🎮 Between April and September 2026, Nintendo shipped 6.49 million Switch 2 consoles, 37% fewer than a year earlier. Revenue fell 12%. And yet operating profit, the measure of what the core business earns, jumped 49%. On paper, the first-half results Nintendo released on November 5 look like a contradiction.

Three Things Behind the Profit Jump

First-half revenue came to ¥966 billion ($6.1 billion), down 12.1%. Operating profit, by contrast, reached ¥216.5 billion ($1.37 billion), a gain of 49.1%, and net profit came in 11.0% higher at ¥220.9 billion. Lifetime Switch 2 shipments now stand at 26.35 million. One caveat applies to every unit figure here: Nintendo reports sell-in, meaning consoles shipped to retailers and distributors, not consoles bought by players.

The first of three drivers is mix. Hardware's share of Nintendo's game platform revenue dropped from 73.2% to 54.5%, and gross margin climbed from 36.2% to 50.4%. Software earns more per yen of sales than consoles do, and 60.7% of Nintendo's console software sales were digital: downloads, add-on content and Nintendo Switch Online. The second is the weak yen. The dollar averaged ¥159.29 over the half, against ¥145.98 a year earlier, which Nintendo says added about ¥22.2 billion to operating profit.

The third is a one-time boost. In the first quarter, Nintendo booked a U.S. tariff refund of about $300 million as a reduction in cost of sales. At the half-year average rate, that is roughly ¥48 billion. Take it out and first-half operating profit falls to about ¥169 billion, up around 16% rather than 49%. Nintendo did not give a yen figure, so that calculation is ours.

July through September alone was weaker. Operating profit for the quarter was about ¥73.9 billion, down about 16% from a year earlier, and net profit was about ¥73.5 billion, down about 29%. Analysts surveyed by Bloomberg had expected quarterly net profit of ¥82.2 billion, AFP reported.

Where the $300 Million Came From

The refund covers tariffs the Trump administration imposed under the International Emergency Economic Powers Act (IEEPA). The U.S. Supreme Court ruled those tariffs unlawful in February 2026, and Nintendo of America sued the federal government the following month to get its money back (related story).

Nintendo's earnings presentation adds a pointed line: the refunded tariffs were mainly ones the company absorbed rather than passed on through prices. In April, two U.S. customers filed a proposed class action arguing that Nintendo would be unjustly enriched if it kept refunds on costs that had already pushed up what shoppers paid. In July, Nintendo asked the court to dismiss the case, according to Game File and Game Developer.

The refund reaches shareholders, too. Nintendo sizes its interim dividend at 40% of first-half operating profit, and this year's payout is ¥76 a share, up from ¥42. In effect, part of that increase is the tariff refund passing through.

The Best-Seller Ran on the Old Switch

Nintendo's top game of the half was not a Switch 2 title. Tomodachi Life: Living the Dream, released on April 16 for the original Nintendo Switch, sold 8.81 million copies, 6 million of them outside Japan. It is a life simulation in which you watch over the small dramas of Mii avatars. Rhythm Heaven Groove, released in July, added 2.89 million on the same older platform. Because the Switch 2 runs original Switch games, Switch 2 owners can buy them too.

On Switch 2, Splatoon Raiders (July 23) sold 2.42 million copies and Fire Emblem: Fortune's Weave (September 17) sold 1.34 million. Japan accounted for 1.41 million copies of Splatoon Raiders, close to 60% of the total. Fire Emblem went the other way, with 920,000 copies, about 70%, sold overseas. Total Switch 2 software reached 24.49 million units, up 18.8%, though last year's figure included copies bundled with consoles, so the comparison is not like for like.

The Market's Verdict on "Show It in the Results"

At the annual shareholders' meeting on June 26, with Nintendo stock at less than half its August 2025 peak, President Shuntaro Furukawa said management wanted to show its progress in the company's results and earn the market's confidence that way (related story). The stock hit its 2026 low, ¥6,544, that same day.

On November 5, shares closed at ¥8,880, up 6.31% on the day and about 36% above the June low. The numbers came out after the close. That evening, on a proprietary trading system (PTS), the stock traded around ¥8,210, 7.5% below the Tokyo close. Kabutan put the drop down to disappointment that Nintendo left its full-year forecasts and unit targets unchanged. According to Reuters, investors have been worried about the memory crunch and a thin lineup of big Switch 2 titles. Furukawa responded that the memory situation had not changed much, that Nintendo was in a position to secure enough of it, and that no further price changes were under consideration.

10.01 Million Units to Go, More Than Last Holiday

The full-year Switch 2 target is still 16.5 million units. Hitting it means shipping 10.01 million in the October–March second half. Last year's second half, which included the console's first holiday season, came to 9.5 million. Nintendo now has to beat that at higher prices: the Switch 2 went up in Japan on May 25 and in the U.S., Canada and Europe on September 1 (related story).

Inventories stood at ¥814.6 billion at the end of September, about ¥275 billion more than in March, most likely stock built up for the holidays. The Legend of Zelda: Ocarina of Time arrived on November 5, and as of that date Metroid Ravenous was set for January 28, 2027, with Pokémon Winds and Pokémon Waves due in 2027.

The forecast already absorbs about ¥100 billion ($630 million) in higher costs from memory and other parts, plus tariffs, and assumes ¥150 to the dollar. With the first half averaging above ¥159, a yen that stays weak would work in Nintendo's favor.

Sony Sold Fewer Consoles, Too

Sony Group, which also reported on November 5, saw fewer consoles and more profit in July–September. PS5 shipments fell 35% to 2.6 million. Yet PlayStation monthly active users reached 127 million in September, up 7% and, by Sony's count, a record for that month. The game segment's operating income rose 83% to ¥220.1 billion, a second-quarter record. Excluding a ¥49.8 billion one-time loss in the prior year, the gain was 29%. Sony said promotions, price adjustments and cost cuts had offset higher memory prices.

Compare the same July–September quarter, though, and the two diverge. Sony's game profit rose, while Nintendo's operating profit fell 16%. Of Nintendo's roughly ¥71.3 billion first-half profit gain, about two-thirds came from a refund that will not recur.

Is a Switch 2 on your holiday list this year, even at the new price? And do you think Nintendo can ship more than 10 million units in the next six months?

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