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Nokia's Q2 Earnings Beat Estimates on Higher AI & Cloud Demand
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Key Takeaways
Nokia's Q2 comparable EPS beat estimates, while revenues rose 8% but missed expectations.
NOK saw AI & Cloud demand drive IP Networks and Optical Networks growth in Network Infrastructure.
Nokia kept its 2026 operational outlook, with AI & Cloud demand supporting Network Infrastructure growth.
Nokia Corporation (NOK - Free Report) reported mixed second-quarter 2026 results, with the bottom line beating the Zacks Consensus Estimate, but the top line missing the same. The company's top line increased year over year, primarily owing to robust growth in Optical Networks and IP Networks within the Network Infrastructure segment, supported by strong AI & Cloud demand.
NOK's Net Income
Nokia reported a net income of €5 million ($5.8 million) or €0.00 per share in the second quarter against a net income of €96 million or €0.02 per share in the year-ago quarter. Accelerated restructuring charges weighed on reported profits despite higher net sales.
Comparable profit was €414 million ($481.4 million) or €0.07 (8 cents) per share, up from €252 million or €0.04 in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate of 7 cents.
Nokia Corporation Price, Consensus and EPS Surprise
Quarterly net sales were €4.82 billion ($5.60 billion), up 8% from €4.44 billion in the year-ago quarter. Growth was primarily driven by strength in the Network Infrastructure segment, fueled by robust demand from AI & Cloud customers. However, revenues missed the Zacks Consensus Estimate of $5.62 billion.
Net sales from Network Infrastructure totaled €2.04 billion ($2.37 billion), increasing from €1.83 billion in the year-ago quarter. On a constant currency basis, IP Networks recorded 16% year-over-year growth, supported by strong AI & Cloud demand and robust order intake. Revenues from Optical Networks surged 20% year over year, driven by AI & Cloud and telecom provider demand, particularly in the Americas. Meanwhile, Fixed Networks declined 2% year over year, reflecting lower sales of consumer-premise fiber products as Nokia continued to prioritize higher-margin offerings, partly offset by stronger operator-premise fiber optical line terminal sales.
Mobile Infrastructure generated revenues of €2.68 billion ($3.12 billion), up 6% year over year on a reported basis and 7% on a constant currency basis. Growth was driven by strength in Radio Networks and Technology Standards, while Core Software recorded modest growth.
Net sales from Portfolio Businesses were €94 million ($109.3 million), up 6% year over year on both a reported and constant currency basis. Growth was primarily driven by Site Implementation and Outside Plant, which also supported a significant improvement in profitability during the quarter.
Technology Standards (reported under Mobile Infrastructure) contributed €407 million ($473.1 million) compared with €357 million in the year-ago quarter. Net sales increased 15% on a constant currency basis, driven by licensing agreements signed during the quarter, including a benefit from catch-up net sales.
Region-wise, net sales from the EMEA region increased to €2.06 billion ($2.39 billion) from €1.91 billion in the year-earlier quarter, reflecting broad-based growth across businesses.
Revenues in the APAC region increased to €982 million ($1.14 billion) from €913 million in the year-ago quarter, supported by growth across both Network Infrastructure and Mobile Infrastructure.
The Americas region generated net sales of €1.78 billion ($2.07 billion), up from €1.62 billion in the prior-year quarter, driven by strong demand in AI & Cloud, particularly for Optical Networks and IP Networks.
NOK's Other Details
In the June quarter, the comparable gross margin was 46%, up from 45.3% in the year-ago quarter. Comparable operating profit increased 18% year over year to €434 million ($504.5 million). Comparable operating margin expanded to 9% from 8.3% in the year-ago quarter.
NOK's Cash Flow & Liquidity
In the June quarter, Nokia used €620 million ($720.7 million) in net cash from operating activities. Free cash flow was negative €732 million ($850.9 million), primarily due to working capital outflows, restructuring-related cash charges and capital expenditures.
As of June 30, 2026, the company had €4.35 billion ($5.06 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €1.92 billion ($2.23 billion).
Outlook of NOK
For 2026, Nokia expects comparable operating profit in the range of €2.1-€2.6 billion, reflecting a technical revision from the previous range following the reclassification of two businesses as discontinued operations. Operationally, the company's outlook remains unchanged. Free cash flow conversion is projected at 55-75% of comparable operating profit, while capital expenditure is estimated to be in the range of €800-€900 million.
The company continues to expect Network Infrastructure net sales to grow 12-14% in 2026 on a constant currency and portfolio basis, including 18-20% growth for the combined IP Networks and Optical Networks businesses, supported by sustained demand from AI & Cloud customers.
Arista Networks Inc. (ANET - Free Report) is scheduled to release second-quarter 2026 earnings on Aug. 8. The Zacks Consensus Estimate for earnings is pegged at 89 cents per share, suggesting growth of 21.92% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 19.86%. The company delivered an average earnings surprise of 8.31% in the last four reported quarters.
Amphenol Corporation (APH - Free Report) is set to release second-quarter 2026 earnings on July 29. The Zacks Consensus Estimate for earnings is pegged at $1.19 per share, implying growth of 46.91% from the year-ago reported figure.
Amphenol has a long-term earnings growth expectation of 24.01%. The company delivered an average earnings surprise of 14.08% in the last four reported quarters.
Corning Incorporated (GLW - Free Report) is set to release second-quarter 2026 earnings on July 28. The Zacks Consensus Estimate for earnings is pegged at 76 cents per share, implying growth of 26.67% from the year-ago reported figure.
