Nintendo has reported a sharp rise in quarterly profit after receiving approximately US$300 million in refunds for US import tariffs, while maintaining that customers are not entitled to a share in the financial boost.

The Japanese gaming giant recorded operating profit of ¥142.5 billion (A$1.28 billion) for the three months to June 30, up 150.5% from ¥56.9 billion (A$511 million) a year earlier.

Net profit climbed 53.5% to ¥147.4 billion (A$1.32 billion), substantially beating analyst expectations, despite revenue falling almost 10% to ¥517.8 billion (A$4.65 billion).

Nintendo recorded the tariff refund as a reduction in its cost of sales, providing a significant one-off boost to earnings.

The company said it had largely absorbed the tariff costs rather than passing them on through higher console prices.

However, Nintendo increased prices for its Switch hardware in several markets over the past year and is now defending a proposed class action from US customers who argue it received a “double recovery” by lifting prices and later collecting refunds.

Nintendo has described the legal action as meritless, arguing customers received the products they agreed to purchase at the advertised price.

The tariff boost was supported by stronger software demand.

Switch 2 software sales increased 9.2% year-on-year, while software sales for the original Switch rose 38.6%.

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Nintendo sold 3.82 million Switch 2 consoles during the quarter, down from 5.82 million in the comparable period, which included demand following the console’s launch.

Lifetime Switch 2 sales have now reached 23.68 million units.

Digital game sales surged 90%, although physical game cards still represented about 40% of software sales.

Nintendo’s wider IP income also more than doubled, helped by the success of The Super Mario Galaxy Movie, which reportedly passed US$1 billion at the global box office.