NOK

Nokia Corporation Q2 2026 Financial Summary

Business Context and Reporting Period

This Form 6-K filing covers Nokia Corporation's financial results for the second quarter and first half of 2026, reported on July 23, 2026. The period is characterized by strong demand in AI and Cloud infrastructure, a strategic reorganization into two primary segments (Network Infrastructure and Mobile Infrastructure), and the reclassification of Fixed Wireless Access CPE and Enterprise Campus Edge businesses as discontinued operations.

Key Financial Metrics

Segment Performance: Network Infrastructure sales grew 12% (constant currency), driven by Optical Networks (+20%) and IP Networks (+16%). Mobile Infrastructure sales grew 6% (reported) with stable profit contribution. Sales to AI & Cloud customers grew 105% year-over-year.

Material Changes vs. Prior Period

• Restructuring Impact: Reported operating results turned negative (loss of EUR 50 million) due to accelerated restructuring charges of EUR 390 million in Q2 2026, compared to EUR 71 million in Q2 2025. Comparable operating profit, excluding these charges, increased 18% to EUR 434 million.
• Discontinued Operations: Nokia reclassified Fixed Wireless Access CPE and Enterprise Campus Edge as discontinued operations. This resulted in a reported loss from discontinued operations of EUR 22 million in Q2 2026.
• Revenue Growth: Reported net sales increased 8% year-over-year, while constant currency and portfolio growth was 9%.
• Cash Flow: Free cash flow was negative EUR 732 million in Q2 2026, driven by working capital outflows and restructuring costs, compared to positive EUR 88 million in Q2 2025.

Guidance, Outlook, and Risks

Full Year 2026 Outlook: Nokia maintains its operational outlook but has technically revised its comparable operating profit guidance range to EUR 2.1 billion to EUR 2.6 billion (previously EUR 2.0 to 2.5 billion) due to the discontinued operations classification. Management expects to deliver somewhat above the midpoint of this range.

Key Assumptions:

• Network Infrastructure net sales growth of 12-14% for the full year.
• Capital expenditures of EUR 800-900 million.
• Restructuring charges of EUR 800 million for the full year.
• Free cash flow conversion of 55% to 75% of comparable operating profit.

Management Commentary: CEO Justin Hotard highlighted strong execution in the "AI supercycle," with EUR 2.8 billion in AI & Cloud order intake in Q2. The company launched the industry's first commercial AI-RAN platform.

Risks and Contingencies:

• Supply Chain: Supply constraints remain a primary industry challenge, though demand is strong.
• Geopolitical & Macro: Risks include inflation, currency fluctuations, tariffs, and geopolitical conflicts.
• Restructuring Execution: Accelerated restructuring in China and Europe carries integration risks.
• Regulatory: Pending regulatory approvals for the acquisition of NXP's Chandler Semiconductor campus.

Investor Verification Checklist

• Restructuring Charges: Verify the timing and cash impact of the EUR 800 million in expected 2026 restructuring charges, particularly the EUR 350 million related to China integration.
• Discontinued Operations: Confirm the final sale terms and closing dates for the Fixed Wireless Access CPE business (to Inseego) and the Enterprise Campus Edge business.
• AI & Cloud Conversion: Monitor the conversion rate of the EUR 2.8 billion AI & Cloud order intake into revenue over the next 12 months.
• Manufacturing Capacity: Track progress on the San Jose Fab ramp-up (Q4 2026) and the NXP Chandler campus acquisition (expected close Q1 2029).
• Free Cash Flow: Assess the sustainability of negative free cash flow in Q2 given the heavy restructuring and working capital outflows.