Nintendo FY3/2020 Q4 Earnings Release, Switch Hardware 55.77M LTD

Aries

Administrator
Note: M = Million (or rather 10^6)

4th Quarter Earnings Release, data as of March 31st 2020: https://www.nintendo.co.jp/ir/pdf/2020/200507e.pdf


+------------------------------------------------------------------------------------------+
| | This Quarter | FY Cumulative |FY3/20 Forecast|FY3/21 Forecast|
+------------------------------------------------------------------------------------------+
| Net Sales | ¥285,851M | ¥1,308,519M (~$12.3B)| ¥1,250,000M | ¥1,200,000M |
| Operating Income| ¥89,440M | ¥352,370M (~$3.31B)| ¥300,000M | ¥300,000M |
| Net Profit | ¥62,252M | ¥258,641M (~$2.43B)| ¥210,000M | ¥200,000M |
+------------------------------------------------------------------------------------------+
SOME BALANCE SHEET DETAILS

Capital Adequacy Ratio: 79.7%

Current Assets: ¥1,501,583 million

Current Liabilities: ¥355,683 million

Cash and deposits: ¥890,402 million

Shareholder's equity: ¥1,575,428 million

Inventories: ¥88,994 million

Hardware sales units: IR Information : Sales Data - Dedicated Video Game Sales Units


+-----------------------------------------------------------------------------------------------------------+
| Switch (units) | This Quarter | FY Cumulative | LTD | FY3/20 Forecast | FY3/21 Forecast |
+-----------------------------------------------------------------------------------------------------------+
| Switch | 2.27M | 14.83M | 49.57M | |
| Switch Lite | 1.0M | 6.19M | 6.19M | |
| Hardware Total | 3.29M | 21.03M | 55.77M | 19.5M | 19.0M |
| Software Total | 45.59M | 168.72M | 356.24M | 140.0M | 140.0M |
+------------------------------------------------------------------------------------------------------------+
(Software sales units include both packaged and downloadable versions of software.)
###
+---------------------------------------------------------------------------------+
| 3DS | This Quarter | FY Cumulative | LTD | FY3/20 Forecast |
+---------------------------------------------------------------------------------+
| Hardware Total | 0.07M | 0.69M | 75.77M | 0.65M |
| Software Total | 0.89M | 4.99M | 383.11M | 4.5M |
+---------------------------------------------------------------------------------+
(Software sales units include both packaged and downloadable versions of software.)
###
+------------------------------------------------------------------------+
| | This Quarter | FY Cumulative |
+------------------------------------------------------------------------+
| Smart devices, IP related income, etc.| ¥14,385M | ¥51,295M |
+------------------------------------------------------------------------+
(Includes income from smart-device content and royalty income.)
Supplemental information:
https://www.nintendo.co.jp/ir/pdf/2020/200507_3e.pdf


+--------------------------------------------------------------------------+
| | This Quarter | FY Cumulative |
+--------------------------------------------------------------------------+
| Proportion of overseas sales | 74.0% | 77.0% |
+--------------------------------------------------------------------------+
(※ Proportion of overseas(outside of Japan) sales to total sales)
+--------------------------------------------------------------------------+
| Proportion of hardware sales | 39.6% | 52.2% |
+--------------------------------------------------------------------------+
(※ Proportion of hardware(including accessories) sales to total
dedicated videogame platform sales)
+--------------------------------------------------------------------------+
| Proportion of first party software sales | 85.1% | 82.8% |
+--------------------------------------------------------------------------+
(※ Proportion of first-party software sales to total dedicated video
game software sales)
+--------------------------------------------------------------------------+
| Digital Sales | ¥79.2B | ¥204.1B |
+--------------------------------------------------------------------------+
(※ Digital sales include a) downloadable versions of packaged software,
b) download-only software,c) add-on content and d) Nintendo Switch Online, etc.
* “Downloadable versions of packaged software” indicates the
downloadable version of software that is offered both physically and digitally.)
+--------------------------------------------------------------------------+
| Proportion of Digital Sales | 48.5% | 34.0% |
+--------------------------------------------------------------------------+
(※ Proportion of digital sales to total dedicated
video game software sales )
+--------------------------------------------------------------------------+
|Proportion of DL Ver. of Packaged SW Sales| 76.9% | 70.0% |
+--------------------------------------------------------------------------+
(※ Proportion of downloadable versions of packaged software sales
to total digital sales as indicated above: a/(a+b+c+d) )


