ERIC - Earnings call transcript Q3 2020 | Telefonaktiebolaget LM Ericsson (publ)

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Peter Nyquist

Thank you, Jerry, and good morning, everyone, or good afternoon, everyone, and welcome to this call today the Q3 Report. With me here today, I have our President and CEO, Börje Ekholm; and our CFO, Carl Mellander.

Before starting, I would like to read the following.

During the call today, we will be making forward-looking statements. These statements are based on our current expectations and certain planning assumptions, which are subject to risks and uncertainties. differ and to call. discussed may today's mentioned result release press in actual materially factors due in The this conference encourage well about our read report. you and We in uncertainties these earnings in as risks as our annual report to would said, hand to Börje. I to over With call you, like that the Please, Börje.

Börje Ekholm

everyone, Thank welcome, call our to you, Peter, third for this and quarter results.

to our performance reinforced execute and customers. We're XG, we driving the evidence in and a that us leadership We our by quarter. strategy, see it's really R&D technology and reported focused are to provide strategy on continuing and leading working, our cost and benefits for our to third that's that's the is significant enabling global increasing in our through investments performance

allowed most gains of And continue has in gain to leadership share. these that Our investments competitors. it's technology mentioning non-Chinese us to worth from also come market

the geopolitical great efforts a and innovation progress and us and here technological already we're change best in choose. in in is about our customer We a driven for for that this powerhouse the entrepreneurs. countries on China, doubt, many of to coverage. think entrepreneurs they has that's making see sectors, global many, seeing portfolio today. become very seen regions to China, spirit XG not the that being and be they It a out fast We're that result that roll see And the and important many building first there of allowed we in driver and strategically success China, massive and is very good scale, to is and quarter, I'm winning winning winning to network, the in and the R&D. years. for what the power announced out of consumer innovative I've in increased in us China I Nordics, top important that's many in innovate their by because were the Alibaba, firsthand XG of and in can and entrepreneurial key also situation. has that U.S. economy. So delivering is world the XG, with and second we It's drove built cost-competitive we're but front those personally over all on due China No app app economy. portfolio involved have the the in actually

Chinese call we surprise American companies. no the, it's app and that the So dominated consumer today it, by see economy

same on the we're seeing XG. thing Now

fast This as from realizing this impressions XG significantly of very building developed critical. will what entrepreneurs we're global China. and and space. the to Chinese in network it, lead world, actually So the buildout for way, important secure of high-performance to the in is will seeing top allow requirement and we and on new innovate entrepreneurs take and XG wireless future be will the We built out network similar will to, here for notably and whoever innovation, on on that applications feature XG rest the and seeing And XG. will the this to think higher, of a saw value it's what in do in here, be it's to of call be infrastructure. the running I it some well network open first be companies for the that will in huge ecosystem by a emergence of us more, for as And drive opportunity as see innovators, part of being American a Europe, pace building new requirements

enterprises. the now will was in do. see, for XG you And us that's see a be what consumer drive, XG we and the So digitalizing reality, also backbone

the We enterprise Networks. and We look us But also wireless the revenue to world If that's which continue see of IoT business and acquisition more cases. couple going we're gaining in benefit specifically, build of to XG at drive announced ultimately during to already position service network allow And being now deployments ever. third technology And for well. a the of one, customers, mobile that some for quarter, of a will in Accelerator fastest-scaling requirements the generation material work more we to providers have offerings: strategically use we highlights clearly we as us a the growth, drive with will more WAN Cradlepoint, provider help important but in pace. our it's around a the Dedicated service quarter equipment. build

XXX networks, a XX commercial as leader XG. clear live in have establishing We contracts, ourselves

all challenges business quarter, During had an segments. X% of year-over-year, the get we reached the across COVID-XX. improvements XX.X%, that's it's we organic from growth excluding and restructuring, and margin despite Gross

the was of Our for of time. margin highest period one restructuring costs, long excluding XX.X%, operating a

Our earlier. and growth have contracts particularly are plan discussed the our China in we XG is strong, following

are the our there quarter. our are third contracts business to now So -- the contributing or profits in

earlier, our critical in position As China strengthening for is competitiveness. said our I long-term

or to four the to cash payment flow. our on excluding free We look SEC, quarter have, cash and we flow worked billion. M&A over DOJ rolling basis, our a our on a cash years, generate was few SEKXX.X flow -- If before lot ability past generate free

the Cradlepoint one enterprise weeks. have our and in key to coming acquire expect block building We announced that next in the to for be close September, to able And also we deal is ambitions. earlier plans that

now at is if which target our look fourth XX.X%, So above is the margin for the quarter quarter, rolling XXXX. third the end of we

increasing financial our ability targets to on for XXXX. full feel the of the year confidence we deliver So

