The gaming company posted a profit of $48.2 million for Q4 of the fiscal year 2022, with plans to keep cutting excess costs.
GameStop stock surged as much as 40% on Wednesday after the video game retailer reported its first profitable quarter in two years.
The gaming company posted a profit of $48.2 million for Q4 of the fiscal year 2022. This is a big win for GameStop after reporting a net loss of $147.5 million in Q4 of 2021. The company has been working toward profitability for quite some time and promised to keep cutting excess costs to stay in the green — key cost-reduction efforts include reducing employee headcount and withdrawing its business operations from select underperforming markets.
Net sales dropped slightly to $2.23 billion, compared to $2.26 billion the previous year. As for a full-year overview, GameStop generated $5.93 billion in sales for the fiscal year 2022.
Subscribe for the biggest stories in the business of sports and entertainment, daily.
More high-level takeaways from GameStop’s Q4 2022 earnings report:
- Selling, general and administrative expenses came in at $453.4 million.
- The company will continue to increase its online business and revamp its physical store footprint.
- Inventory value is down to $682.9 million compared to $915 million a year ago.
- GameStop’s cash and cash equivalents balance is $1.39 billion.
- The company reported increased sales in the collectibles category but didn’t share specific earnings from its NFT business. Remember, GameStop launched an NFT marketplace early last year.
GameStop’s positive earnings outlook comes a little over two years since its long investors kick-started the “meme stock” moment. As a refresher, the failing video game retailer’s stock was heavily shorted and going downhill in late 2020 until the popular subreddit WallStreetBets spearheaded a plan to pump a little life into the company. Shares of $GME were trading for roughly $5 in January of 2021 until retail traders prompted a short squeeze, driving up GameStop stock prices as much as $500 per share.
GameStop CEO Matt Furlong, a former executive at Amazon and Procter & Gamble, took over leadership of the company in June 2021. GameStop has been generally flying under the radar since then and working to turn its business operations around. The company went through a few rounds of layoffs and replaces its CFO in July 2022 to focus on profitability, leading us to the milestone that caught so many industry observers off-guard today.
As usual, GameStop didn’t provide financial guidance or profit predictions to track in future earnings reports.
Stay tuned — the height of the meme stock era may be well behind us, but this company surely still has a few tricks up its sleeve after once being left for dead.
More Tech & Finance:
