Nokia(NOK) - 2025 Q4 - Annual Report

Financial Performance - Nokia's net sales reached €19.889 billion in 2025, with an average employee count of approximately 78,000[23] - The company achieved net sales growth of 3% in 2025, with comparable operating profit of approximately EUR 2 billion and free cash flow of EUR 1.5 billion[34] - Network Infrastructure delivered net sales of EUR 8.0 billion in 2025, with a segment operating margin of 9.8%[68] - Cloud and Network Services reported net sales of EUR 2.6 billion, achieving a segment operating margin of 13.0%[73] - Mobile Networks achieved net sales of EUR 7.8 billion in 2025, with a segment operating margin of 2.8%[80] - Nokia Technologies delivered net sales of EUR 1.5 billion, with a segment operating profit of EUR 1.1 billion[87] - Nokia generated EUR 2.4 billion in orders from AI & Cloud customers in 2025, reflecting strong demand in this segment[34] - Nokia's proposed dividend per share for 2025 is EUR 0.14, reflecting its commitment to shareholder returns[50] Research and Development - The company has invested over €160 billion in R&D since 2000, supporting advancements in 5G and AI technologies[22] - Nokia's R&D investments reached EUR 4.9 billion in 2025, supporting innovation and long-term growth[62] - A new state-of-the-art R&D campus was opened in Oulu, Finland, focusing on 5G and 6G radio innovation with 3,000 staff[29] - The company has invested approximately €4.9 billion in R&D in 2025, contributing to its innovation leadership and patent portfolio[141] - Nokia's AnyRAN portfolio has been enhanced through a partnership with NVIDIA, integrating AI-based innovations into its radio networks[134] Strategic Partnerships and Acquisitions - Nokia closed the acquisition of Infinera in February 2025, enhancing its Network Infrastructure business and innovation capabilities[27] - The acquisition of Infinera for EUR 2.5 billion was completed on February 28, 2025, aimed at enhancing Nokia's optical networking capabilities[96] - A strategic partnership with NVIDIA was announced, with NVIDIA investing $1 billion to accelerate the development of AI-native mobile networks[30] - The integration of Infinera is expected to strengthen Nokia's competitive position, particularly with AI & Cloud customers[37] - Nokia's partnership with NVIDIA focuses on AI-powered radio access networks (AI-RAN) to enhance 5G and 6G capabilities[84] Market Position and Growth Strategy - The company aims to leverage its product portfolio and geographical reach to maintain its market position and order pipeline[13] - Nokia's new strategy aims to accelerate growth in AI & Cloud, lead in AI-native networks and 6G, and improve profitability in Mobile Infrastructure[51] - The company plans to target EUR 2.0 to 2.5 billion in comparable operating profit for 2026, driven by strong demand trends in Network Infrastructure[56] - Nokia is positioned to capture a serviceable addressable market of €60 billion with a 9% CAGR by 2028 in AI and Cloud[95] - Nokia's serviceable addressable market (SAM) for telecommunication providers was €69 billion in 2025, reflecting a 2% year-on-year increase[148] - The SAM for AI & Cloud providers reached €17 billion in 2025, up 28% year-on-year, driven by accelerated data center networking roll-outs[154] - Nokia's SAM related to mission critical enterprises was €13 billion in 2025, an 11% increase year-on-year, supported by strong growth in both Network Infrastructure and Mobile Networks[164] - The company expects the SAM for telecommunication providers to grow at a 1% compound annual growth rate (CAGR) from 2025 to 2028, with fiber, IP routing, and optical networks anticipated to grow faster than the overall market[149] - Nokia forecasts the AI & Cloud market to grow at a 26% CAGR until 2028, driven by the increasing demand for high-capacity connectivity[157] Leadership and Governance - Justin Hotard was appointed as the new President and CEO in February 2025, bringing extensive experience in technology and AI markets[26] - The Board of Directors consists of ten members, with Sari Baldauf re-elected as Chair and Timo Ihamuotila as Vice Chair for the term ending at the next Annual General Meeting[207] - 40% of the Board members are female, representing five different nationalities and a diverse age and tenure range[208] - The Board has adopted diversity principles to ensure a well-balanced composition, considering skills, experience, tenure, age, nationality, cultural and educational backgrounds, and gender[206] - All current Board members were determined to be independent of Nokia and its significant shareholders under the Finnish Corporate Governance Code and NYSE rules[208] Sustainability and Corporate Responsibility - Nokia aims to cut 50% of its absolute scope 1, 2, and 3 greenhouse gas emissions by 2030 and achieve net-zero by 2040[174] - The company has increased the recycled content in mechanical parts and aims for at least 50% recycled materials by 2030[174] - Nokia's commitment to sustainability includes a 100% share of renewable electricity in its factories by 2025[174] - In 2025, Nokia conducted 788 supply chain audits, enhancing safety, labor, and human rights compliance[173] - The company has implemented rigorous inventory management practices to mitigate excess stock risks[168] Manufacturing and Operations - As of December 31, 2025, Nokia's own manufacturing capacity included 11,500 m² in Oulu, Finland, and 15,500 m² in Chennai, India[175] - A new Compound Semiconductor Wafer Fab in San Jose, California, is expected to begin production in 2027, with a capacity of 2,600 m²[176] - The company has a manufacturing network consisting of 4% owned sites and contract manufacturing partners, ensuring flexibility and resilience[169]