FaZe Holdings Inc. Reports Third Quarter 2022 Financial Results
FaZe Holdings Inc. (Nasdaq: FAZE) reported a 12% year-over-year revenue increase for Q3 2022, totaling $14.0 million. Key growth drivers included brand sponsorships, content, and esports. The gross profit rose by 8.2% to $3.5 million, yielding a gross margin of 25.3%. However, the company experienced a net loss of $130.6 million, primarily due to a $116 million loss on debt extinguishment. Operating expenses increased to $18.4 million due to higher administrative costs and headcount. The company is focused on optimizing its financial structure to enhance future results.
- 12% year-over-year revenue growth, reaching $14.0 million
- Gross profit increased by 8.2%, totaling $3.5 million
- Strong growth in sponsorship and esports revenues
- Successful appointment of new CFO Christoph Pachler
- Strategic partnerships with McDonald's and The Sandbox
- Net loss of $130.6 million, significantly higher than the previous year's loss of $9.9 million
- Adjusted EBITDA loss increased to $12.0 million from $7.5 million year-over-year
- Operating expenses rose to $18.4 million due to non-recurring fees and increased headcount
Revenues up
LOS ANGELES, Nov. 14, 2022 /PRNewswire/ -- FaZe Holdings Inc. (Nasdaq: FAZE) ("FaZe" or the "Company"), the lifestyle and media platform rooted in gaming and youth culture, today filed its financial results for the third quarter ended September 30, 2022. Summary financial results are included with this press release.
- Third quarter sales totaled
$14.0 million , an increase of12% year-over-year - Appointed Christoph Pachler Chief Financial Officer
- Announced partnership renewal with McDonald's USA
- Partnered with The Sandbox in inaugural entry to the metaverse, opening the door to a gamified FaZe World that allows users to experience and engage with FaZe Clan and FaZe talent
- Xfinity became the official internet and mobile partner of FaZe Clan, with plans to celebrate creators and the gaming industry's biggest moments
- FaZe Clan's Rainbow Six team won the Stage 2 Elite Six Cup (Copa Elite Six)
- FaZe Swagg announced a landmark streaming deal moving exclusively to YouTube
- Collaborated with RESPAWN to release a line of limited-edition gaming chairs
- Entered Apex Legends, establishing FaZe Clan's 12th professional esports team
"Third quarter revenues were up
Christoph Pachler, Chief Financial Officer, commented, "To solidify our foundation for growth, we are closely examining opportunities to optimize our cost structure, and have executed on
Revenues for the third quarter were
Gross profit for the third quarter increased by
Operating expenses were
Net loss was
FaZe Holdings Inc. will host a webcast and Q&A session today at 2:00 p.m. Pacific Time to discuss the Company's third quarter financial results. The webcast of the conference call can be accessed as follows:
Event: FaZe Holdings Inc. Third Quarter 2022 Earnings Conference Call
Date: Monday, November 14, 2022
Time: 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time)
Webcast: https://events.q4inc.com/attendee/737031907
Toll Free Dial-In: 1 (888) 440-6928
Toll Dial-In: 1 (646) 960-0328
Dial-In Conference ID: 1341513
An archived webcast of the conference call will also be accessible on FaZe Holdings Inc.'s Investor Relations page, https://investor.fazeclan.com.
FaZe Holdings Inc. (Nasdaq: FAZE) is a digital-native lifestyle and media platform rooted in gaming and youth culture, reimagining traditional entertainment for the next generation. Founded in 2010 by a group of kids on the internet, FaZe Clan was created for and by Gen Z and Millennials, and today operates across multiple verticals with transformative content, tier-one brand partnerships, a collective of notable talent, and fashion and consumer products. Reaching over 500 million followers across social platforms globally, FaZe Clan delivers a wide variety of entertainment spanning video blogs, lifestyle and branded content, gaming highlights and live streams of highly competitive gaming tournaments. FaZe Clan's roster of more than 100 influential personalities consists of engaging content creators, esports professionals, world-class gamers and a mix of talent who go beyond the world of gaming, including NFL star Kyler "FaZe K1" Murray, Lebron "FaZe Bronny" James Jr., Lil Yachty aka "FaZe Boat", Offset aka "FaZe Offset" and Snoop Dogg aka "FaZe Snoop." Its gaming division includes 12 competitive esports teams who have won 35 world championships. The content of any website referenced or hyperlinked in this communication is neither incorporated into, nor part of, this communication. For more information, visit www.fazeclan.com, investor.fazeclan.com and follow FaZe Clan on Twitter, Instagram, YouTube, TikTok, and Twitch.