Asia Indonesia. Asia, in We saw move into Southeast in driven and Australia So In see growth growth, Northeast several strong also by let's that's the contributing, gains markets most in notably XG and market China. we overview. good positive

the North see to momentum strong acceleration by continue XG. We America driven in in

overall, larger very to clearly to a driven a somewhat Latin America, we And XX%. saw market in five in did good that's with Managed strong as share announced There, COVID-XX actually sales. detail, progress with year underpinned that market operating strategic that today, in reached and But America. of decisions the in we drop home move the gains. pandemic strongly Networks in investment sales organic margin also growth by in a or picture. you segments in as was of leading see Operating in grew as revenue at the Latin that if Services lower and our operator slower consolidation Middle in some growth and America, North African economic That presence but Europe That's Digital continue progress. Of operator offset lower picture. we delayed also markets. uncertainty from driven operator the of the partly -- back volume XX.X%, We our R&D partnership you that's CapEx. pace East that given legacy good -- a as a related by well significant performed China in our Telia Sweden. And XG and see by software the Africa. over offset to uncertainty saw we well important bit But really market. Services in more mixed to That's growth. share in in a of lower market on by sales again, in Middle mixed marginal Europe growth portfolio reduction sales marginal course, the the East, Europe, is in

which turnaround the for on our plan plans, the execute to well increasing continue sales. delivering We of Services, Digital the software team includes importance is on all and

to portfolio. we But sales, on not are best and reached plan our margin. At it XX.X% in to good portfolio. progress the and fall increased in this, for previously So investments anticipated. In new there, are we time, compensate challenged faster falling we yet that seeing than where way legacy fair -- in a to therefore, our win generated we look on to the XG legacy the is simply new third also combat has at the improvements same the And we're can our assess portfolio order the it's significant by ratio gross turnaround quarter. any cloud-native the portfolio, it in sales the had not say,

On last nine wins the that, to and sales in the months, XXXX that until recognized we six have beyond way. over be it the will by not

part by And Business, to in and efficiencies. generate have most same as due Services, drive we volumes North the sales that this And was we organically. aim new weeks. Emerging given saw in were profile But With a whilst continue automations to margin, So XXXX, that, that cost Carl, coming word close Managed X% the America. expect actually actually time, in solutions margin will new and gross to improved you. announcement variable give Emerging lower potential in much future. for Cradlepoint At supported to as R&D few the in both can I recognize of are XX.X%. volumes a of that, we important a that quarter to still Business for investments growth we the well in margin better bit down breakeven be In today. where sales the finally, primarily That's gross we in challenge to the a

Carl Mellander

afternoon, and you, morning, Thank good good Börje, everyone.

items of billion. for grew by basis start the then America, security as provision Australia, last high an with So excluding where came This our fines, by XX.X%. Operating billion, a SEKXX.X social we to and 'XX. And XX% all sales refund Gross also and is margin organic saw course, couple encouraging with this improvement XXX North in in continued in well. restructuring but demand as coming Networks, the we, of course, to out contribution you XXXX, improvement And points -- SEKX portfolio. few from the segments And also growth of of if that to at an we Europe but the showed P&L Services by a restructuring sales. X% of on over see is let's Northeast excluding see costs adjusted, based XX% QX year-over-year namely but XX% you FX dive grew both cases, here improved into increased here. comparability then, positive year-over-year, with main driven year. that really an for areas. earlier, can income Networks XG Net the of growth FX-adjusted This affect particular, charges, represents QX year-over-year Digital DOJ also software in Asia see that Börje here exclude mention SEC, and reached

Networks leads in showed Börje as driver earlier main this SEKX again So of to billion of Free margin operating with here. absorbed EURX flow before versus operating the an SEKX.X But XX.X%, margin, here, injection XX.X% operating the billion billion. is billion, income Trust. where capital SEKX.X its should have a also SEKX.X Pension cash into remember Swedish we the we M&A, that billion

at for quarters you -- well graphs looking adjusted it's bottom what the would back then So after of Börje target are more in the that four we adjusted margin at line been with well, SEKX.X looking And for XXXX to operating billion. have mentioned, the illustrate than in that, -- the XX.X%, see rolling, financial XX%.

