GameStop's second quarter figures were occurring, and I barely moved the needle. The company pulled in $972.2 million in net sales for the quarter ending August 2nd.
That's up from $798.3 million in the same quarter last year. reason? A small lift in hardware sales is enough to outweigh the total revenue, but nothing big.
Still, investors rose 4% after opening hours, riding more momentum and memes than actual operational wins.
Still known for the 2021 retail frenzy, the company has increased its net profit of $168.6 million from $106.8 million a year ago. The massive jumps have fallen into some wild shaking of assets, especially the crypto.
GameStop currently holds $528.6 million in Bitcoin, which has risen sharply since last year. Total cash, cash equivalents and marketable securities reached $8.7 billion compared to just $4.2 billion at the end of the second quarter last year.
Cost reduction operating profit turnaround
GameStop has significantly reduced spending. Sales, General and Management (SG&A) costs have dropped to $228.8 million from $270.8 million last year. That's a decline of over $50 million. This cost cut helped turn things around.
Operating income rose to $66.4 million this quarter, up from a loss of $22 million in the same period last year. If we exclude impairment or other adjustments, adjusted operating income was $64.7 million compared to an adjusted loss of $31.6 million last year. This shows GameStop is leaning hard towards cutting fat rather than increasing core sales.
The company's adjusted net income came to $138.3 million after deleting impairment, profits from unrealized digital assets and other line items. This is a massive surge from adjusted net profit of $5.2 million posted in the second quarter of last year. But again, most of it is balance sheet mathematics and cryptographic exposure.
GameStop leaned against non-GAAP reports this quarter. We highlighted several adjusted figures, including adjusted SG&A, adjusted operating income, adjusted net income, adjusted EPS, adjusted EBITDA and free cash flow. All of these adjustments remove conversion costs, retirements, profits and losses on digital assets, disability, and sales.
The company claimed that these numbers “provide useful information” to investors looking at core operations. Critics say they're just cleaning up the mess to make the quarter better. In any case, this time there is a big gap between the number of GAAPs and non-GAAPs.
Capital expenditures were taken from free cash flow calculations to depict a smoother financial situation. Meanwhile, Crypto played a major role in inflating the company's books. The $528.6 million Bitcoin Stash is now part of their financial story.
