GameStop (NYSE:GME) shares dropped more than 4% intra-day today after the company reported first-quarter revenue that fell short of expectations, overshadowing an unexpected profit.

The company posted adjusted earnings of $0.17 per share—well ahead of Wall Street's $0.04 estimate—while revenue came in at $732.4 million, missing forecasts of $754.2 million. The stronger bottom-line performance was not enough to offset concerns about falling sales, particularly as hardware and accessories revenue slumped roughly 32%.

Despite returning to profitability with net income of $44.8 million, GameStop continues to face headwinds from the industry-wide shift toward digital game purchases. In response, the company has closed hundreds of U.S. stores and expanded its e-commerce initiatives.

However, international restructuring charges pushed the company to an operating loss of $10.8 million, adding to investor caution. The mixed report underscores the ongoing challenges GameStop faces in navigating its digital transformation.