Nokia kicked off 2025 with solid momentum in its Network Infrastructure and Cloud & Network Services segments, even as overall net sales declined 3% year over year on a constant currency and portfolio basis. The company completed its acquisition of Infinera during the quarter, expanding its scale and reach in optical networking with hyperscalers. Despite a one-time €120 million contract settlement in Mobile Networks and a tough comparison from licensing deals last year, Nokia reiterated its full-year 2025 outlook, including comparable operating profit between €1.9 and €2.4 billion.
Network Infrastructure was a standout, growing 11% year over year, led by 15% growth in Optical Networks following the Infinera deal. Nokia secured key design wins with hyperscale customers, and its overall order backlog expanded. Cloud and Network Services also saw 8% growth, driven by demand for 5G Core solutions with recent wins at AT&T, Boost Mobile, Ooredoo Qatar, and Telefónica. Meanwhile, Mobile Networks posted a modest 2% gain, though its profitability was impacted by the aforementioned settlement. Nokia Technologies revenue fell sharply due to the absence of prior-year licensing catch-up revenue, though its annual run-rate increased to €1.4 billion.
Free cash flow for Q1 was €0.7 billion, and Nokia ended the quarter with €3.0 billion in net cash. CEO Justin Hotard, who joined in April, emphasized renewed focus on capital allocation and long-term value creation across enterprise, hyperscale, and defense markets. While macro and tariff risks remain, Nokia expects continued growth in Network Infrastructure and Cloud & Network Services in 2025. The company also completed a 150 million share buyback program to offset dilution from the Infinera transaction.
Key Points:
- Q1 2025 Revenue: €4.39 billion (down 3% constant currency/portfolio-adjusted)
- Operating margin: 3.6% comparable (down 990 bps); reported -1.1%
- EPS: €0.03 comparable; €-0.01 reported
- Free cash flow: €0.7 billion; Net cash: €3.0 billion
- Network Infrastructure:
- Sales: €1.72 billion (+11% adjusted YoY)
- Optical Networks sales up 15%
- Operating margin: 7.8%
- Mobile Networks:
- Sales: €1.73 billion (+2%)
- Operating loss: €152 million (impacted by €120 million one-time charge)
- Cloud and Network Services:
- Sales: €567 million (+8%)
- Operating profit: €14 million
- Nokia Technologies:
- Sales: €369 million (-52%)
- Operating profit: €259 million
- Group outlook for 2025:
- Comparable operating profit: €1.9–€2.4 billion
- Free cash flow conversion: 50–80%
- Capex: €650 million (updated to include Infinera)
- Tax outflows: €500 million
- EUR 0.14/share proposed dividend (paid in four installments)
“Our expanded Optical Networks business had a strong first quarter with 15% sales growth and several key hyperscaler design wins,” said Nokia CEO Justin Hotard. “We are on track to deliver our synergy targets and see significant value creation potential in the Infinera acquisition.”
