GameStop Corp.

On October 7, 2025, the Company, announced that the Board declared a distribution (the “Warrant Distribution”) to the holders of record of the Company's class A common stock ("Common Stock") and holders of the Convertible Notes, in the form of warrants to purchase shares of Common Stock (the “Warrants”). The Warrants were issued on the terms and conditions described in the Warrant Agreement (as defined below) and were distributed on October 7, 2025, to the record holders of the Common Stock and the Convertible Notes as of the close of business on October 3, 2025 (the “Record Date”).

Pursuant to the terms of the Warrant Agreement between the Company, Computershare Inc., and its affiliate, Computershare Trust Company, N.A., as Warrant Agent (the “Warrant Agreement”), each holder of record of Common Stock as of the Record Date received one Warrant for every ten shares of Common Stock (rounded down to the nearest whole number for any fractional Warrant). Holders of the Convertible Notes also received Warrants on an “as converted” basis in lieu of an adjustment to the conversion rate of the Convertible Notes pursuant to the applicable indenture governing the Convertible Notes. The distribution of the Warrants to the Convertible Noteholders was at the same time and on the same terms as holders of Common Stock. Holders of the Convertible Notes will not need to convert the Convertible Notes into Common Stock in order to receive the Warrants.

Each Warrant entitles the holder to purchase, at the holder’s sole and exclusive election, at a cash exercise price of $32.00 per Warrant (the “Exercise Price”), one share of Common Stock, subject to adjustment pursuant to the provisions of the Warrant Agreement. Payment for shares of Common Stock upon exercise of Warrants must be in cash. The Warrants will expire and cease to be exercisable at 5:00 p.m. New York City time on October 30, 2026 (the “Expiration Date”).

The number of shares of Common Stock issuable upon exercise of the Warrants is subject to certain anti-dilution adjustments, including for stock dividends, share splits, share combinations, rights issuances, other distributions, spinoffs, cash dividends and tender or exchange offers.

The Warrants commenced trading on the New York Stock Exchange under the ticker “GME WS” on October 8, 2025.

In connection with the Warrant Distribution, the Company filed a prospectus supplement, dated October 7, 2025, pursuant to the Company’s existing shelf registration statement on Form S-3 ASR, effective as of October 3, 2025, registering up to 59,153,963 shares of Common Stock to be issued upon exercise of the Warrants.

During fiscal 2025, holders exercised 6,717 Warrants, resulting in the issuance of 6,717 shares of common stock and cash proceeds of $214,873.

Cash Flows

The following table presents a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statements of Cash Flows:

Operating Activities

Cash provided by operating activities was$614.8 million in fiscal 2025, comp ared to $145.7 million in fiscal 2024. The increase was primarily driven by higher operating income and increased interest income during fiscal 2025.

Cash provided by operating activities in fiscal 2024 primarily reflected the impact of net income, a decrease in merchandise inventories, and a decrease in receivables, partially offset by decreases in accounts payable and accrued liabilities.

Investing Activities

Cash used in inve sting activities was $3,209.8 million infiscal 2025, compared to cash provided by investing activities of $265.1 million in fiscal 2024.

Cash used in fiscal 2025 primarily reflected purchases of marketable securities and the purchase of digital assets, partially offset by proceeds from the sale and maturity of marketable securities.

Cash provided by investing activities in fiscal 2024 primarily resulted fromthe maturity of marketable securities and proceeds from the sale of property and equipment in our Europe segment, partially offset by purchases of marketable securities and routine capital expenditures.

Financing activities

Cash provided by financing activities totalled $4,146.2 million in fiscal 2025, compared to $3,443.0 million in fiscal 2024.

Cash provided by financing activities in fiscal 2025 was driven primarily by $4,200 million of gross proceeds received from the issuance of convertible debt, partially offset by debt issuance costs related to the convertible notes and warrants, as well as repayments on our government-guaranteed low interest French term loans due October 2022 through October 2026.

Cash provided by financing activities in fiscal 2024 was driven primarily by $3,453.8 million of net proceeds received from the issuance and sale of shares of our Class A Common Stock under our ATM Offerings, partially offset by repayments on our government-guaranteed low interest French term loans.

