The Nintendo Switch gaming console is a smashing hit, outperforming sales of the Wii U and driving Nintendo to post its best third quarter in eight years.
The last time Nintendo saw such an impressive operating profit in the third quarter, meaning the period from October to December, was back in 2009. The performance is largely due to the popularity of the Switch hybrid console.
Nintendo Switch Beats Expectations
Huge demand for the Nintendo Switch console drove the company's stock price to the highest in nine years, and the device has been on the market for less than a year. The Nintendo Switch launched back in March 2017 and proved to be a great success.
Nintendo Switch sales have exceeded initial expectations by a long shot, beating initial estimates for the Wii U. Great demand has also taken the company a bit off-guard, however, and suppliers are reportedly struggling to come up with the necessary parts.
Nintendo Switch Sales
The company sold 7.2 million Nintendo Switch units during the third quarter ended in December, prompting it to increase its annual sales forecast from 14 million to 15 million units.
The Wii U, which was the predecessor of the Switch, was not nearly as successful. Nintendo sold 13.56 million Wii U consoles in total, which means that the Switch already topped the lifetime sales of its predecessor.
The Wii U was on the market for roughly five years, while the Switch is not even 1 year old and its total sales as of Dec. 31 sit at 14.86 million units.
Nintendo now expects Switch sales to increase to 20 million units or more in the next fiscal year that starts in April.
Nintendo Q3 Operating Profit
For the third quarter of 2017, Nintendo posted a third-quarter operating profit of 116.50 billion yen or roughly $1.07 billion, marking a huge increase from the 32.26 billion yen operating profit it posted last year for the same period.
With the highest Q3 operating profit in eight years, Nintendo has now raised its forecast and says that it expects yearly earnings to beat its previous estimate.
While previously Nintendo set its profit forecast at 120 billion yen and analysts set estimates at 144 billion yen for the company's profits during the fiscal year ending in March, Nintendo has now raised its profit forecast to 160 billion yen. The company also upped its revenue forecast from 960 billion yen to 1.2 trillion yen for the same period.
Nintendo Switch To Drive Future Profitability
This outlines a steady growth trend as Nintendo had previously raised its forecast back in October as well. The strong results during the crucial holiday season bolster investors's confidence that the Switch console will drive the company's profitability in the future.
After that lucrative holiday shopping season and the first batch of first-party games already on the market proved successful, observers are now waiting to see if the company can keep this up and boost Switch adoption rates beyond Nintendo fans, appealing to other gamers as well.