Nintendo Beats Q1 Revenue and Profit Estimates Despite Switch 2 Sales Decline
Japanese gaming giant reports stronger-than-expected earnings while navigating higher component costs and price increases.
Quick Look
Nintendo reported fiscal first-quarter earnings beating analyst estimates with revenue of 517.8 billion yen and net profit of 147.4 billion yen, despite a sharp decline in Switch 2 hardware sales.
AI-generated summary
Why It Matters
Nintendo released its flagship Switch 2 console last June and faced rising memory chip prices driven by AI demand.
Nintendo reported fiscal first-quarter earnings on Thursday, beating analysts' revenue and profit estimates, even as its Switch 2 console sales saw a sharp decline.
Here's how Nintendo did in its fiscal first quarter ended June 30, compared with LSEG median estimates:
Revenue: 517.8 billion Japanese yen ($3.28 billion) versus 444.96 billion yen expected.
Net profit: 147.4 billion yen versus 78.30 billion yen expected.
Shares of the Japanese gaming giant closed 2.87% higher ahead of its earnings release.
The company maintained its forecast for the year ending March 2027 announced in May, keeping its net sales outlook unchanged at 2.05 trillion yen.
Nintendo Switch 2 hardware sales fell 34.4% from a year earlier to 3.82 million units, while sales of the original Nintendo Switch dropped 31.8% to 0.66 million units. The company said consumers continued to adopt the Switch 2 despite lower hardware sales than the year-ago period, supported by the release of new titles and other factors.
Nintendo said it has factored nearly a 100 billion yen impact from higher component prices, particularly for memory, and tariffs into its cost of sales.
Nintendo's flagship Switch 2, launched last June, uses memory chips whose prices have risen sharply against a backdrop of robust AI demand.
Nintendo game sales were driven by the solid performance of Tomodachi Life: Living the Dream, which sold 7.94 million units, and Pokémon Pokopia, which sold 1.27 million units.
The company said releasing new titles at regular intervals is crucial to expanding the Switch 2's installed base, adding that a steady pipeline of new games helps broaden the console's appeal to a wider range of consumers.
In the Japanese market, where Nintendo raised Switch 2 prices on May 25, hardware sell-through has remained solid, the company said.
Nintendo earlier announced a $50 price increase for the console in the United States, raising its retail price to $499.99 from $449.99 effective Sept. 1.
Open Questions
- How will the US price increase impact future sales volumes?
- Will component costs continue to affect profit margins?
