Core Insights - Nokia Corporation reported stronger-than-expected third-quarter 2025 results, with both revenue and net income exceeding the Zacks Consensus Estimate. The growth was primarily driven by the Network Infrastructure segment, particularly in fixed and optical networks, along with improvements in Nokia Technologies and Cloud and Network services [1] Financial Performance - Nokia's net income from continuing operations was €80 million ($93.5 million), or €0.01 per share, down from €145 million or €0.03 per share in the same quarter last year. Increased operating and income tax expenses negatively impacted profits [2] - Comparable profit was €324 million ($378 million), or €0.06 per share, slightly down from €358 million or €0.06 in the previous year, marginally beating the Zacks Consensus Estimate of 6 cents [3] - Quarterly net sales reached €4.83 billion ($5.65 billion), a 12% increase from €4.32 billion in the year-ago quarter, surpassing the Zacks Consensus Estimate by $5.38 billion [4] Segment Performance - Net sales from Network Infrastructure totaled €1.95 billion ($2.28 billion), up from €1.52 billion in the year-ago quarter, beating the revenue estimate of €1.77 billion. IP Networks recorded 4% growth year over year, driven by demand from AI and cloud customers, while Optical Networks improved by 19% [5] - Mobile Networks generated revenues of €1.84 billion ($2.153 billion), down 1% year over year, but still beating the estimate of €1.74 billion, with growth supported by the Middle East, Africa, and APAC regions [6] - Cloud and Network Services reported net sales of €645 million ($754 million), an 8% increase year over year, although it missed the estimate of €700.9 million [7] - Nokia Technologies contributed €391 million ($457 million), up 14% year over year, benefiting from trends in automotive, consumer electronics, multimedia, and IoT [8] Regional Performance - EMEA region net sales increased to €1.936 billion from €1.832 billion in the previous year, with growth in all segments except Mobile Networks [9] - APAC region revenues rose to €1.17 billion, a 15% increase year over year, primarily due to Network Infrastructure growth [9] - Americas saw a 10% growth to €1.71 billion, driven by strong performance in Network Infrastructure and Cloud and Network services [9] Other Financial Metrics - The comparable gross margin was 44.2%, down from 45.7% in the previous year, with a comparable operating profit decrease of 10% year over year to €435 million ($508.4 million) [12] - Nokia generated €597 million ($697 million) in net cash from operating activities, down from €728 million in the prior-year quarter, and had €4.89 billion ($5.74 billion) in cash and cash equivalents as of September 30, 2025 [13] Outlook - For 2025, Nokia expects a comparable operating profit in the range of €1.7 billion to €2.2 billion, with free cash flow estimated at 50-80% of that range and capital expenditure projected at €650 million [14]

Core Insights - Shares of Nokia increased approximately 8% in premarket trading following the announcement of third quarter adjusted profit that exceeded analyst expectations, driven by strong demand for AI and cloud services which positively impacted Optical Networks sales [5] Financial Performance - Nokia's third quarter adjusted operating profit decreased by 10% year-over-year, amounting to €435 million [5]

Q3 2025 Financial results 23 October 2025 1 © 2025 Nokia Disclaimer It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements preceded by "believe", "expect", "expectations", "commit", "anticipate", "foresee", "see", "target", "estimate", "designed", "aim", ...

