speed and latency are globally exposed, consumed and paid for. With the completion of the Vonage acquisition, the cloud communication portfolio, including the communication platforms as a service (CPaaS) with its developer community, provides the business foundation to realize this ambition. Transforming Ericsson into a platform company creates a virtuous circle with new revenue streams for operators to monetize their network investments.

18    Ericsson | Fourth quarter and full year report 2022 Other information

In Networks, Ericsson expects to expand its global footprint and enhance gross income through continued investments in technology for performance and cost leadership and, in addition, improve productivity and capital efficiency across the supply chain. In particular the Segment will continue investing in enhanced portfolio energy performance, enabled by Ericsson Silicon and innovating next-generation open architecture, such as Cloud RAN – key areas of strategic importance for its operator customers. Cloud RAN also offers potential in the enterprise segment.

Ericsson is implementing a revised and robust strategy for achieving profitability in the segment Cloud Software and Services. The segment addresses three distinct offering areas where Ericsson has leading positions including (i) Network Managed Services and (ii) Business and Operations Support Systems which show good business progress but are offset by (iii) Core Networks which has gained significant market share but with negative development of profitability. Key priorities include limiting subscale software development, accelerating automation to lower deployment and maintenance efforts and changing focus from market share gains to profitable business. The target is to reach break-even in full-year 2023 with gradual improvements towards long-term sustainable profitability.

Overall RAN market is expected to be flat with growth of 11% p.a. in the 5G RAN market over the next 3 years

Ericsson is planning for a flat RAN market and is structuring its cost base and operations accordingly. Underlying the flat market is a technology shift to 5G from earlier generation. 5G build-out is still in its early days with only about 20% of all base station sites outside China installed with 5G mid-band. Given the rapid increase in network traffic levels, operators’ investment in performance and capacity is expected to remain robust. The 5G RAN market is expected to grow by over 11% per annum over the next three years, with potential further upside from areas such as Fixed Wireless Access, Enterprise connectivity, XR and Mission Critical Services. With a leading position in 5G, Ericsson is confident in its ability to capitalize on the long runway of opportunities presented by 5G and achieve its long-term targets. With investments in a competitive portfolio, Ericsson remains committed to growing its 39% RAN market share outside of China by 1% per year and increasing gross profit.

Long-term Financial and Sustainability Targets

The trends on operator capex identified in the Q3 report remain. After record capex levels in North America in 2022, build-out is expected to normalize in 2023, beginning in Q4 of this year. At the same time, revenues from share gains in other markets are expected to accelerate during Q4 and into 2023. As disclosed in the Q3 report, while these market share gains contribute to gross profit, they will be margin dilutive. In addition, following easing of the supply chain, there are indications that some customers in advanced markets may adjust their inventory levels continuing into 2023.

Looking to 2024 and beyond, the long-term investments in mobile infrastructure are driven by underlying traffic development and these are expected to continue developing favorably; this gives confidence on the longer-term development of investments.

Ericsson confirms its long-term target of an EBITA margin in the range of 15 to 18% and expects to reach the lower end by 2024. Margin improvement will be supported by the (i) acceleration of structural cost out efforts targeting a run-rate gross reduction of SEK 9 b. by 2023 of which 70% are in cost of goods sold and 30% in SG&A, (ii) growth of IPR revenues, (iii) improved commercial terms and accelerated cadence of new products, (iv) after re-establishing technology leadership, focus is shifting towards productivity in R&D, and (v) the turnaround of BCSS business. This will offset headwinds such as business mix changes and inflation.

There is significant growth potential in IPR revenues over the coming 18-24 months. The recently announced agreement puts Ericsson in a good position to pursue other currently unlicensed actors. In addition, new areas such as consumer electronics provide a further growth opportunity.

The company aims at generating Free Cash Flow before M&A of 9%-12% of sales. During 2022, there has been significant investments in working capital due to geo-resiliency as well as a tight supply chain. Going forward Ericsson expects that the working capital will gradually be released as large roll-out projects are completed, and thus Free Cash Flow before M&A will improve.

Connectivity is a fundamental enabler of digitalization and Ericsson sees 5G as a key driver. Digitalization of industries and society will be critical to tackle the climate crisis. Ericsson remains committed to be Net Zero within its own operations by 2030 and to reach Net Zero across the value chain by 2040.

Building a culture of ethics and integrity

Ericsson is on a critically important journey to transform its culture and to be a leader in how it conducts business. The Company is accelerating its cultural transformation and enhancing its governance. The approach to global risk management has been revamped – putting in place strong central oversight and a streamlined process to effectively anticipate, identify and mitigate material risks at all levels. The Company also continues its work in establishing a sustainable program of compliance and controls that is properly embedded in the organization. Moreover, Ericsson is driving simplification to enhance accountability and our execution effectiveness.

Capital allocation supporting business strategy and value creation Ericsson is introducing near-term capital allocation priorities with a central focus on generating free cash flow in line with the target of 9-12% free cash flow before M&A over net sales, deploying our capital wisely for maximum value creation, while safeguarding balance sheet strength.

Given uncertainties, ensuring a strong financial position is critical. Priority will be given to organic and inorganic investments to support strategy execution and ensure technology and market leadership. As the company is fully focused on delivering the Vonage and Cradlepoint acquisitions, M&A will be limited to bolt-on acquisitions with attractive returns and clear strategic fit. Further, Ericsson targets a stable to progressive dividend with a policy based on earnings, business outlook and financial position.

Börje Ekholm, President and CEO, commented: “With 5G, everything that can go wireless, will go wireless. Long-term, the industry is moving towards the network as a platform for innovation where 5G and future 6G capabilities will be monetized in new ways. Our strategy and industry leadership puts us in an advantageous position to capitalize on this development and thereby create new revenue streams for our operator customers that complement subscription revenues. This is an exciting future, and we remain fully committed to continue executing on this strategy as we build a stronger Ericsson for the long-term.”

Carl Mellander, CFO, commented: “Over the last years, our strategy execution has been visible in the financial results and the strengthened financial position with strong free cash flow generation and return on invested capital. Our expected continued strong business performance, in combination with measures to offset external headwind, puts Ericsson on track to reach the lower end of our long-term EBITA margin target range by 2024.”

Speakers and details of the event

President and CEO Börje Ekholm and CFO Carl Mellander, is joined by members of the company’s Executive Team including Erik Ekudden, CTO, Fredrik Jejdling, Executive Vice President and Head of Business Area Networks, Per Narvinger, Head of Business Area Cloud Software & Services, George Mulhern, Head of Business Area Enterprise Wireless Solutions, Rory Read, Head of Business Area Global Communications Platform and Niklas Heuveldop, Head of Market Area North America.

19    Ericsson | Fourth quarter and full year report 2022 Other information

Ericsson’s Capital Markets Day event can be accessed via the Ericsson website: www.ericsson.com/en/investors/events-and-presentations/cmd

Presentation materials can also be downloaded from the website once the webcast has started.

Ericsson Capital Markets Day 2022

Dec 15, 2022 | Ericsson divests its local customer support business in Russia

Ericsson’s (NASDAQ: ERIC) wholly owned Russian subsidiary has entered into an asset transfer agreement to divest its local customer support business in Russia to a Russian company owned by former operational managers of Ericsson´s Russian subsidiary.

The transaction includes a transfer of approximately 40 Ericsson employees, and certain assets and contracts related to the business.

The customer support business is a local business engagement that does not involve the export of hardware, software, or related services to mobile operators in Russia.

Following Russia’s invasion in Ukraine, Ericsson announced the suspension of operations and deliveries to customers in Russia and an orderly wind-down in accordance with applicable sanctions. Approximately 400 Ericsson employees in Russia have been notified of layoffs and have been leaving the company as operations have been discontinued.

Going into 2023, Ericsson expects to have a small presence in Russia on a local basis. A legal entity owned by Ericsson will continue to be registered to complete the wind-down and to fulfill legal, contractual, and administrative requirements.

Ericsson divests its local customer support business in Russia

Dec 20, 2022 | Ericsson presents a Green Financing Framework

Ericsson (NASDAQ: ERIC) has established a Green Financing Framework to enable the company to issue green bonds and other green financing instruments. The proceeds will be exclusively allocated to investments in energy efficiency and renewable energy.

The framework has been developed in accordance with the 2021 ICMA Green Bond Principles (GBP). CICERO Shades of Green, a Norway-based institute for interdisciplinary climate research and a leading global provider of assessments related to green and sustainable financing, has acted as second party opinion provider.

Carl Mellander, Ericsson’s CFO, says: “This framework is part of our overall ambition in sustainable finance, and complements our existing sustainability linked Revolving Credit Facility. Proceeds raised under the framework will include capital expenditures and R&D investments in enhanced portfolio energy performance in our existing 4G and 5G offerings as well as future 6G solutions. Extending our leadership in energy efficiency is a key priority for Ericsson and of strategic importance for our operator customers.”

Heather Johnson, VP of Sustainability and Corporate Responsibility, says: “This framework is a concrete step in further embedding sustainability across the company, in this case strengthening our climate action and financial activities. Investments based on this framework will help drive the development and deployment of energy-efficient technology that support the Net Zero ambition not only in our own industry but enables the digital and green transition across industries and society.”

The Green Financing Framework and the second party opinion are available at Ericsson website.

Ericsson presents a Green Financing Framework

Post-closing events

Press releases

Jan 4, 2023 | Ericsson is taking action to accelerate

profitability in Cloud Software and Services

Ericsson (NASDAQ: ERIC) is continuing to execute on its revised strategy in segment Cloud Software and Services. As outlined at the recent Capital Markets Day, key priorities include limiting subscale software development, accelerating automation to lower deployment and maintenance efforts and changing focus from market share gains to profitable business.

With the revised Cloud Software and Services strategy, Ericsson is laying the foundation to turn the segment around. The target is to reach break-even in full-year 2023 on EBIT/EBITA level with gradual improvements towards long-term attractive profitability.

Following a portfolio and customer contract review, the Company has decided to exit certain subscale agreements and product offerings, with a one-off negative impact on EBIT of SEK -0.8 b. in Q4 2022, of which SEK -0.7 b. is expected to impact cash flow, mainly in 2023.

Ericsson’s Q4 and full-year 2022 results will be published January 20 at approximately 7:00 CET.

Ericsson is taking action to accelerate profitability in cloud software and services

Jan 11, 2023 | Ericsson Nomination Committee´s proposal for board of directors. Jan Carlson proposed as new Chairman

The Nomination Committee of Ericsson (NASDAQ: ERIC) has informed the Company that it proposes that the shareholders elect at the Annual General Meeting 2023 ten ordinary board members with no deputy directors. The Nomination Committee proposes that the following persons be elected as board members:

Jan Carlson, Chairman (re-election)

Helena Stjernholm (re-election)

Jacob Wallenberg (re-election)

Jon Fredrik Baksaas (re-election)

Carolina Dybeck Happe (re-election)

Börje Ekholm (re-election)

Eric Elzvik (re-election)

Kristin S. Rinne (re-election)

Christy Wyatt (new election)

Jonas Synnergren (new election)

Ronnie Leten, the current Chairman of the board, has informed he will not stand for re-election to the Board at the next Annual General Meeting. Ronnie was elected to the Ericsson board of directors as Chairman in 2018 and will continue to serve as Chairman for the remainder of his term. The Nomination Committee hence proposes that, the current board member, Jan Carlson be elected by the Annual General Meeting 2023 as new Chairman of the Ericsson Board.

Kurt Jofs and Nora Denzel have informed the Nomination Committee that they will not be available for re-election at the Annual General Meeting 2023.

It is the Nomination Committee’s assessment that each of the proposed board members, with their respective experiences, adds valuable expertise and experience to the Board. Christy Wyatt’s and Jonas Synnergren’s extensive international business experiences and deep software, enterprise and technology expertise will be of additional value to Ericsson and will further strengthen the board of directors.

Christy Wyatt is born 1972 and holds a Diploma of Scientific Computer Programming Technology from the College of Geographic Sciences in Canada. Christy has long-term international business experience from senior management roles within DTEX Systems, Good Technology and Motorola and is currently the President and CEO of Absolute Software.

Jonas Synnergren is born 1977 and holds a Master of Science in Business and Economics from Stockholm School of Economics in Sweden. Jonas has long-term international business experience as a Board member of Veoneer, Tieto and Metso and is currently a board member of Nordea. In addition, Jonas is Senior Partner in Cevian Capital, one of Ericsson’s shareholders.

20    Ericsson | Fourth quarter and full year report 2022 Other information

Information of the board members proposed for re-election can be found on the company’s website (www.ericsson.com).

The company expects to hold its Annual General Meeting on March 29, 2023, and the Nomination Committee’s complete proposals and motivated statement will be announced in due time before the Annual General Meeting.

Johan Forssell, Chairman of the Nomination Committee says: “We believe that Ericsson has a strong board of directors to continue to drive the strategic agenda and further strengthen the culture of the company. Jan Carlson has a long career both as CEO and Chairman, as well as good knowledge of Ericsson after serving many years on the board. His international experience, technology background and personal qualities make him an excellent successor as Chairman of the Board, securing a smooth transition from Ronnie Leten.”

Ronnie Leten says: “It has been an honor to serve on the Ericsson board since 2018 and I am very proud of what has been achieved. Today Ericsson is a very strong company both strategically and financially. The company has brought 5G to the world and regained its technology leadership.”

Ronnie continues: “Börje Ekholm, since stepping in as CEO, has turned the company around and this continues with the important governance and cultural transformation which is underway.”

Commenting on the matter, Jan Carlson stated: “Having been on the Board since 2017, it is an honor to be put forward for the Ericsson Chairmanship. I look forward to the Annual General Meeting and to working closely with Börje, the Board and the executive team as we continue to execute on our strategy.”

Ericsson’s Nomination Committee consists of Johan Forssell, Investor AB (Chairman of the Nomination Committee); Karl Åberg, AB Industrivärden, Anders Oscarsson, AMF – Tjänstepension och Fonder, Niko Pakalén, Cevian Capital Partners Limited, and Ronnie Leten, Chairman of the Board.

Ericsson Nomination Committee´s proposal for board of directors. Jan Carlson proposed as new Chairman

Jan 12, 2023 | Ericsson makes provision in fourth quarter of 2022 in relation to potential DPA breach resolution with U.S. Department of Justice

Ericsson (NASDAQ: ERIC) announces that it is now in a position to make a provision of SEK 2.3 billion (approx. USD 220 million) in relation to a potential resolution with the U.S. Department of Justice (DOJ) regarding previously announced, non-criminal, alleged breaches under its 2019 Deferred Prosecution Agreement (DPA). Ericsson has not reached a resolution with the DOJ regarding these alleged breaches and discussions are ongoing.

