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What are GameStop's key sources of revenue?

GameStop reports its revenues under four segments:

New Video Game Hardware, which refers to sales of new video gaming consoles and hand held consoles. The segment accounted for 21% of the company's total sales in 2018.

New Video Game Software, which refers to the sales of new video games for consoles. These games are from third-party publishers, such as Electronic Arts, Take-Two Interactive, Ubisoft, and Activision Blizzard, among others. The segment accounted for 30% of the company's total sales in 2018.

Pre-Owned & Value Video Game Products, which refers to sales of used video gaming consoles, used video game titles, and used video game accessories. The segment accounted for 22% of the company's total revenues in 2018.

Video Game Accessories, Digital & Others, which refers to sales of digital products, retail PC games, video game accessories, and collectibles, among others. The segment accounted for 27% of the company's total revenues in 2018.

Total Revenues

How have GameStop's revenues changed over recent quarters?

Total Revenues for GameStop have largely trended lower over the last few quarters. They declined from $3.50 billion in Q4 2017 to $3.06 billion in Q4 2018. Note that Q4 is seasonally the strongest quarter for GameStop. This decline was largely led by lower pre-owned video games sales, amid inventory issues for Nintendo Switch.

Total Revenues

Change In Revenues (Q-o-Q)

Which are the key revenue drivers to watch out for in GameStop's Q1 results?

GameStop's revenues will likely be $1.69 billion in Q1 2019.

This represents 12% decline over the prior year quarter, and 45% lower than what the company reported in the previous quarter.

Q4 is seasonally the strongest quarter for GameStop.

New Video Game Hardware sales could see sharp decline to $273 million in Q1, given the nearing end of current console cycle for Xbox and Playstation.

Lower hardware sales could also impact the new video game software sales, which could fall to $383 million in Q1.

Pre-owned Video Games could also continue to see decline in sales. However, the company should see some growth in Nintendo Switch sales, as its pre-owned inventory builds up.

Video game accessories sales growth in the recent past was being led by higher demand for audio-related and battle royale (gaming genre) related accessories. However overall weakness could result in mid-single-digit decline to $187 million in Q1.

Total Revenues = A + B + C + D + E

New Video Game Hardware (A)

New Video Game Software (B)

Pre-Owned & Value Video Game Products (C)

Video Game Accessories (D)

Digital, Technology Brands, Collectibles & Others (E)

What will be the impact of the above on GameStop's EPS?

GameStop's adjusted loss per share will likely be $0.02 per share in Q1 2019, as compared to earnings of $0.38 in the prior year quarter.

Average consensus loss estimate ~ $0.03 per share.

This can largely be attributed to lower revenues, and a decline in margins, given the lower mix of pre-owned video games, which is a high-margin business. Increased expenses on promotions and marketing to drive sales could further impact the margins.

Adjusted Earnings Per Share = (A x B) ÷ C

Adjusted Net Income Margin (A)

Total Revenues (B)

Shares Outstanding (C)

Disagree With Our Forecasts? Create Your Own

1. How to save your forecasts for GameStop:

Click on the blue "Try Trefis" button in the header to create an account, then navigate back to this dashboard. Now, any changes you make to these inputs will be auto-saved as a scenario (see left panel of dashboard).

2. How to monitor your scenario vs. actual results

Once you've saved your forecast, you can "rename" your scenario by clicking on the gear icon next to the scenario (on the left panel). For more info, see this quick, 30-sec video (look at the 9 sec mark)

With your forecast saved and named, you can see how well you forecast the company's performance at the end of each period and compare your forecasts to hundreds of other Trefis users who came up with their own forecasts. Lastly, you can share with friends and colleagues to show them how you fared and compare your forecasts to theirs.

By using the Site, you agree to be bound by our Terms of Use. Financial market data powered by Quotemedia.com. Consensus EPS estimates are from QuoteMedia and are updated every weekday. All rights reserved.

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