Nokia reports strong Q4 2024 earnings as market trends improve

Nokia concluded 2024 with strong financial results, reporting increased profitability and revenue growth in the fourth quarter as global market conditions improved. The company’s net sales grew by 9% year-on-year in constant currency, while its comparable operating profit surged by 38% to €1.142 billion. This performance was primarily driven by strong demand for Nokia’s network infrastructure solutions, which experienced a 17% increase in net sales. The positive trend was also supported by steady expansion in Cloud and Network Services, which saw a 7% rise in revenue, while Nokia Technologies posted an impressive 85% year-on-year growth, bolstered by new licensing agreements with Samsung, HP, and Transsion.

Despite market fluctuations earlier in the year, Nokia demonstrated financial discipline and operational efficiency, allowing it to maintain a robust cash flow. The company reported a Q4 free cash flow of €51 million, reinforcing its strong balance sheet, which ended the year with a net cash position of €4.9 billion.

What Drove Nokia’s Q4 Earnings Growth?

Several key factors contributed to Nokia’s earnings growth in Q4 2024. The company’s network infrastructure business remained a major driver, with net sales increasing by 17% year-on-year. Demand for IP Networks surged by 24%, while Fixed Networks and Optical Networks grew by 16% and 7%, respectively. This rebound was largely attributed to a strong recovery in demand from communication service providers, particularly in North America and Europe.

Nokia’s Mobile Networks segment remained stable, reflecting resilience in sales despite a highly competitive telecommunications market. The company continued to strengthen its 5G network business, securing an additional 18,000 base station sites throughout the year. Meanwhile, Nokia Technologies recorded an annualized net sales run-rate of €1.3 billion to €1.4 billion, supported by new licensing deals and the resolution of outstanding patent-related disputes.

Another major factor driving growth was Nokia’s expansion into cloud networking and enterprise services. The company forged key partnerships with Microsoft, Lenovo, and Kyndryl, positioning itself for further expansion in data center switching and IP networking. This strategic shift aligns with Nokia’s broader efforts to grow its presence in cloud-based infrastructure and network automation.

How Does Nokia’s Full-Year 2024 Performance Compare to 2023?

Although Q4 results reflected strong momentum, Nokia’s full-year 2024 performance showed mixed results due to challenges in the first half of the year. The company reported a 9% decline in total net sales compared to 2023, largely due to weaker demand in India‘s 5G market, which accounted for 7 percentage points of the decline. However, despite the lower revenue figures, Nokia successfully improved its profitability.

Comparable operating profit for the full year reached €2.6 billion, achieving a strong operating margin of 13.6%, compared to 11.1% in the previous year. This improvement was driven by higher licensing revenue from Nokia Technologies, improved cost controls, and a more favorable product mix in Mobile Networks and Cloud Services. The company also strengthened its financial position, ending the year with a net cash balance of €4.9 billion, even after returning €1.4 billion to shareholders through dividends and share repurchases.

What Are Nokia’s Strategic Investments for 2025?

Nokia is making strategic investments to sustain its growth trajectory in 2025 and beyond. The company announced plans to invest €100 million annually in Network Infrastructure, with the goal of increasing revenue by €1 billion by 2028. This investment will focus on expanding its capabilities in IP networking, optical transport, and data center solutions.

Another key initiative is Nokia’s pending acquisition of Infinera, a major provider of optical networking solutions. This deal, valued at approximately $1.7 billion, is expected to enhance Nokia’s expertise in high-speed data transmission and cloud networking. The acquisition, which has already secured key regulatory approvals, is projected to close in the first quarter of 2025.

Nokia is also increasing its research and development efforts in cloud automation and AI-driven networking. The company is advancing its Network as Code strategy, which aims to help telecom operators automate and monetize their networks more effectively. These efforts are expected to drive growth in enterprise cloud services and next-generation network management.

What Is Nokia’s Outlook for 2025?

Nokia has set ambitious targets for 2025, projecting comparable operating profit in the range of €1.9 billion to €2.4 billion. The company expects free cash flow conversion to remain between 50% and 80%, emphasizing its commitment to financial discipline and profitability.

The outlook for Network Infrastructure remains positive, with continued demand for IP networks and fiber solutions expected to drive further expansion. Cloud and Network Services are also projected to grow, supported by 5G Core network momentum and increasing demand for enterprise cloud solutions. Mobile Networks is expected to maintain stable sales, with a focus on maintaining strong pricing discipline and protecting profit margins. Nokia Technologies is projected to deliver approximately €1.1 billion in operating profit, reflecting its continued strength in patent licensing.

Despite ongoing market volatility, Nokia’s disciplined approach to cost management, innovation, and strategic expansion places the company in a strong position for sustained profitability.

How Is Nokia Returning Value to Shareholders?

Nokia continues to prioritize shareholder returns through dividends and share repurchases. In 2024, the company completed a €600 million share buyback program, repurchasing 157.6 million shares. To counter dilution from the Infinera acquisition, Nokia announced a new €900 million share buyback program, targeting the repurchase of 150 million shares.

In addition, the company’s Board of Directors has proposed increasing the annual dividend to €0.14 per share, signaling confidence in Nokia’s long-term financial health. These measures reflect the company’s commitment to balancing growth investments with shareholder value creation.

Nokia’s Strong Position for Future Growth

Nokia’s Q4 2024 earnings highlight its ability to adapt and thrive in evolving market conditions. With increasing comparable operating profit, strong network infrastructure growth, and disciplined free cash flow management, the company is well-positioned for continued profitability in 2025.

By investing in cloud networking, data center expansion, and AI-driven automation, Nokia is building a foundation for long-term success. As market conditions improve, its strategic partnerships and acquisitions are expected to drive further innovation and revenue growth in the years ahead.