Nintendo Profit Rises 11% as Games, Mario Movie and Tariff Refund Offset Slower Switch 2 Sales

Fewer consoles sold, more profit earned

Nintendo sold 6.49 million Switch 2 consoles in the six months to September 30, 2026, a decline of 37.4% from a year earlier, yet its net profit rose 11% to 220.9 billion yen. Stronger game sales, growing digital revenue, income from The Super Mario Galaxy Movie and a refund of about $300 million in United States tariffs helped the Kyoto company earn more from lower revenue.

The results, published on November 5 through Nintendo's second quarter results announcement, cover April 1 to September 30, the first half of its fiscal year ending March 2027. Revenue fell 12.1% to 966.0 billion yen, while operating profit increased 49.1% to 216.5 billion yen.

Nintendo kept its annual forecasts unchanged, including a target of 16.5 million Switch 2 consoles. With 6.49 million sold by September, the company needs another 10.01 million during October through March, about 61% of its annual target. Christmas and New Year's, typically its busiest selling seasons, will carry much of that task.

The results show two parts of Nintendo's business moving in different directions. Console sales slowed after the Switch 2 launch year, while owners of both generations of Switch continued buying games. Nintendo also earned more from characters appearing beyond its consoles, especially Mario in cinemas.

For players, the immediate picture is a continuing flow of games across both systems, alongside higher Switch 2 prices in several markets. For shareholders, stronger profitability comes with an unchanged forecast for lower annual net earnings.

Why profit rose while revenue fell

Nintendo's operating profit measures what it earns from running its business after production and operating costs. Its operating margin rose from 13.2% to 22.4%, meaning it retained about 22 yen in operating profit for every 100 yen of revenue, compared with about 13 yen a year earlier.

Games accounted for a larger share of sales as hardware shipments declined. That change helped lift the gross profit margin, the share of revenue left after the direct cost of goods sold, from 36.2% to 50.4%. Research and development spending increased, but the improvement in gross profit still supported higher operating earnings.

The tariff refund also reduced costs. Nintendo had largely borne tariffs imposed under the U.S. International Emergency Economic Powers Act, known as IEEPA. It received approximately $300 million back and deducted that amount from its cost of sales in the first quarter.

Nintendo's ordinary profit, which also includes financial and other nonoperating items, rose 27.4% to 300.6 billion yen. Net profit, the amount remaining after taxes and other adjustments, increased more slowly, by 11%. At 220.92 billion yen before rounding, it came below the 224.6 billion yen estimate in a Visible Alpha analyst poll.

Switch 2 slows after its launch year

Switch 2 shipments reached 2.68 million in the three months ended September 30, taking lifetime shipments to 26.35 million. Nintendo's sales measure includes shipments to business partners, direct sales and digital sales where applicable. For hardware, units supplied to retailers can reach households later.

The comparison with 2025 is demanding because that period included the console's launch. Nintendo had expected sales to decline in its second year, following plentiful launch stock that allowed many customers to buy early, as well as subsequent price increases.

Switch 2 remained more than six million units ahead of both the original Switch and PlayStation 5 at comparable points after launch. Those earlier consoles faced supply constraints, so customers had different opportunities to buy them during their opening months.

Nintendo raised Switch 2 prices in Japan, the United States and some other regions. In the United States, the price increased from about $450 to about $500, roughly an 11% rise. The company is also operating amid chip shortages and rising component prices associated with the global expansion of artificial intelligence infrastructure.

The original Switch sold another 1.27 million consoles during the half, down 32.7%, bringing its lifetime total to 157.2 million. That leaves it 2.8 million below the PlayStation 2's stated total of 160 million. Nintendo's annual target for the older Switch remains two million units.

Digital sales become a larger part of the business

Nintendo sold 24.49 million Switch 2 games during April through September, an increase of 18.8%. Software sales for the original Switch rose 6.8% to 65.73 million. Together, the two platforms generated 90.22 million game sales during the half.

The older console still accounted for nearly 73% of that combined software volume. Its large population of existing owners gives Nintendo an audience that can keep buying games even as demand for new Switch hardware declines.

Digital revenue rose 60.5% to 249.6 billion yen. This category includes downloadable versions of games also sold in boxes, games available only as downloads, additional content and services such as Nintendo Switch Online.

Digital sales reached 60.7% of dedicated gaming platform software revenue, up 6.2 percentage points from a year earlier. The percentage measures money earned, rather than the share of game copies downloaded. Lifetime software sales reached 73.21 million for Switch 2 and 1.59387 billion for the original Switch.

Which games brought in buyers?

Tomodachi Life: Living the Dream was the biggest seller among the highlighted titles, recording 8.81 million copies during April through September after its April 16 release. Nintendo's headline figures put its cumulative sales at 8.81 million; a detailed regional breakdown gives a September total of 8.83 million.

The detailed total rose from 7.96 million at the end of June, adding 870,000 copies during July through September. At 8.83 million, the game had passed its predecessor's lifetime sales of 6.73 million by 2.10 million copies.

Rhythm Heaven: Miracle Stars sold 2.89 million copies following its July release, while Splatoon Raiders sold 2.42 million. Mario Kart World added 1.78 million during the half, bringing lifetime sales to 16.48 million. Star Fox, released on June 25, sold 1.17 million.

Fire Emblem: Many Colors sold 1.34 million copies between its September 17 launch and the end of the reporting period, roughly two weeks. The title is also identified as Fire Emblem: Fortune's Weave in English coverage; Rhythm Heaven: Miracle Stars is also called Rhythm Heaven Groove.

