This section provides a detailed overview of Nintendo's consolidated financial statements for the fiscal year ended March 31, 2025, covering balance sheets, income statements, statements of changes in equity, and cash flow statements, along with important notes and supporting schedules.
Analysis: Nintendo's total assets grew from ¥3,151,394 million in FY2024 to ¥3,398,515 million in FY2025, indicating continued expansion. Total liabilities also saw an increase, while net assets show a stable growth trend, reflecting a healthy financial position.
Analysis: Cash and deposits remain the largest component of current assets, although securities saw a significant decrease from FY2024. Inventories experienced a substantial increase, indicating potential buildup for future sales.
Analysis: Notes and accounts payable - trade saw a significant jump in FY2025, becoming the largest current liability. This could be due to increased procurement or changes in payment terms. Other current liabilities also increased.
Analysis: Net sales and all profit metrics (Gross, Operating, Profit attributable to owners) showed a notable decrease in FY2025 compared to FY2024. This trend indicates a challenging operating environment or a cyclical downturn.
Analysis: In FY2025, Cost of Sales represents a significant portion of Net Sales, highlighting the cost structure of Nintendo's products. Selling, General and Administrative Expenses also take a substantial share, impacting overall profitability.
The Consolidated Statements of Comprehensive Income show the 'Other comprehensive income' components, including valuation differences on available-for-sale securities and foreign currency translation adjustments. Notably, foreign exchange gains were significant in the previous year, while foreign exchange losses were recorded in the current year, impacting non-operating income/expenses.
Analysis: Retained earnings remain the dominant component of shareholders' equity, reflecting Nintendo's long-term profitability. The overall equity increased in FY2025, despite a decrease in profit attributable to owners, primarily driven by the accumulation of retained earnings.
Analysis: Profit attributable to owners significantly decreased in FY2025 compared to the previous year. Consequently, dividends paid also reduced, aligning with the company's profitability. Net changes in other comprehensive income showed a positive contribution in FY2025, contrasting with the negative impact from foreign currency adjustments in FY2024.
Analysis: Operating cash flow saw a sharp decline in FY2025, primarily due to a significant increase in inventories. Investing activities, however, turned positive, largely driven by proceeds from the withdrawal of time deposits. Financing activities remained a net outflow due to dividend payments.
Analysis: Despite the decrease in operating cash flow, Nintendo significantly increased its cash and cash equivalents balance at the end of FY2025, primarily from strategic asset management and investing activities.
This section provides detailed explanations on the basis of preparing the consolidated financial statements, accounting policies, and specific items on the balance sheet and income statement.
Nintendo employs specific valuation and depreciation methods for its assets, alongside detailed accounting for reserves and retirement benefits. Revenue recognition principles are tailored to its diverse entertainment product and service offerings.
Securities, Derivatives, Inventories
Property, Plant & Equipment, Intangible Assets, Leased Assets
Doubtful Accounts, Bonuses, Directors' Compensation
Video Game Platforms, Mobile/IP Income
Key Point: A significant increase in Finished Goods and Raw Materials in FY2025, suggesting a buildup of inventory.
Key Point: Loss on valuation of inventories doubled in FY2025, which correlates with the substantial increase in total inventory, indicating potential challenges in inventory turnover.
Analysis: Research and development expenses continued to increase, reflecting ongoing investment in innovation. Advertising expenses decreased, possibly indicating a shift in marketing strategy or product lifecycle management.
Inventories were recorded at ¥486,428 million (USD 3,264 million) for FY2025, including write-downs of ¥12,221 million (raw materials) and ¥15,760 million (finished goods). The valuation relies on estimates of future production/sales plans and market conditions, which carry uncertainty due to the short product lifecycle in the entertainment sector.
Impact: If net selling price or recoverable amount falls below expectations, or if usage/sales exceed plans, it will affect the closing balance of inventories and cost of sales.
Deferred tax assets for FY2025 were ¥80,929 million (USD 543 million). Their recoverability is based on estimates of future taxable income from business plans. While Nintendo maintains stable taxable income, the entertainment market environment introduces uncertainty.
