GME 10-K & 10-Q changes, risk factors and insider trading

An investment in our Company involves a high degree of risk. You should carefully consider the risks below, together with the other information contained in this report and other filings we make with the SEC, before you make an investment decision with respect to our Company. The risks described below are not the only ones facing us. Additional risks not presently known to us, or that we consider immaterial, may also impair our business operations. Any of the following risks could materially adversely affect our business, operating results or financial condition, and could cause a decline in the trading price of our Class A Common Stocksecurities and the value of your investment.

Risks Related to Our Investment PolicyM&A and Investment PortfolioStrategy

The value of our investment portfolioinvestments may decline.

The Company's Investment Policy permits the Company to invest from time to time in securities and certain crypto-currencies, including Bitcoin and U.S. Dollar-denominated stablecoins,stablecoins. The policy also permits the Company to invest in derivative instruments and theoptions. The Company is, and will be, exposed to market volatility in connection with these investments. The Company’s financial position and financial performance could be adversely affected by worsening market conditions or poor performance of such investments. Bitcoin, for example, is a highly volatile asset and has experienced significant price fluctuations over time. Our Bitcoin strategy has not been tested and may prove unsuccessful. U.S. Dollar-denominated stablecoins may also suffer from value loss due to various issues underlying the product, including bank or issuer failure or underlying blockchain problems. The Company may also invest from time to time in nonmarketable securities and may need to hold such instruments for a long period of time and may not be able to realize a return of its cash investment should there be a need to liquidate to obtain cash at any given time. The Company may also invest from time to time in securities that are interest-bearing securities and if there are changes in interest rates, those changes would affect the interest income the Company earns on these investments and, therefore, impact its cash flows and results of operations.

Our investment portfolioinvestments may be concentrated in one or a few holdings, which may result in a single holding significantly impacting the value of our investment portfolio.investments.

The Company’s investmentinvestments portfolio isare overseen in accordance with the guidelines approved by the Investment Committee pursuant to the Investment Policy. The Company’sCompany's investment portfolioinvestments may be concentrated in just one or a few holdings. Additionally, the Investment Committee may use derivates or leverage, which could further increase the risk and volatility in the holdings. Accordingly, a significant decline in the market value of one or more of such holdings may not be offset by hypothetically better performance of the other holdings, if any. This concentration (especially if the position involves derivatives or leverage) of risk may result in a more pronounced effect on net income and stockholders’ equity, and may result in greater volatility in the fair market value of the Company’s investment portfolioinvestments from one period to another.

IfTo the extent we acquirehold Bitcoin, we will be exposed to certain risks associated with Bitcoin.

Under accounting rules, changes in the unrealized gains and losses on certain of our investments may be included in the Company’s reported net income (loss),income, even though the Company has not actually realized any gain or loss by selling such securities. Accordingly, changes in the market prices of such securities can have a significant impact on the Company’s reported results for a particular period, even though those changes do not bear on the performance of the Company’s operating businesses.

In order not to be regulated as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), unless we can qualify for an exclusion or exemption therefrom, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading in securities and owning “investment securities” having a value constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We are primarily engaged in offering games, collectibles and entertainment products through our stores and ecommerce platforms. Substantially all of our cash and cash equivalents (which are excluded from the term “investment securities” as cash items) have consisted, and are expected to consist, of (i) cash held in demand deposit accounts at banks and (ii) holdings of securities of money market funds that comply with Ruler 2a-7 under the Investment Company Act and (iii) U.S. government securities. Accordingly, we do not believe we are an investment company as defined under the Investment Company Act and we will continue to conduct our operations and monitor our holdings consistent with the Investment Policy to ensure ongoing and continuing compliance with this test so that we are not required to register as an investment company under the Investment Company Act. A change in, or further, guidance that may be issued in the future by the SEC or its Staff could negatively affect our ability to be excluded from the definition of an investment company under the Investment Company Act and regulation thereunder, which, in turn, could inhibit our ability to pursue our chosen strategies and may require us to re-classify our assets for purposes of the Investment Company Act or adjust our strategy accordingly. If we are required to do so, we may no longer be able to be excluded from the definition of an investment company under the Investment Company Act. If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including restrictions on the nature of our investments and restrictions on our issuance of securities. In addition, burdensome requirements may be imposed on us, including registration as an investment company under the Investment Company Act, adoption of a specific form of corporate structure and reporting, limitations with respect to management, operations, transactions with certain affiliated persons and portfolio composition, including with respect to diversification and industry concentration, record keeping, voting, proxy and disclosure requirements and other rules and regulationsregulations. thatSuch restrictions and requirements could have a material adverse effect on our business and financial condition and may also require us to substantially change the manner in which we conduct our business. Further, a determination by regulators that Bitcoin or certain other cryptocurrencies constitute “securities” or “investment securities” under the Investment Company Act or other Federal Securities laws could lead to our classification as an investment company under the Investment Company Act and could negatively impact the market price or liquidity of Bitcoin or such other cryptocurrencies that we may hold should we have to sell such holdings during adverse market conditions and require significant changes in our operations which could have a material adverse effect on the market value of our Class A Common Stock.securities.

