Nintendo Q1 sales drop 9.5%; operating profit soars following higher software sales and $300m in US tariff refunds

Nintendo's first-quarter net sales dropped by 9.5%, while operating profit jumped by 150.5% due to increased software revenue and $300 million in refunds from US tariffs. The company clarified that it did not pass on the tariff refunds to consumers through higher prices but instead absorbed the costs itself, primarily for popular products like the Switch 2.

Despite a 13.3% decline in dedicated video platform sales to ¥483 billion ($3 billion), driven by lower hardware sales, digital sales surged by 90% to ¥132.7 billion ($840 million) thanks to higher demand for downloadable software. The Switch 2 sold 3.82 million units, a 34.4% drop compared to 5.82 million in the same period last year, yet still outperformed the original Switch's sales from two years prior, reaching 23.68 million units shipped.

The strong hardware sales momentum was reflected in the Switch 2's solid performance in the Japanese market, where a price reduction took effect in May. Nintendo also reported that the Switch 2 software sales reached 9.46 million units, up 9.2% year-on-year. The company's IP segment sales grew by 107.4% year-on-year to ¥34.8 billion ($220 million), propelled by high audience engagement with The Super Mario Galaxy Movie, which surpassed $1 billion at the global box office.