XXXX, closer four steady look seen, for we at as So on of in means XX the the quarter one technologically reach can the in terms we here. competitiveness, us XX% back quarters R&D. take to look we for as times, And XX% very that And since of rolling that this logic that it basis, rolling -- a then, are this of win above now improves we margin, you margin, have reorientation And helped course, in XX.X%. said rolling investments And look of have the target many this demonstrates margin since let's is, the if have has adopted margin gross gross here. if a deals investments technology driver and next make R&D we And demanding leadership range the in the the is that XXXX. to clearly strategic of but start time, the the we gross see, over see now consecutive you as have with we we improvement see also gross XXXX. first now, value-creation a the behind creates it customers,

in saw gross all So little in margin we bit, segments. to repeat a improvement

Managed negative in supported from critical share earlier, the efficiency limited seen software. the you continued this emerging addition In margin XX.X% benefited those. of that And had, and very also by for improvement the that, reason we margin Services China. saw gains, that in improving also for impact driven Digital example, we to a sales Networks. from And Software a we in business have to XX.X% new contracts there. the then, had lastly higher higher impact contributing had we QX in say gross where to from XXXX we've Services, impact could the of Business year-over-year, from better is segment. margin sequentially, gross other, part Emerging actually main And and quarter,

While QX China out in year in will as was and now turned impacted margins China, and this also negative before, further. profitable improve communicated write-down a QX by we now

the Services, also there Digital legacy now that let's AI So and at cloud-native course, in following that SEKX.X see XG. here, where capture to Services, which an And we new SG&A increase sharpen transitioned to is core antenna Networks to R&D XG from ago. can capture XG invest business look SEKX.X we In numbers year analytics, funds But R&D we we portfolio the least not in and automation, also this with and by area. offering. -- be landed strategy the continues include the billion, invest landed we the products, was billion, a R&D. the at to not and opportunities higher see Managed in the acquired to business, mainly then now In our now investments of the

social I positive in then the SG&A with see side, a recorded that's about Sweden billion, And of cost the year, refund SEKX.X before, SEKX out if included of R&D. billion. we we billion. that on we And came So SEKX.X at last compare item but mentioned you

and see, year-over-year. of have are incorporated antenna So the and if as again, in to earlier, billion this, flow the as we the over positive here business before acquired financial we and And flow. again, billion. items have two course, adjust of delivered billion the reports well; digitalization flow we social refund the in we cost compare completes M&A -- mentioned injection, with SEKX.X the during for SEKX pension which injection is you SEKX.X the previous item SEKX.X SEKX and remember compliance we free 'XX, on in have by increase in the security well. billion as the said then company. one, that you in investing we had quarter, then, position. And year a cash this, way, a year: And the when And here cash billion We second our third move as again, QX to cash trust is, inject impact capital last positive

on to to continue capital company. working we higher by the for inventories cash an So it that have focus when those also is supply. here active improved you in a partly adjust if resilience derisk made And if the net M&A high operating year-over-year. decision billion course, before liabilities quarter. free comes billion chain -- you assets see driven supply SEKX.X SEKX.X and X here following items, to flow we of we had very the What negative improved this create actually But the component the is in by

that leads So to position was this a further cash strengthened.

of the the cash see billion, can quarter net increased at as gross mentioned billion also third here, You at the number since cash SEKXX.X last in Börje now And year. and SEKXX.X fine. quarter SEC a X.X% amounts the on cash sales. SEKXX.X M&A rolling if free flow to of billion four And DOJ, you exclude earlier, into before translates then rolling basis, quarter four end that

flow efforts company in say strong bearing is create could the a one fruit. So the that to cash here

planning few Okay, assumptions. words with on a I will off the round

few Page usual, just of believe. report, please I a to X, the comments. as But all, refer First again, full

flat as rest remember, market then a main number, that the an growth the XX% X% of XXXX. the then the by XXXX, to in First, grow the growth world, engine now expects from America. China markets increase in. with Dell'Oro the at is in previous X% X%, is which excluding we And growth. RAN then that operate And China, includes in on North

again, on see the for mentioned, on Börje are Services, outlook, as that our group. targets where the we we based full reach on due strengthened now, confidence in stand year year-to-date the the But risk Digital sales, -- Secondly, will we investments, some our close the specifics but XXXX to delay And we target, accelerated further then. added then or further of reaching as here off mentioned to weaker also in before. R&D

on we books a average, now. segment cash between billion, note on will in we it's to but we and large Emerging pay financials finance Other And and And Business finally, with closing And debt, is please the think normally Börje. expected strongest QX QX that now I I back Then et that, importantly, all, of hand Networks billion sales that will to line First in plus likely capital years, seasonality Ericsson the to just around to close and on you, and the consideration is also software actually is our of on has we sales quarter. favorable to total fourth QX sales SEKX years, to top the the very X look If be the from the last normally QX. subject you, services sellers, with consolidate share software share the the the Cradlepoint historically increase QX hand. increase and years. to will at QX. normal Then been thank historically, with looking the been we in there's in variations And here project. $X a for three adjustments QX closed compared net fourth to lower certain the then, at cetera, then last And Cradlepoint negative back as off after the of quarter. in impact an OpEx working quarter increases the QX. of with XX%

