GameStop Corp (NYSE: GME) Q1 2022 earnings call dated Jun. 01, 2022
Matt Furlong — Chief Executive Officer
Greetings, and welcome to the GameStop First Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Matt Furlong, CEO. Thank you, Matt. You may begin.
Matt Furlong — Chief Executive Officer
Thank you, and good afternoon. We appreciate all of our stockholders’ continued passion and support. The enthusiasm remains a differentiator and an extra motivator for all of us at GameStop. We don’t take it for granted and never will.
Before going over this past quarter’s initiatives and results, I also want to once again thank our team for continuing to bring strong focus and intensity to our mission. Change is continuing to be embraced across our stores, fulfillment centers and offices. A constant emphasis on the customer is taking hold up and down the organization. This will remain key as we pursue sustained sales growth, establish broader offerings in consumer electronics and launch new products aligned to the long-term future of gaming.
During Q1, we specifically focused on two main areas: continuing to rebuild and strengthen our commerce business after years of underinvestment, and pursuing growth opportunities in the cryptocurrency, NFT and Web3 gaming verticals, all of which we expect to be increasingly relevant for gamers of the future. With respect to our commerce business, we kept working to pragmatically expand product selection, improve delivery speeds and strengthen the in-store and online shopping experience. We also made additional investments in our assortment, infrastructure, technology and talent. Our sizable Q1 investments should help us round out our rebuild cycle.
With regard to new offerings geared to the future of gaming, our blockchain team continued to drive progress when it comes to advancing new products, deepening partnerships and establishing GameStop’s presence in digital asset communities. An output of these efforts was last month’s launch of the GameStop Wallet, a digital asset wallet that allows gamers and others to store, send, receive and use cryptocurrencies and NFTs across decentralized apps. The wallet, which has significant downloads and a 5-star rating in the Chrome store, will enable transactions on our new NFT marketplace when it launches in the second quarter.
We firmly believe that digital assets are core to the future of gaming. Taken together, we believe these investments and initiatives prioritized over the past quarter are positioning us to become a more diversified and technology-centric business.
Let me now turn to our financial results for Q1. Net sales increased 8% to just under $1.4 billion compared to approximately $1.3 billion during the same period in 2021. As indicated in the past, long-term revenue growth is a primary metric by which we believe stockholders should assess our execution. SG&A was $452.2 million or 32.8% of sales compared to $370.3 million or 29% of sales in last year’s first quarter. We reported a net loss of $157.9 million or $2.08 per diluted share compared to a net loss of $66.8 million or loss per diluted share of $1.01 in the prior year’s first quarter. There were no major one-time transformation, transaction or related costs during the period.
Turning to the balance sheet, we ended the quarter with cash and cash equivalents of $1.04 billion, roughly $340 million higher than the end of the first quarter last year. We continue to maintain a sizable cash position, even while investing in inventory to improve in-stock levels, meet heightened customer demand and mitigate the full impact of global supply chain issues. At the end of the quarter, we had no borrowings under our ABL facility and no debt other than a low interest unsecured term loan associated with the French Government’s response to COVID-19. Total liabilities compared to the first quarter of last year were down $8.4 million.
Capital expenditures for the quarter were $10.8 million, down $3.9 million from last year’s first quarter. We anticipate capex will continue to remain at modest levels as we make pragmatic investments into our infrastructure and tech. In the first quarter, cash flow from operations was an outflow of $303.9 million compared to an outflow of $18.8 million during the same period last year. This does not include the impact of an additional $76.9 million received in proceeds from digital asset sales, which is included in investing activities.
In order to meet customer demand and drive sales growth amidst the tight supply chain, we maintained inventory valued at $917.6 million as of the close of the quarter compared to $570.9 million at the close of the prior year’s first quarter. In terms of our outlook, we’re not providing formal guidance at this time.
I want to conclude by touching on the past year and our path forward in 2022. We set out 12 months ago to accomplish something unprecedented in our industry, transform a decaying brick-and-mortar retailer into a technology-led organization that meets customers’ needs through stores, through e-commerce properties and through emerging digital marketplaces and online communities.
Our growth and the launch of new tech products such as our digital asset wallet and the upcoming NFT marketplace demonstrate that we are, in fact, starting to transform. In the quarters and years ahead, we’re going to continue embracing change, putting the customer first and focusing on long-term stockholder value.
I’ll leave it there for this quarter. As always, our Board and management appreciate the enthusiasm and support from those who matter most, our customers, employees and, of course, GameStop’s stockholders. Thank you.
[Operator Closing Remarks]
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