Share Repurchases

On March 4, 2019, our Board of Directors approved a share repurchase authorization allowing us to repurchase up to $300.0 million of our Class A Common Stock. The authorization has no expiration date.

We did not repurchase shares during fiscal 2025, fiscal 2024 or fiscal 2023. As of January 31, 2026, we have $101.3 million remaining under the repurchase authorization.

OFF-BALANCE SHEET ARRANGEMENTS

We had no material off-balance sheet arrangements as of January 31, 2026 other than those disclosed in Item 8, Notes to the Consolidated Financial Statements, Note 16, "Commitments and Contingencies".

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by us could have a significant impact on our financial results, and actual results could differ from those estimates. Our senior management has discussed the development and selection of these critical accounting policies, as well as the significant accounting policies disclosed in Item 8, Notes to the Consolidated Financial Statements, Note 2, "Summary of Significant Accounting Policies," with the Audit Committee of our Board of Directors. We believe the following accounting policies are the most critical to aid in fully understanding and evaluating our reporting of transactions and events, and the estimates these policies involve our most difficult, subjective or complex judgments.

Valuation of Warrants

During fiscal 2025, the Company issued warrants to the record holders of the Company's Class A common stock and holders of the Convertible Notes. Each warrant entitles the holder to purchase, at the holder's sole exclusive election, one share of common stock at an exercise price, subject to adjustment pursuant to the provision of the Warrant Agreement, of $32.00. The warrants have been classified as equity in accordance with ASC 815-40 and will expire on October 30, 2026.

The valuation of the warrants involves significant judgment, and the Company estimated the fair value using the Black-Scholes option pricing model, a Level 3 valuation technique under ASC 820: Fair Value Measurements, as there was no readily observable market price for these warrants at the time of the issuance. Key inputs used in the model to determine the fair value include: the closing stock price of the Company on the issuance date, the exercise price, the expiration date, the risk-free rate, the expected dividend yield rate, and volatility. This resulted in an estimated valuation of $2.94 for each warrant.

As of January 31, 2026, the consolidated financial statements reflect a $172.9 million aggregate value for the warrants issued, including a noncash, nonrecurring interest charge of $42.2 million for the warrants issued to the holders of the Convertible 2030 Notes and the Convertible 2032 Notes.

Valuation of Merchandise Inventories

Our merchandise inventories are carried at the lower of cost or market generally using the average cost method. Under the average cost method, as new product is received from vendors, its current cost is added to the existing cost of product on-hand and this amount is re-averaged over the cumulative units. Pre-owned gaming systems and other products traded in by customers are recorded as inventory at the amount of cash or store credit given to the customer. In valuing inventory, we are required to make assumptions regarding the necessity of reserves required to value potentially obsolete or over-valued items at the lower of cost or market. We consider quantities on hand, recent sales, potential price protections and returns to vendors, among other factors, when making these assumptions.

Our ability to gauge these factors is dependent upon our ability to forecast customer demand and to provide a well-balanced merchandise assortment. Any inability to forecast customer demand properly could lead to increased costs associated with write-downs of inventory to reflect volumes or pricing of inventory which we believe represents the net realizable value. A 10% change in our obsolescence reserve percentage at January 31, 2026 would have affected net earnings by approxi mately $1.2 million in fiscal 2025.

Customer Liabilities

Our GameStop Pro® rewards program allows paid members to earn points on purchases that can be redeemed for rewards that include discounts or coupons. We allocate the transaction price between the product and loyalty points earned based on the relative stand-alone selling prices and expected point redemption. The portion allocated to the loyalty points is initially recorded as deferred revenue and subsequently recognized as revenue upon redemption or expiration. The two primary estimates utilized to record the deferred revenue for loyalty points earned by members are the estimated retail price per point and estimated amount of points that will never be redeemed, which is a concept known in the retail industry as "breakage." Additionally, we sell gift cards to our customers in our retail stores, through our website and through selected third parties. At the point of sale, a liability is established for the value of the gift card. We recognize revenue from gift cards when the card is redeemed by the customer and recognize estimated breakage on gift cards in proportion to historical redemption patterns.

