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    NOK
    Earnings call· Dec 2025(Q4 FY25)

    NOKIA CORP NOK

    Jan 29, 2026 Source

    Executive summary

    Nokia Q4 FY25 — Strong Network Infrastructure Growth and AI/Cloud Demand Drive Performance

    Nokia delivered Q4 FY25 results in line with expectations, driven by robust performance in Network Infrastructure, particularly Optical Networks, fueled by strong AI and cloud customer demand. The company is strategically repositioning for long-term growth, focusing on efficiency and investing in key areas like AI-native networks, while navigating market shifts and integrating recent acquisitions. Management expressed strong support for EU digital policy initiatives, viewing them as critical for European competitiveness.

    Highlights

    6

    • Net sales grew 3% in Q4 FY25 to EUR 6.1 billion, in line with expectations.

    • Operating profit reached EUR 1 billion in Q4 FY25.

    • Full-year 2025 net sales were EUR 19.9 billion and operating profit was EUR 2 billion, slightly above the midpoint of guidance.

    • Network Infrastructure net sales grew 7% in Q4 FY25, driven by Optical Networks which grew 17%.

    • The company secured EUR 2.4 billion in orders from AI and cloud customers for the full year 2025.

    • Free cash flow conversion for FY25 was 72%, consistent with guidance.

    Concerns

    4

    • Q4 FY25 operating margin was 90 basis points below the prior year, impacted by increased investments in growth areas and the Infinera acquisition.

    • Nokia Technologies net sales declined 17% in Q4 FY25 due to lower catch-up sales compared to the previous year.

    • Q1 2026 net sales are expected to decline "somewhat more than normal seasonality" following a strong Q4 2025.

    • Mobile Infrastructure expects "some top line headwinds from prior contract losses" in 2026.

    Guidance & targets

    15
    CategoryTargetConfidence
    Operating profit
    EUR 2 billion to EUR 2.5 billion
    high materiality
    High
    Network Infrastructure compound annual growth rate
    6% to 8%
    high materiality
    High
    Optical and IP Networks compound annual growth rate
    10% to 12%
    high materiality
    High
    Network Infrastructure operating margin
    13% to 17%
    high materiality
    High
    Mobile Infrastructure operating profit
    at least EUR 1.5 billion
    medium materiality
    High
    Portfolio Businesses operating loss
    lower operating loss
    low materiality
    Medium
    Group Common costs
    approximately EUR 150 million
    low materiality
    High
    Q1 2026 net sales
    decline somewhat more than normal seasonality
    medium materiality
    Medium
    Q1 2026 operating margin
    only slightly better than the prior year
    low materiality
    Medium
    Comparable financial income and expenses
    positive EUR 50 million to EUR 150 million
    low materiality
    High
    Comparable income tax rate
    around 26% and 27%
    low materiality
    High
    Cash tax outflows
    approximately EUR 500 million
    low materiality
    High
    Capital expenditure (CapEx)
    between EUR 900 million and EUR 1 billion
    medium materiality
    High
    Free cash flow conversion
    between 65% to 75%
    medium materiality
    High
    Mobile Infrastructure gross margin
    48% to 50%
    medium materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Network Infrastructure
    Net sales grew 7% in Q4, driven by Optical Networks. Gross margin declined by 80 basis points to 44.6%, impacted by lower gross margin and increased growth-related investments in R&D and Infinera acquisition costs. Overall segment book-to-bill was above 1.
    AI & Cloud customers accounted for 16% of net sales30% of Optical NetworksBook-to-bill: above 1
    		—7%—44.6% (Gross Margin)
    Optical Networks
    Drove Network Infrastructure growth in Q4. Strong demand from AI and cloud customers.
    		—17%——
    Fixed Networks
    Performance was stable year-on-year in Q4. Growth in fiber OLT business was offset by declines in deprioritized customer premises equipment products.
    fiber OLT business grew 16% year-over-year
    		—stable year-on-year——
    Cloud and Network Services (prior structure)
    Q4 decline mainly due to different phasing of revenue recognition. Full year net sales grew 6%. Gross margin increased 650 basis points, partly due to a EUR 37 million provision reversal. Operating margin also increased by 470 basis points.
    net sales growth for the full year 2025: 6%
    		—declined by 4%—increased 650 basis points (Gross Margin)
    Mobile Networks (prior structure)
    Q4 growth driven by Middle East and Africa, Japan, and Indonesia. Full year net sales were stable. Gross margin was 40.1% due to favorable mix and lower indirect costs. Operating margin was 11.3%.
    		—increased by 6%—40.1% (Gross Margin)
    Nokia Technologies
    Q4 decline due to lower catch-up sales. Operating profit impacted by a EUR 20 million impairment charge related to a prior asset purchase.
    annual net sales run rate: approximately EUR 1.4 billion
    		—declined by 17%——
    Portfolio Businesses (new segment)
    Generated EUR 850 million in net sales and an operating loss of EUR 97 million in 2025. Target for 2026 is a lower operating loss as the company concludes a future direction for each business.
    includes Fixed Wireless Access customer Premises Equipment, Site Operations, Microwave Radio, and Enterprise Campus Edge businesses
    		EUR 850 million——EUR 97 million (operating loss)

    Operational metrics

    17
    Net sales
    EUR 6.1 billionup 3%
    Q4 FY25

    Constant currency and portfolio basis.

