September 6 (Reuters) – In a surprising turn of events, GameStop (GME.N) exceeded Wall Street’s quarterly revenue expectations while also reporting a smaller loss than anticipated. The company’s recent performance was propelled by robust demand for video games, collectibles, and gaming consoles. Following this positive news, GameStop’s shares saw a nearly 6% increase in after-hours trading, signifying that the strategic shift towards a more substantial digital presence is starting to yield promising results.
Ryan Cohen, the executive chairman and largest shareholder of GameStop, has been steering the company towards an online-focused business model. This transition comes as GameStop, historically reliant on physical retail stores, seeks to recover from a recent downturn in sales. Analysts are viewing these Q2 results as a promising sign of the company’s ongoing transformation efforts, positioning it for a comeback in the video game retail industry.
John Oh, an analyst at Third Bridge, commented on GameStop’s performance, stating, “GameStop’s Q2 results show encouraging signs towards the company’s ongoing transformation plans to regain its presence in the video game retail industry under its new leadership.”
For the second quarter, approximately 49% of GameStop’s total revenue was generated from sales of software and collectibles. Gamers demonstrated a heightened interest in popular titles like Activision Blizzard’s “Diablo IV” and Electronic Arts’ “F1 23,” driving substantial sales in these categories.
GameStop reported a 2% increase in revenue, reaching $1.16 billion for the quarter ending on July 29, surpassing the estimates of $1.14 billion from three analysts polled by LSEG. The revenue boost was primarily attributed to a “significant software release,” although the company did not provide specific details about this release. Additionally, increased sales of new gaming hardware in select international markets contributed to the revenue growth.
On an adjusted basis, GameStop reported a loss of 3 cents per share, which is significantly better than analysts’ projections of a 14-cent loss. Notably, the company announced that it would not be holding a post-earnings conference call.
In recent months, GameStop has experienced a shake-up in its executive leadership, with its chief financial officer stepping down in the prior month, following the ousting of its fifth CEO in as many years by the board in June.
GameStop’s latest financial report highlights the company’s resilience and adaptability in the face of changing market dynamics, as it continues to pivot towards a digital-first strategy while satisfying the strong demand for video games and related products.