NOK - Earnings call transcript Q2 2022

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David Mulholland

Good morning, ladies and gentlemen and welcome to Nokia’s Second Quarter 2022 Results Call. I’m David Mulholland, Head of Nokia Investor Relations, and today with me is Pekka Lundmark, our President and CEO; along with Marco Wiren, our CFO.

You will notice that we switched to an audio-only webcast this quarter.

We will continue to use video for events where we see it adding value such as our business group progress updates.

For our quarterly updates, considering we’re now on the road meeting many of you in person, we felt it more efficient to return to audio-only.

a started, get we quick disclaimer. Before

factors. results call, our external, well future this are we that uncertainties. currently operating we the that as materially and differences will regarding statements predictions can Actual and risks cause forward-looking expect. making involve therefore business results as statements differ from be these During may could and such Factors performance, financial both be internal

on Form We today’s such report of in our our Risk on the be presentation, growth rates Within section which have will on Factors XX-F, Investor and basis mostly on it identified risks on currency to website. will available comparable is our be annual Relations constant margins a references reporting.

our financials. our back there. report is in QX our our published QX reconciliation You report Please this that on can IFRS presentation are website in and on reconciliation to note the find both tables

the on some that, then performance for of a we terms key Marco how agenda will more give go Pekka and will our impacting With factors outlook the the and see and in let of detail Pekka. financial XXXX. In me progress over bit hand to our the quick quarter; today, overview of into for financial a strategic

Pekka Lundmark

to Thank that you, morning well David and to everybody. say pleased execute I’m QX. good we continue in to

slide, renewal software as we in may year-on-year declined Infrastructure. Network and Mobile Networks this renewals continuing QX that margin, in Gross X% contract and reflecting that due grew see was one-off Networks margins Technologies. constant deal was Mobile sales both technologies in can in to challenges chain remember and in contract supply the of and margin net progress XXXX. and in Nokia slightly operating This timing highlighted you spite on timing XX.X%, As in you XX.X% two that currency. good issues The

the points XXX have exclude deal results, last from on software would Technologies by businesses. from does margin product X.X% demonstrate and in in you improved QX, X.X% strength operating our basis this our improvement of If to year Nokia the

QX you see good expenditure on a can and continue efficiency we this there whilst the can in XX% has our you has invest funded And through this also picture, On increase margins this been since QX on Our achieved in chart screen performance that R&D. SG&A. in improved gross on was see focus to XXXX. been R&D

And the our We words will continue strengthen then focus few across this our leadership. say performance to groups. on a further technology I’ll business

and pleased declines constant a and North from Overall, saw growth see First, QX Africa increase region, with spite XXXX. year-on-year in East in Middle challenges impact the XXXX good this We to Shanghai one-off regions, America comparison in confidence tough other America, us which chain related deal counter of constant currency. software in caused grow our X% by lockdowns where at net including to exit Russia. to sales gives the some growth Latin of Mobile a was in return supply I a a in Networks, currency and in COVID-XX

margin year, on gross chart, the slightly are positive and see did continued declined with progress again the the screen. year. margin basis, in gross deal XX end its the ReefShark XXX% and on at on continue of reaching Also the increase to software track due Infrastructure to the is our of clearly we Network points four divisions trend can the growth. XX-month from we all now pleasingly, XX% showing by this and previous operating While to year-on-year you target year-on-year penetration increased rolling one-off XX-month rolling make the basis margin a

gross Top line margin see, a and strong respectively. delivering points, some excellent to to both very again can quarter XXX Optical increased quarter. improve and in double-digit flowed the were had Network with basis are Networks both margin Services’ in Fixed Networks by Cloud Networks impacting and you operating But NI, growth. which As through in quarter, really expected and XX Submarine in the Infrastructure which net the supplier-specific overall shortages Network sales another There quarter. had stable performance were second half.

the The For a operating half demonstrated good Clearly the quarter ago, month revenue heard overall, towards the hopefully of and impacted as to first a and surrounding of half Raghav of portfolio Oppo. just and and again Regional saw ongoing first progress of presentation was SaaS-based the first by strong CNS. margin. over three Technologies business quarter work patents second the a once rebalance upheld development stream. by the German we in renewals. Nokia Vivo the with margin year bit more gross Then you have were QX, we Oppo the the in litigation Nokia’s weaker, – injunctions a we in against In granted X% Court continues from good initiatives year, move there securing the growth where of longer-term he highlighted mentioned, was both and were some to

