Nokia's Q2 Earnings Miss Estimates on Weakness in Mobile Networks

Nokia reported weaker-than-expected second-quarter 2025 results, with net income plummeting to €83 million from €370 million year-over-year and total revenues of €4.54 billion missing consensus estimates. This performance was primarily driven by a significant 17% year-over-year decline in Mobile Networks revenue due to soft demand in the Americas, Middle East, and APAC, which overshadowed robust growth in Network Infrastructure (up 8%) and Cloud and Network Services. The weakness led to a 29% year-over-year decrease in comparable operating profit to €301 million, though Nokia projects a 2025 comparable operating profit of €1.9-€2.1 billion, anticipating stable Mobile Networks sales and continued strength in other segments.

Analysis

Nokia's second-quarter 2025 results reveal a significant operational divergence, with both revenue and profit missing consensus estimates primarily due to acute weakness in its Mobile Networks division. Net income plummeted to €83 million from €370 million year-over-year, while comparable operating profit fell 29% to €301 million, compressing the operating margin from 9.5% to 6.6%. The core issue was a 17% year-over-year revenue decline in Mobile Networks, stemming from soft demand across the Americas, MEA, and APAC regions. This downturn overshadowed robust performance elsewhere, notably in the Network Infrastructure segment, where revenues grew from €1.52 billion to €1.9 billion, beating estimates on the back of strong growth in Fixed Networks (+17% cc) and Optical Networks (+6% cc). Despite the weak quarterly performance, management's full-year 2025 guidance projects a comparable operating profit between €1.9 billion and €2.1 billion, forecasting a stabilization of Mobile Networks sales and continued strong growth in its other divisions.

Key Decisions for Investors

• Investors should brace for near-term stock price volatility, as the severe Q2 earnings miss and 29% drop in comparable operating profit reflect deep, geographically broad challenges in the crucial Mobile Networks segment.
• The investment thesis now heavily relies on management's ability to deliver on its full-year guidance, which implies a significant operational turnaround in the second half of the year; monitor for evidence of the forecasted stabilization in Mobile Networks revenue.
• Given the starkly different performance across divisions, portfolio managers should scrutinize the sustained growth of the Network Infrastructure and Cloud Services segments, as their continued momentum is essential to offset the current drag from Mobile Networks and achieve the company's profit targets.