Nokia (NOKIA) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales declined 3% year-over-year on a constant currency and portfolio basis, mainly due to a tough comparison in Nokia Technologies, but comparable net sales grew 7% when adjusting for prior-year catch-up.

• Market recovery continued with strong order intake and growth in all businesses except Nokia Technologies.

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

• Focus on capital allocation and investing for long-term value creation.

• CEO transition: Justin Hotard appointed as President and CEO effective 1 April 2025.

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%, with double-digit growth in North America and a return to growth in India.

• 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.

• Gross margin decreased by 820 basis points to 42.3%, mainly due to lower Nokia Technologies sales and a one-off EUR 120 million settlement in Mobile Networks.

• Operating margin for the group was 3.6% in Q1.

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

Outlook and guidance

• 2025 comparable operating profit guidance remains EUR 1.9 billion–EUR 2.4 billion, with free cash flow conversion expected at 50%-80% of comparable operating profit.

• Strong growth is 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, with mitigation efforts ongoing and no assumptions for H2 2025 due to volatility.

• Full year 2025 outlook remains unchanged.