| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥19058.8B | ¥9562.2B | +99.3% |
| Operating Income | ¥3003.9B | ¥2476.0B | +21.3% |
| Ordinary Income | ¥4558.4B | ¥3271.2B | +39.4% |
| Net Income | ¥3588.8B | ¥2372.2B | +51.3% |
| ROE | 12.1% | 8.7% | - |
FY2026 Q3 results show revenue of 1,905.8 billion yen (YoY +99.3%), operating income of 300.4 billion yen (YoY +21.3%), ordinary income of 455.8 billion yen (YoY +39.4%), and net income of 358.9 billion yen (YoY +51.3%). The company achieved substantial revenue growth driven by strong hardware and software sales volume expansion, though operating margin compressed significantly to 15.8% from prior year's 25.9% due to elevated cost of sales and selling, general and administrative expenses. Non-operating income contributed 156.2 billion yen including foreign exchange gains of 47.9 billion yen, equity method investment gains of 64.8 billion yen, and interest income of 34.4 billion yen, substantially boosting ordinary and net income levels. Special gains from investment securities sales of 32.7 billion yen further enhanced bottom-line performance. The company maintains an exceptionally strong balance sheet with total assets of 3,863.4 billion yen, equity of 2,976.4 billion yen, and virtually net-cash position, supporting a current ratio of 395.5% and equity ratio of 77.0%.
[Profitability] ROE of 12.1% reflects a Du Pont decomposition of net profit margin 18.8%, total asset turnover 0.493 times, and financial leverage 1.30 times. Operating margin of 15.8% declined 10.1 percentage points from prior year's 25.9%, primarily due to gross profit margin compression to 37.4% from 59.1% and increased SG&A expenses of 412.1 billion yen. Ordinary income margin of 23.9% and net income margin of 18.8% both contracted from prior year levels of 34.2% and 24.8% respectively, despite substantial non-operating income contributions. ROA of 9.3% and ROIC of 12.1% indicate solid capital efficiency, though profitability at the operating level warrants monitoring given the margin compression. [Cash Quality] Cash and deposits of 1,874.8 billion yen provide 23.6 times coverage of interest-bearing debt of 79.7 billion yen, with interest coverage ratio reaching 2,016 times, indicating virtually debt-free financial strength. [Investment Efficiency] Total asset turnover of 0.493 improved from lower historical levels due to revenue doubling, while inventory turnover days of 125 days and receivables turnover days of 59 days indicate room for working capital optimization. Operating working capital cycle stands at 104 days. [Financial Health] Equity ratio of 77.0% improved from 80.2% prior year, current ratio of 395.5% and quick ratio of 343.7% demonstrate exceptional liquidity, and debt-to-equity ratio of 0.30 times reflects conservative capital structure with minimal financial risk.
Cash and deposits increased 141.8 billion yen year-over-year to 1,874.8 billion yen, reflecting strong earnings accumulation despite significant working capital expansion. The operating profit growth of 52.8 billion yen and non-operating income contributions of 156.2 billion yen supported cash generation, though actual operating cash flow conversion will depend on working capital management given the substantial increases in trade receivables and inventories. Trade receivables surged 247.4 billion yen to 312.6 billion yen, representing a 379.6% year-over-year increase and suggesting extended collection cycles accompanying the revenue surge. Inventories of 410.2 billion yen with turnover days of 125 days indicate elevated inventory levels requiring optimization. Trade payables increased 107.5 billion yen to 308.5 billion yen, providing partial working capital financing through supplier credit extension. The company's cash coverage of short-term liabilities stands at 2.36 times, ensuring ample liquidity buffer. The substantial non-operating income including foreign exchange gains of 47.9 billion yen and equity method gains of 64.8 billion yen contributed approximately 52% of operating income, highlighting the importance of these items to current cash generation though their sustainability may vary with market conditions.
