Software sales boost Game Station's Q2 revenue, exceeding expectations, but long-term prospects remain bleak.
After the US stock market closed on Wednesday, Game Station released its second-quarter earnings report, which showed slightly higher revenue than analysts' expectations.
According to Dolphin Research APP, after the U.S. stock market closed on Wednesday, GameStop (GME.US) released its second-quarter earnings report, which showed slightly higher revenue than analysts' expectations. This is also the first earnings report since the retail chain dismissed its CEO. The data shows that the company's Q2 net sales increased to $1.16 billion, surpassing the average analyst expectation of $1.14 billion. Excluding certain items, the loss per share was 3 cents, also exceeding market expectations.
In June of this year, GameStop dismissed CEO Matt Furlong and promoted billionaire Ryan Cohen to chairman. Cohen, the founder of online pet food retailer Chewy (CHWY.US), acquired a stake in GameStop in 2020 and oversaw several executive personnel changes. According to compiled data, Cohen is the largest shareholder of the company, holding 12% of the shares.
Due to the rapid transition of the video game industry from physical discs to online distribution, GameStop has been struggling. However, boosted by a series of popular games this year, such as "The Legend of Zelda: Breath of the Wild," which sold 18.5 million copies in two months, the company may have found temporary relief. GameStop reported a 26% increase in game software sales during this period.
Nevertheless, considering the industry's transformation, GameStop's long-term prospects remain uncertain. Game console manufacturers Microsoft (MSFT.US) and Sony (SONY.US) have recently launched the latest versions of Xbox and PlayStation without optical drives, posing a challenge to GameStop, which sells physical copies of games.
Earlier this week, in order to benefit the company, Cohen also tweeted that manufacturers should be required to install optical drives on consoles.
However, Wedbush Securities analyst Michael Pachter warned investors in a report before the earnings report that GameStop will be unable to "slow the gradual decline of its new software and used software businesses" in the face of threats from digital, mobile, and subscription services.
After the earnings report was released, as of the time of writing, the stock rose more than 5% after hours.