GameStop — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the second quarter ended August 1, 2026, were $790.2 million, a decrease from $972.2 million in the prior year's second quarter.
• Collectibles net sales grew 57% year-over-year to $356.3 million, representing 45.1% of total net sales compared to 23.4% in the prior year.
• Operating income was $160.2 million, the highest second quarter operating income in the company's history, compared to $66.4 million in the prior year.
• Adjusted operating income was $158.7 million for the quarter, compared to $64.7 million in the prior year.
• Net income was $298.7 million for the quarter, compared to $168.6 million in the prior year.
• Adjusted net income was $161.1 million for the quarter, compared to $138.3 million in the prior year.
• Adjusted EBITDA was $174.0 million for the quarter, compared to $75.7 million in the prior year.
• SG&A expenses were $187.1 million for the quarter, down from $218.8 million in the prior year.
• Total cash, cash equivalents, marketable securities, digital assets, and related receivables were $5.4 billion as of August 1, 2026.
• The Company held approximately 43.4 million shares of eBay Inc. common stock with a fair value of approximately $4.9 billion as of August 1, 2026.
• Long-term debt was reduced to approximately $2.8 billion following the retirement of approximately $1.4 billion in aggregate principal amount of convertible notes.
• Free cash flow for the second quarter was $60.7 million, compared to $113.3 million in the prior year.
• For the first six months of fiscal 2026, Adjusted EBITDA was $339.7 million.

Guidance and Future Outlook

• The Company raised its fiscal year 2026 Adjusted EBITDA outlook to in excess of $650 million, an increase from the prior outlook of in excess of $600 million.

Business Segments and Product Lines

• Beginning in the second quarter of fiscal 2026, the Company reports net sales in three categories: Collectibles, Video Games, and Pre-Owned and Refurbished.
• Video Games net sales were $263.2 million (33.3% of total) for the quarter, compared to $494.6 million (50.9%) in the prior year.
• Pre-Owned and Refurbished net sales were $170.7 million (21.6% of total) for the quarter, compared to $250.0 million (25.7%) in the prior year.
• The decrease in net sales primarily reflects the prior-year launch of Nintendo Switch 2, planned store closures, and the divestiture of the Company's France operations.

Market and Competitive Landscape

• The Company's collectibles business now represents 45.1% of net sales, up from 23.4% in the prior year.
• The Company completed the divestiture of its France operations.
• The Company completed the divestiture of its operations in New Zealand.

Risks and Challenges

• Forward-looking statements are subject to risks including the performance of the business, economic conditions, competitive nature of the industry, and cyclicality of the video game industry.
• Risks include dependence on timely delivery of new products from vendors, supply chain interruptions, and dependence on holiday selling season and trading card popularity.
• Risks include the ability to maintain retail and ecommerce experiences, manage profitability and cost reduction initiatives, and complete the proposed acquisition of eBay.
• Risks include the Company's high dependence on the services of Chairman and CEO Ryan Cohen, potential damage to reputation, and data security and privacy compliance.
• Risks include inventory shrinkage, computerized system failures, and the ability of third-party delivery services to deliver products.
• Risks include the value of investment holdings, concentration of the investment portfolio, and volatility in the Company's stock price.
• Risks include the servicing of Convertible Notes, which requires significant cash, and the potential for the Company to incur additional indebtedness.
• Risks include exposure to cryptocurrency assets (Bitcoin and stable coins) and derivative strategy counterparty risk.

Management Commentary and Tone

• The Company reported the highest second quarter operating income in its history.
• The Company raised its full-year Adjusted EBITDA outlook, indicating confidence in its core operating performance and cost reduction initiatives.

Other Key Points

• On September 3, 2026, the Company completed privately negotiated exchanges retiring approximately $1.4 billion aggregate principal amount of its 0.00% Convertible Senior Notes due 2030 and 0.00% Convertible Senior Notes due 2032.
• The Company holds a significant equity investment in eBay Inc. valued at approximately $4.9 billion.
• The Company has a substantial cash position of $5.4 billion including digital assets and related receivables.
• The Company is proposing an acquisition of eBay Inc.
• The Company's non-GAAP measures exclude items such as transformation costs, asset impairments, gains/losses on digital assets, derivative assets, and unrealized gains on equity investments.
• The Company is unable to reconcile its forward-looking Adjusted EBITDA outlook to the closest GAAP measure (net income) without unreasonable efforts due to the unpredictability of significant items.