Nintendo (NTDOY) projects 9% revenue decrease in fiscal 2022

Nintendo has reported financial results for their fiscal year 2021. The Big N reported very strong results for the year with revenues topping $15.5 billion. That 34% year-over-year growth comes at a price, as the company now faces tough comparisons in FY 2022. Nintendo issued a tepid financial forecast with revenues expected to decline 9% and earnings to drop over 20% from the previous year.

Here's some more information from Nintendo's Q4 2021 earnings release.

FY 2021 net sales topped $15 billion (up 34% from FY 2020)
- overseas sales represent 77.4% of revenue for the company
FY 2021 earnings were up over 80% from FY 2020
Super Mario 3D All-Stars sold 9.01 million units
Super Mario 3D World + Bowser's Fury sold 5.59 million units
Hardware sales reached 28.83 million units during FY 2021
Animal Crossing: New Horizons has sold 32.63 million copies since launching in Q4 of FY 2020
Ring Fit Adventure cumulative sales topped 10 million during the quarter
FY 2022 revenues projected to be $14.6 billion, down 9% from FY 2021
As of the close in Japan, Nintendo trades at a 15.3 trailing price-to-earnings (P/E) ratio
As of the close in Japan, Nintendo trades with a 21.6 forward P/E ratio based on their guidance
Nintendo's expected dividend payout will create an effective year of 2.3% for shareholders
- a decrease of 35% from FY 2021
Nintendo expects to sell 25.5 million Switch units in FY 2022, down 11.5% from FY 2021
Nintendo expects to sell 190 million software units in FY 2022, down 17.7% from FY 2021
Nintendo Switch now boasts 22 First-Party Titles that are Million-Sellers
Nintendo Switch passed the lifetime unit sales of Game Boy Advance
- Only Wii, Game Boy, and Nintendo DS are ahead of Switch in cumulative unit sales
Digital Sales comprised 49.6% of Q4 2021 revenues, and 42.8% of sales for FY 2021
Nintendo currently has $8.5 billion of cash and equivalents on their balance sheet
The company spent a record $880 million on research and development during FY 2021
Nintendo now has 6,574 employees, up 6% from FY 2021

Nintendo Fiscal Year 2022 Financial Outlook

In our mobile business, we are collaborating with Niantic to develop a new application featuring Pikmin for smart devices. This title is expected to be released by Niantic in the second half of 2021. We will also focus on efforts that encourage consumers to continue to enjoy playing the mobile applications we have previously released. Through these initiatives, we expect to see results for the fiscal year ending March 31, 2022 of 1,600.0 billion yen in net sales, 500.0 billion yen in operating profit, 480.0 billion yen in ordinary profit, and 340.0 billion yen in profit attributable to owners of the parent. Assumed exchange rates for the major currencies are 105 yen per US dollar, and 120 yen per euro.

Regarding the risk associated with COVID-19, while the impact on business results for the fiscal year ended March 31, 2021 was limited, the supply of products might be affected if production and shipments are hindered. Other risk factors which are difficult to predict also continue to exist, involving areas such as development and marketing of products and services.

In addition, the production of products might be affected by obstacles to the procurement of parts, including the increase in global demand for semiconductor components. The consolidated earnings forecast is based on the premise that we will be able to secure the parts needed for the manufacture of products in line with our sales plans.

The Nintendo group will take the necessary measures and continue business operations to provide an environment in which consumers can continue to enjoy Nintendo products and services.

This report will likely be received in a bittersweet fashion by investors. On the one hand, fiscal 2021 was a banner year for the financial results of Nintendo, but with those great results come very tough year-over-year comparisons. Many companies that were beneficiaries of the lockdowns due to the COVID-19 pandemic of 2020 experienced record years, and Nintendo is only guiding for a 9% decrease in sales. The more material drop in earnings guidance will hopefully lower the bar for the company, as they are known to be very conservative when projecting out for a full year. It is important to note that Nintendo does not include sales expectations for unannounced games in their financial forecasts.

Shares of Nintendo are currently trading about 3% lower in Germany. Many analysts are still sleeping, because they probably have families or something, so we will have to see how NTDOY shares in the United States will react when the market opens on Wall Street.

Shacknews will be breaking out a lot more stories from Nintendo's FY 2021 financial results so be sure to keep it locked on this website.

Do you own Nintendo shares? Did you think Switch was going to be a huge failure? Do you still kinda hate the company? Let us know in the comments section below.