GameStop Corp. (GME) delivered a tale of two businesses in its third-quarter earnings report Tuesday, with collectibles thriving even as its core gaming business continued to struggle.
The Bottom Line
The video game retailer posted revenue of $821 million for the quarter, coming in well below analyst expectations of $987.28 million. On the earnings side, things looked brighter: adjusted earnings hit 24 cents per share, topping the consensus estimate of 20 cents, according to market data.
Overall revenue declined about 4.5% compared to the same quarter last year, but the category breakdown tells the real story:
- Hardware and Accessories: $367.4 million, down from $417.4 million year-over-year
- Software: $197.5 million, down from $271.8 million year-over-year
- Collectibles: $256.1 million, up from $171.1 million year-over-year
The collectibles segment now represents a meaningful chunk of GameStop's business, growing nearly 50% year-over-year while traditional gaming categories contracted.
Profitability and Cash Position
GameStop flipped to operating income of $41.3 million in the quarter, a notable improvement from the $33.4 million operating loss recorded in the same period last year.
The company's balance sheet remains fortress-like, with approximately $8.8 billion in cash, cash equivalents and marketable securities. GameStop also reported Bitcoin (BTC) holdings valued at $519.4 million at quarter's end, following its decision to add the cryptocurrency to its treasury earlier this year.
True to form, GameStop didn't schedule an earnings call to discuss the results. The retailer hasn't held a conference call since early 2023, leaving investors to interpret the numbers on their own.
Market Reaction
GameStop shares fell 5.67% in after-hours trading to $21.80 following the earnings release.
