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Nokia's Q3 Earnings Beat Estimates on AI & Cloud Strength
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Key Takeaways
Nokia's Q3 earnings beat estimates by 29.45%, while revenues climbed 10% year over year to 5.15 billion Euro.
AI & Cloud sales surged 123%, driving 43% growth in IP Networks and 18% growth in Optical Networks.
Nokia maintained its 2026 profit outlook but lowered its free cash flow conversion forecast to 35-55%.
Nokia Corporation (NOK - Free Report) reported strong third-quarter 2026 results, with both the top and bottom lines beating the Zacks Consensus Estimate. Comparable earnings increased year over year, while revenues rose 10%, driven by robust growth in IP Networks and Optical Networks, supported by accelerating AI & Cloud demand.
The company's earnings beat the consensus estimate by 29.45%, while revenues surpassed expectations by 2.22%. AI & Cloud net sales surged 123% on a constant currency basis, with order intake reaching €1.5 billion during the quarter.
Nokia Corporation Price, Consensus and EPS Surprise
Nokia reported a net profit of €156 million ($179.5 million) or €0.03 per share in the third quarter compared with €80 million or €0.01 per share in the year-ago quarter. Higher restructuring and integration costs weighed on reported operating profitability despite revenue growth.
Comparable profit from continuing operations was €498 million ($573.1 million) or €0.09 (10 cents) per share, up from €334 million or €0.06 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of 8 cents.
Nokia's Revenues
Quarterly net sales were €5.15 billion ($5.93 billion), up 10% from €4.70 billion in the year-ago quarter. On a constant currency basis, revenues grew 9%, primarily driven by strong AI & Cloud demand and growth in Network Infrastructure. Revenues surpassed the Zacks Consensus Estimate of $5.8 billion.
Net sales from Network Infrastructure totaled €2.16 billion ($2.48 billion), increasing 17% year over year. On a constant currency basis, IP Networks recorded 43% growth, supported by strong AI & Cloud demand and increased sales to telecom providers. Optical Networks grew 18%, driven by AI & Cloud and telecom provider demand, particularly in the Americas. Meanwhile, Fixed Networks declined 22%, reflecting the company's continued focus on higher-margin offerings.
Mobile Infrastructure generated revenues of €2.9 billion ($3.34 billion), up 5% year over year. Radio Networks grew 10% on a constant currency basis, partly benefiting from revenue acceleration from the fourth quarter. Technology Standards increased 8%, supported by licensing agreements, while Core Software declined 13% due to softness in certain applications and server infrastructure supply constraints.
Portfolio Businesses recorded revenues of €96 million ($110.5 million), down 2% on a constant currency basis. However, profitability improved, supported by Site Implementation and Outside Plant.
NOK's Regional Performance
Region-wise, net sales from the EMEA region increased 12% year over year to €2.15 billion ($2.48 billion), supported by growth across Network Infrastructure and Mobile Infrastructure.
Revenues in the APAC region increased 7% to €1.17 billion ($1.35 billion), while the Americas generated €1.83 billion ($2.11 billion), up 9% year over year. Growth in the Americas was supported by strong demand for IP Networks and Optical Networks.
Nokia's Margin Performance
In the September quarter, comparable gross margin was 44.6%, down 20 basis points from 44.8% in the year-ago quarter, primarily due to product mix. Reported gross margin declined 220 basis points to 42.2%, reflecting higher restructuring costs.
Comparable operating profit increased 35% year over year to €605 million ($696.2 million). Comparable operating margin expanded 220 basis points to 11.7%, benefiting from revenue growth and operating efficiencies. Reported operating profit declined to €196 million from €252 million, primarily reflecting accelerated restructuring charges.
NOK's Cash Flow & Liquidity
During the September quarter, Nokia generated €95 million ($109.3 million) in net cash from operating activities compared with €597 million in the year-ago period. Free cash flow was negative €99 million ($113.9 million), reflecting working capital outflows, restructuring-related cash payments and capital expenditures.
As of Sept. 30, 2026, the company had €4.05 billion ($4.66 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €1.87 billion ($2.15 billion). Net cash and interest-bearing financial investments totaled €2.58 billion, down from €2.78 billion at the end of the preceding quarter.
Outlook of Nokia
For 2026, Nokia maintained its comparable operating profit outlook of €2.1-€2.6 billion. Free cash flow conversion is now projected at 35-55% of comparable operating profit, down from 55-75%, reflecting additional working capital investments and accelerated restructuring. Capital expenditures are estimated at €750-€850 million.
The company continues to expect Network Infrastructure net sales growth of 12-14% in 2026 on a constant currency and portfolio basis. Its updated assumptions indicate that combined IP Networks and Optical Networks growth will exceed the previous 18-20% expectation. Nokia also anticipates 20-24% sequential net sales growth in the fourth quarter, supported by seasonal demand.
HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. Management expects platform consolidation and AI adoption trends to remain key long-term growth drivers.
Ubiquiti Inc. (UI - Free Report) has a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 22.021%.
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 it 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.
Corning Incorporated (GLW - Free Report) currently carries a Zacks Rank #2. It delivered an earnings surprise of 2.41% in the trailing four quarters.
Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.
View the Zacks #1 Rank List
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Nokia's Q3 Earnings Beat Estimates on AI & Cloud Strength
Key Takeaways
Nokia Corporation (NOK - Free Report) reported strong third-quarter 2026 results, with both the top and bottom lines beating the Zacks Consensus Estimate. Comparable earnings increased year over year, while revenues rose 10%, driven by robust growth in IP Networks and Optical Networks, supported by accelerating AI & Cloud demand.
