Nintendo FY3/2022 Q2 Earnings Release, Switch Hardware Q2 - 3.83M (-44.1% YoY), 92.87M LTD

[Hiska-kun]

Switch vs Wii

---------------------------------------------------------------------
|    |      Nintendo Wii     |     Nintendo Switch   |  Difference  | 
|    |     (2006/11/19)      |     (2017/03/03)      |              | 
|----|-----------|-----------|-----------|-----------|--------------| 
|    |  Quarter  |    LTD    |  Quarter  |    LTD    |   NSW - Wii  | 
|----|-----------|-----------|-----------|-----------|--------------|
| Q13| 11.310.000| 67.450.000|  3.290.000| 55.770.000|   -11.680.000|
| Q14|  3.480.000| 70.930.000|  5.680.000| 61.440.000|    -9.490.000|
| Q15|  3.040.000| 73.970.000|  6.840.000| 68.290.000|    -5.680.000|
| Q16|  1.930.000| 75.900.000| 11.570.000| 79.870.000|     3.970.000|
| Q17|  8.740.000| 84.640.000|  4.720.000| 84.590.000|       -50.000|
| Q18|  1.370.000| 86.010.000|  4.450.000| 89.040.000|     3.030.000|
| Q19|  1.560.000| 87.570.000|  3.830.000| 92.870.000|     5.300.000|
| Q20|  1.790.000| 89.360.000|           |           |              |
| Q21|  5.610.000| 94.970.000|           |           |              |
| Q22|    880.000| 95.850.000|           |           |              |
|----|-----------|-----------|-----------|-----------|--------------|

Switch vs Wii per regions

Switch Shipments each quarter

 

[Stu Benedict]

Hardware is good enough, especially considering it would have been way higher if they included one more week. If they are on track to hit 24mil then it's still an amazing year.

Software just keeps trucking along, it's crazy to see all these games keep selling so much, and most of them deserve it.

I tis interesting that digital ratio has dropped to 43%. I think we saw with playstation that digital share drops in this quarter, so perhaps it's pretty normal, but it being less than half shows Nintendo is still behind the curve here. Not that I mind, I still buy mostly physical.

they will easily miss their forecast this year. wonder why they didn't update it now.

3m for q4 is about right looking at the decline yoy and what other years have done. that puts switch at 11.5m and 12.5m away from the forecast. it means outperforming last year's sales by 1m for the holidays and that isn't happening.

i wonder if they are assuming oled can keep things flat for the next two quarters. it would get them close to 24m. but i think they had wanted/expected zelda for march and it's quietly slipped to another time.

 

[Islander]

This quarter marks the first time Nintendo reports a first-party software sales (revenue) share of under 70%. (While it might've happened before, they only started disclosing this figure in FY2017 or FY3/2018.)

Nintendo First-Party Software Sales share (%)
+----+--------+--------+--------+--------+--------+--------+
|    | FY3/17 | FY3/18 | FY3/19 | FY3/20 | FY3/21 | FY3/22 |
+----+--------+--------+--------+--------+--------+--------+
| Q1 |  83.4  |  87.3  |  82.9  |  74.1  |  82.5  |  72.3  |
| Q2 |  71.4  |  73.6  |  71.0  |  76.0  |  81.2  |  68.9  |
| Q3 |  93.9  |  88.9  |  89.8  |  87.4  |  81.1  |  ----  |
| Q4 |  85.7  |  84.9  |  80.3  |  85.1  |  71.7  |  ----  |
+----+--------+--------+--------+--------+--------+--------+
| FY |  87.0  |  85.3  |  83.8  |  82.8  |  79.4  |  70.6* |
+----+--------+--------+--------+--------+--------+--------+
* - Q1+Q2 only

A bigger third-party share of digital sales might explain part of the decline in digital sales share, since Nintendo only recognizes their cut of the sale as revenue.

Note : Regarding calculation of digital sales, in principle, sales of Nintendo software are recognized as gross sales, while sales of software released by other software publishers are recognized as net sales. For software released by other publishers, the sales commissions that Nintendo receives based on contracts with the software publishers or other parties are recognized as revenue.

 

[Joseki]

.

 

[Stu Benedict]

They revised the forecast down from 25.5m to 24m.

