Nokia Corporation
Half year financial report
24 July 2025 at 08:00 EEST
Nokia Corporation Report for Q2 and Half Year 2025
Solid performance offset by currency impact
- Q2 comparable net sales declined 1% y-o-y on a constant currency and portfolio basis (2% reported) due to a 13% decline in Mobile Networks which had benefited from accelerated revenue recognition in the prior year. Network Infrastructure grew 8% while Cloud and Network Services grew 14%. Nokia Technologies grew 3%.
- Comparable gross margin in Q2 was flat y-o-y at 44.7% (reported increased 10bps to 43.4%). Gross margins were broadly stable in Network Infrastructure and Mobile Networks and improved in Cloud and Network Services.
- Q2 comparable operating margin decreased 290bps y-o-y to 6.6% (reported up 790bps to 1.8%), driven by a negative EUR 50 million venture fund impact which includes a EUR 60 million negative currency revaluation. Operating profit was also impacted by tariffs.
- Q2 comparable diluted EPS for the period of EUR 0.04; reported diluted EPS for the period of EUR 0.02.
- Q2 free cash flow of EUR 0.1 billion, net cash balance of EUR 2.9 billion.
- As announced on 22 July 2025, full year 2025 comparable operating profit outlook revised to between EUR 1.6 and 2.1 billion (was between EUR 1.9 and 2.4 billion) with free cash flow conversion from comparable operating profit unchanged at between 50% and 80%.
This is a summary of the Nokia Corporation Report for Q2 and Half Year 2025 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group’s financial information as well as on Nokia’s outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at http://www.nokia.com/financials. Investors should not solely rely on summaries of Nokia’s financial reports and should also review the complete reports with tables.
JUSTIN HOTARD, PRESIDENT AND CEO, ON Q2 2025 RESULTS
In the following quote, net sales comments and growth rates are referring to comparable net sales and are on a constant currency and portfolio basis.
During my first quarter as CEO, I’ve spent significant time engaging with our stakeholders. One message has stood out: Connectivity is becoming a critical differentiator in the AI supercycle, not only for communication service providers and hyperscalers, but also for new areas like defense and national security. With our portfolio in mobile and fiber access, data center, and transport networks, Nokia is uniquely positioned to be a leader in this market transition. Customer conversations have increased my optimism about our opportunity: There’s been a strong validation of what sets us apart – our technology, partnering culture, and the exceptional talent of our people.
At the same time, our customers expect us to engage with them as one integrated company as they partner with us across our portfolio. Further it is clear we need to continue to evolve how we work so we move faster, improve productivity and focus on what brings value to our customers. As a result, we’re unifying our corporate functions to simplify how we work, build a more cohesive culture and begin to unlock operating leverage.
We have a great opportunity to drive a unified vision for the future of networks, and I am looking forward to discussing our strategy and full value creation story at our Capital Markets Day in New York on November 19.
Turning to our second quarter results, the significant currency fluctuations, particularly the weaker USD, had a meaningful impact on both our net sales and operating profit. On a constant currency and portfolio basis our overall net sales declined 1%, however excluding a settlement benefit in the prior year, sales would have grown 3%. Network Infrastructure grew 8% in Q2. Mobile Networks’ net sales declined 13%, primarily related to the aforementioned prior year settlement benefit and also due to project timing in India. Cloud and Network Services grew 14% with strong momentum in 5G Core. Nokia Technologies grew 3% and secured several new agreements in the quarter.
Q2 comparable gross margin was stable year-on-year at 44.7%. Operating profit in the quarter was impacted by a non-cash negative impact to venture funds of EUR 50 million which included a EUR 60 million negative currency revaluation and the effect of tariffs we highlighted in Q1, contributing to our comparable operating margin declining 290 bps to 6.6%. Despite the cash impact of 2024 incentives during Q2, we had a strong cash performance and have generated free cash flow of over EUR 800 million in the first half.
Q2 saw continued strong order momentum in Optical Networks with a book-to-bill well above 1, driven by new hyperscaler orders. We had several key wins in the quarter, including a deal with a large US communication service provider along with receiving our first award for 800G pluggables from a US hyperscaler. Across the group, Nokia generated 5% of sales in Q2 from hyperscalers. While we still have a lot of work ahead of us, I’m pleased with the progress we are making integrating Infinera, including executing on synergies. Additionally, the commercial momentum we are seeing reinforces the long-term value creation opportunity of the acquisition.
Looking ahead we expect a stronger second half performance, particularly in Q4 consistent with normal seasonality. For the full year, the underlying business is trending largely as expected. We continue to expect strong growth in Network Infrastructure, growth in Cloud and Network Services and largely stable net sales in Mobile Networks on a constant currency and portfolio basis. In Nokia Technologies we expect approximately EUR 1.1 billion in operating profit.
