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Nokia's Q2 Earnings Miss Estimates on Weakness in Mobile Networks
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Key Takeaways
NOK's Q2 net income declined as Mobile Networks weakness offset growth in other segments.
Network Infrastructure revenues rose 8%, led by strong demand in IP, Optical and Fixed Networks.
Mobile Networks revenues fell 17% Y/Y due to soft demand across the Americas, the Middle East and China.
Nokia Corporation (NOK - Free Report) reported weaker-than-expected second-quarter 2025 results, with both top and bottom lines missing the Zacks Consensus Estimate. The company's top line increased year over year, primarily owing to growth in fixed networks and optical networks in the Network Infrastructure segment. Improvement in the Cloud and Network services also supported the top-line growth. However, weakness in the Mobile Networks reversed this trend.
NOK’s Net Income
Nokia reported a net income from continuing operations of €83 million ($94.12 million) or an income of €0.02 (2 cents) per share in the second quarter compared with €370 million or €0.07 in the year-ago quarter. Lower net sales from Mobile Networks, higher operating expenses impacted profits.
Comparable profit was €236 million ($267 million) or €0.04 (5 cents) per share, down from €328 million or €0.06 in the year-earlier quarter. The bottom line missed the Zacks Consensus Estimate of 7 cents.
Nokia Corporation Price, Consensus and EPS Surprise
Quarterly net sales were €4.54 billion ($5.15 billion), up 2% from €4.46 billion in the year-ago quarter. Despite weakness in Mobile Networks, growth in Network Infrastructure, Cloud Network and services supported the top line. Revenues missed the Zacks Consensus Estimate by $5.36 billion.
Net sales from Network Infrastructure totaled €1.9 billion ($2.15 billion), up from €1.52 billion in the year-ago quarter. The top line beat our revenue estimate of €1.75 billion. At cc, IP Networks recorded 3% growth year over year, owing to strength in China, Europe and the Americas, with healthy demand from enterprise and hyperscale customers. Revenues from Optical Networks improved 6% year over year on a cc basis, backed by healthy traction in the North America region. Fixed Networks witnessed a 17% rise year over year at cc, driven by growing fixed wireless access deployments in India and increasing investments in North America.
Mobile Networks generated revenues of €1.73 billion ($1.82 billion), down 17% year over year on a reported basis and 13% at cc. Net sales missed our estimate of €1.94 billion. Soft demand in the Americas, the Middle East, Africa (“MEA”) and the APAC region hindered the net sales growth.
Net sales from Cloud and Network Services were €557 million ($631 million), up 10% year over year on a reported basis and 14% on a cc basis. Growth in Core Networks primarily supported the top line in this segment. The top line in this segment missed our estimate of €755 million.
Nokia Technologies contributed €357 million ($404 million) compared with €356 million in the year-ago quarter. Net sales were up 3% at cc, backed by a licensing agreement signed in the last few months. The top line benefited from positive trends in the automotive, consumer electronics, multimedia and IoT space.
Region-wise, net sales from the EMEA region increased to €1.954 billion from €1.839 billion in the year-earlier quarter. Healthy traction in all segments boosted net sales in this region. Revenues in the APAC region declined to €1.02 billion, down 3% at cc year over year, owing to a decline in the Mobile Networks business.
Americas witnessed 6% decline at cc to €1.57 billion. Strong growth in Optical Networks and IP Networks in the Network Infrastructure segment was offset by the decline in the Mobile Networks.
NOK’s Other Details
In the June quarter, the comparable gross margin was 44.7% matching the figure of the year-ago quarter. Improvement in Cloud and Network Services was offset by weakness in the Mobile Networks. The comparable operating profit decreased 29% year over year to €301 million ($341 million). Comparable operating margin declined to 6.6% from 9.5%.
NOK’s Cash Flow & Liquidity
In the June quarter, Nokia generated €209 million ($237 million) net cash from operating activities compared with €489 million in the prior-year quarter.
As of June 30, 2025, the company had €4.79 billion ($5.63 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €2.34 billion ($2.43 billion).
Outlook of NOK
For 2025, Nokia expects a comparable operating profit in the range of €1.9-€2.1 billion. Free cash flow is estimated at 50-80% of comparable operating profit. Capital expenditure is estimated to be €650 million. Management expects €50-€80 million impact on its comparable operating profit in owing to the current tariff.
In 2025, the company expects strong sales growth in the Network Infrastructure, Cloud and Network Services segment. Nokia expects stable net sales from the Mobile Networks segment.
In the last reported quarter, it delivered an earnings surprise of 61.29%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help to increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.
Jabil, Inc. (JBL - Free Report) currently sports a Zacks Rank #1. In the last reported quarter, it delivered an earnings surprise of 9.44%.
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target of “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. This initiative should position Jabil well on the growth trajectory.
HubSpot Inc. (HUBS - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 2.3%. HubSpot delivered an earnings surprise of 10.65%, on average, in the trailing four quarters. It is benefiting from growing user engagement across all segments. Pricing optimization and the transition to a seat pricing model are expected to drive customer growth. HubSpot is benefiting from growing user engagement across all segments. Pricing optimization and the transition to a seat pricing model are expected to drive customer growth.
