Nintendo's Q1 profits jumped 150% despite a Switch 2 sales slump

Nintendo released its first-quarter financial results for the 2027 fiscal year today. The company reported a 150.5% increase in operating profit despite a noticeable drop in hardware sales across the board.

According to the financial results document covering April 1 to June 30, 2026, net sales hit 517.8 billion yen. That is a 9.5% decrease compared to the same period last year. However, operating profit reached 142.5 billion yen, pushing the operating profit margin from 9.9% up to 27.5%.

The revenue decline comes directly from a cooling hardware market. The Nintendo Switch 2 sold 3.82 million units worldwide this quarter, which is a 34.4% drop compared to its massive launch window last year. The original Nintendo Switch moved 660,000 units, a 31.8% decrease. Selling over half a million units of a console that launched in 2017 is still an impressive feat, but the overall hardware momentum has slowed.

A $300 million tariff refund

The massive profit spike stems from two main sources. First, software sales are carrying the weight. Switch 2 software hit 9.46 million units, an increase of 9.2%. Original Switch software reached 33.81 million units, jumping 38.6%.

Second, Nintendo received a massive tariff refund under the U.S. IEPA. That refund knocked approximately $300 million off the company's cost of goods sold. Getting a third of a billion dollars back from the government definitely helps the bottom line.

Digital sales also saw a massive boost, reaching 132.7 billion yen. That is a 90.0% increase year-over-year. Digital purchases now account for 61.5% of all dedicated game console software sales. Nintendo credits the weak yen and high attach rates for downloadable games sold alongside physical packages for the shift.

8 million copies of Tomodachi

The software numbers were bolstered by a few heavy hitters. Tomodachi Collection: Wakuwaku Seikatsu launched on April 16, 2026. As of August 5, the life simulation game has already surpassed 8 million units sold worldwide.

Outside of games, IP-related revenue doubled to 34.8 billion yen. The main driver there was The Super Mario Galaxy Movie. The animated film hit theaters in April and has already crossed $1 billion at the global box office, proving that Nintendo's push into Hollywood is paying off.

The rest of 2026

Nintendo is keeping its full-year earnings forecast unchanged, noting that the tariff refund was a temporary boosting factor.

The investor relations page outlines a busy fall schedule to help hit those targets. Fire Emblem: Ten Thousand Colors is scheduled for release on September 17, 2026. Nintendo Switch Sports Resort follows shortly after on October 22. Nintendo also confirmed that The Legend of Zelda: Ocarina of Time is still on the schedule for a 2026 release.