Q4 is unusually packed this time because of Pokémon Arceus.

ah ok. it should have come down even more. i guess they really are hoping oled will keep things flat for the remainder of the year, then.

 

[AruanaRiva]

they will easily miss their forecast this year. wonder why they didn't update it now.

3m for q4 is about right looking at the decline yoy and what other years have done. that puts switch at 11.5m and 12.5m away from the forecast. it means outperforming last year's sales by 1m for the holidays and that isn't happening.

i wonder if they are assuming oled can keep things flat for the next two quarters. it would get them close to 24m. but i think they had wanted/expected zelda for march and it's quietly slipped to another time.

I think they are betting a lot on OLED there. They probably consider the lowered demand this quarter is thanks to very early OLED announcement so when holiday comes the pent up demand will be much higher than usual holiday. With combination of multiple big titles like Pokemon BD/SP, Arceus, Mario Party. I think it probably can reach it there.(As long as no more stock problem happen)

 

[Lelouch0612]

they will easily miss their forecast this year. wonder why they didn't update it now.

3m for q4 is about right looking at the decline yoy and what other years have done. that puts switch at 11.5m and 12.5m away from the forecast. it means outperforming last year's sales by 1m for the holidays and that isn't happening.

i wonder if they are assuming oled can keep things flat for the next two quarters. it would get them close to 24m. but i think they had wanted/expected zelda for march and it's quietly slipped to another time.

They revised their hardware target down by 1.5m (25.5m --> 24m).

They are expecting a stronger Q4 performance than last year thanks to a stronger pipeline and a revision.

If you look how they are tracking vs 2019 and how much they sold that year, it is achievable imho. (They did 10.81m in Q4 2019).

 

[Kano]

If I read that right first shipments of OLED are actually part of the number (which would make it extra disappointing).

I dont think it does, since OLED shipments would be labeled differently than just Switch. It only reports Switch and Switch Lite.

 

[Sky-X]

As strong as hardware is, software sales are still more impressive to me and the real big story behind the Switch platform. 680m total software sales, when all is said and done this number will be above 1 billion game. no Nintendo platform ever managed to sell 1 billion game though Wii and DS became very close to that crossing 900m game.

 

[Cocodor]

Hardware results seem to have been linked to people holding off for OLED? Will be interesting to see how is the usual holidays boost.
Pretty empty Q2 for software otherwise (as usual), but some decent results nonetheless. Q2 is usually boring for Nintendo tbh.

 

[Lelouch0612]

As strong as hardware is, software sales are still more impressive to me and the real big story behind the Switch platform. 680m total software sales, when all is said and done this number will be above 1 billion game. no Nintendo platform ever managed to sell 1 billion game though Wii and DS became very close to that crossing 900m game.

I think it will cross 1 Billion for Software next year.

Q3 FY3/22: 100m
Q4 FY3/22 : 55m

Q1-3 FY3/23 : 245m

Total : 1.080m (+400m) by the end of 2022.

 

[garf02]

I dont think it does, since OLED shipments would be labeled differently than just Switch. It only reports Switch and Switch Lite.

I assume the foot note means literally shipped, AKA is on a boat, given what we know from supply chain woes, it possible they have to ship early to ensure consoles will be at store by October, but they didnt count than many as the unit were on transit.

 

[ggx2ac]

I have finished updating the OP.

It has taken much longer than normal due to issues outputting my code because the main program I used stopped working properly thanks to server issues.

I am writing up new code on a new program to use which should solve the issues by the next quarter earnings results.

If there are any errors in the OP please point them out to me.

 

[Sky-X]

I think it will cross 1 Billion for Software next year.

Q3 FY3/22: 100m
Q4 FY3/22 : 55m

Q1-3 FY3/23 : 245m

Total : 1.080m (+400m) by the end of 2022.

ِAgreed, after that we will see how higher it can go. this is strongest Nintendo platform ever in terms of software sales on the platform, even though tie ratio will be a bit less than Wii but again, this number to my knowledge doesn't include digital only releases, which are big part of the platform and they enjoy strong sales as well.

 

[Concurseiro do Futuro]

I wonder if they are planning a price cut to match the hardware forecast.

 

[AruanaRiva]

I wonder if they are planning a price cut to match the hardware forecast.

