Nintendo's first quarter revenue exploded 132% to ¥572.3 billion (US$3.8 billion) as the Switch 2's blockbuster debut dominated earnings - though the hardware's lower profit margins mean the Kyoto giant isn't counting its coins just yet.
The Japanese gaming giant shifted 5.82 million units of its latest console in its first quarter after launching globally on 5 June, marking what Nintendo calls its strongest four-day debut in company history.
Mario Kart World bundled hardware proved wildly popular, but the success comes with strings attached.
Yet while revenue soared, operating profit barely budged at ¥56.9 billion - a modest 4.4% increase.
Hardware now represents 64.8% of Nintendo's dedicated gaming platform sales, up from 40.2% last year, and the Switch 2 carries significantly thinner margins than its predecessor.
That saw gross profit margins collapse from 61.8% to 32.3% - an inevitable trade-off for selling expensive tech instead of high-margin software.
And digital sales declined 13.5% to ¥69.8 billion, despite accounting for 59.3% of software revenue.
It should be noted that the Switch 2 game catalogue is still in its infancy - meaning there's big margins for growth in the software division as marquee and third-party titles trickle in across the coming months.
Currency headwinds didn't help either though, with forex impacts trimming ¥28 billion from net sales and roughly ¥10 billion from operating profit.
The adventure's only just begun
Nintendo's full-year guidance remained unchanged at ¥1.9 trillion (US$12.6 billion) revenue and ¥320 billion (US$2.1 billion) operating profit.
The gaming outfit dismissed concerns about U.S. tariff measures, stating there's "no significant impact" on current fiscal year forecasts.
Analysts reckon the 15 million unit forecast looks conservative given early demand, yet Nintendo isn't budging.
The smart money, however, suggests they're managing expectations while supply chains catch up to demand that's “exceeding supply in many countries”, says Nintendo.
Company shares have rallied roughly 40% this year on the back of Switch 2 excitement, yet the market may be starting to think whether Nintendo can maintain momentum.
With over 100 million active users bridged across both console generations, the gamer base is at least there for Switch 2 sales to outperform its predecessor's 140 million unit sales.
