Nintendo surpassed expectations by doubling sales
Nintendo Surpasses Analyst Expectations with Strong Q1 Results, Led by Switch 2 Success
Nintendo, the Japanese gaming company, has reported impressive financial results for the quarter ending June 30, 2025, surpassing analyst expectations. The success of the Switch 2 console, Nintendo's latest gaming device, has been the clear catalyst for this financial upturn.
In the first quarter of the current fiscal year, Nintendo's revenue increased by 132% year-over-year to 572.3 billion yen. The operating profit for the quarter was 56.9 billion yen. The impressive growth was primarily due to the launch of the new Switch 2 console. By the end of the quarter on June 30, 5.82 million units of the Switch 2 console were sold, making it the fastest-selling console in Nintendo's history.
The higher selling price of the new Switch 2 console compared to its predecessor contributed to the growth of the gaming platforms business, which grew by 142.5% to 555.5 billion yen. The launch title Mario Kart World contributed significantly, selling 5.63 million units.
However, Nintendo's management in Kyoto maintains a cautious outlook and is sticking to its annual forecast for the fiscal year ending in March 2026. The sales target for the Switch 2 remains unchanged at 15 million units. Despite this, analysts recognize strong Switch 2 demand and the likelihood that Nintendo will meet or exceed its 15 million unit sales target.
Despite the strong start, Nintendo's intellectual property business, including films and merchandise, saw a 4.4% decline in revenues. This decline was attributed to the decreased earnings from last year's cinematic hit "The Super Mario Bros. Movie."
Nintendo's conservative approach is evident in its forecast of 1.9 trillion yen in revenue and 320 billion yen in operating profit for the fiscal year ending in March 2026. Analysts view this outlook as too conservative, and many believe the company will easily surpass these targets. The deliberately conservative annual forecast leaves plenty of room for positive surprises and future upgrades, providing further fuel for the stock's strong uptrend.
Potential risks such as U.S. tariffs are believed to be offsettable in the long run through growing user base and higher software sales. The success of the Switch 2 console demonstrates that the company has once again hit the nail on the head with gamers. The launch of the Switch 2 has been a resounding success, and it will be interesting to see how Nintendo continues to capitalize on this momentum in the coming quarters.
Investors are closely watching Nintendo's financial growth, particularly in the realm of investing in technology, as the company's strong Q1 results were largely driven by the success of the Switch 2 console, a testament to innovative technology in gaming. As the Switch 2 continues to sell at a rapid pace, exceeding expectations and assumption of 15 million unit sales for the fiscal year, questions arise regarding the potential expansion of Nintendo's technology offerings in the future.