The company's earnings beat the consensus estimate by 29.45%, while revenues surpassed expectations by 2.22%. AI & Cloud net sales surged 123% on a constant currency basis, with order intake reaching €1.5 billion during the quarter.
Nokia Corporation Price, Consensus and EPS Surprise
Nokia Corporation price-consensus-eps-surprise-chart | Nokia Corporation Quote
NOK's Net Income
Nokia reported a net profit of €156 million ($179.5 million) or €0.03 per share in the third quarter compared with €80 million or €0.01 per share in the year-ago quarter. Higher restructuring and integration costs weighed on reported operating profitability despite revenue growth.
Comparable profit from continuing operations was €498 million ($573.1 million) or €0.09 (10 cents) per share, up from €334 million or €0.06 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of 8 cents.
Nokia's Revenues
Quarterly net sales were €5.15 billion ($5.93 billion), up 10% from €4.70 billion in the year-ago quarter. On a constant currency basis, revenues grew 9%, primarily driven by strong AI & Cloud demand and growth in Network Infrastructure. Revenues surpassed the Zacks Consensus Estimate of $5.8 billion.
Net sales from Network Infrastructure totaled €2.16 billion ($2.48 billion), increasing 17% year over year. On a constant currency basis, IP Networks recorded 43% growth, supported by strong AI & Cloud demand and increased sales to telecom providers. Optical Networks grew 18%, driven by AI & Cloud and telecom provider demand, particularly in the Americas. Meanwhile, Fixed Networks declined 22%, reflecting the company's continued focus on higher-margin offerings.
Mobile Infrastructure generated revenues of €2.9 billion ($3.34 billion), up 5% year over year. Radio Networks grew 10% on a constant currency basis, partly benefiting from revenue acceleration from the fourth quarter. Technology Standards increased 8%, supported by licensing agreements, while Core Software declined 13% due to softness in certain applications and server infrastructure supply constraints.
Portfolio Businesses recorded revenues of €96 million ($110.5 million), down 2% on a constant currency basis. However, profitability improved, supported by Site Implementation and Outside Plant.
NOK's Regional Performance
Region-wise, net sales from the EMEA region increased 12% year over year to €2.15 billion ($2.48 billion), supported by growth across Network Infrastructure and Mobile Infrastructure.
Revenues in the APAC region increased 7% to €1.17 billion ($1.35 billion), while the Americas generated €1.83 billion ($2.11 billion), up 9% year over year. Growth in the Americas was supported by strong demand for IP Networks and Optical Networks.
Nokia's Margin Performance
In the September quarter, comparable gross margin was 44.6%, down 20 basis points from 44.8% in the year-ago quarter, primarily due to product mix. Reported gross margin declined 220 basis points to 42.2%, reflecting higher restructuring costs.
Comparable operating profit increased 35% year over year to €605 million ($696.2 million). Comparable operating margin expanded 220 basis points to 11.7%, benefiting from revenue growth and operating efficiencies. Reported operating profit declined to €196 million from €252 million, primarily reflecting accelerated restructuring charges.
NOK's Cash Flow & Liquidity
During the September quarter, Nokia generated €95 million ($109.3 million) in net cash from operating activities compared with €597 million in the year-ago period. Free cash flow was negative €99 million ($113.9 million), reflecting working capital outflows, restructuring-related cash payments and capital expenditures.
As of Sept. 30, 2026, the company had €4.05 billion ($4.66 billion) in cash and cash equivalents, with long-term interest-bearing liabilities of €1.87 billion ($2.15 billion). Net cash and interest-bearing financial investments totaled €2.58 billion, down from €2.78 billion at the end of the preceding quarter.
Outlook of Nokia
For 2026, Nokia maintained its comparable operating profit outlook of €2.1-€2.6 billion. Free cash flow conversion is now projected at 35-55% of comparable operating profit, down from 55-75%, reflecting additional working capital investments and accelerated restructuring. Capital expenditures are estimated at €750-€850 million.
The company continues to expect Network Infrastructure net sales growth of 12-14% in 2026 on a constant currency and portfolio basis. Its updated assumptions indicate that combined IP Networks and Optical Networks growth will exceed the previous 18-20% expectation. Nokia also anticipates 20-24% sequential net sales growth in the fourth quarter, supported by seasonal demand.
NOK’s Zacks Rank & Stocks to Consider
Nokia currently has a Zacks Rank #3 (Hold).
HubSpot (HUBS - Free Report) currently sports a Zacks Rank #1 (Strong Buy). It delivered an earnings surprise of 4.97% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
HubSpot continues to witness rising adoption among larger customers as businesses consolidate marketing, sales and service workflows on a unified AI-enabled platform. Management expects platform consolidation and AI adoption trends to remain key long-term growth drivers.
Ubiquiti Inc. (UI - Free Report) has a Zacks Rank #2 (Buy) at present. In the last reported quarter, it delivered an earnings surprise of 22.021%.
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 it 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.
Corning Incorporated (GLW - Free Report) currently carries a Zacks Rank #2. It delivered an earnings surprise of 2.41% in the trailing four quarters.
Corning’s competitive strength lies in its focus on innovation. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be a key growth driver in its Optical Communication segment. Some of its businesses stand to benefit from government regulations. For example, the fiber optic business is a direct beneficiary of the government-mandated bridging of the digital divide across the United States.