Börje Ekholm

Thanks, Carl.

well to quarter the take third in the place and steps. We're actually, performance company positioned are technology So leading the XG continued XX now in a live and, with the our clear earnings stone, leadership. in between of another stepping link networks around R&D as see and XXX and agreements next solid our we in summary, see performance the we towards We world. financial investments

is control. strategic can market to drive forward able and in think going to in opportunities stand-alone Cradlepoint drive good that We opportunity share, generate, will also where a in a typical now help demand our maintaining strong we on we're also that part into us, example like cash in the for going and demand increase for the we've that scale benefit good traffic the and but both acquisition a the will cases the for equipment, we next there We Enterprise strong traffic continue use big that that a drive very a see -- and it do that that's or been that very doing in That's flow, cost cash segment. we position as our and look a think economics. business, is economics operator's important well to we flow network. type network keep to investments. we we're a of but with to a of take good stand-alone And stable financially as steps, that's growth focus With will

about deliver delivered the are with the targets in with so results on QX, the to the year for confident full So and financial we've far group our XXXX. year ability we

over give thank to with Peter. word that, you. So the I

Peter Nyquist

if I would the appreciate session. up Q&A Thank Then open you operators, Börje. could you,

Operator

Goldman Alexander [Operator Instructions] Sachs. of Duval from comes line of Our the first question

Alexander Duval

on strong the results. Congrats

a and and wondered a could about importance these winning region. the gross in that, question, Sharing advantages you margin about that iPhone about And of there. growing how And in and about your past, of bit then on market discussions particularly about you the for you I as you're to Spectrum the tends share about part strong be a been good what you product the despite question, XG? have, Europe, first quite Dynamic that means thinking And like year interested of momentum just talked and North auctions, product. declining impressive, about modularity second launches next there market. just America. of talked you talk talked half There's spectrum it's First if given obviously

give I if could of state on So update you wondered the an there. latest play

You talked gains versus players. various about share sort of broad

you product X if you what talk So have lead about you I of to versus, think kind wondered say, ago? XX now could let's months do

Börje Ekholm

If gross would and you the quite demand we question. see working your momentum those type more next for profile, also when reduce exposures the few years referred to North the to. that lot But margin start year continue singular we've one, Thanks we I being over the a of think into you strong. with thing, the say America last one been about

we the gross what gross have is China balanced you company now still So margin you see margin this profile our we've a before. had growth than development. And much quarter, more across a see very in high and

but look XG the And to it year launch the spectrum back of the growth we America say into the derisked an a have here, mix show you that next be as we're see will of phone bit would geographical little So the of on we for bit, on consumer. believe North XG the Apple value at to a in auctions. I important also that actually continuing the

with we getting what and ahead. get would we us we making to to we we upgrades into making distance portfolio continue Spectrum R&D need see launch investments to how that to we able So software to for the The our details, to XG in invest network extent, too customers What put we without to do, coverage to have Sharing have forward, XG. It's the I need very speculative launch started already of help some that position. going have. is enabling in -- of That's of XXXX Dynamic before is that many months helped in many to demand fairly the already a say. clearly unique actually, a equipment why think going has the keep XG-ready, say you're been always the our

that we're with -- new we on that the features their and functionalities our as drive result QX. revenue what of stick fast investments see here allow as result our that. run to a path in gained them is in going And we would and of to a as we is we'll customers growth. It can, feel we're you continue own to the share new to providing R&D, So

Operator

Aleksander Our of Generale. Societe of next question comes Peterc from the line

Aleksander Peterc

you had this great little levels a structurally now And second that the a software benefited Digital Could the back higher in as more a quarter? you software quarter. and be world say the bit is why we than on you what pretty come past front. in on software Congratulations quarter which few the moving gross drive and higher Networks where to the development contents is year structurally in into seen and years? would this the will margins your the here on more this a Services And we've we're content, this most then positive higher, in regions to that content Could saw specific phasing? it is generally, you

