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FaZe Clan falling $100m short of financial target may impact growth in Brazil

FaZe Holdings Inc released an array of financial details as part of their SEC filing.

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Following their registration on the Nasdaq stock market in mid-Jul., FaZe Holdings Inc has released the required filings to the Securities and Exchange Commission, which gives a deep look into their current financials.

Notably, their Jul. merger with B. Riley Principal 150 Merger Corp, which allowed them to be listed on the Nasdaq was expected to raise $218 million. However, it only raised $100.2 million.

Falling short of a financial target by $117.8m is bound to cause issues and the filing stated as follows:

Accordingly, we have less cash available to pursue our anticipated growth strategies and new initiatives than we projected. This may cause significant delays in, 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 lone presence in Brazil.

In particular, FaZe detailed plans to monetise their global audience further as they stated that “[FaZe’s] historical sponsorship and talent deals have been largely with US-domestic partners” and that they are “working to build the infrastructure necessary to monetize our brand and grow brand awareness outside of North America… with plans for a significant rollout in 2022”.

For example, while the company has caught a lot of attention with their recent partnerships with Disney, McDonalds, DoorDash, Naruto, DC Comics, and the NFL, these are only available to American fans. They planned to grow similar partnerships in regions such as Brazil, however, this growth will likely be delayed due to the $100m in lower earnings than expected.

The filing states that during the first six months of 2022, 41.9% of FaZe’s audience was from outside of North America, but they made up only 9% of revenue.

We plan on expanding our global brand presence in international markets by following the same strategy we have successfully executed in the U.S.: developing and signing talent, expanding our content platforms to produce targeted content internationally, and leveraging the growth of digital and social platforms.

For fans of the Brazilian Rainbow Six roster, this means that despite their success -- they won the Sweden Major and were a single round away from the Berlin Major title -- FaZe’s growth into Brazil may slow this year and may not be as deep as the company wished.

This is in contrast to Team Liquid, who this year launched a localised Brazilian store and released their fan engagement platform, Liquid+, in the region on Sep. 1. FaZe still lack a localised store, with items being sold on the Fallen Store instead

To help with these plans, FaZe on Thursday, Aug. 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 made clear just how important sponsorships were 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 FaZe’s G Fuel sponsorship made up 12% of the companies revenue. This is notable as the 10-year-long G Fuel-FaZe Clan partnership ended in May of this year. Most of FaZe’s partners currently do not have a notable presence in Brazil.

More details surrounding FaZe Clan will be released at the end of the month in their third quarter financial report.

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