Consideration: Any changes in future taxable income estimates will impact deferred tax assets and deferred income taxes.
"Advances received" (¥164,504 million) and "Other" (¥157,701 million) under "Current liabilities" were reclassified into a single "Other" amounting to ¥322,206 million as of March 31, 2024, due to immateriality of "Advances received."
"Interest expenses," "Loss on sale of securities," and "Loss on sale of investment securities" (totaling ¥451 million) were reclassified into "Other" (¥496 million) under "Non-operating expenses" for FY2024, also due to immateriality.
Analysis: Future lease payments under non-cancelable operating leases significantly increased in FY2025, especially for payments due after one year, indicating larger or longer-term lease commitments.
Analysis: The book value of held-to-maturity debt securities significantly decreased in FY2025 compared to FY2024, indicating a reduction in these holdings. The fair value largely tracks the book value, with minor differences.
Analysis: The total amount of other securities sold increased in FY2025. While total gains decreased, total losses also saw a reduction, indicating overall efficient management of these sales.
Information regarding the breakdown of other securities (equity, debt, etc.) by book value, acquisition cost, and difference is provided in detail in the original report.
Analysis: In FY2024, derivative contracts (currency-related) resulted in a net unrealized loss. However, in FY2025, a positive fair value and net unrealized gain were recorded, indicating improved positioning or favorable currency movements for these hedging instruments.
Nintendo uses exchange forward contracts for currencies like Canadian Dollar and British Pound to manage exchange rate risks. These transactions are primarily for hedging purposes and are not for speculation.
Analysis: Retirement benefit obligations showed a consistent increase, reflecting growing future employee benefits. This is influenced by current service costs and interest costs.
Analysis: Plan assets also grew but experienced actuarial losses in FY2025, which slightly offset the growth from contributions and expected returns.
Analysis: Retirement benefit expenses increased significantly in FY2025, primarily due to the amortization of actuarial gains and losses turning into an expense, and the inclusion of past service cost.
Analysis: Net deferred tax assets decreased in FY2025, primarily due to an increase in deferred tax liabilities related to undistributed retained earnings of subsidiaries and available-for-sale securities.
Analysis: The effective tax rate was consistently lower than the statutory rate due to tax deductions for R&D, different rates applied to subsidiaries, and the effect of equity method accounting, with a further reduction in FY2025.
Effective March 31, 2025, Japan's statutory tax rate changed from 30.5% to 31.4% for fiscal years starting on or after April 1, 2026. This change resulted in a net decrease of ¥1,126 million (USD 7 million) in deferred tax assets, a ¥911 million (USD 6 million) lower valuation difference on available-for-sale securities, and a ¥215 million (USD 1 million) higher deferred income tax.
Analysis: All regions saw a decrease in revenue from dedicated video game platforms in FY2025, with The Americas and Europe remaining the largest markets, despite a downturn.
Analysis: Nintendo Switch platform remains the dominant revenue driver, though its contribution decreased significantly in FY2025. Other platforms and services (Mobile, IP, etc.) show a smaller but stable contribution.
Nintendo recognizes revenue from various contracts, including sales of hardware, software, and accessories for dedicated video game platforms, as well as services like Nintendo Switch Online and mobile applications.
Control transferred upon arrival.
Available for customer use.
Progressively over subscription period.
App available / Currency used / IP used.
Context: Contract liabilities primarily represent pre-charged balances for e-commerce purchases, advances for undelivered membership services/add-on content, and advances from software manufacturers. Of the revenue recognized in FY2025, ¥112,280 million (USD 753 million) was from contract liabilities as of April 1, 2024.
Note: The presentation of transaction price allocated to remaining performance obligations is omitted due to immateriality or contract periods within one year, based on practical expediency.
Nintendo Co., Ltd. common shares are listed on the Tokyo Stock Exchange, Prime Market.
The Annual General Meeting of Shareholders for the fiscal year ended March 31, 2025 was scheduled to be held on June 27, 2025 at Kyoto International Exhibition Hall "Miyako Messe" in Kyoto, Japan.
PricewaterhouseCoopers Japan LLC, Tokyo, Japan.