GameStop Corp. Q2 FY2022 earnings call

• GameStop was saddled with significant debt, decaying systems, limited employee depth, etc. in early last year, and spent the second half of 2021 and first half of 2022 modernizing the business, resulting in a more diversified product catalog, strengthened fulfillment network, improved tech stack, e-commerce presence, and fortified corporate infrastructure. • In Q2, rightsized corporate expenditures and headcount following hiring of over 600 new individuals, contributing to a 14.3% reduction in SG&A while improving e-commerce experience and reducing free shipping to 1 - 3 days. • Launched new marketplace for NFTs to support long - term growth in cryptocurrency, NFT and Web 3.0 gaming verticals. • Actively exploring accretive partnerships, e.g., the deal with FTX as a result of commerce and blockchain teams working together. • Rolled out improved compensation model for U.S. store leaders, including time - based equity grants and performance - based equity grants, and raised hourly pay for certain store associates to enhance retention and recruitment.

Net sales for the second quarter were $1.136 billion compared to $1.183 billion in the prior year's second quarter. Sales attributable to collectibles, a segment intended to be grown long term, were $223.2 million in Q2 compared to $177.2 million in the prior year's second quarter. SG&A was $387.5 million or 34.1% of sales compared to $378.9 million or 32% of sales in last year's second quarter. Net loss was $108.7 million or $0.36 per diluted share compared to a net loss of $61.6 million or $0.21 per diluted share in the prior year's second quarter. Ended the quarter with cash and cash equivalents of $908.9 million. Total liabilities compared to the second quarter of last year were down $237.8 million. Capital expenditures for the quarter were $20.5 million, up $7 million from last year's second quarter. Cash flow from operations was an outflow of $103.4 million compared to an outflow of $11.5 million during the same period last year. Inventory was $734.8 million at the close of the quarter compared to $596.4 million at the close of the prior year's second quarter.

• Not providing formal guidance at this time. • Ongoing engagement with key suppliers is positioning to receive stronger supply of next - generation consoles in the months ahead.

• The path to becoming a more diversified and tech - centric business carries risk and will take time, as it involves unknown risks and uncertainties described in the company's earnings press release and SEC filings.