The quarter beat on revenue and improved the outlook, but not on adjusted EPS. Published expectations called for roughly $756.9 million of revenue and $0.27 of EPS; GameStop delivered $790.2 million of revenue and $0.27 of adjusted diluted EPS, making this primarily a top-line and guidance beat rather than a broad earnings surprise.
| Metric | Q2 FY2026 | Q2 FY2025 / prior expectation | Read |
|---|---|---|---|
| Net sales | $790.2M | $972.2M / ~$756.9M consensus | Beat consensus; down 18.7% year over year (Income Statement) |
| Adjusted diluted EPS | $0.27 | $0.25 / ~$0.27 consensus | In line with consensus (Adjusted Net Income reconciliation) |
| Adjusted net income | $161.1M | $138.3M | Up 16.5% year over year (Adjusted Net Income reconciliation) |
| Adjusted EBITDA | $174.0M | $75.7M | Up 129.7% year over year (Adjusted EBITDA reconciliation) |
| FY2026 adjusted EBITDA outlook | Above $650M | Above $600M prior outlook | Raised (Outlook) |
| Free cash flow | $60.7M | $113.3M | Down 46.4% year over year (Cash Flow reconciliation) |
The underlying retail business is shrinking in dollars but becoming more profitable. Net sales fell to $790.2 million from $972.2 million, partly because the comparison quarter benefited from the Nintendo Switch 2 launch and because of store closures and the France divestiture. Gross margin expanded to 43.7% from 29.1%, while operating income rose to $160.2 million from $66.4 million (Income Statement). That margin improvement, not sales growth, is doing most of the work.
Collectibles are now the growth engine, while the legacy categories are contracting sharply. Collectibles revenue rose 57% to $356.3 million and reached 45.1% of sales, while video games fell to $263.2 million from $494.6 million and pre-owned and refurbished sales declined to $170.7 million from $250.0 million (Sales Mix). This is a meaningful mix shift, but the filing does not show that collectibles growth fully replaces the lost video-game volume; total revenue still declined nearly 19% year over year.
The guidance increase is the clearest upside surprise. GameStop raised fiscal 2026 adjusted EBITDA guidance to above $650 million from above $600 million, while first-half adjusted EBITDA reached $339.7 million. The raise signals that management believes the margin gains and collectibles momentum can offset weaker traditional gaming sales, though the company provides no revenue outlook and cannot reconcile the EBITDA forecast to GAAP earnings.
The balance sheet is more concentrated and cash generation was weaker. Cash, cash equivalents, marketable securities, and digital assets totaled $5.4 billion, while the eBay investment was valued at $4.9 billion. Cash and equivalents plus marketable securities fell to $5.1 billion from $8.7 billion a year earlier, largely reflecting the eBay investment and related capital deployment (Balance Sheet; Cash Flow statement). The net result is a narrow positive: revenue beat expectations and guidance rose, but adjusted EPS merely matched consensus and the core sales base remains under pressure.
Read the original 8-K on SEC EDGAR ↗