Sales of our products involve discretionary spending by consumers, making our results highly dependent on the health of the economies and consumer confidence in the markets in which we operate. Consumers are typically more likely to make discretionary purchases, including purchasing gaming and technologycollectibles products, when there are favorable economic conditions. Our business may be affected by many economic, social, and political factors outside our control. Some of these factors include consumer disposable income levels, consumer confidence in current and future economic conditions, levels of employment, consumer credit availability, consumer debt levels, interest rates, tax rates, housing market conditions, inflation, tariffs, socio-political factors, such as civil unrest or political uncertainty, and the effect of weather, natural disasters, and public health crises. Adverse economic, social and political changes in any of the regions in which we sell our products could adversely affect our business in many ways, including reduced sales and margins.

The retail environment is intensely competitive and subject to rapid changes in consumer preferences and frequent new product introductions. We compete with mass merchants and regional chains, including Walmart and Target, computer product and consumer electronics stores, including Best Buy, other United States and international gaming and PC software specialty stores, such as FNAC Darty, and Media Markt-Saturn, major hypermarket chains like Leclerc, toy retail chains, internet-based retailers such as Amazon.com, other internet marketplaces, including those operated by game publishers and console manufacturers, online retailers of digital software, game rental companies and collectibles and trading card retailers. Competition may also result from new entrants into the markets we serve, offering products and/or services that compete with us. If we lose customers to our competitors, or if we reduce our prices or increase our spending to maintain our customers, such actions may negatively impact our business and our financial performance.

The gaming industry has historically been cyclical in nature in response to the introduction and maturation of new technology. Following the introduction of new gaming platforms, sales of these platforms and related software and accessories generally increase due to initial demand, while sales of older platforms and related products generally decrease as customers migrate toward the new platforms. A new console cycle began with the launch of the Sony PlayStation 5 in November 2020, the Microsoft Xbox Series X in November 2020 and the Nintendo Switch in March 2017. In January 2025, Nintendo announced that Nintendo Switch 2, the successor to the Nintendo Switch system, will be releasedTwo in June 2025.

We depend on manufacturers and publishers to deliver video game hardware, software, collectibles (including trading cards), and consumer electronics in quantities sufficient to meet customer demand. Some of the products we sell may be in short supply and highly allocated among us and our competitors and we compete for product inventory. If we fail to obtain products in sufficient quantities, our sales may be negatively impacted.

We also depend on these manufacturers and publishers to regularly introduce new and innovative products and software titles to drive industry sales. In recent years, the number of new software titles available for sale has decreased. Separately, our collectibles category, including trading cards, has been driven in part by demand for new releases. Any material delay in the introduction or delivery, or limited allocations, of hardware platforms, collectibles or software titles could result in reduced sales. In addition, some publishers that have historically published games compatible with multiple gaming platforms have been acquired by console manufacturers. This consolidation could lead to a further reduction in the number of new software titles available for sale.

OurA number of our suppliers rely on foreign sources, primarily in Asia, to manufacture a portion of the products we purchase from them. As a result, any event causing a disruption of imports, including labor shortages, natural disasters, public health crises or the imposition of import or trade restrictions in the form of tariffs or quotas could increase the cost and reduce the supply of products available to us, which may negatively impact our business and results of operations.

