Ericsson reported a drop in sales for the second consecutive quarter, with the telecom equipment giant restructuring internally to “mitigate component cost inflation.”

The vendor’s second quarter (Q2) earnings for 2026 saw net sales for the period April to June drop by six percent Year-on-Year (YoY), while organic sales growth fell by one percent. In North America, its Networks sales also dropped by one percent, though that dip was partly offset by continued growth in Latin America.

It was a more positive story for Ericsson’s Cloud Software and Services sales, which increased three percent to $1.51 billion (14.7 billion Swedish kronor). The segment was buoyed by demand in North America, while Europe also helped drive growth due to core 5G network upgrades in multiple markets.

Ericsson’s Networks unit, however, saw an eight percent YoY drop in sales to $3.4 billion (33 billion kronor). Gross income for the segment unit fell by nine percent, with soon-to-depart CEO Börje Ekholm telling investors that it expects “some pressure” on Networks' adjusted gross margin for the next quarter due to “higher volumes of network rollout projects.”

Ekholm, who is retiring later this year as company stalwart Per Narvinger takes the reins from October, said Ericsson took action in Q2 to combat soaring component costs.

Among those efforts were redundancies, with Ericsson’s earnings report stating that its total number of employees was 86,536, down from 87,521 on March 31, 2026. Its staffing numbers for the same quarter in 2025 were 91,937.

The vendor unveiled plans in January to cut some 1,600 jobs in its native Sweden in order to “ensure the company's competitive position.” According to its latest earnings report, a portion of the restructuring provisions recognized in Q1 was reversed in the quarter.

As the impact of rising costs is expected to build in the coming quarters, Ekholm told investors that Ericsson “will continue to pursue internal measures and pricing actions to help offset the effect.”

“Our Q2 results underscore the strength of our portfolio and disciplined execution,” the departing CEO added.