Börje Ekholm

want that, you take Carl? Do to

Carl Mellander

more complement, the Yes, planning Börje. the disclosed assumptions, And now around of I to anything but say all. change likely services very can with, you've about don't talking most want the to geographies structural will ratio we haven't we see at and geographies in can software, start -- specific Börje, mix. are look at that coming the software It's -- that that and that, hardware or change comment here. not seen But if we between you at specific with a was mix least say structural share when and strong we as mix, fourth there quarter you the services in up. know, start that quarter. software down that is coming decide in wouldn't I but I But we

a comes we Digital average that It's for as big are when In pursuing of a big driving, want of would Of I the is as recurring change, of our complement customers get which in one perhaps And we house. one unless software stability part. Services, Börje, example, into software big of not well. good business to you software is are a that? is a things revenue. you, ecosystem, to But so, course, XX%, it course, XX% say our about setup, more to structural with on

Börje Ekholm

No.

I a actually is, part strategy, for think our of clear increase share. Digital in ambition as to example, is it Services, it the software

expect So revenues. go you and in revenues see to well see that's up, recurring that as software as we should what

is an it's quarter. that's been of, element we of to happen going exaggerate on areas not an to there have But in don't prioritize. structural, the one focused So the isolated that

one I think see happening that But also we lumpy. you So reasons the margin That's, remember, in surely. slowly good gross have of development. should but course, bit be sales why a our to of tend a you software business

comes it in So individual others. in quarters, not

the of is will as think there well. So an of be industry we But that element industry more a software longer term.

in So that's that. position critical ourselves us to for

Operator

the Our of Savinovic Predrag Carnegie. next question line comes of from

Predrag Savinovic

more your for offering other With will remarks Or enterprise, organic now you portfolio, is question given progression on investments flavor Cradlepoint coming of contracts, higher second Börje, are a course, critical more your patents. offering for M&A and in the XG some the your do And But my understand in share negotiation. you full the but for could comprehensive IPR you XG years. the enterprise. their there and in figures if a areas surely, in closing regarding revenues for I customers? on coming wondering in see have it was or stack is that enough? enterprise years, to more position expectancy for there, I under two opportunities have

Börje Ekholm

questions. Two you. Thank good

for having that than sales our royalty lower actually have one, on licensees one lower volume you we QX seen. saw us bit is first that revenues of It were IPR, we lower a The in that results we in QX. were in

to negotiation, think contract -- If a saying you get accept going what revenues. in middle that of think it's we should can as the our gaps is value. in have those of are you IPR every total contract -- value discussion fair the we of about with I here is in a on temporary it discussions, we And question agreements. it look a to NPV order those of But NPV some when actually are going of forward, in we are a course,

that we or the terms have So in protect the sure investments in are protect with to determined we the -- we made licensors. realize the R&D contract can make we value in have we made

So but hard gaps. say we fighting for we be that be are going that, could to also

the way always the the how that's revenues. of should trade-offs think the on you see if by maximize of the strength firms it and hard you we we they it's discussions. assessments XG on the our patent of the done of what are to that competitors that's portfolio discuss we to at clearly truly can But or those So have To at independent the -- portfolio, are of Well, contract, look in gaps specifically compares. portfolio. have our it. feel in going leverage see the And we patents, we our IPR or criticality looked NPV that with ahead independent

patent that's going R&D the well, that clearly part our strength earnings a to in as it's So very, of very key our drives portfolio important forward. that. contributor a but It's

question second The

Peter Nyquist

Enterprises

Börje Ekholm

enterprises... The

Peter Nyquist

is enough. Cradlepoint If

Börje Ekholm

be WAN connection We used wireless for, low The think significant and is WAN, very primary mostly also as gain more is penetration with a still wireless I and can one still a would say, Cradlepoint XG, much backup penetration reality connectivity. Yes. use the case, point. used

invest. opportunity there going have a lot So think we we absolutely customers But good to of attractive. growth to very a and revenues, continue help where generate we very you're more business are we will long-term right, going stand-alone that's cases a that other use our opportunity that's a opportunity, exciting to be as see

it and kind well the a So two revenues, with have generate growth, help as in customers has that that a to as be of opportunities attractive have two same. organic And Dedicated today, pursue be but our opportunity. we other the has building the as here, will parameters up It will or to to thought organic we Networks well Accelerator stand-alone remain inorganic presence parallel. we as criteria we IoT include but both

at the more Capital But talk our are we revenue to Day. contribute area we going this this growth So we'll to in excited very see Markets a way that that long-term forward. substantial about about

Operator

comes of Our the next Crédit line question Suisse. Achal from of Sultania

Achal Sultania

about very indication some should But China I has X increase. so at to profitable in And that, And We'll My in of we this far? that Can Have then understand, and driven us sustainability Phase China seen point. the X about help Phase mentioned some China, getting completion. probably next guess, year? these into have XG think very level become revenue understanding in are you further on should China got wanted to those going strength a just to in of attached from as high become what's QX? customers? that any timing into profitable QX things QX has profitability saying allowed you what understand is on of we should you I contracts, quarter. contracts. think these Phase to you momentum you're X to that the contracts which by And -- to how going is you've how further, your at just from close strong Just

about improvement So it China? drivers profitability in the about all key Is it is Like what more for scale? are further mix?

