1Summary

Nintendo's revenue for the year ended 31 March 2026 rose 98.6% to ¥2,313,051m. Its operating profit rose 27.5% to ¥360,117m. Both of those are true at once, and the gap between them is the entire point of this filing.

This was the Switch 2 launch year. The console shipped in June 2025 and sold 19.86m units in the fiscal year. Selling a console is a low-margin activity: gross profit rose only 28.0% to ¥908.9bn on revenue that nearly doubled, which took the gross margin from 61.0% to 39.3% — a 21.7-point fall. Operating margin went from 24.3% to 15.6%. Nintendo did not have a worse year. It had a year with a different mix in it.

Below the operating line the picture changes again. Non-operating income was a net ¥182.0bn, mostly equity-method income from The Pokémon Company plus interest income and foreign exchange gains, which lifted ordinary profit 45.6% to ¥542,196m and net income 52.1% to ¥424,056m. Net income grew twice as fast as operating profit, and none of that difference came from selling consoles.

The company's own forecast for the year to March 2027 is the clearest statement of what it expects next: revenue of ¥2,050,000m — down 11.4% — with operating profit of ¥370,000m, up 2.7%. Guiding revenue down and profit up is what the second year of a console cycle looks like, when hardware volume falls away and higher-margin software carries the result.

Nintendo runs as a single reported segment, so there is no segment table to read. What the company gives instead is unit data, and that is where the detail lives.

2Business

One segment: home entertainment. The group is the parent plus 32 subsidiaries and 4 affiliates at 31 March 2026. Nintendo develops and manufactures dedicated game hardware and software, sells it mainly through regional subsidiaries (Nintendo of America, Nintendo of Europe, and others), and runs adjacent businesses in video content and mobile applications built on the same intellectual property. It also still sells character goods and playing cards.

Development is spread across the parent and a long list of studios — Retro Studios, Next Level Games, Shiver Entertainment, Monolith Soft, 1-UP Studio, SRD, Nintendo Pictures, Nintendo Systems and others. Manufacturing is done by the parent company alone, and the company discloses separately that it outsources component production and assembly to firms outside the group.

Overseas revenue was ¥1,778.1bn, up 99.8%, or 76.9% of the total. This matters for reading the rest of the accounts: Nintendo transacts mostly in local currencies and holds substantial foreign-currency assets, so translation moves both the income statement and the balance sheet.

3Results

Full year to 31 March 2026 (consolidated, Japanese GAAP)

One convention worth explaining. Ordinary profit (経常利益) is a Japanese GAAP line between operating and pre-tax profit. It adds recurring non-operating items — interest, dividends, FX, equity-method results — but excludes one-off extraordinary items. For Nintendo it sits ¥182.1bn above operating profit, which is unusually large and is the reason the bottom line and the operating line tell different stories. An IFRS filer such as Sony (6758) has no equivalent line.

What management said

The figures in this section come from the company's own MD&A in the same securities report (docID S100Y9NX) rather than from the machine-verified headline extract.

Units. Switch 2 hardware sold 19.86m units in its first fiscal year, launched in June 2025 and supported into the year end by Poko a Pokémon in March. Switch 2 software sold 48.71m units. The original Switch, in its tenth year, still sold 3.80m units of hardware and 136.91m units of software.

Individual titles, as disclosed:

Digital sales were ¥407.6bn, up 25.0%. IP-related income was ¥73.5bn, down 9.7%, which management attributes mainly to lower film-related revenue — the prior year carried the theatrical business and this one did not.

The margin bridge. Revenue rose ¥1,148.1bn. Gross profit rose only ¥198.7bn to ¥908.9bn, up 28.0%. SG&A rose ¥121.2bn on higher R&D and advertising. That leaves operating profit up ¥77.6bn. In other words, roughly 83% of the incremental revenue was absorbed by cost of sales — the arithmetic of shipping 19.86m consoles.

Below the line. Non-operating income netted ¥182.0bn, from equity-method income at The Pokémon Company and others, interest income, and foreign exchange gains. Ordinary profit ¥542.1bn, up 45.6%. Net income ¥424.0bn, up 52.1%.

Balance sheet and cash. Total assets rose ¥406.7bn to ¥3,805.3bn as securities fell but cash, deposits and receivables rose. Liabilities rose ¥177.0bn to ¥850.1bn on payables and income taxes payable. Net assets rose ¥229.7bn to ¥2,955.1bn on retained earnings. Cash and equivalents fell ¥97.4bn to ¥1,316.7bn, against a ¥560.6bn increase the prior year. Operating cash flow was ¥289.7bn against pre-tax profit of ¥568.1bn, the difference being tax payments, the equity-method result (income that is not cash), and a build in trade receivables.

First quarter to 30 June 2026 (disclosed 6 August 2026)

Japanese quarterly reporting is cumulative from the start of the fiscal year; these are three-month figures and are not annualised.

Company forecast for the full year to March 2027: revenue ¥2,050,000m, operating profit ¥370,000m, ordinary profit ¥430,000m, net income ¥310,000m.

