GME 10-Q: Smart Summary

• Business description: GameStop Corp. (GameStop) is a Delaware corporation established in 1996 that offers games, collectibles, and entertainment products through its stores and ecommerce platforms, operating in 3 geographic segments: United States, Australia, and Europe.
• Canada divestiture: During the second quarter of fiscal 2025, GameStop divested its operations in Canada, which previously comprised a fourth separate reporting segment; all financial statement references are to continuing operations unless otherwise noted.
• Fiscal year and periods: Fiscal 2026 consists of 52 weeks ending January 30, 2027; fiscal 2025 consisted of 52 weeks ended January 31, 2026; all three-month periods presented contain 13 weeks; the annual 10-K for the year ended January 31, 2026 was filed with the SEC on March 24, 2026.
• Seasonality: A significant portion of sales and operating profit is realized during the fourth quarter (the holiday selling season), though management notes its relative contribution has moderated compared to historical levels.

• Cash reconciliation: Cash and cash equivalents were $7.4B as of May 2, 2026 ($6.4B as of May 3, 2025; $6.3B as of January 31, 2026); restricted cash (current) was $3.6M and long-term restricted cash was $10.6M, yielding total cash, cash equivalents and restricted cash of $7.4B as of May 2, 2026.
• Derivative asset — eBay Put/Call Pairs: During Q1 fiscal 2026, the Company entered into Put/Call Pairs providing economic exposure to 22,176,000 shares of eBay Inc. common stock (par value $0.001 per share), plus direct beneficial ownership of 25,000 shares, collectively representing an approximately 5% economic interest based on 444 million shares reported as outstanding by eBay as of April 24, 2026; the Put/Call Pairs are scheduled to expire February 23, 2028 and are accounted for as single forward contracts, with fair value changes recorded in 'Unrealized gain on derivative asset, net' as a nonoperating item.
• Derivative asset balance and collateral: As of May 2, 2026, the Company carried a Derivative asset of $285.3M in current assets (reflecting intent to exercise within twelve months) and had pledged $983.3M of collateral in connection with the Put/Call Pairs, presented gross as 'Collateral pledged for derivative asset'; a cross-default provision exists but as of May 2, 2026 no additional collateral would have been required if triggered.
• Pending accounting pronouncements: Four ASUs not yet adopted — ASU No. 2024-03 (expense disaggregation disclosures, effective annual periods after December 15, 2026), ASU No. 2025-11 (interim reporting clarifications, effective interim periods within annual periods after December 15, 2027), ASU No. 2025-12 (codification improvements, effective interim periods within annual periods after December 15, 2026), and ASU No. 2026-01 (PIK dividends on equity-classified preferred stock, effective interim periods within annual periods after December 15, 2026); the Company is evaluating each and does not expect the latter three to have a material impact.

• Performance obligations: Unredeemed customer liabilities, extended warranties, and GameStop Pro® subscriptions are recognized in Accrued liabilities and other current liabilities; unredeemed customer liabilities totaled $110.6M as of May 2, 2026 vs. $146.7M as of May 3, 2025, extended warranties were $43.7M vs. $46.5M, and subscriptions were $42.1M vs. $43.8M, for total performance obligations of $196.4M vs. $237M.
• Contract liability rollforward: The contract liability balance moved from $194.9M (fiscal year beginning) to $196.4M as of May 2, 2026, with increases of $170.6M and decreases of $169.5M; gift cards redeemed that were previously outstanding as of January 31, 2026 totaled $41.5M (vs. $28.4M in the prior-year period).
• Recognition methods: Extended warranty revenues are recognized on a straight-line basis over the contract life (terms generally 12 to 24 months); GameStop Pro® subscription revenues are recognized on a straight-line basis over a 12-month term; unredeemed customer liabilities are generally redeemed within one year of issuance.

