Nokia Corporation released its Q2 and Half Year 2025 financial report on July 24, 2025, highlighting a solid underlying performance overshadowed by currency fluctuations and tariffs. The report, detailed at www.nokia.com/financials, reflects Nokia’s strategic focus on connectivity in the AI supercycle, with updates on business segments and a revised full-year outlook.
Net Sales: Q2 comparable net sales declined 1% year-over-year (YoY) on a constant currency and portfolio basis (2% reported, €4.55 billion), driven by a 13% drop in Mobile Networks due to a prior-year settlement benefit and project timing in India. Network Infrastructure grew 8%, Cloud and Network Services 14%, and Nokia Technologies 3%.
Gross Margin: Comparable gross margin remained stable at 44.7% (reported up 10bps to 43.4%), with stable margins in Network Infrastructure and Mobile Networks, and improvements in Cloud and Network Services.
Operating Profit: Q2 comparable operating profit fell 29% to €301 million, with a comparable operating margin of 6.6% (down 290bps YoY). Reported operating profit was €81 million (1.8% margin). A €50 million venture fund impact, including a €60 million negative currency revaluation, and tariffs drove the decline.
Earnings Per Share (EPS): Comparable diluted EPS was €0.04; reported diluted EPS was €0.02.
Cash Flow: Q2 free cash flow was €0.1 billion, with a net cash balance of €2.9 billion. First-half free cash flow exceeded €800 million.
Dividend: The Board authorized a €0.14 per share dividend for 2024, with a Q2 distribution of €0.04 per share.
Network Infrastructure: Grew 8% in Q2, driven by strong order momentum in Optical Networks (book-to-bill >1) and hyperscaler wins, including an 800G pluggables award from a US hyperscaler. The Infinera acquisition, completed in Q1 2025, boosted Optical Networks’ scale.
Mobile Networks: Declined 13% due to a prior-year settlement and India project timing. Stabilization signs include a T-Mobile US contract extension.
Cloud and Network Services: Grew 14%, fueled by 5G Core demand with wins at AT&T, Boost Mobile, Ooredoo Qatar, and Telefónica.
Nokia Technologies: Grew 3%, securing new agreements and targeting €1.1 billion in operating profit for 2025. Annual licensing run-rate reached €1.4 billion in Q1.
Justin Hotard, Nokia’s President and CEO, emphasized connectivity’s role in the AI supercycle, positioning Nokia to lead in mobile, fiber, data center, and transport networks. The company is unifying corporate functions to enhance efficiency and customer engagement. The Infinera acquisition strengthens Optical Networks, with 5% of Q2 sales from hyperscalers. Nokia’s Capital Markets Day on November 19, 2025, in New York will outline its value creation strategy.
Nokia revised its 2025 comparable operating profit outlook to €1.6-2.1 billion from €1.9-2.4 billion due to two external headwinds:
Currency Impact: A weaker USD, with a €1:$1.17 exchange rate (vs. €1:$1.04 in January), contributes a €230 million negative impact (€140 million operational, €90 million from non-cash venture fund revaluations).
Tariffs: Expected to reduce operating profit by €50-80 million, including Q2 impacts.
Free cash flow conversion remains at 50-80%. Nokia anticipates a stronger H2, particularly Q4, with stable Mobile Networks sales, growth in Network Infrastructure and Cloud and Network Services, and €1.1 billion in Nokia Technologies’ operating profit.
Nokia, a leader in the $160 billion telecom equipment market, faces competitive pressures and currency risks but benefits from 5G and AI-driven demand. The Infinera acquisition and organizational changes, including transferring Managed Services to Mobile Networks (€430 million net sales, €40 million operating profit in 2024), enhance its portfolio.
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