Read against that forecast, Q1 revenue is 25.3% of the full year, operating profit 38.5%, and net income 47.6%. Three things follow. The revenue line is on a straight line. The profit lines are well ahead of one. And the company has left the forecast unchanged, which means it expects margin to give way over the remaining nine months — or that the forecast was set conservatively. Either way the gap between 25.3% and 47.6% is the disclosure worth watching, not the headline.

The forecast itself is the more interesting number. Revenue guided down 11.4% from ¥2,313.1bn to ¥2,050.0bn, with operating profit guided up 2.7%. That is a company telling you it expects to sell fewer consoles and make more money doing it.

4Valuation context

At ¥8,781 per share (the 20 August 2026 close) with 1,287,260,000 shares issued and a market capitalisation of ¥11,303,430m (Nikkei):

• Trailing PER: ¥8,781 ÷ ¥364.51 = 24.1x
• Forward PER on company guidance: the ¥310,000m net income forecast against the share count implied by Q1 EPS (¥147,423m ÷ ¥127.88 ≈ 1,152.8m shares, i.e. net of treasury) gives forecast EPS of about ¥269, or 32.7x. Nikkei quotes 32.6x.
• PBR: on shares issued, ¥11,303,430m ÷ ¥2,955,180m = 3.83x. On the ex-treasury share count above, ¥10,122bn ÷ ¥2,955,180m = 3.43x. Nikkei quotes 3.46x, so it is using the ex-treasury count. Nintendo holds roughly 134m shares in treasury, about 10% of shares issued, and which count you use moves the ratio by four tenths of a turn. This is worth knowing before comparing Nintendo's PBR with anything.
• Dividend yield: 1.84% forecast (Nikkei).
• Forecast ROE 10.5% (Nikkei), against an equity ratio of 77.6%.

That last pairing is the structural fact about Nintendo. It earns a 10.5% forecast return on equity while financing itself almost entirely with equity — ¥2,955bn of net assets against ¥850bn of total liabilities, and ¥1,317bn of cash. A balance sheet that conservative caps ROE arithmetically no matter how good the operating business is. The market is paying 32.7x forward earnings for the operating business and getting a very large cash pile attached to it.

5What to watch

1. Gross margin. 39.3% this year, from 61.0%. This is the single number that decides whether the March 2027 forecast is conservative or accurate. If hardware volume falls as guided and software mix rises, gross margin should recover materially; if it does not, the +2.7% operating profit guidance on −11.4% revenue does not work.
2. Switch 2 software attach rate. 48.71m software units against 19.86m hardware units is roughly 2.5 titles per console in year one. Console economics depend on that number rising over the cycle, because software carries the margin.
3. The original Switch tail. 3.80m hardware and 136.91m software units in year ten. How fast that declines determines how much of the software base transfers rather than disappears.
4. Equity-method income from The Pokémon Company. A large part of the ¥182.0bn of non-operating income. It is disclosed as a net figure rather than broken out, and it is the main reason net income and operating profit diverge.
5. Foreign exchange. 76.9% of revenue is overseas and the company holds substantial foreign-currency assets. It names FX first in its own risk section and says it continues to purchase in foreign currency specifically to reduce the effect. A yen move affects the income statement, the balance sheet, and the translation of both.

6Risks the company discloses

Nintendo's risk section is short and unusually direct about the nature of the business.

Foreign exchange is listed first, for the reasons above.

Market environment and competition. Nintendo frames its competitor set as "entertainment" broadly, not as other console makers: if customers' preference shifts to other kinds of entertainment, the game market shrinks. It adds that the industry requires heavy R&D and advertising while competing with very large peers, and that profit may become harder to secure than before.

New product development. Software, apps and video content take considerable time and money, tastes change constantly, and there is no guarantee any new product is accepted. Hardware development is long-cycle while technology moves; a delayed launch can cost market share. Development can be suspended or cancelled outright.

Inventory. Product life cycles are short, demand is taste-driven and seasonal, so both excess inventory and stockouts are named risks — the company says accurate sales forecasting is difficult and that it manages this partly by pushing downloadable software.

Dependence on outside manufacturers. Components and assembly are outsourced. A supplier failure or shortage of a critical part raises cost and can cause supply shortfalls; most contract production sites are overseas. Nintendo says it multi-sources most materials and outsourced production, and tracks every process and location for critical parts.

Seasonality, disclosed in its own right: demand concentrates in the year-end and New Year shopping periods.

System trouble, product liability, limits on intellectual property protection in some jurisdictions, unauthorised access, and changes in law or tax treatment complete the list.

Management states plainly in the MD&A that the presence or absence of hit products, and their scale, has a large effect on results. For a single-segment company with this cost structure, that is not boilerplate.

7Sources

• EDINET annual securities report, docID S100Y9NX, filed 2026-06-25 (year ended 31 March 2026). All consolidated headline figures, unit data, MD&A and risk disclosure.
• Q1 results release (決算短信) for the year ending March 2027, disclosed 2026-08-06, via EDINET DB.
• Share price ¥8,781, shares issued, market capitalisation, PBR, forward PER, dividend yield and forecast ROE: Nikkei company page, retrieved 2026-08-20.

---

This is a review of reported results. It contains no investment recommendation, no price target and no valuation model. Multiples are stated as arithmetic on disclosed figures and a stated share price.