Q4 2022 FaZe Holdings Inc. Earnings Call

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Speaker 2: I got some money to look, huh, yeah Let's tent murder It didn't count I see the station, I'm working out I don't waste time, we're getting clout I got some money to figure out I feel like the mayor Little jacket, you a hater I'm one of the n**** who made ya I'm the creator My over time, I feel like the savior They feel like nobody could save us We have trip and we have play

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Speaker 3: At this time, we're awaiting participants and should be going live at 5 10 Eastern Standard Time. We appreciate your patience and ask that you please continue holding.

Speaker 2: They feel like nobody can save us We ain't have strength and we ain't have flavors Although we knew that nobody could play us We was on time and we was on time and we was on time and I ain't no beef with comin' to profit On life so n***a sign it Climb me, this is slime and Robert E. N***a diamonds Get money in this cold It's like a fighting chain to climb it And I put all the things behind it

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Speaker 4: I can't worry about the city.

Speaker 2: We was on time and I ain't no beef with comin' to profit Doin' life so nothin' designed to define me To slime and rob all these niggas with diamonds Get money in this cold And take a fight and change the climate And I put all of these niggas in the

Speaker 1: I need to watch the big down. It's time to go crazy. My turn around. Yeah. Public public house. Make it out. I don't wait. Black man. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target. Target.

Speaker 1: This was PRPLPRNCH, and I'm out!

Speaker 1: And I put all the demons behind it All my shoes are coming in alignment Say we got people who you ducking and hiding All my shooters is coming to find it For the block, for the block, for the top, no stop Can't you see, yeah yeah Had a bar, had a gang like me Had a bar like an NDP Jammin' for the block to the top Kidney sex, feelings right, so me It's out of place, had a gang like me Had a bar like an NDP and a...

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Speaker 4: I Black those all me again. Like me, the iabolic me and.

Speaker 2: I'm working out. I don't waste time with getting cut. I got some money to figure out. I feel like the mayor Don't jack it to a hater. I'm nature i'm the creator My

Speaker 3: If you would like to withdraw your question, please press star 1 again. If anyone should require operator assistance during the conference call, please press star, then zero. Additionally, before getting started, please be advised that due to a technical error, the company reposted its 2022 shareholder letter.

Speaker 3: to the Investor Relations site at approximately 5 p.m. Eastern Time. Players are advised to access this updated version of the letter.

Speaker 3: I would now like to introduce your host for today's conference, Kyron Johnson, General Counsel. Please go ahead, sir. The conference is being held.

Speaker 3: like to introduce your host for today's conference, Kyron Johnson, General Counsel. Please go ahead, sir. Thank you everyone for joining us.

Speaker 5: With me today are Lee Trink, Chief Executive Officer, and Christophe Packler, Chief Financial Officer.

Speaker 5: Before we begin, I want to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws.

Speaker 5: These include statements of FASE Holdings Financial Outlook, the company's plans and timing for product development and sales, and any other statements besides the historical facts.

Speaker 5: These forward-looking statements are based on management's current expectations and involve risks and uncertainties.

For discussion of risk factors and uncertainties that may affect our performance or cause actual results to differ materially from these statements, please review the most recent SCC filings, which are available on our website at baysquiet.com.

In addition, during this call, we may discuss certain non-GAAP financial measures.

Additional information regarding these non-GAAP measures, including reconciliation of these measures to the most directly comparable GAAP measures, is contained in our shareholder letter and also available on our website at faseclan.com.

The content of this conference call contains time-sensitive information, accurate only as of the date of this broadcast.

Except as required by law, FASE Holdings undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call.

With that, I am pleased to turn over the call to our CEO , Lee Trink.

Thank you, Kyron, and hello, everyone. Thank you for joining us today on our first full year earnings call as a public company.

I'd like to strongly encourage everyone to read the shareholder letter we posted on our investor relations website, which includes a full update on the state of the business and the opportunities we see ahead of us. On the call today, I'd like to highlight our financial results.

and discuss our strategic priorities for 2023 before turning the call over to our CFO , Kristof, to review the financials in more detail.

for 2023 before turning the call over to our CFO Kristof to review the financials in more detail.il.

I am proud to announce that we achieved revenue of $70 million hitting our target for the year.

Despite a challenging market environment, particularly since our public listing in July , we've secured new brand partners, welcomed new talent to our roster, and expanded our network to reach over half a billion people worldwide. These achievements are a good reminder of the influence of the phase brand and what collectively we will keephey fork behind our borders.

can achieve.

With Nike in particular, we've previously had other opportunities in the category, but we remain patient for the right deal.

We knew Nike was the best fit for us and we couldn't be more thrilled with the results of our first product collaboration.

We also can't wait to show you what we have in store next.

So we see great things ahead, but we also know we're operating in a difficult near-term environment.

We have reevaluated our goals and initiatives in 2023 to better align with our capital position.

We've streamlined the business regarding staffing and other cost savings to establish a healthy foundation for embarking on a path to profitability.

I am happy to report that we're making significant progress and we continue to look for cost savings in the business.

For the coming year, we are diligently focused on our core revenue drivers.

sponsorships, talent, and esports.

