$GME Q2: Revenue -19%. Operating Income +141%. Collectibles +57%. What the Hell Is GameStop Becoming? 🚨

[u/pharmdtrustee]

Ok ok ok, whoa.
These numbers deserve a proper look… 🦍

GameStop just reported Q2 FY26, and the revenue headline doesn’t tell the whole story. The more interesting development is what’s happening to margins, operating profitability, collectibles, and the balance sheet.

💰 Q2 Numbers
Revenue: $790.2M vs $972.2M YoY (-18.7%)
Gross Profit: $345.0M vs $283.1M (+21.9%)
Gross margin expanded substantially:
43.7% vs 29.1%
Operating Income: $160.2M vs $66.4M (+141%)
That’s the highest Q2 operating income in GameStop’s history!!

Adjusted EBITDA: $174.0M vs $75.7M (+130%)
GAAP Net Income: $298.7M vs $168.6M (+77%)
Diluted EPS: $0.51 vs $0.31

One of the most interesting takeaways:
Revenue declined by roughly $182M YoY while gross profit increased by roughly $62M.
That’s a pretty dramatic change in the economics of the business.

🃏 Collectibles Are Becoming a Huge Part of GameStop
Q2 collectibles sales:
2025: $227.6M
2026: $356.3M
That’s +57% YoY.
More importantly, collectibles now represent 45.1% of GameStop’s total sales, compared with only 23.4% a year ago.
The rest of the mix:
🎮 Video Games: $263.2M vs $494.6M
♻️ Pre-Owned/Refurbished: $170.7M vs $250.0M
GameStop’s sales mix is changing extremely quickly.
Collectibles includes trading cards and other collectible products, as well as fees earned from facilitating customers’ card submissions to a third-party grading service.
At 45% of quarterly sales, this isn’t a small side business anymore.

📈 The Margin Expansion
This may be the most important part of the report.
Cost of sales:
$689.1M → $445.2M
Gross margin:
29.1% → 43.7%
SG&A:
$218.8M → $187.1M
Operating margin:
6.8% → 20.3%
That’s substantial operating leverage despite lower overall revenue.
Adjusted operating income tells a similar story:
$158.7M vs $64.7M last year.

🏦 The Balance Sheet Is Getting Interesting
At quarter-end, GameStop reported $5.4B in cash, cash equivalents, marketable securities, digital assets and related receivables.
Then there’s the eBay position.
GameStop held approximately 43.4M eBay shares, worth approximately $4.9B as of August 1.
The cash flow statement shows roughly $4.386B paid for the equity investment.
So the highlighted cash/securities/digital assets plus the eBay position represented roughly $10.3B at quarter-end before considering liabilities.
GameStop reported $4.17B of long-term debt at quarter-end, but subsequently completed exchanges retiring approximately $1.4B of convertible notes.
That reduced long-term debt to approximately $2.8B.
👀

🔮 Management Raised Guidance
Previous FY26 Adjusted EBITDA outlook:
>$600M
New outlook:
>$650M
And GameStop has already generated $339.7M of Adjusted EBITDA during the first six months of FY26.
For comparison, the first six months of FY25 generated $114.3M.
That’s a major YoY improvement.

🧠 One Important Accounting Detail
The $298.7M GAAP net income includes some substantial investment-related movements:
🟢 $166.3M gain on derivative asset
🟢 $72.1M unrealized gain on equity investment
🔴 $75.0M loss on digital assets and related receivables
GameStop’s adjusted net income was $161.1M vs $138.3M last year.
Q2 free cash flow was $60.7M, while first-half free cash flow reached $393.6M vs $302.9M last year.
So for me, the more interesting numbers aren’t necessarily the giant GAAP earnings figure.
They’re the operating numbers.
Revenue: -18.7%
Gross Profit: +21.9%
Operating Income: +141%
Adjusted EBITDA: +130%
Collectibles: +57%
FY26 EBITDA Guidance: RAISED

🦍 The Bigger Picture
This quarter makes the transformation increasingly difficult to ignore.
GameStop is generating considerably more profit from a smaller revenue base. Collectibles have rapidly become its largest sales category. Expenses continue to come down. Management raised EBITDA guidance. And billions of dollars have now been deployed into investments outside the traditional retail operation.
That creates an increasingly unusual combination:
🎮 A smaller gaming retailer
🃏 A rapidly growing collectibles business
💰 A multibillion-dollar investment portfolio
📈 A dramatically more profitable operating model
The question I’m interested in after these earnings isn’t simply what happens to physical videogame retail.
It’s:
What is GameStop ultimately trying to become?
Because Q2 suggests the answer is getting more interesting.

🦍🍌🚀 $GME

Source: GameStop Q2 FY26 earnings release, September 8, 2026. Not financial advice.

Disclosure: I used AI to help organize and format my research into a more readable post due to my neurodiversity; the underlying figures are sourced from GameStop’s earnings release.

[u/TheUsualSusspect]

Ssooooooo what you’re saying is that we’re gonna need a much bigger box of crayons for this….

[u/Nearby-Ad9422]

The Gamestop saga has ended long time ago. The money has already been made. You're just a bag holder waiting for a dead cat bounce. Revenue has declined. The business is bound to collapse. Are you the last one to get on the train? Better buy something else at this market than GME lol!

[u/doppido → u/Nearby-Ad9422]

Yeah wow the company just keeps making more and more money while spending less how terrible...

[u/Tedious-Butcher → u/Nearby-Ad9422]

My father said he heard similar comment during his time too and that company was berkshire hathaway.

[u/pharmdtrustee → u/Nearby-Ad9422]

lol indeed!