Earlier Fire Emblem entries provide a useful comparison of scale, with different selling periods. Three Houses reached 2.29 million by September 2019 after launching that July, then 2.87 million by March 2020. Engage reached 1.61 million by March 2023 following its January release. Additional content through an expansion pass is planned for the latest game.

Japan and overseas markets favour different titles

Tomodachi Life's regional figures show six million copies sold overseas and 2.82 million in Japan during the half. Overseas markets supplied about 68% of its sales, giving the title a much broader audience than Japan alone.

Rhythm Heaven had the reverse pattern: 2.13 million copies in Japan and 770,000 overseas. Japan represented about 74% of its worldwide total. Splatoon Raiders also sold more domestically, with 1.41 million copies in Japan and 1.01 million overseas.

Star Fox drew about 83% of its sales from overseas markets, where it sold 970,000 copies, compared with 200,000 in Japan. Fire Emblem also leaned overseas, selling 920,000 copies outside Japan and 420,000 domestically. Regional figures are rounded to 10,000 units, so their sums can vary slightly from worldwide totals.

Poco a Pokémon contributed another 1.63 million copies during the half and reached 4.04 million cumulatively in overseas markets where Nintendo handles publishing and distribution. Japanese sales are excluded from those figures. Together, the regional results show how different games contribute to Nintendo's business in different places.

Mario's movie lifts income beyond games

Nintendo's intellectual property related revenue rose 87.9% to 62.7 billion yen, supported by video content revenue associated with The Super Mario Galaxy Movie. The film is Nintendo's second animated feature based on the Mario series.

Intellectual property means creations a company owns or controls, including characters and fictional worlds. Nintendo earns money from these through films, licensing, merchandise and other activities. Its reported category also includes mobile payments, royalties and goods sold through official stores.

The category represented about 6.5% of first half revenue, calculated from 62.7 billion yen out of 966.0 billion yen. Dedicated gaming platform revenue remained much larger at 903.3 billion yen, although it fell 15.3% from a year earlier.

Nintendo is extending its characters into movies, theme parks and toys. A live action Legend of Zelda film is scheduled for 2027, and a licensing agreement allows Hasbro to make toys based on Zelda characters. The Mario movie's contribution gives a concrete example of how entertainment outside games can support earnings during a slower hardware period.

Zelda leads the next release schedule

The Legend of Zelda: Ocarina of Time was scheduled for November 5, the same day Nintendo announced its results. A special console design marking Zelda's 40th anniversary had already gone on sale in October.

The release calendar extends through the holiday shopping season and into January. Key dates include:

• September 17, 2026: Fire Emblem: Many Colors launched.
• September 30, 2026: Nintendo's first half reporting period ended.
• November 5, 2026: Results were published and The Legend of Zelda: Ocarina of Time was scheduled for release.
• November 12, 2026: Pikmin 4 Nintendo Switch 2 Edition + Dandori Academy is scheduled.
• December 3, 2026: Xenoblade Chronicles 3 Nintendo Switch 2 Edition is scheduled.
• January 28, 2027: Metroid Ravenous is scheduled.
• March 31, 2027: Nintendo's fiscal year ends.

Dr Serkan Toto, chief executive of Japanese games consultancy Kantan Games, expects Ocarina of Time to carry much of Nintendo's remaining fiscal year. He said:

For the rest of the fiscal year, Nintendo will need to mainly rely on the Ocarina of Time remake, which I believe will sell much better than what other analysts are predicting.

Toto also said he expected a bigger 2027 from Nintendo. His assessment places particular weight on Zelda, while Nintendo's unchanged targets also depend on continuing sales of existing games and the rest of its release schedule.

What the unchanged forecast requires

Nintendo maintained its forecast for annual revenue of 2.050 trillion yen, down 11.4%, and net profit of 310 billion yen, down 26.9%. It expects operating profit of 370 billion yen, up 2.7%, and ordinary profit of 430 billion yen, down 20.7%.

The company has already earned about 71% of its forecast annual net profit, using 220.9 billion yen for the first half against the 310 billion yen target. Its unchanged projection leaves approximately 89.1 billion yen of net profit for the second half, despite that period containing the busiest shopping season.

Nintendo's Switch 2 software target remains 60 million copies, requiring another 35.51 million after September. The original Switch software target is 105 million, leaving 39.27 million. Hardware targets require another 10.01 million Switch 2 consoles and 730,000 original Switch consoles.

Nintendo kept its assumed exchange rates at 150 yen per U.S. dollar and 175 yen per euro. Those assumptions matter because sales earned overseas translate into different amounts of yen as currencies move. The company did not provide a new date for revising its forecasts.

A larger interim dividend, a lower annual payout

Nintendo set its interim dividend at 76 yen per share, up from 42 yen a year earlier. The planned dividend at the fiscal year end is 86 yen, keeping the annual forecast at 162 yen per share.

The annual forecast is 57 yen below the previous year's payout of 219 yen, even though the interim payment is larger. Shareholders therefore face a lower expected payment across the full year.

Nintendo shares rose 6.3% in Tokyo on November 5. The results were announced after trading ended, placing that day's share price move before the earnings release.

Key Points

• First half revenue fell 12.1% to 966.0 billion yen, while net profit rose 11% to 220.9 billion yen.
• Switch 2 sold 6.49 million consoles during the half, down 37.4%, reaching 26.35 million cumulatively.
• Stronger software sales, digital revenue, Mario movie income and a tariff refund supported profit.
• Digital revenue rose 60.5% to 249.6 billion yen.
• Nintendo kept its annual target of 16.5 million Switch 2 consoles and net profit forecast of 310 billion yen.
• Zelda and the Christmas and New Year's shopping seasons lead the next stage of Nintendo's sales calendar.