FaZe Holdings Inc.

Good afternoon, everyone. My name is Beau, and I will be your conference operator for today. At this time, I would like to welcome everyone to the FASE Holdings Incorporated Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Kyren Johnson, Corporate Counsel, you may begin your meeting. Please go ahead. Thank you, Operator, and thank you, everyone, for joining us.

With me today are Lee Trink, Chief Executive Officer, and Christoph Petzler, Chief Financial Officer. Before we begin, I would like to remind you that comments made by management during this call will include forward-looking statements within the meaning of federal securities laws. These include statements of Faze Holdings' financial outlook, the company's plans and timing for product development and sales, and any other statements other than statements of historical fact. 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, I encourage you to review our most recent SEC filings, which are available on our website at fadesclan.com. In addition, during this call, we may discuss certain non-GAAP financial measures. Additional information regarding these non-GAAP measures, including reconciliations of these measures to the most directly comparable GAAP measures, is contained in our third quarter earnings release, which is also available on our website at phaseclan.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, Fays Holdings undertakes no obligation to revise or otherwise update any statement to reflect events or circumstances after the date of this call. With that, it is my pleasure to turn the call over to our CEO, Lee Trank.

Thanks, Kyron, and hello, everyone. Great to have you all here for our third quarter earnings call. While we hosted a short call covering highlights of the second quarter just after our public listening, today's call is our first full quarter call as Faze Holdings. I'm excited to introduce our new CFO, Christoph Packler, to the Faze team and to the call today. Christoph joined us in October and has a terrific background as an entertainment and media industry CFO. He's hit the ground running and you'll hear from him shortly. First, I'd like to summarize the results at a high level, and then get you updated on the Faze story. We've been very busy, and our opportunity set is both evolving and expanding rapidly. Our third quarter revenue totaled $14 million, up 12% year over year, driven by increased revenue from brand sponsorships, content, and esports. Historically, Faze's revenue trajectory builds heading into the fourth quarter, And our pace of business activity, particularly in the sponsorship category, indicates that that will be the case again this year. While the timing of deal signings and revenue recognition can be lumpy in our business, our current expectations are that we'll achieve revenue for 2022 in line with projections provided in our GO public filings. Since our last call in mid-August, we've announced several exciting partnerships. including a renewal with McDonald's, a new sponsorship deal with Comcast's Xfinity broadband service, and our new Metaverse partnership with the Sandbox, all of which will benefit future results. During Q3, we have also set the foundation to fully deploy our partnership with crypto payments infrastructure leader Moonpay, which was announced earlier this year. As I'll discuss more in a moment, there are some exciting new deals in the pipeline that we expect to be sharing in the very near future. I do want to be clear that we're not just focused on top line growth. We're also laser focused on our cost structure and managing the capital raised in our GoPublic transaction. We reported an adjusted EBITDA loss of $12 million in the quarter. This is an elevated figure that includes public company costs for the first time. as well as recent exec hires and expenses related to the GoPublic transaction. The good news is that those transaction expenses are non-recurring. As for our ongoing operating expenses, we've been aggressively tackling spending, especially given the current economic environment. We're also aligning our expense structure with how we're positioning phase for growth. Kristof will have more in a moment, but the headline is, we've already executed on more than $7 million in annualized savings that will benefit our results beginning in 2023. Let's now turn to positioning and strategy. It's been an eventful first few months as a public company, more eventful than we imagined, for both Faze and our industry overall. As the first public company focused on Gen Z and purpose-built for the creator economy, we've generated tremendous opportunities from both inside and outside our industry. The pace of conversations and interest in working with us has ratcheted up quickly. This includes potential partnerships and collaborations, as well as M&A opportunities and new ventures. We expect to see the initial fruits of these conversations in the early part of 2023. We believe the reason for all the activity is that the creator economy is evolving and expanding rapidly. With our talent roster and highly engaged fan base of more than 520 million worldwide, we view ourselves as one of the few and perhaps only companies that not only understands this change, but are positioned to capitalize on it. There are multiple inflections happening in the broader entertainment landscape, all driven by the rise of Gen Z. You already see incumbent media models under threat, particularly in video content. Gen Z does not follow traditional consumption habits. They spend more than eight hours a day consuming digital entertainment, including a healthy dose of gaming, music, and social media. And they favor the new generation of creators, the creators who make up the foundation of our business. These new creators are not captive to legacy media companies and their own business models. They have control of their destinies and Faze is uniquely positioned to partner with them as they drive the next few decades of entertainment. Through our deep connection with Gen Z and our strong relationships and understanding with this new generation of talent, we are well positioned to capture more audience attention and revenue as the current trends continue to tilt in our direction. It also means that our business model will adapt and evolve. Some still only associate us with esports, but in actuality, the phase opportunity is about something much bigger. Esports will always remain a cornerstone of our brand and a space where we continue to bring home more trophies and see growth, as we did here in the third quarter. But as a revenue generating business, it will not be as big as revenue streams associated with sponsorship and with talent initiatives. Faze's core competency is our understanding and our ability to partner with this new breed of talent that is the future of entertainment. We've always known this, but our entry into the public market has accelerated the opportunity to build a compelling business around this competency. Our brand, our expansive reach, and our expertise position us to be an incubator and an accelerator for talent, giving them the tools and resources to create and actualize their business goals. At the same time, we continue to advance our role in helping established brands reach Gen Z and engage with them. So effectively, we believe the best way to think about Faze's future is that we've spent 12 years building a powerful brand, the singular position. Now we are using that brand and our position to both lift up brands who need to reach Gen Z and to create the talent-based brands and businesses of the future. The good news about this for our investors is that we believe Faze is a capital-efficient business and becoming even more so. And our public status enables us to leverage that even further, such as through M&A opportunities that could broaden our capabilities, our talent network, and our geographic reach. As we grow, we expect our monetization streams to focus more on sponsorship and talent-related initiatives. As part of our evolution, you will also see our leadership team become tighter and more focused. As we disclose today in an 8K, These moves include our Chief Strategy Officer, Kai Henry, an important contributor over the past two years, who will now be partnering with us from outside the organization on a number of key business initiatives. You'll be hearing more and seeing some key business developments in the coming weeks and months, including our early plans for bringing the gaming generation into Web3. So stay tuned, and now I'll turn it over to Christoph.