Japan's Nintendo on Tuesday posted an 23% jump in quarterly profit on robust sales of its Switch 2 console and said a surge in memory chip prices is not having a major impact on earnings in the current financial year.
The "Super Mario" maker also maintained its annual earnings and hardware forecasts, including a prediction that sales of its Switch 2 will hit 19 million units.
It sold 17.4 million units of the hybrid home-portable gaming device in the nine months to end-December, which includes the key year-end shopping season.
"Despite a lack of exclusive blockbusters, Switch 2 sold like hotcakes over the holidays," said Serkan Toto, founder of the Kantan Games consultancy.
The Kyoto-based gaming company launched the Switch 2, the successor to the wildly popular Switch, in mid-2025 and investors have been debating whether strong early sales would hold up.
Memory chip prices soar
Manufacturers of electronic hardware are now grappling with sharply rising prices for memory chips amid booming investment in artificial intelligence.
The price surge is not significantly impacting Nintendo's results this financial year, but if the spike continues beyond expectations and persists over the long term it could pressure profitability, Nintendo President Shuntaro Furukawa told an earnings briefing.
Nintendo is better placed than competitors to cope and its "sizable inventories and long-term contracts will shield it" for several quarters, Jefferies analyst Atul Goyal wrote in a client note ahead of earnings.
The company booked operating profit of 155 billion yen ($995 million) in the latest quarter, and forecast the annual figure to come in at 370 billion yen, an increase of nearly a third over the previous financial year.
The Switch 2 is priced at $449.99 in the United States, far more than the Japanese language system sold in Japan for 49,980 yen ($320). The higher U.S. price is seen as taking into account the current inflationary environment.
Nintendo's shares have fallen almost a third since a recent high in November.
Goldman Sachs analyst Minami Munakata noted that Nintendo has a policy of not selling hardware at a loss and said "concerns about the Nintendo Switch 2 becoming unprofitable are overdone."
Investors have also been fretting about a lack of high-profile titles, such as games from "The Legend of Zelda" series that helped drive Switch sales.
Upcoming titles include "Mario Tennis Fever", which is due for release next week.
($1 = 155.4800 yen)
(Reporting by Sam Nussey; Editing by Edwina Gibbs)
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