obligations our to remains this and it license contract expect previously was do pleased chain patent so In ongoing do some the Electronics expect we related run those have despite billion we billion and our Consumer Enterprise increase We And In which the Segments, the will highlighted accelerated return see a of to to in I on the X.X portfolio, pleased EUR But delivered quarter this to Technologies, concluded. EUR robustly course, other half but new second defend course grew renewals rate delivering slide, a an two fairly. by I’m agreements says challenges. to growth order and was we’ll sales the business, also the catch-up X% standard we like Nokia this communicated Court annual Automotive The overall, to new the the some X.X with And the essential also of of markets. Customer all patent patent year-on-year. Then the with recognized Enterprise as value we returned we complied segment, to that to had are as of we holder. negotiation in of the also the year. with were X%. that assumption separate see impacted also businesses challenges in as quarter, strong intake supply And growth Enterprise, really say

we and quarter. as down of you We space. showing the As our you in on this investments added is can to doubled in results. second during slide, since have XX XXX customers on see that strengthen Private new this have And remember, we Private in Wireless start leadership the our customers year, now Wireless the

handing in words So to then progress about Enterprise And challenges wider environment say the in I’ll overall segment. finally, next good before a operating the Marco. over few our

Of uncertainty need all is macroeconomic attention something course, pay to. to the we

we So, impacts let few me them. the clarify make as see a current points to

to XG investments increase increase even is not immune our to to and typically to Actually be of customers economic which worst difficulty] cope trends, and And a which need to consumption for particularly good the data times, in fiber our the increases First could deployments. industrial trends though to [technical productivity productivity, continue of are with business very investments. see enable. important those all, investment many macro strong connectivity, we into in networks increasing need

than So outlook. we and demand intake limited. supply order we Customer remains continue demand changes strong be and not far, have our more seen to major demand in any

see China charts, fiber penetration the As global excluding the you can both on rates low. and on the for XG, remain

you customers XX% total more For and markets percentage different the of on impact around macro some parts or also XX%, on movements can, homes emerging see connected charts. a example, in priced and of challenges US could globally homes markets where the chains. could specifically XG sites the less of effectively of developed products at invest. passed for it’s that some in world and which be the in trends than the the dollars homes impact affordability in euros. supply There the More even But are pace as our our currency

and been ways pandemic since situation this with number know, really the it you a hit. of As have challenging been a dealing in has globally we

of in by the bit that the also of QX, and and situation But more April constraining that COVID-XX end do towards ‘XX we in into the year Today a see we region. which were or quite of in related first largely the throughout half said chain were situation QX, the last the to impacted situation business. be starting across of that from second In potentially constraints signs Towards year, in supply the challenges business. a of our actually lockdowns quarter, the we affected changing the less Last did could but more Shanghai and remains we challenges was that that manage suppliers well case May. last we we the supplier-specific in lot remaining ‘XX. have or facing was which the case, recovered half highlighted ease we

with you And to the that over after Q&A. I So look – that, forward then to I Marco.

Marco Wiren

that had it Then America, the to Networks XX% large portion Networks growth the excluding feel Thank course, trends here at see the regions, starting Submarine our we actual was see, basis. a a of Fixed of was And regions. impacted reflected region. a Technologies to on in that in had so if Submarine demand the the that business see performance, as you the the both currency and that Submarines and include which see that we Networks the of is provide IP will there. this look comes currencies, a this we different here Nokia to little X% results Infrastructure, bit FX better show North than from And Europe. across double-digit If you financial impact nature between good year-on-year and now that at the decision to we constant the double-digit all and also report growth. you, And to a morning XX% can America. with looking Mobile fact has deeper that Pekka lastly, about can that very because you the it start year-on-year in and strong Also fact and the Russia level XXX exit see we’re And my you we volatility on separately, this remember, growth, but we a And can year-on-year. performance, also reported growth growth we business good XX% was the where well. had had of side now also million impact and we when our it’s North Europe, on the in EUR growth regional Network double-digit have And Group And and impact. the decline, due chart impact our as saw related – Russia Networks. regional

So to one-off the over Mobile next, Once businesses, Networks a Mobile Networks operating improvements despite came in and the profit in good we improvement profit software XXXX. development. Network our saw And in both moving and that margin operating Quarter deal helped X Infrastructure again, impressively, where expanded.

operating cash performance X.X%, in quite negative had customers mentioned, looking cash net and and exclude capital, these two due and also quarter, technologies the free in that a this business from changes However, masked year And litigation had the Group flow last from and was our deal would this quarter, operating one-off also X.X% were margin funds. fact these revaluation Pekka profit. offset benefited to to our to Nokia our in year, which from the profits. a the impressive. Common well QX improved flow largely working related as as year the the positive if mainly software by our have we at remaining was with currency venture briefly is Technologies And which adjusted impacted last

you liabilities that to slide, mainly payment you X. in flagged of which notably XXXX and If we net change broken look the working variable which out the to more pay can already have of the our components capital, see we the employee related Quarter related in

the to ongoing receivables in somewhat in an component lower and sale middle partially in by the also quarter, the to We these of increase managed were higher receivables, situation, of the quarter. offset due inventories

