Summary
- Nokia’s Q2 net sales rose 9% at constant currency and 8% as reported to €4.815 billion.
- AI and Cloud customer sales were €446 million, up 105% at constant currency; order intake reached €2.8 billion and about half is expected to convert to revenue within 12 months.
- Network Infrastructure grew 12% at constant currency, led by 20% growth in Optical Networks and 16% in IP Networks.
- Comparable operating profit rose 18% to €434 million and the comparable margin reached 9.0%, but Nokia reported a €50 million operating loss and a negative 1.0% margin after €390 million of quarterly restructuring charges.
- Free cash flow was negative €732 million. Nokia now expects €800 million of restructuring charges and €700 million to €800 million of associated cash outflows in 2026.
The demand signal is unusually large relative to the revenue already recognised. Nokia booked €2.8 billion of AI and Cloud orders in the quarter, yet sales to that customer group were €446 million. Management expects around half of the new orders to become revenue over the next 12 months.
That is evidence of customers committing earlier as supply remains constrained. It is not €2.8 billion of quarterly sales, nor a promise that every order will be delivered, accepted and paid in the same period. Nokia must reserve components and manufacturing capacity before the whole ledger turns into cash.
The operating evidence is still strong. AI and Cloud sales more than doubled at constant currency. Network Infrastructure grew 12%, with Optical Networks up 20% and IP Networks up 16%. The broader group increased reported sales 8% to €4.815 billion.
Two profit measures describe two real costs
Nokia’s comparable operating profit rose 18% to €434 million, giving a 9.0% margin. The reported result was a €50 million operating loss and negative 1.0% margin, compared with €147 million of profit a year earlier.
The gap is not an arithmetic error. Comparable measures exclude restructuring and several acquisition-related or other items. Nokia recorded €390 million of restructuring and associated charges in the quarter, plus acquired-asset amortisation and depreciation, impairments and Infinera integration costs.
Comparable profit helps show how the ongoing product portfolio performed. Reported profit shows the cost that shareholders actually absorb through the income statement. Neither should replace the other.
Nokia accelerated its programmes and now expects €800 million of restructuring charges during 2026. That includes €250 million to conclude the 2023-2026 programme, €350 million of the planned China integration charges and €200 million for additional actions mainly in Europe. Associated cash outflows across its programmes are expected at €700 million to €800 million.
Employees and communities carry part of that transition risk even though the report does not quantify job reductions in this update. Investors pay through charges and cash outflow. The company expects the resulting structure to redirect resources toward growth, but the benefits must appear later in cost, speed or revenue.
Working capital absorbed the quarter
Free cash flow was negative €732 million, versus positive €88 million a year earlier. Operating activities used €620 million of cash. Nokia identifies about €1.15 billion of working-capital outflow, including roughly €280 million from receivables and €170 million of restructuring-related cash outflow.
The working-capital movement connects the order story to the financing story. Longer-term demand can require inventory, supplier commitments and customer-payment timing before cash arrives. A profitable comparable quarter can therefore consume cash.
Nokia reduced its 2026 capital-expenditure assumption to €800 million to €900 million, mainly because of changes in real-estate plans, while continuing to expand optical manufacturing. It also agreed to acquire NXP’s Chandler semiconductor campus. Nokia plans to lease part of the facility from early 2027, convert it for indium-phosphide production and buy the full site in a transaction expected to close in Q1 2029, subject to approvals. The price was not disclosed.
The fab agreement adds a future supply-control option; it is not a completed acquisition or current-quarter capacity. The next judgment should compare AI and Cloud revenue with order conversion, receivables and free cash flow. If revenue and payments catch the orders while restructuring falls, Nokia’s repositioning will finance itself. If cash remains negative, customers may be committing early while Nokia continues to fund the bridge.