GameStop Corp (GME) Q1 2024 Financial Results

Executive Summary

GameStop Corp. (GME) reported its financial results for Q1 2024, covering the fiscal period ending on 2024-06-11. Below is an overview of the key highlights from the report.

Revenue and Expenses

GameStop's revenue for Q1 2024 amounted to $881.8M. The cost of revenue was $637.3M, resulting in a gross profit of $244.5M. The selling, general, and administrative expenses totaled $290.7M, leading to an operating expense of the same amount.

After accounting for other expenses/income amounting to -$32.3M, the total operating expenses stood at $928M, driving the operating income to -$46.2M. The EBITDA for this period is recorded at -$31.3M.

The net income before taxation was reported at -$35.7M, and after a tax expense of -$3.4M, the net income settled at -$32.3M. The EPS (Earnings Per Share) and EPS Diluted were -$0.11 respectively, with 305.9M weighted average shares outstanding.

Financial Ratios and Performance Metrics

Key financial ratios illustrate the company's performance and health. Notably, the gross profit margin stood at 27.73%, while the operating profit margin was -5.24%. The net profit margin was recorded at -3.66%. Return on assets was -1.25%, and return on equity was -2.47%.

Market performance indicators comprised a market capitalization of $10.20B and an Altman Z Score of 7.00, a measure indicating financial stability.

Cash Flow and Balance Sheet

GameStop's cash flow statement reported a net cash increase of $74.7M during the quarter. Starting from a cash position of $925.2M at the beginning of the period, the cash and cash equivalents reached $999.9M by the end.

Operational cash flow was negative, at -$109.8M, showing significant operational cash outflow. Investing and financing activities showed expenditures in property, plant, and equipment ($-4.9M) and debt repayment ($-2.7M), respectively.

The balance sheet presents total assets of $2.59B, with current assets totaling $1.88B. Total liabilities were recorded at $1.28B, making up a debt to equity ratio of 15.56% and a long-term debt to capitalization ratio of 1.13%.

Peer Comparison and TTM Ratios

The trailing twelve-month (TTM) ratios depict GameStop's performance relative to industry peers. The gross profit margin of 25.45% and net profit margin of 0.51% are lower compared to peers, indicating a need for strategic improvements.

GameStop outperformed in the current ratio at 221.58%, showcasing strong liquidity management. However, the company lags in metrics like price to free cash flow ratio (-4,433.83%), underlining the ongoing challenges in generating positive cash flows effectively.

Conclusion

GameStop Corp.'s Q1 2024 financial performance reflects ongoing challenges in achieving profitability and efficient cash flow management. Despite showing strong liquidity, the company needs to address operational inefficiencies and improve its overall profitability to enhance shareholder value.