This charge, which will be booked in the Company’s fourth quarter 2022 financial results, will be SEK 2.3 billion (approx. USD 220 million). The Company believes that this is a sufficiently reliable estimate of the financial penalty associated with any potential breach resolution, and this provision also includes estimated expenses for the previously announced extended monitorship. The provision will be booked as Other Operating Expenses in the income statement of Segment Other.

The Company’s internal investigation and its cooperation with authorities in relation to the allegations in the 2019 Iraq-related internal investigation report remain open and ongoing.

Since 2019, Ericsson has taken significant remedial measures, overseen by the Board of Directors. These include enhancing its group-wide approach to risk management and strengthening its compliance program and internal controls. The Company agreed in December 2022 to extend its independent compliance monitorship until June 2024 to further our efforts to embed best-in-class compliance, risk management and internal controls frameworks across the organization.

Background

In 2019, Ericsson entered into the DPA in order to resolve past (prior to 2017) Foreign Corrupt Practices Act (FCPA) violations relating to misconduct in certain countries. The 2019 agreement provided that, in the event of any breach of its ongoing DPA obligations, the Company could be prosecuted for the historic FCPA violations covered by the DPA.

As announced in October 2021 and March 2022, the DOJ notified Ericsson that it failed to provide documents and information to the DOJ in a timely manner and did not adequately report to the DOJ certain information relating to a 2019 Iraq-related internal investigation.

The DOJ has not alleged or charged Ericsson with any new criminal misconduct since the start of the DPA.

Ericsson makes provision in fourth quarter of 2022 in relation to potential DPA breach resolution with U.S. Department of Justice

21    Ericsson | Fourth quarter and full year report 2022 Other information

Risk factors    

Ericsson is exposed to a number of risks in its activities. To stimulate identification and support cross-functional treatment within the Ericsson Group, risks are grouped in a number of categories, including for example risks relating to technology, IPR, compliance, project execution, operations, products and services, treasury and accounting, the geopolitical environment, M&A, cyber security and occupational health and safety.

Ericsson’s risk management is embedded into strategy development and operational processes and is a part of the Ericsson Group Management System to ensure accountability, effectiveness, efficiency, business continuity and compliance. Risks are defined in both a short-term and long-term perspective and are related to long-term objectives as per the strategic direction as well as to short-term objectives. Risk factors and uncertainties of relevance to Ericsson are described in the Annual Report 2021 and in the Annual Report on Form 20-F 2021 (in the following the “Annual Report 2021”). Updates to these risk factors and uncertainties observed by Ericsson that are deemed of short-term relevance include, but are not limited to, the following risks described below:

We are subject to certain US and other anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations. Ericsson may be subject to further adverse consequences under the DPA with the DOJ and the injunction issued in connection with the settlement with the SEC, both from 2019, and other investigations by governmental authorities.

The Company is required to comply with anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations in jurisdictions where Ericsson does business. In addition, some of the international locations in which we operate lack a developed legal system and have elevated levels of corruption affecting many aspects of conducting business. When necessary, the Company investigates potential instances of corruption, including potential violations of anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism laws, rules and regulations.

The Company cannot assure that its employees, subcontractors and agents have complied with these requirements in the past, and the Company faces exposure to possible past, present and future violations of these requirements by its employees, subcontractors and agents. Actions by Ericsson’s employees, or by third-party intermediaries acting on the Company’s behalf in violation of these laws, rules or regulations, whether carried out in the US or elsewhere in connection with the conduct of Ericsson’s business, may expose the Company to significant civil or criminal liability that would materially harm the Company, including its reputation, business, financial condition, funding, operating results cash flows, and prospects.

In December 2019, Ericsson entered into a deferred prosecution agreement (DPA) with the DOJ resolving the DOJ’s investigations into Ericsson’s business dealings in Djibouti, China, Vietnam, Indonesia and Kuwait.. The DPA has a three-year term and includes a guilty plea by our Egyptian subsidiary to a criminal violation of the US Foreign Corrupt Practices Act’s (FCPA) anti-bribery provisions.

Under the DPA, the Company admitted to the conduct described in the DPA’s statement of facts, and the DOJ agreed to defer prosecution of Ericsson for the DPA’s three-year term if Ericsson does not violate the terms of the DPA.

In October 2021, the DOJ notified us of its determination that we breached our obligations under the DPA by failing to provide required information to the DOJ.

In February 2022, the Company publicly disclosed that an internal investigation in 2019 included a review of the conduct of Ericsson employees, vendors and suppliers in Iraq during the period 2011–2019. The investigation found serious breaches of compliance rules and the Company’s Code of Business Ethics and identified evidence of corruption-related misconduct and other serious violations, including payments to intermediaries and the potential use of alternate transport routes in connection with circumventing Iraqi Customs, at a time when terrorist organizations, including ISIS, controlled some transport routes. The investigation also identified payment schemes and cash transactions that potentially created the risk of money laundering. The investigators could not determine the ultimate recipients of any payments, nor identify that any Ericsson employee was directly involved in financing terrorist organizations.

As a result of the investigation, several employees were terminated from the Company and multiple other disciplinary and other remedial actions were taken.

In March 2022, the DOJ informed Ericsson that, before entering into the DPA, the Company provided insufficient information to the DOJ about the Company’s 2019 internal investigation into conduct in Iraq. The DOJ also determined that the Company breached the DPA by failing to inform the DOJ about the investigation post-DPA. The DOJ’s determination that the Company violated the DPA allows the DOJ, in its sole discretion, to commence prosecution for criminal violations, including the charged conspiracy to violate the FCPA’s anti-bribery, books and records and internal controls provisions referenced in the DPA. In doing so, the DOJ could rely upon Ericsson’s DPA admissions and would benefit from Ericsson’s waiver of certain procedural and evidentiary defences. The DOJ also may, in its sole discretion, extend the term of the DPA.

The Company is in communication with the DOJ regarding the facts and circumstances of the breach determinations and is committed to cooperating with the DOJ to resolve the matters. While the length of the process cannot be determined, the resolution of these matters could result in a range of actions by the DOJ, including criminal prosecution, civil or criminal penalties and additional monetary fines or penalties.

In June 2022, the SEC informed us that it opened an investigation concerning matters described in the Company’s 2019 Iraq investigation report. Under Ericsson’s consent judgment with the SEC, we are permanently enjoined from violating the FCPA’s anti-bribery, books and records and internal controls provisions. Violations of the injunction or consent judgment could subject us to new civil and criminal penalties as well as a new enforcement action. In December 2022, the Company agreed with the DOJ and SEC to extend the term of the Company’s independent Compliance Monitor for one year, to June 2024.

Ericsson is committed to cooperating with the DOJ and the SEC to resolve these matters, the outcome of which we are unable to predict. The Company made a provision in the fourth quarter of 2022 of SEK 2.3 billion (approx. USD 220 million) in relation to a potential resolution with the DOJ regarding previously announced, non-criminal, alleged breaches under the DPA. The provision also includes estimated expenses for the previously announced extended Compliance Monitorship. The eventual financial penalty could differ materially from the provision. The Company’s internal investigation and its cooperation with authorities in relation to the allegations made in the 2019 Iraq report remain open and ongoing.

We also face other negative consequences from these matters, including matters under review as part of our ongoing and future communications with governmental authorities to comply with our

22    Ericsson | Fourth quarter and full year report 2022 Risk factors

obligations under the DPA. Governmental authorities in the US and elsewhere are investigating us for possible violations of applicable anti-corruption (including anti-bribery, anti-money laundering, sanctions, terror finance and anti-terrorism) laws, rules or regulations, and we currently face litigation related to these matters. Any criminal prosecution or civil or criminal penalties imposed as a result of non-compliance for any reason with the DPA or consent judgment could have a material adverse effect on the Company, including its reputation, business, financial condition, funding, operating results, cash flows, or prospects.

Ericsson may also face other potentially negative consequences relating to the investigations by, and settlements with, the DOJ and SEC, or to other potential investigations. Enforcement authorities in the US or elsewhere, including the SEC, the DOJ or OFAC, could investigate us for additional possible violations of applicable anti-corruption (including anti-bribery, anti-money laundering, sanctions, terror finance and anti-terrorism) laws, rules or regulations of which we are aware or unaware at any time. Such violations could result in severe reputational damage, and have a materially adverse effect on Ericsson, including its reputation, business, financial condition, operating results, cash flows, or prospects and could constitute a violation of the DPA or the consent judgment with the SEC. Neither the DPA nor the consent judgment prevents the DOJ, SEC or any other authorities from carrying out investigations with respect to facts not covered in the agreements or in other jurisdictions, or prevents other authorities from carrying out investigations related to these or other matters. Similarly, the resolutions with the DOJ and SEC do not foreclose third parties, such as competitors, customers, suppliers, or shareholders, from commencing litigation related to these or other matters.

There can be no assurance that the remedial measures described above and any others Ericsson may take in the future will be effective or that there will not be a finding of material weakness in Ericsson’s internal controls. Any one or more of the foregoing could have a material adverse effect on the Company, including its reputation, business, financial condition, funding, operating results, cash flows, or prospects.

Additionally, any ongoing media or governmental interest in investigations and resolutions or additional company investigations that we are currently undertaking or may undertake in the future could result in the discovery of additional facts, impact the public perception of Ericsson and result in reputational harm and other negative consequences. For example, customers or suppliers may reconsider their relationships with the Company, or governmental and regulatory authorities in the relevant jurisdictions or elsewhere could seek to penalize the Company or place restrictions on its operations or ability to participate in public tenders. Harm to reputation, or any resulting disruption in customer or supplier relationships, could have a material adverse impact on Ericsson, including its reputation, business, financial condition, funding, operating results, cash flows, or prospects.

Ericsson is involved in lawsuits, legal proceedings and regulatory investigations which, if determined unfavorably, could require the Company to pay substantial damages, fines and/or penalties.

In the normal course of Ericsson’s business Ericsson is involved in legal proceedings. These proceedings include matters such as commercial disputes, claims regarding intellectual property, antitrust, tax and labor disputes, as well as government inquiries and investigations. Legal proceedings can be expensive, lengthy and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable resolution of a particular matter could have a material adverse effect on Ericsson’s business, operating results, financial position and reputation. As a publicly listed company, Ericsson may be exposed to lawsuits in which plaintiffs allege that the Company or its officers have failed to comply with securities laws, stock market regulations or other laws, regulations or requirements. Whether or not there is merit to such claims, the time and costs incurred to defend the Company and its officers and the potential settlement or compensation to the plaintiffs could have significant impact on Ericsson’s reported results and reputation.

In addition, the Company is from time to time and may in the future be subject to additional inquiries, litigation or other proceedings or actions, regulatory or otherwise, arising in relation to the matters described above and related litigation and investigative matters. An unfavorable outcome of any such litigation or regulatory proceeding or action could have a material adverse effect on Ericsson’s business, financial condition and operating results.

In April 2019, Ericsson was informed by China’s State Administration for Market Regulations (SAMR) Anti-monopoly bureau that SAMR has initiated an investigation into Ericsson’s patent licensing practices in China. Ericsson is cooperating with the investigation, which is still in a fact-finding phase. The next steps include continued fact-finding and meetings with SAMR in order to facilitate the authority’s assessment and conclusions. In case of adverse findings, SAMR has the power to impose behavioral and financial remedies, which may have material adverse effects on Ericsson’s business, financial condition and operating results.

On March 3, 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of investors in Ericsson securities in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9, 2022, which added a former Ericsson officer as a defendant. The amended complaint alleges violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and anti-corruption policies and obligations and the conduct of its business in Iraq. In December 2022, Ericsson filed a motion to dismiss the complaint.

In August 2022, a civil lawsuit was filed in the United States District Court for the District of Columbia against Telefonaktiebolaget LM Ericsson and Ericsson Inc. The lawsuit was brought by US military service members and employees of US government contractors who were killed or injured in terrorist attacks in Iraq, Afghanistan and Syria from 2005 to 2021, as well as by their family members. The lawsuit asserts claims against Ericsson under the US Anti-Terrorism Act alleging that Ericsson made payments that ultimately aided the terrorist organizations that committed, planned or authorized the attacks. In November 2022, Ericsson filed a motion to dismiss the complaint. On December 20, 2022, plaintiffs filed an amended complaint, which added additional plaintiffs, named Ericsson AB, CEO Börje Ekholm and a former employee as additional defendants and also asserted additional allegations and claims.

An unfavorable outcome of any of the abovementioned proceedings may have material adverse effects on Ericsson’s business, financial condition and operating results. For additional information regarding certain of the inquiries and lawsuits in which Ericsson is involved, see “Legal proceedings” in the Report.

5G volumes shifting into more volatile markets

As mentioned in the Annual Report 2021 risk factor 1.9, telecom investment levels fluctuate and are affected by many factors. In addition to the risk factor described in the Annual Report 2021, with 5G volume at scale shifting from early 5G markets into markets with higher volatility and as Ericsson is establishing business relationship with new customers, the levels of uncertainty and fluctuation can increase going forward. For example, both sales and profit can be impacted due to a significant variation in underlying market and/or product and services mix. Furthermore, Ericsson might fail to anticipate customer demand properly, leading to an over or under supply of components, production capacity and deployment capabilities.

23    Ericsson | Fourth quarter and full year report 2022 Risk factors

Stockholm, January 20, 2023

Telefonaktiebolaget LM Ericsson (publ)

The Board of Directors

Corporate Reg. No. 556016-0680

Date for next report: April 18, 2023.

24    Ericsson | Fourth quarter and full year report 2022 Risk factors

Editor’s note

Press briefing and live webcast

Ericsson invites media, investors and analysts to a conference call on January 20, 2023, starting at 9:00 am CET.

Live audio webcast of the conference call as well as supporting slides will be available at:

www.ericsson.com/investors and

www.ericsson.com/press

Replay of the conference call will be available approximately one hour after the call has ended and will remain available for seven days.