Don't see that happening when they are not even seeing the Holiday OLED boost effect yet there.

 

[Arynio]

I have finished updating the OP.

It has taken much longer than normal due to issues outputting my code because the main program I used stopped working properly thanks to server issues.

I am writing up new code on a new program to use which should solve the issues by the next quarter earnings results.

If there are any errors in the OP please point them out to me.

Thank you very much for your work, particularly under these circumstances.

I'm very surprised by the OG Switch shipment to the Americas this quarter. Looks like they tried to empty the channel before OLED. Maybe there was (proportionally) a bit more of OG Switch stock over there?

 

[Kano]

I assume the foot note means literally shipped, AKA is on a boat, given what we know from supply chain woes, it possible they have to ship early to ensure consoles will be at store by October, but they didnt count than many as the unit were on transit.

I agree that they definitely shipped those units within the quarter but I don't think they actually counted those in the report. Because they would be labeled as switch oled otherwise.

EDIT: Nevermind, I actually missed the footnote. Forget what I said. It is weird though, does that mean they will correct course during the next earnings report?

 

[storres]

How much software they shipped this quarter?

 

[Lelouch0612]

I wonder if they are planning a price cut to match the hardware forecast.

They expect to be facing supply issues with this forecast so I would go with no.

Plus, FY shipments forecast (Nintendo) = FY production (Nikkei) so they should start the next FY with extremely low inventory.

 

[Aostia82]

They revised their hardware target down by 1.5m (25.5m --> 24m).

They are expecting a stronger Q4 performance than last year thanks to a stronger pipeline and a revision.

If you look how they are tracking vs 2019 and how much they sold that year, it is achievable imho. (They did 10.81m in Q4 2019).

How they are tracking vs 2019?

 

[Lelouch0612]

How they are tracking vs 2019?

Q2 CY 2019 - 2.13M / Q2 CY 2021 - 4.45M (+109%)
Q3 CY 2019 - 4.80M (Lite launch) / Q3 CY 2021 - 3.83M (-20%)
Q4 CY 2019 - 10.81M / Q4 CY 2021 (OLED launch) - ?

Q2+Q3 CY 2019 : 6.93M / Q2+3 CY 2021 : 8.23M (+19%)

 

[Maronic03]

It's totally beating the Wii by the end of the next quarter.

 

[johanto21]

At the rate it's selling games (and also taking into account the very strong pipeline Nintendo has for 2022), do you think Nintendo Switch may end being the best selling video game console ever when it comes to software?
It will surpass any other Nintendo platform for sure, but I think that both PS2 and PS4 have also surpassed the 1Billion games sold.
For PS4 I think Sony has accounted for digital only releases when giving the total software numbers, so this may pose a problem when comparing with the Switch (the almost 700 million games sold are packaged software + digital versions of said packaged software, not digital only releases included there).

 

[D.Lo]

Curve looking very PS1/PS2 like, with the system peaking later.

I wonder how they could have sold last year and this year without shortages...

 

[Aostia82]

Q2 CY 2019 - 2.13M / Q2 CY 2021 - 4.45M (+109%)
Q3 CY 2019 - 4.80M (Lite launch) / Q3 CY 2021 - 3.83M (-20%)
Q4 CY 2019 - 10.81M / Q4 CY 2021 (OLED launch) - ?

Q2+Q3 CY 2019 : 6.93M / Q2+3 CY 2021 : 8.23M (+19%)

Thanks!
Really curious to see next quarter, so far many elements had an impact, making predictions pretty hard for the FY

 

[garf02]

They expect to be facing supply issues with this forecast so I would go with no.

Plus, FY shipments forecast (Nintendo) = FY production (Nikkei) so they should start the next FY with extremely low inventory.

Q1 FY 2023 will crawl sales wise

 

[ggx2ac]

Hardware results seem to have been linked to people holding off for OLED?

No, it's moreso linked to the global semiconductor shortage that Nintendo mentions in the earnings release and supplementary material:

For Nintendo Switch hardware, we reduced our forecast by 1.50 million units to 24.00 million units. Our shipment forecast for the second half was reduced because of the change in our production plan due to the effects of the global semiconductor shortage. On the other hand, we revised the Nintendo Switch software forecast up by 10.00 million units to 200.00 million units based on the sales performance of the first half.

