Supplementary Information: Earnings Release for the Three-Month Period Ended June 2018

Nintendo’s financial results for the three-month period ending June 2018 demonstrate significant growth in both net sales and profitability compared to the same quarter in the previous fiscal year. Net sales reached 168.1 billion yen, an increase from 154.1 billion yen in the prior year, while operating profit surged to 30.5 billion yen, nearly doubling the 16.2 billion yen reported in the first quarter of 2018. This performance reflects a robust gross profit margin of 49.3%, a notable recovery from the 42.0% margin recorded during the same period in 2017.

The company’s revenue remains heavily reliant on international markets, with overseas sales accounting for 75.3% of total revenue. Hardware sales continue to be a primary driver, representing over half of the dedicated video game platform revenue, while first-party software remains a dominant force, consistently accounting for approximately 85% of software sales. Digital sales have shown a marked upward trajectory, reaching 22.8 billion yen for the quarter, which represents 17.3% of total software sales. This shift highlights an increasing consumer preference for digital content, including downloadable versions of packaged games and add-on content.

The financial data is supported by a strong release schedule for the Nintendo Switch, which includes both high-performing first-party titles like Mario Tennis Aces and a diverse lineup of third-party software. Management maintains a cautious outlook, noting that these results are subject to inherent market risks and uncertainties. The company continues to monitor foreign exchange fluctuations closely, as a significant portion of its assets and liabilities are denominated in U.S. dollars and Euros, impacting overall ordinary profit, which reached 43.9 billion yen for the quarter.