Industry Updates

Nokia Corporation Interim Report for Q1 2026

Solid start to the year with strong growth in Optical Networks

• Q1 comparable net sales grew 4% y-o-y on a constant currency and portfolio basis (+2% reported).
• Network Infrastructure net sales grew 6% y-o-y on a constant currency and portfolio basis with a strong contribution from Optical Networks which grew 20%. Net sales from AI & Cloud customers grew 49%.
• Mobile Infrastructure net sales grew 3% y-o-y on a constant currency basis. Core Software grew 5% while Radio Networks was flat and Technology Standards grew 10% with several new deals signed in the quarter.
• Q1 comparable gross margin expanded 320bps y-o-y to 45.5%. Reported gross margin increased 270bps to 44.2%.
• Q1 comparable operating margin increased 200bps y-o-y to 6.2%. Reported operating margin expanded 190bps to 1.4%.
• Q1 comparable diluted EPS of EUR 0.05; reported diluted EPS for the period of EUR 0.02.
• Q1 free cash flow of EUR 0.6 billion, net cash balance of EUR 3.8 billion.
• Nokia's full year outlook is unchanged. Nokia targets EUR 2.0 to 2.5 billion of comparable operating profit.

"We are increasing our growth assumption for Optical and IP Networks and we are investing to capture accelerating demand from AI & Cloud customers."
Justin Hotard, President and CEO

This is a summary of the Nokia Corporation Interim Report for Q1 2026 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. Investors should not solely rely on summaries of Nokia's financial reports and should also review the complete reports with tables.

JUSTIN HOTARD, PRESIDENT AND CEO, ON Q1 2026 RESULTS

In the following quote, net sales comments and growth rates are referring to comparable net sales and are on a constant currency and portfolio basis. References to margins are related to Nokia's comparable results.

We delivered a solid start to the year, with net sales growing 4%, gross margin expanding 320bps and operating margin expanding 200bps in the first quarter. Demand continued to be strong, particularly in AI & Cloud, where net sales grew 49% and now account for 8% of group sales. We also booked EUR 1 billion of orders from AI & Cloud customers in the quarter.

Network Infrastructure net sales grew 6%, with Optical Networks growing 20%, supported by strong order intake and a book-to-bill well above one. We won a number of important AI & Cloud design wins and orders for both pluggables and line systems in the quarter. IP Networks net sales grew 3% and we expect growth to improve in Q2 and for the full year. In Fixed Networks, net sales declined 13%, reflecting our strategic shift to higher-margin products. Our core fiber OLT business was largely flat, with a growing pipeline in our major markets.

At our Capital Markets Day in November, we outlined our view of the AI supercycle and the market opportunity for Nokia. Since then, demand has accelerated significantly. We now expect the addressable market in AI & Cloud to grow at a 27% CAGR (2025–2028), compared to the 16% we estimated in November. Across the supply chain, demand is accelerating and lead times are extending, reflecting the scale of investment underway.

At the OFC optical conference in March, we announced a new suite of innovations in Optical Networks designed to deliver the scale and performance required for AI workloads. We announced four new Digital Signal Processors (DSPs) that power 13 new solutions. These solutions unlock new applications and reduce total cost of ownership by up to 70% for our customers. Products will begin sampling in mid-2027, with volume production starting in the second half. Our new indium phosphide manufacturing facility online in San Jose, California is on track to begin ramping production later this year.

We are seeing good traction in IP Networks, with pipeline growth driven by new design wins and deeper penetration into AI & Cloud use cases inside the data center.

Mobile Infrastructure delivered a solid Q1, with an operating margin of 8.9%. Net sales grew 3%, with strength in Core Software, a steady performance in Radio Networks, and growth in Technology Standards supported by new deals in consumer electronics and multimedia. Margin expansion reflected a one-time charge in the prior year. The integration of this new segment is on track, with teams focused on delivering against our KPIs, expanding gross margin and growing operating profit over time.

We are making progress on AI-RAN and are on track to launch customer trials later this year. With the addition of Orange, we now have 10 customers publicly committed to working with us.

For the full year, we now expect Network Infrastructure net sales to grow between 12% and 14% in 2026. We expect Optical Networks and IP Networks combined to grow between 18% and 20%. We are also increasing our investment in Optical Networks to maximize our opportunity in this accelerating market. As a result we are currently tracking somewhat above the mid-point of our full year financial outlook of EUR 2.0 to 2.5 billion in comparable operating profit.

FINANCIAL RESULTS

SHAREHOLDER DISTRIBUTION

Dividend

Under the authorization by the Annual General Meeting held on 9 April 2026, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.14 per share to be paid in respect of financial year 2025. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period unless the Board decides otherwise for a justified reason.

On 23 April 2026, the Board resolved to distribute a dividend of EUR 0.04 per share. The dividend record date is 28 April 2026 and the dividend will be paid on 7 May 2026. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

Following this announced distribution, the Board’s remaining distribution authorization is a maximum of EUR 0.10 per share.