+---------------------------------------------------+
| NSW Lite Sell-In WW LTD | Units | Percentage |
+---------------------------------------------------+
| Japan | 2.0M | 32.31% |
| The Americas | 2.33M | 37.64% |
| Other | 0.53M | 8.56% |
| Europe | 1.34M | 21.65% |
+---------------------------------------------------+
|All NSW HW Sell-In WW LTD | Units | Percentage |
+---------------------------------------------------+
| Japan | 13.44M | 24.1% |
| The Americas | 22.12M | 39.66% |
| Other | 5.78M | 10.36% |
| Europe | 14.43M | 25.87% |
+---------------------------------------------------+
###
+---------------------------------------------------+
|Switch SW Sell-In WW LTD | Units | Percentage |
+---------------------------------------------------+
| Japan | 67.2M | 18.86% |
| The Americas | 158.59M | 44.52% |
| Other | 24.54M | 6.89% |
| Europe | 105.92M | 29.73% |
+---------------------------------------------------+
###
+----------------------------------------------------------------+
| New Titles (Switch) | This Quarter | FY Cumulative| LTD |
+----------------------------------------------------------------+
| Japan | 50 | 260 | 558 |
| The Americas | 69 | 313 | 698 |
| Other | 77 | 331 | 710 |
+----------------------------------------------------------------+

+-------------------------------------------------------------------------------------------------+
| Title | FY Japan | FY Overseas | FY Global | Global LTD |
+-------------------------------------------------------------------------------------------------+
| Super Mario Maker 2 | 1.16M | 4.32M | 5.44M | 5.48M |
| The Legend of Zelda: Link's Awakening | 0.43M | 3.95M | 4.38M | 4.38M |
| Mario Kart 8 Deluxe | 8.08M | 0.93M | 7.15M | 24.77M |
| The Legend of Zelda: Breath of the Wild | 0.45M | 4.18M | 4.0M | 17.41M |
| New Super Mario Bros. U Deluxe | 0.33M | 2.96M | 3.29M | 6.6M |
| Astral Chain | 0.16M | 0.91M | 1.08M | 1.08M |
| Ring Fit Adventure | 0.89M | 1.84M | 2.73M | 2.73M |
| Super Mario Party | 0.62M | 3.09M | 3.7M | 10.1M |
| Pokémon Sword/Shield | 4.52M | 12.85M | 17.37M | 17.37M |
| Super Smash Bros. Ultimate | 0.9M | 4.13M | 5.03M | 18.84M |
| Luigi's Mansion 3 | 0.83M | 5.5M | 6.33M | 6.33M |
| Marvel Ultimate Alliance 3 | 0.04M | 1.04M | 1.08M | 1.08M |
| Splatoon 2 | 0.45M | 0.98M | 1.43M | 10.13M |
| Fire Emblem: Three Houses | 0.58M | 2.29M | 2.87M | 2.87M |
| Pokémon: Let's Go Pikachu/Eevee | 0.14M | 1.2M | 1.34M | 11.97M |
| Super Mario Odyssey | 0.21M | 2.75M | 2.97M | 17.41M |
| Animal Crossing: New Horizons | 3.84M | 7.93M | 11.77M | 11.77M |
| Pokémon Mystery Dungeon | 0.36M | 0.89M | 1.26M | 1.26M |
+---------------------------------------------------------------------------------------------------+
Top selling title sales units as of March 31st, 2020 in no particular order: (Go to the link to see it in order: IR Information : Sales Data - Top Selling Title Sales Units )

+----------------------------------------------------------------------+
| Switch - Top Selling Titles (units) | This Quarter| LTD |
+----------------------------------------------------------------------+
| Mario Kart 8 Deluxe | 1.81M | 24.77M |
| Super Mario Odyssey | 0.82M | 17.41M |
| Super Smash Bros. Ultimate | 1.16M | 18.84M |
| The Legend of Zelda: Breath of the Wild | 1.07M | 17.41M |
| Pokémon Let's Go Pikachu/Eevee | 0.21M | 11.97M |
| Splatoon 2 | 0.32M | 10.13M |
| Super Mario Party | 0.98M | 10.1M |
| New Super Mario Bros. U Deluxe | 0.75M | 6.6M |
| Animal Crossing: New Horizons | 11.77M | 11.77M |
| Pokémon Sword/Shield | 1.31M | 17.37M |
+----------------------------------------------------------------------+



