Rumble Inc.

Good afternoon ladies and gentlemen and welcome to Rumble Incorporated's third quarter 2024 earnings call. All participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press the star key and zero on your telephone keypad. Please note that this event is being recorded. I would now like to turn the conference over to Shannon Devine, investor relations for Rumble. Thank you.

Thank you, operator. I'm here today with Chris Pawlowski, founder, chairman, and CEO of Rumble, and Brandon Alexandroff, CFO. A press release detailing our third quarter 2024 results was released today and available on the investor relations section of our website. Before we begin the formal presentation, I would like to remind everyone that statements made on this call and webcast may include predictions, estimates, or other information that might be considered forward-looking. All forward-looking statements are made only as of the date of this call and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC. Future company updates will be available via press release and updates via the company's identified social media channels. I will now turn the call over to Rumble's founder, chairman, and CEO, Chris Pabloski.

Thanks, Shannon. Wow, what a couple of weeks. It's been two years since we first became public and since we posted our first earnings call. I can honestly say that I've never been more optimistic about our opportunity. And more importantly, it has never felt more real than it does today. With the U.S. presidential election now in the rearview mirror and on the heels of our two-year public anniversary, I feel this presents the perfect time to reflect on where we were, what has transpired over the two years since our public debut, and explain where we go from here. On our first earnings call, I shared with you our mission to protect the free and open Internet, the DNA of our community, our users, our creators, our partners, and our employees. I reflected on how Rumble held the line on free speech when no one else had the courage. It was lonely at times. It was even scary at times. We were canceled by technology partners, commercial partners, cut off by the so-called mainstream, and forced to shut off countries. We faced hit piece after hit piece. We even faced illegal advertising boycotts. Most importantly, I shared the pain of our creators who have had their voices suppressed and even eliminated from society. It was out of control. Can you imagine that our current president-elect was canceled, but Rumble held the line. We allowed these voices to be heard. We could see the movement when no one else did. We saw the momentum as our creators grew their audience from thousands to tens of thousands to even hundreds of thousands of users every day. We set out on a growth strategy to build our teams, our infrastructure, our product, and our revenue engines for our creators. 2023 was a building year. in 2024 has been focused on bringing the revenue engines online and monetizing this incredible audience we have, and we have delivered. We perfectly position our business for this moment. Turning to the election, we cemented ourselves as the leader in the independent creator space. On the evening of November 5th and into the morning of November 6th, we set new high marks in a variety of categories, including number of live streams, live concurrent views, consumption, total Rumble premium subscribers, and revenue generated through the Rumble advertising center known as RAC. Meanwhile, traditional TV networks saw ratings plummet by as much as 50% versus the 2020 election. This was the nail in the coffin for traditional media in the dawn of a new era where the independent creator is the new source of truth and Rumble is at the forefront. According to StreamsCharts, which tracks live stream metrics, Rumble set a new peak number of concurrent viewers and took a 17.8% share of live hours watched in the United States on election day. To put this in perspective, our 17.8% compares to 71.2% for YouTube and 10% for Twitch. Additionally, the Rumble app also reached number three in the photo and video category of the Apple App Store, ahead of YouTube. Not bad, considering that YouTube is estimated to be worth over $400 billion. Dan Bongino set a new high for individual stream with over 515,000 concurrent viewers, and host Steven Crowder notched a personal best of over 460,000 concurrent viewers. These were the two biggest independent creator live streams in the world at the time. And keep in mind, this was all running on Rumble Cloud, an amazing technical feat by our incredible team of engineers and proof that our cloud belongs in the big leagues. Our cloud offering has taken hold and we are continuing to have conversations with large enterprise customers in all various stages of the sales cycles. The progress here is encouraging. and the election's proof of just how mission-critical our product is. Turning to Q3, we saw strong growth across our core business, reaching monthly active users of 67 million, and I can confidently say we are advancing our business from a more volatile testing phase to a more scalable and predictable phase. I mentioned that 2023 was focused on expanding our goal to secure and sustain our audience. Well, we certainly have the audience. Monetization has taken the majority of our focus for 2024 and we have been progressing nicely with quarterly revenues increasing sequentially since Q2. Importantly, the headwinds we have experienced on the monetization front are being overtaken by election-related tailwinds. With the goals of expanding our content offering and cultivating a loyal audience, avenues for monetization opportunities opened wider and sooner than I could have anticipated. One example of this is Rumble Premium, which has exceeded our expectations. We launched this service as a no-ad experience back in May this year, similar to the YouTube Premium model. As we increased our ad load by introducing mid-rolls in September, we saw strong growth in Premium subscribers and were very pleased with the progress. However, we are now stepping on the gas by adding exclusive content to the Rumble Premium offer. On election night, we announced that Steven Crowder's Mug Club, one of the largest subscription communities on the Internet, is now included in the Rumble Premium offering with Crowder's exclusive content. This proved to be a very strong driver of subscription growth in recent weeks, and we are looking to continually add content and creators to the offer, such as Street League Skateboarding, which we'll be adding to Rumble Premium shortly. One easy way to think of this is that we are now offering a combination of YouTube's no ad experience and Netflix subscription to exclusive content. With this hybrid model, we feel that we have an opportunity to provide superior economics to the creator versus any other platform. The fourth quarter has been something special to watch. It's the first full quarter that our entire revenue mousetrap is live across rack and premium, and the early results have been very promising. I feel that Rumble is now in the lead with the best monetization engine in the creator economy. For all of these reasons, I continue to be excited about our performance in the fourth quarter, which will mark another quarter of consecutive revenue growth. As we look forward, the elephant in the room is, how much longer can brand advertisers ignore more than half the country? We and our user base are now a majority. Although many platforms have peeled back their policies on strict moderation, The audiences have not gone back to them. They have stayed loyal to Rumble. And during this time, we've grown our user base. Brands cannot ignore this forever. And in fact, we have signs of proof that it's finally changing. Immediately after we saw Garm disband, Rumble landed its first major brand advertising partnership, which is set for December of 2024. For those who may not be familiar, I previously spoke about GARM, the Global Alliance for Responsible Media, conspiracy, effectively creating an advertising cartel more powerful than most of the media buying agencies in the world. The so-called standards manufactured by GARM were in fact an agreement among competing advertisers and ad agencies not to advertise with platforms like Rumble and X, which created an artificial headwind for our business. Within days of our lawsuit, alongside X, Garmin was dismantled. Not only has corporate America started to turn prior to the election, but I believe the results of the election will only accelerate this onset of brand partnerships across both advertising and cloud. I've already seen early signs, and we are a week out from the election. I always said 2024 is our Super Bowl, and now I can say we won the Super Bowl. Rumble set new records in new heights and corporate media viewership dropped as much as 50% over 2020. The world is forever changed and corporate America is going to change with it. They don't have a choice. Our courageous employees helped change the course of history and I could not be more proud. The American people have spoken. Cancel culture is dead. Free speech is now mainstream and Rumble is in the driver's seat with the best lineup of independent creators with the best economics. Now I'll pass to Brandon Alexandrov to walk through the financials.