For further information, please contact:

Carl Mellander, Senior Vice President, Chief Financial Officer

Phone: +46 72 583 88 70

E-mail: investor.relations@ericsson.com or

media.relations@ericsson.com

Stella Medlicott, Senior Vice President, Chief Marketing and Communications Officer

Phone: +46 73 095 65 39

E-mail: investor.relations@ericsson.com or

media.relations@ericsson.com

Telefonaktiebolaget LM Ericsson

Org. number: 556016-0680

Torshamnsgatan 21

SE-164 83 Stockholm

Phone: +46 10 719 00 00

www.ericsson.com

Investors

Peter Nyquist, Vice President,

Head of Investor Relations

Phone: +46 70 575 29 06

E-mail: peter.nyquist@ericsson.com

Lena Häggblom, Director,

Investor Relations

Phone: +46 72 593 27 78

E-mail: lena.haggblom@ericsson.com

Alan Ganson, Director,

Investor Relations

Phone: +46 70 267 27 30

E-mail: alan.ganson@ericsson.com

Media

Kristoffer Edshage, Director of Corporate Media

Phone: +46 72 220 44 46

E-mail: media.relations@ericsson.com

Corporate Communications

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com

25    Ericsson | Fourth quarter and full year report 2022 Editor’s note

Forward-looking statements

This report includes forward-looking statements, including statements reflecting management’s current views relating to the growth of the market, future market conditions, future events, financial condition, and expected operational and financial performance, including, the following:

• Our ability to reach a mutually agreeable resolution with DOJ regarding alleged DPA breaches

• Any such potential resolution could involve a financial penalty that differs materially from the provision

• Our ability to reach a full and final resolution that covers all past conduct, including allegations of past conduct in Iraq

• Our goals, targets, strategies, planning assumptions and operational or financial performance expectations, such as the investor day key messages and our targets and strategies as described in the introductory bullets, the CEO comments, the Segment descriptions and in Other information

• Industry trends, future characteristics and development of the

• markets in which we operate

• Our future liquidity, capital resources, capital expenditures, cost savings and profitability

• The expected demand for our existing and new products and services as well as plans to launch new products and services

• including research and development expenditure

• The ability to deliver on future plans and to realize potential for

• future growth

• The expected operational or financial performance of strategic

• cooperation activities and joint ventures

• The time until acquired entities and businesses will be integrated and accretive to income

• Technology and industry trends including the regulatory and

• standardization environment in which we operate, competition

• and our customer structure.

The words “believe,” “expect,” “foresee,” “anticipate,” “assume,” “intend,” “likely,” “projects,” “may,” “could,” “plan,” “estimate,” “forecast,” “will,” “should,” “would,” “predict,” “aim,” “ambition,” “seek,” “potential,” “target,” “might,” “continue,” or, in each case, their negative or variations, and similar words or expressions are used to identify forward-looking statements. Any statement that refers to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.

We caution investors that these statements are subject to risks and uncertainties many of which are difficult to predict and generally beyond our control that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.

Important factors that could affect whether and to what extent any of our forward-looking statements materialize include, but are not limited to, the factors described in the section “Risk factors”, and in “Risk factors” in the Annual Report 2021.

These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events, whether as a result of new information, future events or otherwise, except as required by applicable law or stock exchange regulation.

26    Ericsson | Fourth quarter and full year report 2022 Forward-looking statements

Auditors’ Review Report

Introduction

We have reviewed the condensed interim financial information (year-end report) of Telefonaktiebolaget LM Ericsson (publ.) as of December 31, 2022, and the twelve months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the year-end report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this year-end report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity.

A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the year-end report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Stockholm, January 20, 2023

Deloitte AB

Thomas Strömberg

Authorized Public Accountant

27    Ericsson | Fourth quarter and full-year report 2022 Auditors’ Review Report

Financial statements and other information

Contents

Financial statements (unaudited)	29
Condensed consolidated income statement	29
Condensed statement of comprehensive income (loss)	29
Condensed consolidated balance sheet	30
Condensed consolidated statement of cash flows	31
Condensed consolidated statement of changes in equity	32
Condensed consolidated income statement – isolated quarters	32
Condensed consolidated statement of cash flows – isolated quarters	33
Condensed Parent Company income statement	34
Condensed Parent Company statement of comprehensive income (loss)	34
Condensed Parent Company balance sheet	35
Accounting policies and Explanatory notes (unaudited)	36
Note 1 – Accounting policies	36
Note 2 – Critical accounting estimates and judgements	36
Note 3 – Segment information	37
Note 4 – Financial income and expenses, net	41
Note 5 – Provisions	42
Note 6 – Financial risk management	43
Note 7 – Cash flow	44
Note 8 – Contingent liabilities and Assets pledged as collateral	44
Note 9 – Share information	45
Note 10 – Employee information	45
Note 11 – Business combinations	46
Alternative performance measures (unaudited)	47
Sales growth adjusted for comparable units and currency	47
Items excluding restructuring charges	48
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges	49
Rolling four quarters of net sales and EBIT margin excluding restructuring charges (%)	49
Gross cash and net cash, end of period	50
Capital employed	50
Capital turnover	50
Return on capital employed	51
Equity ratio	51
Return on equity	51
Adjusted earnings per share	52
Free cash flow before M&A / Free cash flow after M&A	52
Sales growth by segment adjusted for comparable units and currency	53
Sales growth by market area adjusted for comparable units and currency	53
Gross margin by segment by quarter	54
EBIT margin by segment by quarter	54
Restructuring charges by function	55
Restructuring charges by segment	55
Gross income and gross margin excluding restructuring charges by segment	56
EBIT and EBIT margin excluding restructuring charges by segment	57
Rolling four quarters of net sales by segment	57
Rolling four quarters of EBIT margin excluding restructuring charges by segment (%)	57
EBITA and EBITA margin by segment by quarter	58
EBITA and EBITA margin excluding restructuring charges by segment	59
Other ratios	59

28    Ericsson | Fourth quarter and full-year report 2022 Financial statements and other information

Financial statements (unaudited)

Condensed consolidated income statement

			Q4							Jan-Dec
SEK million	Note		2022		2021		Change			2022		2021
Net sales		3		85,980		71,332		21	%		271,546		232,314
Cost of sales				-50,411		-40,511		24	%		-158,251		-131,565
Gross income		3		35,569		30,821		15	%		113,295		100,749
Research and development expenses				-13,217		-11,863		11	%		-47,298		-42,074
Selling and administrative expenses				-11,791		-7,620		55	%		-35,692		-26,957
Impairment losses on trade receivables				99		99		—			-40		-40
Operating expenses				-24,909		-19,384		29	%		-83,030		-69,071
Other operating income and expenses¹)				-2,824		428		-760	%		-3,262		362
Share of earnings of JV and associated companies				17		-4		-525	%		17		-260
Earnings before financial items and income tax (EBIT)		3		7,853		11,861		-34	%		27,020		31,780
Financial income and expenses, net		4		-474		-945		-50	%		-2,411		-2,530
Income after financial items				7,379		10,916		-32	%		24,609		29,250
Income tax				-1,189		-770		54	%		-5,497		-6,270
Net income				6,190		10,146		-39	%		19,112		22,980
Net income attributable to:
Owners of the Parent Company				6,066		10,076					18,724		22,694
Non-controlling interests				124		70					388		286
Other information
Average number of shares, basic (million)		9		3,330		3,330					3,330		3,329
Earnings per share, basic (SEK) ²)				1.82		3.03					5.62		6.82
Earnings per share, diluted (SEK) ³)				1.82		3.02					5.62		6.81

¹⁾  Jan-Dec 2022 includes a provision of SEK -2.3 billion in relation to a potential DPA breach resolution with DOJ, including estimated expenses for extended monitorship.

²⁾  Based on net income attributable to owners of the Parent Company.

³⁾  Potential ordinary shares are not considered when their conversion to ordinary shares would improve earnings per share.

Condensed statement of comprehensive income (loss)

	Q4				Jan-Dec
SEK million	2022		2021		2022		2021
Net income		6,190		10,146		19,112		22,980
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefits pension plans incl. asset ceiling		-3,596		-79		10,669		3,537
Revaluation of borrowings due to change in credit risk		-661		205		1,030		31
Cash flow hedge reserve
Gains/ losses arising during the period		—		—		3,703		—
Transfer to goodwill		—		—		-3,677		—
Tax on items that will not be reclassified to profit or loss		57		62		-3,067		-682
Items that have been or may be reclassified to profit or loss
Cash flow hedge reserve
Gains/ losses arising during the period		2,189		-188		-701		-542
Reclassification adjustments on gains/ losses included in profit or loss		153		-24		280		-96
Translation reserves
Changes in translation reserves		-7,301		1,241		7,130		3,342
Reclassification to profit and loss		-55		41		-85		46
Share of other comprehensive income of JV and associated companies		-24		-6		49		28
Tax on items that have been or may be reclassified to profit or loss		-482		38		87		126
Total other comprehensive income (loss), net of tax		-9,720		1,290		15,418		5,790
Total comprehensive income (loss)		-3,530		11,436		34,530		28,770
Total comprehensive income (loss) attributable to:
Owners of the Parent Company		-3,816		11,423		34,274		28,694
Non-controlling interests		286		13		256		76

29    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed consolidated balance sheet

			Dec 31		Dec 31
SEK million	Note		2022		2021
Assets
Non-current assets
Intangible assets
Capitalized development expenses				3,705		3,528
Goodwill		11		84,570		38,204
Customer relationships, IPR and other intangible assets		11		26,340		3,830
Property, plant and equipment				14,236		13,580
Right-of-use assets				7,870		7,948
Financial assets
Equity in JV and associated companies				1,127		941
Other investments in shares and participations		6		2,074		2,258
Customer finance, non-current		6		415		568
Interest-bearing securities, non-current		6		9,164		30,626
Other financial assets, non-current		6		6,839		6,217
Deferred tax assets				19,394		23,109
				175,734		130,809
Current assets
Inventories				45,846		35,164
Contract assets				9,843		10,506
Trade receivables		6		48,413		45,399
Customer finance, current		6		4,955		2,719
Current tax assets				7,973		6,379
Other current receivables				9,688		7,656
Interest-bearing securities, current		6		8,736		12,932
Cash and cash equivalents		6		38,349		54,050
				173,803		174,805
Total assets				349,537		305,614
Equity and liabilities
Equity
Stockholders’ equity				134,814		108,775
Non-controlling interest in equity of subsidiaries				-1,510		-1,676
				133,304		107,099
Non-current liabilities
Post-employment benefits				27,361		36,050
Provisions, non-current		5		3,959		3,722
Deferred tax liabilities		11		4,784		884
Borrowings, non-current		6		26,946		22,241
Lease liabilities, non-current				6,818		7,079
Other non-current liabilities				745		1,587
				70,613		71,563
Current liabilities
Provisions, current		5		7,629		5,782
Borrowings, current		6		5,984		9,590
Lease liabilities, current				2,486		2,224
Contract liabilities				42,251		32,834
Trade payables		6		38,437		35,684
Current tax liabilities				2,640		2,917
Other current liabilities				46,193		37,921
				145,620		126,952
Total equity and liabilities				349,537		305,614

30    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed consolidated statement of cash flows

			Q4				Jan-Dec		Jan-Dec
SEK million	Note		2022		2021		2022		2021
Operating activities
Net income				6,190		10,146		19,112		22,980
Adjustments for
Taxes				1,304		938		5,383		6,576
Earnings/dividends in JV and associated companies				-24		13		55		360
Depreciation, amortization and impairment losses		7		3,535		2,552		10,543		8,969
Other				432		398		1,657		1,238
				11,437		14,047		36,750		40,123
Changes in operating net assets
Inventories				5,898		248		-7,740		-5,565
Customer finance, current and non-current				-871		780		-1,732		34
Trade receivables and contract assets				-4,080		-5,227		4,766		1,551
Trade payables				-131		3,020		-1,995		1,385
Provisions and post-employment benefits				1,749		950		2,339		-118
Contract liabilities				2,878		-1,655		5,794		4,014
Other operating assets and liabilities, net				5,235		4,606		-813		2,701
				10,678		2,722		619		4,002
Interest received				127		-104		344		8
Interest paid				-406		-310		-1,250		-974
Taxes paid				-1,941		-1,159		-5,600		-4,094
Cash flow from operating activities				19,895		15,196		30,863		39,065
Investing activities
Investments in property, plant and equipment		7		-1,502		-701		-4,477		-3,663
Sales of property, plant and equipment				76		34		249		115
Acquisitions/divestments of subsidiaries and other operations, net		11		-445		178		-51,688		59
Product development		7		-717		-302		-1,720		-962
Purchase of interest-bearing securities				-12,108		-8,858		-13,582		-35,415
Sale of interest-bearing securities				789		7,064		40,541		20,114
Other investing activities				2,012		-122		-3,720		-131
Cash flow from investing activities				-11,895		-2,707		-34,397		-19,883
Financing activities
Proceeds from issuance of borrowings				1,301		1		10,755		7,882
Repayment of borrowings				-121		-39		-16,029		-5,791
Sale of own shares				—		—		—		42
Dividends paid				-4,172		-3,395		-8,415		-6,889
Repayment of lease liabilities				-765		-623		-2,593		-2,368
Other financing activities				-183		-825		352		-2,183
Cash flow from financing activities				-3,940		-4,881		-15,930		-9,307
Effect of exchange rate changes on cash				-2,460		-34		3,763		563
Net change in cash and cash equivalents				1,600		7,574		-15,701		10,438
Cash and cash equivalents, beginning of period				36,749		46,476		54,050		43,612
Cash and cash equivalents, end of period				38,349		54,050		38,349		54,050

31    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed consolidated statement of changes in equity

	Jan-Dec
SEK million	2022		2021
Opening balance		107,099		85,177
Total comprehensive income		34,530		28,770
Sale/repurchase of own shares		—		42
Long-term variable compensation plans		89		93
Dividends to shareholders		-8,415		-6,889
Transactions with non-controlling interests		1		-94
Closing balance		133,304		107,099

Condensed consolidated income statement – isolated quarters

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Net sales		85,980		68,040		62,465		55,061		71,332		56,263		54,941		49,778
Cost of sales		-50,411		-39,905		-36,163		-31,772		-40,511		-31,487		-31,084		-28,483
Gross income		35,569		28,135		26,302		23,289		30,821		24,776		23,857		21,295
Research and development expenses		-13,217		-11,880		-11,496		-10,705		-11,863		-10,155		-10,480		-9,576
Selling and administrative expenses		-11,791		-9,441		-7,872		-6,588		-7,620		-6,177		-6,972		-6,188
Impairment losses on trade receivables		99		38		3		-180		99		-27		100		-212
Operating expenses		-24,909		-21,283		-19,365		-17,473		-19,384		-16,359		-17,352		-15,976
Other operating income and expenses1)		-2,824		234		393		-1,065		428		500		-579		13
Share of earnings of JV and associated companies		17		29		-22		-7		-4		-82		-103		-71
Earnings before financial items and income tax (EBIT)		7,853		7,115		7,308		4,744		11,861		8,835		5,823		5,261
Financial income and expenses, net		-474		-535		-759		-643		-945		-598		-454		-533
Income after financial items		7,379		6,580		6,549		4,101		10,916		8,237		5,369		4,728
Income tax		-1,189		-1,220		-1,899		-1,189		-770		-2,471		-1,469		-1,560
Net income		6,190		5,360		4,650		2,912		10,146		5,766		3,900		3,168
Net income (loss) attributable to:
Owners of the Parent Company		6,066		5,214		4,504		2,940		10,076		5,752		3,679		3,187
Non-controlling interests		124		146		146		-28		70		14		221		-19
Other information
Average number of shares, basic (million)		3,330		3,330		3,330		3,330		3,330		3,330		3,329		3,328
Earnings per share, basic (SEK) ²)		1.82		1.56		1.36		0.88		3.03		1.73		1.10		0.96
Earnings per share, diluted (SEK) ³)		1.82		1.56		1.35		0.88		3.02		1.73		1.10		0.96

¹⁾  Q4 2022 includes a provision of SEK -2.3 billion in relation to a potential DPA breach resolution with DOJ, including estimated expenses for extended monitorship. Q3 2022 includes revaluation of Ericsson Ventures investments of SEK 0.2 billion. Q2 2022 includes revaluation/disposals of Ericsson Ventures investments of SEK 0.1 billion. Q1 2022 includes a provision of SEK -0.9 billion for impairment of assets and other one-time costs due to the suspension of the affected business in Russia, and revaluation of Ericsson Venture investments of SEK -0.3 billion. Q4 2021 includes a gain from divestment of a data center and revaluation of Ericsson Ventures investments of SEK 0.4 billion. Q3 2021 includes an Ericsson Ventures investment revaluation of SEK 0.5 billion. Q2 2021 includes cost of SEK -0.8 billion as a result of the Nokia settlement related to the 2019 resolutions with SEC and DOJ.

