NOK Net Income Swings 167% in Q2 2025

Nokia Corporation announced its Q2 2025 financial results, reporting comparable net sales of EUR 4.551 billion, a 2% increase year-over-year. Net income for the quarter was EUR 96 million, compared to a net loss of EUR 142 million in Q2 2024. Diluted EPS for the period was EUR 0.02, while comparable diluted EPS reached EUR 0.04, falling short of the analyst estimate of EUR 0.07. The company's free cash flow stood at EUR 0.1 billion in Q2, with a net cash balance of EUR 2.9 billion.

Segment Performance and Business Drivers

In Q2 2025, Network Infrastructure net sales surged by 25% on a reported basis, and 8% on a constant currency and portfolio basis, driven by growth across all business units, including IP Networks, Optical Networks, and Fixed Networks. Cloud and Network Services also demonstrated strong growth, with a 10% increase on a reported basis and 14% on a constant currency basis, primarily fueled by momentum in 5G Core. Nokia Technologies saw a 3% increase in net sales on a constant currency basis, attributed to new agreements signed over the past 12 months. Conversely, Mobile Networks experienced a 17% decline in reported net sales and a 13% decline on a constant currency basis, mainly due to accelerated revenue recognition in the prior year and project timing in India.

The company noted continued strong order momentum in Optical Networks, particularly from new hyperscaler orders, with Nokia generating 5% of its Q2 sales from hyperscalers across the group. The integration of Infinera is progressing well, contributing to the positive commercial momentum and reinforcing long-term value creation. Mobile Networks' gross margin declined, largely due to the Q2 2024 one-time contract settlement benefit, though the current quarter saw supportive product and regional mix. Cloud and Network Services’ gross margin improved significantly, driven by top-line growth and margin expansion in Enterprise Campus Edge and Core Networks.

Management Outlook and Headwinds

Nokia's President and CEO, Justin Hotard, highlighted that connectivity is becoming a critical differentiator in the AI supercycle, positioning Nokia uniquely in the market. The company expects a stronger second half performance, especially in Q4, aligning with normal seasonality. For the full year, the underlying business trends are largely as anticipated, with strong growth expected in Network Infrastructure, growth in Cloud and Network Services, and largely stable net sales in Mobile Networks (on a constant currency and portfolio basis). Nokia Technologies anticipates approximately EUR 1.1 billion in operating profit.

However, the full-year operating profit outlook has been revised downwards due to two uncontrollable headwinds: currency fluctuations from a weaker USD and tariffs. Currency impacts are expected to result in an approximately EUR 230 million negative impact, including EUR 90 million from non-cash venture fund currency revaluations. Current tariff levels are projected to impact operating profit by EUR 50 million to EUR 80 million. Consequently, the comparable operating profit outlook for the full year 2025 has been adjusted to a range of EUR 1.6 billion to EUR 2.1 billion, down from the previous range of EUR 1.9 billion to EUR 2.4 billion. Free cash flow conversion from comparable operating profit remains unchanged at between 50% and 80%.