Our financial results depend significantly upon the business terms we can obtain from our suppliers and service providers, including competitive prices, unsold product return policies, advertising and market development allowances, freight charges and payment terms. We purchase substantially all of our products directly from manufacturers, software publishers and, in some cases, distributors. If our suppliers and service providers do not provide us with favorable business terms or allocate reduced volumes of their products to us, we may not be able to offer products to our customers in sufficient volumes or at competitive prices. Vendors may request credit support which could require us to either use cash on hand or collateralize letters of credit with restricted cash or other credit support mechanisms, which would reduce our liquidity available for other purposes.

A significant portion of the products we offer are purchased from foreign vendors or manufactured in foreign countries. In recent months, trade tensions between the United States and other countries have escalated. The imposition of additional, new, or different actions with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., the erection of barriers to trade, tax policy related to international commerce, or other trade matters could impact the cost or availability of the merchandise we offer, which may have an adverse impact on our business.

In-store and ecommerce retail are competitive and evolving environments. Insufficient, untimely or inadequately prioritized or ineffectively implemented investments could significantly impact our profitability and growth and affect our ability to attract new customers, as well as maintain our existing ones.

An important element of our profitability initiative iswas to reduce our global store base. Failure to successfully transfer customers and sales from closed stores to nearby stores could adversely impact our financial results.

As a part of our profitability initiative, we aresignificantly reducingreduced our global store base,base in fiscal 2025, which includesincluded closing stores that aredid not meetingmeet our performance standards orand stores at the end of their lease terms with the intent of transferring sales to other nearby locations. If we are unsuccessful in marketing to customers of the stores that wehave plan to closeclosed or in transferring sales to nearby stores, our results of operations could be negatively impacted.

An important part of our business involves the receipt, collection, storage, transfer, disposal, disclosure, security, use, and other processing (collectively, “process” or “processing”) of personal information of our customers and associates (including, in the case of customers, payment information) and other sensitive informationinformation, (including without limitation proprietary and confidential business data, trade secrets, intellectual property, and financial data).data. We have systems and processes in place that are designed to protect against security and data breaches, compromise of confidential and other sensitive information, and other interruptions. Despite these efforts, we have been the target of cybersecurity attacks in the past and there is no guarantee that the procedures we have implemented to protect against such security breaches, compromises, and other interruptions are adequate or will be effective. Our data and information systems (including those of third parties with whom we work), are subject to a variety of evolving threats (e.g., phishing attacks, software bugs, ransomware, and others). These threats come from a wide variety of actors (e.g., hackers, personnel, nation states and state-sponsored actors). Our data and information systems may also be compromised for reasons other than a cyberattack (e.g., information system malfunctions, loss, telecommunications failures, earthquakes, fire or flood). We rely on certain third parties and their technologies to operate critical business systems to process sensitive data (including personal information) in a variety of contexts. Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place. If the third parties with whom we work experience a security breach, compromise, or other interruption, we could experience adverse consequences.

Given our processing of personal information, we are subject to laws and other obligations (including industry standards (such as those related to payment cards), policies, statements and contracts) relating to personal information. Laws governing personal information continue to evolve, as federal, state and foreign governments continue to adopt new or different measures relating to data privacy and security as well as the processing of personal information. The interpretation and application of many existing privacy and data protection laws and regulations in the U.S. (including the California Consumer Privacy Act, as amended (“CCPA”)), Europe (including the European Union’s General Data Protection Regulation), and elsewhere impose stringent obligations on processing personal information and create the risk of significant fines and other adverse consequences for noncompliance. Such laws and regulations may be interpreted or applied in a manner that is inconsistent with each other and may complicate our existing data management practices. Evolving compliance and operational requirements under applicable data protection obligations have become increasingly burdensome and complex. Additionally, under various data protection laws and other obligations, we may be required to provide specific notices and obtain certain consents to process personal information. For example, some of our data processing practices have been, and may in the future continue to be, subject to challenges or lawsuits under data privacy, data security, and communications laws, including, for example, challenges based on anti-wiretapping or eavesdropping laws. We are or may become subject to obligations that limit the manner in which we transfer personal information across national borders. Our insurance coverage may be inadequate to protect us from privacy and security liabilities, such coverage may not continue to be available on commercially reasonable terms or at all, or such coverage may not pay claims.