²⁾  Based on net income attributable to owners of the Parent Company.

³⁾  Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share.

32    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed consolidated statement of cash flows – isolated quarters

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Operating activities
Net income		6,190		5,360		4,650		2,912		10,146		5,766		3,900		3,168
Adjustments for
Taxes		1,304		1,307		1,751		1,021		938		2,824		1,230		1,584
Earnings/dividends in JV and associated companies		-24		-17		88		8		13		159		112		76
Depreciation, amortization and impairment losses		3,535		2,638		2,224		2,146		2,552		2,385		2,097		1,935
Other		432		-19		345		899		398		24		631		185
		11,437		9,269		9,058		6,986		14,047		11,158		7,970		6,948
Changes in operating net assets
Inventories		5,898		-3,564		-4,728		-5,346		248		-3,877		-701		-1,235
Customer finance, current and non-current		-871		-872		134		-123		780		-1,419		454		219
Trade receivables and contract assets		-4,080		4,595		3,350		901		-5,227		8,833		-4,034		1,979
Trade payables		-131		-1,817		1,324		-1,371		3,020		1,733		744		-4,112
Provisions and post-employment benefits		1,749		-58		-321		969		950		-130		-1,461		523
Contract liabilities		2,878		-2,623		-721		6,260		-1,655		-3,388		4,603		4,454
Other operating assets and liabilities, net		5,235		1,052		-333		-6,767		4,606		3,168		608		-5,681
		10,678		-3,287		-1,295		-5,477		2,722		4,920		213		-3,853
Interest received		127		156		-17		78		-104		42		2		68
Interest paid		-406		-196		-437		-211		-310		-120		-384		-160
Taxes paid/received		-1,941		-1,291		-1,022		-1,346		-1,159		-1,276		-1,861		202
Cash flow from operating activities		19,895		4,651		6,287		30		15,196		14,724		5,940		3,205
Investing activities
Investments in property, plant and equipment		-1,502		-1,104		-1,053		-818		-701		-1,040		-1,007		-915
Sales of property, plant and equipment		76		74		61		38		34		40		17		24
Acquisitions/divestments of subs. and other operations, net		-445		-51,412		123		46		178		-55		-69		5
Product development		-717		-414		-301		-288		-302		-190		-266		-204
Purchase of interest-bearing securities		-12,108		-437		-1,037		—		-8,858		-9,670		-13,207		-3,680
Sale of interest-bearing securities		789		978		22,747		16,027		7,064		1,801		7,408		3,841
Other investing activities		2,012		-6,537		1,384		-579		-122		-4		—		-5
Cash flow from investing activities		-11,895		-58,852		21,924		14,426		-2,707		-9,118		-7,124		-934
Financing activities
Proceeds from issuance of borrowings		1,301		1,666		—		7,788		1		—		7,804		77
Repayment of borrowings		-121		-5,915		-9,993		—		-39		—		-510		-5,242
Sale of own shares		—		—		—		—		—		42		—		—
Dividends paid		-4,172		-79		-4,164		—		-3,395		-161		-3,328		-5
Repayment of lease liabilities		-765		-658		-577		-593		-623		-580		-617		-548
Other financing activities		-183		-277		243		569		-825		-1,849		940		-449
Cash flow from financing activities		-3,940		-5,263		-14,491		7,764		-4,881		-2,548		4,289		-6,167
Effect of exchange rate changes on cash		-2,460		2,595		3,042		586		-34		145		-375		827
Net change in cash and cash equivalents		1,600		-56,869		16,762		22,806		7,574		3,203		2,730		-3,069
Cash and cash equivalents, beginning of period		36,749		93,618		76,856		54,050		46,476		43,273		40,543		43,612
Cash and cash equivalents, end of period		38,349		36,749		93,618		76,856		54,050		46,476		43,273		40,543

33    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed Parent Company income statement

	Q4				Jan-Dec
SEK million	2022		2021		2022		2021
Net sales		—		—		—		—
Cost of sales		—		—		—		—
Gross income		—		—		—		—
Operating expenses		-537		-317		-1,492		-820
Other operating income and expenses		-1,234		664		691		1,770
EBIT		-1,771		347		-801		950
Financial net¹)		-1,689		1,849		19,213		8,399
Income after financial items		-3,460		2,196		18,412		9,349
Transfers to (-) / from untaxed reserves		-7,272		-1,526		-7,272		-1,526
Income tax¹)		1,495		223		631		-167
Net income (loss)		-9,237		893		11,771		7,656

¹⁾  Revaluation of borrowings due to change in credit risk, which historically has been reported under Other Comprehensive Income has for 2022 been reported in the Income Statement. Prior periods have been restated. The restatement is due to an identified exemption in the Swedish Annual Accounts Act (RFR 2) which does not allow the items to be reported under Other Comprehensive Income. The restatement from Other comprehensive income to the Income statement resulted in an increase of reported financial net of SEK 31 million YTD and 205 MSEK in the fourth quarter and an increase of the reported tax expense of SEK 6 million YTD and SEK 42 million in the fourth quarter, 2021. SEK 366 million has been restated from Revaluation of borrowings to Other retained earnings in equity for the opening balance of year 2021.

Condensed Parent Company statement of comprehensive income (loss)

	Q4				Jan-Dec
SEK million	2022		2021		2022		2021
Net income (loss)		-9,237		893		11,771		7,656
Cash flow hedge reserve
Gains / losses arising during the period		—		-26		3,703		-26
Transfer to investments		—		—		-3,677		—
Tax on items that will not be reclassified to profit or loss		-758		—		-758		—
Other comprehensive income (loss), net of tax		-758		-26		-732		-26
Total comprehensive income (loss)		-9,995		867		11,039		7,630

34    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Condensed Parent Company balance sheet

	Dec 31		Dec 31
SEK million	2022		2021
Assets
Fixed assets
Intangible assets		4		8
Tangible assets		380		413
Financial assets¹)		156,720		120,605
		157,104		121,026
Current assets
Receivables		27,664		27,364
Short-term investments		8,540		12,722
Cash and cash equivalents		23,731		37,128
		59,935		77,214
Total assets		217,039		198,240
Stockholders’ equity, provisions and liabilities
Equity
Restricted equity		48,164		48,164
Non-restricted equity		37,753		34,984
		85,917		83,148
Provisions		2,435		293
Non-current liabilities		26,835		22,406
Current liabilities		101,852		92,393
Total stockholders’ equity, provisions and liabilities		217,039		198,240
¹) Of which interest-bearing securities, non-current		9,157		30,615

35    Ericsson | Fourth quarter and full-year report 2022 Financial statements

Accounting policies and Explanatory notes

(unaudited)

Note 1 – Accounting policies

The group

This condensed consolidated interim financial report for the quarterly reporting period ended December 31, 2022, has been prepared in accordance with Accounting Standard IAS 34 “Interim Financial Reporting”. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2021 and should be read in conjunction with that annual report. There are no amendments of IFRS during 2022 that are estimated to have a material impact on the result and financial position of the Company.

New segment structure implemented in Q3

As announced in May 2022, Ericsson will start to report its financials according to its new segment structure from Q3 2022. The four new segments are:

Networks – including Radio Access Networks, Transport Solutions, Site Solutions, Network Rollout & Tuning and Customer Support.

Cloud Software and Services – including Core Network and Automation, Managed Services, Services Orchestration and Telecom BSS.

Enterprise – including Enterprise Wireless Solutions, Technologies & New Businesses, Global Communication Platform (Vonage – reported from Q3 2022) and Global Network Platform.

Other – including media businesses, Ericsson Ventures and one-offs.

The financial reporting by segment was restated in the Q3 report for the first two quarters of 2022, each quarter of 2021 and full-year 2020.

Note 2 – Critical accounting estimates and judgements

Russia

In the first quarter 2022, Ericsson recorded a SEK 0.9 billion provision for impairment of assets and other costs related to its decision to wind down operations in Russia. The provision was recorded in Other operating expenses in Segment Other and has been utilized during 2022.

Provision

In December 2022, the Company agreed with the DOJ and SEC to extend the term of the Company’s independent compliance monitor for one year, to June 2024. In addition, the Company made a provision in the fourth quarter of 2022 of SEK 2.3 billion (approx. USD 220 million) in relation to a potential resolution with the DOJ regarding previously announced, non-criminal, alleged breaches under the DPA. The provision also includes estimated expenses for the previously announced extended monitorship. The eventual financial penalty could differ materially from the provision, since negotiations are still ongoing. For more information, see note 5 “Provisions”.

36     Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 3 – Segment information^*)

Net sales by segment by quarter

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		58,626			48,147			45,983			40,712			51,097			40,591			39,876			36,274
Of which Products		45,804			35,763			35,299			31,131			39,963			31,078			30,415			27,495
Of which Services		12,822			12,384			10,684			9,581			11,134			9,513			9,461			8,779
Cloud Software and Services		20,210			14,213			14,014			12,087			17,955			13,610			12,949			11,710
Of which Products		8,047			4,752			4,675			3,631			7,133			4,590			3,977			3,567
Of which Services		12,163			9,461			9,339			8,456			10,822			9,020			8,972			8,143
Enterprise		6,582			5,161			1,875			1,762			1,802			1,558			1,600			1,276
Other		562			519			593			500			478			504			516			518
Total		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
	2022												2021
Sequential change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		22	%		5	%		13	%		-20	%		26	%		2	%		10	%		—
Of which Products		28	%		1	%		13	%		-22	%		29	%		2	%		11	%		—
Of which Services		4	%		16	%		12	%		-14	%		17	%		1	%		8	%		—
Cloud Software and Services		42	%		1	%		16	%		-33	%		32	%		5	%		11	%		—
Of which Products		69	%		2	%		29	%		-49	%		55	%		15	%		11	%		—
Of which Services		29	%		1	%		10	%		-22	%		20	%		1	%		10	%		—
Enterprise		28	%		175	%		6	%		-2	%		16	%		-3	%		25	%		—
Other		8	%		-12	%		19	%		5	%		-5	%		-2	%		0	%		—
Total		26	%		9	%		13	%		-23	%		27	%		2	%		10	%		-28	%
	2022												2021
Year over year change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		15	%		19	%		15	%		12	%		—			—			—			—
Of which Products		15	%		15	%		16	%		13	%		—			—			—			—
Of which Services		15	%		30	%		13	%		9	%		—			—			—			—
Cloud Software and Services		13	%		4	%		8	%		3	%		—			—			—			—
Of which Products		13	%		4	%		18	%		2	%		—			—			—			—
Of which Services		12	%		5	%		4	%		4	%		—			—			—			—
Enterprise		265	%		231	%		17	%		38	%		—			—			—			—
Other		18	%		3	%		15	%		-3	%		—			—			—			—
Total		21	%		21	%		14	%		11	%		3	%		-2	%		-1	%		0	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		193,468			134,842			86,695			40,712			167,838			116,741			76,150			36,274
Of which Products		147,997			102,193			66,430			31,131			128,951			88,988			57,910			27,495
Of which Services		45,471			32,649			20,265			9,581			38,887			27,753			18,240			8,779
Cloud Software and Services		60,524			40,314			26,101			12,087			56,224			38,269			24,659			11,710
Of which Products		21,105			13,058			8,306			3,631			19,267			12,134			7,544			3,567
Of which Services		39,419			27,256			17,795			8,456			36,957			26,135			17,115			8,143
Enterprise		15,380			8,798			3,637			1,762			6,236			4,434			2,876			1,276
Other		2,174			1,612			1,093			500			2,016			1,538			1,034			518
Total		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
	2022												2021
Year over year change, percent	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		15	%		16	%		14	%		12	%		1	%		—			—			—
Of which Products		15	%		15	%		15	%		13	%		5	%		—			—			—
Of which Services		17	%		18	%		11	%		9	%		-11	%		—			—			—
Cloud Software and Services		8	%		5	%		6	%		3	%		-6	%		—			—			—
Of which Products		10	%		8	%		10	%		2	%		-5	%		—			—			—
Of which Services		7	%		4	%		4	%		4	%		-6	%		—			—			—
Enterprise		147	%		98	%		26	%		38	%		30	%		—			—			—
Other		8	%		5	%		6	%		-3	%		0	%		—			—			—
Total		17	%		15	%		12	%		11	%		0	%		-1	%		-1	%		0	%

*) Net sales by segment has been restated for the first two quarters of 2022, each quarter 2021 and for the full year 2020. Comparisons against isolated quarters 2020 are not available by segment.