• Recurring fair value hierarchy: As of May 2, 2026, total assets measured at fair value on a recurring basis were $1.6B (adjusted cost $1.4B, unrealized gains $285.3M, unrealized losses ($59.3M)), while total liabilities were $8.5M; this compares to total assets of $11.5M and total liabilities of $100,000 as of May 3, 2025, reflecting the addition of marketable securities ($970.5M fair value), a derivative asset ($285.3M, Level 2), and digital assets receivable ($369.6M, Level 2) in the current period.
• Digital assets collateral / covered-call strategy: During fiscal 2025, the Company pledged a portion of its digital assets as collateral in connection with a covered-call strategy, resulting in derecognition of the pledged digital assets and recognition of a digital assets receivable (adjusted cost $428M, fair value $369.6M as of May 2, 2026); a related derivative liability on digital assets carried a fair value of $8.4M as of May 2, 2026 versus $700,000 as of January 31, 2026.
• Nonrecurring fair value / no impairments: Assets remeasured on a nonrecurring basis (property and equipment, operating lease ROU assets, other intangible assets) are written down only when estimated fair value falls below carrying value using Level 3 discounted cash flow inputs; no such remeasurements were recorded during the quarter.
• Warrant Distribution and French Term Loans: The Company estimated the fair value of Warrants issued October 7, 2025 using the Black-Scholes model (Level 3) at $2.94 per Warrant, recording an aggregate fair value of $173.9M to additional paid-in-capital, of which $42.2M was recognized as interest expense (distributed to Convertible Notes holders) and $131.7M was recorded to retained earnings; French Term Loans reclassified to Liabilities held for sale had a carrying value of $8.9M and fair value of $8.8M as of May 2, 2026, estimated using a Level 2 discounted cash flow model.

• Total outstanding debt: As of May 2, 2026, May 3, 2025, and January 31, 2026, outstanding debt was $4.2B, $1.5B, and $4.2B, respectively; an additional $8.9M, $11.4M, and $7.5M of debt associated with the French disposal group was classified as current within Liabilities held for sale as of those respective dates.
• Convertible 2030 Notes: Completed April 1, 2025 via private offering of $1.5B aggregate principal (including full exercise of the initial purchaser's $200M option); general unsecured obligations issued under the 2030 Indenture with U.S. Bank Trust Company, National Association as trustee; as of May 2, 2026, carrying value net of $15.4M debt issuance costs was $1.5B, and fair value (Level 2) was approximately $1.7B.
• Convertible 2032 Notes: Completed June 17, 2025 via private offering of $2.3B aggregate principal, with an additional $450M option exercised in full on June 23, 2025 and issued June 24, 2025, bringing total principal to $2.7B; general unsecured obligations issued under the 2032 Indenture with the same trustee; as of May 2, 2026, carrying value net of $18.5M debt issuance costs was $2.7B, and fair value (Level 2) was approximately $3B.
• Credit facilities: The Company maintains uncommitted letter of credit facilities with certain banks for issuance of letters of credit and bank guarantees, at times supported by cash collateral.

Commitments

• Stand-by letters of credit and bank guarantees (~$7.2M as of May 2, 2026): Approximately $7.2M outstanding, supported by $6M of cash collateral included in restricted cash.

Legal Proceedings

• Ordinary course matters (no material exposure disclosed): Subject to wage and hour class actions, stockholder actions, consumer class actions, and other conflicts; management does not believe any existing matter will have a material effect on financial condition, results of operations, or liquidity.

• Anti-dilutive Warrants: Warrants to purchase 59.1 million common shares were excluded from diluted EPS for the three months ended May 2, 2026 (nil for the comparable prior-year period), as the exercise price is significantly above the average market price.
• Convertible Notes dilution: The dilutive effect of Convertible Notes increased sharply to 143.6 million shares for the three months ended May 2, 2026 from 50.2 million shares for the three months ended May 3, 2025, driving the majority of the year-over-year expansion in diluted share count.

