GameSquare Sells 25.5% Interest in FaZe Media for $9.5 Million
GameSquare has sold a 25.5% interest in FaZe Media for $9.5 million to an entity controlled by FaZe Media CEO FaZe Banks. This transaction follows an $11 million investment by Matt Kalish for a 49% interest in FaZe Media, valuing the business at $40 million. Despite the sale, GameSquare retains controlling voting interest and will continue consolidating FaZe Media's financials. Additionally, GameSquare holds 100% ownership of FaZe Esports, a leading esports organization. The proceeds from the sale will be used to invest in growth and support working capital. GameSquare's recent strategic moves include several non-core asset sales generating over $36 million in non-dilutive capital, refining their business model for long-term growth.
- GameSquare sold a 25.5% interest in FaZe Media for $9.5 million, valuing the business at $40 million.
- Retained controlling voting interest in FaZe Media, ensuring continued financial consolidation.
- Proceeds from the sale will be used for growth investments and supporting working capital.
- GameSquare continues to own 100% of FaZe Esports.
- Generated over $36 million in non-dilutive capital from recent transactions.
- FaZe Media had revenue of $30 million for the twelve months ended March 31, 2024.
- FaZe Esports had revenue of $11.3 million for the twelve months ended March 31, 2024.
- The purchaser has the option to acquire more shares at fair market value, creating potential future dilution.
- GameSquare's market capitalization of $32.5 million is significantly lower than the valuation of FaZe Media.
Insights
From a financial perspective, the sale of a 25.5% stake in FaZe Media for
Moreover, GameSquare retains voting control of the transferred shares for two years, ensuring that it can still influence major business decisions. The proceeds from this transaction are earmarked for growth investments and working capital, which should positively impact operational scalability and efficiency.
However, retaining only 25.5% equity might dilute GameSquare's future gains from FaZe Media's success, especially if FaZe Media capitalizes on new licensing and sponsorship opportunities. Investors should weigh the potential short-term benefits of immediate cash influx against the long-term value appreciation of maintaining a larger equity stake.
Evaluating the market implications, FaZe Media's focus on expanding its brand through licensing and sponsorships aligns with the broader industry trend of monetizing digital IP. The company's ability to engage Gen Z and Millennial audiences makes it an attractive partner for brands seeking to tap into these demographics. The involvement of FaZe Banks, a key figure in the gaming community, could rejuvenate the brand's innovative edge and drive consumer loyalty.
However, market analysts should consider the competitive landscape. The esports and gaming industry is highly dynamic, with new players frequently entering the market. While FaZe Media has a solid foundation and reputable brand, sustained success will depend on its ability to innovate and stay relevant amidst evolving consumer preferences.
Additionally, FaZe Media's projected expansion into products, merchandise and events could open new revenue streams, enhancing its market position. For retail investors, the emphasis should be on monitoring the company's execution of these strategies and its ability to convert brand equity into tangible financial results.
Transaction follows
GameSquare to retain controlling voting interest in FaZe Media, and will continue to consolidate FaZe Media's financial results in its financial statements
GameSquare continues to own
FRISCO, TX / ACCESSWIRE / June 18, 2024 / GameSquare Holdings, Inc. (NASDAQ:GAME), ("GameSquare", or the "Company"), today announces that it has sold a
Justin Kenna, CEO of GameSquare stated, "Today's announcement is a win-win for GameSquare, FaZe Media, and the greater FaZe Clan community. Since completing the acquisition of FaZe Clan in March 2024 our strategy has been focused on reigniting the FaZe brand by returning its founders in a meaningful way. With the support of Matt Kalish and his direct investment in FaZe Media, we structured the new business as a creator-led IP and media company. Today's announcement solidifies this approach by providing access to a significant stake in the business and aligning FaZe's founders in the success of the brand."
FaZe Media is focused on expanding the value of the FaZe brand IP and returning creative control of the brand to its founding leaders who created one of the most influential global internet brands dedicated to gaming, esports and youth audiences. FaZe Media will seek to expand the licensing and sponsorship opportunities for the FaZe brand across many categories, as well as deliver products, merchandise, events and more under the FaZe brand.
Transaction Details:
An entity controlled by FaZe Media's CEO FaZe Banks acquired a
GameSquare will continue to provide certain corporate and agency services to FaZe Media as part of the agreement.