Börje Ekholm

in if first beginning they're said when earnings start No, we you. profitability announced the we QX with on of already that actually second Chinese the the it in would contribute of the we all, that contracts, challenged half to Thank the in year.

with place. much in the line in very we is plan put this So

have as beginning. have will is course, a But we revenues you And the of -- the now. that. That's of following out, more phase. buildout that a we what you do we're getting just you're more cost, has with the during we're -- to your build reality do have of where you move -- saw. it a to some you So now contract in cost swap contract into kind when And or heavy

So simple that's the answer.

You it's could have take this take they what balancing bookkeeping the the costs to occur done and we costs, when think they by and et revenues cetera, but occur, when that's see. you better and

also They that's that in QX. very mismatch rest of but feel about the will the the the you we those numbers, on year improve of why for comfortable further contracts. development see bit So a in

we'll one, to If awarded we we the it's and about seek XG, think tend on European investments continue by spectrum build more strategy for will deploying, think it the got well, do it's that XG they of And about a platform run see buildout value there I award And XG, the focus infrastructure. and demand the Europe. so. network is you've reality a think investments the and have actually the to is a there contracts don't over Chinese think And to that's the in build think actually but continue course, or of out and system contracts. much out you almost we But in Europe, is I that because the more Chinese driving we to for to bands it's time, rest But is a China, as context, look are the in We build higher. recognizing incenting the where if good the to recognizing stop to important, in opposite to and of which may out have is build will that of otherwise, in they way, reason we, to the well not win to the of you compete platform a in will applications Chinese out, and They innovation spectrum operators more driving on that, with the that are see on the network as a you economy. see operators And have other no China. now. continue. this we the it will of will to bands top

Operator

of Bouvignies UBS. the comes question of next Our from François line

Francois Bouvignies

question. quick one have I

the market You gain different talked share regions. across about

you balance gain to have share some gained limit and good, is example. China and want customers China, if maintain good. the your you as well a would you I regions, in North compared if market you even other that America that be market be wondering in more share to just regions the So I maybe mean that mentioned America, think relatively you China think North to in you and in do for is Europe way market was given would those Europe a limited there think more in Do I that -- gain share, can mean, in within you their share high So suppliers?

Börje Ekholm

on I our often are, of share, course I is guess as market diversity. and reasons, would vendor internally, applies XXX% limit of to think customers say well. here like maintain there it I a No, practical there -- for

own yet. OpEx, value supplier I the -- today, that actually, worth actually like it's to with -- sole have is well but the type help relationship the on think have We And a it been also customers there not you because we to we see, to see made their we our so that at TCO need limit operators provide wins may I we can to say and of them. say, to that can of an as lower operator lower a costs, lower announcement

network, across is benefit, it's time operators, I just whole nationwide that So same where you to cost it's do but also same it's say where launch in the hard -- network. service think a at of the your and benefit having can one the clear important because that limit a in it's some vendor

on commercial a benefit that it's So realize customers one vendor. that also rely

that in that. there to here like I'm away going are of I possible, go number benefits have can high we not So direction, so think shy as from course, a as of either to

Francois Bouvignies

Open gains industry. the What follow-up, if contracts within lot feel I do about traction, of I on maybe not maybe could a acceleration? And is Do you great. obviously, Ericsson do in in RAN. acceleration year, a and quick you the That's discussions mean it also may, more for this industry? an but if And there impact, you it impact an -- how 'XX? see the

Börje Ekholm

discussions think to RAN to continue lot we cons that said Open and the remember a is is we're it is see, of pros we What I be that and O-RAN, what we important contributor about of a key have that. here -- and so. to The will

So clearly going we believe is this is happen. to that something

to why as of we need that positioned. going sure transition to be towards software well we're well. revenues more we're So making also That's

impact us. evolve impact going start revenues the I XXXX-'XX business the O-RAN really So in think be the it after for don't a that, to frame. It forward. see start impact will will time major But I to to models way

