Nokia Q2 Highlights; 3% Topline Decline, Apple Partnership And Strong Enterprise Performance

Nokia Corp NOK reported a second-quarter FY23 net sales decline of 3% year-on-year (0% in constant currency) to €5.71 billion ($6.22 billion), missing the consensus of $6.38 billion.

Network Infrastructure sales declined by 6% Y/Y in CC. Cloud and Network Services sales increased by 2% Y/Y in CC, while Nokia Tech grew by 10% Y/Y benefiting from €80 million of catch-up net sales.

Mobile Networks sales grew by 5% Y/Y in CC as 5G deployments in India ramped up. 

Margins: Gross margin declined by 200 bps to 38.2%. Comparable gross margin decreased by 180 bps to 38.8% due to regional mix in Mobile Networks.

The operating margin decreased by 130 bps to 8.3%, and the comparable operating margin declined by 120 bps to 11.0%.

EPS was €0.05, and comparable EPS was €0.07 ($0.076), missing the consensus of $0.08.

Nokia held €5.1 billion in cash and equivalents and used €0.4 billion in free cash flow.

Dividend: The board proposed a quarterly dividend of €0.03 per share. 

The quarter's highlight was the new long-term patent license agreement signed with Apple Inc AAPL. Nokia's performance in Enterprise was also a highlight, with net sales increasing by 27% in constant currency. 

FY23 Outlook: As announced on July 14, 2023, Nokia now expects full-year 2023 net sales of EUR 23.2 billion- EUR 24.6bn with a comparable operating margin of 11.5%-13.0%.

Price Action: NOK shares traded lower by 0.25% at $3.93 premarket on the last check Thursday.