Nintendo beats forecasts: profit surged despite decline in Switch 2 sales
Nintendo reported a 150.5% surge in operating profit for the first quarter, despite a slowdown in hardware sales for the Switch 2 and original models. Strong performance was driven by game demand and US customs duty refunds.
Nintendo opened the fiscal year with stronger-than-expected results, despite signs of a slowdown in sales of its new gaming console. The Japanese gaming giant reported today (Thursday) that operating profit for the first quarter, which ended on June 30, surged by 150.5% compared to the same period last year, totaling 142.6 billion yen (about 904 million dollars) — well above analyst forecasts, which averaged 70.3 billion yen, according to LSEG data.
The strong performance was supported mainly by high demand for games for the Switch 2 console, alongside refunds the company received on customs duties in the USA. Nintendo shares rose by 2.9% ahead of the report's publication. However, hardware sales data indicate a moderation following the initial launch of the new console. Switch 2 sales for the quarter totaled 3.82 million units — a decrease of 34.4% compared to last year. Sales of the original Nintendo Switch model also fell by 31.8% to 660 thousand units.
Despite the decline, Nintendo stated that consumers continue to adopt the Switch 2, and that the release of new games and other factors support the expansion of the user base. The company emphasized:
«Releasing new titles at regular intervals is critical for expanding the Switch 2 user base.»
Nintendo left its forecasts for the fiscal year ending in March 2027 unchanged. The company expects net sales of 2.05 trillion yen, an operating profit of 370 billion yen, and the sale of 16.5 million Switch 2 units alongside 60 million software units. The company noted that the rise in component prices, mainly memory chips, as well as the impact of customs duties, are expected to weigh on costs. According to the company, it has already factored an impact of nearly 100 billion yen into the cost of sales as a result of these factors. The rise in memory chip prices comes against the backdrop of growing demand for artificial intelligence (AI) infrastructure.
On the software side, Nintendo enjoyed success with several new titles. The game Tomodachi Life: Living the Dream sold 7.94 million units, while Pokémon Pokopia sold 1.27 million units. The company's film business also continues to contribute to revenue. Nintendo reported that «The Super Mario Galaxy Movie» has grossed more than a billion dollars at the box office worldwide since its release on April 1, becoming the second most successful film ever based on a video game.
Switch 2 was launched last June and arrived after years in which Nintendo's original console became one of the most successful in the company's history. Now, the company's main challenge is to maintain a high sales pace even after the initial wave of enthusiasm, by expanding the game library and retaining the user base.