Corning has a long-term earnings growth expectation of 23.89%. The company delivered an average earnings surprise of 2.41% in the last four reported quarters.
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Nokia's Q2 Earnings Beat Estimates on Higher AI & Cloud Demand
Key Takeaways
Nokia Corporation (NOK - Free Report) reported mixed second-quarter 2026 results, with the bottom line beating the Zacks Consensus Estimate, but the top line missing the same. The company's top line increased year over year, primarily owing to robust growth in Optical Networks and IP Networks within the Network Infrastructure segment, supported by strong AI & Cloud demand.
NOK's Net Income
Nokia reported a net income of €5 million ($5.8 million) or €0.00 per share in the second quarter against a net income of €96 million or €0.02 per share in the year-ago quarter. Accelerated restructuring charges weighed on reported profits despite higher net sales.
Comparable profit was €414 million ($481.4 million) or €0.07 (8 cents) per share, up from €252 million or €0.04 in the year-earlier quarter. The bottom line beat 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 €4.82 billion ($5.60 billion), up 8% from €4.44 billion in the year-ago quarter. Growth was primarily driven by strength in the Network Infrastructure segment, fueled by robust demand from AI & Cloud customers. However, revenues missed the Zacks Consensus Estimate of $5.62 billion.
Net sales from Network Infrastructure totaled €2.04 billion ($2.37 billion), increasing from €1.83 billion in the year-ago quarter. On a constant currency basis, IP Networks recorded 16% year-over-year growth, supported by strong AI & Cloud demand and robust order intake. Revenues from Optical Networks surged 20% year over year, driven by AI & Cloud and telecom provider demand, particularly in the Americas. Meanwhile, Fixed Networks declined 2% year over year, reflecting lower sales of consumer-premise fiber products as Nokia continued to prioritize higher-margin offerings, partly offset by stronger operator-premise fiber optical line terminal sales.
Mobile Infrastructure generated revenues of €2.68 billion ($3.12 billion), up 6% year over year on a reported basis and 7% on a constant currency basis. Growth was driven by strength in Radio Networks and Technology Standards, while Core Software recorded modest growth.
Net sales from Portfolio Businesses were €94 million ($109.3 million), up 6% year over year on both a reported and constant currency basis. Growth was primarily driven by Site Implementation and Outside Plant, which also supported a significant improvement in profitability during the quarter.
Technology Standards (reported under Mobile Infrastructure) contributed €407 million ($473.1 million) compared with €357 million in the year-ago quarter. Net sales increased 15% on a constant currency basis, driven by licensing agreements signed during the quarter, including a benefit from catch-up net sales.
Region-wise, net sales from the EMEA region increased to €2.06 billion ($2.39 billion) from €1.91 billion in the year-earlier quarter, reflecting broad-based growth across businesses.
Revenues in the APAC region increased to €982 million ($1.14 billion) from €913 million in the year-ago quarter, supported by growth across both Network Infrastructure and Mobile Infrastructure.
The Americas region generated net sales of €1.78 billion ($2.07 billion), up from €1.62 billion in the prior-year quarter, driven by strong demand in AI & Cloud, particularly for Optical Networks and IP Networks.
NOK's Other Details
In the June quarter, the comparable gross margin was 46%, up from 45.3% in the year-ago quarter. Comparable operating profit increased 18% year over year to €434 million ($504.5 million). Comparable operating margin expanded to 9% from 8.3% in the year-ago quarter.
NOK's Cash Flow & Liquidity
In the June quarter, Nokia used €620 million ($720.7 million) in net cash from operating activities. Free cash flow was negative €732 million ($850.9 million), primarily due to working capital outflows, restructuring-related cash charges and capital expenditures.
As of June 30, 2026, the company had €4.35 billion ($5.06 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €1.92 billion ($2.23 billion).
Outlook of NOK
For 2026, Nokia expects comparable operating profit in the range of €2.1-€2.6 billion, reflecting a technical revision from the previous range following the reclassification of two businesses as discontinued operations. Operationally, the company's outlook remains unchanged. Free cash flow conversion is projected at 55-75% of comparable operating profit, while capital expenditure is estimated to be in the range of €800-€900 million.
The company continues to expect Network Infrastructure net sales to grow 12-14% in 2026 on a constant currency and portfolio basis, including 18-20% growth for the combined IP Networks and Optical Networks businesses, supported by sustained demand from AI & Cloud customers.
NOK’s Zacks Rank
NOK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. (ANET - Free Report) is scheduled to release second-quarter 2026 earnings on Aug. 8. The Zacks Consensus Estimate for earnings is pegged at 89 cents per share, suggesting growth of 21.92% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 19.86%. The company delivered an average earnings surprise of 8.31% in the last four reported quarters.
Amphenol Corporation (APH - Free Report) is set to release second-quarter 2026 earnings on July 29. The Zacks Consensus Estimate for earnings is pegged at $1.19 per share, implying growth of 46.91% from the year-ago reported figure.
Amphenol has a long-term earnings growth expectation of 24.01%. The company delivered an average earnings surprise of 14.08% in the last four reported quarters.
Corning Incorporated (GLW - Free Report) is set to release second-quarter 2026 earnings on July 28. The Zacks Consensus Estimate for earnings is pegged at 76 cents per share, implying growth of 26.67% from the year-ago reported figure.
Corning has a long-term earnings growth expectation of 23.89%. The company delivered an average earnings surprise of 2.41% in the last four reported quarters.