• Segment structure: The company operates in 3 geographic segments: United States, Australia, and Europe. During the second quarter of fiscal 2025, operations in Canada were divested; Canada had previously comprised a fourth reportable segment and is not included in current fiscal year results.
• CODM and profit metric: The CODM are the Chief Executive Officer and the Principal Financial and Accounting Officer; segment profit is measured using Operating income (loss), defined as Net income (loss) excluding Interest income, net, Income tax expense (benefit), Loss (gain) on digital assets and related receivables, and Unrealized gain on derivative assets, net.
• Intersegment transactions: Transactions between segments consist primarily of royalties, management fees, intersegment loans and related interest; no material intersegment sales occurred during the three months ended May 2, 2026 or May 3, 2025.
• Total assets: Information on total assets by segment is not disclosed, as such information is not used by the CODM to evaluate segment performance or allocate resources and capital.

• Electronic Boutique Canada, Inc. divested (second quarter of fiscal 2025): Management approved a plan to divest the Company's Canadian and French operations in the first quarter of fiscal 2025; the Canadian subsidiary, which operated retail stores and e-commerce, was subsequently sold, with its assets and liabilities derecognized upon closing and no longer reflected in held-for-sale balances in subsequent periods.
• France operations held for sale (as of May 2, 2026): The French disposal group remains classified as held for sale, carrying $152.4M of Assets held for sale (net of a cumulative $25.4M impairment) and $143M of Liabilities held for sale as of May 2, 2026; the Company expects to complete the sale within the next twelve months.
• Impairment charges — France disposal group: An initial impairment charge of $35.5M was recognized in the first quarter of fiscal 2025 across the French and Canadian disposal groups; for full fiscal 2025 the net impairment on the French disposal group was $30.6M, and in the first quarter of fiscal 2026 a net impairment reversal of $4.6M was recorded, reflecting remeasurement to fair value less costs to sell including impacts from Accumulated other comprehensive income.

• Position overview: During the first quarter of fiscal 2026, the Company entered into Put/Call Pairs providing economic exposure to 22,176,000 shares of eBay Common Stock, plus direct beneficial ownership of 25,000 shares, collectively representing an approximately 5% economic interest based on the 444 million shares reported by eBay as outstanding as of April 24, 2026; the Put/Call Pairs are scheduled to expire on February 23, 2028 and have not been designated as hedging instruments.
• Strike price and structure: The Put/Call Pairs were acquired in tranches with strike prices ranging between $84.40 to $95.49 (average strike price $91.20), with eBay stock price at $104.07 as of the measurement date; each pair is accounted for as a single forward contract combining a non-transferable embedded purchased call option and a non-transferable embedded written put option entered into with the same counterparty.
• Fair value and gain: As of May 2, 2026, the fair value of the Put/Call Pairs was $285.3M (unrealized gain of $285,296,080 on a gross basis for the three months ended May 2, 2026), classified as Level 2 within the ASC 820 fair value hierarchy and presented as Derivative asset within Current assets; the gain is presented net of certain transaction-related costs in Unrealized gain on derivative asset, net within nonoperating income.
• Collateral and settlement: As of May 2, 2026, the Company had pledged $983.3M of collateral under the Master Agreement, held in a restricted account controlled by the counterparty and presented as Collateral pledged for derivative asset on the condensed consolidated balance sheets; the HSR Act Condition was satisfied on June 3, 2026, after which the Put/Call Pairs became settleable in shares (in addition to cash), and based on the $285.3M fair value, the Company would expect a net settlement inflow upon termination.

