FaZe Clan reveals business workings in latest SEC filing

by Adam Fitch  · 
FaZe Clan reveals business workings in latest SEC filing
Twitter: FaZe Clan

FaZe Clan, a North American entertainment company and esports organization, has shared more insights into its business through its latest SEC filing.

Money talks: FaZe Clan lost $9.3M in the second quarter of 2022.

  • The organization expected to receive $218M in capital through its merger which made it a public company, but it actually received $100.2M.
  • Much like with its financial miscalculations in 2021, FaZe is now anticipating that it will have higher costs of revenue and greater administrative expenses than it had forecasted for 2022.
  • Additionally, it now expects that its total revenue will be 20% shy of what it was predicted to be for the year.
  • For context, FaZe Clan's Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2021 was $9.7M less than projected. The organization explained that its general expenses for the year were higher than anticipated, whereas its revenue was "at least" 20% lower than leadership had estimated.

Over-reliance? Esports organizations are largely dependent on sponsorships.

  • FaZe Clan revealed that its now-defunct sponsorship with energy drink brand G Fuel made for 12% of the revenue it generated in 2021.
  • For the first half of the year, sponsorships represented 60.4% of its total revenue. In 2021 and 2020 this figure was 45% and 43%, respectively.
  • It was also indirectly revealed, by explaining a bonus paid to its Chief Strategy Officer, that cryptocurrency company MoonPay's initial sponsorship payment to FaZe was $6M.
  • While known for housing many popular content creators, the following statistic about the organization's income may surprise some. A single content creator accounted for "approximately 17%" of FaZe Clan's total revenue for the first half of 2022.

Payroll: The filing also revealed the financial rewards for FaZe's leaders.

  • Lee Trink, Chief Executive Officer, receives $600K in salary and is guaranteed to receive at least $600K in bonuses, annually.
  • Amit Bajaj, former Chief Financial Officer, received $350K in salary in 2021 as well as a bonus of $175K.
  • Kai Henry, Chief Strategy Officer, receives $275K in salary, an annual discretionary bonus, and up to 5% net commission on "any new venture" that he leads. This includes FaZe Clan's MoonPay partnership.