    Operating profit
    EUR 1 billion
    Q4 FY25

    Comparable reporting.

    Net sales
    EUR 19.9 billion
    FY25

    Full year.

    Operating profit
    EUR 2 billionslightly above midpoint of guidance
    FY25

    Full year.

    Free cash flow conversion
    72%consistent with guidance
    FY25

    Full year, within guided range of 50% to 80%.

    Net cash
    EUR 3.4 billion
    Q4 FY25

    Ended the quarter with this position.

    NVIDIA equity investment
    EUR 0.9 billion
    Q4 FY25

    Cash increased as a result of this investment.

    Nokia Shanghai Bell shares acquisition cash impact
    EUR 0.5 billion
    Q4 FY25

    Equates to 50% of net cash in the joint venture, paid to the other equity owner.

    Nokia Shanghai Bell integration run rate cost synergies
    EUR 200 million
    Annual

    Expected from the integration.

    Nokia Shanghai Bell integration costs
    EUR 350 million to EUR 400 million
    Total

    Expected over the integration period.

    Group Common costs
    EUR 180 million
    FY25

    Recast cost base for 2025.

    FX assumption USD to EUR
    1.18
    2026

    Used in the 2026 estimate.

    FX sensitivity (operating profit)
    EUR 50 million
    Annual

    Before hedging, a EUR 0.02 move on USD versus euro would imply this change.

    Restructuring cash outflow
    EUR 450 millionmore heavier than 2025
    FY26

    Expected for 2026, following the cost-cutting program announced in October 2023.

    Cost savings program target
    EUR 800 million to EUR 1.2 billion
    Until 2026

    Program running until end of 2026.

    Mobile Infrastructure gross margin target
    48% to 50%
    Longer-term

    Aim to improve profitability in Mobile Infrastructure.

    Net sales growth
    4%
    FY25

    With strength in Network Infrastructure.

    Industry KPIs

    11
    MetricValueDetails
    Capital return—
    Backlog order book—
    Book to bill ratioabove 1
    Orders backlog qualityabove 1
    Product orders order growthEUR 2.4 billionEUR
    Segment growth margin targets6% to 8%%
    Ai cloud infrastructure ordersEUR 2.4 billionEUR
    Recurring software service revenueapproximately EUR 1.4 billionEUR
    Revenue mix by product customer type16%%
    Design wins product cycle transitionsmultiple design wins
    Front end vs back end scale up vs scale across msignificant near term

    Orderbook & backlog

    4
    AI and cloud customer ordersEUR 2.4 billionFY25

    Full year orders.

    Network Infrastructure book-to-billabove 1Q4 FY25

    Overall segment, with strength in IP and Optical Networks.

    Mission-critical enterprise customer segment book-to-billwell above 1Q4 FY25

    Supported by a growing pipeline from new and existing customers.

    IP and Optical Networks book-to-billgoodQ4 FY25

    Each segment individually and combined.

    Product announcements

    3
    ProductTypeDetails
    7220 IXR-H6 switching platformlaunch
    Agentic AI solution for event-driven automation managementlaunch
    AI-RAN trials and proofs-of-conceptroadmap

    Deals & partnerships

    8
    InfineraStrengthened portfolio with acquisition of Infinera.

    Acquisition completed in 2025, part of repositioning Nokia for long-term value creation.

    TeliaWon a 5G core deal.

    Deal secured by Core Software, leveraging Nokia's differentiated cloud-native core network stack.

    Bharti AirtelCollaboration on Nokia's Network as Code API platform.

    Collaboration announced, adding to over 75 partners using the platform, including 43 telcos.

    NVIDIAPartnership announced for AI-RAN.

    Partnership announced in Q4, with trials and proofs-of-concept on AI-RAN expected to begin later in 2026.

    Telecom ItaliaMarket share expansion deal.

    Deal announced by Radio Networks.

    Telefonica GermanyContract extension.

    Contract extension announced by Radio Networks.

    SoftBankContract extension.

    Contract extension announced by Radio Networks.

    Nokia Shanghai BellClosed transaction to take full ownership of the joint venture in China.

    Gives Nokia greater operational flexibility and full alignment with its global operating model.

