Nokia Oyj (NOK) shares tumbled 9.42% in pre-market trading on Thursday following the release of its first-quarter 2025 earnings report that fell short of analyst expectations. The Finnish telecommunications equipment maker faced challenges on multiple fronts, leading to a significant decline in profitability.

The company reported quarterly earnings of $0.03 per share, missing the analyst consensus estimate of $0.04 by 20%. This marked a sharp 68% decrease from earnings of $0.10 per share in the same period last year. Nokia's comparable operating profit plummeted 74% to 156 million euros, well below the average forecast of 243.83 million euros.

Several factors contributed to the disappointing results. Nokia's gross margin decreased significantly, dropping 820 basis points year-over-year to 42.3%. The company also took an unexpected one-time contract settlement charge with a net impact of 120 million euros in its Mobile Networks division. Additionally, Nokia warned of a potential 20 to 30 million euro impact on second-quarter comparable operating profit due to current trade tariffs.

Despite these headwinds, Nokia maintained its full-year 2025 outlook, with comparable operating profit expected between 1.9 billion and 2.4 billion euros. However, the company acknowledged that achieving the higher end of this range would now be more challenging. Investors appear to be reacting negatively to the earnings miss and the increased uncertainty surrounding Nokia's profitability in the coming quarters.