As the race for third place in the smartphone race heats up, Finnish giant Nokia ( NYSE: NOK ) is celebrating record sales of its Windows Phone powered Lumia range in the firm's most recent financial quarter.Figures for Q2 2013 saw Lumia sales hit 7.4 million  the range's strongest performance to date, and up an impressive 85 percent on the sales pulled in during the same period in 2012 It's a figure that also puts Nokia's Lumia range comfortably ahead of third-place rival BlackBerry 10, which shipped 2.7 million units in its June quarter With the rise of Lumia, however, comes with the continued decline of Nokia's legacy smart devices.Whereas Lumia accounted for less than 40 percent of the smartphone handsets the firm sold during the same period in 2012, lead devices such as the Lumia 920 have propelled the range up a 100 percent share.As such, smartphone sales are actually down 27 percent as Nokia continues to build its business around the Lumia brand."We are very proud of the recent creations by our Lumia team, from the Lumia 520 - our most affordable Windows Phone 8 product which has enjoyed a strong start in markets like China, France, India, Thailand, the UK, the US and Vietnam - to the Lumia 1020, our star imaging product which we unveiled to the world last week," said CEO Stephen Elop of the result."Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem."During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue."But while Lumia and Windows Phone as a whole is building momentum, Nokia is not out of the woods from a financial perspective.Net sales fell to 5.7 billion (around $7.5 billion)  down from 7.5 billion ($9.8 billion) during the same period in 2012  with the firm's vital Device & Services division also suffering a net sales decline, down from more than 4 billion ($5.2 billion) in Q2 2012 to 2.7 billion ($3.5 billion) in the most recent quarter.Elop, however, is naturally keen to the trump Nokia's "underlying operating profit", which came in at 303 million (around $397 million) using non-IFRS measures.Taking those into account, and Nokia posted a 115 million ($151 million) operating loss in Q2 2013, down from the 824 million ($1 billion) loss it suffered during the same period in 2012.Nonetheless, Nokia Group ends Q2 with gross cash of 9.5 billion ($12.5 billion) and net cash of 4.1 billion ($5.4 billion) in reserve.[source: Nokia