OUTLOOK

1 Please refer to Alternative performance measures section in Nokia Corporation Interim Report for Q1 2026 for a full explanation of how this term is defined.
2 Outlook is based on a EUR:USD rate of 1.15 for the remainder of 2026.

The outlook and the underlying outlook assumptions are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this release.

Along with Nokia's official outlook target provided above, Nokia provides the below assumptions that support the group level financial outlook for 2026.

1 Net sales growth assumption is on a constant currency and portfolio basis.

RISK FACTORS

Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:

• Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;
• Changes in customer network investments related to their ability to monetize the network or opportunities related to AI and data center growth;
• Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;
• Our ability to procure or manufacture certain components and the costs thereof, such as semiconductors;
• Disturbance in the global supply chain;
• Impact of inflation, increased global macro-uncertainty, major currency fluctuations, changes in tariffs and higher interest rates;
• Potential economic impact and disruption of global pandemics;
• War or other geopolitical conflicts, disruptions and potential costs thereof;
• Other macroeconomic, industry and competitive developments;
• Timing and value of new, renewed and existing patent licensing agreements with licensees;
• Results in technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;
• The outcomes of on-going and potential disputes and litigation;
• Our ability to execute, complete, successfully integrate and realize the expected benefits from transactions;
• Timing of completions and acceptances of certain projects;
• Our product and regional mix;
• Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;
• Our ability to utilize our Finnish deferred tax assets and their recognition on our balance sheet;
• Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;

as well the risk factors specified under Forward-looking statements of this release, and our 2025 annual report on Form 20-F published on 5 March 2026 under Operating and financial review and prospects-Risk factors.

FORWARD-LOOKING STATEMENTS

Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, projects, programs, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, cost savings, the timing of receivables, operating expenses, provisions, impairments, tariffs, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, value creation, revenue generation in any specific region, and licensing income and payments; D) our ability to execute, expectations, plans or benefits related to transactions, investments and changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including "anticipate", “continue”, “believe”, “envisage”, “expect”, “aim”, “will”, “target”, “may”, “would”, “could“, "see", “plan”, “ensure” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

Nokia Corporation Interim Report for Q1 2026

Solid start to the year with strong growth in Optical Networks

• Q1 comparable net sales grew 4% y-o-y on a constant currency and portfolio basis (+2% reported).
• Network Infrastructure net sales grew 6% y-o-y on a constant currency and portfolio basis with a strong contribution from Optical Networks which grew 20%. Net sales from AI & Cloud customers grew 49%.
• Mobile Infrastructure net sales grew 3% y-o-y on a constant currency basis. Core Software grew 5% while Radio Networks was flat and Technology Standards grew 10% with several new deals signed in the quarter.
• Q1 comparable gross margin expanded 320bps y-o-y to 45.5%. Reported gross margin increased 270bps to 44.2%.
• Q1 comparable operating margin increased 200bps y-o-y to 6.2%. Reported operating margin expanded 190bps to 1.4%.
• Q1 comparable diluted EPS of EUR 0.05; reported diluted EPS for the period of EUR 0.02.
• Q1 free cash flow of EUR 0.6 billion, net cash balance of EUR 3.8 billion.
• Nokia's full year outlook is unchanged. Nokia targets EUR 2.0 to 2.5 billion of comparable operating profit.

"We are increasing our growth assumption for Optical and IP Networks and we are investing to capture accelerating demand from AI & Cloud customers."
Justin Hotard, President and CEO

This is a summary of the Nokia Corporation Interim Report for Q1 2026 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. Investors should not solely rely on summaries of Nokia's financial reports and should also review the complete reports with tables.

JUSTIN HOTARD, PRESIDENT AND CEO, ON Q1 2026 RESULTS

In the following quote, net sales comments and growth rates are referring to comparable net sales and are on a constant currency and portfolio basis. References to margins are related to Nokia's comparable results.

We delivered a solid start to the year, with net sales growing 4%, gross margin expanding 320bps and operating margin expanding 200bps in the first quarter. Demand continued to be strong, particularly in AI & Cloud, where net sales grew 49% and now account for 8% of group sales. We also booked EUR 1 billion of orders from AI & Cloud customers in the quarter.

Network Infrastructure net sales grew 6%, with Optical Networks growing 20%, supported by strong order intake and a book-to-bill well above one. We won a number of important AI & Cloud design wins and orders for both pluggables and line systems in the quarter. IP Networks net sales grew 3% and we expect growth to improve in Q2 and for the full year. In Fixed Networks, net sales declined 13%, reflecting our strategic shift to higher-margin products. Our core fiber OLT business was largely flat, with a growing pipeline in our major markets.

At our Capital Markets Day in November, we outlined our view of the AI supercycle and the market opportunity for Nokia. Since then, demand has accelerated significantly. We now expect the addressable market in AI & Cloud to grow at a 27% CAGR (2025–2028), compared to the 16% we estimated in November. Across the supply chain, demand is accelerating and lead times are extending, reflecting the scale of investment underway.