We seek to mitigate our exposure to disruptions to our support, fulfillment and refurbishment operations in several ways. For example, where feasible, we design the configuration of our logistics operations to reduce the consequences of disasters and other disruptions. We also maintain insurance for these facilities against casualties, and we evaluate our risks and develop contingency plans for dealing with them. Although we have reviewed and analyzed a broad range of disruption risks applicable to our logistics operations, the ones that actually affect us may not be those that we have concluded are most likely to occur. Furthermore, our plans may not be adequate at the time of occurrence for the magnitude of any particular disruption event that we may encounter.

As a seller of consumer products, we are also subject to various federal, state, local and international laws, regulations and statutes, including laws relating to product safety and consumer protection and privacy. While we take steps to comply with these laws, there can be no assurance that we will be in compliance, and failure to comply with these laws could result in litigation, regulatory action and penalties which could have a negative impact on our business and financial condition. In addition, our suppliers might not adhere to product safety requirements and the Company and those suppliers may therefore be subject to involuntary or voluntary product recalls or product liability lawsuits. Direct costs, lost sales and reputational damage associated with product recalls, government enforcement actions or product liability lawsuits, individually or in the aggregate, could have a negative impact on future revenues and results of operations.

Stock markets in general and ourOur stock price in particular havehas experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies and our Company. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. In particular, a large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which has put and may continue to put pressure on the supply and demand for our Class A Common Stock, further influencing volatility in its market price. These and other external factors have caused and may continue to cause the market price and demand for our Class A Common Stock to fluctuate substantially, which may limit or prevent our stockholders from readily selling their shares of our Class A Common Stock and may otherwise negatively affect the liquidity of our Class A Common Stock.

Risks Related to FinancialOur PerformanceOutstanding and ReportingNotes

GameStop Corp. (“GameStop,” “we,” “us,” “our” or the “Company”), a Delaware corporation established in 1996, is a leading specialty retailer offering gamesgames, collectibles, and entertainment productsproducts. As we navigate the evolving commercial landscape, our business model is expanding beyond traditional retail to include value creation through itsdisciplined thousandscapital ofallocation. storesWe view our significant cash and ecommerceliquidity platforms.position as a strategic asset to be deployed into acquisitions, and control transactions that offer long-term value.

•OnStore FebruaryFleet 18,Optimization: 2025,Each year, we announcedconduct a plancomprehensive to pursue a salereview of our operations in France and Canada We have also initiated a comprehensive store portfolio optimizationto reviewidentify whichunderperforming involves identifying storeslocations for closure based on many factors, including an evaluation of current market conditionsconditions, operational performance, and individualother storerelevant performance.factors. This review, among other things,review resulted in the closure of 590727 stores in the United States induring fiscal 2024.2025. WhileAt this reviewtime, iswe ongoing and a specific set of stores hasdo not been identified for closure, we anticipate closing a significant number of additional stores in fiscal 2025.2026, as our domestic store footprint remains a core component of our logistics infrastructure strategy.

Gross profit decreasedincreased $180.3$82.2 millionmillion, or 13.9%7.4%, in fiscal 20242025 compared to the prior year, and gross profit as a percentage of net sales increased to 33.0% from 29.1% in fiscal 2024 compared to 24.5% in the prior year.

Selling, general, and administrative ("SG&A") expenses decreased $193.5$220.2 millionmillion, or 14.6%19.5%, in fiscal 20242025 compared to the prior year, andyear. SG&A as a percentage of net sales increaseddecreased to 29.6%,25.1% in fiscal 2024,2025, comparedfrom to29.6% 25.1%in the prior year.

AssetIn impairmentsthe prior year, impairment charges primarily related to store-levelmanagement's assetsplan, increasedapproved $4.9during millionthe tothird $9.7quarter million inof fiscal 2024, compared to $4.8divest millionthe Company's operations in the prior year.Italy. See Item 8, Notes to the Consolidated Financial Statements, Note 5 "Segment Information" for additional information related to the impact of impairment charges by segment.

