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Nintendo (NTDOY) cuts FY2025 sales forecast, keeps conservative yen foreign exchange rate assumption

Nintendo is out with its latest Q2 earnings report, and the company is cutting full-year sales guidance on Switch weakness.

Asif Khan

November 4, 2024 11:05 PM

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Nintendo is out with earnings results for the first half of its fiscal year ending March 31, 2025, and things are not going great over at the Big N. The company has reduced its internal forecast for FY2025 Net sales by 5.2% and operating profit guidance by 10%. Please take a look.

Although Nintendo Switch hardware and software unit sales through the first half of the fiscal year were both below our initial expectations, many people continue to play with Nintendo Switch even in its eighth year since launch. For hardware, by continuing to convey the appeal of Nintendo Switch, we try to not only put one system in every home, but several in every home, or even one for every person. Another objective is to continually release new offerings so more consumers keep playing Nintendo Switch even longer and we can maximize hardware sales. For software, in addition to Super Mario Party Jamboree, released in October, we have other titles planned for release, such as Mario & Luigi: Brothership (November), and Donkey Kong Country Returns HD (January 2025). Other software publishers plan to release a wide variety of titles, and we will strive to invigorate the platform by continually introducing new titles in addition to the existing titles.

We have modified the Nintendo Switch hardware and software sales unit forecasts for the fiscal year. in consideration of the sales trend through the six months ended September 30, 2024, and revised the financial forecast originally published on May 7, 2024. For details, please see "Notice of Full-Year Financial Forecast Modifications" issued today (November 5, 2024).

Nintendo maintained somewhat conservative foreign exchange rate assumptions of 140 yen per U.S. dollar and 155 yen per euro. The current exchange rates sit at 152 yen per U.S. dollar and 165 yen per euro in reality, so the company's guidance implies an expectation of a strengthening yen within the next six months. 

While the yen exchange rate assumption is a factor in financial reporting, Nintendo Switch hardware and software sales weakness is the primary driver of today's decrease in expected net sales for the fiscal year ending March 31, 2025.

This is Furukawa, President of Nintendo. We will make an announcement about the successor to Nintendo Switch within this fiscal year. It will have been over nine years since we announced the existence of Nintendo Switch back in March 2015. We will be holding a Nintendo Direct…

— 任天堂株式会社（企業広報・IR） (@NintendoCoLtd) May 7, 2024

Nintendo also issued a notice of Non-Operating Expense foreign currency exchange loss of 22.4 billion yen as of the end of September 2024. This could be related to the Nikkei stock market crash in August of this year, as that was a period of extreme volatility.

Nintendo fans are all waiting for the Nintendo Switch successor to be unveiled, and Nintendo President Furukawa has previously stated that the next generation gaming device would be announced by the end of FY2025. Only six more months at the very latest. In the meantime, Nintendo expects a 5.2% decrease in Net sales and a 10% decrease in Operating profit as Switch closes out its eighth year. 

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long Nintendo via NTDOY shares

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.