Nintendo Q1 profit jumps 53.5% on tariff refunds and Switch 2 software sales

Profit surge driven by tariff refunds and software

Nintendo reported group net profit of 147.4 billion yen ($933 million) for the April-June quarter, a 53.5% increase from 96 billion yen a year earlier. Operating profit rose 150.5% to 142.6 billion yen ($903.8 million), exceeding the average estimate of 70.3 billion yen from 15 analysts polled by LSEG. Bloomberg's survey of analysts had projected net profit of 77.8 billion yen. The results were announced on August 6, and Nintendo's Tokyo-listed shares rose 2.9% in trading that day. Quarterly sales, however, declined 9.5% to 517.8 billion yen ($3.3 billion).

A significant portion of the profit increase came from a $300 million tariff refund. Nintendo recorded the amount as a reduction of cost of sales for the quarter, after the US Supreme Court ruled in February that Trump's "reciprocal" tariffs were illegal. The Trump administration has refunded about $100 billion from tariffs charged before the ruling, representing 60% of the $165 billion collected. Nintendo filed a lawsuit weeks after the court ruling demanding a full refund from the White House covering what it spent on tariffs plus interest.

Switch 2 console sales slow, software holds strong

Switch 2 console sales fell from 5.82 million units in the same quarter last year to 3.82 million units, a drop of about 30%. However, that figure was higher than the 2.49 million units sold in the preceding quarter. Nintendo said the Switch 2, which went on sale in June 2025, "maintained strong sales momentum." Software sales totaled 9.46 million units for the quarter, with Switch 2 software sales up 9.2% year-on-year and original Switch software sales up 38.6%.

Popular titles included "Yoshi and the Mysterious Book," released in May, "Pokémon Pokopia," and "Tomodachi Life: Living the Dream," which sold nearly eight million copies. "The Super Mario Galaxy Movie," released in April, contributed to the company's performance with 517.8 billion yen in revenue, much of it from overseas. Nintendo hopes to sustain momentum with new releases including "Splatoon Raiders," which went on sale last month, and "The Legend of Zelda: Ocarina of Time," currently in development.

Full-year forecast unchanged

Nintendo maintained its full-year earnings forecast, projecting net profit of 310 billion yen ($2 billion) for the fiscal year ending March 2027, down nearly 27% from the previous fiscal year. Annual sales are expected to slip 11% to 2.05 trillion yen ($13 billion). The company projects Switch 2 console sales of 16.5 million units for the fiscal year, down about 17% from the previous year. Software sales are forecast at 60 million units, up 23%.

Legal battle over tariff refunds

Nintendo is defending a class action lawsuit filed last month on behalf of customers who claim the company raised prices due to tariffs but later retained the refunds. Nintendo's lawyers described the lawsuit as "meritless," arguing that consumers received the products they paid for.

the price customers paid represents the purchase price of the goods they wanted and received

The company says it bore the brunt of tariff costs rather than passing them to consumers through price increases. Sony faces a similar legal challenge, having been sued by customers in May over allegations it saw a "double recovery windfall" by collecting tariff refunds after increasing PlayStation console prices. A coalition of 25 US states is suing the Trump administration over a fresh round of tariffs imposed on more than 80 countries last month, including Japan, which could open the door to another round of refunds.