Ordinary income of 455.8 billion yen versus operating income of 300.4 billion yen shows non-operating net contribution of approximately 156.2 billion yen, representing 52.0% of operating income and 8.2% of revenue. The primary components include equity method investment gains of 64.8 billion yen, foreign exchange gains of 47.9 billion yen, and interest and dividend income of 34.4 billion yen, all derived from financial and investment activities rather than core operations. Special income of 32.7 billion yen from investment securities sales represents a one-time gain equivalent to approximately 9.1% of net income, indicating limited recurrence potential. The concentration of non-operating and special items totaling 188.9 billion yen suggests elevated earnings volatility risk as these components are subject to market fluctuations and strategic timing. Operating margin compression of 10.1 percentage points year-over-year from 25.9% to 15.8% reflects fundamental profitability pressure at the core business level, driven by gross margin decline from 59.1% to 37.4% and SG&A expense expansion. While specific cash flow statement data is not provided for the quarterly period, the substantial increase in trade receivables by 247.4 billion yen and the elevated inventory turnover days of 125 days suggest potential working capital absorption that may moderate cash earnings quality. The effective tax rate of 26.5% and interest coverage ratio of 2,016 times indicate efficient tax management and negligible financial burden, supporting cash retention capacity. Overall earnings quality reflects strong absolute profit growth but with notable dependency on non-recurring items and working capital efficiency challenges requiring attention.
Inventory management risk stems from inventory turnover days of 125 days, exceeding the manufacturing industry median of 109 days, with absolute inventory levels of 410.2 billion yen creating potential for promotional discounting or write-downs if demand weakens or product mix shifts unfavorably. Foreign exchange exposure is substantial, with foreign exchange gains of 47.9 billion yen representing 15.9% of operating income, indicating significant earnings volatility potential from currency fluctuations particularly in USD/JPY and EUR/JPY given global revenue concentration. Platform lifecycle dependency creates revenue concentration risk, as the substantial 99.3% year-over-year revenue growth likely reflects specific hardware generation momentum that may not sustain at current levels through natural console lifecycle progression, requiring successful new product launches and major IP releases to maintain growth trajectory.
[Industry Position] (Reference - Proprietary Analysis) Nintendo's profitability metrics significantly exceed manufacturing industry medians. Operating margin of 15.8% compares favorably to the industry median of 8.3%, though has declined substantially from the company's historical 33.3% in FY2024. Net profit margin of 18.8% substantially exceeds the industry median of 6.3%, ranking in the top quartile. ROE of 12.1% outperforms the industry median of 5.0% by 7.1 percentage points, while ROA of 9.3% significantly exceeds the median of 3.3%. Financial health indicators are exceptionally strong, with equity ratio of 77.0% well above the industry median of 63.8%, and current ratio of 395.5% far exceeding the median of 2.84 times. The company maintains a net cash position versus the industry median net debt to EBITDA of negative 1.11 times. Revenue growth of 99.3% dramatically outpaces the industry median of 2.7%, though this exceptional growth rate likely reflects cyclical factors and new product launches rather than sustainable trend. Asset turnover of 0.493 times trails the industry median of 0.58 times, suggesting room for asset efficiency improvement. Inventory turnover days of 125 days moderately exceed the industry median of 109 days, indicating working capital optimization opportunity. Overall, Nintendo demonstrates superior profitability and financial strength relative to the broader manufacturing sector, though working capital efficiency and operating margin trends warrant monitoring as the company scales.
※ Industry: Manufacturing (98 companies), Comparison: FY2025 Q3 periods, Source: Proprietary analysis
Revenue momentum of 99.3% year-over-year growth substantially outperforms both the manufacturing industry median of 2.7% and the company's recent historical trend from 7.7% in FY2024, indicating a significant inflection driven by product cycle dynamics, though sustainability depends on platform lifecycle management and major IP release cadence. The company has transitioned from an operating-margin-driven model with 33.3% operating margin in FY2024 to a volume-growth model with 15.8% operating margin in current period, requiring assessment of whether gross margin pressure from 59.1% to 37.4% reflects temporary promotional activity, product mix shift toward lower-margin hardware, or structural cost inflation. Non-operating income dependency has increased materially, with foreign exchange gains, equity method gains, and investment income totaling 156.2 billion yen representing 52% of operating income, creating earnings volatility exposure to currency movements and investee performance while potentially masking underlying operational profitability trends that will determine sustainable earnings power.
This report was automatically generated by AI analyzing XBRL earnings data as an earnings analysis tool. This is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled from publicly available earnings data. Please make investment decisions at your own responsibility and consult professionals as needed.