Nintendo Co., Ltd. has a lot of lofty targets. They’ve guided to 15 million of their rumored Switch 2 console in the fiscal year ending March 2026. The company is reeling from a long list of market headwinds. Recent tariff changes have made matters worse, throwing uncertainty over pre-orders in the United States.
In April, Nintendo delayed pre-orders for the Switch 2 in the U.S. due to tariffs initiated by former President Donald Trump. Despite this setback, the company remains optimistic about its new console, which will retail at a starting price of $449.99. The Switch 2 should provide significant upgrade across the board compared to the original model. This is intended to thrill current die-hard fans and bring in new recurring customers.
Nintendo today reported a net profit of 41.6 billion yen for the last fiscal period. This remarkable number was much higher than what the market had predicted at 33.91 billion yen. During the earnings call, the company attributed its strong performance in no small part to the continued popularity of its major franchises. Super Mario and Pokémon have been absolutely essential in lengthening the lifespan of all of its hardware.
Though Nintendo’s financial performance hasn’t been all sunshine and rainbows. The gaming behemoth reported a dramatic fourth quarter revenue decline of 24.7 percent from year ago levels. Profits took an even larger hit, falling by almost half over that same stretch. Additionally, sales of the original Nintendo Switch declined by 31% year-on-year, with 10.8 million units sold—just shy of the company’s own forecasts.
Looking forward, Nintendo forecasts consolidated net sales of 1.9 trillion yen, a blistering 63% increase compared to the prior year. This figure is below forecasts from LSEG, which had forecasted net sales of 2 trillion yen. Nintendo forecasted a return to profit growth of 7.6%, for a net profit of 300 billion yen. This projection is short of LSEG’s forecast for 388.8 billion yen.
Second, Nintendo is working to diversify its revenue sources. They’re pushing their intellectual property further than ever by moving into the film industry to cash in on their most popular, iconic, and successful characters and franchises. Coupled with other recent strategic moves, this acceleration of subscription growth could improve the company’s economic fortunes as it still grapples with up and down hardware sales.
Despite these challenges, Nintendo’s shares have surged by 33% this year, indicating investor confidence in the company’s long-term growth potential. So it’s not at all surprising that Nintendo is set to launch its next console, the Switch 2. Incredibly ambitious and innovative, we will see how well it’s able to capture market share in that most competitive of landscapes.