Nokia Corporation (NYSE:NOK) shares rose about 10% on both the US (NYSE) and Helsinki (HEL) stock exchanges, following an earnings beat in the third quarter of fiscal 2025.
Details
The company reported net sales growth of 12% year-on-year (Y/Y) to 4.82 billion euros ($5.65 billion), surpassing analysts’ consensus estimate. by $5.38 billion.
The growth was mainly driven by strong growth in the Optical Networks segment (+19% year-on-year).
Also read: Nokia strengthens Vodafone and Vodacom alliance to enable energy-efficient 5G networks
Comparable earnings per share came in at 6 euro cents (7 cents per share in dollars), compared to analysts’ consensus estimate of 6 cents in dollars.
Comparable net income amounted to EUR 324 million, down 9% year-on-year, due to lower comparable operating profit (-10% year-on-year) and higher income tax expenses.
Segment performance
Network Infrastructure revenue increased 28% year-on-year, driven by solid growth across all business divisions and contributions from the Infinera acquisition.
Cloud and Network Services revenue increased 8% year-on-year, driven by the strength of the broad businesses and especially in Core Networks.
Nokia Tech’s revenue rose 11% year-on-year, led by net revenue catch-up related to agreements signed in the quarter.
On the other hand, mobile network revenue fell 1% year-on-year due to the decline in European operations.
Margins
Comparable gross margin decreased by 150 basis points year-on-year to 44.2% due to an unfavorable product mix in network infrastructure and mobile networks.
Like-for-like operating margin declined 220 basis points year-over-year to 9.0% in the quarter. Without a one-off benefit from a rollback of provisions in the previous year, the margin would have been flat compared to last year.
Other important statistics
Nokia ended the quarter with EUR 3 billion in net cash and EUR 429 million in free cash flow.
The board has proposed a dividend authorization of 0.14 euros per share.
On October 23, the board of directors approved a dividend of 3 euro cents per share, payable on November 6, to shareholders of record on October 28.
Outlook
Nokia has raised its profit forecast for the 2025 financial year to 1.7 billion euros – 2.2 billion euros, compared to 1.6 billion euros – 2.1 billion euros previously.
Nokia expects sequential net sales growth (excluding Nokia Technologies) in the fourth quarter to be slightly higher than the seasonal average growth rate of 22% due to robust order trends.
For fiscal year 2025, the company maintains its expectations for strong growth in network infrastructure, growth in cloud and network services and stable net revenue in mobile networks.
Nokia Technologies’ operating profit is expected to be approximately EUR 1.1 billion for the full year.
The company reiterated its fiscal 2025 operating guidance unchanged and expects a cash conversion rate of 50% to 80% of comparable operating profit.
At Capital Markets Day in New York on November 19, Nokia will outline its strategy to unlock the full potential of its portfolio and sharpen its focus on driving growth and operating leverage. CEO Justin Hotard said: “The AI supercycle is accelerating demand for providers of advanced and trusted connectivity. Nokia is uniquely positioned to be a leader in this market.”
Investors can gain exposure to the stock through iShares US digital infrastructure and real estate ETF (NYSE:IDGT) and Defiance Connective Technologies ETF (NASDAQ:SIXG).
Price promotion: NOK shares were trading 7.21% higher at $5,950 premarket at last check on Thursday. On HEL, shares rose 8.09%.
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