XXX payment We quarterly to million of related and the about outflow shares. our EUR dividend repurchase also saw of

at the So a billion addressable market. the led Shifting over this of position X.X all net to cash to end quarter. EUR of our

here. We have upgrade quarterly usual our provided

continue X% between currencies While at grow expect our there addressable were we movements market in BTs, some to at XXXX. constant targeted to

related for we is Network this somewhat Our access. some and remains increased the are demand the estimate increased outlook is When Networks, X% in from market to we market to TAM and adjustments fixed environment America in are driven China, the Europe. XXXX, wireless growth mainly the X% and Mobile Fixed strong comes from upcoming the the broadband this supply technologies Networks for have estimate X%, we and uncertainties potential reflect increased prioritizing. areas largely expectations and it if both North by X%, due seen reflected around the declined Services, of initiatives look that, Infrastructure, strong, Network it we contract mainly our to comes timing or When COVID-XX to for now we to chain course, demand to lockdowns situation. Cloud now and but of made to better renewals additional And to

and rate we remains range. is year tracking unchanged in midpoint inflation, this tracking towards And end net as assumed slide. now we are sales to full explain Our net EUR XX% the XX.X reflecting earlier currently to current range XX.X%. higher will X.XX, operating constant of remains as guidance of our I and which the we EUR ongoing on between billion currency our margin currently headwinds, And towards next euro-USD the are outlook here guidance the sales billion, currencies of XX.X our manage this comparable

there. So go let’s

seen dollar US volatility So around XX%. strengthening the this with year significant has currency

and currency the So And relatively Operationally, currencies. net net cost, in the exposures cost about currency in hedging strengthening the X% XX% as see we can a reinforcing be with financial to to in And you impact is to to margin my are before currency means hedged. perspective, But slide positive. well, are is operating we have operating an this sales well USD. horizon the net and compared the And would between our absolute you a a would naturally to our we help we in balanced the results, approximately slightly it XX-month rule want in as thumb, changes by dampen we largely program US on understand XX% have fluctuations is to The unaffected current in see here exposures our as terms hedging, dollar. as of different XX% the of largest from of profit that X, largely our which Quarter we USD financial USD year, of exposure point sales. benefit had in well. sales

what expected summarize, our this towards negative as the pace issues progress continued are a the are of expect and making we the the facing also we tracking from net immediate and well. has track still with our sales profit then deliver will the in have margin a inflation start the to operating these standpoint, strong we’ve geopolitical result didn’t start at XXXX, our year issues, year, to well of But And that the benefit business. And targets. which gather emphasize we the a been midpoint to despite in operating see we range, operating in unchanged, short-term. clearly, we Given compared we on impact on to full had margin just we are to to

that, Q&A. to back for hand I with David So

David Mulholland

and well you, Pekka you for Thank Marco as you, comments the made. thank

date to you Before session, the dairies. to we your I move wanted for Q&A give just another

in join the for also in-person York will We are with in-person. Technologies hold who of New focus shift Strategy but Xth with Nishant its update, progress Technology President, the those to September, our event business planning Batra, next which Officer, being technology The group Nokia on Lukander. event unable webcast along will our us our Jenni to to with on Chief are will Friday, our be and strategy

with the let’s start that, So Q&A.

please please and the to give others Darcy, question one in instructions? a queue, As could you follow-up. to yourself a could limit brief you the courtesy

Operator

Thank you.

back We I’ll question-and-answer session. begin now David Mr. call hand Instructions] [Operator now the will to the Mulholland.

David Mulholland

take We’ll Darcy. you, question Generale. Thank Peterc our Alex Societe from first today from

Alex Peterc

Congratulations and good Yes, by question. we for solid morning thank results everywhere. the see you that the very headwinds for

on there any improve contracts any new first Now, longer divisions? my this That do be And to frequency pricing. And product your duration ability in my first if would give process? among brief lot. where Are or is inventory. do have could of buffer of inflation-related follow-up us levels Are question. would on be the – you question pressures a ongoing will to increase year increase going cost your inflationary across similar your divisions? what’s you releases be on are repricing your meaningful respect of differences lower offset And the the the given with trend chain? now or just you need happy Thanks a you in remainder the to the supply in

Pekka Lundmark

Marco the you. thank first take second one. the takes I one, and Okay, If

existing there when a contracts as all, inflation. between difference with and understand, big all is of First new deal contracts you we

course, information our of our good deals, all making businesses, order to when cost signing guess are, into available. all are we all while doing cost account in that offers the I in have development we to is strong new the that, news continue continue taking are and estimates and We intake. – contracts have that we we we And

the side businesses. that And So Networks news. is Mobile in would other one between business. when you businesses in depending this average longer contracts definitely other guess the coin the than the asked would about good be be Then, the where is on I of the differences

the existing to is fact. back hard an to usually the start it go changing contract very prices So, and after

now have all educational We mode of now kind a a that, in effort environment. this are every has quite we inflationary big an that is to remember down into to go prices And industry us from been thought this where a time because for change long year.