The two primary estimates utilized to record the balance sheet liability for loyalty points earned by members are the estimated redemption rate and the estimated weighted-average retail price per point redeemed. We use historical redemption rates experienced under our loyalty program as a basis for estimating the ultimate redemption rate of points earned. We estimate breakage of loyalty points and unredeemed gift cards based on historical redemption rates. The weighted-average retail price per point redeemed is based on our most recent actual loyalty point redemptions and is adjusted as appropriate for recent changes in redemption values, including the mix of rewards redeemed. Our estimate of the amount and timing of gift card redemptions is based primarily on historical transaction experience.

We continually evaluate our methodology and assumptions based on developments in redemption patterns, retail price per point redeemed and other factors. Changes in the ultimate redemption rate and weighted-average retail price per point redeemed have the effect of either increasing or decreasing the deferred revenue balance through current period revenue by an amount estimated to cover the retail value of all points previously earned but not yet redeemed by loyalty program members as of the end of the reporting period. A 10% change in our customer loyalty program redemption rate or a 10% change in our weighted-average retail value per point redeemed at January 31, 2026, in each case, would have affected net earnings by approxima tely $1.3 million infiscal 2025. A 10% change in our gift card breakage rate at January 31, 2026 would have affected net earnings by approximately $8.6 million in fiscal 2025. A 10% change in our reservation breakage at January 31, 2026 would have affected net earnings by approximately $1.5 million in fiscal 2025.

Income Taxes

We account for income taxes using an asset and liability approach, under which deferred tax assets and liabilities are recognized for the estimated future tax effects of differences between the financial reporting and tax bases of assets and liabilities, using enacted tax rates. Because we operate in multiple foreign jurisdictions, our global effective tax rate reflects a blend of the applicable statutory rates in those jurisdictions.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The legislation includes significant provisions, such as the permanent extension of certain provisions of the Tax Cuts and Jobs Act, modifications to the U.S. international tax framework, and the restoration of favorable business tax provisions, including the immediate expensing of domestic research and experimental expenditures. These provisions have varying effective dates beginning in 2025 and extending through through 2027. While we continue to evaluate the full impact of the legislation, the OBBBA did not have a material effect on our estimated fiscal 2025 effective tax rate.

The Organization for Economic Co-operation and Development ("OECD"), supported by more than 140 countries, has agreed to implement a global minimum corporate tax rate of 15% on certain multinational enterprises under the Pillar Two framework. These rules began taking effect across various jurisdictions in 2024 as countries enacted legislation aligned with the OECD model. In fiscal 2025, the Company did not incur any Pillar Two top-up taxes and, therefore, did not record any related impact to the fiscal 2025 effective tax rate. We will continue to monitor additional OECD guidance and pending and enacted legislation in the jurisdictions in which we operate.

A valuation allowance is recorded when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In evaluating the realizability of our deferred tax assets, we consider a number of factors, including the remaining years available for the carryforward, applicable tax laws, projected future profitability of specific business units, and feasible tax-planning strategies. Based on this evaluation, we concluded that certain deferred tax assets are not more likely than not to be realized. As a result, our valuation allowances increased by a net of $111.9 million, reaching $403.2 million as of January 31, 2026. See Item 8, Notes to the Consolidated Financial Statements, Note 15, "Income Taxes," for additional information.

We maintain accruals for uncertain tax positions until the relevant tax years are audited by the applicable taxing authorities, the statutory periods for review expire, or new information becomes available that affects our assessment. Our liability for uncertain tax positions was $5.0 million as of January 31, 2026. Significant judgment is required in evaluating uncertain tax positions due to the inherent complexity of tax laws, varying interpretations among jurisdictions, and the impact of potential changes in tax regulations. Our estimated annual effective tax rate reflects a weighted combination of jurisdictional tax rates and projected income by jurisdiction, based on our understanding of applicable tax rules and regulations.

Judgments related to uncertain tax positions or the realizability of deferred tax assets may change as a result of new information, tax audits, or changes in tax law. If such changes occurs, our effective tax rate could fluctuate in future periods, impacting our net earnings.

RECENT ACCOUNTING STANDARDS AND PRONOUNCEMENTS

See Item 8, Notes to the Consolidated Financial Statements, Note 3, "New Accounting Pronouncements," for recent accounting standards and pronouncements.