Thank you, Chris. I'll now take you through our third quarter financials at a very high level before turning the call over to the operator for Q&A. For the third quarter of 2024, we reported revenues of $25.1 million compared to $18 million for Q3 2023, an increase of $7.1 million, of which $5.9 million is attributable to an increase in audience monetization revenues, and 1.2 million is attributable to higher other initiative revenues. For the third quarter, we reported ARPU of 33 cents compared to 37 cents in the second quarter. Given that we are currently in the early stages of monetizing our user base, we expect to see some lag in revenue relative to users, particularly during periods of high user growth. As a result, in the third quarter, Rumble saw a decrease in ARPU as revenue growth slightly lagged our strong MAU growth, from lead up to the United States presidential election. As we have previously stated, our expectation for revenues in 2024 was a sequential quarter over quarter increase beginning in the second quarter of the year. So far, we have achieved and we continue to expect revenue growth for the remainder of 2024. Cost of services decreased to 36.4 million for the quarter compared to 39.8 million in the third quarter of 2023. The $3.3 million decrease is due to a decrease in content costs of $5.4 million, offsetting an increase of $1.7 million in share-based compensation and $0.4 million in other cost services. As of September 30, 2024, our programming and content agreements had a minimum contractual cash commitment of $38 million, down from $106 million at December 31, 2023. Moving to our cash position, we entered the third quarter of 2024 with approximately $132 million in cash, cash equivalents, and marketable securities, compared to $219.5 million as of December 31, 2023. I would like to draw your attention to a specific item in our press release, the trend in cash, cash equivalents, and marketable securities usage, which has improved in each of the last four quarters. For the third quarter, our cash usage was 22.3 million, 25% lower usage compared to the second quarter. We continue to maintain sufficient cash to meet our ongoing capital needs. Before I conclude, I would like to reiterate our expectation to continue to move materially towards adjusted EBITDA breakeven in 2025. To that end, we started reporting adjusted EBITDA this quarter. Adjusted EBITDA loss for the third quarter of 2024 was $23.5 million compared to a loss of $35.4 million in the third quarter of 2023. That concludes my prepared remarks. Before I turn the call over to the operator, I invite you all to join Chris this evening at 6.30 p.m. Eastern Time for an exclusive post-earning interview with Matt Kors to be streamed live on the Matt Kors Rumble channel. I will now turn the call over to the operator to open up the line for questions.

Thank you, sir. We will now be conducting the question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Scott Divert of Redbush Securities. Please go ahead.

Thanks. Now that traditional media is election and, um, you know, this is kind of your time as you described it, um, in the call is, I don't know what type of visibility that you, you attain in terms of like forward advertising revenue, but as we try to get a better understanding of kind of the trajectory of the business, um, beyond, you know, usage metrics and things like that, and the ability to attach revenue, um, as you, you know, kind of, um, go into this new period. Is there a way to quantify that more in giving formal guidance or just something to allow us to better understand like what's happening financially in the business versus waiting until end of quarter when you report numbers? And I'm cognizant of kind of the, you know, the commentary that you gave around it, but I was just wondering if there's If you're gaining visibility in ways that you can quantify it, it would be interesting to understand that earlier.

Yeah, thanks for the question. This is Chris. With respect to the advertising business, up until now it's been very dependent on direct response and performance-based advertising, which I would say is a pretty good line in the sand in terms of where we are. I don't foresee direct response faltering in any major way or being as volatile as it was in the past. And I see a tremendous upside now going forward in terms of how brands can start coming in. The major question is with the advertisers is how fast do they start moving in and when do they start moving in on the brand side. Like I said, we did one brand partnership pretty immediately after Garm disbanded. And the major question still holds is, like, how many others are going to follow once this happens going into 2025? But I definitely see this as a tailwind, and we kind of have a line in the sand with respect to the direct response type ads that we already see. I don't see those going away and pushing us lower at any point. So I do see that... What I'm seeing in Q4, obviously, with our first brand partnership coming in December and what we're currently seeing, even with direct response, is going very well at this point. I hope that answers your question.

Yeah, it does. And I'll send a lot of my congratulations to you for pressing through this period when the business has been suppressed in the way that it has. So congrats to you and the team.

Thank you. Really appreciate that.

The next question comes from Jason Holstein of Oppenheimer & Co. Please go ahead.