has in though even this we year, competitiveness does is the of So profitability year expect we inflation at the said why of clearly some the the already reason continue our improvements dampen that and underlying this our last end to this during the XX.X% course, the in today to are included of year. we this around the all been, expecting our And what profit XX% improvement we said range. land guidance, midpoint of including to and somewhere incorporated that potential

Marco Wiren

the it when levels to And and be. inventory where want comes to we

and have As been inventories have that’s times, the it’s normal. volatile. working buffers. example, And to business we returned we you’ve lead least just today good And increased we build been And that little to that until inventories the to stocks chain level been X, some quite have they’ve exact for suppliers, reason by from safety our a get lead than has has supply that seen, on difficult prefer understand we’ve normal to Quarter EUR to have times bit more million. believe XXX why can we more trust being to the we the we buffer. In and for at it have

David Mulholland

Thank We’ll Andrew you, please our take Gardiner Andrew, Alex. Citi. from next ahead. from question go

Andrew Gardiner

Good Thank the Good morning, morning, question. for you guys. David. taking

guidance Just Alex’s on another giving, if you’re margins. technologies through If know through based the progression on is in there year you of on first one well. the the think and in Infrastructure Mobile as a follow-up and point to the half half you’ve the terms declines somewhere for we range. Network assume you year a effectively bit full the I the mid-X% of say for done half year licensees, from of X.X% implying just declined are complement the into full

terms already you are of half seeing going FX. in current that or you’re inflation constraints I saying I you terms prudent Now, of hear you’re to know in just costs being just in drive is that whether is second supply anything know environment? you and specific there and wondering the was what chain that

Marco Wiren

and first chain what We well more supply-specific challenging. start. executing in have still if inflation year, hedging operating improve actually we has from we that see all, for why midpoint. I supply onwards. also one that you salary main as mentioned we quite towards we the extremely early should half adjustment that than additionally, July which half, we the program it’s the issues And I it a see the whole broad-based would in the to margin, And the will but issue well second have implicated And the come and I reasons is least guiding that have situation annual highlight at fact And of can presentation. we a see now been are have also Yeah, that and our the first comes been two our have we industry.

Pekka Lundmark

– strong is that about add maybe, And comments We saw in just a the one thing America. just in specifically to HX. pretty is Marco, And North also sorry, Networks. Mobile to had add mix you important, just

second So all half into the this closer be And midpoint is to to mix of being this the range. incorporated expected the less year. the in forecast the favorable of of been has again,

Andrew Gardiner

much. very Thanks

David Mulholland

Did a follow-up, you have Andrew?

Andrew Gardiner

impact. by Just the hedging

Marco Wiren

see I And sales, Yeah. example, we on we just by that program What going a have but we in hedging is the a now, for when And will impact mean timing operating big will keep step-by-step that profit in strong the a have at issue, that so the operating get impact rolling terms. USD fluctuations. operating XX-month margin. seen just absolute level. negative same in will to But swings our hedging is the profit the we we’ve currency higher because we dampen this hedge very it is growth,

David Mulholland

Duval please take question you, Andrew. Thank our Alex, Alex from go ahead. Goldman Sachs. from We’ll next

Alex Duval

view seen about think into this you’re tends of Many today us would being there to from macro year, about about one a the thanks. the macro. adopting not to just be well. you’ve But give to target Obviously, peers have there. talked about next rates. you question. good color RAN going of get some year. to impact next wondered sensitive. great a sustainability on could less year? near-term customers context on of somewhat XG that And big market bit indeed the I into a your talk confidence Yes. Hi backdrop Many solid if one as you’ve talked We’ve your thanks the situation Marco,

Pekka Lundmark

countries we what question. regions and the one seeing customers, obviously, a But that’s us be seeing ‘XX strong. are today most yet. we is remember India none the important only here. And hearing Alex, and XG thing. plans same really look for even at are from an there started America, to have obviously what that, have our It’s Thanks, important Latin again, of we starting And enormously we when haven’t Okay. today, one. now. crystal ball seem which in to are of the And pretty this on one

believe we are still we why in that’s So XG that early the do cycle.

