Nintendo Q1 sales drop 9.5%; operating profit soars following higher software sales and $300m in US tariff refunds

Nintendo’s first quarter ended June 30, 2026 with lower top-line sales but a much stronger bottom line. Net sales slipped to ¥517.8 billion ($3.2 billion), yet operating profit rose to ¥142.5 billion ($902.7 million) after the company booked roughly $300 million in U.S. tariff refunds and saw higher software revenue.

For developers, the more interesting signal is where the money is moving: hardware softened, but digital sales climbed 90% to ¥132.7 billion ($840 million), driven by downloadable software. That’s a reminder that platform economics increasingly reward content cadence, long-tail catalog performance, and attach rate more than raw box sales alone.

Switch 2 sold 3.82 million units in the quarter, down 34.4% year over year, but Nintendo said sell-in is still tracking ahead of the original Switch at the same point in its lifecycle, with 23.68 million units shipped to date. Original Switch software also remained resilient, helped by Tomodachi Life: Living the Dream and continued sales of older titles that remain playable on Switch 2.

The tariff angle matters too: Nintendo said the refunds were mostly absorbed by the company rather than passed through to consumers, a detail that now sits alongside a class action dispute. For studios watching platform-holder margins, pricing strategy, and regional cost pressure, this is a useful snapshot of how hardware, software, and policy shocks can all hit the same P&L at once.