Q3 20 17 Earnings November 21, 20 17
Safe Harbor Th is presentation contains forw a rd -looking statements w it h in the m e a n in g of the P riva t e Securities Lit ig a t io n Re form Act of 19 9 5. Such statements may include, but a re not lim it e d to, the outlook for fis c a l 2 0 17, future fin a n c ia l and o p e ra t in g re s ults and projections, p ro je c t e d s tore openings, t im in g and term s of p o t e n t ia l a c q u is it io n s, the company's p la ns, objectives, expectations and intentions, and other statements that a re not h is t o ric a l fa cts. Such statements a re based upon the curre nt beliefs and expectations of GameStop's management and a re s u b je c t to s ign ific a n t ris ks and u n c e rt a in t ie s. Act ua l results may differ from those set forth in the forw a rd -looking statements. Gam estop undertakes no o b lig a t io n to p ub licly update or re vis e any forw a rd-looking statements. The following fa ctors, among others, could cause actual results to differ from those set forth in the forw a rd-looking statements: the in a b ilit y to o b t a in s u ffic ie n t quantities of product to meet consumer demand, in c lu d in g console ha rd w a re and accessories; the t im in g of re le a s e and consumer demand for new and p re -owned vid e o game titles; our a b ilit y to continue to expand, and successfully open and opera te new store s for, our colle ctib le s and tech bra nd s businesses; ris ks associated w it h achievement of anticipated fin a n c ia l and operating re s ults from a c q u is it io n s ; our a b ilit y to s u s t a in and grow our console d ig it a l vid e o game s a le s ; the t im in g and amount of re c o gn it io n of tax attributes; the ris ks associated w it h international operations, wireless industry partnerships and operations and the c o m p le t io n and in t e gra t io n of a c q u is it io n s ; increased c o m p e t it io n and changing technology in the vid e o game industry, in c lu d in g brow ser and m o b ile games and d ig it a l d is t rib u t io n of console games, and the im p a c t of that competition and those changes on p h ys ic a l vid e o game sa les; the costs and consequences of le ga l proceedings and tax a u d it s ; and changes in d o m e s t ic or fo re ign la w s and regulations that re d uce consumer demand for, or in c re a s e p ric e s of, our products or o t h e rw is e a d verse ly a ffect our business. Additional fa ctors that could cause GameStop's re s ults to differ m a teria lly from those described in the forw a rd -looking statements can be found in GameStop's Annual Re p ort on Form 10 -K for the fis c a l yea r ended Ja n. 28, 2 0 17 file d w it h the S EC and available at the SEC's In t e rn e t s it e at http://www.sec.gov orhttp://investor.gam estop.com. 2
GameStop is a Global Specialty Retailer VIDEO GAMES No. 1 Market Share in 13 in countries 13 Countries $13 Billion Addressable US Market We re a global family of specialty retail brands that makes the most popular technologies affordable and simple DIGITAL $1 Billion Digital Business $8 Billion Addressable US Market COLLECTIBLES $12 Billion Addressable US Market TECHNOLOGY BRANDS $200+ Billion Addressable US Market 55 million members worldwide 2017E: $7B 2017E: >$1B 2017E: $.7B 2017E: $.9B 3
