Nokia comparable operating profit rises 35% as AI sales surge
Key Facts
Nokia's comparable operating profit rose 35% in the third quarter of 2026 to 605 million euros from 448 million euros in the same period a year earlier, according to its financial report. The group's comparable operating margin was 11.7% for the quarter, according to the company's earnings release. The improvement in profitability coincided with sales to AI and cloud customers reaching 631 million euros, up 123% year-on-year at constant currency. Nokia booked 1.5 billion euros in new orders from these customers during the quarter, according to its earnings presentation. Those orders were below the level recorded in the second quarter of 2026, when they reached 2.8 billion euros, according to the company's report for the previous period.
By business, IP Networks sales grew 43% year-on-year at constant currency in the third quarter, according to the earnings release. Optical Networks sales rose 18% on the same basis during the period. By contrast, Fixed Networks sales fell 22% at constant currency from the corresponding quarter a year earlier. Nokia said in its financial report that Mobile Infrastructure sales benefited partly from revenue recognition being brought forward from the fourth quarter to the third quarter. When announcing its second-quarter results, the company had said that "supply remains the primary constraint on the industry, prompting our customers to place longer-term orders."
By contrast, Nokia's reported operating profit fell to 196 million euros in the third quarter of 2026, according to its financial report. The company had recorded reported operating profit of 252 million euros in the corresponding period of 2025, putting the annual decline at 22%. Restructuring and associated charges rose to 357 million euros during the third quarter. That compared with charges of 44 million euros in the corresponding quarter a year earlier, according to the results table. On cash flow, Nokia recorded negative free cash flow of 99 million euros, compared with positive free cash flow of 429 million euros a year earlier.
Nokia lowered its assumption for the conversion of comparable operating profit into free cash flow during 2026 to a range of 35% to 55%, according to its third-quarter earnings presentation. The previous assumption ranged from 55% to 75%, according to the outlook published with its second-quarter results. The company attributed the reduction to additional investment in working capital, alongside accelerated restructuring. Nokia plans to invest an additional 400 million euros in working capital during the year, according to its financial report. It said the investment aims to secure supply and support future growth.
As part of changes to its business portfolio, Nokia signed a definitive agreement to sell its private wireless networks and industrial edge solutions business to Aurelius, according to the transaction announcement. The business to be sold also includes industrial devices and applications. It serves approximately 900 customers globally, according to the statement. Its customer base includes companies in manufacturing, mining and logistics. It also serves customers in airports, ports and power generation.
For the full year 2026, Nokia maintained its comparable operating profit outlook at a range of 2.1 billion to 2.6 billion euros, according to its earnings presentation. The company assumes fourth-quarter sales growth of 20% to 24% compared with the third quarter. For 2027, Nokia expects its Optical Networks and IP Networks businesses combined to grow between 25% and 30%, according to its financial report. It expects the sale of its private wireless networks and industrial edge solutions business to close in the first half of 2027, subject to customary closing conditions. The company is scheduled to publish its fourth-quarter and full-year 2026 results on 28 January 2027.