However, we are facing two headwinds to our full year operating profit outlook which are outside of our control, currency due to the weaker US Dollar, and tariffs. Currency has an approximately EUR 230 million negative impact relative to our expectations at the start of the year with EUR 90 million from non-cash venture fund currency revaluations. The current tariff levels are forecasted to impact operating profit by EUR 50 million to EUR 80 million inclusive of those in Q2. Considering these two headwinds, we decided it was prudent at this point to lower our comparable operating profit outlook to a range of EUR 1.6 billion to EUR 2.1 billion from the prior range of EUR 1.9 billion to EUR 2.4 billion.
Justin Hotard
President and CEO
FINANCIAL RESULTS
| EUR million (except for EPS in EUR) | Q2’25 | Q2’24 | YoY change | Q1-Q2’25 | Q1-Q2’24 | YoY change |
| Reported results | ||||||
| Net sales | 4 546 | 4 466 | 2% | 8 936 | 8 910 | 0% |
| Gross margin % | 43.4% | 43.3% | 10bps | 42.5% | 46.5% | (400)bps |
| Research and development expenses | (1 161) | (1 134) | 2% | (2 306) | (2 259) | 2% |
| Selling, general and administrative expenses | (744) | (715) | 4% | (1 472) | (1 408) | 5% |
| Operating profit | 81 | 432 | (81)% | 32 | 836 | (96)% |
| Operating margin % | 1.8% | 9.7% | (790)bps | 0.4% | 9.4% | (900)bps |
| Profit from continuing operations | 83 | 370 | (78)% | 24 | 821 | (97)% |
| Profit/(loss) from discontinued operations | 13 | (512) | 13 | (525) | ||
| Profit/(loss) for the period | 96 | (142) | 36 | 296 | (88)% | |
| EPS for the period, diluted | 0.02 | (0.03) | 0.01 | 0.05 | (80)% | |
| Net cash and interest-bearing financial investments | 2 879 | 5 475 | (47)% | 2 879 | 5 475 | (47)% |
| Comparable results | ||||||
| Net sales | 4 551 | 4 466 | 2% | 8 941 | 8 910 | 0% |
| Constant currency and portfolio YoY change(1) | (1%) | (2%) | ||||
| Gross margin % | 44.7% | 44.7% | 0bps | 43.5% | 47.6% | (410)bps |
| Research and development expenses | (1 126) | (1 064) | 6% | (2 241) | (2 140) | 5% |
| Selling, general and administrative expenses | (612) | (610) | 0% | (1 199) | (1 194) | 0% |
| Operating profit | 301 | 423 | (29)% | 457 | 1 023 | (55)% |
| Operating margin % | 6.6% | 9.5% | (290)bps | 5.1% | 11.5% | (640)bps |
| Profit for the period | 236 | 328 | (28)% | 390 | 840 | (54)% |
| EPS for the period, diluted | 0.04 | 0.06 | (33)% | 0.07 | 0.15 | (53)% |
| Business group results | Network Infrastructure | Mobile Networks | Cloud and Network Services | Nokia Technologies | Group Common and Other | |||||
| EUR million | Q2’25 | Q2’24 | Q2’25 | Q2’24 | Q2’25 | Q2’24 | Q2’25 | Q2’24 | Q2’25 | Q2’24 |
| Net sales | 1 904 | 1 522 | 1 732 | 2 078 | 557 | 507 | 357 | 356 | 3 | 4 |
| YoY change | 25% | (17)% | 10% | 0% | (25)% | |||||
| Constant currency and portfolio YoY change(1) | 8% | (13)% | 14% | 3% | (25)% | |||||
| Gross margin % | 38.2% | 38.4% | 41.1% | 41.8% | 42.7% | 37.5% | 100.0% | 100.0% | ||
| Operating profit/(loss) | 109 | 97 | 77 | 182 | 9 | (35) | 255 | 258 | (150) | (78) |
| Operating margin % | 5.7% | 6.4% | 4.4% | 8.8% | 1.6% | (6.9)% | 71.4% | 72.5% | ||
(1) This metric provides additional information on the growth of the business and adjusts for both currency impacts and portfolio changes. The full definition is provided in the Alternative performance measures section in Nokia Corporation Report for Q2 and Half Year 2025.
SHAREHOLDER DISTRIBUTION
Dividend
Under the authorization by the Annual General Meeting held on 29 April 2025, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.14 per share to be paid in respect of financial year 2024. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period unless the Board decides otherwise for a justified reason.
On 24 July 2025, the Board resolved to distribute a dividend of EUR 0.04 per share. The dividend record date is 29 July 2025 and the dividend will be paid on 7 August 2025. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.
