FaZe Clan reveals business woes in new SEC filing

by Adam Fitch  ·  Updated 
FaZe Clan reveals business woes in new SEC filing

North American esports organization FaZe Clan's planned public listing via merger may be in trouble following business woes revealed through a new SEC filing.

The basics: The industry made a big song and dance about FaZe Clan being esports' first organization to be valued at $1 billion.

  • FaZe Clan revealed in October 2021 that it was set to go public at roughly a $1B valuation through a merger with B. Riley Principal 150 Merger Corp.
  • At the time, the org estimated that it would generate $50M in revenue in 2021, though a new filing with the SEC highlights a different picture than the one it painted in October.
  • The merger was predicated upon FaZe Clan hitting the estimations it had set but, as of April 28, the financial forecasts of the company have all been revised and reduced — a move that some feel marks the end of the org's merger hopes.

The specifics: The transaction was originally earmarked to be completed in the first quarter of 2022.

  • The S-4 filing reveals that FaZe Clan's adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2021 was $9.7M less than what it had projected.
  • It goes on to reveal that the companies now expect FaZe's 2022 financial performance to differ from what had been forecasted, and the results for 2023 through 2025 may also take a hit based on what was estimated prior.
  • It attributes the changes to "current market trends" which may actually "completely stunt, or limit the scope of, our planned acquisition strategy," the costs of revenue to be higher than what FaZe had originally projected, an increase in general and administrative expenses upon what was projected, and lower revenues of "at least [20%]" than projected.
  • The filing explains that "numerous significant assumptions were made" regarding the organization's financial performance and evidently it's not been capable of producing the results that were expected.
  • Following such deviations from projections, the management of both FaZe and B. Riley Principal 150 Merger Corp are engaging in "ongoing discussions" regarding the current status and future position of the esports org's business. However, the SPAC's approval of this amended filing is said to demonstrate "its continuing support for the transaction."
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