RUM - NASDAQ

Good morning, ladies and gentlemen, and welcome to Rumble Inc. Fourth Quarter and Full Year 2024 Earnings Call. All participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this event is being recorded. I will now turn the conference over to Shannon Devine, Investor Relations for Rumble Inc. Please go ahead.

Thank you, operator. I'm here today with Chris Pavlovski, Founder, Chairman, and CEO of Rumble Inc., and Brandon Alexandroff, CFO. A press release detailing our fourth quarter and full year 2024 results was released today and is 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 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 the company's identified social media channels. I'll now turn the call over to Rumble's Chairman, Founder, and CEO, Chris Pavlovski.

Thanks, Shannon. The fourth quarter was everything we anticipated, and much more. While we closed a major chapter in our journey with the US presidential election in November, by late December, we immediately entered an entirely new era when we announced the $775 million strategic investment from Tether. Today, I will address the significant implications of both these events. First, the US presidential election. Rumble Inc. cemented its place in the online media ecosystem. According to Stream Charts, we were the top destination for live independent creator election coverage. Both Dan Bongino and Steven Crowder dominated election night in first and second place respectively, beating out all other platforms and independent creators. Our success was rewarded over a month ago when I was fortunate enough to be invited to the new independent media seat in the White House briefing room with press secretary Carolyn Levitt. This is just one powerful and immediate example of how the media landscape is changing and how well positioned we are for the future. I see Rumble Inc. as the dominant online media force for future election coverage, and as audiences transition from network TV to OTT, Rumble Inc. will be positioned to capture this growth. In previous calls, we also discussed the potential impact of the election on our advertising business. With the Trump administration's very strong stance on free speech, we expect to see the artificial headwinds on brand advertising that we faced in 2024 to turn into tailwinds in 2025 and 2026. Due to the environment change, Rumble Inc. will be repositioning, investing, and expanding its sales focus to target brands more aggressively. The fourth quarter was something special to watch. We broke internal livestream records without any hiccups from our Rumble Cloud infrastructure. Moreover, it was the first full quarter with our full revenue suite online, which includes rack, sponsorships, and premium. The results are very promising, and it's now clear to us that we have one of the best monetization engines in the creator economy. The fourth quarter delivered another revenue record in another consecutive quarter of revenue growth, registering over $30 million in revenue with 68 million MAUs. Importantly, our US and Canada MAUs jumped 21% from $43 million in the third quarter to $52 million in the fourth quarter of 2024. As a note, while we are working actively to prepare for brands, it is worth highlighting the success we've had with a performance marketing solution for direct response advertisers. One of our most successful advertising categories has been precious metals. Over the last three years, Rumble Inc.'s audience has purchased over $750 million of precious metals through Rack and creator sponsorships. A true testament to the audience we have that the brands who advertise on Rumble Inc. can no longer be ignored. And what this means for Rumble Inc. We closed out 2024 with our most exciting announcement since going public. In December, we announced a $775 million investment from Tether, the largest company in the digital asset industry and the most widely used dollar stable coin across the world. This transaction was not just a move to fortify the company's balance sheet while providing a liquidity opportunity for all our stockholders. The investment was rooted in extremely strong and not always obvious commonalities between cryptocurrency and free speech communities. Both built on a passion for freedom, transparency, and decentralization. With more than 400 million international Tether users, imagine the possibilities between Rumble Inc. and Tether. Going forward, we expect four core impacts on the business. Number one, accelerated international expansion. We expect to leverage Tether's massive presence outside of the US and make inroads with Rumble Video and Rumble Cloud. The first example of this is our recently announced partnership between Rumble Cloud and the government of El Salvador. Once we deliver the cloud, we will be well positioned to build our presence in El Salvador, draw a new audience to the video platform, and ultimately sell this audience to local advertisers. While we still need to prove this strategy, this is the template that we will look to deploy around the world. A few other countries we are speaking to in the same vein as El Salvador are Macedonia and Panama. Number two, aggressively expand Rumble Cloud's customer base by onboarding as many Tether portfolio companies onto the Rumble Cloud. Tether has a growing portfolio of nearly 100 companies of various sizes and various cloud needs. Number three, we are now very well positioned to become the leading media platform in the crypto community. The first tangible project underway is the Rumble wallet, which we are building alongside Tether to deliver the first crypto wallet to the creator community at scale. Accepting and paying out in USDT, Tether Gold, and Bitcoin. We expect this to bring direct value to the crypto community on our platform, enable international expansion on the video platform, and facilitate meaningful high-value partnerships with crypto exchanges. Number four, while we continue to move toward adjusted EBITDA breakeven, $250 million in gross proceeds will greatly strengthen our balance sheet and allow us to more fiercely compete with Google's product suite. I want to emphasize this. Having one of the most profitable companies in the world backing Rumble Inc. has only emboldened our vision to take on Google across their ecosystem. And this is a shared vision from myself and our newest shareholders. We're already taking them on in video, but we plan to get very aggressive on cloud and expand into various other product suites either by acquisitions or internal development. Before I turn the call over to Brandon, I want to reiterate one thing that's for certain. We are entering a new era for Rumble Inc. One where artificial advertising headwinds have the potential to turn into real tailwinds and one with a powerful ally that is deeply passionate about helping take Rumble Inc. to the next level. I've never been more excited for the future of this business. Now I'll pass to Brandon Alexandroff to walk through the financials.