    Capital programs

    1
    New indium phosphide fabunderway
    Funding: partial funding in the CHIPS Act from the U.S. government

    Benefit: support the demand that we're seeing and to meet our forecast

    This fab, part of the Infinera acquisition, is expected to come online later in 2026 to support 2027 demand for optical networking products. It is critical for Nokia's photonic integrated circuit capability.

    Risks & headwinds

    6
    Operating margin impact from increased investments and acquisition costsQ4 FY25

    90 basis points below prior year (Q4 FY25)

    Limited growth in Fixed Networks due to product prioritization2026

    product prioritization decisions will limit growth

    Mitigation: focus on fiber OLT portfolio due to strong underlying demand

    Top line headwinds in Mobile Infrastructure from prior contract losses2026

    some top line headwinds

    Mitigation: focus on gross margin and efficiency, targeting at least EUR 1.5 billion in operating profit

    Impact of new product introductions on gross margin2026 (especially H1)

    will be an impact on gross margin

    Mitigation: important for longer-term journey and market opportunities

    Supply constraints in AI infrastructure buildongoing

    consistently constrained (power, connectivity, computational silicon, memory)

    Mitigation: investing in own capacity and supporting the ecosystem; long-term agreements for supply

    Memory price increasesbeyond this year

    rising memory prices

    Mitigation: not a material part of overall bill of materials, long-term agreements, expect to pass through to pricing

    What to watch in Q1 FY26

    5

    Network Infrastructure growth rates

    2026
    CurrentNI grew 7% in Q4 FY25; Optical grew 17%
    TargetIn line with long-term targets (6-8% CAGR for NI, 10-12% for Optical/IP)

    Why it matters

    Verifies progress towards long-term strategic KPIs and the impact of AI/cloud investments.

    In 2026, we expect growth rates in both cases to be in line with these long-term targets.

    Q&A highlights

    6

    Why is Optical growth guidance lower than Q4 performance, and what factors contribute to the expected sub-seasonal Q1 decline?

    Optical growth guidance is balanced due to the transition from a telco-centric base and the need to scale production. The Q1 decline is attributed to normalization after a strong Q4, where telco customers made significant purchases, leading to a slower start to the year.

    “we are being balanced on the 10% to 12% across IP and Optical Networking... we're working to scale production.”

    asked by Alex Duval · answered by Justin Hotard

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Repositioning and Infinera Acquisition

    Nokia completed the acquisition of Infinera in 2025, strengthening its portfolio and simplifying its operating model. The company set a clear strategy at its Capital Markets Day to focus on areas offering differentiation, scale, and sustainable market leadership. This foundational year of repositioning aims for long-term value creation, with a focus on disciplined execution and building a high-performance culture.

    02

    AI and Cloud Demand Driving Network Infrastructure

    Network Infrastructure remains Nokia's primary growth engine, particularly Optical and IP Networks, driven by strong structural demand from AI and cloud customers. The company secured EUR 2.4 billion in orders from AI and cloud customers in FY25. Optical Networks, with its 800-gig ZR and ZR+ pluggable products, is seeing strong demand and multiple design wins, leading to investments in ramping production capacity.

    03

    New Operating Structure and Portfolio Businesses

    Effective January 1, Nokia implemented a new operating structure, forming the Mobile Infrastructure segment (combining core software, radio networks, and technology standards) and a new Portfolio Businesses unit. This reorganization aims to sharpen accountability, improve profitability, and position the company for long-term technology leadership. The Portfolio Businesses, which generated EUR 850 million in net sales and a EUR 97 million operating loss in 2025, are targeted for strategic direction conclusion in 2026.

    04

    Nokia Shanghai Bell Integration and Cost Synergies

    Nokia closed the transaction to take full ownership of its joint venture in China, Nokia Shanghai Bell, in Q4 FY25. This integration is expected to deliver approximately EUR 200 million of run-rate cost synergies over 24 to 36 months, with integration costs estimated at EUR 350 million to EUR 400 million. Full ownership provides greater operational flexibility and aligns the China operations with Nokia's global model.

    05

    European Digital Policy and Competitiveness

    Management expressed strong support for the EU's Cybersecurity Act and Digital Networks Act, viewing them as crucial for Europe's long-term competitiveness in technology, infrastructure, and innovation. These acts are seen as an opportunity for Europe to reshape its future, particularly in the context of 6G readiness and AI-RAN, and require support for network operators to manage accelerated CapEx programs.

    06

    IP Networks Expansion and Leadership Changes

    Nokia is making progress in its expansion into data center switching within IP Networks, launching new products like the 7220 IXR-H6 switching platform and securing a design win for its next-generation platform. While growth in this area is expected to ramp over time⏳, the company has appointed new leadership with deep data center experience to accelerate its presence in this rapidly growing market.

    AI-generated summary of the company’s earnings call. Not investment advice.