• Accounting framework: Bitcoin is measured at fair value under ASC 350-60, classified as Level 1 in the fair value hierarchy using unadjusted quoted prices from the Coinbase exchange (identified as the principal active market); unrealized gains and losses are recognized in the condensed consolidated statements of operations as Gain on digital assets and related receivables, presented as nonoperating activity.
• Bitcoin holdings as of May 2, 2026: The Company held 1.0 Bitcoin (actual quantity, not in millions) with a cost basis of $200,000, fair value of $100,000, and cumulative unrealized loss of ($100,000); no Bitcoin was purchased or sold during the first quarter of fiscal 2026, and a gain of $1.1M on Digital assets and related receivables was recorded during the three months ended May 2, 2026.
• Covered-call options and collateral: Under a Collateral Agreement with Coinbase Credit, Inc., the Company had outstanding covered-call option contracts referencing approximately 4,709 Bitcoin as of May 2, 2026, with a strike price of $80,000 and maturity through May 29, 2026; these contracts resulted in a derivative liability of $8.4M (presented within Accrued liabilities and other current liabilities) and an unrealized loss of approximately $1.8M during the first quarter of fiscal 2026; the options are classified as Level 2 within the fair value hierarchy and accounted for as non-designated derivatives under ASC 815.
• Pledged Bitcoin derecognition: Because the counterparty held the right to rehypothecate, commingle, or unilaterally sell the 4,709 Pledged Bitcoin, the Company concluded control transferred to the counterparty and derecognized the Pledged Bitcoin as an intangible asset, recognizing instead a Digital assets receivable representing the fair value of its contractual right to receive equivalent Bitcoin; the receivable is classified as a Current asset (due within 12 months), remeasured at fair value using Level 2 inputs, with changes recognized in Gain on digital assets and related receivables.

• Effective tax rate: Income tax expense was $116.8M for the three months ended May 2, 2026, representing an effective tax rate of 23.1%, compared to $3.5M and 7.2% for the three months ended May 3, 2025; the increase was driven primarily by significantly higher pre-tax income and the prior-year recognition of certain tax benefits that were substantially all utilized in fiscal 2025.
• Rate vs. statutory: The difference between the effective tax rate and the U.S. federal statutory rate of 21% is primarily attributable to state income taxes.
• OBBBA legislation: The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, makes permanent certain expiring provisions of the Tax Cuts and Jobs Act, modifies the U.S. international tax framework, and restores certain favorable business tax provisions, with provisions taking effect on various dates between 2025 and 2027; the Company does not expect it to have a material impact on its estimated fiscal 2026 effective tax rate.

• Related party relationship: Director Nat Turner also serves as Chairman and CEO of Collectors Holdings, Inc. (Collectors), parent of Professional Sports Authenticator (PSA), making both entities related parties under ASC 850.
• Collaboration arrangements: The Company became an authorized PSA dealer in Q3 fiscal 2024, with PSA providing authentication and grading services for trading cards through select GameStop stores across the United States; in Q2 fiscal 2025, the Company launched Power Packs, a digital trading card platform developed in collaboration with PSA.
• Transaction materiality: Transactions with Collectors and PSA were not material, individually or in the aggregate, during the first quarters of fiscal 2026 and 2025.

• eBay acquisition proposal: On May 3, 2026, the Company submitted a non-binding proposal to acquire 100% of eBay's outstanding shares at $125.00 per share in a combination of cash and stock; eBay rejected the proposal on May 12, 2026. Consummation was subject to shareholder approvals of both companies and required antitrust approvals, and the Company stated there can be no assurance it will enter into a binding agreement on favorable terms or at all.
• eBay stake and Schedule 13D filings: On May 4, 2026, the Company filed a Schedule 13D disclosing direct beneficial ownership of 25,000 shares of eBay Common Stock and derivative exposure to 22,176,000 additional shares through American-style put and call option transactions (Put/Call Pairs) expiring February 23, 2028. Subsequent amendments increased derivative exposure to 29,078,699 shares (Amendment No. 1, May 19, 2026), then 34,508,990 shares (Amendment No. 2, May 28, 2026).
• HSR Act condition satisfied; beneficial ownership update: Amendment No. 3 (filed June 5, 2026) disclosed that the HSR Act Condition was satisfied on June 3, 2026, enabling the Company (for call portions) and the financial institution counterparty (for put portions) to elect physical settlement of underlying eBay shares in lieu of cash settlement. As of June 5, 2026, the Company may be deemed to beneficially own 39,874,306 shares of eBay Common Stock — 827,648 shares held directly and 39,046,658 shares underlying the Put/Call Pairs — though the Company has no voting or dispositive power over the 39,046,658 underlying shares unless and until the Put/Call Pairs are physically settled.
• Share repurchase authorization: On June 2, 2026, the Board approved a new discretionary $2B share repurchase authorization for Class A common stock, replacing the previous authorization; the program does not require acquisition of any specific number of shares and may be terminated at any time.

