Nintendo has reported mixed financial results for the first quarter of its fiscal year ending March 2027, with net sales falling 9.5% year-over-year while operating profit surged 150.5%. The company’s latest earnings show that stronger software performance, expanding digital sales, and approximately $300 million in U.S. tariff refunds more than offset weaker hardware revenue.
According to Nintendo’s latest financial results, the company generated ¥517.8 billion ($3.2 billion) in net sales during the three months ending June 30, 2026. Operating profit climbed to ¥142.5 billion ($902.7 million), while ordinary profit rose 115.1% to ¥206.1 billion and net profit increased 53.3% to ¥147.4 billion.
Software and digital business offset lower hardware sales
Nintendo attributed the increase in profitability to higher software revenue and digital purchases, even as dedicated gaming hardware sales declined. Digital revenue rose 90% year-over-year to ¥132.7 billion ($840 million), fueled by stronger sales of downloadable software.
The company also addressed the impact of U.S. tariffs, explaining that the refunds “were primarily borne by the company rather than passed on to consumers through product prices.” Nintendo is currently seeking to dismiss a class-action lawsuit alleging it failed to pass those savings on to customers.
Nintendo’s legal team argued the company absorbed tariff costs on several major products, including the Nintendo Switch 2, while making only selective pricing adjustments.
Although Switch 2 hardware sales totaled 3.82 million units during the quarter, down from 5.82 million in the same period last year, Nintendo said consumer demand remains healthy. The company noted,
“Many consumers continued to adopt the system, encouraged by the release of new titles and other factors.”
Lifetime Switch 2 shipments have now reached 23.68 million units, with Nintendo adding, “For a hardware system in its second year, sales compare favourably to the adoption trajectory of Nintendo Switch.” The company also highlighted that hardware sell-through in Japan remained solid following a price revision in May.
Software continued to be a major growth driver. Switch 2 software sales reached 9.46 million units, supported by titles such as Yoshi and the Mysterious Book, Star Fox, and Pokémon Pokopia, which has sold nearly four million copies since launching in March.
The original Switch platform also remained strong, with 33.81 million software units sold, a 38.6% increase year-over-year. Much of that momentum came from Tomodachi Life: Living the Dream, which has sold 7.94 million copies since its April release. Nintendo also credited continued sales of older Switch games, noting that compatibility with Switch 2 has helped maintain interest across its existing catalog.
Outside gaming, Nintendo’s IP business more than doubled revenue to ¥34.8 billion ($220 million), driven largely by the global success of The Super Mario Galaxy Movie, which has surpassed $1 billion at the worldwide box office.