As previously announced, on 29 April 2025 the Board resolved to distribute a dividend of EUR 0.04 per share. The dividend record date was 5 May 2025 and the dividend was paid on 12 May 2025. Following these distributions, the Board’s remaining distribution authorization is a maximum of EUR 0.06 per share.
OUTLOOK
| Full Year 2025 | |
| Comparable operating profit(1,2) | EUR 1.6 billion to EUR 2.1 billion (adjusted from EUR 1.9 billion to 2.4 billion) |
| Free cash flow(1) | 50% to 80% conversion from comparable operating profit |
1Please refer to Alternative performance measures section in Nokia Corporation Report for Q2 and Half Year 2025 for a full explanation of how these terms are defined.
2Outlook is based on a EUR:USD rate of 1.17 for the remainder of the year.
The outlook and all of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this report.
Along with Nokia’s official outlook targets provided above, Nokia provides the below additional assumptions that support the group level financial outlook.
| Full year 2025 | Comment | ||
| Q3 Seasonality | Normal seasonality would imply flat net sales sequentially into Q3. The business expects somewhat more challenging product mix along with continued R&D investment. Comparable operating margin expected to be largely stable sequentially. | ||
| Group Common and Other operating expenses | Approximately EUR 400 million | ||
| Comparable financial income and expenses | Positive EUR 50 to 150 million | ||
| Comparable income tax rate | ~25% | ||
| Cash outflows related to income taxes | EUR 500 million | ||
| Capital expenditures | EUR 650 million | ||
| Recurring gross cost savings | EUR 400 million | Related to ongoing cost savings program and not including Infinera-related synergies | |
| Restructuring and associated charges related to cost savings programs | EUR 250 million | Related to ongoing cost savings program and not including Infinera-related synergies | |
| Restructuring and associated cash outflows | EUR 400 million | Related to ongoing cost savings program and not including Infinera-related synergies |
RISK FACTORS
Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:
- Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;
- Changes in customer network investments related to their ability to monetize the network;
- Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;
- Our ability to procure certain standard components and the costs thereof, such as semiconductors;
- Disturbance in the global supply chain;
- Impact of inflation, increased global macro-uncertainty, major currency fluctuations, changes in tariffs and higher interest rates;
- Potential economic impact and disruption of global pandemics;
- War or other geopolitical conflicts, disruptions and potential costs thereof;
- Other macroeconomic, industry and competitive developments;
- Timing and value of new, renewed and existing patent licensing agreements with licensees;
- Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;
- The outcomes of on-going and potential disputes and litigation;
- Our ability to execute, complete, successfully integrate and realize the expected benefits from transactions;
- Timing of completions and acceptances of certain projects;
- Our product and regional mix;
- Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;
- Our ability to utilize our Finnish deferred tax assets and their recognition on our balance sheet;
- Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;
as well the risk factors specified under Forward-looking statements of this release, and our 2024 annual report on Form 20-F published on 13 March 2025 under Operating and financial review and prospects-Risk factors.
FORWARD-LOOKING STATEMENTS
Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia’s current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, projects, programs, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, cost savings, the timing of receivables, operating expenses, provisions, impairments, tariffs, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, value creation, revenue generation in any specific region, and licensing income and payments; D) ability to execute, expectations, plans or benefits related to transactions, investments and changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including “anticipate”, “continue”, “believe”, “envisage”, “expect”, “aim”, “will”, “target”, “may”, “would”, “could“, “see”, “plan”, “ensure” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.
ANALYST WEBCAST
- Nokia’s webcast will begin on 24 July 2025 at 11.30 a.m. Finnish time (EEST). The webcast will last approximately 60 minutes.
- The webcast will be a presentation followed by a Q&A session. Presentation slides will be available for download at http://www.nokia.com/financials.
- A link to the webcast will be available at http://www.nokia.com/financials.
- Media representatives can listen in via the link, or alternatively call +1-412-317-5619.
FINANCIAL CALENDAR
- Nokia plans to publish its third quarter and January-September 2025 results on 23 October 2025.
About Nokia
At Nokia, we create technology that helps the world act together.
As a B2B technology innovation leader, we are pioneering networks that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs, which is celebrating 100 years of innovation.
With truly open architectures that seamlessly integrate into any ecosystem, our high-performance networks create new opportunities for monetization and scale. Service providers, enterprises and partners worldwide trust Nokia to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of the future.
Inquiries:
Nokia
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Phone: +358 10 448 4900
Email: press.services@nokia.com
Maria Vaismaa, Global Head of External Communications
Nokia
Investor Relations
Phone: +358 931 580 507
Email: investor.relations@nokia.com
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