Note: €1 = $1.13450 (period average from Apr. 1, 2025, to Jun 30, 2025) €1 = $1.17420 (as of June 30, 2025)
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Nokia's Q2 Earnings Miss Estimates on Weakness in Mobile Networks
Key Takeaways
Nokia Corporation (NOK - Free Report) reported weaker-than-expected second-quarter 2025 results, with both top and bottom lines missing the Zacks Consensus Estimate. The company's top line increased year over year, primarily owing to growth in fixed networks and optical networks in the Network Infrastructure segment. Improvement in the Cloud and Network services also supported the top-line growth. However, weakness in the Mobile Networks reversed this trend.
NOK’s Net Income
Nokia reported a net income from continuing operations of €83 million ($94.12 million) or an income of €0.02 (2 cents) per share in the second quarter compared with €370 million or €0.07 in the year-ago quarter. Lower net sales from Mobile Networks, higher operating expenses impacted profits.
Comparable profit was €236 million ($267 million) or €0.04 (5 cents) per share, down from €328 million or €0.06 in the year-earlier quarter. The bottom line missed the Zacks Consensus Estimate of 7 cents.
Nokia Corporation Price, Consensus and EPS Surprise
Nokia Corporation price-consensus-eps-surprise-chart | Nokia Corporation Quote
NOK’s Revenues
Quarterly net sales were €4.54 billion ($5.15 billion), up 2% from €4.46 billion in the year-ago quarter. Despite weakness in Mobile Networks, growth in Network Infrastructure, Cloud Network and services supported the top line. Revenues missed the Zacks Consensus Estimate by $5.36 billion.
Net sales from Network Infrastructure totaled €1.9 billion ($2.15 billion), up from €1.52 billion in the year-ago quarter. The top line beat our revenue estimate of €1.75 billion. At cc, IP Networks recorded 3% growth year over year, owing to strength in China, Europe and the Americas, with healthy demand from enterprise and hyperscale customers. Revenues from Optical Networks improved 6% year over year on a cc basis, backed by healthy traction in the North America region. Fixed Networks witnessed a 17% rise year over year at cc, driven by growing fixed wireless access deployments in India and increasing investments in North America.
Mobile Networks generated revenues of €1.73 billion ($1.82 billion), down 17% year over year on a reported basis and 13% at cc. Net sales missed our estimate of €1.94 billion. Soft demand in the Americas, the Middle East, Africa (“MEA”) and the APAC region hindered the net sales growth.
Net sales from Cloud and Network Services were €557 million ($631 million), up 10% year over year on a reported basis and 14% on a cc basis. Growth in Core Networks primarily supported the top line in this segment. The top line in this segment missed our estimate of €755 million.
Nokia Technologies contributed €357 million ($404 million) compared with €356 million in the year-ago quarter. Net sales were up 3% at cc, backed by a licensing agreement signed in the last few months. The top line benefited from positive trends in the automotive, consumer electronics, multimedia and IoT space.
Region-wise, net sales from the EMEA region increased to €1.954 billion from €1.839 billion in the year-earlier quarter. Healthy traction in all segments boosted net sales in this region. Revenues in the APAC region declined to €1.02 billion, down 3% at cc year over year, owing to a decline in the Mobile Networks business.
Americas witnessed 6% decline at cc to €1.57 billion. Strong growth in Optical Networks and IP Networks in the Network Infrastructure segment was offset by the decline in the Mobile Networks.
NOK’s Other Details
In the June quarter, the comparable gross margin was 44.7% matching the figure of the year-ago quarter. Improvement in Cloud and Network Services was offset by weakness in the Mobile Networks. The comparable operating profit decreased 29% year over year to €301 million ($341 million). Comparable operating margin declined to 6.6% from 9.5%.
NOK’s Cash Flow & Liquidity
In the June quarter, Nokia generated €209 million ($237 million) net cash from operating activities compared with €489 million in the prior-year quarter.
As of June 30, 2025, the company had €4.79 billion ($5.63 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €2.34 billion ($2.43 billion).
Outlook of NOK
For 2025, Nokia expects a comparable operating profit in the range of €1.9-€2.1 billion. Free cash flow is estimated at 50-80% of comparable operating profit. Capital expenditure is estimated to be €650 million. Management expects €50-€80 million impact on its comparable operating profit in owing to the current tariff.
In 2025, the company expects strong sales growth in the Network Infrastructure, Cloud and Network Services segment. Nokia expects stable net sales from the Mobile Networks segment.
Nokia’s Zacks Rank & Stocks to Consider
Nokia currently has a Zacks Rank #3 (Hold).
Ubiquiti Inc. (UI - Free Report) sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last reported quarter, it delivered an earnings surprise of 61.29%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help to increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.
Jabil, Inc. (JBL - Free Report) currently sports a Zacks Rank #1. In the last reported quarter, it delivered an earnings surprise of 9.44%.
Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target of “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. This initiative should position Jabil well on the growth trajectory.
HubSpot Inc. (HUBS - Free Report) sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 2.3%. HubSpot delivered an earnings surprise of 10.65%, on average, in the trailing four quarters. It is benefiting from growing user engagement across all segments. Pricing optimization and the transition to a seat pricing model are expected to drive customer growth. HubSpot is benefiting from growing user engagement across all segments. Pricing optimization and the transition to a seat pricing model are expected to drive customer growth.
Note: €1 = $1.13450 (period average from Apr. 1, 2025, to Jun 30, 2025)
€1 = $1.17420 (as of June 30, 2025)