The shares of GameStop has risen after the retailer reported its first quarterly profit in two years.

For the first time in two years, GameStop reported a quarterly profit on Tuesday, capping off its fiscal year on a high note in the holiday quarter after dealing with sales losses, inventory issues, and cash flow pressure.

During premarket trading on Wednesday, the company’s stock increased by more than 40%.

Net sales for the quarter ending Jan. 28 fell marginally to $2.23 billion from $2.25 billion in the previous year’s fourth quarter. The video game store also earned $48.2 million, or 16 cents per share, compared to a loss of $147.5 million, or 49 cents, the previous year.

GameStop did not issue financial guidance and has not done so since the pandemic’s inception. Its results cannot be compared to Wall Street estimates since the firm is covered by too few analysts.

The retailer had been attempting to return to profitability and had done it in part by decreasing costs. Selling, general, and administrative expenses were $453.4 million during the quarter, or 20.4% of sales, compared to $538.9 million, or 23.9% of sales, the previous year.

On an investor call, CEO Matt Furlong stated that the business will enter 2023 with additional plans to slash excess expenses, especially in European markets where it has already exited and begun to pull out of several countries. He also stated that GameStop is considering expanding into higher-margin areas such as toys.

Previously, GameStop was riding some short-term, meme-stock momentum, but that has since flattened off, and the company has made progress in right-sizing its business by cleaning up its inventory levels and overhauling its cost structure.

The stock finished at roughly $18 per share on Tuesday, a significant drop from its 52-week high of nearly $50 about a year ago.

A leadership shake-up in 2021 re-energized GameStop’s turnaround strategy, putting Furlong, an Amazon veteran, at the helm and adding Ryan Cohen, Chewy founder, and former Bed Bath & Beyond activist investor, as board chair. In addition, the corporation lay off employees and changed its chief financial officer.

As the video game industry evolves, the store has been seeking to improve its real estate assets and grow its online business.

GameStop witnessed $5.93 billion in sales for the whole fiscal year, down slightly from $6.01 billion in fiscal 2021, and grew revenues from its collectibles segment, which the retailer hopes would drive long-term growth.

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GameStop, like many other retailers, had supply chain delays, resulting in a backlog of goods after previously attempting to fulfill high demand. According to its fourth-quarter balance sheet, the company still has $682.9 million in inventory, down from $915 million a year earlier.

GameStop has been attempting to boost its cash balance as part of its recovery strategy. This quarter, it had $1.39 billion in cash and cash equivalents.

While dealing with the responsibilities of its physical presence, the corporation has been searching for its digital identity. So far, their experiments have resulted in a few blunders.

It began an ill-fated cooperation with the now-defunct cryptocurrency exchange FTX in September. The firms intended to work together on e-commerce marketing, and GameStop planned to sell FTX gift cards in its stores. Two months later, GameStop announced on Twitter that it was “winding down” the agreement and would refund everyone who had purchased an FTX gift card in one of its stores.

Furthermore, since July, the company has been experimenting with an NFT marketplace. That debut occurred amid talk of a “crypto winter,” as cryptocurrencies underwent widespread cooling following their 2021 rally. The marketplace witnessed an initial rise in activity, but it has since leveled out and may not be the ticket to the stable digital presence that the corporation had hoped for.

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Nonetheless, Furlong stated on a conference call with investors that the company is better positioned than in 2021 when many “predicted we were headed for bankruptcy.”

“GameStop is a much healthier business today than it was at the beginning of 2021,” he explained.

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