Thanks, Chris. I'll now take you through our fourth quarter and full year 2024 financials at a very high level before turning the call over to the operator for Q&A. For the full year of 2024, we reported revenues of $95.5 million, an increase of 18% when compared to $81 million in 2023. For the fourth quarter of 2024, we reported revenues of $30.2 million compared to $20.4 million for Q4 of 2023, an increase of $9.8 million, of which $7.9 million was attributable to an increase in audience monetization revenues, and $1.9 million to other initiatives. The increase in audience monetization revenues was mainly due to higher revenue from advertising, subscription, tipping fees, licensing, and platform hosting. The increase in other initiative revenues was mostly due to more advertising inventory being monetized by our publisher network and an increase in cloud services offered. ARPU was $0.39 for the fourth quarter compared to $0.33 in the third quarter of 2024. The increase from the third quarter is attributable to higher advertising revenue and subscription revenue. Cost of services decreased to $34.5 million for the quarter compared to $39.5 million in the fourth quarter of 2023, primarily due to a reduction in programming and content costs of $5.3 million, offset by an increase of $0.3 million in other cost of services including payment processing fees, and costs paid to publishers. For the full year, cost of services decreased by $7.7 million to a reduction in programming and content costs to $138.5 million, primarily due to $9.5 million offset by an increase of $1.8 million in other cost of services, including payment processing fees, and costs paid to publishers. You will see in our financial statements a net loss for the fourth quarter of $236.8 million, which compares to a net loss of $29.3 million in the fourth quarter of 2023. Included in the net loss for this quarter is $184.7 million in the change in fair value of derivative expense, which is related to the Tether strategic investment. Adjusted EBITDA for the fourth quarter of 2024 was $13.4 million, a 55% improvement compared to a loss of $30 million in the fourth quarter of 2023. For the full year of 2024, adjusted EBITDA loss was $92.1 million compared to a loss of $115.3 million in 2023. As we ramp up monetization and maintain discipline around our cost structure, we continue to expect to move materially towards adjusted EBITDA breakeven in 2025. As Chris stated, this remains the goal today. However, with the recently closed capital infusion from Tether, we have the increased flexibility to further invest in initiatives that could accelerate and expand our business sooner than originally anticipated. Moving to our cash position, we ended the year with approximately $114 million in cash, cash equivalents, and marketable securities compared to $132 million as of September 30, 2024. Upon closing of the Tether transaction on February 7, 2025, this does not include the $250 million in gross proceeds to the company. During the fourth quarter, we will once again see an improvement in cash, cash equivalents, and marketable securities usage, which has improved in each of the last five quarters. For the fourth quarter, our cash usage was $18 million, representing 19% less usage compared to the third quarter. As it relates to the first quarter of 2025, given the timing of our call today relative to the end of the first quarter, I wanted to provide some color on our top-line expectations. For the first quarter, we expect revenue growth of at least 25% compared to the first quarter of 2024. Lastly, in the earnings release, we have provided two capitalization tables for reference, showing our fully diluted share count as of December 31, 2024, pre-Tether completion, and as of March 12, 2025, after the Tether completion was complete. That concludes my prepared remarks. I will now turn the call over to the operator to open up the line for questions.