The information in this communication includes "forward-looking statements" pursuant to the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact included in this communication, regarding the company's strategy, future operations and financial performance, estimated financial position, estimated revenue and losses, projections of market opportunity and market share, projected costs, prospects, plans and objectives of management are forward-looking statements. These forward-looking statements generally are identified by the words "budget," "could," "forecast," "future," "might," "outlook," "plan," "possible," "potential," "predict," "project," "seem," "seek," "strive," "would," "should," "may," "believe," "intend," "expects," "will," "projected," "continue," "increase," and/or similar expressions that concern strategy, plans or intentions, but the absence of these words does not mean that a statement is not forward-looking. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on the management's belief or interpretation of information currently available.
These forward-looking statements are based on various assumptions, whether or not identified herein, and on the current expectations of management and are not predictions of actual performance. Because forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions, whether or not identified in this communication, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Many factors could cause actual results and condition (financial or otherwise) to differ materially from those indicated in the forward-looking statements. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the company. Forward-looking statements speak only as of the date they are made. While FaZe Clan may elect to update these forward-looking statements at some point in the future, FaZe Clan specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing FaZe Clan's assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Investors
ir@fazeclan.com
Media
chelsey.northern@fazeclan.com
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(in thousands, except shares and per-share information) | ||||||
(unaudited) | ||||||
Three Months Ended | ||||||
September 30, | ||||||
2022 | 2021 | |||||
Revenues | $ | 14,012 | $ | 12,493 | ||
Cost of revenues | 10,470 | 11,403 | ||||
Gross profit | 3,542 | 1,090 | ||||
Operating expenses: | ||||||
General and administrative | 16,928 | 8,408 | ||||
Sales and marketing | 1,479 | 1,109 | ||||
Impairment of content assets | - | - | ||||
Loss from operations | (14,865) | (8,427) | ||||
Other (income)/expense: | ||||||
Interest expense, net | 459 | 1,517 | ||||
Change in fair value of warrant liabilities | (19) | - | ||||
Loss on debt extinguishment | 115,292 | - | ||||
Other, net | 1 | 11 | ||||
Total other (income)/expense: | 115,733 | 1,528 | ||||
Net loss | $ | (130,598) | $ | (9,955) | ||
Net loss per common share - basic and diluted | $ | (2.39) | $ | (0.50) | ||
Weighted-average number of common shares | 54,590,538 | 19,949,557 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(in thousands, except shares and per-share information) | ||||||
(unaudited) | ||||||
Nine Months Ended | ||||||
September 30, | ||||||
2022 | 2021 | |||||
Revenues | $ | 48,621 | $ | 37,756 | ||
Cost of revenues | 34,647 | 32,278 | ||||
Gross profit | 13,974 | 5,478 | ||||
Operating expenses: | ||||||
General and administrative | 39,025 | 22,720 | ||||
Sales and marketing | 3,557 | 2,470 | ||||
Impairment of content assets | 1,073 | - | ||||
Loss from operations | (29,681) | (19,712) | ||||
Other (income)/expense: | ||||||
Interest expense, net | 4,491 | 3,635 | ||||
Change in fair value of warrant liabilities | (19) | - | ||||
Loss on debt extinguishment | 115,292 | - | ||||
Other, net | 17 | (56) | ||||
Total other (income)/expense: | 119,781 | 3,579 | ||||
Net loss | $ | (149,462) | $ | (23,291) | ||
Net loss per common share - basic and diluted | $ | (4.65) | $ | (1.24) | ||
Weighted-average number of common shares | 32,144,653 | 18,757,552 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands, except shares) | ||||||
(unaudited) | ||||||
September 30, | December 31, | |||||
2022 | 2021 | |||||
ASSETS | ||||||
Current Assets: | ||||||
Cash | $ | 43,872 | $ | 17,018 | ||
Accounts receivable, net | 20,892 | 6,266 | ||||
Contract assets | 2,959 | 4,118 | ||||
Inventory | - | 6 | ||||
Content asset, net | - | 474 | ||||
Prepaid expenses | 8,833 | 944 | ||||
Other assets | 1,795 | 5,246 | ||||
Total Current Assets | 78,351 | 34,072 | ||||
Restricted cash | 600 | 600 | ||||
Property, equipment and leasehold improvements, net | 3,925 | 925 | ||||
Intangible assets, net | 947 | 738 | ||||
