They added a 5th character and stage to the game solely because the game was more popular than expected, they teamed up with Dark Horse to make a comic book based on the game. I think Nintendo considers it a success.

Nintendo already has it's 10 million seller on the Switch right now from the Mario Kart team. 8DX is going to carry the Switch for quite a while, thus giving Yabuki time to focus on ARMS. It wouldn't be prioritizing anything when they already got a number 1 priority out of the way. And green lighting a sequel would not be the result of bad management. 

"Ah sweet an ARMS thread getting 100+ comments!?"
*clicks on thread*
"Ah, typical."

Neither of those things prove it was a success though, they likely planned Dr Coyle all along and the Dark Horse venture is probably just Nintendo desperately trying to remind people it exists. The fact that it's dead in both sales and mindshare tells the real story. There are virtually endless possibilities for what the team could do next, and making a followup to a game that's shown itself to lack real potential is near the bottom of that list to any competent manager. 

Lonely Dolphin does make a good point though, and not just that the game is so dead that only a prolonged debate between two stubborn individuals like us could protract an ARMS thread for this long, lulz. We're really just going in circles and repeating ourselves at this point, so feel free to PM me if you want to continue this discussion. Much like the game itself, this thread has kinda long since played itself out, so I won't be reading any further posts.

Is the favorite game of my girlfriend on switch, she bought a switch and a copy of ARMS after playing it on my switch. And she never liked any fighting game before.
Thank god ARMS existed. We are totally into ARMS 2. This inovative software that move hearts, because mario kart, everyone knows what is.

I hope Nintendo buries this weird/embarrassing looking game for good and bring back Punch Out!!