As you any not on of China saw only would the that the slide, is cycles. to of penetration the in Again, outside does XX% be XG world. this macroeconomic immune mean sites we

they is course, a cyclical seeing play for some do time. that be what Of role, but then we almost are to secular, arguing all we we underlying And continue of trends comment the are kind there can quite not today. should

David Mulholland

follow-up, a Alex? have you Did

Alex Duval

questions Just the earlier very talking one the the on chain using second in briefly half. about supply of

Some up press about in communication some chips prices investors taking talking been areas, chipmakers in reports have asking coming quarters. about in including

the if of wondered next supply comment factor that easing couple at you that thanks. can Many Just your all in statement chain quarters? of and into on how you

Pekka Lundmark

reasonably availability supply side. see taking release the all are easing down. said, everything, new from much strong. will How will semiconductor it course, question billion-dollar and that more capacity the we the pricing. mean Then make. relevant consumer And to as now in of foundry suppliers, with be that is We’ve seen. we going that of has able That capacity, that substrate economy on semiconductor you on some account that, I chain now know the the the been be deal if seeing remains demand the to comment as the We weakens, can I are that been reflected is equipment in seeing we how market and then, was we well, numbers. into our on inflation are capacity on offers

seen parts, seen. We have memory for that to already prices the other down. then But still have remains come it be

David Mulholland

JPMorgan. We’ll you, ahead. question take our Deshpande go Thank from Sandeep next Sandeep, please from Alex.

Sandeep Deshpande

Hi.

David Mulholland

Sandeep?

Sandeep Deshpande

hi. Can me? you Hi, hear

David Mulholland

Yes. ahead, Sandeep. Go

Sandeep Deshpande

that growth when because hi. been QX, ship. look at you you begin take growth. have that could looks second in Yeah, the in to QX Networks you has My market Do share you below will market Mobile know accelerate you think because now like not it is, the half? your you share in maybe growth lost And question will and it into

So that. into to I catch to now will on allow on up in which one the be go that following share you quick And share year taker allow you a to will take have the shipments to follow-up market?

Pekka Lundmark

you, Sandeep. the year of is still share statement in The then that lost already Market we had stages did Capital than Day Thank is that early ago more XG. now that market at made valid changing. we That Yeah. we the a admit

We up on have technology. caught

year. continue trend in have second of expect in And this growth. we quarter, half growth saw, the in to positive to XX in Now stronger. you million continue, do top been deal if the actually one-off a especially have were as we this to share, returned trend comparison the terms exclude of you software And line the to market would and that EUR quarter,

Marco Wiren

the Pekka services in on Quarter taking and have customers deploy we And Sandeep. enough Networks actually development very down, geographies good we just X a side, profitable we enough. what the certain believe Mobile we And – sales, you deliberately Also to been had side. equipment don’t on said, the if where are build certain look that RAN

the this So is impacting also mix.

Pekka Lundmark

on the Sandeep, is, Marco there headline to types growth This Networks. make, which installation and are to we moving higher-margin mentioned that are very low-margin of getting work. it from more when is customer kind Mobile line much a we important of is the to and software priority fact of we deals on Marco comes support that than selective And is services side, deploy, higher services, and the and becoming services more figure in the actually care services The deploy equipment point top raising.

Sandeep Deshpande

Thank you.

and market? you we follow-up one look when some have at stations as are investors, been know was, when be how America of you started at well, in all of you you them XG to other know of presented XG that base talk many on your where many I need mean, that Is about rollout case peak Just installed. market, installed before the we terms North in know data how the on parts

Pekka Lundmark

other then ahead seen I probably North But which started everybody even in to markets, normalization to has India, strong in up. side, It then, now only reasons, is is in – ‘XX. side, Enterprise course, would is ‘XX. refer obviously America yet. American and seen Enterprise to picking there not that, for you obvious then have Digitalization some continues mean, I start North of on comments addition some their CapEx. the And see of which has operators’ the they

multiple mean, factors – So I equation. playing into it’s there’s this

David Mulholland

Thank our go next please Bouvignies We’ll Francois Francois, you, ahead. question take UBS. Sandeep. from from

Francois Bouvignies

what Thank wondering I a in Huawei. much. there growth where my of growth just excluding are of and sales some you That’s and with Russia to share Europe, have given out is was swap rate is in technology market your first you maybe very terms just feel question.

Marco Wiren

comes start. Russia, and we the Europe, we on in XXX it technology like then Russia. I exiting – well mentioned whole million remember impact – had as can have technology I sales, When about from have the just that, presentation EUR to Yeah, figures, that we those

cases. supplier customers been quite the would So half have have that’s I impacting. and about say Europe, been cases that the successful those base, When we in those otherwise replacing won to of where our it we comes

Just some remember time impact It line. our the contract, we here in that’s when to through. see don’t P&L, as swaps our do well that we beginning before in in that takes starts big that that and come profit of the

David Mulholland

have you Francois? follow-up, a Do

Francois Bouvignies

I do XG excluding this XG China. focusing more maybe urban and lack on to feel you just or urban to near for site follow-up going penetration more the should of what you the about penetration the longer-term? maybe given you on but how in quick be like we the site percentage level was areas. stage it’s use XX% a wondering this of first I how be to in future. the XXX% think penetration expect lower Just rural, Yeah, mean about in is penetration, the penetration maybe disclosed about think trying