The Phase Talent Network sits at the very heart of the Phase brand.

We're refreshing and optimizing our talent network to concentrate on high engagement talent to drive strength in both sponsorships and esports businesses.

Speaking of esports, our Counter-Strike team just had an historic weekend, bringing home FaZe Clan's 38th championship and becoming the first ever international roster to win the Intel Grand Slam. We're extremely proud of that.

That being said, we know the past several months have been difficult for our investors. We are committed to FASE's success and are implementing a strategy that we believe will boost growth this year, considerably reduce our losses, and put FASE in a stronger position to succeed as a business and as the economy improves.

As demonstrated by our Bleach It partners and exceptional talent, we believe the Phase brand has tremendous value and potential. We are a unique brand that sits at the nexus of Gen Z and the seismic changes in the consumption of both content and products that this digitally native generation is driving.

We look forward to capitalizing on our potential in 2023 and beyond. I'll now turn it over to Kristof to review the financials and our outlook in more detail.

Thank you, Lee, and hello, everyone.

Detailed information about our financial performance can be found in our shareholder letter, but I'd like to highlight a few key points from the full year. As Lee mentioned, we reported 2022 full year revenue of 70 million dollars.

which aligns with our plan for the year.

Revenue was primarily driven by brand partnerships, which has been our key operational focus throughout the year.

Our revenue portfolio from BrainPartnerships is diverse.

has high margin and includes such stellar household names as Porsche, McDonald's, Xfinity Comcast, DoorDash, Ghost Energy Drink, MoonPay and others, as well as a recently launched program with Nike. Our 2022 adjusted EBITDA loss of 33.5% in 2020.

this to result in a 17% reduction in annual headcount expenses with additional savings from operational efficiencies.

As we discussed during our previous earnings call,

In late 2022, we also exited capital-intensive initiatives in the content space that did not generate sufficient returns.

which will further help reduce our cost basis going forward.

We ended the year with $37.8 million in cash.

confidently held in one of America's biggest banks.

This is sufficient to fund our near-term growth plans following the reductions and cost savings initiatives we have executed.

We continue to examine further opportunities to enhance our capital structure.

While we are not providing guidance for 2020 through, in light of the macroeconomic uncertainty, we are planning for revenue growth and a significant narrowing of our adjusted EBITDA loss, following the cost reductions we have implemented.

We expect our top line to be driven by expanding our brand partnership business into new categories. And we're actively pursuing a solid pipeline of new opportunities.

We look forward to updating you as the year unfolds.

In closing, we believe we have done a lot of hard work over the past several months to position phase 4 success.

There is much more to do. Our management team and board are committed to seeing this work through and to delivering results for ourselves and our shareholders.

With that, we'd like to open the call for questions.

And as a reminder, if you do have a question, that will be star 1.

We'll go first today to Stephen Saltz with Force Family Office.

Thank you. Great job, guys. Hey, can we assume 2022 figures are likely repeatable for sponsorships in 2023? And can you provide color on the length of these sponsorship contracts? Sure. Thanks, Stephen. We'll see if somebody thoughts about how that's going to help to keep students slated

To answer your second question, typically our sponsorship deals are a year or longer. Historically, we've kept them to that length because the value increases kind of year on year. We've shown that and experienced that over the last few years. But in regard to 2023, look, we've demonstrated the ability to continue growing our partner list year after year.

Not only maintaining a high quality of sponsors, but really even improving the quality of sponsors and getting great, great sponsors. Over the years, we've moved from gaming endemic brands to iconic globally recognized brands like, as Kristof mentioned, McDonald's, Porsche, and Nike.

I'd note that in 2022, we had 15 significant brand partnerships, which is up from 12 significant partnerships the year before. And we've got a robust pipeline of both new deals and renewables.

So we're optimistic about the brand partnership business for 2023. Thank you. We'll hear next from Mark Gehr with Blue Dream Capital. Blue Dream Capital.

Hi everybody, great, great year. My question is in relation to the partnerships. In Q1, you announced partnerships with Nike and Porsche, and I'm wondering how much money do you make from those?

So thanks, Mark. We don't comment on the value of individual deals. We obviously talk about the business overall, but we don't really talk about individual deal size. We think that could be poGlike, but just him, the inner minimum value of individual competitors.

So, that being said, what I'll note about the two partnerships that you highlight is, while the revenue we put in our significant bucket, those two partnerships in particular have opened a lot of other doors and have enhanced the overall revenue.

the standing of phases brand and we're already starting to see the benefits of those associations beyond even the revenue that those generate.

And at this time, I'd like to turn things back to Lee Trink for any closing remarks.

Got it well. Thank you again everyone for participating and for your interest in SAVES. You know, what I would say the takeaways for today are that we've got a strong plan in place. We are executing on it. We've had a strong execution in Q1. We put the company in a position to drive improved performance.

in 2023, and we really look forward to updating you on our Q1 conference call in mid-May. And have a great day, everyone. Thank you. And again, that will conclude today's conference. Thank you all for joining us. You may now disconnect.

I can't worry about the third of the hour I got some money to look, huh, yeah, a 10 hour