GameStop (NYSE: GME) reported fiscal Q2 2026 net sales of $790.2 million for the 13 weeks ended August 1, down 18.7% from $972.2 million, while diluted EPS increased to $0.51 from $0.31. Operating income reached a second-quarter record of $160.2 million as gross margin expanded and SG&A declined, while collectibles grew 57% to become 45.1% of sales. The company also raised its full-year adjusted EBITDA outlook.
Core Earnings Data
The sales decline primarily reflected the prior-year launch of Nintendo Switch 2, planned store closures, and the divestiture of GameStop’s France operations. However, cost of sales fell approximately 35.4%, substantially faster than revenue, lifting gross margin to 43.7% from 29.1%.
SG&A decreased approximately 14.5% to $187.1 million, although it increased as a percentage of sales to 23.7% from 22.5%. Higher gross profit and lower absolute SG&A helped operating income more than double.
| Metric | Q2 FY2026 | Q2 FY2025 | Approx. YoY Change |
|---|---|---|---|
| Net sales | $790.2 million | $972.2 million | -18.7% |
| Gross profit / margin | $345.0 million / 43.7% | $283.1 million / 29.1% | +21.9% / +14.6 pp |
| Operating income / margin | $160.2 million / 20.3% | $66.4 million / 6.8% | +141.3% / +13.5 pp |
| Net income | $298.7 million | $168.6 million | +77.2% |
| Diluted EPS | $0.51 | $0.31 | +64.5% |
| Adjusted net income | $161.1 million | $138.3 million | +16.5% |
| Adjusted EBITDA | $174.0 million | $75.7 million | +129.9% |
| Operating cash flow | $62.4 million | $117.4 million | -46.8% |
Adjusted operating income was $158.7 million, up from $64.7 million. Its proximity to GAAP operating income indicates that the operating profit improvement was not primarily created by the investment-related items recorded below the operating income line.
Business and Segment Performance
Collectibles were the clearest source of sales growth. Revenue from the category increased approximately 57% to $356.3 million from $227.6 million, while its share of total sales nearly doubled to 45.1% from 23.4%. Beginning this quarter, GameStop is reporting sales through three categories—Collectibles, Video Games, and Pre-Owned and Refurbished—with prior periods recast to the new presentation.
Geographically, every reported region generated lower sales, but operating results improved. The United States produced most of the company’s operating income, Australia increased its profit, and Europe reduced its operating loss despite a particularly steep revenue decline.
| Region | Q2 FY2026 Sales | Q2 FY2025 Sales | Approx. YoY Change | Q2 FY2026 Operating Income (Loss) | Q2 FY2025 Operating Income (Loss) |
|---|---|---|---|---|---|
| United States | $608.2 million | $724.6 million | -16.1% | $153.2 million | $63.7 million |
| Australia | $120.9 million | $140.9 million | -14.2% | $8.1 million | $6.0 million |
| Europe | $61.1 million | $106.7 million | -42.7% | $(1.1) million | $(3.3) million |
GameStop cited the divestiture of its France operations as one factor behind the consolidated sales decline. The company did not quantify the divestiture’s individual effect on quarterly revenue.
Investment Gains Lifted Net Income but Not Operating Cash Flow
GAAP net income of $298.7 million was materially higher than adjusted net income of $161.1 million. Reported earnings included a $166.3 million gain on a derivative asset and a $72.1 million unrealized gain on the eBay equity investment, partly offset by a $75.0 million loss on digital assets and related receivables. These items explain why GAAP net income grew much faster than adjusted net income.
Operating cash flow moved in the opposite direction, declining to $62.4 million from $117.4 million despite higher net income. The cash flow reconciliation removed a $203.6 million derivative gain and the $72.1 million unrealized equity gain because they did not represent operating cash inflows during the quarter. Receivables, inventory, and income tax movements also used cash.
Investing activities consumed $2.61 billion of cash. GameStop paid $4.39 billion for its equity investment, partly offset by $983.3 million released from collateral pledged for the derivative asset and $763.3 million from maturities and sales of marketable securities.
At August 1, the company held approximately $5.4 billion of cash, marketable securities, digital assets, and related receivables. Separately, its approximately 43.4 million eBay shares had a fair value of about $4.9 billion. This leaves a substantial asset base but also makes investment values and transactions increasingly important to reported earnings and liquidity.
Long-term debt was $4.17 billion at quarter-end. In a post-quarter event on September 3, GameStop completed privately negotiated exchanges that retired approximately $1.4 billion of convertible note principal, reducing total long-term debt to approximately $2.8 billion.
Fiscal 2026 Guidance
GameStop raised the minimum level of its adjusted EBITDA outlook by $50 million. Adjusted EBITDA for the first six months of fiscal 2026 was $339.7 million, compared with the updated full-year outlook of more than $650 million.
| Metric | Latest Guidance | Previous Guidance | Change |
|---|---|---|---|
| FY2026 adjusted EBITDA | More than $650 million | More than $600 million | Threshold raised by $50 million |
The outlook covers the fiscal year ending January 30, 2027. Because adjusted EBITDA is a forward-looking non-GAAP measure, GameStop said it could not reconcile the guidance to projected GAAP net income without unreasonable effort.
Recent Insider Transactions
The supplied six-month aggregate shows 42,392 shares classified as purchases across two transactions and 36,456 shares sold across five transactions, resulting in a net increase of 5,936 shares. Total insider holdings were reported at approximately 39.61 million shares.
The following table presents the latest 10 reported transactions from the supplied two-year insider transaction history. The reported values and transaction classifications are shown without drawing conclusions about insiders’ views of the company.
| Date | Insider | Transaction | Ownership | Price per Share | Reported Value |
|---|---|---|---|---|---|
| Jul. 6, 2026 | Mark Haymond Robinson, General Counsel | Sale | Direct | $22.38–$22.62 | $248,029 |
| Jul. 1, 2026 | Daniel William Moore, Officer | Sale | Direct | $22.38 | $158,562 |
| Apr. 13, 2026 | Mark Haymond Robinson, General Counsel | Sale | Direct | $23.19 | $90,715 |
| Apr. 1, 2026 | Daniel William Moore, Officer | Sale | Direct | $22.94 | $165,430 |
| Apr. 1, 2026 | Mark Haymond Robinson, General Counsel | Sale | Direct | $22.94 | $165,407 |
| Apr. 1, 2026 | Daniel William Moore, Officer | Stock award | Direct | $23.59 | $500,014 |
| Apr. 1, 2026 | Mark Haymond Robinson, General Counsel | Stock award | Direct | $23.59 | $500,014 |
| Jan. 23, 2026 | Lawrence Cheng, Director | Purchase | Indirect | $22.87 | $114,368 |
| Jan. 21, 2026 | Ryan Cohen, CEO | Purchase | Direct | $21.12–$21.60 | $21,359,200 |
| Jan. 21, 2026 | Alain Attal, Director | Purchase | Direct | $21.63 | $259,577 |
Risks Investors Need to Watch
- Sales durability: Quarterly revenue fell 18.7%, with the comparison affected by the prior-year Nintendo Switch 2 launch, store closures, and the France divestiture. Future results remain sensitive to product release cycles and the changing store footprint.
- Greater dependence on collectibles: Collectibles accounted for 45.1% of sales, up from 23.4%. This increases exposure to trading-card popularity and the company’s ability to identify and respond to consumer trends.
- Investment-related earnings volatility: The derivative asset, eBay stake, and digital assets produced substantial gains and losses during the quarter. Changes in their values could cause GAAP earnings to diverge significantly from operating performance.
- Cash conversion and capital allocation: Operating cash flow declined even as net income increased, while the equity investment required $4.39 billion of cash. The conversion of accounting earnings into cash and the use of the remaining liquidity are therefore important measures to monitor.
Summary
GameStop’s fiscal Q2 2026 combined lower sales with a substantial improvement in gross profit and operating income, supported by a sharp shift toward collectibles and lower absolute SG&A. Adjusted operating results improved materially, but investment-related gains amplified GAAP net income while operating cash flow declined. The raised adjusted EBITDA outlook points to greater full-year profitability, with sales durability, cash conversion, collectibles concentration, and investment exposure remaining the main areas to follow.
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