Interest income, net increased $113.9$108.1 million to $163.4$271.5 million in fiscal 2024,2025, compared to $49.5$163.4 million in the prior year. The increase iswas primarily attributabledriven toby anhigher increase incash, cash equivalent, and cashmarketable equivalentssecurities balances resulting from the issuance of the Convertible 2030 Notes and saleConvertible 2032 Notes, partially offset by $42.2 million of shares of our Class A Common Stock under the ATM Transactions, as well as highernon-cash interest ratesexpense in the current year comparedrelated to the priorissuance year.of warrants to the holders of the Convertible Notes.

Income tax expense, net decreased $0.5$40.3 million to $5.9a tax benefit of $34.4 million in fiscal 2024,2025, compared to $6.4a tax expense of $5.9 million in the prior year. The companyCompany reported an effective tax rate of 4.3%(9.0)% in fiscal 20242025 downcompared fromto 48.9%4.3% in the prior year. ThisThe decreasechange in income tax expense and the effective tax rate iswas primarily attributabledriven toby athe $113.9$141.1 million increaserelease inof interestvaluation incomeallowance andon acertain correspondingU.S. $24 million increase in statutorydeferred tax expense, offset by tax benefits recognized in the current year.assets. See Item 8, Notes to the Consolidated Financial Statements, Note 14,15, "Income Taxes," for additional information.

Our principal sources of liquidity are cash on hand and cash from operations. As of FebruaryJanuary 1,31, 2025,2026, we had total$6,304.7 million of unrestricted cash and cash equivalentsequivalents, onand hand$2,709.1 million of $4,756.9 million and marketable securities of $18.0 million.securities.

Our cash and cash equivalents are carried at fair value and consist primarily of cash, money market funds, cash deposits with commercial banks, U.S. government bonds and notes, and highly rated direct short-term instruments with original maturities of 90 days or less.

Our marketable securities are also carried at fair value and include investments in certain highly-rated short-term government notes, government bills, commercial paper, and time deposits. As of FebruaryJanuary 1,31, 2025,2026, the$2,709.1 investment portfolios' aggregate balance was $18.0 million, allmillion of whichthese haveinvestments anhad original maturitymaturities in excess of 90 days and less than one year and are classified as marketable"Marketable securities" on our Consolidated Balance Sheets.

On March 18, 2025, the Board approvedof Directors (the "Board") unanimously authorized a revised Investmentinvestment Policy.policy (the "investment policy"). See "Item 1, Part II,I, Item"Notes 7.to Management’sthe DiscussionConsolidated andFinancial AnalysisStatements," Note 2, "Summary of FinancialSignificant ConditionAccounting and Results of Operations - Investments”Policies," for moreadditional information. Gains and losses on marketable securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company’s results of operations. However, the amount of gain or loss on marketable securities for any given period may have no predictive value and variations in amount from period to period may have no analytical value.

In fiscal 2021, six separate unsecured term loans held by our French subsidiary, Micromania SAS, for a total of €40.0 million were extended for five years. During the first quarter of fiscal 2025, we reclassified the French Term Loans to Liabilities held for sale on the Consolidated Balance Sheets where it continues to be measured at the lower of its carrying amount and fair value less costs to sell. As of FebruaryJanuary 1,31, 2025,2026, $16.9$7.5 million remains outstanding.outstanding and classified in "Liabilities held for sale."

We maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of FebruaryJanuary 1,31, 2025,2026, we had letters of credit and other bank guarantees outstanding in the amount of $7.3$6.7 million.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed in the section entitled "Risk Factors" in Part I, Item 1A in our 2025 Annual Report on Form 10-K for the year ended January 31, 2026,10-K, and the other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects. During the period covered by this Quarterly Report on Form 10-Q, there have been no material changes in our risk factors as previously disclosed.