Description of Operating Results
1. Operating Results and Financial Positions for the Fiscal Year Ended March 31, 2020
Net cash provided by (used in) operating activities:
Net cash provided by (used in) investing activities:
Net cash provided by (used in) financing activities:
2. Information About Risks Related to COVID-19
(2) Financial positions as of March 31, 2020
Total assets increased by 243.7 billion yen compared to the prior fiscal year-end to 1,934.0 billion yen mainly due to an increase in
short-term and long-term investment securities. Total liabilities increased by 117.6 billion yen compared to the prior fiscal year-end to
393.1 billion yen mainly due to an increase in notes and accounts payable-trade. Net assets increased by 126.1 billion yen compared to
the prior fiscal year-end to 1,540.9 billion yen.
(3) Cash flows for the fiscal year ended March 31, 2020
The ending balance of “Cash and cash equivalents” (collectively, “Cash”) as of March 31, 2020 was 621.4 billion yen, with an
increase of 36.0 billion yen during the fiscal year. During the prior fiscal year, there was an increase of 100.8 billion yen. Net increase
(decrease) of Cash and contributing factors during the fiscal year ended March 31, 2020 are as follows:
There were decreasing factors contributing to 361.2 billion yen of profit before income taxes such as an increase in payments of
income taxes and notes and accounts receivable-trade. However, due to increasing factors such as a decrease in inventories and an
increase in trade payables, net cash resulted in an increase of 347.7 billion yen compared to an increase of 170.5 billion yen during
the prior year.
Net cash from investing activities decreased by 188.4 billion yen compared to an increase of 45.3 billion yen during the prior year
mainly due to proceeds from withdrawal of time deposits and sales and redemption of short-term and long-term investment securities
being lower than payments into time deposits and purchase of short-term and long-term investment securities.
Net cash from financing activities decreased by 111.0 billion yen compared to a decrease of 109.0 billion yen during the prior year
mainly due to payments of cash dividends.
(1) Operating results for the fiscal year ended March 31, 2020
For the fiscal year ended March 31, 2020, Nintendo Switch Lite launched in September as a compact, lightweight, and easy-to-carry
dedicated handheld system, and Nintendo Switch performed very well without losing momentum, resulting in significant sales growth
for the entire Nintendo Switch family. Looking at software, Pokémon Sword and Pokémon Shield became big hits, posting sales of
17.37 million units, and Animal Crossing: New Horizons, released in March, sold 11.77 million units, which is now the best start ever
for a Nintendo Switch title. In addition to titles like Luigi’s Mansion 3 and Super Mario Maker 2 that were released during this fiscal
year, sales also continued to grow steadily for popular titles released in previous fiscal years and for titles from other software
publishers. The total number of million-seller titles during this fiscal year reached 27 titles, including those from other software
publishers. Nintendo Switch also launched in China through Tencent Holdings Limited in December.
Because of COVID-19, production and shipments of the Nintendo Switch console, accessories like the Joy-Con controllers, and Ring
Fit Adventure faced delays in some regions from February through March, but this only had limited impact on business results for this
fiscal year.
As a result, sales of both hardware and software exceeded last year's good results. In terms of volume, hardware sales for this fiscal
year totaled 21.03 million units (24.0% increase on a year-on-year basis), and software sales totaled 168.72 million units (42.3%
increase on a year-on-year basis).
For Nintendo 3DS, hardware sales totaled 0.69 million units (73.0% decrease on a year-on-year basis), and software sales totaled
4.99 million units (62.3% decrease on a year-on-year basis).
Turning to our digital business for dedicated video game platforms, in addition to the strong sales of downloadable versions of
packaged software for Nintendo Switch, the steady growth in sales of download-only software and add-on content, and the
contribution from Nintendo Switch Online throughout the year all helped to bring overall digital sales to 204.1 billion yen (71.8%
increase on a year-on-year basis).
For the mobile business, many consumers continue to enjoy applications released during this fiscal year, such as Mario Kart Tour, as
well as titles that were released in previous fiscal years. Our mobile, IP related income reached 51.2 billion yen (11.5% increase on a
year-on-year basis).
In total, net sales reached 1,308.5 billion yen (including overseas sales of 1,007.3 billion yen, or 77.0% of the total sales). Operating
profit came to 352.3 billion yen, ordinary profit was 360.4 billion yen, and net profit attributable to owners of parent totaled 258.6
billion yen for this fiscal year.
The spread of COVID-19 poses the following risks that may impact the Nintendo group. However, this list does not encompass all
risks, and there may be other risks that cannot be predicted.
・ Impact on parts procurement, production, and shipments
It appears that delays in production and shipping are gradually recovering. However, we may be affected if there continue to be
issues involving the procurement of necessary components. In addition, if the impact of COVID-19 is prolonged or worsens
further, it may disrupt the product supply.
Nintendo Co., Ltd. - 3

3. Outlook for the Fiscal Year Ending March 31, 2021
4. Basic Policy of Profit Distribution and Dividends
Basic Policy on the Selection of Accounting Standards
It is the Company’s basic policy to internally provide the capital necessary to fund future growth, including capital investments, and
to maintain a strong and liquid financial position in preparation for changes in the business environment and intensified competition.
As for direct profit returns to our shareholders, dividends are paid based on profit levels achieved in each fiscal period.
The annual dividend per share will be established at the higher of the amount calculated by dividing 33% of consolidated operating
profit by the total number of outstanding shares, excluding treasury shares, as of the end of the fiscal year rounded up to the 10 yen
digit, and the amount calculated based on the 50% consolidated profit standard rounded up to the 10 yen digit.
The end of 2nd quarter (interim) dividend per share is calculated by dividing 33% of consolidated operating profit by the total
number of outstanding shares, excluding treasury shares, as of the end of the six-month period rounded up to the 10 yen digit.
As a result, the dividend for the fiscal year ended March 31, 2020 has been established at 1,090 yen (interim: 270 yen, year-end: 820
yen) and dividend for fiscal year ending March 31, 2021 will be 840 yen if earnings are in line with the financial forecast herein. The
end of 2nd quarter dividends are yet to be determined as there are no interim financial forecasts, but there are no changes to our
dividend policy.
Retained earnings are maintained for effective use in research of new technology and development of new products and services,
capital investments and securing materials, enhancement of selling power including advertisements, strengthening of network
infrastructure, and treasury share buyback whenever deemed appropriate.
There are concerns that COVID-19 will lead to a global decline in production and consumption.
Given the situation, we will work to continue to convey the appeal of the Nintendo Switch and Nintendo Switch Lite hardware and
expand their installed base. Our plans with Nintendo software include the release of Xenoblade Definitive Edition in May and
Clubhouse Games: 51 Worldwide Classics in June. In addition, we plan to distribute The Isle of Armor for Pokémon Sword Expansion
Pass and Pokémon Shield Expansion Pass by the end of June as the first-ever add-on content for the Pokémon series, and to follow that
up with The Crown Tundra in the fall. Other software publishers also plan to release a wide variety of appealing titles, and the
combination of existing popular titles and a continuous stream of appealing new titles will work together to invigorate the platform.
For our mobile business, operations will focus on encouraging more consumers to continue to enjoy playing applications released
during this fiscal year like Mario Kart Tour, as well as existing applications that were released in previous years.
Through these initiatives, we expect to see results on the order of 1,200.0 billion yen in net sales, with 300.0 billion yen in operating
profit, 290.0 billion yen in ordinary profit, and profit attributable to owners of parent of 200.0 billion yen.
Unit sales of key products used in these forecasts can be found on page 14 under the heading "(4) Consolidated sales units, number
of new titles, and sales units forecast" in the section titled "Others." Exchange rate assumptions for the major currencies used in
forecasting are 105 yen per US dollar and 115 yen per euro.
Nintendo is preparing for mandatory International Financial Reporting Standards adoption by attending seminars held by outside
agencies to collect information, and conducting a deliberation on its adoption. However, the effective date has not been determined.
[Note] Statements relating to future projections represent the judgments made by Nintendo management based on information that was available at the time they
were written, and therefore include certain potential risks and uncertainties. Regarding the impact of COVID-19 on our earnings forecasts, production and sales
volumes may decrease for a certain period of time, but we anticipate that production and sales will be able to meet demand for the full year and that we will be
able to release software titles now in development as planned. That being said, there are many elements of uncertainty, so if there is a need to revise our earnings
forecasts at a later date, we will promptly disclose those revisions. Please be aware that such risks and uncertainties may cause actual results to be materially
different from these forecasts (including but not limited to earnings forecasts and dividend forecasts).
・ Impact on consumption activities
There are restrictions on sales channels in each country due to measures to prevent the spread of the virus including restrictions
on movement outside the home and closure of retail stores, and this effect may be prolonged. Also, if physical distribution is
suspended, we will not be able to sell hardware or packaged software through e-commerce (electronic sales transactions). In
addition, there is a possibility that provision of those services offered via our network may be suspended in the event that we are
no longer able to maintain the stability of our network systems.
・ Impact on research and development
If the effects of COVID-19 are prolonged or worsen further, development schedules may be impacted due to the difference in
development environments between working from home and in the office. In particular, the impact to overseas subsidiaries and
other affiliated companies involved in development is anticipated to be even more difficult to predict than within Japan. As a
result of these factors, we may not be able to proceed with the release of Nintendo products and the start of services as planned.
This is also true for other software publishers, so it may not be possible to provide game content on Nintendo platforms as
planned.
・ Impact of exchange rate fluctuations
Changing circumstances in different countries due to the effects of COVID-19 may cause exchange rate fluctuations that could
impact our financial results.
Nintendo Co., Ltd. - 4
 

Nova

Member
Not at all surprised at how the hardware sold the most in the Japan and the America. Like the maximum sales are from those two regions. And it sems like the earning would continue to rise this year if the supplies go well. I hope things improve as well for the rest of the developer titles.
 
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