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The call emphasized strong execution in Q1 with notable revenue and margin expansion, robust free cash flow, outsized AI & cloud demand (49% growth) and a significant upgrade to Network Infrastructure/Optical guidance. Management acknowledged supply constraints, order elongation and near-term margin/seasonality headwinds, but reported Infinera synergies ahead of plan and committed investments (fab and product roadmap) to capture a structural AI-driven market expansion. Overall, the positives — raised guidance, strong Optical performance, large new orders, margin improvement and healthy cash generation — outweigh the near-term operational and timing challenges.
Nokia left its group-level 2026 financial outlook unchanged but said it is tracking somewhat above the midpoint of comparable operating profit guidance of EUR 2.0–2.5 billion; Q1 actuals were EUR 4.5 billion net sales, 6.2% operating margin, EUR 629 million free cash flow and EUR 3.8 billion net cash. Management raised Network Infrastructure 2026 growth guidance to 12–14% (from 6–8%) and now targets Optical + IP Networks growth of 18–20% (up from 10–12%); they expect Q2 net sales to increase sequentially by 5–9%, Q2 to represent 12–16% of full‑year operating profit (implying H1 at 24–28% of full‑year operating profit), and Mobile Infrastructure net sales to be largely flat for the year with margin seasonality (weaker in Q2–Q3, stronger in Q4). They also highlighted market assumptions underpinning the upside: AI & cloud addressable market now modeled at a 27% CAGR for 2025–2028 (network‑infrastructure addressable market ~14% CAGR), hyperscaler CapEx expectations rising to >$700 billion in 2026, and AI traffic at ~20% (~80 exabytes/month).
Net sales grew 4% year-on-year to EUR 4.5 billion. Gross profit was EUR 2.0 billion, with gross margin expanding 320 basis points to 45.5%. Operating profit was EUR 281 million, with operating margin improving by 200 basis points to 6.2%.
Delivered free cash flow of EUR 629 million in Q1 and ended the quarter with net cash of EUR 3.8 billion, providing balance-sheet flexibility.
AI and Cloud customer segment revenue grew 49% year-on-year. The company reported roughly EUR 1.0 billion in new orders in Q1 largely driven by Optical Networks. Book-to-bill for AI & Cloud was cited as very strong (management referenced ~3 in Q&A), and group-level book-to-bill was above 1.
Optical Networks net sales grew 20% in Q1, benefiting from Infinera synergies and hyperscaler demand. Nokia raised 2026 growth guidance for Network Infrastructure to 12–14% (from 6–8%) and for Optical + IP to 18–20% (from 10–12%).
Launched next-generation hyperscale multi-rail optical solution (shipping later in 2026) offering 8x increased fiber density and 25% higher density vs recent competitors. Announced a building-block optical architecture (4 engines, 13 application-optimized solutions) with sampling in H1 2027 and volume in H2 2027, claiming up to 70% TCO reduction for customers.
Integration of Infinera is delivering synergies that contributed to Optical margin improvement; management reports synergy capture ahead of their internal schedule and still targeting double-digit operating margins in Optical over time.
Mobile Infrastructure net sales grew 3%; Core Software grew 5% and delivered six competitive swaps in the quarter. Mobile Infrastructure gross margin improved 430 basis points to 48.5% (aided by a prior-year contract settlement) and operating margin rose to 8.9% (+380 bps).
Announced increased investment in Optical manufacturing including an indium phosphide facility in San Jose projected to begin ramping later in 2026, intended to support scaling and address supply constraints for high-growth optical demand.
Good morning, ladies and gentlemen. Welcome to Nokia's First Quarter 2026 Results Call. I'm David Mulholland, Head of Nokia Investor Relations. Today with me is Justin Hotard, our President and CEO; along with Marco Wiren, our CFO. Before we get started, a quick disclaimer. During this call, we will be making forward-looking statements regarding our future business and financial performance, and these statements are predictions that involve risks and uncertainties. Actual results may therefore differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors.
We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website. Within today's presentation, references to growth rates will mostly be on a constant currency and portfolio basis and other financial items will be relating to our comparable reporting. Please note that our Q1 report and a presentation that accompanies this call are published on our website. The report includes both reported and comparable financial results and reconciliation between the two. In terms of the agenda for today, Justin will go through our key messages for the quarter. Marco will then go through the financial performance, and we'll then move to Q&A. With that, let me hand over to Justin.
Thank you, David, and good morning, everyone. Our first quarter gave us a solid start to 2026. Net sales grew 4% to EUR 4.5 billion with an operating margin of 6.2%, and we delivered a fre...