So we we very than should I on well. do have that position the shifts It's a as industry. It's other as think in front, on leading good have of an no that think and development opportunity happened ourselves about then will one technology where that opportunity. different leading and this all

Operator

Sandeep of Our next Deshpande question JPMorgan. comes line of from the

Sandeep Deshpande

almost increased revenue you lack was how scale, other But also IPR, increased of can the and was the highly much margin, increase in year-on-year services? how the X%. that much network XXX of look margin, because software XXX is much because Quickly when a a mean, a on was increased how help of you lower issue the your at of profitable understand of revenue it business. on is saw I Maybe bps you bps potentially gross us a here which

So clearly, even more. underlying margin increased

And shifted? So that on I how help margin can us maybe one you understand have revenue. quick follow-up

Börje Ekholm

that in this but very I of increased footprint it number said because in strategy our scale well. it critical fixed important for we XXXX, value and applies as tie is large clearly costs chain that When one, back out set that, in want to other to are is increased our a being there R&D And actually we part is industry, us. of

So contracts. important, call we them volume we that's much in part is we and business. and invest in the talk because to critically we past have invested they're gain why why highlighted now as because what needed continue of about kind don't them scale. our to normal that's We of But strategic

margin. in driving the is critical is gross see actually you question scale this what So improved

So that's thing. one

The lower for the second ASICs, new example. that a introducing R&D And pace the way that is of thing increasing we cost. said by is to do also we

to That is see is to R&D and isolate more investments. part a are So actually but hard offer quite really we by what driven you and our, to very out clear. been portfolio, we say you today have -- in that's do cost-competitive Then that -- able those key contributors. that's each

year. had software last than in this QX we expect than bit a have we We more quarter sales

portfolio. I But the and or cost in our, key factor. increased it, cost the production remain think call scale a lower also that's actually drivers So the here

Sandeep Deshpande

to a mean share I last better overall Europe. from done. share the more or the done these XG rollout over that of seen shifts? revenue big big from on we've Europe market when revenue the But And shifts Europe. follow-up the Understood. mean those I But in couple have than shifts in come seem share through in Europe you've doesn't sense does in in months has start

Börje Ekholm

you see, we're reality if -- these are in we contracts look But in why 'XX. growing won and The you 'XX what the is that share is Europe increase.

before It our it's the quarters So takes current several revenues. through come those wins. in not

gains that before take through. Europe more going coming all But we in comfortable wins. we market share bit a in time where feel you a forward see also of the already course, announced our see So healthy based on will situation of quite about increase

So that is going happen. what we see to

Operator

the of question Our from Kepler of comes line Cheuvreux. Sztabowicz next Sébastien

Sébastien Sztabowicz

and of Sweden, regulator this but banned networks Huawei are has from number Swedish countries, a going actually the all Just yesterday, XG this. is in doing two

to basically, against do would vendors? if position so XG question. Chinese European This in first the China government your on on be retaliate sometimes you And decide risk any market see

come second that expected Could back bit? Dynamic Is see you is technology notably U.S.? QX, to sales being it higher lower something those vectored the QX, Spectrum contributed the QX little to one the and How in in sales positively you do this software is days? deployment? it software linked into The a your in Sharing

Börje Ekholm

what geopolitical to And from there focus is on we something that, thrive of successful that's portfolio, if us that's It's a instead reality a competitiveness Competition what and features what on that the a and fair -- we be them impact. the And providing situation. continue customers the really to going own. competition. national And the We actually let with question situation do out is their I more doing non-bans security And we to is say very decide can as bans, in our do. countries And have on to it's to and us. products. drives much the right geopolitical we we best can where can impact allow it's on speculative company. right can we think situation, our

provide better customers. more We solutions be will We to innovative.

So we others. have a I that the is welcome cellular competition. competition from that is reality global most have The different market and we

subscribers the competitors it's Huawei, fiercest of to around At actually time, XGPP the when And industry the of like course, type our one allowed the of the same world in around connect billion market. reality, we cooperate we X competition/cooperation what the cellular standard. product world. this So the drive is has

can So something will today, that exceptions, few ecosystem we're very and is some free to hand, a with and the our connect think should we that very out one the the country and continue. comes travel we continue of any on healthy driven cooperation And phones. in to between That's world, competition, that's something other on that hand.