• Business description: GameStop Corp., a Delaware corporation established in 1996, offers games, collectibles, and entertainment products through its stores and ecommerce platforms.
• Strategic direction: Management describes the business model as expanding beyond traditional retail to include value creation through disciplined capital allocation, with significant cash and other sources of liquidity characterized as a strategic asset to be deployed into investments, acquisitions, and control transactions that management believes offer long-term value.

• Strategic pillars: The company's strategy is organized around two pillars: Capital Allocation (acquiring, investing in, or partnering with businesses that offer long-term value) and Operational Excellence (maximizing cash flow of the legacy retail business by optimizing the store fleet).
• Capital deployment focus: Management views the balance sheet as a strategic asset and continues to review uses of cash and other liquidity sources, including potential control transactions and transformational acquisitions, with no stated industry limitations on its Investment Committee's review scope.

• Investment policy scope: Permissible instruments include cash and cash equivalents (e.g., bank obligations, money market funds, and commercial paper), fixed income securities (e.g., obligations of the U.S. Treasury), equity securities (limited to those listed on major exchanges), derivative instruments and options, and certain crypto-currencies, including Bitcoin; the policy is reviewed at least annually by the Board.
• Investment Committee structure: The Board has delegated authority to an Investment Committee to manage cash and other liquidity sources and review potential acquisition and control opportunities; the Committee consists of Chairman and CEO Ryan Cohen and two independent Board members.
• Alignment of interests: Mr. Cohen or other Investment Committee members may, in their personal capacity or through affiliated investment vehicles, invest in the same securities as the Company; the Board anticipates this aligns the interests of related parties with those of the Company by placing their personal resources at risk in substantially the same manner as the Company's resources.

Retail footprint: Management states it is optimizing its retail footprint and views its domestic network of physical locations not merely as stores, but as fulfillment and service anchors that provide immediate capabilities.

• Strategic validation: The Company states that recent initiatives have validated its thesis that consumers value transactional speed and convenience, citing the use of stores as trade-in destinations as evidence that its infrastructure can drive transaction volume and customer engagement.
• Network effect: Management believes its dense store network serves as a competitive advantage in expanding its addressable market through new product and service offerings.

• Indirect spend: The Company significantly reduced indirect costs in fiscal 2025 and intends to continue this discipline in fiscal 2026, focusing on eliminating non-income generating spend.
• International streamlining: Over the past three years the Company has exited operations in Ireland, Switzerland, Austria, Germany, New Zealand, Italy, and Canada; it has also signed an agreement related to a potential sale of its France operations to a strategic buyer.
• Store fleet optimization: A comprehensive store portfolio review resulted in the closure of 727 stores in the United States in fiscal 2025; management does not anticipate closing a significant number of stores in fiscal 2026, viewing the domestic footprint as a core component of its logistics infrastructure strategy.
• Acquisition strategy: Subsequent to the end of the first quarter of fiscal 2026, the Company announced a non-binding proposal to acquire eBay Inc.; management states the strategy is explicitly focused on leveraging cash, a flexible capital structure, and stock to acquire assets, though no binding agreements for a specific transaction exist at this time.

