GameStop beat quarterly revenue estimates thanks to strong demand for video games

Sept. 6 (Reuters) – GameStop Inc (GME.N) on Wednesday beat Wall Street estimates for quarterly revenue and posted a smaller-than-expected loss, boosted by strong demand for video games, collectibles and consoles.

The company’s shares jumped nearly 10% in volatile extended trading, as the results indicated that efforts to boost its digital presence are paying off.

Executive chairman and largest shareholder, Ryan Cohen, has been guiding GameStop toward a more online-centric model as the chain, which relies largely on brick-and-mortar stores, seeks to recover from a recent decline in sales.

Software and hardware sales contributed about 49% of total revenue in the second quarter.

Gamers have been spending their money on popular games like Activision Blizzard (ATVI.O) “Diablo IV” and Electronic Arts (EA.O) “F1 23”.

GameStop said revenue rose about 2% to $1.16 billion for the quarter ended July 29, beating estimates of $1.14 billion, according to three analysts surveyed by LSEG.

The company said the revenue increase was primarily due to a “significant software release”, as well as increased sales of new gaming hardware in certain international segments, but did not elaborate on the software release.

On an adjusted basis, GameStop lost 3 cents per share, compared to analyst estimates for a loss of 14 cents.

The company said it will not hold a conference call after the earnings announcement.

In a major shake-up, its chief financial officer resigned last month in the second high-profile exit after the board in June ousted its fifth chief executive in five years.

“Leadership transitions can be difficult to manage by their nature, and failure to implement transitions in a timely or successful manner can create disruption,” the company said in a quarterly regulatory report.

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