Nintendo reported robust first-half results, with revenue more than doubling to 1.1 trillion yen and net profit surging 83%, primarily driven by the successful launch of its Switch 2 console. Despite a significant drop in gross margin due to higher hardware sales and lower profit margins on the new console, the company raised its full-year revenue outlook by 18.4% and increased its Switch 2 unit sales forecast to 19 million. This strong performance and optimistic outlook led to a 4.4% rise in Nintendo's stock.
Nintendo reported robust first-half results, with revenue more than doubling year-over-year to 1.1 trillion yen and net profit surging 83% to 198.9 billion yen. Operating profit also rose 19.5% to 145.1 billion yen, driving a 4.4% increase in NTDOY stock. This strong performance was primarily driven by the successful June launch of the Switch 2 console, which, with its higher unit price, significantly boosted overall revenue. Hardware sales now constitute over 70% of total sales, up from approximately 40% previously. However, this shift towards lower-margin hardware led to a nearly 25 percentage point drop in overall gross margin to 36.2%. Despite the margin compression, Nintendo raised its full-year outlook, now expecting to sell 19 million Switch 2 units, up from 15 million. The company also increased its revenue outlook by 18.4% to 2.25 trillion yen and boosted profitability metrics guidance. This revised guidance reflects the Switch 2's stronger-than-expected initial performance. Nintendo is demonstrating resilience by thriving despite an adverse tariff environment for the Switch 2, and also raised its outlook for software sales, including original Switch games compatible with both consoles. This robust performance and optimistic outlook position Nintendo favorably in the video game sector.
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