Thank you. We will now be conducting a question and answer session. Our first question is from Thomas Forte with Maxim Group. Please proceed.

Great. Thanks. So I'm gonna ask one question, one follow-up, and I'll get back in queue to potentially ask more. So first off, Chris, congrats on a tremendous quarter and year. The first question I had was, how should we think about the impact on your monthly active users and other engagement metrics from Dan Bongino being named FBI deputy director? And then second part on this one, are there other influencers on your platform that may take roles in the administration that may negatively impact their ability to provide content on Rumble Inc.?

Hi, Tom. Thanks for the question. With respect to the second part of that question, I'm not aware of any other current content creators that may take on roles. Obviously, you know, that could change at any moment's notice, but I'm unaware of anything. With respect to Dan Bongino becoming the deputy director, what we did in the last couple of weeks, and we announced last Monday, is that we launched something called the Rumble lineup. And we introduced a technology called the rating rate feature that allows one stream to follow another stream. And we've seen enormous success on this as of last week. Dan Bongino's last show, I believe, was March 14th or around there. And when we launched the lineup, we had Vince come in and take over Dan Bongino's show on his channel. And then we had Steven Crowder move to the eleven o'clock slot, and Tim Pool moved to the noon slot. And what we've seen is starting from 9 AM, we were dominating number one in the live streaming space in the United States at 10 AM as well with Vince, and then 11 AM, Crowder really took on the largest part of that audience, and Tim Pool continued holding number one at the noon slot. We're kinda seeing that throughout the entire week last week. So we think the transition there has been incredible, to say the least, and potentially leading us to a bigger opportunity here with expanding that lineup throughout the entire day and into prime time to compete against network TV. So we're really excited about that. Obviously, losing Dan is a huge loss, but we think we filled the gap very well. And Steven Crowder has definitely stepped up to take on a large part of that audience along with Vince. And then, obviously, adding Tim Pool to our lineup helps a lot as well. So we're not seeing any kind of significant change. If anything, what we're seeing is this audience is sticking on a little longer and now watching other shows as well. So we're really happy with what we're seeing in the first week.

Good. That's very encouraging. Alright. So then my second question, then I'll get back in the queue for more. Earlier this month, you announced Bitcoin treasury purchases. For those investors who may not be familiar, what's the strategy?

Yeah. So we announced a while ago, I think it was back in November or December, that we're gonna be adopting a Bitcoin treasury strategy of up to $20 million in Bitcoin purchases. Up until this point, we've invested around $17.1 million into Bitcoin, and the strategy behind that is, obviously, I've been very, very pro-Bitcoin my entire life. When the Trump administration came into office, this was an obvious thing for us to do. I felt very strongly that we needed to have a position in this, not just in holding cash, but also holding in Bitcoin. And from what I can see, we're one of the top 50 public companies holding Bitcoin now with our $17.1 million, that I'm aware of that's holding. So our strategy here is to make sure that we're aligned with the community that's very enthusiastic in using our products and showing that we really believe in what they believe in, and we see this as a really good investment for this company in the long term.

Great. Thank you. I appreciate that. I'll get back in the queue.

Our next question is from Jason Helfstein with Oppenheimer and Company. Please proceed.

Thanks. Several questions. So first, let's start off with the, kind of the Bitcoin or Rumble wallet, I guess. Who is gonna be kind of doing the development of that? Is Tether gonna be bearing the cost of that? Are you gonna be bearing the cost of that? Just that's the only way to kind of factor in. That's question one. We'll just I'll pick them up one at a time. Thanks.

