Net sales

12 Months Ended

Dec. 31, 2023

Disclosure of disaggregation of revenue from contracts with customers [abstract]

Net sales

2.1. Net sales

Accounting policies

Nokia accounts for a contract with a customer when the

contract has been approved in writing, which is generally

when both parties are committed to perform their

respective obligations, the rights, including payment terms,

regarding the goods and services to be transferred can be

identified, the contract has commercial substance, and

collection of the consideration to which Nokia expects to be

entitled is probable. Management considers only legally

enforceable rights in evaluating the accounting for contracts

with customers. As such, frame agreements that do not

create legally enforceable rights and obligations are

accounted for based on the issuance of subsequent legally

binding purchase orders under the frame agreements.

A contract modification or a purchase order is accounted

for as a separate contract if the scope of the contract

increases by additional distinct goods or services, and the

price of the contract increases by an amount that reflects

the standalone selling price of those additional goods or

services. In cases where the additional goods or services

are distinct but not sold at a standalone selling price,

the contract modification is accounted for prospectively.

In cases where the additional goods or services are not

distinct, the modification is accounted for through a

cumulative catch-up adjustment.

Nokia recognizes revenue from contracts with customers

to reflect the transfer of promised goods and services to

customers for amounts that reflect the consideration to

which Nokia expects to be entitled in exchange for those

goods and services. The consideration may include a

variable amount, which Nokia estimates based on the most

likely amount. Items causing variability include volume

discounts and sales-based or usage-based royalties. Nokia

includes variable consideration into the transaction price

only to the extent that it is highly probable that a significant

revenue reversal will not occur. The transaction price also

excludes amounts collected on behalf of third parties.

In cases where the timing of payments provides either the

customer or Nokia with a significant benefit of financing,

the transaction price is adjusted for the effect of financing

and the related interest revenue or interest expense

is presented separately from revenue. As a practical

expedient, Nokia does not account for financing

components if, at contract inception, the consideration is

expected to be received within one year before or after the

goods or services have been transferred to the customer.

Nokia enters into contracts with customers consisting of any

combination of hardware, services and intellectual property.

Hardware and software sold by Nokia includes warranty,

which can either be assurance-type for repair of defects

and replacement of hardware recognized as a centralized

warranty provision, or service-type for scope beyond the

repair of defects or for a time period beyond the standard

assurance-type warranty period and considered a separate

performance obligation within the context of the contract.

The associated revenue recognized for such contracts

depends on the nature of the underlying goods and services

provided. The promised goods or services in the contract

might include sale of goods, license of intellectual property

and grant of options to purchase additional goods or

services that may provide the customer with a material

right. Nokia conducts an assessment at contract inception

to determine which promised goods and services in a

customer contract are distinct and accordingly identified

as performance obligations.

The standalone selling price of each performance obligation

is determined by considering factors such as the price of

the performance obligation if sold on a standalone basis and

the expected cost of the performance obligation plus a

reasonable margin when price references are not available.

The portion of the transaction price allocated to each

performance obligation is then recognized when the

revenue recognition criteria for that performance obligation

have been met. 

Nokia allocates the transaction price to each distinct

performance obligation on the basis of their standalone

selling prices, relative to the overall transaction price. If a

standalone selling price is not observable, it is estimated.

The transaction price may include a discount or a variable

amount of consideration that is generally allocated

proportionately to all performance obligations in the

contract unless Nokia has observable evidence that the

entire discount relates to only one or more, but not all,

performance obligations in a contract. The amount of

revenue recognized is the amount allocated to the satisfied

performance obligation based on the relative standalone

selling prices. A performance obligation may be satisfied

at a point in time or over time.

As described in Note 4.5. Trade receivables and other

customer-related balances, Nokia presents its customer

contracts in the statement of financial position as either

a contract asset or a contract liability, depending on

the relationship between Nokia’s performance and

the customer’s payment for each individual contract.

      Sale of products

Nokia manufactures and sells a range of networking

equipment, covering the requirements of network

operators. Revenue for these products is recognized when

control of the products has transferred, the determination

of which may require judgment. Typically, for standard

equipment sales, control transfers upon delivery. For

more complex solutions, control generally transfers

upon acceptance.

In some arrangements, mainly within the Submarine Networks

business, Nokia’s performance does not create an asset with an

alternative use and Nokia recognizes revenue over time using

the output method, which faithfully depicts the manner in

which the asset is transferred to the customer as well as

Nokia’s enforceable rights to payment for the work completed

to date, including margin. The output measure selected by

Nokia for each contract may vary depending on the nature

of the contract.

