On Monday, the Japanese gaming company reported operating profit of 229.7 billion yen ($ 2.2 billion) in the quarter ended December, exceeding analysts ’expectations. Sales of its Switch console reached a record high of 11.6 million units during such an important holiday season.
The fugitive success of the Switch caused the company to increase its level sales and earnings forecasts for the second time since November. He now expects a 24% profit increase from what he projected just three months ago, with an estimated 560 million yen ($ 5.3 billion) for the year ending in March.
The results show that even many months after the pandemic, people continue to turn to the Switch en masse. Nintendo previously projected that it would sell 19 million units of the console by the end of March. It now expects to sell 26.5 million after several upward revisions to the forecast.
Nintendo has been a big winner in the pandemic-hit economy as more people continue to recover their games and devices to help keep them entertained at home. Last year, the company’s profits skyrocketed, sometimes by margins in excess of 400%.
One of the company’s major successes has been the continued popularity of “Animal Crossing: New Horizons.” The game, set in a relaxing virtual utopia of the island, allows users to fish, catch insects and play with friends on the beach, runs Switch and has become a best-seller.
Nintendo sold 19.4 million copies of the game in the last nine months of 2020, bringing total sales to about 31.2 million units.
But the company has also been concerned about how long it can keep its streak warm, especially as the world begins to look beyond the pandemic.
Currently, analysts remain cautiously optimistic.
On Monday, Jefferies equities analyst Atul Goyal advised investors to “buy, but stay agile.”
“We were expecting this beat,” he wrote in a research note reacting to the gains.
But to continue its performance success, the company “will need a strong gaming pipeline and a hardware upgrade,” he added.
The company plans to release several new titles for Switch this year, including “Super Mario 3D World” and “Bowser’s Fury.”
But “the formation of the title cannot be denied [the upcoming fiscal year] it seems to be missing, “said Takao Suzuki, an analyst at Daiwa Securities in Japan.” And investors continue to closely monitor the impact on profits from a potential change in consumer behavior as a result of the development and distribution of Covid-19 vaccines. “
Nintendo should also work to build its brand “in business areas other than games,” such as mobile apps or theme parks, he told CNN Business.
The company has not tested the new hardware, although some analysts suggest they could change by the end of this year.
The Switch was first launched in 2017, while the smaller, cheaper Switch Lite model came out in 2019. Since then, other rivals, such as Microsoft (MSFT) i Sony (SNE), have released new consoles, specifically the Xbox Series X and PlayStation 5.
For now, Nintendo “lacks a history of profit growth,” Goyal wrote. “We would have loved to see Nintendo start building one [broader] strategy, but that is still a dream. “
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