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GameStop (GME) Q2 2022 earnings results miss revenue on smaller than expected loss

GameStop is out with their latest earnings results. Check out all the info from the GME Q2 2022 release.

Asif Khan

September 7, 2022 1:10 PM

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GameStop's Q2 2022 earnings results have been released. The company reported $1.14 billion in revenues, missing Wall Street expectations of $1.27 billion. GameStop also reported a loss of 35 cents per share, beating consensus estimates for a loss of 38 cents per share.

Here are some interesting data points from the GameStop Q2 2022 earnings report:

• Net sales were $1.136 billion for the quarter, compared to $1.183 billion in the prior year’s second quarter.
• Sales attributable to collectibles, which is a segment the Company intends to grow over the long-term, were $223.2 million for the quarter, compared to $177.2 million in the prior year’s second quarter.
• Selling, general and administrative expenses were $387.5 million for the quarter, representing a sequential decline of 14.3% from the first quarter of 2022 and reflecting, in part, the Company’s focus on right-sizing costs following a period of significant investment in long-term initiatives.
• Inventory was $734.8 million at the close of the quarter, compared to $596.4 million at the close of the prior year’s second quarter, reflecting the Company’s focus on maintaining adequate in-stock levels to meet customer demand and offset lingering supply chain headwinds.
• Followed the launch of the Company's digital wallet by launching the Company's non-fungible token ("NFT") marketplace to allow gamers, creators, collectors and others to buy, sell and trade NFTs.
• Modernized and strengthened the Company’s systems through the implementation of SAP.
• Ended the period with cash and cash equivalents of $908.9 million as well as no debt other than a low-interest, unsecured term loan associated with the French government’s response to COVID-19.
• Stock Split
  • On July 6, 2022, our Board of Directors declared a four-for-one stock split of our Class A common stock in the form of a stock dividend (the "Stock Split"). This dividend was distributed on July 21, 2022 to stockholders of record at the close of business on July 18, 2022. There was no net effect on total stockholders' equity, and the par value per share of our Class A stock remains unchanged at $0.001 per share after the Stock Split. All references made to share or per share amounts in the accompanying condensed consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.

Another interesting data point from the GME 10-Q SEC filing is that 71.3 million shares that have been directly registered with GameStop's transfer agent ComputerShare. GameStop also announced a new partnership with FTX just before the earnings results were released. 

These results are somewhat mixed, with revenues missing expectations, and the new GameStop Wallet and NFT Marketplace initiative having no material effect on the first six months of the company's fiscal year. While the company has remained somewhat silent about the treatment of the stock split dividend, they did mention that it was the form of a stock dividend in their 10-Q filing. This is not how all investors were treated according to reports from German regulators.

The stock is up materially in after-hours trading, largely due a slowdown in the cash outflows at the company. Net cash outflows decreased 46% from the prior quarter, leaving GameStop with over $900 million in cash with no material debt on the balance sheet.

We will be streaming the GameStop Q2 2022 earnings call on our Shacknews Twitch channel when it kicks off at 5:00 p.m. EDT.

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This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long GameStop via GME shares (partially-hedged with out-of-the-money put options)

Long GameStop via GME call options

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.