GME earnings analysis
What we found in GME's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
GameStop delivered a strong operational quarter despite an 18.7% revenue decline, with gross margin rising to 43.7% and operating income increasing 141.3% to $160.2 million as Collectibles grew 56.5%. Cash generation improved, but reported earnings benefited materially from a $166.3 million derivative gain and a $72.1 million eBay investment gain, while digital assets produced a $75.0 million loss. The large eBay investment, Bitcoin exposure and continued contraction in Video Games and Pre-Owned sales temper the otherwise favorable margin and cost-control trend.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Collectibles offset part of revenue decline
- Quarterly revenue declined $182.0 million, or 18.7%, to $790.2 million versus $972.2 million in the prior-year quarter. The decline was driven by a $231.4 million reduction in Video Games sales, partly offset by a $128.7 million increase in Collectibles.
- Major gross-margin expansion
- Gross margin expanded to 43.7% from 29.1%, a 14.6-percentage-point improvement, as Collectibles reached 45.1% of sales versus 23.4% last year while Video Games fell to 33.3% from 50.9%.
- Operating profit more than doubled
- Operating income increased $93.8 million, or 141.3%, to $160.2 million, while SG&A declined $31.7 million, or 14.5%, to $187.1 million. Management attributed the SG&A reduction partly to $18.5 million lower store-related rent and occupancy costs.
- Large liquidity and investment base
- The Company held $4,854.3 million of cash and cash equivalents and $206.0 million of marketable securities as of August 1, 2026, for a combined $5,060.3 million. It also held approximately $4.9 billion of eBay common stock at fair value.
- Operating cash generation improved
- Operating cash flow rose to $399.8 million from $309.9 million in the prior-year six-month period. Investing cash use increased to $1,865.1 million, primarily because of the eBay equity investment; the filing does not separately disclose capital expenditures, so free cash flow cannot be determined.
- Collectibles became the core growth engine
- Collectibles sales increased to $356.3 million, or 45.1% of quarterly sales, from $227.6 million, or 23.4%, in the prior-year quarter. Six-month Collectibles sales rose 60.6% to $705.2 million.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Legacy gaming sales contracted sharply
- Revenue remains exposed to difficult comparisons and weak legacy categories: quarterly Video Games sales fell 46.8% to $263.2 million and Pre-Owned and Refurbished sales fell 31.7% to $170.7 million. Management attributed much of the decline to the prior-year Nintendo Switch 2 launch.
- Bitcoin exposure creates earnings volatility
- The Company recognized a $75.0 million quarterly loss on digital assets and related receivables, versus a $28.6 million gain in the prior-year quarter. The filing states the loss reflected a decline in Bitcoin’s market price, demonstrating material earnings volatility.
- Large eBay investment concentration
- Capital allocation is becoming a material concentration risk: the Company held approximately $4.9 billion of eBay stock while cash, cash equivalents and marketable securities totaled $5,060.3 million. The Company also used $1,865.1 million in investing cash during the first six months, primarily for the eBay investment.
- Tax rate normalized higher
- Quarterly tax expense increased to $121.5 million from $6.0 million, and the effective tax rate rose to 28.9% from 3.4%, as prior-year U.S. net operating loss carryforwards and valuation allowance benefits were substantially exhausted.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.27
- Gross margin
- 43.7%
- Operating margin
- 20.3%
- Segment
- United States: $608.2 million, down 16.1% year over year for the quarter; $1,259.3 million, down 0.2% for the six-month period.
- Segment
- Australia: $120.9 million, down 14.2% year over year for the quarter; $220.5 million, down 1.0% for the six-month period.
- Segment
- Europe: $61.1 million, down 42.7% year over year for the quarter; $145.7 million, down 19.7% for the six-month period.
- Segment
- Canada: no current-quarter sales following divestiture; six-month sales were $0 versus $38.2 million in the prior-year period.
- Segment
- Product categories: Collectibles $356.3 million, up 56.5%; Video Games $263.2 million, down 46.8%; Pre-Owned and Refurbished $170.7 million, down 31.7%.
What they said about what is next.
The 10-Q provides no new quantitative revenue or EPS guidance. The filing reiterates that the Company is actively evaluating acquisitions requiring significant capital deployment, but states it has no binding agreement for a specific transaction; it also says it does not anticipate closing a significant number of stores in fiscal 2026. The previously disclosed fiscal 2026 Adjusted EBITDA outlook above $650 million was raised in the prior 8-K, not updated in this filing.
The filing reads about the same as the one before it.
What came before.
- 10-Q · June 11, 2026
- GameStop's Q1 2026 report highlights strong financial performance with revenue reaching $835.3 million, surpassing estimates by 8.96%, and a notable EPS of $0.30, exceeding expectations of $0.11. The company reported a…
- 10-K · March 24, 2026
- GameStop’s 2026 Form 10-K frames the company as a capital-rich operator shifting toward two pillars: active capital allocation (acquisitions/investments) and maximizing cash flow from its legacy retail footprint. The…
- 10-Q · December 9, 2025
- GameStop reported a profitability inflection in the quarter: net sales declined to $821.0 million (from $860.3M) but gross profit rose to $273.4 million and operating income turned positive at $41.3 million (versus an…
- 10-Q · June 11, 2024
- GameStop reported Q1 net sales of $881.8M, down $355.3M (−28.7%) vs. $1,237.1M a year ago; gross profit was $244.5M and gross margin improved to 27.7% from 23.2%. Operating loss narrowed to $50.6M from $58.4M a year…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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