The following discussion should be read in conjunction with the information contained in our condensed consolidated financial statements, including the notes thereto set forth in Part I, Item 1 of this Form 10-Q. Statements regarding future economic performance, management’s plans and objectives, and any statements concerning assumptions related to the foregoing contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations constitute forward-looking statements. These statements are only predictions based on current expectations and assumptions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements included in this Form 10-Q are based upon information available to us as of the filing date of this Form 10-Q, and we undertake no obligation to update or revise any of these forward-looking statements for any reason, whether as a result of new information, future events or otherwise after the date of this Form 10-Q, except as required by law. You should not place undue reliance on these forward-looking statements. The forward-looking statements involve a number of risks and uncertainties. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Certain factors, which may cause actual results to vary materially from these forward-looking statements, accompany such statements and are discussed in our 2025 Annual Report on Form 10-K,10-K for the year ended January 31, 2026 (the “2025 Annual Report on Form 10-K”), including the disclosures under Part I, Item 1A "Risk Factors."

Investments are made in accordance with the guidelines of an Investment Policy that is reviewed at least annually by the Board.Company’s Board of Directors (the “Board”). Permissible investment 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.

•Alignment of Interests: Depending on certain market conditions and various risk factors, Mr. Cohen or other members of the Investment Committee, each in their personal capacity or through affiliated investment vehicles, may at times invest in the same securities in which the Company invests. The Board anticipates that such investments will align the interests of the Company with the interests of related parties because itthey placesplace the personal resources of such directors at risk in substantially the same manner as resources of the Company.

•Strategic Validation: Our recent initiatives have validatedsupport our thesisview that consumers value transactional speed and convenience. By utilizing our stores as efficient trade-in destinations, we have demonstrated that our infrastructure can drive transaction volume and customer engagement.

•International Streamlining: We continue to evaluate our international assets for strategic relevance. In the past three years, the Company has exited operations in Ireland, Switzerland, Austria, Germany, New Zealand, ItalyItaly, Canada and Canada. In addition, the Company has signed an agreement related to a potential sale of its operations in France to a strategic buyer.France.

FirstSecond Quarter Developments

Consistent with our focus on the growth of collectibles, we continued to expand the store space and roll out new fixtures dedicated to the category to support in-store collectibles sales. As a result of our efforts in this area, our Collectibles product category increased to 45.1% of our Net Sales in the second quarter of fiscal 2026 compared to 23.4% in the second quarter of fiscal 2025.

We also continued our profit-optimizationprofit optimization efforts during the quarter, including further reductions in selling, general and administrative expenses through ongoing cost-disciplinecost discipline and indirect-spend initiatives.

Our balance sheet continued to reflect the proceeds of our 0.00% Convertible Senior Notes due 2030 (the “2030 Notes”) and 2032,0.00% Convertible Senior Notes due 2032 (the “2032 Notes”, and together with the 2030 Notes, the “Convertible Notes”), and our Bitcoin treasury reserve holdings and related receivables, and the Warrant Distribution completed in fiscal 2025 (NYSE: GME WS), under which a nominal number of warrants were exercised during the quarter.receivables. Total Cash, cash equivalents, Marketable securities, Digital assets and related receivables, and Collateral pledged for derivative assetsreceivables were $9,721.0$5,354.4 million as of MayAugust 2,1, 2026. This total included $7,397.6$4,854.3 million of Cash and cash equivalents, $970.5$206.0 million of Marketable securities, $983.3 million of Collateral pledged for derivative asset during the quarter, and approximately $369.6$294.1 million in Digital assets and related receivables.

The Three and Six Months Ended MayAugust 2,1, 2026 Compared to the Three and Six Months Ended MayAugust 3,2, 2025

Gross profit increased $87.5$149.4 million, or 34.6%27.9% during the threesix months ended MayAugust 2,1, 2026, compared to the prior year.year Gross profit as a percentage of Net sales increased to 40.7%, from 34.5% in the prior year.period.

Gross profit as a percentage of Net sales increased to 42.2%, from 31.4% in the prior year period. The increase in Gross profit and gross margin was primarily driven by a shift in sales mix towards our higher-margin product categories,categories: particularly collectibles. Salessales of collectiblesCollectibles increased to 41.8%43.4% of total Net sales for the threesix months ended MayAugust 2,1, 2026, compared to 28.9%25.8% in the prior year.year period, while sales of Video Games decreased to 33.8% of Net sales, compared to 49.6% in the prior year period.

