Nintendo posts 53% profit spike

Nintendo said on Aug. 6 that profit attributable to owners of parent rose 53.5% to 147.4 billion yen in the three months ended June 30, while net sales fell 9.5% to 517.8 billion yen. The Japanese game company said operating profit climbed 150.5% to 142.5 billion yen and ordinary profit rose 115.1% to 206.1 billion yen. The company said the quarter included about $300 million recorded as a reduction in cost of sales tied to refunds of U.S. tariffs imposed under the International Emergency Economic Powers Act, or IEEPA. ### Where did the profit jump come from if sales fell? Nintendo said the tariff refunds were the main non-operating feature in the quarter’s profit picture. In its financial results material, the company said it recorded “approximately 300 million U.S. dollars” as a reduction of cost of sales connected with IEEPA tariff refunds, and said those tariffs were “primarily borne by the company rather than passed on to consumers through product prices.” (nintendo.co.jp) The same filing showed the gap between revenue and profit growth. Net sales fell to 517.8 billion yen from 572.3 billion yen a year earlier, while net profit rose to 147.4 billion yen from 96.0 billion yen. Operating profit rose to 142.5 billion yen from 56.9 billion yen. ### Why were sales down in the quarter? Nintendo said dedicated video game platform sales fell 13.1% year over year to 483.0 billion yen. (nintendo.co.jp) The company said the decline came “primarily” from lower hardware unit sales, even though software unit sales increased and the weaker yen added to revenue. CNBC reported that Switch 2 hardware sales fell 34.4% from a year earlier to 3.82 million units, while original Switch hardware sales fell 31.8% to 0.66 million units. (nintendo.co.jp) The company told investors consumers were still adopting the Switch 2, supported by new game releases and other factors. ### What else supported results besides the refund? (nintendo.co.jp) Nintendo said IP-related income more than doubled to 34.8 billion yen from 16.7 billion yen a year earlier. The company said that increase was driven in part by higher income from movies and videos related to *The Super Mario Galaxy Movie*. CNBC reported the film has generated more than $1 billion in global box office revenue since its April 1 worldwide release. (cnbc.com) CNBC also reported software sales were helped by *Tomodachi Life: Living the Dream*, which sold 7.94 million units, and *Pokémon Pokopia*, which sold 1.27 million units in the quarter. ### Did Nintendo change its outlook? (nintendo.co.jp) Nintendo left its full-year forecast unchanged on Aug. 6. CNBC reported the company kept its net sales forecast for the year ending March 2027 at 2.05 trillion yen. Reuters, as carried by RTÉ, reported Nintendo also maintained its operating profit forecast at 370 billion yen and kept its forecast to sell 16.5 million units of Switch 2 hardware and 60 million software units in the current business year. (cnbc.com) Nintendo has also said it has factored in nearly 100 billion yen of impact from higher component prices, especially memory, and tariffs into cost of sales. CNBC reported Nintendo raised the U.S. retail price of the Switch 2 by $50 to $499.99 effective Sept. 1, after earlier price revisions in Japan on May 25. ### What should investors watch next? (cnbc.com) Aug. 6 is Nintendo’s scheduled three-month earnings release date for the fiscal year ending March 2027, according to the company’s investor relations site. The company posted its earnings release and explanatory materials the same day. Nintendo’s next formal checkpoints will be its subsequent quarterly disclosures and any update to its March 2027 forecasts on unit sales, tariffs and component costs. (cnbc.com) (nintendo.co.jp)