Nintendo Profit Rises 150% Despite Switch 2 Sales Drop

Nintendo posted stronger first-quarter (Q1) profits despite a slowdown in Nintendo Switch 2 hardware sales. The company credited software growth and a $300M USD U.S. tariff refund for the improved earnings, while keeping its full-year hardware forecast unchanged.

For the quarter ended June 30, 2026, Nintendo reported net sales of ¥517.8B (~$3.27B), down 9.5% year-on-year (YoY). Operating profit rose 150.5% to ¥142.5B (~$900M). The company stated that the tariff refunds "were primarily borne by the company rather than passed on to consumers through product prices."

Nintendo Switch 2 Software Offsets Hardware Decline

Nintendo shipped 3.82M Switch 2 consoles during the quarter, down 34.4% from the launch quarter a year earlier. Dedicated gaming revenue also fell 13.1% to ¥483B (~$3.05B), mainly because of lower hardware sales. Even so, Nintendo continues to expect Switch 2 sales to reach 16.5M units for the fiscal year (FY) ending March 2027.

Software remained the bright spot.

Switch 2 software sales increased 9.2% to 9.46M units, while original Switch software sales jumped 38.6% to 33.81M units. Tomodachi Life: Living the Dream sold 7.94M copies during the quarter, while Pokémon Pokopia added 1.27M units. Digital sales also surged 90% to ¥132.7B (~$838M), representing 61.5% of software revenue.

Earlier in 2026, Nintendo raised Switch 2 prices across Japan, the U.S., Canada, and Europe, citing higher component costs and changing market conditions. The company is also seeking dismissal of a proposed U.S. class action over those pricing decisions after receiving tariff refunds.

Beyond gaming, Nintendo's IP business generated ¥34.8B (~$220M) in revenue, up 107.4% YoY. The increase was driven by the global success of The Super Mario Galaxy Movie, which has surpassed $1B at the worldwide box office. The results confirm that Nintendo's software and entertainment businesses continue to support growth as Switch 2 enters its second year.