• Net sales: Increased 14.0% to $835.3M compared to the prior-year period, driven primarily by continued growth in the collectibles category — achieved despite a smaller store base and reduced international footprint following fiscal 2025 actions including closure of underperforming U.S. stores, divestiture of Canadian operations, and wind-down of New Zealand operations.
• Collectibles expansion: Continued to expand store space and roll out new fixtures dedicated to the collectibles category to support in-store sales, consistent with the company's strategic focus on collectibles growth.
• eBay derivative position: Obtained economic exposure to approximately 5% of eBay's outstanding common stock through a series of put and call option transactions, resulting in a Derivative asset and an Unrealized gain on derivative asset, net recognized during the quarter.
• Balance sheet: Total Cash, cash equivalents, Marketable securities, Digital assets and related receivables, and Collateral pledged for derivative assets were $9.7B as of May 2, 2026, comprising $7.4B of Cash and cash equivalents, $970.5M of Marketable securities, $983.3M of Collateral pledged for derivative asset, and approximately $369.6M in Digital assets and related receivables; the balance sheet also reflected proceeds from 0.00% Convertible Senior Notes due 2030 and 2032, Bitcoin treasury reserve holdings, and the Warrant Distribution (NYSE: GME WS) completed in fiscal 2025 under which a nominal number of warrants were exercised during the quarter.
• Store footprint and France: An agreement has been entered into for the potential sale of the company's operations in France; management does not anticipate closing a significant number of stores in fiscal 2026, viewing the domestic store footprint as a core component of logistics and fulfillment infrastructure.

• Net sales: Net sales grew 14.0% to $835.3M from $732.4M, with gross margin expanding 620 basis points to 40.7% from 34.5% as cost of sales fell to 59.3% of net sales from 65.5%.
• SG&A and asset impairments: SG&A decreased 11.6% to $201.6M (24.1% of net sales) from $228.1M (31.1%), while asset impairments swung to a net benefit of ($4.6M) from an expense of $35.5M, driving operating income to $143.3M versus a loss of ($10.8M) in the prior year.
• Below-the-line items: Interest income, net rose 47.1% to $83.7M; an unrealized gain on derivative asset of $268.4M and a gain on digital assets and related receivables of $1.1M, both with no prior-year comparable, contributed materially to income before income taxes of $506.4M versus $48.3M prior year.
• Net income: Net income increased $344.8M, or 769.6%, to $389.6M (46.6% of net sales) from $44.8M (6.1%), with income tax expense rising to $116.8M from $3.5M.

• Overall net sales: Total net sales increased $102.9M, or 14.0%, to $835.3M for the three months ended May 2, 2026 compared to $732.4M for the three months ended May 3, 2025.
• Category drivers: Growth was primarily driven by a $137.4M, or 65.0%, increase in collectibles sales, partially offset by a decline in software sales of $22.9M, or 13.0%, and a decline in hardware and accessories sales of $11.6M, or 3.4%.
• Segment performance: Net sales increased 21.6% in Australia, 21.1% in the United States, and 13.1% in Europe, while Net sales declined 100.0% in Canada; the Canada segment decline reflects the divestiture of that business in the second quarter of fiscal 2025.

• Gross profit growth: Gross profit increased $87.5M, or 34.6%, during the three months ended May 2, 2026, compared to the prior year, with gross margin expanding to 40.7% from 34.5%.
• Sales mix shift: The improvement was primarily driven by a shift toward higher-margin collectibles, which grew to 41.8% of total Net sales for the three months ended May 2, 2026, compared to 28.9% in the prior year.

• Overall SG&A decline: SG&A expenses decreased $26.5M, or 11.6%, for the three months ended May 2, 2026 compared to the prior year, with SG&A as a percentage of Net sales falling to 24.1% from 31.1%.
• Labor, consulting, and marketing savings: A $9.5M decrease in labor-related costs, consulting services, and marketing expenses was driven by ongoing cost-optimization initiatives.
• Store-related cost reductions: Store-related rent and occupancy costs decreased $15.1M and depreciation expense decreased $1M, primarily due to store closures and international divestitures completed in recent periods.