Meanwhile, one of the reasons Switch Lite shipments have been very low was due to COVID-19 affecting production in Vietnam.(This was mentioned by David Gibson sometime back when he was reporting inventory numbers)

 

[Lelouch0612]

Q1 FY 2023 will crawl sales wise

Depend on :

1. If they indeed finish the FY 2022 with very low inventory. In that case they would need to put a lot of Switch units in Q1 to improve the system's availability.
2. Their software pipeline. We know Kirby is probably going to fall in Q1 FY but will it be accompanied with a big seller ? (Splatoon 3 ?)

 

[storres]

At the rate it's selling games (and also taking into account the very strong pipeline Nintendo has for 2022), do you think Nintendo Switch may end being the best selling video game console ever when it comes to software?
It will surpass any other Nintendo platform for sure, but I think that both PS2 and PS4 have also surpassed the 1Billion games sold.
For PS4 I think Sony has accounted for digital only releases when giving the total software numbers, so this may pose a problem when comparing with the Switch (the almost 700 million games sold are packaged software + digital versions of said packaged software, not digital only releases included there).

For Nintendo themselves, sure. I doubt they'll topple PS2 and 4. Especially, since Nintendo doesn’t count digital only games in the total, and that's is a good chunk of their software in the Eshop.

 

[Star Ocean]

At the rate it's selling games (and also taking into account the very strong pipeline Nintendo has for 2022), do you think Nintendo Switch may end being the best selling video game console ever when it comes to software?
It will surpass any other Nintendo platform for sure, but I think that both PS2 and PS4 have also surpassed the 1Billion games sold.
For PS4 I think Sony has accounted for digital only releases when giving the total software numbers, so this may pose a problem when comparing with the Switch (the almost 700 million games sold are packaged software + digital versions of said packaged software, not digital only releases included there).

We have PS4 numbers without only digital only sales since PlayStation change the tracking during 2020

For some time we can compare

 

[dabbling]

We should reach 50 million total sales for MK8 (including Wii U) this financial year, I think.

50m ltd for Deluxe feels plausible to me - is that too optimistic?

(yay my first post on this forum... let's see if it will be the last)

Welcome, nice avatar

 

[Chris1964]

Nintendo lowballs a lot Switch software forecast at only 200m but they probably want to have a big victory at the end of FY that will offset the drop at hardware.

 

[Oregano]

At the rate it's selling games (and also taking into account the very strong pipeline Nintendo has for 2022), do you think Nintendo Switch may end being the best selling video game console ever when it comes to software?
It will surpass any other Nintendo platform for sure, but I think that both PS2 and PS4 have also surpassed the 1Billion games sold.
For PS4 I think Sony has accounted for digital only releases when giving the total software numbers, so this may pose a problem when comparing with the Switch (the almost 700 million games sold are packaged software + digital versions of said packaged software, not digital only releases included there).

No, I think PS4 is unbeatable just on the basis of the difference in third party support. COD alone will add probably 100m to the PS4's total.

 

[Guaraná]

Nintendo lowballs a lot Switch software forecast at only 200m but they probably want to have a big victory at the end of FY that will offset the drop at hardware.

Just like I lowball Switch sales to be happy when my estimates are surpassed

 

[Mr_F_Snowman]

No, I think PS4 is unbeatable just on the basis of the difference in third party support. COD alone will add probably 100m to the PS4's total.

Not only that but also the most popular software on the Switch (Nintendo first party) never get deep discounts. Maybe if they start to follow Sony / third party pricing structure where you end up at £7.99 price point Nintendo would match it lol

 

[JackAvery]

Just sharing the graphs I'm using for my Dutch langauge discussion of the quarterly results. Sadly enough no forum with datawrapper integration yet.

First one is in Euro's, rest in Japanese yen, sorry

All in all a decent quarter in terms of financials. Healthy profits are being made. Software is doing well considering the 'ok' hardware sales. Switch Lite seems to be underperforming compared to previous quarters. Nintendo attributes this to lower stock, but I wonder if this is the only explanation.

The low digital ratio surprises a bit. Advertising and R&D keeps creeping upwards, which is a good sign.

Hoping Nintendo splits OLED from regular hybrid shipments starting next quarter.

 

[Guaraná]

Was the revision down due to production issues reported yesterday?

