Finland · Delayed Price · Currency is EUR Nokia Oyj Earnings Call Transcripts
Fiscal Year 2026
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Q1 saw 4% sales growth to EUR 4.5B, with strong AI/cloud demand driving 49% segment growth and EUR 1B in new orders, mainly in Optical Networks. Upgraded 2026 guidance for Network Infrastructure and Optical/IP Networks reflects robust demand and successful Infinera integration.
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The briefing showcased major advances in optical networking, including new DSPs, pluggable solutions, and record-setting amplifier density, all driven by close customer collaboration and expanded manufacturing. The roadmap targets significant TCO and power savings, with new products sampling next year.
Fiscal Year 2025
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Q4 and full-year 2025 results met expectations, with net sales and operating profit slightly above guidance. Strong growth in Optical Networks and AI/cloud demand offset stable telco markets, while strategic investments and cost programs position for long-term margin expansion and growth.
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The discussion highlighted a strategic pivot toward AI and cloud, with disciplined growth targets and a focus on software-driven business models. Manufacturing regionalization and partnerships, such as with NVIDIA, are key to future competitiveness. Leadership changes and improved communication aim to reinforce the company's role as a critical infrastructure provider.
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Nokia unveiled a major strategic shift to lead in the AI supercycle, reorganizing into two core segments and targeting double-digit operating profit growth by 2028. The company is investing in AI-native networks, expanding in cloud/hyperscaler and defense markets, and focusing on software-driven value, automation, and disciplined capital allocation.
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A $1 billion Nvidia investment will accelerate AI-native network innovation, making AnyRAN software AI-centric and supporting a shift to software-driven, intelligent networks. Field trials begin in 2026, with commercial rollout by 2027, aiming for 6G leadership.
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Net sales rose 9% year-over-year in Q3 2025, with all business groups growing and strong order intake from AI and cloud customers. Operating margin declined due to a prior year one-time gain, but profitability and cash flow remain solid. Integration of Infinera is ahead of schedule, and the outlook for Q4 and the full year is positive.
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Strong technology and customer relationships are driving growth, with AI and optical infrastructure as key focus areas. U.S. and Europe lead in AI-driven demand, while investments in IP networking and photonics support innovation. Supply chain and market expansion remain priorities.
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Q2 2025 saw stable gross margins and growth in network infrastructure and cloud services, but mobile networks declined due to prior year revenue recognition. Currency and tariff headwinds led to a lowered full-year profit outlook, while integration of Infinera and strong demand from hyperscalers support future growth.
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Q1 2025 saw 7% comparable net sales growth (excluding prior-year catch-up), led by strong performance in Network Infrastructure and Cloud and Network Services, while Mobile Networks stabilized. The Infinera acquisition and a multi-year T-Mobile US contract extension support future growth, though a one-off settlement and tariff risks weigh on margins.
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AI and data center growth are driving a new wave of investment and innovation in optical networks, with automation, security, and advanced fiber technologies at the forefront. The recent integration with Infinera expands scale and capabilities, positioning the company as a global leader across multiple market segments.
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Nokia announced a leadership transition with Justin Hotard set to become CEO in April 2025, focusing on accelerating growth in data centers, AI, and defense communications. The company targets €1 billion additional data center revenue by 2028 and continues to strengthen its position in 5G and network infrastructure.
Fiscal Year 2024
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Q4 2024 saw 9% net sales growth, record margins, and strong cash flow, driven by Network Infrastructure and Nokia Technologies. Strategic acquisitions and increased investment in IP Networks position the company for continued growth in 2025, with stable Mobile Networks and expanding opportunities in data centers and new tech segments.
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Q3 saw a 7% sales decline but a 490 bps gross margin improvement, strong free cash flow, and continued cost savings. Fixed and IP networks are recovering, while mobile and optical remain weak. The Infinera acquisition and new deals in data centers and enterprise are set to drive future growth.
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Industry challenges are giving way to renewed growth, driven by fiber, 5G, cloud, and AI trends. Technology leadership, strategic partnerships, and the Infinera acquisition position the business for mid-single-digit growth and margin expansion, with strong momentum in data center and optical markets.
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Q2 2024 saw an 18% sales decline, mainly due to India, but order intake improved and gross margin rose. Cost savings and strong cash flow support an unchanged outlook, with significant H2 sales acceleration expected, especially in Q4.
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The acquisition aims to create a leading optical networking business with enhanced scale, innovation, and market reach, targeting EUR 200 million in synergies by 2027. The deal is expected to be accretive to profit and EPS, with strong customer and stakeholder support.