Q3 20 17 Highlights Consolidated com parable store sales increased 1.9% versus prior year quarter, reflecting growth for the third consecutive quarter New hardware sales increased 8.8% due to continued strength in Nintendo Switch sales New softwa re sa les grew 5.4% ve rsus p rior yea r q ua rte r, d rive n by a strong t it le lin e u p Collectibles sales increased 26.5% versus prior year quarter Omnichannel sales increased 38.6% versus prior year quarter 4
Q 3 20 17 Fin a n c ia l O ve rvie w Consolidated Performance Summary (In millions, except EPS and % s) Q 3 2 0 17 Q 3 2 0 16 Total Sales $1,988.6 + 1.5 % $ 1,9 5 9.2 Com p SSS + 1.9 % Gross Margin $689.4 34.7% Operating Earnings (adjusted) $ 8 0.8-18.2 % Net Incom e (adjusted) $55.1 + 8.5% Dilut ed EPS (adjusted) $0.54 + 10.2 % $70 8.2 3 6.1% $98.8 $ 50.8 $ 0.49 A reconciliation of adjusted financial results to the nearest GAAP measure is presented in the 3Q 2017 earnings press release 5
Q3 2017 Sales Category Highlights ( In m illions, except % s) Q 3 2 0 17 Q 3 2 0 16 New hardware $ 30 9.5 +8.8% New softw are $649.9 + 5.4 % Pre- owned/ Value $458.5-2.4 % Video Game Accessories $ 13 6.4-12.6 % $ 28 4.4 $616.6 $ 470.0 $ 15 6.0 Digital $ 37.2-16.8% Technology Brands $ 19 4.2-10.2 % Collectibles $ 13 8.4 + 26.5% Other $ 6 4.5 +4.4% Total Sales $1,988.6 + 1.5 % $ 4 4.7 $ 2 16.3 $ 10 9.4 $ 6 1.8 $ 1,9 5 9.2 6
Q3 2017 Gross Profit by Category ( In m illions, except % s) Q 3 2 0 17 Q3 2 0 16 New hardware $ 36.8 11.9 % New softw are $155.9 24.0 % Pre-owned/ Value $ 19 9.7 4 3.6 % Video Game Accessories $ 4 8.5 35.6 % $ 37.3 13.1% $ 15 0.0 24.3% $ 2 18.0 46.4% $ 4 9.6 3 1.8 % Digital $ 34.1 9 1.7% Technology Brands $ 14 1.4 72.8 % Collectibles $ 5 2.7 3 8.1% Other $ 20.3 3 1.5 % Total Gross Profit Gross Margin $689.4 34.7% $ 35.0 78.3% $ 15 9.6 73.8 % $ 39.7 36.3% $ 19.0 30.7% $70 8.2 3 6.1% 7
2017 Guidance (In millions, except EPS and % s) Sam e Store Sales FY 2 0 17E Positive low -to-m id single digits Incom e Tax Rate ~3 1.0 % Net Incom e $ 320.0 t o $ 354.0 Diluted EPS * $ 3.10 t o $ 3.4 0 *Diluted EPS guidance is based on weighted average shares outstanding of 101,500,000 8
2017 Projected Cash Flow Use Sources ~$300Mof FCF $ 110 t o $ 12 0 M of Capital Expenditures Priorities for FCF Divid e n d Pote ntia l M&A S ha re re p urcha s e s ~$60M Video Game Brands ~$30M Technology Brands ~$25M ThinkGeek 9
Collectibles Business Loot sales are expected to grow 30% to 40% in fiscal 2017 Increasing the amount of space dedicated to co lle ct ib le s a cros s our glo b a l store footprint and opening standalone collectibles stores Entering in t o lic e n s in g agreements w it h m a jo r IP h o ld e rs to produce unique,e xc lu s ive products Le ve ra g in g our lo ya lt y p ro gra m s in each country to d rive re le va n t product a round a robust la unch s che d ule Hire d a n a ccom p lis hed b ra nd m a na ge m e nt a nd p rod uct lic e n s in g le a d e r to se rve in a n e w ly created p o s it io n as S e n io r Vic e P re s id e n t of Collectibles 10
Omni-Channel is Growing the Business Store Web/ Mobile Web Ship from store Web in store Pick up at store >60% of our transactions now involve BOTH online and a physical store 11
PowerUp Rewards A Core Strategic Asset 55 MILLION Global Mem bers 38M in the U.S. 17M International U.S. Penetration 1 in 5 Sales 3X % of Sales 70+% Profits 5X Personalized Offers DLC Targeting Trade Generation Collectibles Marketing 12
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