Sale of services

Nokia provides services related to the provision of networking

equipment, ranging from managing a customer’s network

and product maintenance services to network installation,

integration and optimization. Revenue for each separate

service performance obligation is recognized as or when the

customer obtains the benefits of Nokia’s performance. Service

revenue is recognized over time for managed and maintenance

services, as in these cases Nokia performs throughout a fixed

contract term and the customer simultaneously receives and

consumes the benefits as Nokia performs. In some cases,

Nokia performs services that are subject to customer

acceptance where revenue is recognized when the customer

acceptance is received.

Sale of intellectual property licenses

Nokia provides its customers with licenses to intellectual

property (IP) owned by Nokia by granting software licenses

and rights to benefit from Nokia’s IP in their products.

When a software license is sold, revenue is recognized

upon delivery or acceptance of the software, as Nokia has

determined that each software release is distinct and the

license is granted for software as it exists when the control

transfers to the customer.

When Nokia grants customers a license to use IP owned by

Nokia, the associated license fee revenue is recognized in

accordance with the substance of the relevant agreements.

In the majority of cases, Nokia retains obligations to

continue to develop and make available to the customer

the latest IP in the licensed assets during the contract term,

and therefore revenue is recognized pro rata over the

period during which Nokia is expected to perform.

Recognition of the revenue as pro rata over the term of the

license is considered the most faithful depiction of Nokia’s

satisfaction of the performance obligation as the IP being

licensed towards the customer includes new inventions

patented by Nokia that are highly interdependent and

interrelated and created through the course of continuous

research and development (R&D) efforts that are relatively

stable throughout the year. In some contracts, Nokia has

no remaining obligations to perform after granting a license

to the initial IP, and licensing fees are non-refundable. In

these cases, revenue is recognized at the beginning of the

license term.

Revenue disaggregation

Management has determined that Nokia’s geographic areas

are considered as the primary determinants to depict how

the nature, amount, timing and uncertainty of revenue and

cash flows are affected by economic factors. Nokia’s primary

customer base consists of companies that operate on

a country-specific or a regional basis. Although Nokia’s

technology cycle is similar around the world, different countries

and regions are inherently in a different stage of that cycle,

often influenced by macroeconomic conditions specific to

those countries and regions. In addition to Net sales to external

customers by region, the chief operating decision-maker,

as described in Note 2.2. Segment information, also reviews

Net sales by customer type disclosed in this note.

Each reportable segment, as described in Note 2.2. Segment

information, consists of customers that operate in all

geographic areas. No reportable segment has a specific

revenue concentration in any geographic area other than

Nokia Technologies, which is included within Europe.

Net sales to external customers by region

Net sales to external customers by region are based on the

location of the customer, except for Nokia Technologies IPR

and licensing net sales which are allocated to Europe.

EURm	2023	2022	2021
Asia Pacific	2 291	2 648	2 472
Europe	5 873	6 662	6 313
Greater China	1 303	1 581	1 512
India	2 842	1 290	1 035
Latin America	1 046	1 223	983
Middle East & Africa	2 050	1 969	1 771
North America	5 733	8 388	7 187
Submarine Networks	1 120	1 150	929
Total	22 258	24 911	22 202

Net sales by customer type

EURm	2023	2022	2021
Communications service providers	17 652	19 921	17 977
Enterprise	2 282	1 997	1 575
Licensees	1 085	1 595	1 502
Other(1)	1 239	1 398	1 148
Total	22 258	24 911	22 202

(1)Includes net sales of Submarine Networks which operates in a different market, and

Radio Frequency Systems (RFS), which is being managed as a separate entity, and

certain other items, such as eliminations of inter-segment revenues. Submarine

Networks and RFS net sales also include revenue from communications service

providers and enterprise customers.

Order backlog

At 31 December 2023, the aggregate amount of the

transaction price allocated to partially or wholly unsatisfied

performance obligations arising from fixed contractual

commitments amounted to EUR 22.0 billion (EUR 19.5 billion

in 2022). Management has estimated that these unsatisfied

performance obligations will be recognized as revenue as follows:

	2023	2022
Within 1 year	51%	75%
2-3 years	30%	21%
More than 3 years	19%	4%
Total	100%	100%

The estimated timing of the satisfaction of these performance

obligations is subject to change owing to factors beyond

Nokia’s control such as customer and network demand,

market conditions and, in some cases, restrictions imposed

by the weather or other factors impacting project logistics.

Revenue recognized in the reporting period from performance

obligations satisfied (or partially satisfied) in previous periods

(for example, due to changes in transaction price) was

not material.