Nokia Corporation Sponsored American Depositary Shares
NOK · NYSE
Next quarter
Expected to report Jan 28, 2027 — estimated from last year’s reporting date.
Consensus is $0.17 EPS for Dec 2026 across 6 estimates, ranging $0.15 to $0.19.
NOK Sep 2026
- 25.00%
- $0.08
- $0.10
- —
- —
Highlights
- Earnings beat Nokia reported EPS of 0.10 versus consensus of 0.08, a 25% surprise; net sales grew 9% year over year and operating margin rose 220 basis points to 11.7%.
- AI and cloud surge Segment sales increased 123% year over year to 12% of group sales; gross order intake rose 118% to €1.5 billion.
- Network Infrastructure acceleration Sales grew 15%, led by IP Networks at +43% and Optical Networks at +18%; the combined businesses are now expected to grow 25%–30% in 2027.
- Cash use and investment Free cash flow was negative €99 million, with net cash of €2.6 billion. Nokia plans €400 million more working capital investment than expected at the start of the year and now forecasts 2026 free-cash-flow conversion of 35%–55%.
- Restructuring Expected 2026 restructuring charges increased to approximately €1.1 billion, with restructuring-related cash outflows of €800 million–€900 million; Nokia remains on track for €200 million of Infinera synergies by year-end, a year early.
- Fourth-quarter setup Nokia expects sales to increase 20%–24% sequentially, but said revenue pulled forward into Q3 will dampen normal seasonality. Full-year comparable operating-profit guidance is unchanged, with performance tracking above its midpoint.
- Mixed business lines Fixed Networks sales fell 22% as Nokia reduced lower-margin customer-premises equipment; Mobile Infrastructure rose 5%, including Radio Networks growth of 10% partly from deliveries shifted out of Q4.
- Technology milestones Nokia demonstrated more than 20% AI RAN spectral-efficiency gains in live environments, against a 100% improvement target for 2028; multi-rail technology has 25% higher density than competing solutions and three design wins.
Analysis
Nokia delivered a stronger Q3, with EPS of 0.10 beating the 0.08 consensus by 25%. Net sales grew 9% year over year and operating profit was €605 million, while operating margin expanded 220 basis points to 11.7%. Gross margin was largely stable at 44.6%. The quarter’s clearest growth engine was AI and cloud: sales rose 123% year over year, and order intake increased 118% to €1.5 billion. That demand lifted Network Infrastructure sales 15%, as IP Networks grew 43% and Optical Networks 18%. Management raised its combined 2027 growth expectation for those businesses to 25%–30%, while noting that supply, not demand, is the constraint.
The print also included timing and investment costs. Radio Networks deliveries moved from Q4 into Q3, and management said that pull-forward will temper Q4 seasonality despite its forecast for a 20%–24% sequential sales increase. Nokia kept full-year comparable operating-profit guidance unchanged and said it was tracking above the midpoint. Free cash flow was negative €99 million, reflecting restructuring payments and working-capital buildup; the company plans an additional €400 million of working capital investment and now expects 2026 cash conversion of 35%–55%. Restructuring charges are forecast at about €1.1 billion for 2026. Compared with the first-half Network Infrastructure gross margin of roughly 43%, Q3’s 41.2% reflected product mix and new-product ramp costs; management expects improvement in Q4.
AI and cloud demand
- Sales and orders AI and cloud sales grew 123% year over year and represented 12% of group sales. Gross order intake reached €1.5 billion, up 118%.
- Network pull-through IP Networks sales rose 43% and Optical Networks 18%, as earlier design wins converted to revenue. Nokia said demand exceeded supply and raised its 2027 combined growth expectation for IP and Optical to 25%–30%, from an earlier 18%–20% full-year assumption for the current year.
- Customer and product traction Nokia secured two additional hyperscaler IP design wins and has 29 customers with 800-gig coherent-pluggable design wins; shipment volumes more than doubled sequentially. Multi-rail has three design wins and its first customer is receiving initial volumes.
Margins and business mix
- Group result Net sales rose 9% year over year; operating profit was €605 million and operating margin increased 220 basis points to 11.7%. Gross profit was €2.3 billion and gross margin was 44.6%, broadly stable.
- Network Infrastructure Sales grew 15% and operating margin improved 230 basis points to 10%. Gross margin declined 150 basis points to 41.2%, primarily from product mix and the ramp of new IP products; management expects Q4 improvement.
- Mobile Infrastructure Sales increased 5%, with Radio Networks up 10% partly because some Q4 deliveries moved into Q3. Core Software declined 13% amid portfolio deemphasis and operator project delays tied to server-infrastructure supply constraints. Technology Standards rose 8% on new licensing agreements and catch-up revenue; management expects slower deal activity and lower revenue in Q4.
- Fixed Networks Sales fell 22% as Nokia prioritized higher-margin products and reduced customer-premises equipment exposure. Optical line terminal sales were stable, and Nokia reported approximately 45% global port share excluding China.
Cash and restructuring
- Cash position Free cash flow was negative €99 million, affected by restructuring payments and higher receivables and inventory. Nokia ended Q3 with €2.6 billion of net cash.
- Working capital Management plans an additional €400 million of working-capital investment versus its expectations at the start of the year, citing stronger demand and growth expectations for 2027. It now expects 2026 free-cash-flow conversion of 35%–55%.
- Restructuring costs Expected 2026 charges are approximately €1.1 billion, with restructuring and associated cash outflows of €800 million–€900 million. Nokia expects China integration work to be 90% complete by year-end and is accelerating restructuring in Europe.
- Infinera integration Nokia expects to achieve €200 million of synergies by year-end, one year ahead of schedule.
Outlook and supply
- Q4 sales Nokia expects net sales to rise 20%–24% sequentially. Some revenue pulled forward from Q4 into Q3 will dampen normal seasonal growth, particularly in Mobile Infrastructure.
- Full-year outlook Comparable operating-profit guidance is unchanged, and management said results were tracking above the midpoint.
- Supply constraints Management described broad-based constraints and structural cost increases affecting leading-edge nodes, memory, printed circuit boards and other sourced materials. Nokia said AI and cloud demand currently exceeds its ability to supply and is seeking greater customer visibility over the next 12–18 months.
Network technology investment
- AI RAN Live trials demonstrated spectral-efficiency gains above 20%, against a target of 100% improvement by 2028. T-Mobile completed a first live voice call on the platform, while Elisa tested voice, mobile data and AI workloads simultaneously; Nokia said 19 customers are working with it.
- Optical capacity Nokia’s San Jose fab remains on track to start production before year-end, with 90% of process development complete and 24/7 operations expected to begin by the end of October. The company described the separate Chandler facility as a longer-term, around-2029 capacity option.
- Fiber and partnerships Nokia introduced a 16-port line card supporting 10-, 25- and 50-gig PON on every port; SoftBank completed Japan’s first commercial implementation. Nokia also announced an ICEYE partnership on sovereign low-Earth-orbit communications and is supporting Google’s €13 billion investment in Finland with data-center connectivity.
