Nokia (NOKIA) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales declined 7% year-over-year, mainly due to Mobile Networks weakness in India and a divestment in Cloud and Network Services, but gross margin improved by 490 basis points to 45.7%, supported by cost reductions and favorable product and regional mix.

• Free cash flow remained strong at over EUR 600 million in Q3, with a net cash position of EUR 5.5 billion at quarter-end.

• The cost savings program achieved EUR 500 million in run-rate gross cost savings and reduced headcount, with a target of EUR 800-1,200 million gross savings by 2026.

• The Infinera acquisition is progressing, with regulatory and shareholder approvals received and closing targeted for H1 2025.

• Market remains weak but signs of recovery are visible in Fixed and IP Networks, while Optical and Mobile Networks lag behind.

Financial highlights

• Q3 2024 net sales: EUR 4,326 million, down 7% year-over-year; gross margin: 45.7%, up 490bps year-over-year.

• Operating margin: 10.5%, up 160bps year-over-year; comparable operating profit: EUR 454 million.

• Free cash flow: EUR 621 million; net cash: EUR 5.5 billion.

• Returned EUR 360 million to shareholders through dividends and share buybacks during the quarter.

• Comparable diluted EPS: EUR 0.06 (up from EUR 0.05); reported diluted EPS: EUR 0.03.

Outlook and guidance

• 2024 financial outlook remains unchanged, with comparable operating profit expected between EUR 2.3 billion and 2.9 billion and free cash flow conversion between 30% and 60%.

• 2024 net sales growth guidance: -6% to -3% (constant currency); operating margin 10.0% to 12.0%.

• Segment operating margin guidance: Network Infrastructure 10–12%, Mobile Networks 5–7%, Cloud and Network Services 6–8%.

• 2026 targets: grow faster than the market, operating margin ≥13%, free cash flow conversion 55%-85%.