Nokia (NOKIA) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales declined 3% year-over-year on a constant currency and portfolio basis, but adjusted for prior-year catch-up sales, net sales grew 7%.

• Strong order growth and market recovery signs, with notable wins and a multi-year RAN contract extension with T-Mobile US.

• Infinera acquisition completed in Q1, expanding scale and innovation in Optical Networks and hyperscaler markets; integration underway.

• CEO emphasized capital allocation focus, efficiency, and investment in growth segments, with a full value creation vision to be presented at Capital Markets Day in November.

• Comparable operating margin fell to 3.6%, impacted by lower gross margin and higher operating expenses for long-term growth.

Financial highlights

• Network Infrastructure net sales grew 11% year-over-year, with Optical Networks up 15%, Fixed Networks up 9%, and IP Networks up 7%.

• Cloud and Network Services net sales increased 8%, driven by 5G Core demand and broad-based regional growth.

• Mobile Networks net sales stabilized, growing 2% in Q1, with double-digit growth in North America and a return to growth in India; profitability declined due to a EUR 120 million one-off contract settlement.

• Nokia Technologies net sales declined 52% due to a tough comparison with the prior year’s catch-up sales; annual run rate now at EUR 1.4 billion.

• Free cash flow exceeded EUR 700 million, ending the quarter with EUR 3 billion in net cash after the Infinera acquisition.

Outlook and guidance

• 2025 comparable operating profit guidance remains EUR 1.9 billion–EUR 2.4 billion, but reaching the top end is now more challenging due to the Mobile Networks charge.

• Free cash flow conversion expected at 50%-80% of comparable operating profit.

• Strong growth expected in Network Infrastructure, growth in Cloud and Network Services, and stable net sales in Mobile Networks.

• Tariffs could impact Q2 operating profit by EUR 20 million–EUR 30 million; no assumptions made for H2 2025 due to lack of visibility.