Financial Results Explanatory Material: 1st Quarter of Fiscal Year Ending March 2027

Nintendo’s financial performance for the first quarter of the fiscal year ending March 2027 reflects a strategic transition toward its next-generation hardware ecosystem. While net sales experienced a 9.5 percent year-on-year decline due to the anticipated contraction of legacy hardware, the company achieved a 150.5 percent surge in operating profit, reaching 142.5 billion yen. This profitability was driven by a combination of reduced cost of sales, including significant tariff refunds, and a robust expansion in digital software revenue and IP-related income.

The company is currently prioritizing the adoption of the Nintendo Switch 2, which recorded 382,000 hardware units and 9.46 million software units sold during the quarter. Management remains committed to its full-year forecast of 16.5 million hardware units and 60 million software units, supported by a steady pipeline of first-party and third-party titles. The success of this transition is further bolstered by high user engagement, with annual playing users remaining stable above the 100 million mark.

Beyond core gaming operations, the company is successfully diversifying its revenue streams through multimedia integration. The global box-office performance of The Super Mario Galaxy Movie, which surpassed 1 billion dollars, underscores the efficacy of leveraging intellectual property to drive brand value. To ensure long-term technological competitiveness, a 121 billion yen investment is underway for a new Technology Development Center, slated for completion in March 2029. These initiatives collectively position the company to maintain market relevance as it shifts its focus toward the Switch 2 platform and broader entertainment ventures.