Nintendo Climbs After Raising Outlook on Strong Switch Sales

Nintendo shares rose after the company raised its outlook for profit and Switch sales for a second straight quarter following robust shipments during the holidays, the strongest sign yet that the console is going to be a long-term success, according to Bloomberg.

The stock climbed as much as 3.8 percent in early trading in Tokyo. The company raised its operating profit outlook to 160 billion yen ($1.5 billion) from 120 billion yen for the current fiscal year through March. The company lifted its Switch hardware sales forecast for the period to 15 million, up from 14 million it set in October.

Solid results during Nintendo’s most important quarter help to confirm investors’ bet that the Switch, still less than a year old, will be able to fuel future profitability, following disappointing shipments of the Wii U console. Nintendo’s shares have doubled to a decade-high on that optimism, reaching a market value of 6.8 trillion yen. Revenue is now forecast at 1.02 trillion yen for the period, up from 960 billion yen.

Operating profit in the December quarter came in at 116.5 billion yen, based on figures derived from reported nine-month results. That exceeded the 82 billion yen average of estimates. Revenue was 483 billion yen in the quarter, compared with the prediction for 452 billion yen.

Nintendo sold 7.2 million Switch consoles during the holiday quarter, bringing its lifetime total to 14.9 million and within striking distance of its goal of 16.7 million units by March. Kimishima is aiming for more than 20 million units next fiscal year, he said at a news conference.

The company sold 25.1 million Switch software titles during the quarter. Super Mario Odyssey, which went on sale in October, topped all games with 9.1 million units sold during the period. Nintendo lifted its full-year Switch software sales estimate to 53 million titles, up from 50 million it set in October. Kimishima said more new titles were on the way.

Revenue from Nintendo’s smartphone games was 11.2 billion yen in the quarter, up from 8.8 billion yen in the previous period. Some of the gain can be attributed to Animal Crossing: Pocket Camp app, which became a top-download in most countries including Japan and the U.S. The app has been downloaded 22 million times and generated $17 million globally through December.