Thanks, Jason. Yeah. So Tether is helping with us on that, and, you know, they're bearing their own cost on that side and helping us build that. We also are bearing a cost on our side for the implementation of it, but the development is in unison with the Tether teams, and there is no additional cost or any material impact cost on building that that you'll see. So it's basically both teams kind of working on their ends of the Rumble wallet.

Yeah. And then just, like, at a high level, I mean, obviously, Tether has their own reasons for making this investment. I mean, I guess, it sounds like some of this potentially will aid demand for Rumble Cloud. Obviously, you've got this kind of, you know, Rumble wallet. I guess just are there other strategic rationale that Tether has, I don't know, perhaps either publicly said or you're aware of, kind of why they've made this investment from a strategic standpoint.

Yes. So strategically speaking, one of the big strategies around the Rumble wallet is to allow us to go to the international markets. You know, right now, in terms of having advertisers in international markets, it's very difficult for us. We're very focused in the United States and Canada. But let's just take El Salvador as an example. We'll have the Rumble wallet available when it's done, and we can now enter a market like El Salvador, and then we can have, whether it's a crypto exchange, whether it's Tether, they can all come in and help advertise that product with influencers that we have in the El Salvadorian market. So the way we see that is it's a real great growth opportunity to grow in an international market and have big advertisers like Tether come in and help promote the Rumble Wallet product, which would carry USDT and Tether Gold along with Bitcoin. So this is a real large strategic play with the Rumble wallet to go very international and tap into those 400 million Tether users that they have. On the cloud side, they have a lot of portfolio companies that we can tap into and move over to the Rumble Cloud. Those are longer-term plays that take long to onboard. But that's something that's very strategic. They have a lot of portfolio companies. There's revenue there for us to bring in on the cloud side and utilize, and that's something that we're aggressively approaching too. So both on the international expansion and bringing, you know, the ability for people to tip and pay and creators to get paid in Tether around the world, is a huge strategic point for them. Obviously, on the cloud is a huge strategic point for them.

And then just, Lance, on a fundamental side, so in the fourth quarter, we obviously saw better engagement as it relates to US or UK and MAU. And a nice uptick sequentially in monetization. Maybe, Bridget, how are you thinking about that with respect to the first quarter guide? You know, kind of between the mix between engagement and monetization to get to that first quarter guide and kind of are you assuming any natural follow-up post the election? Thank you.

Yes. So with respect to the MAUs, what I can say is in the first quarter, being that we're nearly closing out the first quarter here, we have stuck the MAUs in the first quarter better than we have after any other election cycle. So as you've probably seen historically, in the midterm elections, we had a massive drop post the midterm elections in the first quarter from the fourth quarter. We're not gonna see that type of massive drop here after the US presidential election. It's gonna be a much tighter range than it was in the midterm elections. And that's attributable to the product just being dramatically improved over the last year. We're sticking to users better than we ever have. And we're growing in different segments of the market, not just politics. So that's something that I think the market will see is that we're gonna see a tighter range compared to the ranges of drops that we saw from the previous midterm elections.

Alright. Thank you.

Thanks, Jason.

Our next question is a follow-up from Thomas Forte with Maxim Group. Please proceed.

Great. Thanks. Thanks for taking my follow-up. So I haven't asked this type of question in a while. I think it's important. How are you able to get Doctor Disrespect in the White House to join the platform? What is it about the platform today that makes it more attractive to content providers than in the past? And at a high level, are you able to add content with more favorable gross margins than in the past?