• Current period vs. prior year: Asset impairment was a benefit of $4.6M for the three months ended May 2, 2026, compared to an expense of $35.5M in the prior year; as a % of Net sales, impairment was (0.6)% in the current year period versus 4.8% in the prior year.
• Canada divestiture: Management approved a plan in the first quarter of fiscal 2025 to divest operations in Canada and France; $18.3M of impairment expense was recorded for the Canadian disposal group in the first quarter of fiscal 2025, and that divestiture was completed during the second quarter of fiscal 2025.
• France divestiture: $17.2M of impairment expense was recorded for the French disposal group in the first quarter of fiscal 2025; the French divestiture is expected to be completed during the current fiscal year.

• Interest income, net: Rose $26.8M to $83.7M for the three months ended May 2, 2026, compared to $56.9M in the prior year, primarily driven by higher Cash and cash equivalent, and Marketable securities balances resulting from the issuance of the Convertible 2030 Notes and Convertible 2032 Notes.

• Unrealized gain on derivative asset, net: Increased $268.4M or 100% in the three months ended May 2, 2026 compared to the prior year, driven by the Company entering into Put/Call Pairs that provide economic exposure to the eBay Common Stock.

Gain on digital assets: Gain on digital assets and related receivables increased to $1.1M for the three months ended May 2, 2026, compared to no such gain in the prior year.

• Period-end balances: Cash, cash equivalents and marketable securities totaled $8.4B as of May 2, 2026, compared to $6.4B as of May 3, 2025 and $9B as of January 31, 2026.
• Marketable securities: Marketable securities were $970.5M as of May 2, 2026, down from $2.7B as of January 31, 2026, and compared to zero as of May 3, 2025.

• Liquidity position: As of May 2, 2026, the company held $7.4B of unrestricted cash and cash equivalents and $970.5M of marketable securities; marketable securities consist of highly-rated short-term government notes, government bills, commercial paper, and time deposits, all with original maturities in excess of 90 days and less than one year.
• Collateral pledges reducing available liquidity: During the first quarter of fiscal 2026, $983.3M of cash was pledged as collateral in support of Derivative asset positions, reducing available liquidity by a corresponding amount; separately, 4,709 Bitcoin were pledged as collateral under a Collateral Agreement with Coinbase Credit, Inc. in connection with a covered-call strategy, resulting in derecognition of the Pledged Bitcoin as an Intangible asset and recognition of a Digital assets receivable — a $1.1M gain on this receivable was recorded in Q1 fiscal 2026.
• French disposal group and term loans: The French disposal group included $28.5M of cash within Assets held for sale as of May 2, 2026; six unsecured term loans of Micromania SAS totaling €40.0 million (originally extended in fiscal 2021 for five years) were reclassified to Liabilities held for sale in Q1 fiscal 2025, with $8.9M remaining outstanding as of May 2, 2026.
• Bitcoin treasury reserve: In Q2 fiscal 2025, the company purchased 4,710 Bitcoin for $500M following Board approval to add Bitcoin as a treasury reserve asset, allowing a portion of cash or future debt and equity proceeds to be invested in Bitcoin.

ATM offering program: On May 17, 2024, the company entered into an Open Market Sale Agreement℠ with Jefferies LLC as Sales Agent, providing for the sale of shares of Class A common stock (par value $0.001 per share) from time to time through an "at-the-market offering" program.

• Convertible 2030 Notes: On April 1, 2025, the company completed a private offering of $1.5B aggregate principal amount of 0.00% Convertible Senior Notes due 2030, including full exercise of the initial purchaser's option to purchase up to an additional $200M aggregate principal amount; the notes are general unsecured obligations issued under an Indenture dated April 1, 2025 with U.S. Bank Trust Company, National Association as trustee.
• Convertible 2032 Notes: On June 17, 2025, the company completed a private offering of $2.3B aggregate principal of 0.00% Convertible Senior Notes due 2032, with an initial purchaser option to purchase up to an additional $450M aggregate principal amount for settlement within 13 days of the issuance date; the notes are general unsecured obligations issued under an Indenture dated June 17, 2025 with the same trustee.

