In brief: As doubt lingers over the future of Microsoft's console business, and controversy over the end of physical media clouds Sony's, Nintendo wants investors to know its hardware division is still growing. The company's Q1 fiscal 2027 report points to strong mainstream software sales, a hit tie-in movie, and $300 million in tariff refunds that customers will never see.
The Switch 2 has sold more than 23 million units in its first year on the market, well ahead of its predecessor's roughly 17 million over the same span. The hybrid console has now also outsold the GameCube's entire five-year run in a single year – a reminder of how far Nintendo's hardware business has come over the past two decades.
The quarter ending June 2026 did show a more than 30% YoY drop in hardware sales, but that's expected: the year-ago quarter included the Switch 2's explosive launch.
Software tells us a different story. Switch 2 game sales rose 9% YoY, while the original Switch's software sales jumped 38%. Tomodachi Life was likely the driver, selling more than 8 million copies between its April launch and early August. Net profit, meanwhile, climbed 53% YoY.
Nintendo also disclosed $300 million in refunds after the US Supreme Court ruled the Trump administration's 2025 tariffs illegal. The government has paid out more than $80 billion of the roughly $166 billion it owes manufacturers and retailers, Nintendo among them, alongside Amazon, Walmart, Sony, and Apple.
Still, Nintendo is fighting a lawsuit from customers demanding a cut of those refunds, arguing it has no obligation to compensate buyers who willingly paid tariff-era prices.
The company kept the Switch 2's $450 launch price intact despite steep tariffs on its Vietnamese manufacturing – even after Vietnam was briefly hit with a proposed 46% rate. Apple, by contrast, plans to funnel its $2.2 billion refund into domestic manufacturing, while Amazon, Walmart, BJ's, and Arctic have said they'll return some of the money to consumers in various forms.
Nintendo also touted The Super Mario Galaxy Movie, which opened in April and has since crossed $1 billion at the box office. Up next: a live-action The Legend of Zelda movie, due in 2027.
