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Nintendo's latest financial results reveal a surprising disconnect between sales and profitability. During the first quarter of fiscal year 2027, covering April through June 2026, the company generated 517.8 billion yen in net sales, a 9.5% decline compared to the same period last year. Despite that drop, Nintendo's operating profit surged 150.5% to 142.6 billion yen.
The company's ordinary profit also jumped 115.1% to 206.1 billion yen, while profit attributable to Nintendo's owners increased 53.5% to 147.4 billion yen.
The unusual results can largely be explained by Nintendo selling a greater proportion of software this quarter. Software generally delivers significantly higher margins than hardware, helping the company generate more profit even as overall revenue declined.
Nintendo also received a refund related to IEEPA tariffs in the United States. Those tariffs had previously been recorded as a cost of sales, meaning the refund provided an additional one-time boost to the company's bottom line.
Meanwhile, the Nintendo Switch 2 continues to build momentum. Nintendo sold 3.82 million Switch 2 consoles during the quarter, bringing the system's lifetime sales to 23.68 million units since its launch in June 2025.
Switch 2 software sales reached 9.46 million units during the quarter. Nintendo highlighted steady performances from Yoshi and the Mysterious Book and Star Fox, while Pokémon Pokopia, which launched during the previous fiscal year, continued to sell strongly.
The original Nintendo Switch is now in a very different stage of its life cycle. Hardware sales totaled just 0.66 million units during the quarter, bringing lifetime sales to an enormous 156.59 million consoles.
Software sales on the original Switch, however, remain surprisingly strong. Tomodachi Life: Living the Dream, which launched in April, has already sold 7.94 million copies. Nintendo specifically pointed to the game's strong performance as evidence that its enormous Switch user base remains highly engaged.
Across both Switch generations, software sales totaled 33.81 million units during the quarter. Older Switch games are also playable on Switch 2, allowing Nintendo to continue benefiting from its enormous back catalog.
Digital sales are becoming an increasingly important part of Nintendo's business as well. Digital revenue reached 132.7 billion yen, representing a massive 90% increase year over year. Nintendo attributed much of that growth to stronger sales of downloadable versions of packaged games.
The company's intellectual-property business performed even better. Revenue from licensing, merchandise, and film-related activities increased 107.4% to 34.8 billion yen. Nintendo credited strong audience engagement with The Super Mario Galaxy Movie for helping drive that growth.
Despite the strong quarterly profit numbers, Nintendo has not changed its full-year financial forecast. The company continues to expect 2.05 trillion yen in annual net sales, representing an 11.4% decline for the full fiscal year. It is also forecasting 370 billion yen in operating profit, 430 billion yen in ordinary profit, and 310 billion yen in profit attributable to its owners.
Nintendo's confidence in those targets appears to be tied heavily to its upcoming release schedule. The company has several major Switch 2 games still planned for the remainder of 2026, following the July release of Splatoon Raiders.
Among the biggest upcoming releases are Fire Emblem: Fortune's Weave in September and Nintendo Switch Sports Resort in October. Nintendo also once again confirmed that The Legend of Zelda: Ocarina of Time is scheduled to launch in 2026, giving Zelda fans another major release to look forward to.
The original Switch is still receiving new software as well. Rhythm Heaven Groove launched in July, and Nintendo says it intends to continue supporting the massive existing Switch audience through new releases and its collection of evergreen games.
With Switch 2 hardware sales continuing to climb and software generating increasingly strong margins, Nintendo appears to be in a particularly unusual position. The company can report declining overall revenue while simultaneously enjoying a dramatic increase in profit, and its upcoming lineup gives it plenty of opportunities to maintain that momentum through the rest of the fiscal year.
The company's ordinary profit also jumped 115.1% to 206.1 billion yen, while profit attributable to Nintendo's owners increased 53.5% to 147.4 billion yen.
The unusual results can largely be explained by Nintendo selling a greater proportion of software this quarter. Software generally delivers significantly higher margins than hardware, helping the company generate more profit even as overall revenue declined.
Nintendo also received a refund related to IEEPA tariffs in the United States. Those tariffs had previously been recorded as a cost of sales, meaning the refund provided an additional one-time boost to the company's bottom line.
Meanwhile, the Nintendo Switch 2 continues to build momentum. Nintendo sold 3.82 million Switch 2 consoles during the quarter, bringing the system's lifetime sales to 23.68 million units since its launch in June 2025.
Switch 2 software sales reached 9.46 million units during the quarter. Nintendo highlighted steady performances from Yoshi and the Mysterious Book and Star Fox, while Pokémon Pokopia, which launched during the previous fiscal year, continued to sell strongly.
The original Nintendo Switch is now in a very different stage of its life cycle. Hardware sales totaled just 0.66 million units during the quarter, bringing lifetime sales to an enormous 156.59 million consoles.
Software sales on the original Switch, however, remain surprisingly strong. Tomodachi Life: Living the Dream, which launched in April, has already sold 7.94 million copies. Nintendo specifically pointed to the game's strong performance as evidence that its enormous Switch user base remains highly engaged.
Across both Switch generations, software sales totaled 33.81 million units during the quarter. Older Switch games are also playable on Switch 2, allowing Nintendo to continue benefiting from its enormous back catalog.
Digital sales are becoming an increasingly important part of Nintendo's business as well. Digital revenue reached 132.7 billion yen, representing a massive 90% increase year over year. Nintendo attributed much of that growth to stronger sales of downloadable versions of packaged games.
The company's intellectual-property business performed even better. Revenue from licensing, merchandise, and film-related activities increased 107.4% to 34.8 billion yen. Nintendo credited strong audience engagement with The Super Mario Galaxy Movie for helping drive that growth.
Despite the strong quarterly profit numbers, Nintendo has not changed its full-year financial forecast. The company continues to expect 2.05 trillion yen in annual net sales, representing an 11.4% decline for the full fiscal year. It is also forecasting 370 billion yen in operating profit, 430 billion yen in ordinary profit, and 310 billion yen in profit attributable to its owners.
Nintendo's confidence in those targets appears to be tied heavily to its upcoming release schedule. The company has several major Switch 2 games still planned for the remainder of 2026, following the July release of Splatoon Raiders.
Among the biggest upcoming releases are Fire Emblem: Fortune's Weave in September and Nintendo Switch Sports Resort in October. Nintendo also once again confirmed that The Legend of Zelda: Ocarina of Time is scheduled to launch in 2026, giving Zelda fans another major release to look forward to.
The original Switch is still receiving new software as well. Rhythm Heaven Groove launched in July, and Nintendo says it intends to continue supporting the massive existing Switch audience through new releases and its collection of evergreen games.
With Switch 2 hardware sales continuing to climb and software generating increasingly strong margins, Nintendo appears to be in a particularly unusual position. The company can report declining overall revenue while simultaneously enjoying a dramatic increase in profit, and its upcoming lineup gives it plenty of opportunities to maintain that momentum through the rest of the fiscal year.
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