Other long-term assets | 679 | 733 | ||||
TOTAL ASSETS | $ | 84,502 | $ | 37,068 | ||
LIABILITIES, MEZZANINE EQUITY AND | ||||||
LIABILITIES: | ||||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | $ | 11,311 | $ | 28,381 | ||
Short-term debt | - | 3,148 | ||||
Contract liabilities | 12,199 | 7,902 | ||||
Other current liabilities | - | 7 | ||||
Total Current Liabilities | 23,510 | 39,438 | ||||
Long-term debt, net of discounts (Note 7) | - | 70,854 | ||||
Warrant liabilities | 95 | - | ||||
Other long-term liabilities | 36 | - | ||||
Total Liabilities | 23,641 | 110,292 | ||||
COMMITMENTS AND CONTINGENCIES (Note 10) | ||||||
MEZZANINE EQUITY: | ||||||
Series A preferred stock, | - | 33,705 | ||||
STOCKHOLDERS' DEFICIT: | ||||||
Preferred stock, | - | - | ||||
Common stock, | 7 | 2 | ||||
Additional paid-in capital | 322,724 | 5,477 | ||||
Accumulated deficit | (261,870) | (112,408) | ||||
Total Stockholders' Deficit | 60,861 | (106,929) | ||||
TOTAL LIABILITIES, MEZZANINE EQUITY, AND | $ | 84,502 | $ | 37,068 | ||
This earnings release includes Adjusted EBITDA, which is a non-GAAP measure. Adjusted EBITDA is defined as net loss before share-based compensation expense, foreign currency gains and losses, interest expense, loss on extinguishment of debt, depreciation and amortization, impairment of content assets, and change in the fair value of warrant liabilities and other net income and expense. Adjusted EBITDA is used by the FaZe board and management as a key factor in determining the quality of our earnings (loss).
Adjusted EBITDA is a performance measure that we believe is useful to investors and analysts because it helps illustrate certain underlying financial and business trends relating to our core, recurring results of operations and also enhances comparability between periods.
Adjusted EBITDA is not a recognized measure under U.S. GAAP and is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. Investors should exercise caution in comparing our non-GAAP measure to any similarly titled measure used by other companies. This non-GAAP measure excludes certain items required by U.S. GAAP and should not be considered as alternatives to information reported in accordance with U.S. GAAP.
The table below presents our adjusted EBITDA, reconciled to our net loss, the most directly comparable U.S. GAAP financial measure, for the periods indicated.
For the Nine Months Ended | ||||||||
($ in thousands) | 2022 | 2021 | ||||||
Net loss | $ | (149,462) | $ | (23,291) | ||||
Adjusted for: | ||||||||
Stock base compensation expense | 4,996 | 655 | ||||||
Foreign currency gains and losses | 3 | - | ||||||
Interest expense, net | 4,491 | 3,635 | ||||||
Loss on extinguishment of debt | 115,292 | - | ||||||
Depreciation and amortization of intangible assets and property plant and equipment | 1,230 | 675 | ||||||
Impairment of content assets | 1,073 | - | ||||||
Change in the fair value of warrant liabilities | (19) | - | ||||||
Other income and expense, net | 17 | (56) | ||||||
Adjusted EBITDA | $ | (22,379) | $ | (18,382) | ||||
For the Three Months Ended | ||||||||
($ in thousands) | 2022 | 2021 | ||||||
Net loss | $ | (130,598) | $ | (9,955) | ||||
Adjusted for: | ||||||||
Stock base compensation expense | 2,337 | 655 | ||||||
Foreign currency gains and losses | 3 | - | ||||||
Interest expense, net | 459 | 1,517 | ||||||
Loss on extinguishment of debt | 115,292 | - | ||||||
Depreciation and amortization of intangible assets and property plant and equipment | 567 | 241 | ||||||
Impairment of content assets | - | - | ||||||
Change in the fair value of warrant liabilities | (19) | - | ||||||
Other income and expense, net | 1 | 11 | ||||||
Adjusted EBITDA | $ | (11,958) | $ | (7,531) | ||||
While not included in the adjustments above, management also removes certain expenses for internal reporting purposes, as they are unpredictable and not considered core to our operations. These expense adjustments that are utilized for internal reporting purposes include expenses related to legal settlements, legal fees outside of the ordinary course of business, and severance. For the three and nine months ended September 30, 2022, legal settlements were immaterial. For the three and nine months ended September 30, 2021, legal settlements totaled
____________________ |
1 Adjusted EBITDA is a non-GAAP financial measure. See "Non-GAAP Reconciliation" for our definition of, and additional information about, Adjusted EBITDA and for reconciliation to net loss, the most directly comparable U.S. GAAP financial measure. |
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SOURCE FaZe Clan
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