37    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Gross income by segment by quarter

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		26,056		21,366		20,735		18,211		23,643		19,401		19,111		16,714
Cloud Software and Services		6,664		4,516		4,692		4,234		6,362		4,575		3,959		3,933
Enterprise		2,862		2,398		843		843		832		760		765		534
Other		-13		-145		32		1		-16		40		22		114
Total		35,569		28,135		26,302		23,289		30,821		24,776		23,857		21,295
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		86,368		60,312		38,946		18,211		78,869		55,226		35,825		16,714
Cloud Software and Services		20,106		13,442		8,926		4,234		18,829		12,467		7,892		3,933
Enterprise		6,946		4,084		1,686		843		2,891		2,059		1,299		534
Other		-125		-112		33		1		160		176		136		114
Total		113,295		77,726		49,591		23,289		100,749		69,928		45,152		21,295

EBIT (loss) by segment by quarter

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		12,453		9,597		8,861		7,601		11,757		9,624		8,645		7,240
Cloud Software and Services		673		-792		-733		-837		590		-449		-1,158		-1,217
Enterprise		-2,944		-1,670		-839		-781		-770		-819		-649		-727
Other		-2,329		-20		19		-1,239		284		479		-1,015		-35
Total		7,853		7,115		7,308		4,744		11,861		8,835		5,823		5,261
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		38,512		26,059		16,462		7,601		37,266		25,509		15,885		7,240
Cloud Software and Services		-1,689		-2,362		-1,570		-837		-2,234		-2,824		-2,375		-1,217
Enterprise		-6,234		-3,290		-1,620		-781		-2,965		-2,195		-1,376		-727
Other		-3,569		-1,240		-1,220		-1,239		-287		-571		-1,050		-35
Total		27,020		19,167		12,052		4,744		31,780		19,919		11,084		5,261

38    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Net sales by market area by quarter

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
South East Asia, Oceania and India		11,239			7,914			7,962			5,836			8,604			6,450			7,099			6,676
North East Asia		8,396			5,597			7,319			5,421			9,816			5,691			7,123			6,491
North America		25,301			26,517			22,849			20,727			22,264			20,161			17,950			17,081
Europe and Latin America ¹) ²)		20,877			15,298			15,325			15,290			19,236			14,378			14,011			12,647
Middle East and Africa		7,379			5,668			5,223			4,301			6,948			4,985			4,459			4,393
Other ¹) ²)		12,788			7,046			3,787			3,486			4,464			4,598			4,299			2,490
Total		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
¹) Of which in Sweden		778			833			950			678			1,078			478			404			389
²) Of which in EU		10,495			8,242			8,511			8,611			10,181			7,069			7,256			6,801
	2022												2021
Sequential change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
South East Asia, Oceania and India		42	%		-1	%		36	%		-32	%		33	%		-9	%		6	%		-32	%
North East Asia		50	%		-24	%		35	%		-45	%		72	%		-20	%		10	%		-49	%
North America		-5	%		16	%		10	%		-7	%		10	%		12	%		5	%		-11	%
Europe and Latin America ¹) ²)		36	%		0	%		0	%		-21	%		34	%		3	%		11	%		-26	%
Middle East and Africa		30	%		9	%		21	%		-38	%		39	%		12	%		2	%		-33	%
Other ¹) ²)		81	%		86	%		9	%		-22	%		-3	%		7	%		73	%		-42	%
Total		26	%		9	%		13	%		-23	%		27	%		2	%		10	%		-28	%
¹) Of which in Sweden		-7	%		-12	%		40	%		-37	%		126	%		18	%		4	%		7	%
²) Of which in EU		27	%		-3	%		-1	%		-15	%		44	%		-3	%		7	%		-23	%
	2022												2021
Year over year change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
South East Asia, Oceania and India		31	%		23	%		12	%		-13	%		-12	%		-17	%		8	%		13	%
North East Asia		-14	%		-2	%		3	%		-16	%		-23	%		-35	%		-9	%		66	%
North America		14	%		32	%		27	%		21	%		17	%		10	%		-2	%		-5	%
Europe and Latin America ¹) ²)		9	%		6	%		9	%		21	%		12	%		8	%		7	%		3	%
Middle East and Africa		6	%		14	%		17	%		-2	%		7	%		-10	%		-18	%		-25	%
Other ¹) ²)		186	%		53	%		-12	%		40	%		4	%		26	%		0	%		-37	%
Total		21	%		21	%		14	%		11	%		3	%		-2	%		-1	%		0	%
¹) Of which in Sweden		-28	%		74	%		135	%		74	%		197	%		92	%		42	%		71	%
²) Of which in EU		3	%		17	%		17	%		27	%		15	%		0	%		0	%		9	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
South East Asia, Oceania and India		32,951			21,712			13,798			5,836			28,829			20,225			13,775			6,676
North East Asia		26,733			18,337			12,740			5,421			29,121			19,305			13,614			6,491
North America		95,394			70,093			43,576			20,727			77,456			55,192			35,031			17,081
Europe and Latin America ¹) ²)		66,790			45,913			30,615			15,290			60,272			41,036			26,658			12,647
Middle East and Africa		22,571			15,192			9,524			4,301			20,785			13,837			8,852			4,393
Other ¹) ²)		27,107			14,319			7,273			3,486			15,851			11,387			6,789			2,490
Total		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
¹) Of which in Sweden		3,239			2,461			1,628			678			2,349			1,271			793			389
²) Of which in EU		35,859			25,364			17,122			8,611			31,307			21,126			14,057			6,801
	2022												2021
Year to date, Year over year change, percent	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
South East Asia, Oceania and India		14	%		7	%		0	%		-13	%		-4	%		0	%		10	%		13	%
North East Asia		-8	%		-5	%		-6	%		-16	%		-13	%		-6	%		16	%		66	%
North America		23	%		27	%		24	%		21	%		5	%		1	%		-4	%		-5	%
Europe and Latin America ¹) ²)		11	%		12	%		15	%		21	%		8	%		6	%		5	%		3	%
Middle East and Africa		9	%		10	%		8	%		-2	%		-11	%		-18	%		-21	%		-25	%
Other ¹) ²)		71	%		26	%		7	%		40	%		—			—			—			—
Total		17	%		15	%		12	%		11	%		—			—			—			—
¹) Of which in Sweden		38	%		94	%		105	%		74	%		109	%		67	%		55	%		71	%
²) Of which in EU		15	%		20	%		22	%		27	%		6	%		2	%		4	%		9	%

39    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Net sales by market area by segment

	Q4 2022															Jan-Dec 2022
SEK million	Networks			Cloud Software and Services			Enterprise			Other			Total			Networks			Cloud Software and Services			Enterprise			Other			Total
South East Asia, Oceania and India		8,501			2,693			45			0			11,239			23,695			9,179			77			0			32,951
North East Asia		6,989			1,338			69			0			8,396			22,488			4,015			230			0			26,733
North America		20,680			4,573			48			0			25,301			81,917			13,362			115			0			95,394
Europe and Latin America		13,675			7,038			164			0			20,877			44,644			21,638			508			0			66,790
Middle East and Africa		3,725			3,510			144			0			7,379			11,707			10,472			392			0			22,571
Other 1)		5,056			1,058			6,112			562			12,788			9,017			1,858			14,058			2,174			27,107
Total		58,626			20,210			6,582			562			85,980			193,468			60,524			15,380			2,174			271,546
Share of total		68	%		23	%		8	%		1	%		100	%		71	%		22	%		6	%		1	%		100	%

¹⁾  Includes primarily IPR licensing revenues and a major part of segment Enterprise.

	Q4 2022
Sequential change, percent	Networks			Cloud Software and Services			Enterprise			Other			Total
South East Asia, Oceania and India		53	%		15	%		200	%		—			42	%
North East Asia		47	%		68	%		33	%		—			50	%
North America		-11	%		37	%		78	%		—			-5	%
Europe and Latin America		34	%		41	%		31	%		—			36	%
Middle East and Africa		21	%		41	%		44	%		—			30	%
Other		260	%		277	%		26	%		8	%		81	%
Total		22	%		42	%		28	%		8	%		26	%

	Q4 2022															Jan-Dec 2022
Year over year change, percent	Networks			Cloud Software and Services			Enterprise			Other			Total			Networks			Cloud Software and Services			Enterprise			Other			Total
South East Asia, Oceania and India		44	%		1	%		350	%		—			31	%		17	%		8	%		108	%		—			14	%
North East Asia		-14	%		-18	%		-15	%		—			-14	%		-8	%		-9	%		-9	%		—			-8	%
North America		10	%		33	%		167	%		—			14	%		23	%		22	%		46	%		—			23	%
Europe and Latin America		9	%		8	%		39	%		—			9	%		15	%		2	%		21	%		—			11	%
Middle East and Africa		5	%		8	%		4	%		—			6	%		9	%		8	%		24	%		—			9	%
Other		138	%		147	%		326	%		18	%		186	%		25	%		23	%		174	%		8	%		71	%
Total		15	%		13	%		265	%		18	%		21	%		15	%		8	%		147	%		8	%		17	%

40    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Top 5 countries in sales

	Q4						Jan-Dec
Country, percentage of net sales¹)	2022			2021			2022			2021
United States		41	%		32	%		40	%		34	%
India		6	%		3	%		4	%		3	%
China		3	%		6	%		4	%		4	%
Japan		4	%		6	%		4	%		6	%
United Kingdom		3	%		3	%		3	%		3	%

¹⁾  Based on Jan-Dec 2022. Includes IPR licensing revenues.

IPR licensing revenues by segment by quarter

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		4,917		1,282		1,186		1,142		1,949		2,146		1,904		671
Cloud Software and Services		1,080		281		261		250		428		471		418		147
Total		5,997		1,563		1,447		1,392		2,377		2,617		2,322		818
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		8,527		3,610		2,328		1,142		6,670		4,721		2,575		671
Cloud Software and Services		1,872		792		511		250		1,464		1,036		565		147
Total		10,399		4,402		2,839		1,392		8,134		5,757		3,140		818

Note 4 – Financial income and expenses, net

Financial income and expenses, net

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Financial income		283		319		117		59		125		127		124		315
Financial expenses		-757		-428		-452		-293		-439		-325		-382		-528
Net foreign exchange gains/losses		—		-426		-424		-409		-631		-400		-196		-320
Total		-474		-535		-759		-643		-945		-598		-454		-533
	2022								2021
Year to date, SEK million	Jan-Dec Jan-Sep				Jan-Jun		Jan-Mar		Jan-Dec Jan-Sep				Jan-Jun		Jan-Mar
Financial income		778		495		176		59		691		566		439		315
Financial expenses		-1,930		-1,173		-745		-293		-1,674		-1,235		-910		-528
Net foreign exchange gains/losses		-1,259		-1,259		-833		-409		-1,547		-916		-516		-320
Total		-2,411		-1,937		-1,402		-643		-2,530		-1,585		-987		-533

41    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 5 – Provisions

Provisions

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Opening balance		10,562		9,668		10,197		9,504		8,813		9,232		11,045		10,466
Additions ¹)		4,304		351		547		1,583		1,738		316		616		1,753
Utilization ²)		-1,974		-533		-893		-1,173		-643		-408		-2,179		-979
Of which restructuring		-150		-70		-51		-67		-193		-95		-161		-336
Reversal of excess amounts		-1,034		-236		-316		-452		-603		-66		-170		-339
Reclassification, translation difference and other²)		-270		1,312		133		735		199		-261		-80		144
Closing balance		11,588		10,562		9,668		10,197		9,504		8,813		9,232		11,045
Of which restructuring		668		595		579		604		637		732		807		950
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Opening balance		9,504		9,504		9,504		9,504		10,466		10,466		10,466		10,466
Additions¹)		6,785		2,481		2,130		1,583		4,423		2,685		2,369		1,753
Utilization ²)		-4,573		-2,599		-2,066		-1,173		-4,209		-3,566		-3,158		-979
Of which restructuring		-338		-188		-118		-67		-785		-592		-497		-336
Reversal of excess amounts		-2,038		-1,004		-768		-452		-1,178		-575		-509		-339
Reclassification, translation difference and other ²)		1,910		2,180		868		735		2		-197		64		144
Closing balance		11,588		10,562		9,668		10,197		9,504		8,813		9,232		11,045
Of which restructuring		668		595		579		604		637		732		807		950

¹⁾  Q4 2022 includes a provision of SEK -2.3 billion in relation to a potential DPA breach resolution with DOJ, including estimated expenses for extended monitorship.

²⁾ Includes a provision from acquired business in Q3 2022, which was utilized in Q4 2022. For more information see note 11 “Business combinations”.

In December 2019, Ericsson entered into a deferred prosecution agreement (DPA) with the United States Department of Justice (DOJ). The DPA has a three-year term and includes a guilty plea by our Egyptian subsidiary to a criminal violation of the US Foreign Corrupt Practices Act’s (FCPA) antibribery provisions. In October 2021, the DOJ notified Ericsson of its determination that the Company breached its obligations under the DPA by failing to provide required information to the DOJ. In March 2022, the DOJ informed Ericsson that, before entering into the DPA, the Company provided insufficient information to the DOJ about the Company’s 2019 internal investigation into conduct in Iraq. The DOJ also determined that the Company breached the DPA by failing to inform the DOJ about the investigation post-DPA. In December 2022, the Company agreed with the DOJ and SEC to extend the term of the Company’s independent compliance monitor for one year, to June 2024. In addition, the Company made a provision in the fourth quarter of 2022 of SEK 2.3 billion (approx. USD 220 million) in relation to a potential resolution with the DOJ regarding previously announced, non-criminal, alleged breaches under the DPA. The provision also includes estimated expenses for the previously announced extended monitorship. The eventual financial penalty could differ materially from the provision, since negotiations are still ongoing.

42    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 6 – Financial risk management

There have been no changes to the classification of financial instruments or fair value hierarchy categorization from that presented in the latest Annual Report. Where Level 2 and Level 3 fair value hierarchies apply, the inputs and valuation methods used remained unchanged. The book values and fair values of financial instruments are as follows:

Financial instruments

SEK billion	Dec 31 2022								Dec 31 2021
	Fair value hierarchy level								Fair value hierarchy level
	Carrying value		Level 1		Level 2		Level 3		Carrying value		Level 1		Level 2		Level 3
Assets at fair value through profit or loss
Customer finance ¹)		5.4		—		—		5.4		3.3		—		—		3.3
Interest-bearing securities		17.5		17.5		—		—		43.3		43.3		—		—
Cash equivalents ²)		15.3		—		15.3		—		26.0		—		26.0		—
Other financial assets		2.1		0.1		—		2.0		2.3		0.6		—		1.7
Other current assets		1.1		—		1.1		—		0.3		—		0.3		—
Assets at fair value through OCI
Trade receivables		48.4		—		—		48.4		45.4		—		—		45.4
Assets at amortized costs
Interest-bearing securities		0.4		—		—		—		0.3		—		—		—
Cash equivalents ²)		2.9		—		—		—		4.0		—		—		—
Other financial assets		0.6		—		—		—		0.5		—		—		—
Total financial assets		93.7								125.4
Financial liabilities at designated FVTPL
Parent company borrowings		-29.6		-16.7		-12.9		—		-31.4		-19.5		-11.9		—
Financial liabilities at FVTPL
Other current liabilities		-2.6		—		-2.6		—		-0.8		—		-0.8		—
Liabilities at amortized cost
Trade payables		-38.4		—		—		—		-35.7		—		—		—
Borrowings		-3.4		—		—		—		-0.4		—		—		—
Total financial liabilities		-74.0								-68.3

¹⁾  Year to date movements of customer finance receivables are as follows: additions of SEK 37.3 billion, disposals and repayments of SEK 35.4 billion and revaluation gain of SEK 0.2 billion.

²⁾  Total Cash and cash equivalent is SEK 38.3 (54.1) billion, of which SEK 18.2 (30.0) billion relating to Cash equivalents are presented in the table above.