Pekka Lundmark

you and areas, start be that installation rural there urban a long, detailed of difficulty] The of a there way course, adding take time, capacity question, areas first you areas, also the very and it urban to [technical gradually. But will same answer. the build That’s, then but very coverage. in when rural give long goes time world, is course, it, the good this a that, at the coverage of difficult where start lot a rural course, of – goes before more in will coverage is in

pace So, detailed require with will this what than more it this is the and never But conversation go happen, of a of would will possible time. this XXX%. course, at longer to which

David Mulholland

Peter, question Thank ahead. please Francois. our go Nielsen from you, ABG. take from We’ll Peter next

Peter Nielsen

take the in going you. should there and behind will second we latter hampered North QX be, much. and half. forward very Pekka, in the to accelerate more North the follow-up Can near-term? growth the you market again contribution that are based also of And will dynamics issues your competition, hampering et looking structural assume the in sales are I last going I sort may, at Enterprises America which in near-term part now on of comments North accelerated you with year the negative completely, of more and at in To correctly. in comments – sort my would to be if in be sort growth and your your perhaps I’d comments please. in line quick growth market like Can investments the just your mentioned forward? sales America we profit imply in that if we Thanks going the understand also forward, cetera, about Enterprises factors but return Thank no of previous America

Pekka Lundmark

At continuous it Then, to comes be we fully competitive grow that would win And what confirm of basis. the comes it can course, least lost from on to are be is that, goal back. deals always now market. course, is the are course, in is when we a of goal to business, we would that I And that in least now customers to we we with there want now hearing technology. of – market, North when our at new share market our America, to it have any made

at yes, possibilities fight Then the So which side, we market. harder the which is Enterprise even on least us technology on is basis to see accelerating. investment gives good that’s the fundamental competitiveness, for do then Enterprise there

market And Digitalization of provider the this small market. many is market, why, the been a a throughout of always service many low decade in our But be cases, – a world yet. And Enterprise and Enterprise well, actually. And expect captured potential has times, grows whole, the have said As the roughly X% part is that in now of market this the part is been a to growth has that something will is only as that’s megatrend double-digit. be that driving sales. we we Industrial or Enterprise

would years. goal Our share it double-digit get we coming make that forward going absolutely into in to grow so relative that is the

David Mulholland

our next Arete. from Thank Richard from question you, Kramer take Richard, go We’ll ahead. please Peter.

Richard Kramer

impacting thanks currently Oppo/Vivo much. in end shortfall specifically the in large license understand I’d between having other year Are huge now they of with very ask profitability. on that any a might to Because very this Technologies trying right, impact be Thanks. an to have dispute numbers? licensees business? All and impact And I’m the do like the beyond you renewals obviously anticipate just Technologies. on you potential any because the those

Marco Wiren

we’ve been Yeah, thank Vivo, it’s saying as Oppo just and And you. like well.

them. have in we the very we latest several So been Germany was how suppose these countries, positive least And handling it from with Court I we saw outcome German in a that have at that have negotiations. you seems litigation

have again patent value confident good very So want we that our are the of portfolio to we want emphasize well. as once protect just patent a – before very timing, we that portfolio and we and specific to

David Mulholland

Did – you a have follow-up, Richard

Richard Kramer

since about the follow-up can Yes, on products share whether talk market a a might CapEx plus the you X.X gig Can question out a can in been about you Sandeep’s this, Thanks. bit it the XX% the little have you back please. peak whether level at US in just competitiveness a your and And Nokia expecting obviously customer has that lay And past. quick in of ’XX. at of on that’s Verizon the on still radio win you’re side?

Pekka Lundmark

and overall. carriers that to win one how well. customers I at the XG shares the as and Ookla recent or in product that to have the when network the North if mean, believe it on fully one true are customers specific measurements example, have, of in just a of We large and frequencies our backs. we and they performance the look X.X their America X.X competitive T-Mobile and rating part is different of you the largest both this market as of and competitiveness other comes then network Then where that the a significant is we

market back. to somewhere, do is to our As it of something I maximize said want is happen, our market if to that’s on a our if we would not share. share have things those lost goal win general that And on. level, course, But speculate I goal

David Mulholland

question Thank from you, please our from Richard. take go We’ll SEB. ahead. Artem next Beletski Artem,

Artem Beletski

relating this of the showing big this for revenue been going how sustained development Yes, to of And related quick hi. get to situation the like see be like has chain Just forward impact, us acceleration that been Fixed limitations has part first that And there in big Thank type normalizes. good taking a some would see capacity development. question. if to of I guess provide come would would clue type I maybe Network my Network that is double-digit the year? follow-up to impact positively. this surprise indication going how supply Or whether you growth some And ask forward? to could is particularly we you? you type about could continues of Infrastructure you half