• Warrant Distribution: On October 7, 2025, the Board declared a distribution of warrants to purchase shares of Common Stock to holders of record of Common Stock and Convertible Notes as of the close of business on October 3, 2025; Common Stock holders received one Warrant for every ten shares (rounded down), while Convertible Noteholders received Warrants on an "as converted" basis without needing to convert their notes.
• Exercise terms: Each Warrant entitles the holder to purchase one share of Common Stock at a cash exercise price of $32.00 per Warrant, subject to anti-dilution adjustments; the Warrants expire at 5:00 p.m. New York City time on October 30, 2026, and commenced trading on the New York Stock Exchange under the ticker "GME WS" on October 8, 2025.
• Registration and exercises: The Company registered up to 59,153,963 shares of Common Stock issuable upon exercise of the Warrants via a prospectus supplement dated October 7, 2025; during the three months ended May 2, 2026, holders exercised 1,950 Warrants, resulting in the issuance of 1,950 shares of common stock and cash proceeds of $62,400.

• Operating cash flow: Cash provided by operating activities was $337.4M during the three months ended May 2, 2026, compared to $192.5M during the three months ended May 3, 2025, with the increase primarily driven by higher operating income and increased interest income during the current year period.

• Investing cash flows: Cash provided by investing activities was $742.9M during the three months ended May 2, 2026, compared to $7.3M during the three months ended May 3, 2025, a substantial year-over-year increase.
• Current period drivers: The three months ended May 2, 2026 cash inflow was primarily due to proceeds from sales and maturities of Marketable securities, partially offset by cash pledged as collateral in connection with the Derivative asset.
• Prior period drivers: The three months ended May 3, 2025 cash inflow was primarily due to proceeds from the maturity of Marketable securities, partially offset by purchases of Marketable securities and routine Capital expenditures.

• Financing cash flows: Cash provided by financing activities was $1.5M during the three months ended May 2, 2026, compared to $1.5B during the three months ended May 3, 2025.
• Year-over-year decrease: The decrease primarily reflects gross proceeds of $1.5B received from the issuance of the 2030 Convertible Notes in the prior year period, with no comparable financing activity in the current year period.

• Derivative asset structure: During the first quarter of fiscal 2026, the Company recognized a Derivative asset providing economic exposure to 22,176,000 shares of eBay Inc. common stock (par value $0.001 per share) through a series of paired put and call option transactions ("Put/Call Pairs") — each structured as a combination of a non-transferable embedded purchased call option and a non-transferable embedded written put option entered into contemporaneously with the same counterparty, scheduled to expire on February 23, 2028.
• Fair value methodology: The options are valued under ASC 820 using widely accepted option-pricing models incorporating observable market inputs — including underlying stock price, implied volatility, and time to expiration — and are classified as Level 2 within the fair value hierarchy; key inputs include strike price, market price of eBay common stock, number of contracts, and resulting intrinsic value per share.
• Balance sheet and P&L impact: As of May 2, 2026, the Derivative asset on the condensed consolidated balance sheet is $285.3M; during the three months ended May 2, 2026, the Company recognized an Unrealized gain on derivative asset, net of $268.4M (net of certain transaction-related costs) in its condensed consolidated statements of operations.
• Critical accounting estimate status: The Company designates the valuation of the Derivative asset as a critical accounting estimate due to significant judgment involved and its material impact on financial position and results of operations; this is the only material change to critical accounting policies from those included in the 2025 Annual Report on Form 10-K.

Off-balance sheet arrangements: No material off-balance sheet arrangements as of May 2, 2026, other than those disclosed in Note 5 "Debt" and Note 6 "Commitments and Contingencies" of the condensed consolidated financial statements.