FaZe Clan reports $53 million loss despite increased revenue

Esports and gaming lifestyle organization FaZe Clan has released its 2022 Q4 financial results, recording a total of $70 million in revenue, but closes its first financial year as a public company with a $53.2 million net loss.

FaZe’s total net loss was actually as high as $168.5 million, but this figure includes a one-off debt extinguishment charge related to going public, with ‘Legacy FaZe’ debt converted into common stock.

The organization boasts that their topline revenue figure was “near the top of our guidance,” with a 32% year-over-year boost to $70 million. The growth, FaZe says, was “driven by a nearly 70% increase in brand sponsorship revenue,” as well as growth in their esports operations.

The easing of the global pandemic, tournament wins and “higher player transfer fees and league participation” are cited for the boost to esports revenue.

However, there was a decline in revenue from “consumer products” and content, but FaZe says it is “placing less strategic emphasis” on these parts of their business, in the short term.

FaZe net loss exceeds $50 million

Despite strong revenue, FaZe operating costs resulted in a total net loss of $168.5 million, or $53.2 million when excluding the debt extinguishment.

FaZe list a number of increasing costs “in compensation and benefits due to increased headcount, stock compensation expense, and professional services fees as a result of the growth of the business and of becoming a public company. “

Some of these costs the company addressed by laying off staff in February. On their earnings call, FaZe said they estimate that these measures will save approximately 17% in annual headcount expenses.

In the last quarter alone, FaZe’s net loss was $19.1 million – up from $13.6 million in Q4 2021.

Despite these losses, FaZe’s $37.8 million in cash and cash equivalents, it says, “will be adequate to fund our operations and support our investment plans for 2023.”

FaZe Clan’s stock woes

It’s yet to be seen how the market will react to FaZe’s Q4 financial results, but the picture of the stock’s short time on the public market so far has not been a pretty one.

It hit a new all-time low of $0.40 per share on March 20, an alarming decline from the all-time high of over $20 in August 2021.

The share price has remained depressed below $1 for more than 30 business days, prompting a deficiency notice from Nasdaq. FaZe has 180 days from the date of the notice to regain compliance – by maintaining a share price over $1 for 10 consecutive business days – or will be subject to delisting.

FaZe CEO Lee Trink, in his letter to shareholders, said, “We are optimistic as ever about the future of FaZe Clan. We believe we have a gifted roster of esports athletes and content creators, a talented and dedicated team committed to our mission, and a loyal fan base that continues to grow and engage with our brand.”

However, he also admitted that their start to life as a public company wasn’t the strongest: “to be candid, we’ve gotten off to a slower start on this journey than we would have liked.”