Nintendo beats earnings thanks to US tariff refunds

Nintendo has smashed its first-quarter earnings estimates for the fiscal year, bolstered by strong games sales and US tariff refunds, though its customers likely won’t receive anything from the latter. In its latest financial results, Nintendo reports that operating profits soared to 142.5 billion yen (about $902 million) between April 1st and June 30th, compared to 56.9 billion yen (about $360 million) for the same quarter last year — an increase of 150.5 percent.

This spike is partially attributed to a boom in game sales, with Switch 2 software sales increasing by 9.2 percent compared to the previous year, and software for the original Switch console increasing by 38.6 percent. Sales for the Switch 2 console itself fell from 5.82 million units to 3.82 million units over the same period, though that current figure is higher than the 2.49 million units Nintendo sold last quarter.

A sizable chunk of the boosted profit comes from refunds for US tariffs, with Nintendo saying it recorded “approximately $300 million as a reduction of cost of sales” for this quarter. While the company has increased the price of both Switch consoles over the last year, Nintendo says it bore the brunt of costs associated with tariffs instead of passing them over to consumers through increased product prices. That means it believes anyone who paid a higher price for their Switch console isn’t entitled to part of that tariff refund.

Nintendo is currently defending this argument in court, in a bid to dismiss a lawsuit alleging that it’s retaining tariff refunds despite passing those costs to its customers. Other gaming companies have faced a similar legal battle — Sony was also sued by customers in May, who alleged it saw a “double recovery windfall” by collecting tariff refunds after increasing PlayStation console prices.