By Takashi Mochizuki

(Bloomberg) -- Nintendo Co. reported stronger-than-expected earnings buoyed by tariff refunds from the US and strong sales of a pair of in-house titles for its flagship Switch 2 console.

Most Read from Bloomberg

• Iran Says Agreement on Hormuz Shipping Reached With Oman

• Google AI Veterans Depart During Seismic Leadership Shift

• SpaceX's AI Splurge Puts a Damper on First Earnings After IPO

The Kyoto-based company posted net income of ¥147.4 billion ($934 million) for the June quarter, compared with an analyst consensus estimate of ¥77.8 billion. Revenue of ¥517.8 billion surpassed the market expectation of ¥448.8 billion.

Results were aided by refunds of import tariffs the US had imposed last year and later rescinded, which also boosted earnings at Sony Group Corp. and Canon Inc. Nintendo and Sony both raised hardware prices as a result of the higher costs. Robust sales of first-party titles, including Pokémon Pokopia and Tomodachi Life: Living the Dream, also helped drive revenue in Kyoto.

The Switch 2 made its debut last summer at $449.99 in the US and also had a Japan-exclusive model sold at a loss to attract the biggest possible audience. Nintendo had planned to gradually narrow those losses through manufacturing efficiencies, tighter marketing spending and a stronger software lineup that could offset the hardware deficit. But April's Liberation Day tariffs by the White House and an AI-driven surge in the cost of key components such as DRAM and NAND memory chips complicated the picture.

High-margin software sales remain critical to the company's profitability. Nintendo has released several successful titles, including Yoshi and the Mysterious Book and Star Fox, alongside the popular film sequel The Super Mario Galaxy Movie. However, the blockbuster sales investors have come to expect from the company's flagship franchises, such as Super Mario and The Legend of Zelda have not yet shown up on the year-old console.

"We expect some investors to remain concerned about rising component prices and tariffs, as well as the lack of an outsized upcoming hit," said Nick McKay, an analyst at Freedom Capital Markets. "Microsoft has said console storage component prices are expected to increase more than fivefold by the 2027 holiday season compared with fall 2025, with memory costs following a similar trajectory."

Most Read from Bloomberg Businessweek

• TikTok Withheld a Safety Feature From Millions. One Died by Suicide

• Lululemon Is At War With Itself

• Americans Are Rethinking Their Love Affair With Plant Milks

• Armed With $10 Billion, Sequoia's Leaders Plan Its New Era