GameStop Q1 Earnings Beat Estimates, Collectibles Sales Improve Y/Y

GameStop Corp. GME posted first-quarter fiscal 2025 results, wherein the top line missed the Zacks Consensus Estimate and declined year over year. On the contrary, the bottom line beat the consensus mark and improved from the year-ago period. Collectibles sales improved significantly in the quarter under review.

GameStop’s Quarterly Performance: Key Insights

GME posted adjusted earnings per share of 17 cents in first-quarter fiscal 2025, beating the Zacks Consensus Estimate for adjusted earnings of 8 cents. The company incurred an adjusted loss of 12 cents in the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

GameStop reported net sales of $732.4 million, which missed the consensus estimate of $750 million. Also, the metric decreased 16.9% from $881.8 million in the year-ago quarter. The decrease in consolidated net sales was caused by lower sales across most categories.

GameStop Corp. Price, Consensus and EPS Surprise

 

GameStop Corp. price-consensus-eps-surprise-chart | GameStop Corp. Quote

By sales mix, hardware and accessories sales fell 31.7% to $345.3 million from $505.3 million in the year-ago quarter. Software sales were $175.6 million, down 26.7% from $239.7 million in the year-ago quarter. Sales in the collectibles unit increased 54.6% to $211.5 million from $136.8 million in the year-ago quarter.

By region, United States sales fell 12.9% to $537.5 million from $617.3 million in the year-ago quarter. Canada sales declined 10.3% to $38.2 million from $42.6 million. Australia sales rose 2.9% to $81.9 million from $79.6 million. Europe sales dropped 47.4% to $74.8 million from $142.3 million.

Insight Into GME’s Margins & Expenses

Gross profit increased 3.4% to $252.8 million from $244.5 million in the year-ago quarter. However, the gross margin expanded 680 basis points (bps) to 34.5% from 27.7% in the first quarter of fiscal 2024.

Adjusted selling, general and administrative (SG&A) expenses declined 24.8% to $225.3 million from $299.5 million in the year-ago quarter. As a percentage of net sales, adjusted SG&A expenses were 30.8%, down 320 bps from 34% in the year-ago period.

GameStop reported an adjusted EBITDA of $38.6 million against an adjusted EBITDA loss of $37.6 million in the same quarter last year. 

The company’s adjusted operating income was $27.5 million in the reported quarter against an adjusted operating loss of $55 million in the prior-year period.

GME Stock Past 3 Months' Performance

GME’s Financial Snapshot: Cash, Debt & Equity Overview

GameStop ended the fiscal first quarter with cash and cash equivalents of $6.39 billion, net long-term debt of $1.48 billion, and stockholders’ equity of $4.99 billion. Net merchandise inventory totaled $421.3 million at the end of the fiscal quarter, down from $675.8 million in the same period last year.

In the 13 weeks ended May 3, 2025, the net cash flow provided by operations was $192.5 million. The free cash flow for the period totaled $189.6 million, while capital expenditure amounted to $2.9 million.

The company finalized the sale of its Canadian operations on May 4, 2025. Between May 3 and June 10, 2025, it acquired 4,710 Bitcoin using cash.

In the past three months, shares of this Zacks Rank #3 (Hold) company have risen 37.1% compared with the industry’s 11.5% growth.

Key Picks

A few better-ranked stocks are Accel Entertainment Inc. ACEL, Roblox Corporation RBLX and Super League Enterprise Inc. SLE.

Accel Entertainment is a distributed gaming operator primarily in the United States. The company has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for ACEL’s current financial year’s sales indicates growth of 7.7% from the prior year’s reported figure. The company has a trailing four-quarter average earnings surprise of 16.3%.

Roblox develops and operates an online entertainment platform. It currently carries a Zacks Rank of 2. 

The consensus estimate for Roblox's current financial-year earnings and sales indicates growth of 2.8% and 22.7%, respectively, from the 2024 reported figures. RBLX has a trailing four-quarter average earnings surprise of 16.6%.

Super League is a strategically-integrated publisher and creator of games. It has a Zacks Rank of 2 at present. 

The Zacks Consensus Estimate for Super League’s current financial-year earnings and sales indicates growth of 79.4% and 2.6%, respectively, from the 2024 reported figures. SLE has a negative trailing four-quarter average earnings surprise of 25.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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