Exchange rates used in the consolidation

	Jan-Dec
	2022		2021
SEK/EUR - closing rate		11.08		10.24
SEK/USD - closing rate		10.38		9.05

43    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 7 – Cash flow

Information on investments

Investments in assets subject to depreciation, amortization, impairment and write-downs

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Additions
Property, plant and equipment		1,502		1,104		1,053		818		701		1,040		1,007		915
Capitalized development expenses		717		414		301		288		302		190		266		204
IPR, brands and other intangible assets		120		2		2		2		123		3		1		4
Total		2,339		1,520		1,356		1,108		1,126		1,233		1,274		1,123
Depreciation, amortization and impairment losses
Property, plant and equipment		1,250		1,100		1,074		964		1,134		954		910		874
Capitalized development expenses		395		387		403		401		396		394		329		224
Goodwill, IPR, brands and other intangible assets		1,196		499		159		198		436		464		294		283
Right-of-use assets		694		652		588		583		587		572		564		554
Total		3,535		2,638		2,224		2,146		2,553		2,384		2,097		1,935
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Additions
Property, plant and equipment		4,477		2,975		1,871		818		3,663		2,962		1,922		915
Capitalized development expenses		1,720		1,003		589		288		962		660		470		204
IPR, brands and other intangible assets		126		6		4		2		131		8		5		4
Total		6,323		3,984		2,464		1,108		4,756		3,630		2,397		1,123
Depreciation, amortization and impairment losses
Property, plant and equipment		4,388		3,138		2,038		964		3,872		2,738		1,784		874
Capitalized development expenses		1,586		1,191		804		401		1,343		947		553		224
Goodwill, IPR, brands and other intangible assets		2,052		856		357		198		1,477		1,041		577		283
Right-of-use assets		2,517		1,823		1,171		583		2,277		1,690		1,118		554
Total		10,543		7,008		4,370		2,146		8,969		6,416		4,032		1,935

Note 8 – Contingent liabilities and Assets pledged as collateral

Contingent liabilities and Assets pledged as collateral

SEK million	Dec 31 2022		Dec 31 2021
Contingent liabilities		3,322		1,614
Assets pledged as collateral		7,226		6,873

44    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 9 – Share information

Number of shares and earnings per share

	Q4				Jan-Dec
	2022		2021		2022		2021
Number of shares, end of period (million)		3,334		3,334		3,334		3,334
Of which class A-shares (million)		262		262		262		262
Of which class B-shares (million)		3,072		3,072		3,072		3,072
Number of treasury shares, end of period (million)		4		4		4		4
Number of shares outstanding, basic, end of period (million)		3,330		3,330		3,330		3,330
Numbers of shares outstanding, diluted, end of period (million)		3,334		3,333		3,334		3,333
Average number of treasury shares (million)		4		4		4		5
Average number of shares outstanding, basic (million)		3,330		3,330		3,330		3,329
Average number of shares outstanding, diluted (million) ¹)		3,334		3,333		3,334		3,332
Earnings per share, basic (SEK) ²)		1.82		3.03		5.62		6.82
Earnings per share, diluted (SEK) ¹)		1.82		3.02		5.62		6.81

¹⁾  Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share.

²⁾  Based on net income attributable to owners of the Parent Company.

The proposed dividend of SEK 2.50 per share was approved by the AGM on March 29, 2022. The dividend was paid out in two equal installments; SEK 1.25 per share in Q2 and in Q4 2022.

Note 10 – Employee information

Number of employees

	2022								2021
End of period	Dec 31		Sep 30		Jun 30		Mar 31		Dec 31		Sep 30		Jun 30		Mar 31
South East Asia, Oceania and India		27,761		26,844		26,127		26,255		26,369		26,363		26,325		26,123
North East Asia		13,207		13,219		13,077		12,999		13,091		14,111		14,043		14,033
North America		11,993		11,706		10,501		10,327		10,344		10,371		10,256		10,161
Europe and Latin America ¹		48,023		48,144		47,240		46,994		47,064		46,903		46,616		46,482
Middle East and Africa		4,545		4,577		4,514		4,492		4,454		4,455		4,384		4,314
Total		105,529		104,490		101,459		101,067		101,322		102,203		101,624		101,113
¹) Of which in Sweden		14,481		14,444		14,564		14,195		14,183		13,908		13,626		13,379

45    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Note 11 – Business combinations

Acquisition Vonage – Final PPA

SEK billion	2022
Purchase price paid on acquisition ¹)		51.3
Deferred consideration ²)		2.0
Total consideration, all cash and cash equivalents		53.3
Net assets (liabilities) acquired
Intangible assets		23.6
Property, plant and equipment		0.2
Right-of-use assets		0.3
Deferred tax assets		2.4
Trade receivables		1.1
Cash and cash equivalents		0.5
Other assets		1.9
Provisions		-1.1
Deferred tax liabilities		-6.2
Borrowings		-6.5
Lease liabilities		-0.4
Other liabilities		-3.8
Total identifiable net assets (liabilities)		12.0
Goodwill		41.3
Total		53.3
Acquisition-related costs ³)		0.4

¹⁾  Purchase price to acquire shares outstanding net of hedge release of SEK 3.7 billion.

²⁾  Deferred consideration relates to the pre-combination portion of employee stock awards that were previously granted to Vonage employees, which will be paid out post acquisition according to the original award vesting schedule.

³⁾  Acquisition-related costs are included in Selling and administrative expenses in the consolidated income statement.

On July 21, 2022, the Company acquired, in an all cash transaction, all of the shares in Vonage Holdings Corp – a US-based global provider of cloud-based communications. This acquisition provides Ericsson with an opportunity to access a complementary, substantial and high growth segment. Vonage is a supplier of consumer communications solutions, as well as network API’s, unified communications, and contact center solutions to enterprises world-wide. With increasing investments in 4G and 5G – and a flourishing ecosystem of new applications and use cases leveraging the power of modern networks – demand from enterprises for programmable networks has been accelerating. Goodwill in this transaction represents future customers, technology, and synergies and is not expected to be deductible for tax purposes. The intangible assets mainly relate to customer relationships. The fair values of the assets acquired and liabilities assumed, at the acquisition date and as presented in Q4 2022, are final.

Vonage’s net sales and EBIT (loss) for the period, from acquisition date, amounts to SEK 7.0 billion and SEK -1.8 billion respectively.

Vonage’s net sales and EBIT (loss) for the 2022 financial year, as though the acquisition date occurred at the beginning of the annual reporting period, amounts to SEK 14.4 (USD 1.4) billion and SEK -3.0 (USD -0.3) billion respectively.

46    Ericsson | Fourth quarter and full-year report 2022 Accounting policies and Explanatory notes

Alternative performance measures (unaudited)

In this section, the Company presents its Alternative Performance Measures (APMs), which are not recognized measures of financial performance under IFRS. The presentation of APMs has limitations as analytical tools and should not be considered in isolation or as a substitute for related financial measures prepared in accordance with IFRS.

APMs are presented to enhance an investor’s evaluation of ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of results between periods.

Management uses these APMs to, among other things, evaluate ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of certain performance-based compensation. APM’s should not be viewed as substitutes for income statement or cash flow items computed in accordance with IFRS.

This section also includes a reconciliation of the APMs to the most directly reconcilable line items in the financial statements. For more information about non-IFRS key operating measures, see Ericsson Annual Report 2021.

Sales growth adjusted for comparable units and currency

Sales growth adjusted for the impact of acquisitions and divestments as well as the effects of foreign currency fluctuations. Also named organic sales.

	2022												2021
Isolated quarters, year over year change	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Reported net sales		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
Acquired business		-4,090			-2,925			—			—			-124			-402			-450			-225
Net FX impact		-9,489			-7,437			-5,034			-4,008			-385			1,196			5,455			5,341
Comparable net sales, excluding FX impact		72,401			57,678			57,431			51,053			70,823			57,057			59,946			54,894
Comparable quarter net sales adj. for acq/div business		71,332			56,263			54,941			49,778			69,590			57,472			55,578			49,750
Sales growth adjusted for comparable units and currency (% )		1	%		3	%		5	%		3	%		2	%		-1	%		8	%		10	%
	2022												2021
Year to date, year over year change	Jan-Dec			Jan-Sep			Jan-Jun			Jan-M ar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-M ar
Reported net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
Acquired business		-7,015			-2,925			—			—			-1,201			-1,077			-675			-225
Net FX impact		-25,968			-16,479			-9,042			-4,008			11,607			11,992			10,796			5,341
Comparable net sales, excluding FX impact		238,563			166,162			108,484			51,053			242,720			171,897			114,840			54,894
Comparable quarter net sales adj. for acq/div business		232,314			160,982			104,719			49,778			232,390			162,800			105,328			49,750
Sales growth adjusted for comparable units and currency (% )		3	%		3	%		4	%		3	%		4	%		6	%		9	%		10	%

47    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Items excluding restructuring charges

Gross income, operating expenses, and EBIT are presented excluding restructuring charges and, for certain measures, as a percentage of net sales.    

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Gross income		35,569			28,135			26,302			23,289			30,821			24,776			23,857			21,295
Net sales		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
Gross margin (%)		41.4	%		41.4	%		42.1	%		42.3	%		43.2	%		44.0	%		43.4	%		42.8	%
Gross income		35,569			28,135			26,302			23,289			30,821			24,776			23,857			21,295
Restructuring charges included in cost of sales		96			55			42			2			199			6			6			62
Gross income excluding restructuring charges		35,665			28,190			26,344			23,291			31,020			24,782			23,863			21,357
Net sales		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
Gross margin excluding restructuring charges (%)		41.5	%		41.4	%		42.2	%		42.3	%		43.5	%		44.0	%		43.4	%		42.9	%
Operating expenses		-24,909			-21,283			-19,365			-17,473			-19,384			-16,359			-17,352			-15,976
Restructuring charges included in R&D expenses		10			7			4			33			140			-2			-1			—
Restructuring charges included in selling and administrative expenses		122			19			3			6			124			1			-1			15
Operating expenses excluding restructuring charges		-24,777			-21,257			-19,358			-17,434			-19,120			-16,360			-17,354			-15,961
EBIT		7,853			7,115			7,308			4,744			11,861			8,835			5,823			5,261
Net sales		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
EBIT margin (%)		9.1	%		10.5	%		11.7	%		8.6	%		16.6	%		15.7	%		10.6	%		10.6	%
EBIT		7,853			7,115			7,308			4,744			11,861			8,835			5,823			5,261
Total restructuring charges		228			81			49			41			463			5			4			77
EBIT excluding restructuring charges		8,081			7,196			7,357			4,785			12,324			8,840			5,827			5,338
Net sales		85,980			68,040			62,465			55,061			71,332			56,263	��		54,941			49,778
EBIT margin excluding restructuring charges (%)		9.4	%		10.6	%		11.8	%		8.7	%		17.3	%		15.7	%		10.6	%		10.7	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Gross income		113,295			77,726			49,591			23,289			100,749			69,928			45,152			21,295
Net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
Gross margin (%)		41.7	%		41.9	%		42.2	%		42.3	%		43.4	%		43.4	%		43.1	%		42.8	%
Gross income		113,295			77,726			49,591			23,289			100,749			69,928			45,152			21,295
Restructuring charges included in cost of sales		195			99			44			2			273			74			68			62
Gross income excluding restructuring charges		113,490			77,825			49,635			23,291			101,022			70,002			45,220			21,357
Net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
Gross margin excluding restructuring charges (%)		41.8	%		41.9	%		42.2	%		42.3	%		43.5	%		43.5	%		43.2	%		42.9	%
Operating expenses		-83,030			-58,121			-36,838			-17,473			-69,071			-49,687			-33,328			-15,976
Restructuring charges included in R&D expenses		54			44			37			33			137			-3			-1			—
Restructuring charges included in selling and administrative expenses		150			28			9			6			139			15			14			15
Operating expenses excluding restructuring charges		-82,826			-58,049			-36,792			-17,434			-68,795			-49,675			-33,315			-15,961
EBIT		27,020			19,167			12,052			4,744			31,780			19,919			11,084			5,261
Net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
EBIT margin (%)		10.0	%		10.3	%		10.3	%		8.6	%		13.7	%		12.4	%		10.6	%		10.6	%
EBIT		27,020			19,167			12,052			4,744			31,780			19,919			11,084			5,261
Total restructuring charges		399			171			90			41			549			86			81			77
EBIT excluding restructuring charges		27,419			19,338			12,142			4,785			32,329			20,005			11,165			5,338
Net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
EBIT margin excluding restructuring charges (%)		10.1	%		10.4	%		10.3	%		8.7	%		13.9	%		12.4	%		10.7	%		10.7	%

48    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges

Earnings before interest, taxes, amortizations, write-downs of acquired intangibles and excluding restructuring charges also expressed as a percentage of net sales.

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net income		6,190			5,360			4,650			2,912			10,146			5,766			3,900			3,168
Income tax		1,189			1,220			1,899			1,189			770			2,471			1,469			1,560
Financial income and expenses, net		474			535			759			643			945			598			454			533
Amortizations and write-downs of acquired intangibles		1,196			498			158			199			436			464			294			283
EBITA		9,049			7,613			7,466			4,943			12,297			9,299			6,117			5,544
Net sales		85,980			68,040			62,465			55,061			71,332			56,263			54,941			49,778
EBITA margin (%)		10.5	%		11.2	%		12.0	%		9.0	%		17.2	%		16.5	%		11.1	%		11.1	%
Restructuring charges		228			81			49			41			463			5			4			77
EBITA excluding restructuring charges		9,277			7,694			7,515			4,984			12,760			9,304			6,121			5,621
EBITA margin excluding restructuring charges (%)		10.8	%		11.3	%		12.0	%		9.1	%		17.9	%		16.5	%		11.1	%		11.3	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Net income		19,112			12,922			7,562			2,912			22,980			12,834			7,068			3,168
Income tax		5,497			4,308			3,088			1,189			6,270			5,500			3,029			1,560
Financial income and expenses, net		2,411			1,937			1,402			643			2,530			1,585			987			533
Amortizations and write-downs of acquired intangibles		2,051			855			357			199			1,477			1,041			577			283
EBITA		29,071			20,022			12,409			4,943			33,257			20,960			11,661			5,544
Net sales		271,546			185,566			117,526			55,061			232,314			160,982			104,719			49,778
EBITA margin (%)		10.7	%		10.8	%		10.6	%		9.0	%		14.3	%		13.0	%		11.1	%		11.1	%
Restructuring charges		399			171			90			41			549			86			81			77
EBITA excluding restructuring charges		29,470			20,193			12,499			4,984			33,806			21,046			11,742			5,621
EBITA margin excluding restructuring charges (%)		10.9	%		10.9	%		10.6	%		9.1	%		14.6	%		13.1	%		11.2	%		11.3	%

Rolling four quarters of net sales and EBIT margin excluding restructuring charges (%)

Net sales, EBIT margin and restructuring charges as a sum of last four quarters.

