Nintendo reported financial results for the third quarter of fiscal 2026 with a 23% increase in operating profit compared to the previous year. Sales of the Nintendo Switch 2 reached 17.37 million units globally by December 2025. However, performance above projections in the Japanese market caused a reduction in the console’s gross and operating profit margin.
The company’s president, Shuntaro Furukawa, explained the phenomenon during the report’s question and answer session. Hardware components are primarily purchased in US dollars, while sales in Japão occur in yen. The continuous devaluation of the Japanese currency increased the cost of production in relation to the local revenue obtained.
High sales in the console’s home country were driven by important launches during the holiday season. Dois titles stood out in this movement of consumer transition to the new generation of hardware.
Boost provided by major launches
Pokémon Legends: Z-A in version Nintendo Switch 2 Esses games have driven a higher rate of migration of owners from the original Nintendo Switch to the new model compared to other markets.
Furukawa highlighted that Japanese consumers took advantage of the launches as an ideal opportunity to update the console. The combination of exclusive titles with local appeal strengthened the hardware’s domestic performance.
Consolidated data shows that Pokémon Legends:Z-A has sold 12.3 million copies by the end of 2025. Kirby Air Riders has reached 1.76 million units in the same period, performing especially strongly in the Japanese market.
Effect of exchange rate on margins
Nintendo’s cost structure relies heavily on international suppliers who charge in US dollars. Cada unit sold in Japão generates revenue in yen, but expenses with semiconductors and other components remain linked to the US currency.
The accumulated devaluation of the yen in 2025 and 2026 has increased the difference between cost and local selling price. Quanto the greater the volume of units sold domestically, the greater the negative impact on operating margins.
Analysts note that this phenomenon is temporary and depends on exchange rate volatility. The company maintains its projection of 19 million units sold globally by the end of the fiscal year in March 2026.
Global and regional console performance
Accumulated sales of the Nintendo Switch 2 surpassed those of the original model in the same launch period. The console registered 7.01 million units sold in the quarter ending in December 2025 alone.
Outside of Japão, the pace of adoption was slightly below the company’s initial expectations. Regiões as well as América of Norte and Europa showed solid growth, but without the same momentum seen in the domestic market.
Nintendo’s total revenue for the nine-month period reached 1.9 trillion yen. The dedicated hardware segment, led by Switch 2, contributed significantly to the 86% growth in quarterly revenue.
Component shortage and future outlook
The semiconductor industry faces rising memory prices since the end of 2025. Fornecedores global companies have adopted measures to protect margins, increasing production costs for console manufacturers.
Furukawa stated that the impact was not yet significant in the quarter analyzed. The company monitors the situation and does not rule out price adjustments if the trend continues into the next fiscal year.
Nintendo lost significant market value at the end of 2025 due to concerns about chip shortages. Investidores reacted to the possibility of restrictions on the production capacity of Switch 2.
Software and catalog strategy
The Switch 2 launch catalog includes enhanced ports of predecessor titles and new exclusives. The game compatibility strategy of the original Switch made the transition easier for millions of users.
- Pokémon Legends: Z-A stands out as the platform’s best-selling title to date
- Kirby Air Riders won over audiences with innovative flight and exploration mechanics
- Other first-party games maintained recurring sales during the holiday season
- Partnerships with third parties have expanded options available since launch
The proportion of digital sales grew in the period, contributing to higher margins in this segment. The company invests in expanding Nintendo Switch Online to retain the installed base.
Consolidated financial results
Quarterly net profit registered an increase of 24% compared to the same period of the previous year. The mobile games and intellectual property licensing division also showed stable growth.
Nintendo maintains conservative guidance for the full fiscal year. The operating profit projection remains unchanged despite regional variations in hardware sales.
The balance sheet demonstrates resilience even in the face of exchange rate and supply challenges. The installed base of the Switch ecosystem, including original and new models, surpasses the company’s historical marks.
Positioning in the console market
The Nintendo Switch 2 competes in the hybrid segment that combines portability and domestic performance. The differentiated approach allowed the company to reach audiences beyond traditional hardcore gamers.
Competitors face similar component constraints, but with different pricing strategies. Nintendo prioritizes price stability since the console launch in 2025.
The initial success reinforces the company’s position in the interactive entertainment sector. Analistas project continued growth driven by launches scheduled for 2026.