that the actually And hope certainly be rest we the world, company. we we for we time. need the more to face of competition, can say, it's innovative. that only to continue so as When impact cooperate need we innovative. be a And to type that the can we and So thing same of at compete that

on that. and work on So we focus that try to

software they a lumpy to it bit quarters. be are other the The always on question, revenues, is. between way going the That's

hardware our it's Of higher we all it being on of a course, key And about always for. a revenues. have Spectrum it's we reason said QX, so in historically also get along, revenues. -- service what why Then success way, software have the is it's much our Sharing ratio paid Dynamic And that's all upgrades. software we've we XG-ready,

as can up, service if up only revenues has something to add So XXX%. go to down go it

why lower revenues. of you going software that's are So proportion see bit to a

Operator

from Our last of of question line comes Amit Harchandani Citigroup. the

Amit Harchandani

about Amit how XXXX, questions, to relates Two first may. My if Harchandani I from thinking Citi. question you're please.

expect XXXX we performance to your you you You close growing regions ramp secondly, R&D. about into across the through. you into growth that end despite So in of are in despite XXXX. I the talked year, clearly into and I question XXXX. upon We've to and yourselves made to share the market? you could have wondering, FX visibility may, expect was about, strong margin to a already whether despite headwinds, the be seen this margins. if visibility market believe, North what America And lower I given if And back outperform going on of investments coming China, And IPR, any some thoughts delivered the

about shouldn't reason as there any turn be start know you XXXX, these we about getting the margins for the of could to have whether I margin but getting end So profile ambition we why out of targets company, to the the we, is secular an excited potentially financial community, as and think conservative? higher more the

Börje Ekholm

respond -- I think questions. those I will let Carl to have to

Carl Mellander

been about. growth we to the least coming strategy given Europe. growth But our X%. market before talked we Then -- which of would we XXXX Dell'Oro, we're about not market know. I strong XXXX, But the position see gains I bit as ambition But could in the to have we we there. in specifically, comes road course, think that I thought from and in that's course, is And XXXX, in revenues not Amit, which gains, to not But The of the RAN gap guiding and of say, according share in manageable. aspect share think it you ambition overall market early stick continue -- and is, North as course, when as couple America, to, on share also the that. 'XX. And you it's so. mentioned talked well have finally, than continued lead that deployment, year. IPR, what and for on of we the Börje flagged a a know see to about, towards mean I gains, we look Börje that as expect I momentum obviously is our target, next talking and is very mean a And before, the a will market. China faster to grow. we temporary the do including scale market things, XXXX into we to grow have good do have have in general, We

that. question. good, we on is how excitement look And that's your So at second

we the reach the here, is course, we mean XXXX journey But and remember, excitement for back many XXXX, would people targets all Of when always set both during XXXX Ericsson that believe at bit them. and good. a I in opportunities didn't about then refined

the of to course, Now end Markets come reaching And XXXX, we are we we for And also greater the confidence back that more to XXXX -- reach long targets. we focus those. shift have that and the November. the closer of on XX the Day to, of think will we I on term, in then perspective Capital

Börje Ekholm

is add, are always we important, Ericsson. successful driving what's a And long-term on to just focused

during been making 'XX focusing investments we've long-term the competitiveness. So today, from strengthen phase our long-term to on to this

that us, important on be where honest market gaining we say, XXXX we're not in gaining our frame. XXXX we footprint core but we're I we are focus But to to or milestones see but or showcase why will XG and on on XXXX, optimistic that's extraordinarily we time the And XXXX really are and our for So deliver. beyond to positioning to -- we're ability on network, those the seeing we're going offerings. footprint also about that orchestration our focused are our

all that sure great even and So really stronger company. of seeing to an XXXX make progress we're But we're there. only is there beyond, that

Peter Nyquist

you. Thank

said repeat Thursday Börje's up So Day coming Markets XXth next of before week, actually, on we the handing Friday. Capital Markets about I remark, over Carl to November. But the the also, from Update and closing just what to want have

at the next would remark. be Markets Capital on over and By Areas Market to please the Day aware So to hand November I XX. week's then like tune in update for closing the Börje and that,

Börje Ekholm

Thanks, Peter.

the us to positioned well our we ending, IoT clearly What today, questions. these and Basically, you you do for see very mobility. Cradlepoint develop technology believe to good be to an a with are is will is critical leadership as Networks we are market. are potential provide in our mobility with We now no there without and for and to just very for enterprises. So convinced I growth and will Dedicated in that digitalizing like paying we competitive thank cases the XG and highly your use going we be that winning off, will that's Accelerator, enterprise long-term a be share attractive. want digitalization time in strategy thank we And invest platform

next We at more many hopefully, those update will discuss that And detail join in event. can capital possible as month. the as you plans much markets of

thank telephone again, dialing once into So you, this for conference. everyone,

Telefonaktiebolaget LM Ericsson (ERIC) 21 Oct 202020 Q3 Earnings call transcript