Key facts
- Nintendo's net profit increased 54% year-over-year to $931 million for the quarter ending June.
- The profit surge was largely due to a $300 million refund related to US tariffs.
- Revenue decreased by 10% to $517.8 billion yen.
- Nintendo's shares rose 2.87% following the earnings announcement.
- A class-action lawsuit alleges Nintendo profited from tariff refunds without passing savings to consumers.
Nintendo reported a significant 54% year-over-year increase in net profit to $931 million for the quarter ending June, substantially exceeding analyst expectations. This profit surge was primarily attributed to a $300 million refund on US tariffs, following a Supreme Court ruling that declared Donald Trump's trade levies illegal. While revenue saw a 10% decline to $517.8 billion yen, steady sales of the Switch console and popular games provided some support.
Nintendo's shares rose 2.87% on Thursday after the earnings release. The company had previously filed a lawsuit seeking a full refund of tariffs paid, plus interest. However, Nintendo has not confirmed the exact refund amount and is currently facing a class-action lawsuit from US customers who allege the company benefited from refunds without passing savings on. Nintendo's legal team has dismissed this lawsuit as 'meritless'.
The company's situation is part of a broader trend where other major corporations, including Apple and Amazon, have also received refunds from invalidated tariffs. These refunds represent a one-time boost to earnings, with analysts cautioning that they may not sustain long-term profitability.