Financial Data and Key Metrics Changes - Q2 2025 net sales were €4.55 billion, reflecting a 1% decline on a constant currency and portfolio basis [17] - Gross margin remained stable at 44.7%, while operating margin declined to 6.6% due to negative currency impacts and tariffs [18] - Free cash flow generated in the quarter was €88 million, with a net cash position of €2.9 billion at the end of the quarter [23] Business Line Data and Key Metrics Changes - Network infrastructure grew by 8%, with fixed networks up 17%, optical networks up 6%, and IP networks up 3% [18][19] - Mobile networks saw a 13% decline, primarily due to accelerated revenue recognition from the previous year [20] - Cloud and network services net sales increased by 14%, driven by growth in North America and Asia Pacific [21] - Nokia Technologies net sales increased by 3% on a constant currency basis, maintaining a run rate of approximately €1.4 billion [22] Market Data and Key Metrics Changes - Hyperscalers accounted for 5% of net sales in Q2, with strong demand driving order intake [11] - North America experienced a decline in mobile networks but saw double-digit growth in network infrastructure and cloud services [22] - APAC region showed flat sales in India due to a pause in mobile network investments, while growth was noted in fixed networks [22] Company Strategy and Development Direction - The company is focusing on unifying corporate functions to improve productivity and customer value [6][7] - Investments are being made in optical networking and AI infrastructure to capitalize on market transitions [5][10] - The company plans to discuss its full value creation strategy at the Capital Markets Day on November 19 [7][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities in connectivity, particularly in the AI super cycle [5] - The demand environment remains consistent, with no major impacts from geopolitical uncertainties [10] - Full-year expectations include strong growth in network infrastructure and stable net sales in mobile networks, with operating profit guidance revised down due to currency and tariff impacts [14][15] Other Important Information - The company is experiencing a €230 million headwind to operating profit due to currency fluctuations [15] - The tariff situation is expected to impact operating profit by €50 million to €80 million for the full year [15][18] Q&A Session All Questions and Answers Question: What is required to win large hyperscaler deals? - Management emphasized the importance of customer relationships and understanding customer needs to increase sales to hyperscalers [34] Question: Will the fiber build programs from U.S. Telcos accelerate into 2026? - Management expressed optimism about growth opportunities in fiber builds due to recent legislative support and customer demand [36] Question: Can you discuss the guidance revision? - Management explained that uncertainties have increased due to currency shifts and tariff impacts, leading to a prudent adjustment of the guidance range [44][46] Question: Can you provide insights on network infrastructure performance in Q2? - Management noted that supply chain constraints affected growth, but they expect strong performance in the second half driven by hyperscale and AI data center customers [50][52] Question: What is the outlook for the optical business? - Management acknowledged that while there is growth, they are still catching up in market share and need to continue product development to compete effectively [86]

Financial Performance - Nokia's Q2 2025 net sales experienced a 1% year-over-year decrease on a constant currency and portfolio basis[18] - The Q2 2025 operating margin was 6.6%, a decrease of 290 basis points year-over-year[18] - Free cash flow for Q2 2025 was EUR 0.1 billion[18] Business Segment Performance - Network Infrastructure net sales increased by 8% year-over-year in Q2 2025, reaching EUR 1.904 billion[25, 26] - Mobile Networks net sales decreased by 13% year-over-year in Q2 2025, totaling EUR 1.732 billion[32, 33] - Cloud and Network Services net sales grew by 14% year-over-year in Q2 2025, reaching EUR 557 million[38, 42] - Nokia Technologies net sales increased by 3% year-over-year in Q2 2025, reaching EUR 357 million[45] Outlook and Guidance - The comparable operating profit outlook for full year 2025 has been lowered to EUR 1.6 billion to EUR 2.1 billion, due to currency and tariff headwinds[11, 13] - Free cash flow conversion is expected to be 50% to 80% of comparable operating profit for full year 2025[11, 13] Regional Performance - Americas experienced a 22% decrease, APAC a 3% decrease, and EMEA a 17% decrease[49]

Financial Performance - Nokia's Q1 2025 net sales experienced a year-on-year decline of 3% on a constant currency and portfolio basis[17][42] - The company's Q1 2025 gross margin was 423%[15] - Nokia reported a Q1 2025 operating margin of 36%, a decrease of 990 basis points year-on-year[16] - Strong free cash flow (FCF) was reported at EUR 07 billion, with a net cash position of EUR 30 billion after the Infinera acquisition[9][16] Business Segment Highlights - Network Infrastructure experienced strong growth of 11%, with Optical Networks growing by 15%[9][24] - Cloud and Network Services grew by 8%, driven by strong demand for 5G core[9][33] - Mobile Networks stabilized with 2% growth[9][28] Nokia Technologies - Nokia Technologies experienced a challenging year-on-year comparison due to over EUR 400 million of catch-up net sales in Q1 2024[41] - Continued execution in Nokia Technologies led to a contracted run-rate of EUR 14 billion[41] Strategic Initiatives - The Infinera acquisition closed in Q1, targeting EUR 200 million of operating profit synergies by 2027[10] - Optical Networks market share was 26% on a proforma basis in 2024, with sales growth of 15% in Q1[11] Outlook - Nokia's full year 2025 outlook remains unchanged, with a comparable operating profit target of EUR 19 billion to EUR 24 billion[8][47] - The company anticipates a 50% to 80% conversion of comparable operating profit to free cash flow for the full year 2025[47]