	2022												2021
Rolling four quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net sales		271,546			256,898			245,121			237,597			232,314			230,572			231,781			232,418
EBIT		27,020			31,028			32,748			31,263			31,780			30,927			30,735			28,763
Restructuring charges		399			634			558			513			549			78			403			1,082
EBIT excl. restr . charges		27,419			31,662			33,306			31,776			32,329			31,005			31,138			29,845
EBIT margin excl. restr. charges (%)		10.1	%		12.3	%		13.6	%		13.4	%		13.9	%		13.4	%		13.4	%		12.8	%

49    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Gross cash and net cash, end of period

Gross cash: Cash and cash equivalents plus interest-bearing securities (current and non-current).

Net cash: Cash and cash equivalents plus interest-bearing securities (current and non-current) less borrowings (current and non-current).

	2022								2021
SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Cash and cash equivalents		38,349		36,749		93,618		76,856		54,050		46,476		43,273		40,543
+ Interest-bearing securities, current		8,736		6,640		3,715		12,292		12,932		15,016		12,855		4,599
+ Interest-bearing securities, non-current		9,164		2,423		3,061		15,022		30,626		26,668		20,998		23,477
Gross cash, end of period		56,249		45,812		100,394		104,170		97,608		88,160		77,126		68,619
- Borrowings, current		5,984		5,437		3,686		10,403		9,590		10,155		11,737		2,353
- Borrowings, non-current		26,946		26,994		26,363		28,599		22,241		22,282		21,673		23,299
Net cash, end of period		23,319		13,381		70,345		65,168		65,777		55,723		43,716		42,967

Capital employed

Total assets less non-interest-bearing provisions and liabilities.

	2022								2021
SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Total assets		349,537		361,166		332,453		323,935		305,614		290,527		281,045		270,319
Non-interest-bearing provisions and liabilities
Provisions, non-current		3,959		4,511		4,020		4,498		3,722		2,471		1,922		2,337
Deferred tax liabilities		4,784		8,025		1,250		1,012		884		909		975		1,049
Other non-current liabilities		745		791		762		1,070		1,587		1,605		1,596		1,326
Provisions, current		7,629		6,051		5,648		5,699		5,782		6,342		7,310		8,708
Contract liabilities		42,251		41,105		41,547		39,875		32,834		33,869		36,621		32,054
Trade payables		38,437		40,864		39,539		35,316		35,684		31,877		29,638		29,135
Current tax liabilities		2,640		5,008		6,703		5,701		2,917		5,409		4,676		4,761
Other current liabilities		46,193		50,554		40,346		41,919		37,921		36,025		32,477		35,761
Capital employed		202,899		204,257		192,638		188,845		184,283		172,020		165,830		155,188

Capital turnover

Annualized net sales divided by average capital employed.

Annualization factor of four is used for isolated quarter.

Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Net sales		85,980		68,040		62,465		55,061		71,332		56,263		54,941		49,778
Annualized net sales		343,920		272,160		249,860		220,244		285,328		225,052		219,764		199,112
Average capital employed
Capital employed at beginning of period		204,257		192,638		188,845		184,283		172,020		165,830		155,188		161,990
Capital employed at end of period		202,899		204,257		192,638		188,845		184,283		172,020		165,830		155,188
Average capital employed		203,578		198,448		190,742		186,564		178,152		168,925		160,509		158,589
Capital turnover (times)		1.7		1.4		1.3		1.2		1.6		1.3		1.4		1.3
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Net sales		271,546		185,566		117,526		55,061		232,314		160,982		104,719		49,778
Annualized net sales		271,546		247,421		235,052		220,244		232,314		214,643		209,438		199,112
Average capital employed
Capital employed at beginning of period		184,283		184,283		184,283		184,283		161,990		161,990		161,990		161,990
Capital employed at end of period		202,899		204,257		192,638		188,845		184,283		172,020		165,830		155,188
Average capital employed		193,591		194,270		188,461		186,564		173,137		167,005		163,910		158,589
Capital turnover (times)		1.4		1.3		1.2		1.2		1.3		1.3		1.3		1.3

50    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Return on capital employed

The annualized total of EBIT as a percentage of average capital employed.

Annualization factor of four is used for isolated quarter.

Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
EBIT		7,853			7,115			7,308			4,744			11,861			8,835			5,823			5,261
Annualized EBIT		31,412			28,460			29,232			18,976			47,444			35,340			23,292			21,044
Average capital employed
Capital employed at beginning of period		204,257			192,638			188,845			184,283			172,020			165,830			155,188			161,990
Capital employed at end of period		202,899			204,257			192,638			188,845			184,283			172,020			165,830			155,188
Average capital employed		203,578			198,448			190,742			186,564			178,152			168,925			160,509			158,589
Return on capital employed (%)		15.4	%		14.3	%		15.3	%		10.2	%		26.6	%		20.9	%		14.5	%		13.3	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
EBIT		27,020			19,167			12,052			4,744			31,780			19,919			11,084			5,261
Annualized EBIT		27,020			25,556			24,104			18,976			31,780			26,559			22,168			21,044
Average capitalem ployed
Capital employed at beginning of period		184,283			184,283			184,283			184,283			161,990			161,990			161,990			161,990
Capital employed at end of period		202,899			204,257			192,638			188,845			184,283			172,020			165,830			155,188
Average capital employed		193,591			194,270			188,461			186,564			173,137			167,005			163,910			158,589
Return on capital employed (%)		14.0	%		13.2	%		12.8	%		10.2	%		18.4	%		15.9	%		13.5	%		13.3	%

Equity ratio

Equity expressed as a percentage of total assets.

	2022												2021
SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Total equity		133,304			136,820			127,799			109,879			107,099			95,628			91,695			88,124
Total assets		349,537			361,166			332,453			323,935			305,614			290,527			281,045			270,319
Equity ratio (%)		38.1	%		37.9	%		38.4	%		33.9	%		35.0	%		32.9	%		32.6	%		32.6	%

Return on equity

Annualized net income attributable to owners of the Parent Company as a percentage of average stockholders’ equity.

Annualization factor of four is used for isolated quarter.

Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.

	2022												2021
Isolated quarters, SEK million	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Net income attributable to owners of the Parent Company		6,066			5,214			4,504			2,940			10,076			5,752			3,679			3,187
Annualized		24,264			20,856			18,016			11,760			40,304			23,008			14,716			12,748
Average stockholders’ equity
Stockholders’ equity, beginning of period		138,607			129,620			111,701			108,775			97,323			93,331			89,782			86,674
Stockholders’ equity, end of period		134,814			138,607			129,620			111,701			108,775			97,323			93,331			89,782
Average stockholders’ equity		136,711			134,114			120,661			110,238			103,049			95,327			91,557			88,228
Return on equity (%)		17.7	%		15.6	%		14.9	%		10.7	%		39.1	%		24.1	%		16.1	%		14.4	%
	2022												2021
Year to date, SEK million	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Net income attributable to owners of the Parent Company		18,724			12,658			7,444			2,940			22,694			12,618			6,866			3,187
Annualized		18,724			16,877			14,888			11,760			22,694			16,824			13,732			12,748
Average stockholders’ equity
Stockholders’ equity, beginning of period		108,775			108,775			108,775			108,775			86,674			86,674			86,674			86,674
Stockholders’ equity, end of period		134,814			138,607			129,620			111,701			108,775			97,323			93,331			89,782
Average stockholders’ equity		121,795			123,691			119,198			110,238			97,725			91,999			90,003			88,228
Return on equity (%)		15.4	%		13.6	%		12.5	%		10.7	%		23.2	%		18.3	%		15.3	%		14.4	%

51    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Adjusted earnings per share

Adjusted earnings per share, diluted, excluding amortizations and write-downs of acquired intangible assets and excluding restructuring charges.

	2022								2021
Isolated quarters, SEK	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Earnings per share, diluted		1.82		1.56		1.35		0.88		3.02		1.73		1.10		0.96
Restructuring charges		0.05		0.02		0.01		0.01		0.11		0.00		0.00		0.02
Amortizations and write-downs of acquired intangibles		0.26		0.12		0.03		0.05		0.10		0.09		0.07		0.06
Adjusted earnings per share		2.13		1.70		1.39		0.94		3.23		1.82		1.17		1.04
	2022								2021
Year to date, SEK	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Earnings per share, diluted		5.62		3.80		2.23		0.88		6.81		3.79		2.06		0.96
Restructuring charges		0.09		0.04		0.02		0.01		0.13		0.02		0.02		0.02
Amortizations and write-downs of acquired intangibles		0.45		0.19		0.08		0.05		0.32		0.22		0.13		0.06
Adjusted earnings per share		6.16		4.03		2.33		0.94		7.26		4.03		2.21		1.04

Free cash flow before M&A / Free cash flow after M&A

Free cash flow before M&A: Cash flow from operating activities less net capital expenditures, other investments (excluding M&A) and repayment of lease liabilities.

Free cash flow after M&A: Cash flow from operating activities less net capital expenditures, other investments and repayment of

lease liabilities.

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Cash flow from operating activities		19,895		4,651		6,287		30		15,196		14,724		5,940		3,205
Net capital expenditures and other investments (excl M&A)
Investments in property, plant and equipment		-1,502		-1,104		-1,053		-818		-701		-1,040		-1,007		-915
Sales of property, plant and equipment		76		74		61		38		34		40		17		24
Product development		-717		-414		-301		-288		-302		-190		-266		-204
Other investments 1)		-121		-1		23		-27		-122		-4		—		-5
Repayment of lease liabilities		-765		-658		-577		-593		-623		-580		-617		-548
Free cash flow before M&A		16,866		2,548		4,440		-1,658		13,482		12,950		4,067		1,557
Acquisitions/ divestments of subs and other operations, net		-445		-51,412		123		46		178		-55		-69		5
Free cash flow after M&A		16,421		-48,864		4,563		-1,612		13,660		12,895		3,998		1,562
	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec Jan-Sep Jan-Jun						Jan-Mar
Cash flow from operating activities		30,863		10,968		6,317		30		39,065		23,869		9,145		3,205
Net capital expenditures and other investments (excl M&A)
Investments in property, plant and equipment		-4,477		-2,975		-1,871		-818		-3,663		-2,962		-1,922		-915
Sales of property, plant and equipment		249		173		99		38		115		81		41		24
Product development		-1,720		-1,003		-589		-288		-962		-660		-470		-204
Other investments 1)		-126		-5		-4		-27		-131		-9		-5		-5
Repayment of lease liabilities		-2,593		-1,828		-1,170		-593		-2,368		-1,745		-1,165		-548
Free cash flow before M&A		22,196		5,330		2,782		-1,658		32,056		18,574		5,624		1,557
Acquisitions/ divestments of subs and other operations, net		-51,688		-51,243		169		46		59		-119		-64		5
Free cash flow after M&A		-29,492		-45,913		2,951		-1,612		32,115		18,455		5,560		1,562

¹⁾  Other investments is part of the line item Other investing activities in the Consolidated cash flow statement. The differences are movements in other interest-bearing assets and the cash flow hedge reserve gain, which are not to be part of the definition of Free cash flow.

52    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Sales growth by segment adjusted for comparable units and currency^*)

	2022												2021
Isolated quarter, year over year change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		1	%		4	%		—			—			—			—			—			—
Cloud Software and Services		2	%		-5	%		—			—			—			—			—			—
Enterprise		15	%		21	%		—			—			—			—			—			—
Other		10	%		-1	%		—			—			—			—			—			—
Total		1	%		3	%		5	%		3	%		2	%		-1	%		8	%		10	%
	2022												2021
Year to date, year over year change, percent	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		4	%		5	%		—			—			—			—			—			—
Cloud Software and Services		-1	%		-3	%		—			—			—			—			—			—
Enterprise		16	%		17	%		—			—			—			—			—			—
Other		3	%		0	%		—			—			—			—			—			—
Total		3	%		3	%		4	%		3	%		4	%		6	%		9	%		10	%

*) Sales growth adjusted for comparable units and currency has not been restated by segment for the first two quarters of 2022 and for each quarter in 2021.

Sales growth by market area adjusted for comparable units and currency

	2022												2021
Isolated quarter, year over year change, percent	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
South East Asia, Oceania and India		21	%		13	%		6	%		-17	%		-13	%		-16	%		14	%		21	%
North East Asia		-16	%		-6	%		-1	%		-20	%		-22	%		-33	%		1	%		78	%
North America		-7	%		9	%		12	%		9	%		15	%		13	%		11	%		10	%
Europe and Latin America		0	%		0	%		4	%		15	%		12	%		9	%		14	%		12	%
Middle East and Africa		-4	%		3	%		8	%		-9	%		5	%		-8	%		-10	%		-16	%
Total		1	%		3	%		5	%		3	%		2	%		-1	%		8	%		10	%
	2022												2021
Year to date, year over year change, percent	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
South East Asia, Oceania and India		7	%		1	%		-5	%		-17	%		-1	%		4	%		17	%		21	%
North East Asia		-11	%		-9	%		-10	%		-20	%		-8	%		1	%		27	%		78	%
North America		5	%		10	%		10	%		9	%		12	%		11	%		11	%		10	%
Europe and Latin America		4	%		6	%		9	%		15	%		12	%		12	%		13	%		12	%
Middle East and Africa		-1	%		1	%		0	%		-9	%		-7	%		-12	%		-13	%		-16	%
Total		3	%		3	%		4	%		3	%		4	%		6	%		9	%		10	%

53    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Gross margin by segment by quarter

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		44.4	%		44.4	%		45.1	%		44.7	%		46.3	%		47.8	%		47.9	%		46.1	%
Cloud Software and Services		33.0	%		31.8	%		33.5	%		35.0	%		35.4	%		33.6	%		30.6	%		33.6	%
Enterprise		43.5	%		46.5	%		45.0	%		47.8	%		46.2	%		48.8	%		47.8	%		41.8	%
Other		-2.3	%		-27.9	%		5.4	%		0.2	%		-3.3	%		7.9	%		4.3	%		22.0	%
Total		41.4	%		41.4	%		42.1	%		42.3	%		43.2	%		44.0	%		43.4	%		42.8	%
	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		44.6	%		44.7	%		44.9	%		44.7	%		47.0	%		47.3	%		47.0	%		46.1	%
Cloud Software and Services		33.2	%		33.3	%		34.2	%		35.0	%		33.5	%		32.6	%		32.0	%		33.6	%
Enterprise		45.2	%		46.4	%		46.4	%		47.8	%		46.4	%		46.4	%		45.2	%		41.8	%
Other		-5.7	%		-6.9	%		3.0	%		0.2	%		7.9	%		11.4	%		13.2	%		22.0	%
Total		41.7	%		41.9	%		42.2	%		42.3	%		43.4	%		43.4	%		43.1	%		42.8	%