So I'll tackle the last question there first. With respect to the margins on the content, what's very different now than what was available a year ago or two years ago is that our entire product suite is now available from Rumble premium to Rack to the sponsorships. And both premium and rack really kind of dovetail into each other to help drive higher margins around the creators. We didn't have this a year ago or two years ago. We didn't realize the impact that would actually have on the margins. And we believe that going forward now that we have these three, it puts us in a place where we're, in my opinion, one of the best places to monetize on the creator economy. And I think we're gonna really, like, well, we're definitely gonna be stepping on the gas pedal here and bringing on more creators to push the envelope here, especially with this revenue engine that we do have. Now going with respect to your other questions, the White House, one thing that is definitely true is that Rumble Inc. is the lead in the independent creator space for streaming in the political sphere. The White House knows that. We dominated the election cycle, and we continue to dominate every, you know, almost every morning last week. We were number one at nine, number one at ten, number one at eleven, number one at noon, in the United States. So the White House definitely sees that, and they've definitely rewarded us with bringing their channel onto the platform, so we couldn't be happier about that. You know, I obviously believe that we should have been with the previous administration and had the White House channel then as well. We were a dominant force then. It's really nice to be recognized by the current administration how dominant we are in that political news space. With respect to content creators, there's just nobody that has that type of influence that Rumble Inc. does in the Internet sphere. With respect to Doctor Disrespect, we're really making a push into gaming. We've also launched a new creator program here in the first quarter that is showing us tremendous early results, and we are going to be very ambitious in growing this program, and we think this program is here to stay for the long term. And we're going to be investing very heavily into that going forward because what we're noticing is that it's driving results with respect to the mousetrap of having both sponsorships, premium, and rack, it's really driving results a lot better than what we were anticipating. So we're going to step on the gas pedal in gaming and really push a lot harder through our creator program that would be open and available to all creators. And this is kind of our pivot away from the whole contract, MG contract, the things that we do. And kind of move to a very open program that everyone can join and generates both high revenues for the creators and high revenues for Rumble Inc. So we're really gonna lean into that in the future. Obviously, if there's a real big opportunity like we had with Tim Pool, we'll definitely look at that, but we're gonna be a lot more conscious. We really understand our numbers. We really understand the data now. We know what works, and we know what doesn't. And we're really gonna lean in on this creator program that we know is working currently.

Great. So last one. High level. So Chris, as a long-time follower of the company and stock, you sound more confident to me about the business than you have in the past. What gives you that confidence? And then, for example, I think you had high expectations heading into 2024 because of the US presidential election. But you actually found even much better after the election. Can you highlight why you feel that way?

Thanks, Tom. You know, having a partner like Tether is obviously a big confidence booster. They're an enormous company, the most profitable company per employee that I'm aware of, and, you know, one of the most profitable companies out there. And having them back Rumble Inc. obviously instills confidence in this company in a way that, you know, we haven't seen in someone come in in the past. So that's very helpful. We obviously had a really great election cycle, and the results were, you know, I think are gonna be very positive to the Rumble Inc. business. I think the advertisers are gonna open up, and I think that, you know, right now, the line in the sand for this business is direct response. We already have that. The macro economy is not gonna really have an impact on direct response, but we have enormous headroom to grow with brands. Like, we're at basically zero right now. If brands start coming in, then that moves the headroom up a lot and drives our revenue up pretty materially. So I see, like, a lot of optimism around there, a lot of optimism around the fact that Tether is coming in, and they're very ambitious about us growing internationally and utilizing their current user base to really grow Rumble Inc. internationally. And they obviously have the balance sheet to advertise and have the balance sheet to really lean in on Rumble Inc., however they want to lean in on it. But, most importantly, you know, one of the things that we're very aligned on with the Tether guys is that we want to take on Google head-on. And I've always wanted to do that. We've taken a chip out of YouTube. I think there's a real opportunity for us to really do something big on the cloud side. They think that as well. And in terms of even furthering that ecosystem, we're equally excited about adding even more products to the Rumble Inc. product line, not just cloud, not just rack, not just video. But really looking into email, really looking into these other products where we think that our audience, both Rumble Inc.'s and tapping into Tether's audience, would be very much wanting something like that. So we're exploring that right now. That's something we're thinking about, all these different ideas and all these different approaches. It's very consistent with the mission that we've had and how we wanted to take on Google in the past. The difference now is that we have someone like Tether behind us that really believes in that and has stepped up to come and help us with that. So, like you've noticed, I'm very optimistic. And I'm really looking forward to the coming year.

Excellent. Very, very encouraging, and excellent. Thank you.