FaZe Clan Loses $100M From Financial Goal, Could Impact Brazil Growth — SiegeGG
Following their Nasdaq listing in mid-July, FaZe Holdings Inc filed required filings with the Securities and Exchange Commission, which provides an in-depth look at their current finances.
Notably, their July merger with B. Riley Principal 150 Merger Corp, which got them listed on Nasdaq, was expected to raise $218 million. However, he only raised $100.2 million.
Missing a financial target of $117.8 million is bound to cause problems and the filing states the following:
As a result, we have less cash than we anticipated to pursue our planned growth strategies and new initiatives. This could cause material delays or limit the scope of our planned acquisition strategy and our planned international expansion.
The international expansion in question refers to their pilot markets of Brazil, Europe, and Thailand, with their Rainbow Six roster and streamers being their sole presence in Brazil.
In particular, FaZe detailed their plans to further monetize their global audience stating that “[FaZe’s] historic sponsorship and talent deals have largely been with US domestic partners” and that they “are working to build the infrastructure necessary to monetize our brand and grow brand awareness outside of America North…with plans for a major deployment in 2022”.
For example, while the company has garnered a lot of attention with its recent partnerships with Disney, McDonalds, DoorDash, Naruto, DC Comics, and the NFL, these are only available to US fans. They planned to develop similar partnerships in regions such as Brazil, however, this growth will likely be delayed due to the $100 million in revenue falling short of forecasts.
The filing says that in the first six months of 2022, 41.9% of FaZe’s audience came from outside of North America, but they only accounted for 9% of revenue.
We plan to expand our global brand presence in international markets by following the same strategy we have successfully implemented in the United States: developing and recruiting talent, expanding our content platforms to produce content targeted internationally and leverage the growth of digital and social platforms.
For fans of Rainbow Six’s Brazilian roster, this means that despite their success – they won the Sweden Major and were one round away from the Berlin Major title – FaZe’s growth in Brazil may slow this year and not not be as deep as the company wished.
This contrasts with Team Liquid, which launched a localized Brazilian store this year and launched its fan engagement platform, Liquid+, in the region on September 1. FaZe still does not have a localized store, with items being sold on the Fallen store In place
To help with those plans, FaZe on Thursday, August 25, hired Christoph Pachler as the company’s new chief financial officer. He will oversee all aspects of FaZe’s financial management and will likely have a very busy year ahead of him. Pachler previously worked for Sony and Playboy Enterprises, helping the latter company go private in 2011.
The filing also showed how important sponsorships are to FaZe Clan’s business, with 60.4% of all revenue coming from “commercial revenue” in the first half of this year, while last year sponsorship FaZe’s G Fuel accounted for 12% of company revenue. . This is notable as the 10-year G Fuel-FaZe Clan partnership ended in May of this year. Most FaZe partners currently do not have a notable presence in Brazil.
More details about FaZe Clan will be released at the end of the month in their third quarter financial report.