Nokia Corporation Financial Report for Q4 2025 and full year 2025

Core Insights - Nokia's Q4 2025 performance met expectations, with net sales growing 3% to EUR 6.1 billion and full-year operating profit of EUR 2.0 billion, slightly above guidance [4][7] - The company is focusing on long-term growth opportunities, particularly in AI and Cloud, and has simplified its operating model for better accountability and profitability [8][11] Financial Performance - Q4 2025 net sales reached EUR 6.1 billion, a 3% increase year-over-year, while full-year net sales grew 2% on a constant currency basis [4][7] - Comparable gross margin for Q4 improved by 90 basis points to 48.1%, while reported gross margin decreased by 120 basis points to 44.9% due to restructuring charges [7][14] - Full-year comparable operating profit was EUR 2.0 billion, with a free cash flow of EUR 1.5 billion, equating to a conversion rate of 72% [7][12] Business Segments - Network Infrastructure saw a 7% increase in net sales in Q4, driven by a 17% growth in Optical Networks, with strong order intake from AI and Cloud customers [5][6] - Mobile Networks net sales grew by 6% in Q4, while Cloud and Network Services experienced a 4% decline [6][12] - Nokia Technologies maintained a contracted net sales run-rate of EUR 1.4 billion, reflecting stable performance [6] Strategic Initiatives - The acquisition of Infinera has strengthened Nokia's portfolio, aligning with its strategy to leverage AI in network operations [7][9] - The company is investing in AI-native networks and 6G technologies, anticipating significant demand in these areas [10][12] Outlook for 2026 - Nokia targets a comparable operating profit of EUR 2.0 to 2.5 billion for 2026, with expectations of strong demand in Network Infrastructure [12][18] - The company anticipates net sales growth in Network Infrastructure of 6-8% CAGR, with combined IP and Optical Networks expected to grow 10-12% [20][26] - Capital expenditures are projected to be between EUR 900 million and 1 billion, primarily for manufacturing capacity and real estate renewal projects [20][21]