Pekka Lundmark

And markets the drive KPI, that, is do the thing underlying building base that to market, the the fixed Homes trends a backhauling and stations we that and Optical, on stations, and broadband then base the that see strong be Network backbone you and IP Passed But have For seen is XG take both starting building the that see we in that IP technology and are well. interesting now saw is slide then and position optical is we And broadband when driving first Infrastructure, next, And pretty continue. and the it’s one access for market access an which as typically, Homes we driving NI would we a home routing Optical. to It’s market. Connected. assumption have natural strong the then here. would the good thing acceleration Regional for

XX% or are, long to take it’s last access getting QX course, tougher will QX. that Of double-digit ask of continues XX% in fixed if grew how course, then growth the if XX% – broadband comparables year, you the impossible say and fixed in you

good are more terminals, XGS-PON line getting market we have yes, than So GPON we grown market share or market has comparables The But share. optical have XX% tough. share. in

So there – the to – even this business. and that on remains. again, strongholds of is of have that level, one And we work lot that access and is in a that network do

achieved why be there every the well. we years couple last that’s optimistic the what really of in reason as and So is of are to future has NI proud about

Marco Wiren

if well. And good to lot know market focusing leader heavily and area. to it are for said, building you connectivity. look on on what Pekka good just as and of comes a we at this here us see opportunities share capture And the Union a European US also government When you as

David Mulholland

take We’ll Simon, go Artem. James. question Leopold Simon from you, from Thank Raymond our ahead. next please

Simon Leopold

my easy very you than Thank want I clarification much. to question. just really get a

just and reflective is a and want of the opportunities goals I revenue On the verify in factors? for year your clarification, to And my non-telco the that higher for get of to outlook for revenue. currency not want question, other understanding the rationale I full of better terms fully

could want government private hear does the a drives get you. it, kind out what coming verticals, look routing, we double-digits, Thank what’s of did understanding webscale, the wireless, what I into we to X% future, the where base whether I As come that. unpack for earlier, it driving of it’s versus goal from and from? better

Marco Wiren

FX comes top start, rates the is to we the purely it can on I when and the line, guidance this adjustment that Yeah, to have. current

say little So interval. we we on the of keep that we The thing narrowed the upper had now earlier. we that bit, only end down as guidance that a

of CSP comes we the where mentioned understanding And CSPs. we beyond bit more grow Enterprise coming that definitely within to the has and webscalers. little we believe part give guidance. coming have Enterprise XX% in higher outlook Pekka that sales ambitions we and a that big years today, earlier, market, growth about than are growth we see is from that believe that sector we in this sector market, So like much operators, just to outside the What of

Pekka Lundmark

mean, another is what look that authority telco webscalers, is well. I government on, police, and the XX%, when there growth private to so and addition of the several for growth for to licensing we of Routing it’s and one Obviously, as then, is with modernized the I estimated is own going and that which or invest then, yes, that business on US Then Infrastructure, attempts really growing is non-telco, a market there to of we lot. the have going into a Enterprise, market But breakthrough Optical types networks course, government’s with big for opportunity is this of again, wireless investing business. to real webscalers well. quite so point are fast. at Submarine There’s are Then Microsoft example, of the other And made when opportunities. and is in really we in an means on side webscalers on of lot in business such estimates a fast what Enterprise. course, switching you are which the on. that as slow additional case of we And as is security view, similar qualify Network webscalers And wireless of opportunity networks, on important brigades, from some services, is Just when non-telco, enterprise, mean, case look important while you the about Networks in clearly while at us, connectivity the because for which that have that, types talk – different it’s or are build we business there different getting and the authorities public ambulance generations fire networking, networks, Optical growing getting one. into. And have campus new we

of We for unit A that. have a lot special as opportunities there well. started

or talk we it’s we And really about are fronts several is this moving quite Enterprise So, – when on non-telco, there. broad-based.

David Mulholland

We’ll Thank Sami from question Bank. next Sami, take you, go Sarkamies Danske our ahead. please from Simon.

Sami Sarkamies

the to the terms that for you guidance pending the Good would guidance. expecting year? with range reach very this able one do When in of being like be IPR midpoint the more you clear to midpoint if I say the margin, around you’re even be EBIT thing. to still renewals check you afternoon. Thanks of think don’t will happen

Marco Wiren

Yeah, be the these thank that that litigation in now will two deals The solved. outlook that we the assumption have we is you. right are in

is this So as our in, baked in outlook well.

Sami Sarkamies

as ago? catch-up IPR now follow-up, could the a and a And please payments Okay. you the quarter year disclose you recorded in second

Pekka Lundmark

quarter year. the level last And same about this were they than

Sami Sarkamies

was? Which

Marco Wiren

signed, And we of that, there’s a are and allowed calculate in we’re We is in deal. one the that is do to you able itself. if deal disclose not position could also backwards the that. those specific what not And value case unfortunately, that details of haven’t to deals, number we be the actually to disclosed the any reason

Sami Sarkamies

Okay, thank you.