FaZe Media had revenue of
FaZe Esports
GameSquare will continue to own
FaZe Esports had revenue of
Mr. Kenna, continued, "Retaining ownership in FaZe Media demonstrates our belief in the value of the FaZe brand and commitment to FaZe Banks' vision. It allows us to share in the upside growth potential of FaZe Media, while dedicating more resources to our proven esports growth strategy. After growing our prior esports team by over
Recent Transactions
Since the Company's inception in 2020, GameSquare has followed a two-pronged growth strategy focused on growing revenue organically by helping global brands reach esports, gaming, and youth audiences, and by pursuing acquisitions that add capabilities, increase scale, unlock cost savings, empower fans and creators, and drive value for shareholders.
As part of GameSquare's acquisition strategy and focus on profitability, GameSquare has divested certain non-core assets aimed at streamlining its business, adding non-dilutive capital, and prioritizing the Company's high-growth, high margin media, technology and esports assets. As a result, GameSquare has completed the following transactions and asset sales:
- In December 2023, sold non-core radio business assets for
$3.4 million at a valuation of approximately 1.8x trailing 12-month revenue - In March 2024, sold Complexity Gaming for total consideration of
$10.4 million at a valuation of approximately 1.0x trailing 12-month revenue - In May 2024, closed an
$11 million investment into FaZe Media from Matt Kalish funding FaZe Media's business and adding a proven, strategic investor - In June 2024, sold non-core content management software ("CMS") and PR distribution assets for a total consideration of
$2.2 million at a valuation of approximately 1.4x trailing 12-month revenue - In June 2024, sold a
25.5% interest in FaZe Media for$9.5 million , valuing the organization at approximately$40 million
Mr. Kenna concluded, "We are focused on optimizing our business model to create a best-in-class platform of media, technology and esports assets that help brands reach esports, gaming and youth audiences. I am pleased with the progress we have made over the past seven months, as we have added over
*Proforma revenue for the twelve months ended March 31, 2024, excludes Complexity revenue and includes FaZe Clan revenue.
About GameSquare Holdings, Inc.
GameSquare's (NASDAQ: GAME) mission is to revolutionize the way brands and game publishers connect with hard-to-reach Gen Z, Gen Alpha, and Millennial audiences. Our next generation media, entertainment, and technology capabilities drive compelling outcomes for creators and maximize our brand partners' return on investment. Through our purpose-built platform, we provide award winning marketing and creative services, offer leading data and analytics solutions, and amplify awareness through FaZe Clan, one of the most prominent and influential gaming organizations in the world. With an audience reach of 1 billion digitally native consumers across our media network and roster of creators, we are reshaping the landscape of digital media and immersive entertainment. GameSquare's largest investors are Dallas Cowboys owner Jerry Jones and the Goff family.
To learn more, visit www.gamesquare.com.
Forward-Looking Information
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the Company's and FaZe Media's future performance, revenue, growth and profitability; and the Company's and FaZe Media's ability to execute their business plans.. These forward-looking statements are provided only to provide information currently available to us and are not intended to serve as and must not be relied on by any investor as, a guarantee, assurance or definitive statement of fact or probability. Forward-looking statements are necessarily based upon a number of estimates and assumptions which include, but are not limited to: the Company's and FaZe Media's ability to grow their business and being able to execute on their business plans, the Company being able to complete and successfully integrate acquisitions, the Company being able to recognize and capitalize on opportunities and the Company continuing to attract qualified personnel to supports its development requirements. These assumptions, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: the Company's ability to achieve its objectives, the Company successfully executing its growth strategy, the ability of the Company to obtain future financings or complete offerings on acceptable terms, failure to leverage the Company's portfolio across entertainment and media platforms, dependence on the Company's key personnel and general business, economic, competitive, political and social uncertainties including impact of the COVID-19 pandemic and any variants. These risk factors are not intended to represent a complete list of the factors that could affect the Company which are discussed in the Company's most recent MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. GameSquare assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Corporate Contact
Lou Schwartz, President
Phone: (216) 464-6400
Email: ir@gamesquare.com
Investor Relations
Andrew Berger
Phone: (216) 464-6400
Email: ir@gamesquare.com
Media Relations
Chelsey Northern / The Untold
Phone: (254) 855-4028
Email: pr@gamesquare.com
SOURCE: GameSquare Holdings, Inc.
View the original press release on accesswire.com
FAQ
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