During the three months ended August 1, 2026, Selling, general, and administrative ("SG&A") expenses decreased $26.5$31.7 million, or 11.6% for the three months ended May 2, 202614.5%, compared to the prior year.year period. SG&A as a percentage of Net sales decreasedincreased to 24.1%23.7% in the current year period compared to 31.1%22.5% in the prior year.year period.

During the three months ended August 1, 2026, Asset impairment was a benefit of $4.6$2.3 million for the three months ended May 2, 2026,million, compared to ana expensebenefit of $35.5$2.1 million in the prior year.year period. As a percentage of Net sales, Impairmentthe expensenet impairment benefit was (0.6)%0.3% during the current year period, compared to 4.8%0.2% in the prior year.year period. The change was primarily attributable to management's plan, approved in the first quarter of fiscal 2025, to divest the Company's operations in Canada and France, resulting in the reclassification of the related assets and liabilities as held for sale. We recorded $18.3 million of Impairment expense related to the Canadian disposal group in the first quarter of fiscal 2025, and theThe divestiture was completed during the second quarter of fiscal 2025. We recorded $17.2 million of impairment expense related to the French disposal group in the first quarter of fiscal 2025, and the divestiture is expected to be completed during the current fiscal year.2026.

Interest income, net increaseddecreased $26.8$2.5 million to $83.7$77.1 million for the three months ended MayAugust 2,1, 2026, compared to $56.9$79.6 million in the prior year.year period. The increasedecrease was primarily driven by higherlower average Cash and cash equivalent,equivalent and Marketable securities balances resulting from the issuanceinvestment ofin the ConvertibleeBay 2030Common NotesStock andduring Convertiblefiscal 2032 Notes.2026.

Unrealized Gain on Derivative Asset, net

During the three months ended May 2, 2026, Unrealized gain on derivative asset, net increased $268.4 million or 100% compared to the prior year. The increase in the Unrealized gainGain on derivative asset, net for the three and six months ended MayAugust 2,1, 2026 was due to the Company entering into the Put/Call Pairs during the first half of fiscal 2026 that provideprovided economic exposure to the eBay Common Stock.

Loss (Gain) on Digital Assets and Related Receivables

GainFor the three months ended August 1, 2026, the Loss on digital assets and related receivables increasedwas to $1.1$75.0 million for the three months ended May 2, 2026, compared to noa suchGain gainon digital assets of $28.6 million in the prior year.year period.

We recognized Income tax expense of $116.8$121.5 million for the three months ended MayAugust 2,1, 2026, compared to an Income tax expense of $3.5$6.0 million for the three months ended MayAugust 3,2, 2025. Our effective income tax rate was 23.1%28.9% for the three months ended MayAugust 2,1, 2026 compared to 7.2%3.4% for the three months ended MayAugust 3,2, 2025.

The increase in income tax expense was driven primarily by significantly higher pre-tax income for the three and six months ended MayAugust 2,1, 20262026, compared to the three and six months ended MayAugust 3,2, 2025. The increase in the effective tax rate reflects that the recognitionprior-year period benefited from the utilization of certainU.S. taxnet benefitsoperating availableloss duringcarryforwards and the threerelated monthsrelease endedof Mayvaluation 3, 2025,allowances, which reduced income tax expense in that period but were substantially allexhausted utilizedby inthe end of fiscal 2025. The difference between our effective tax raterates and the U.S. federal statutory rateincome oftax 21%rates in the current periods is primarily attributable to state income taxes.taxes Theand differencelosses betweenfor ourwhich effectiveno corresponding tax ratebenefit andwas the statutory income tax rate in the current year period is primarily due to the state income taxes.recognized.

Our principal sources of liquidity are cash on hand and cash from operations. As of MayAugust 2,1, 2026, we had $7,397.6$4,854.3 million of unrestricted cashCash and cash equivalents, and $970.5$206.0 million of marketableMarketable securities.

Our Marketable securities are carried at fair value and include investments in certain highly-rated short-term government notes, government bills, commercial paper, and time deposits. As of MayAugust 2,1, 2026, $970.5$206.0 million of these investments had original maturities in excess of 90 days and less than one year and are classified as "Marketable securities" on our condensed consolidated balance sheets.