 

[PillFencer]

Switch vs. top consoles

Worldwide | Hardware

Japan | Hardware

Japan | Software

The Americas | Hardware

The Americas | Software

Europe + Other | Hardware

Europe + Other | Software

 

[Skittzo]

I was actually expecting ~3.5M so this was higher then I thought. Of course, I also was not expecting OLED shipments to be part of this report since when I asked about that months ago most people said it would not count for Q2. So mixed bag there, depending on how many OLED models are part of this number.

No, I think PS4 is unbeatable just on the basis of the difference in third party support. COD alone will add probably 100m to the PS4's total.

That can be partially offset by MK8 and ACNH combining for like 80M when all is said and done.

 

[johanto21]

For Nintendo themselves, sure. I doubt they'll topple PS2 and 4. Especially, since Nintendo doesn’t count digital only games in the total, and that's is a good chunk of their software in the Eshop.

PS4 may be impossible considering the huge 3rd party support that has and that the first party is not selling bad either (not as good as Nintendo's, but still good enough to make a difference).
But PS2... it didn't have digital so it may be a bit unfair to compare it to the Switch, but I think more games and promos are being done today so it evens out in a way. The battle between PS2 and Switch may be very interesting cosidering Switch strongest years in terms of software have still to come.

No, I think PS4 is unbeatable just on the basis of the difference in third party support. COD alone will add probably 100m to the PS4's total.

Yeah PS4 may have been a bit too much maybe.

We have PS4 numbers without only digital only sales since PlayStation change the tracking during 2020

For some time we can compare

True, I'll look for them since PS4's 2018 should be the equivalent of Switch's 2021 if I'm counting it right. Thanks!

 

[Guaraná]

Shouldn't Nintendo's R&D expenses be higher considering a new console will probably be launched within the next 18 to 24 months?

 

[Adri]

Still very good numbers. I wonder how many units could be sold next quarter. At least, PS1 total sales (102.49 million units) should be surpassed.
PS4 is higher (116,6 as of September 30), but we can expect Swicth to beat it as well, if Switch 2 doesn't come out next year.

 

[Star Ocean]

Comparison will be difficult between PS4 and Switch since both ecosystem are different and the number reports of ps4 changed during FY 2020

However since we have old numbers

@johanto21

Comparison -

Switch -
HW - 92.87
SW - 681 mil
Time Frame - 4yr -7 months

PS4 -
HW - 94.2
SW - 904 mil (876 sold through to customer)
Time Frame - 5 years

(The PS4 numbers are from the old reporting structure which didn't had digital only games numbers)

However few factors -
1) Average Revenue Of Copy sold on switch should be higher
2) F2P and GaaS MTX/DLC on PlayStation are very high

PS - Both have done great and should be the best performing on software for both family of system

 

[Skittzo]

Will there be a presentation and Q&A tomorrow for this release?

 

[Arynio]

Just sharing the graphs I'm using for my Dutch langauge discussion of the quarterly results. Sadly enough no forum with datawrapper integration yet.

First one is in Euro's, rest in Japanese yen, sorry

All in all a decent quarter in terms of financials. Healthy profits are being made. Software is doing well considering the 'ok' hardware sales. Switch Lite seems to be underperforming compared to previous quarters. Nintendo attributes this to lower stock, but I wonder if this is the only explanation.

The low digital ratio surprises a bit. Advertising and R&D keeps creeping upwards, which is a good sign.

Hoping Nintendo splits OLED from regular hybrid shipments starting next quarter.

Thank you for sharing these great and informative figures. May I suggest that mods threadmark these?

 

[mbolibombo]

Nintendo probably should change how they report numbers - not reporting on software that doesnt have retail presence in this day and age is a bit weird.
Maybe once Switch 2 hits the market.

Nintendo lowballing software numbers for the forecast and looks like it's banking on the current pipeline for the FY and OLED to keep HW high through the holidays and winter.
Arceus is a key title for the winter to keep the momentum before the heavy hitters for Software releases next year.

 

[SoonyXboneUhh]

Switch Lite is in inventory clearance mode in Europe the last few months, so the low shipments makes sense.
In Germany the last AC Bundles getting sold right now.

 

[Joseki]

.

 

[ggx2ac]