Efforts to revive its struggling business, evident within Texas-based GameStop Corp’s (NYSE: GME) 22% rise in second-quarter FY25 revenue on Tuesday (Wednesday AEST), saw shares in the video-game retailer and original meme stock trade 4% higher overnight.
Drawing gaming fans with demo units set up with the latest releases, GameStop sells new and used video games, consoles, and accessories, as well as pop culture merchandise.
Marking the company’s 5th straight quarterly profit, the second quarter result came as welcome relief for long-suffering shareholders who have witnessed market share in the once dominant force in physical retail erode in recent years.
Due to the pivot towards e-commerce giants as go-to destinations for gaming and general merchandise, the company has struggled to generate demand over the last six years, dropping by around 11.2% annually.
By comparison, this quarter GameStop reported robust year-on-year revenue growth of 21.8%, and its US$972.2 million of revenue topped Wall Street estimates by 18.1%.
Earnings per share (EPS) ended up at $0.25 per share, also up on consensus estimates of $0.19 per share.
Net income was US$168.6 million, up from US$14.8 million for the previous year’s second quarter.
Operating income was US$66.4 million for the period, compared to an operating loss of US$22.0 million in the previous year's second quarter.
While the company’s performance on hardware sales was up following the release of Nintendo Switch 2, it also managed to revitalise sales with the bigger shift into collectibles - now comprising around 25% of sales - where second quarter revenue surged 63%.
The company held cash, cash equivalents and marketable securities of US$8.7 billion at the quarter end, up from US$4.2 billion at the end of Q2 FY24.
Gamestop’s Bitcoin holdings were valued at US$528.6 billion at the quarter-end.
GameStop did not issue forward guidance.
With US$3.85 billion in revenue over the past 12 months, GameStop is a relatively small retailer, which can make it more difficult to compete with larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
GameStop also announced a special dividend, with shareholders receiving one warrant for every ten shares of GameStop common stock held.
The company expects to distribute up to approximately 59 million warrants on or around Tuesday, 7 October.
Each warrant will entitle the holder to purchase one share of common stock at an exercise price of US$32.00.
