10-Q: Rumble Inc. Reports Q3 2024 Results: Revenue Growth Amidst Increased User Engagement

Rumble Inc. saw a 39% increase in revenue year-over-year in the third quarter of 2024, driven by growth in both audience monetization and other initiatives, alongside a 26% increase in monthly active users compared to the previous quarter.

Summary

• Rumble Inc. reported a net loss of $31.5 million for the third quarter of 2024, compared to a net loss of $29.0 million in the same period of 2023.
• The company's revenue increased by 39% year-over-year to $25.1 million in Q3 2024, up from $18.0 million in Q3 2023.
• Audience monetization revenue grew to $21.8 million, while other initiatives contributed $3.2 million in revenue.
• Operating expenses totaled $57.9 million, a slight decrease from $58.2 million in the prior year's quarter.
• The company's monthly active users (MAUs) averaged 67 million in Q3 2024, a 26% increase from the second quarter of 2024.
• Average revenue per user (ARPU) was $0.33 in Q3 2024, an 11% decrease from the previous quarter.
• For the nine months ended September 30, 2024, the net loss was $101.6 million, compared to $87.1 million for the same period in 2023.
• The company's cash, cash equivalents, and marketable securities totaled $132.0 million as of September 30, 2024.
• Rumble has entered into programming and content agreements with a minimum contractual cash commitment of $38 million.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While revenue and user growth are positive, the increasing net loss, decreasing ARPU, and significant risks associated with content acquisition and competition temper the overall sentiment. The potential capital raise also adds uncertainty.

Positives

• Rumble experienced significant revenue growth of 39% year-over-year in Q3 2024.
• The company's user base expanded substantially, with a 26% increase in MAUs compared to the previous quarter.
• Cost of services decreased by $3.3 million in Q3 2024 compared to Q3 2023.
• The company has a strong cash position with $132.0 million in cash, cash equivalents, and marketable securities.

Negatives

• Rumble reported a net loss of $31.5 million for Q3 2024, an increase from the $29.0 million loss in Q3 2023.
• Average revenue per user (ARPU) decreased by 11% in Q3 2024 compared to the previous quarter.
• Interest income decreased by $1.7 million in Q3 2024 compared to Q3 2023.
• The change in fair value of warrant liability resulted in a loss of $0.8 million in Q3 2024.

Risks

• The company's content acquisition strategy involves fixed payment obligations to content creators that are not contingent on actual revenue or performance metrics, which could negatively impact financial performance if expectations are not met.
• Rumble's recently launched cloud services business may not achieve success due to intense competition and other factors.
• The company's reliance on advertising revenue makes it vulnerable to the loss of advertisers or reductions in their advertising budgets.
• Negative media campaigns and advertiser boycotts could harm the company's financial performance and relationships with business partners.
• The company is involved in several legal proceedings, which could result in significant costs and liabilities.
• The company's key business metrics may not be comparable period-over-period due to adjustments in calculation methods.

Future Outlook

The company expects to continue to invest substantial resources to support its growth and anticipates that each of the expense categories will increase in absolute dollar amounts for the foreseeable future. The company also intends to continue to offer incentives, including economic incentives, to content creators to join the platform.

Management Comments

• The company is using a substantial portion of funds to acquire content by providing economic incentives to a small number of content creators, including sports leagues.
• The company's present focus is to grow users and usage consumption and experiment with monetization levers, which may not maximize profitability in the immediate term, but which the company believes positions its business for the long term.

Industry Context

Rumble operates in the competitive video sharing and cloud services market, facing competition from established platforms like YouTube and other cloud providers. The company's focus on content creator incentives and a commitment to free speech positions it as a unique player in the market, but also exposes it to potential risks related to content moderation and advertiser boycotts.

Comparison to Industry Standards

• Rumble's revenue growth of 39% year-over-year in Q3 2024 is a strong performance compared to some established social media platforms, but it is important to note that Rumble is still in a high-growth phase and is not yet profitable.
• The company's MAU growth of 26% quarter-over-quarter is also significant, indicating strong user engagement, but it is important to note that the company has changed its methodology for calculating MAUs, making direct comparisons to previous periods difficult.
• Rumble's ARPU of $0.33 in Q3 2024 is relatively low compared to more mature platforms, indicating that the company still has significant room to improve its monetization capabilities.
• The company's reliance on advertising revenue is similar to many other social media platforms, but its dependence on a single large advertiser is a risk factor that needs to be addressed.
• Rumble's investment in content acquisition through fixed payment obligations is a strategy that is not commonly used by other platforms, and it carries significant financial risk if the content does not generate the expected returns.
• Compared to companies like Cloudflare or Digital Ocean, Rumble's cloud services business is still in its early stages and faces significant competition from more established players.

Legal Proceedings

• Rumble is defending a lawsuit seeking rescission of a share redemption sale agreement or damages alleged to be worth $419.0 million.
• Rumble has filed an antitrust lawsuit against Google alleging unlawful advantages given to YouTube.
• Rumble has filed a second antitrust lawsuit against Google related to monopolization of the online advertising market.
• Rumble has filed a lawsuit to block the enforcement of New York State's Social Media Law.
• Rumble has filed a defamation lawsuit against Nandini Jammi and Claire Atkin.
• Rumble has filed an antitrust lawsuit against the World Federation of Advertisers, WPP plc, and GroupM Worldwide LLC alleging a conspiracy to withhold advertising revenue.

Related Party Transactions

• The company has a vendor relationship with Cosmic Inc. and Kosmik Development Skopje doo, controlled by Chris Pavlovski and Ryan Milnes, for content moderation and software development services.
• Compensation to related parties totaled $3,595,041 for the three months ended September 30, 2024, and $10,725,648 for the nine months ended September 30, 2024.

Stakeholder Impact

• Shareholders may be concerned about the increasing net loss and decreasing ARPU.
• Employees may be affected by the company's growth and strategic shifts.
• Content creators may benefit from the company's incentive programs, but may also face risks related to platform changes.
• Advertisers may be hesitant to invest in the platform due to concerns about brand safety and potential boycotts.
• Customers may be impacted by changes in content availability and platform features.

Next Steps

• The company will continue to invest in content acquisition and platform development.
• Rumble will focus on growing its user base and experimenting with monetization strategies.
• The company will continue to defend itself in ongoing legal proceedings.
• Rumble will explore options for raising capital through the recently filed shelf registration statement.

Key Dates

Keywords

Rumble, video sharing, cloud services, content creators, advertising, monthly active users, MAUs, ARPU, revenue, net loss, financial results, quarterly report