At the OFC optical conference in March, we announced a new suite of innovations in Optical Networks designed to deliver the scale and performance required for AI workloads. We announced four new Digital Signal Processors (DSPs) that power 13 new solutions. These solutions unlock new applications and reduce total cost of ownership by up to 70% for our customers. Products will begin sampling in mid-2027, with volume production starting in the second half. Our new indium phosphide manufacturing facility online in San Jose, California is on track to begin ramping production later this year.

We are seeing good traction in IP Networks, with pipeline growth driven by new design wins and deeper penetration into AI & Cloud use cases inside the data center.

Mobile Infrastructure delivered a solid Q1, with an operating margin of 8.9%. Net sales grew 3%, with strength in Core Software, a steady performance in Radio Networks, and growth in Technology Standards supported by new deals in consumer electronics and multimedia. Margin expansion reflected a one-time charge in the prior year. The integration of this new segment is on track, with teams focused on delivering against our KPIs, expanding gross margin and growing operating profit over time.

We are making progress on AI-RAN and are on track to launch customer trials later this year. With the addition of Orange, we now have 10 customers publicly committed to working with us.

For the full year, we now expect Network Infrastructure net sales to grow between 12% and 14% in 2026. We expect Optical Networks and IP Networks combined to grow between 18% and 20%. We are also increasing our investment in Optical Networks to maximize our opportunity in this accelerating market. As a result we are currently tracking somewhat above the mid-point of our full year financial outlook of EUR 2.0 to 2.5 billion in comparable operating profit.

FINANCIAL RESULTS

SHAREHOLDER DISTRIBUTION

Dividend

Under the authorization by the Annual General Meeting held on 9 April 2026, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.14 per share to be paid in respect of financial year 2025. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period unless the Board decides otherwise for a justified reason.

On 23 April 2026, the Board resolved to distribute a dividend of EUR 0.04 per share. The dividend record date is 28 April 2026 and the dividend will be paid on 7 May 2026. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

Following this announced distribution, the Board’s remaining distribution authorization is a maximum of EUR 0.10 per share.

OUTLOOK

1 Please refer to Alternative performance measures section in Nokia Corporation Interim Report for Q1 2026 for a full explanation of how this term is defined.
2 Outlook is based on a EUR:USD rate of 1.15 for the remainder of 2026.

The outlook and the underlying outlook assumptions are forward-looking statements subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this release.

Along with Nokia's official outlook target provided above, Nokia provides the below assumptions that support the group level financial outlook for 2026.

1 Net sales growth assumption is on a constant currency and portfolio basis.

RISK FACTORS

Nokia and its businesses are exposed to a number of risks and uncertainties which include but are not limited to:

• Competitive intensity, which is expected to continue at a high level as some competitors seek to take share;
• Changes in customer network investments related to their ability to monetize the network or opportunities related to AI and data center growth;
• Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments;
• Our ability to procure or manufacture certain components and the costs thereof, such as semiconductors;
• Disturbance in the global supply chain;
• Impact of inflation, increased global macro-uncertainty, major currency fluctuations, changes in tariffs and higher interest rates;
• Potential economic impact and disruption of global pandemics;
• War or other geopolitical conflicts, disruptions and potential costs thereof;
• Other macroeconomic, industry and competitive developments;
• Timing and value of new, renewed and existing patent licensing agreements with licensees;
• Results in technology licensing; costs to protect and enforce our intellectual property rights; on-going litigation with respect to licensing and regulatory landscape for patent licensing;
• The outcomes of on-going and potential disputes and litigation;
• Our ability to execute, complete, successfully integrate and realize the expected benefits from transactions;
• Timing of completions and acceptances of certain projects;
• Our product and regional mix;
• Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various countries and OECD initiatives;
• Our ability to utilize our Finnish deferred tax assets and their recognition on our balance sheet;
• Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions;

as well the risk factors specified under Forward-looking statements of this release, and our 2025 annual report on Form 20-F published on 5 March 2026 under Operating and financial review and prospects-Risk factors.

FORWARD-LOOKING STATEMENTS

Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, projects, programs, product launches, growth management, licenses, sustainability and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of potential global pandemics, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand and our customers’ businesses) and any future dividends and other distributions of profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales, income, margins, cash flows, cost savings, the timing of receivables, operating expenses, provisions, impairments, tariffs, taxes, currency exchange rates, hedging, investment funds, inflation, product cost reductions, competitiveness, value creation, revenue generation in any specific region, and licensing income and payments; D) our ability to execute, expectations, plans or benefits related to transactions, investments and changes in organizational structure and operating model; E) impact on revenue with respect to litigation/renewal discussions; and F) any statements preceded by or including "anticipate", “continue”, “believe”, “envisage”, “expect”, “aim”, “will”, “target”, “may”, “would”, “could“, "see", “plan”, “ensure” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

Source: https://www.nokia.com/newsroom/nokia-corporation-interim-report-for-q1-2026/