David Mulholland

Paul Silverstein question next from from you, Paul, Cowen. go ahead. our Thank We’ll please take Sami.

Paul Silverstein

seen quarters? I of me the strength the question insight linearity quarter, Marco, appreciate squeezing Have on ongoing certain about quarter? specific Pekka the this macro. the order My your your throughout you and end appreciate into in. of you all quarter, I and book demand, comments any consistent strength is, of but through the can beginning in about in concerns you give

Pekka Lundmark

Yeah.

major any not have changes. seen We

Our the I’m that happens be pipeline and immune of has that would not number new Again, strong. in the in we that implying we have opportunities order remained macro. the to anything intake

been is In seen and/or been worrying where this change. have no time, seeing on our change. any weak all be All hit has have the from to ball. we is especially But in been have where – rules. are we is more not there exceptions We and cases, the seeing comment crystal indicated in customers, these at have of kind don’t the a aggregate are time we no there what macro. There by inflation we level, been – CapEx markets than can development countries all plans can at emerging picture, there this high currencies have lower. big meaningful we But

Paul Silverstein

supply obvious I for actually inflation comments, with Relative based on similar allowing same on follow-up, you my chain thing So your – cost inflation. already chain impact your question half? seeing the just an you improvement a – for is hope in and points just about or actually impact And you comments coming second accounting regarding to improvement, have seen an are your have are that that start assuming have to improvement supply structure? the

Pekka Lundmark

up, so Now I sure the if line was not I’m – breaking

David Mulholland

business. asking something half. on – And seen impact we supply the concrete second the of chain inflation concrete do have on we He the have was what our improvement evidence on in of

Pekka Lundmark

profitability able I pretty and And to productivity been been deals, despite the I with well, some solid that improvement has, that’s improvement it then when of gone that we prices we’ve touch that semiconductor And the been of mean – with at our course, inflation guidance we’ve business, new able moment. much incorporated why to the And so given a we seeing absolutely, that up. as you technology are have explained comes have on. inflation inflation. pretty in in of the world earlier. in maintain all the There mitigate everything is in the to

deals we I that evidence tactical. are Then and information the account semiconductors, we what make, new we take mean, specifically are seeing all in you is coming this concrete very expecting course, in Of on asked the that see that years. we cost into to for. all

We actually Then, expecting to more we cases not And key little, second memory are of we year. on have true but are little and half where prices by said have is seen base. have to little just They are semiconductors, as supplier the in little broader that and the complete what cost yet dropped, the earlier, I this answer the there turned. to is day-to-day this we component the suppliers of components more in discussions with becoming available. see all see –

David Mulholland

our We’ll question Paul. take Henriksson go Felix, from ahead. from last Nordea. you, please Felix Thank

Felix Henriksson

Hi, my question. taking for thanks

we to about restruct and towards the the about only Networks your you’re should rose and components? inflationary heading achieve upside are given Just penetration think year-end margin Thanks. the How by year-end. should that different XXX% the mounting the in the XXXX headwinds as gross say how Mobile Mobile Networks the your into to we one think target

Pekka Lundmark

giving the this of outcome to margin doing. game any important. any are, I is is We not And you gross and your are this important. mean, always what business, for volume a in like that’s guidance. we shareholders. line Top specific that is you course, margin – play so need that is optimize you that want Margin between

our We the with with deal are working to inflation. suppliers

that, that not are, said, the deals, get course, to in development regardless of as our so of all negotiating inflationary best development potential so I’m It have overall volume and technology get still really I sure and any on. more We productivity and this. we best we a than I’m overall depends on the details semiconductor outcome. able the position, possible margin to optimizing our our possible efficiency, R&D lot cost internal if into improve prices

addition supply cost. in do to to on lot a there’s chain the So working

David Mulholland

quick Felix? very you have follow-up, Did a

Felix Henriksson

No, that’s all me. from Thanks.

David Mulholland

risks conclude you today’s like That Ladies statements for the from Factors for questions. you, both could was I Marco, expected. operating uncertainties. internal our call Actual therefore be involve you Thank would for your well last this that may today, during question today. we materially and number the factors. remind Pekka call. answers. that can have Thank and currently as – external results differ to of does for made differences that a everyone gentlemen, and your forward-looking results cause such as

on on our report such in the which listening. Investor We section Factors risks annual XX-F, available Form for Thank is have you Risk our of identified website. Relations

Operator

conference you attending now The for has concluded. presentation. Thank today’s

Nokia (NOK) 21 Jul 222022 Q2 Earnings call transcript