Nintendo Reports Mixed Financial Results, Announces Switch 2 Price Increases

"Switch 2 demand is surging, but we see headwinds ahead."

Nintendo Co. Ltd. reported stellar annual financial results driven by the launch of the Switch 2 console, but tempered investor enthusiasm with a sobering outlook. The company announced hardware price increases and forecasted lower sales and profit for the upcoming fiscal year, citing rising component costs and market conditions.

Financial Performance

Annual Results (Fiscal Year Ending March 2026)

• Net Profit: 424 billion yen ($2.7 billion), a 52% increase from 279 billion yen the previous year.
• Annual Sales: 2.3 trillion yen ($15 billion), a 99% increase from 1.2 trillion yen.
• Operating Profit: 360.1 billion yen, a 27.5% increase year-on-year. This figure fell short of analyst estimates.

Nine-Month Results (Period Ending December 31, 2025)

• Net Sales: ¥1.9 trillion ($12.3 billion), a 99.3% year-on-year increase.
• Operating Profit: ¥300.4 billion ($1.9 billion), a 21.3% increase.
• Ordinary Profit: ¥445.8 billion ($2.9 billion), a 39.4% increase.
• Net Profit: ¥358.8 billion ($2.3 billion), a 51.3% increase.

Forecast (Fiscal Year Ending March 2027)

• Sales Forecast: 2.1 trillion yen ($13 billion), an 11% decline.
• Operating Profit Forecast: 370 billion yen ($2.36 billion), a 2.7% increase.
• Net Profit Forecast: Expected to decline 27%.

Switch 2 Hardware: Sales & Pricing

Sales have been a blockbuster story. The console is the second fastest-selling in US history and the best-selling console in the US in 2026.

• First-Year US Sales: 5.9 million units sold, trailing only the Game Boy Advance (6.5 million units in 2001).
• Cumulative Global Sales: 17.37 million units as of December 31, 2025.
• Sales by Period: 7.01 million units (Q3 ending Dec 31, 2025) — the strongest quarter since launch. Launch quarter sales were 5.82 million units.
• Full-Year Forecast: Nintendo expects to sell 16.5 million Switch 2 units in the fiscal year ending March 2027, a 17% decrease from 19.86 million units sold in the previous fiscal year.

Price Increases Announced

President Shuntaro Furukawa cited rising costs of components, particularly memory chips, and exchange rate fluctuations as reasons for the price adjustments. The company expects additional costs of roughly 100 billion yen this fiscal year from component price rises and tariffs. Furukawa stated that Switch 2 profitability will be roughly unchanged from the previous fiscal year due to the price increases.

Original Switch Performance

The aging original Switch is starting to show its age as attention shifts to its successor.

• Sales (9-month period): 3.25 million consoles sold, a 66% decrease year-on-year.
• Cumulative Sales: Reached 155.37 million units.
• Active Users: 129 million people used the original Switch hardware between January and December 2025, a slight decrease from 130 million in 2024.

Software Sales

Switch 2 Software

• Cumulative Sales: 37.93 million units as of December 31, 2025.
• Full-Year Forecast: 60 million units, up 23% from 48.7 million.
• Q3 Sales (Ending Dec 31, 2025): 17.31 million units.

Original Switch Software

• Sales (Nine Months Ending Dec 31, 2025): 108.93 million units, a 12.1% decrease year-on-year.

Top-Selling Titles

• Pokemon Pokopia: Reported as a hit title.
• Mario Kart World: 14 million copies sold.
• Donkey Kong Bananza: 4.25 million units sold.
• Pokémon Legends Z-A (Switch 2 version): 3.89 million units sold.
• Kirby Air Riders: 1.76 million units sold.
• Tomodachi Life: Living the Dream: Over 3.8 million units sold in two weeks.

Media Performance

• The Super Mario Galaxy Movie has grossed over $800 million since its release a month ago.

Market Reaction & Supply Chain

Stock Drop

"Switch 2 customers are particularly price-sensitive, and the first-year game lineup is weaker than that of its predecessor." — Gaming Industry Consultant Serkan Toto

Following the earnings announcement and forecast, Nintendo's stock price dropped by up to 9.9% to 6,908 yen in Tokyo trading. Shares have lost over 15% year-to-date.

Memory Chip Shortage

Nintendo faces significant challenges from rising prices for semiconductor memory chips (DRAM), driven by increasing demand from the AI and data center sectors. Contract prices for conventional DRAM chips were projected to increase by 90% to 95% in the first quarter of the year compared to the prior three months, according to TrendForce. A semiconductor industry CEO indicated the memory chip shortage is expected to continue through 2027.

Nintendo's Response

President Shuntaro Furukawa stated that while price increases are occurring faster than expected, they did not significantly impact hardware profitability in the third quarter and are not anticipated to affect Q4 results. He indicated that future price increases could put pressure on profitability. Nintendo is working to secure stable supplies and reduce costs through mass production. No final decision has been made regarding future pricing adjustments.

Upcoming Releases

• Games: "Mario Tennis Fever" (February) and "Pokémon Pokopia" (March) for the Switch 2.
• Original Switch Updates: Large-scale updates for "Animal Crossing: New Horizons" and "Splatoon 3" are planned to maintain consumer engagement.

Analyst Insight: "2026 will be a significant year for the Switch 2's future in expanding its mass market appeal." — James McWhirter, Omdia