EBIT margin by segment by quarter

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		21.2	%		19.9	%		19.3	%		18.7	%		23.0	%		23.7	%		21.7	%		20.0	%
Cloud Software and Services		3.3	%		-5.6	%		-5.2	%		-6.9	%		3.3	%		-3.3	%		-8.9	%		-10.4	%
Enterprise		-44.7	%		-32.4	%		-44.7	%		-44.3	%		-42.7	%		-52.6	%		-40.6	%		-57.0	%
Other		-414.4	%		-3.9	%		3.2	%		-247.8	%		59.4	%		95.0	%		-196.7	%		-6.8	%
Total		9.1	%		10.5	%		11.7	%		8.6	%		16.6	%		15.7	%		10.6	%		10.6	%
	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		19.9	%		19.3	%		19.0	%		18.7	%		22.2	%		21.9	%		20.9	%		20.0	%
Cloud Software and Services		-2.8	%		-5.9	%		-6.0	%		-6.9	%		-4.0	%		-7.4	%		-9.6	%		-10.4	%
Enterprise		-40.5	%		-37.4	%		-44.5	%		-44.3	%		-47.5	%		-49.5	%		-47.8	%		-57.0	%
Other		-164.2	%		-76.9	%		-111.6	%		-247.8	%		-14.2	%		-37.1	%		-101.5	%		-6.8	%
Total		10.0	%		10.3	%		10.3	%		8.6	%		13.7	%		12.4	%		10.6	%		10.6	%

54    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Restructuring charges by function

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Cost of sales		-96		-55		-42		-2		-199		-6		-6		-62
Research and development expenses		-10		-7		-4		-33		-140		2		1		0
Selling and administrative expenses		-122		-19		-3		-6		-124		-1		1		-15
Total		-228		-81		-49		-41		-463		-5		-4		-77

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Cost of sales		-195		-99		-44		-2		-273		-74		-68		-62
Research and development expenses		-54		-44		-37		-33		-137		3		1		0
Selling and administrative expenses		-150		-28		-9		-6		-139		-15		-14		-15
Total		-399		-171		-90		-41		-549		-86		-81		-77
												��

Restructuring charges by segment

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		-65		-26		-45		-10		-278		1		-8		23
of which cost of sales		-69		-3		-44		-10		-77		1		-1		24
of which operating expenses		4		-23		-1		0		-201		0		-7		-1
Cloud Software and Services		-16		-55		0		-25		-158		-5		-4		-87
of which cost of sales		1		-52		2		8		-116		-7		-2		-82
of which operating expenses		-17		-3		-2		-33		-42		2		-2		-5
Enterprise		-147		0		-4		-6		-27		-1		11		1
of which cost of sales		-28		0		0		0		-6		0		1		0
of which operating expenses		-119		0		-4		-6		-21		-1		10		1
Other		0		0		0		0		0		0		-3		-14
of which cost of sales		0		0		0		0		0		0		-4		-4
of which operating expenses		0		0		0		0		0		0		1		-10
Total		-228		-81		-49		-41		-463		-5		-4		-77

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		-146		-81		-55		-10		-262		16		15		23
of which cost of sales		-126		-57		-54		-10		-53		24		23		24
of which operating expenses		-20		-24		-1		0		-209		-8		-8		-1
Cloud Software and Services		-96		-80		-25		-25		-254		-96		-91		-87
of which cost of sales		-41		-42		10		8		-207		-91		-84		-82
of which operating expenses		-55		-38		-35		-33		-47		-5		-7		-5
Enterprise		-157		-10		-10		-6		-16		11		12		1
of which cost of sales		-28		0		0		0		-5		1		1		0
of which operating expenses		-129		-10		-10		-6		-11		10		11		1
Other		0		0		0		0		-17		-17		-17		-14
of which cost of sales		0		0		0		0		-8		-8		-8		-4
of which operating expenses		0		0		0		0		-9		-9		-9		-10
Total		-399		-171		-90		-41		-549		-86		-81		-77

55    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

Gross income and gross margin excluding restructuring charges by segment

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		26,125		21,369		20,779		18,221		23,720		19,400		19,112		16,690
Cloud Software and Services		6,663		4,568		4,690		4,226		6,478		4,582		3,961		4,015
Enterprise		2,890		2,398		843		843		838		760		764		534
Other		-13		-145		32		1		-16		40		26		118
Total		35,665		28,190		26,344		23,291		31,020		24,782		23,863		21,357

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		44.6	%		44.4	%		45.2	%		44.8	%		46.4	%		47.8	%		47.9	%		46.0	%
Cloud Software and Services		33.0	%		32.1	%		33.5	%		35.0	%		36.1	%		33.7	%		30.6	%		34.3	%
Enterprise		43.9	%		46.5	%		45.0	%		47.8	%		46.5	%		48.8	%		47.8	%		41.8	%
Other		-2.3	%		-27.9	%		5.4	%		0.2	%		-3.3	%		7.9	%		5.0	%		22.8	%
Total		41.5	%		41.4	%		42.2	%		42.3	%		43.5	%		44.0	%		43.4	%		42.9	%

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		86,494		60,369		39,000		18,221		78,922		55,202		35,802		16,690
Cloud Software and Services		20,147		13,484		8,916		4,226		19,036		12,558		7,976		4,015
Enterprise		6,974		4,084		1,686		843		2,896		2,058		1,298		534
Other		-125		-112		33		1		168		184		144		118
Total		113,490		77,825		49,635		23,291		101,022		70,002		45,220		21,357

	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		44.7	%		44.8	%		45.0	%		44.8	%		47.0	%		47.3	%		47.0	%		46.0	%
Cloud Software and Services		33.3	%		33.4	%		34.2	%		35.0	%		33.9	%		32.8	%		32.3	%		34.3	%
Enterprise		45.3	%		46.4	%		46.4	%		47.8	%		46.4	%		46.4	%		45.1	%		41.8	%
Other		-5.7	%		-6.9	%		3.0	%		0.2	%		8.3	%		12.0	%		13.9	%		22.8	%
Total		41.8	%		41.9	%		42.2	%		42.3	%		43.5	%		43.5	%		43.2	%		42.9	%

56    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

EBIT and EBIT margin excluding restructuring charges by segment

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		12,518		9,623		8,906		7,611		12,035		9,623		8,653		7,217
Cloud Software and Services		689		-737		-733		-812		748		-444		-1,154		-1,130
Enterprise		-2,797		-1,670		-835		-775		-743		-818		-660		-728
Other		-2,329		-20		19		-1,239		284		479		-1,012		-21
Total		8,081		7,196		7,357		4,785		12,324		8,840		5,827		5,338

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		21.4	%		20.0	%		19.4	%		18.7	%		23.6	%		23.7	%		21.7	%		19.9	%
Cloud Software and Services		3.4	%		-5.2	%		-5.2	%		-6.7	%		4.2	%		-3.3	%		-8.9	%		-9.6	%
Enterprise		-42.5	%		-32.4	%		-44.5	%		-44.0	%		-41.2	%		-52.5	%		-41.3	%		-57.1	%
Other		-414.4	%		-3.9	%		3.2	%		-247.8	%		59.4	%		95.0	%		-196.1	%		-4.1	%
Total		9.4	%		10.6	%		11.8	%		8.7	%		17.3	%		15.7	%		10.6	%		10.7	%

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		38,658		26,140		16,517		7,611		37,528		25,493		15,870		7,217
Cloud Software and Services		-1,593		-2,282		-1,545		-812		-1,980		-2,728		-2,284		-1,130
Enterprise		-6,077		-3,280		-1,610		-775		-2,949		-2,206		-1,388		-728
Other		-3,569		-1,240		-1,220		-1,239		-270		-554		-1,033		-21
Total		27,419		19,338		12,142		4,785		32,329		20,005		11,165		5,338

	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		20.0	%		19.4	%		19.1	%		18.7	%		22.4	%		21.8	%		20.8	%		19.9	%
Cloud Software and Services		-2.6	%		-5.7	%		-5.9	%		-6.7	%		-3.5	%		-7.1	%		-9.3	%		-9.6	%
Enterprise		-39.5	%		-37.3	%		-44.3	%		-44.0	%		-47.3	%		-49.8	%		-48.3	%		-57.1	%
Other		-164.2	%		-76.9	%		-111.6	%		-247.8	%		-13.4	%		-36.0	%		-99.9	%		-4.1	%
Total		10.1	%		10.4	%		10.3	%		8.7	%		13.9	%		12.4	%		10.7	%		10.7	%

Rolling four quarters of net sales by segment ^*)

	2022								2021
Rolling four quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		193,468		185,939		178,383		172,276		167,838		—		—		—
Cloud Software and Services		60,524		58,269		57,666		56,601		56,224		—		—		—
Enterprise		15,380		10,600		6,997		6,722		6,236		—		—		—
Other		2,174		2,090		2,075		1,998		2,016		—		—		—
Total		271,546		256,898		245,121		237,597		232,314		230,572		231,781		232,418

*) Rolling four quarters of net sales by segment has not been restated for the first three quarters of 2021.

Rolling four quarters of EBIT margin excluding restructuring charges by segment (%) ^*)

	2022												2021
Rolling four quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		20.0	%		20.5	%		21.4	%		22.0	%		22.4	%		—			—			—
Cloud Software and Services		-2.6	%		-2.6	%		-2.2	%		-2.9	%		-3.5	%		—			—			—
Enterprise		-39.5	%		-38.0	%		-45.3	%		-44.6	%		-47.3	%		—			—			—
Other		-164.2	%		-45.7	%		-22.0	%		-74.5	%		-13.4	%		—			—			—
Total		10.1	%		12.3	%		13.6	%		13.4	%		13.9	%		13.4	%		13.4	%		12.8	%

*) Rolling four quarters of EBIT margin excluding restructuring charges by segment has not been restated for the first three quarters of 2021.

57    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

EBITA and EBITA margin by segment by quarter

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		12,555		9,624		8,889		7,629		11,787		9,643		8,679		7,274
Cloud Software and Services		695		-769		-710		-783		861		-318		-1,035		-1,097
Enterprise		-1,882		-1,223		-732		-664		-635		-505		-512		-598
Other		-2,319		-19		19		-1,239		284		479		-1,015		-35
Total		9,049		7,613		7,466		4,943		12,297		9,299		6,117		5,544

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		21.4	%		20.0	%		19.3	%		18.7	%		23.1	%		23.8	%		21.8	%		20.1	%
Cloud Software and Services		3.4	%		-5.4	%		-5.1	%		-6.5	%		4.8	%		-2.3	%		-8.0	%		-9.4	%
Enterprise		-28.6	%		-23.7	%		-39.0	%		-37.7	%		-35.2	%		-32.4	%		-32.0	%		-46.9	%
Other		-412.6	%		-3.7	%		3.2	%		-247.8	%		59.4	%		95.0	%		-196.7	%		-6.8	%
Total		10.5	%		11.2	%		12.0	%		9.0	%		17.2	%		16.5	%		11.1	%		11.1	%

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		38,697		26,142		16,518		7,629		37,383		25,596		15,953		7,274
Cloud Software and Services		-1,567		-2,262		-1,493		-783		-1,589		-2,450		-2,132		-1,097
Enterprise		-4,501		-2,619		-1,396		-664		-2,250		-1,615		-1,110		-598
Other		-3,558		-1,239		-1,220		-1,239		-287		-571		-1,050		-35
Total		29,071		20,022		12,409		4,943		33,257		20,960		11,661		5,544

	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		20.0	%		19.4	%		19.1	%		18.7	%		22.3	%		21.9	%		20.9	%		20.1	%
Cloud Software and Services		-2.6	%		-5.6	%		-5.7	%		-6.5	%		-2.8	%		-6.4	%		-8.6	%		-9.4	%
Enterprise		-29.3	%		-29.8	%		-38.4	%		-37.7	%		-36.1	%		-36.4	%		-38.6	%		-46.9	%
Other		-163.7	%		-76.9	%		-111.6	%		-247.8	%		-14.2	%		-37.1	%		-101.5	%		-6.8	%
Total		10.7	%		10.8	%		10.6	%		9.0	%		14.3	%		13.0	%		11.1	%		11.1	%

58    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures

EBITA and EBITA margin excluding restructuring charges by segment

	2022								2021
Isolated quarters, SEK million	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Networks		12,620		9,650		8,934		7,639		12,065		9,642		8,687		7,251
Cloud Software and Services		711		-714		-710		-758		1,019		-313		-1,031		-1,010
Enterprise		-1,735		-1,223		-728		-658		-608		-504		-523		-599
Other		-2,319		-19		19		-1,239		284		479		-1,012		-21
Total		9,277		7,694		7,515		4,984		12,760		9,304		6,121		5,621

	2022												2021
Isolated quarters, as percentage of net sales	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
Networks		21.5	%		20.0	%		19.4	%		18.8	%		23.6	%		23.8	%		21.8	%		20.0	%
Cloud Software and Services		3.5	%		-5.0	%		-5.1	%		-6.3	%		5.7	%		-2.3	%		-8.0	%		-8.6	%
Enterprise		-26.4	%		-23.7	%		-38.8	%		-37.3	%		-33.7	%		-32.3	%		-32.7	%		-46.9	%
Other		-412.6	%		-3.7	%		3.2	%		-247.8	%		59.4	%		95.0	%		-196.1	%		-4.1	%
Total		10.8	%		11.3	%		12.0	%		9.1	%		17.9	%		16.5	%		11.1	%		11.3	%

	2022								2021
Year to date, SEK million	Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar		Jan-Dec		Jan-Sep		Jan-Jun		Jan-Mar
Networks		38,843		26,223		16,573		7,639		37,645		25,580		15,938		7,251
Cloud Software and Services		-1,471		-2,182		-1,468		-758		-1,335		-2,354		-2,041		-1,010
Enterprise		-4,344		-2,609		-1,386		-658		-2,234		-1,626		-1,122		-599
Other		-3,558		-1,239		-1,220		-1,239		-270		-554		-1,033		-21
Total		29,470		20,193		12,499		4,984		33,806		21,046		11,742		5,621

	2022												2021
Year to date, as percentage of net sales	Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar			Jan-Dec			Jan-Sep			Jan-Jun			Jan-Mar
Networks		20.1	%		19.4	%		19.1	%		18.8	%		22.4	%		21.9	%		20.9	%		20.0	%
Cloud Software and Services		-2.4	%		-5.4	%		-5.6	%		-6.3	%		-2.4	%		-6.2	%		-8.3	%		-8.6	%
Enterprise		-28.2	%		-29.7	%		-38.1	%		-37.3	%		-35.8	%		-36.7	%		-39.0	%		-46.9	%
Other		-163.7	%		-76.9	%		-111.6	%		-247.8	%		-13.4	%		-36.0	%		-99.9	%		-4.1	%
Total		10.9	%		10.9	%		10.6	%		9.1	%		14.6	%		13.1	%		11.2	%		11.3	%

Other ratios

	Q4				Jan-Dec
	2022		2021		2022		2021
Days sales outstanding		—		—		61		71
Inventory turn over days		89		79		93		88
Payable days		72		76		85		94

59    Ericsson | Fourth quarter and full-year report 2022 Alternative performance measures