Nokia Corporation has released its financial results for second quarter (Q2) and half year 2025. As per the company, its net sales increased to EUR 4,551 million in Q2 2025 from EUR 4,466 million in Q2 2024, showing a 2 per cent year-on-year (YoY) growth. However, Q2 2025 comparable net sales declined 1 per cent YoY on a constant currency and portfolio basis due to a 13 per cent decline in mobile networks which had benefited from accelerated revenue recognition in the prior year. Network infrastructure grew by 8 per cent while cloud and network services grew by 14 per cent. Meanwhile, Nokia Technologies grew by 3 per cent.
Further, comparable gross margin in Q2 2025 was flat YoY at 44.7 per cent (reported increased 10 bps to 43.4 per cent). Gross margins were broadly stable in network infrastructure and mobile networks and improved in cloud and network services.
The comparable operating margin decreased 290 base points (bps) YoY to 6.6 per cent from 9.5 per cent in Q2 2024 per cent (reported down 790 bps to 1.8 per cent). This was driven by a negative EUR 50 million venture fund impact which includes a EUR 60 million negative currency revaluation. Operating profit was also impacted by tariffs.
Furthermore, diluted earnings per share (EPS) stood at EUR 0.04 against EUR 0.06, showing a 33 per cent YoY decrease. The reported diluted EPS for the period was EUR 0.02. In addition, company’s free cash flow and net cash balance stood at EUR 0.1 billion and EUR 2.9 billion respectively.
Commenting on the results, president and chief executive officer (CEO), Nokia Corporation, said, “During my first quarter as CEO, I have spent significant time engaging with our stakeholders. One message has stood out: Connectivity is becoming a critical differentiator in the artificial intelligence (AI) supercycle, not only for communication service providers and hyperscalers, but also for new areas like defense and national security. With our portfolio in mobile and fibre access, data centre, and transport networks, Nokia is uniquely positioned to be a leader in this market transition. Customer conversations have increased my optimism about our opportunity: There has been a strong validation of what sets us apart – our technology, partnering culture, and the exceptional talent of our people. At the same time, our customers expect us to engage with them as one integrated company as they partner with us across our portfolio. Further, it is clear we need to continue to evolve how we work so we move faster, improve productivity and focus on what brings value to our customers. As a result, we are unifying our corporate functions to simplify how we work, build a more cohesive culture and begin to unlock operating leverage. We have a great opportunity to drive a unified vision for the future of networks, and I am looking forward to discussing our strategy and full value creation story at our Capital Markets Day in New York on November 19.
He further mentioned, “Turning to our Q2 results, the significant currency fluctuations, particularly the weaker USD, had a meaningful impact on both our net sales and operating profit. On a constant currency and portfolio basis our overall net sales declined 1 per cent, however excluding a settlement benefit in the prior year, sales would have grown 3 per cent. Network infrastructure grew 8 per cent in Q2. Mobile Networks’ net sales declined 13 per cent, primarily related to the aforementioned prior year settlement benefit and also due to project timing in India. Cloud and network services grew 14 per cent with strong momentum in 5G Core. Nokia Technologies grew 3 per cent and secured several new agreements in the quarter. Q2 comparable gross margin was stable year-on-year at 44.7 per cent. Operating profit in the quarter was impacted by a noncash negative impact to venture funds of EUR 50 million which included a EUR 60 million negative currency revaluation and the effect of tariffs we highlighted in Q1, contributing to our comparable operating margin declining 290 bps to 6.6 per cent. Despite the cash impact of 2024 incentives during Q2, we had a strong cash performance and have generated free cash flow of over EUR 800 million in the first half. Q2 saw continued strong order momentum in optical networks with a book-to-bill well above 1, driven by new hyperscaler orders. We had several key wins in the quarter, including a deal with a large US communication service provider along with receiving our first award for 800G pluggables from a US hyperscaler. Across the group, Nokia generated 5 per cent of sales in Q2 from hyperscalers. While we still have a lot of work ahead of us, I am pleased with the progress we are making integrating Infinera, including executing on synergies. Additionally, the commercial momentum we are seeing reinforces the long-term value creation opportunity of the acquisition.
He noted, “Looking ahead, we expect a stronger second half performance, particularly in Q4 consistent with normal seasonality. For the full year, the underlying business is trending largely as expected. We continue to expect strong growth in Network Infrastructure, growth in cloud and network services and largely stable net sales in mobile networks on a constant currency and portfolio basis. In Nokia Technologies, we expect approximately EUR 1.1 billion in operating profit. However, we are facing two headwinds to our full year operating profit outlook which are outside of our control, currency due to the weaker USD, and tariffs. Currency has an approximately EUR 230 million negative impact relative to our expectations at the start of the year with EUR 90 million from non-cash venture fund currency revaluations. The current tariff levels are forecasted to impact operating profit by EUR 50 million to EUR 80 million inclusive of those in Q2. Considering these two headwinds, we decided it was prudent at this point to lower our comparable operating profit outlook to a range of EUR 1.6 billion to EUR 2.1 billion from the prior range of EUR 1.9 billion to EUR 2.4 billion.”