In fiscal 2025, we reclassified Cash and Marketable securities associated with the French disposal group to Assets held for sale on the condensed consolidated balance sheets. As of MayAugust 2,1, 2026, the divestiture of the French disposal group includedwas $28.5 million of cash and an immaterial amount of marketable securities within Assets held for sale.completed. See Note 9, "AssetAssets Held for Sale," for additional information.

We maintain uncommitted facilities with certain lenders that provide for the issuance of letters of credit and bank guarantees, at times supported by cash collateral. As of MayAugust 2,1, 2026, we had letters of credit and other bank guarantees outstanding in the amount of $7.2$4.6 million.

In the first quarter of fiscal 2025, we announced that the Board approved the addition of Bitcoin as a treasury reserve asset, allowing a portion of our cash or future debt and equity proceeds to be invested in Bitcoin. During the second quarter of fiscal 2025, we purchased 4,710 Bitcoin for $500 million. In the fourth quarter of fiscal 2025, we entered into an agreement (the "Collateral Agreement") with Coinbase Credit, Inc. (the "counterpartyCoinbase"), under which we sold covered call options on a portion of the Bitcoin we own. In connection with this covered-call strategy, we pledged 4,709 Bitcoin (the "Pledged Bitcoin") as collateral.

Under the terms of the Collateral Agreement, the counterpartyCoinbase retained the right to rehypothecate, commingle, or unilaterally sell the Pledged Bitcoin. As a result of these rights, we concluded that control of the Pledged Bitcoin transferred to Coinbase. Accordingly, during the counterparty.fourth Accordingly,quarter of fiscal 2025, we derecognized the Pledged Bitcoin as an Intangible asset and recognized Digital assets receivable within Digital assets and related receivables on our condensed consolidated balance sheets representing our contractual right to receive equivalent amount of Bitcoin in the future. The Digital assets receivable is presented within Digital assets and related receivables on the condensed consolidated balance sheets as of both August 1, 2026 and January 31, 2026, and remains subject to the Collateral Agreement. Although the classification of these assets has changed, our economic exposure is consistent with direct ownership of the underlying Bitcoin.Bitcoin, except to the extent of the covered call options written on a portion of those holdings.

We recorded a gainloss of $1.1$75.0 million and $73.9 million related to the Digital asset receivable during the firstthree quarterand ofsix fiscalmonths ended August 1, 2026, respectively, reflecting the increasedecrease in the market price of Bitcoin during the period.periods.

On May 17, 2024, we entered into an Open Market Sale AgreementSM (the “Sales Agreement”) with Jefferies LLC (the “Sales Agent”) providing for the sale by the Company of shares of our Class A common stock, par value $0.001 per share (“Common Shares”), from time to time, through the Sales Agent in connection with an “at-the-market offering” program (the “ATM Offering”). No shares of Common Stock were sold under the ATM Offering during the six months ended August 1, 2026.

On April 1, 2025, we completed a private offering of $1,500 million aggregate principal amount of 0.00% Convertible Senior Notes due 2030 (the "Convertible 2030 Notes"),Notes, including the exercise in full of the initial purchaser's option to purchase up to an additional $200 million aggregate principal amount of the Convertible 2030 Notes. The Convertible 2030 Notes are general unsecured obligations of the Company. The Convertible 2030 Notes were issued pursuant to an Indenture, dated April 1, 2025, between the Company and U.S. Bank Trust Company, National Association (the "Trustee"), as trustee.

On June 17, 2025, we completed a private offering of $2,250 million aggregate principal of 0.00% Convertible Senior Notes duethe 2032 (theNotes, "Convertible 2032 Notes" and, collectively withplus the Convertibleexercise 2030 Notes,of the "Convertibleoption Notes"). Pursuant to the purchase agreement between the Company andby the initial purchaser of the Notes,2032 the Company granted the initial purchaser an optionNotes to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued,purchase up to an additional $450 million aggregate principal amount of 2032 Notes. The Convertible 2032 Notes are general unsecured obligations of the Company. The Convertible 2032 Notes were issued pursuant to an Indenture, dated June 17, 2025, between the Company and the Trustee, as trustee.