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Ericsson is taking action to accelerate profitability in Cloud Software and Services

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Ericsson is implementing a revised strategy for its Cloud Software and Services segment aimed at reaching break-even EBIT in 2023. Key changes involve exiting subscale agreements, which will negatively impact EBIT by SEK -0.8 billion in Q4 2022. The company is shifting its focus from market share growth to profitability. This strategic pivot comes ahead of its upcoming Q4 and full-year 2022 results announcement on January 20, 2023.

Positive
  • Targeting break-even EBIT in 2023 for Cloud Software and Services.
  • Focus on profitable business over market share growth.
Negative
  • One-off EBIT impact of SEK -0.8 billion from exiting subscale agreements in Q4 2022.
  • Expected cash flow impact of SEK -0.7 billion in 2023.

STOCKHOLM, Jan. 4, 2023 /PRNewswire/ -- 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 am CET.

Read the full press release from Ericsson's Capital Markets Day here: www.ericsson.com/en/press-releases/2022/12/ericsson-capital-markets-day-2022

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Ericsson Newsroom
media.relations@ericsson.com  (+46 10 719 69 92)
investor.relations@ericsson.com  (+46 10 719 00 00)
 

ABOUT ERICSSON

Ericsson enables communications service providers and enterprises to capture the full value of connectivity. The company's portfolio spans the following business areas: Networks, Cloud Software and Services, Enterprise Wireless Solutions, Global Communications Platform, and Technologies and New Businesses. It is designed to help our customers go digital, increase efficiency and find new revenue streams. Ericsson's innovation investments have delivered the benefits of mobility and mobile broadband to billions of people globally. Ericsson stock is listed on Nasdaq Stockholm and on Nasdaq New York. www.ericsson.com

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https://mb.cision.com/Main/15448/3693182/1763736.pdf

Ericsson is taking action to accelerate profitability in Cloud Software and Services

Cision View original content:https://www.prnewswire.com/news-releases/ericsson-is-taking-action-to-accelerate-profitability-in-cloud-software-and-services-301713266.html

SOURCE Ericsson

FAQ

What is Ericsson's target for EBIT in 2023?

Ericsson aims to reach break-even EBIT for its Cloud Software and Services segment in 2023.

How much will exiting subscale agreements impact Ericsson's EBIT?

The exit from subscale agreements will negatively impact Ericsson's EBIT by SEK -0.8 billion in Q4 2022.

When will Ericsson release its Q4 and full-year 2022 results?

Ericsson is scheduled to publish its Q4 and full-year 2022 results on January 20, 2023.

What is the expected cash flow impact of Ericsson's recent strategy changes?

Ericsson expects a cash flow impact of SEK -0.7 billion in 2023 due to the exit from certain agreements.

What strategic changes is Ericsson implementing?

Ericsson is limiting subscale software development and shifting focus from market share gains to profitability.

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