Nintendo hikes profit forecast as Mario movie, Zelda game breathe new life into Switch console

Nintendo reported better-than-expected sales and profit for its fiscal second quarter on Tuesday, as it continues to get a bump from the “Super Mario Bros. Movie” and flagship Zelda game released this year.

Here’s how Nintendo did in its fiscal second quarter versus LSEG estimates:

• Revenue: 334.9 billion Japanese yen ($2.2 billion) versus 317.3 billion yen expected.
• Net profit: 90.3 billion yen versus 75.7 billion yen expected

Nintendo’s revenue fell 4% year-on-year and its profit dropped 19%.

In the previous quarter, the company got a boost from the success of the “Super Mario Bros. Movie” and the highly anticipated May release of the “The Legend of Zelda: Tears of the Kingdom” game, which drove people to buy the Japanese giant’s flagship Switch gaming console. That seems to have continued into the September quarter.

For the six month period of April to September, Nintendo reported a 21.2% year-on-year rise in revenue to 796.2 billion yen while net profit jumped 17.7% to 271.2 billion yen.

“Sales in the first half of the fiscal year were the largest since the launch of Nintendo Switch,” Nintendo said in a statement, citing the increase in sales in its video game business and the depreciation of the Japanese yen.

Buoyed by this, Nintendo raised its full-year forecasts. The company said net sales for its fiscal year, which ends in March 2024, will be 1.58 trillion yen, up from a previous forecast of 1.45 trillion. Nintendo on Tuesday said net profit will be 420 billion yen, up from the previous forecast of 340 billion yen.

Investors have been concerned that sales of the Nintendo Switch, which is now more than six years old, have peaked. Many have called on the company to release a new console. However, Nintendo’s results underscore how its recognizable characters can continue to drive sales for the Switch.

The Japanese gaming giant said it sold 6.84 million Switch consoles in the April to September period, up 2.4% year-on-year. Nintendo maintained its forecast for sales of 15 million Switch consoles in the current fiscal year.

Nintendo has sold 19.5 million units of “The Legend of Zelda: Tears of the Kingdom” game in the first six months of its fiscal year. “Mario Kart 8 Deluxe,” which was released on the Switch in 2017, was Nintendo’s second-most popular game in the period helped by the success of the Mario movie, which has generated more than $1 billion at the box office since its April release. The film was produced in collaboration with Universal Studios.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.