Rumble Inc. Q4 FY2024 Earnings Call

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 U.S. 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 U.S. 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 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 U.S. 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 stablecoin 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 are 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 U.S. 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 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% 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 $138.5 million, primarily due to a $9.5 million reduction in programming and content costs 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 once again saw 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. I'll ask one question and 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 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 announced last Monday, is that we launched something called the Rumble Lineup. 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. When we launched the lineup, we had Vince come in and take over Dan Bongino's show on his channel, Steven Crowder moved to the eleven o'clock slot, and Tim Pool moved to the noon slot. What we've seen is starting from 9:00 a.m., we were dominating number one in the live streaming space in the United States; at 10:00 a.m. as well with Vince; at 11:00 a.m., Crowder took a large part of that audience; and Tim Pool continued holding number one at the noon slot. We saw similar trends throughout the entire week. So we think the transition has been excellent and potentially leads to a bigger opportunity with expanding that lineup throughout the entire day and into prime time to compete against network TV. Losing Dan is a significant loss, but we think we filled the gap very well. Steven Crowder has stepped up to take on a large part of that audience along with Vince, and adding Tim Pool to our lineup helps a lot as well. We're not seeing any significant negative change. If anything, the audience is sticking on a little longer and now watching other shows as well. We're really happy with what we're seeing in the first week.

Good. That's very encouraging. All right. 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?

Yes. We announced a while ago, I think it was back in November or December, that we're going to adopt 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 straightforward. I've been very pro-Bitcoin for a long time. When the Trump administration came into office, this was an obvious thing for us to do. I felt it was important to have a position not just in cash but also in Bitcoin. From what I can see, we are one of the top 50 public companies holding Bitcoin with our $17.1 million position, to my knowledge. So our strategy is to ensure that we're aligned with the community that is enthusiastic about using our products and to show that we believe in what they believe in. We see this as a good long-term investment for the company.

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 Bitcoin or Rumble Wallet. Who is going to be doing the development of that? Is Tether going to bear the cost, or are you going to bear the cost? That's the only way to factor it in. That's question one. I'll pick them up one at a time. Thanks.

Thanks, Jason. Tether is helping us on that, and they are bearing their own costs for their portion and helping us build the wallet. We are also bearing costs on our side for the implementation, but development is a joint effort with the Tether teams. There is no additional material impact you will see from the costs of building the wallet. Essentially both teams are working on their respective ends of the Rumble Wallet.

And then, at a high level, I mean, obviously, Tether has their own reasons for making this investment. It sounds like some of this potentially will aid demand for Rumble Cloud. Are there other strategic rationales that Tether has publicly said or that you're aware of, why they've made this investment from a strategic standpoint?

Yes. Strategically, one of the big drivers around the Rumble Wallet is to allow us to enter international markets. 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. Take El Salvador as an example. We'll have the Rumble Wallet available when it's done, and we can enter a market like El Salvador and then work with local influencers and advertisers to promote the product. Whether it's a crypto exchange or Tether, they can come in and help advertise that product with influencers in the El Salvador market. The Rumble Wallet will carry USDT and Tether Gold along with Bitcoin. This is a significant strategic play to go international and tap into Tether's 400 million users. On the cloud side, Tether has many portfolio companies that we can tap into and migrate to Rumble Cloud. Those are longer-term plays that take time to onboard, but they are strategically important. There is revenue potential for us to bring in on the cloud side, and we're aggressively pursuing that. So both the international expansion enabled by the wallet and bringing portfolio companies onto Rumble Cloud are strategic priorities for Tether and for us.

And then, on a fundamental side, in the fourth quarter we saw better engagement in the U.S. and an uptick sequentially in monetization. How are you thinking about that with respect to the first quarter guide? Specifically, between the mix of engagement and monetization to get to that first quarter guide, and are you assuming any natural follow-up post the election?

Regarding MAUs, as we approach the end of the first quarter, MAUs have held better than after any previous election cycle. Historically, after the midterm elections we saw a large drop from the fourth quarter to the first quarter. We're not expecting that kind of decline this time. It will be a much tighter range than the drop we saw after the midterms. That's attributable to the product improvements we've made over the last year. We're retaining users better than ever and we're growing in different segments of the market beyond politics. So the market should see a tighter range compared to the drops observed from previous election cycles.

All right. Thank you.

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

Great. Thanks for taking my follow-up. I haven't asked this type of question in a while, but I think it's important. How were 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?

I'll tackle the margins question first. What's different now compared to a year or two ago is that our entire product suite is now available: Premium, Rack, and sponsorships. Premium and Rack dovetail into each other to help drive higher margins for creators. We didn't have this suite a year or two ago, and we didn't fully realize the impact it would have on margins. Going forward, having these products positions us well to monetize in the creator economy. We plan to accelerate bringing on more creators to push the envelope, especially given the revenue engine we now have. Regarding the White House, Rumble Inc. is the leader in the independent creator space for political streaming. The White House is aware of that leadership. We dominated the election cycle and continue to lead many morning time slots. The White House recognized our influence and brought their channel onto the platform. It's gratifying to receive that recognition from the current administration. Regarding content creators generally and Doctor Disrespect specifically, we are making a substantial push into gaming. We've launched a new creator program in the first quarter that shows tremendous early results, and we will be ambitious in growing this program. We will invest heavily in gaming because the combination of sponsorships, Premium, and Rack is driving results better than anticipated. We're going to lean into gaming and expand a creator program open to all creators, moving away from exclusive contracts toward a broadly accessible program that generates high revenue for creators and for Rumble Inc. For exceptional opportunities, such as Tim Pool, we will consider them, but our approach will be more data-driven and disciplined. We understand our numbers and what works, and we're going to focus on scaling this effective creator program.

Great. Last one. As a long-time follower of the company and stock, you sound more confident than in the past. What gives you that confidence? For example, you had high expectations heading into 2024 because of the U.S. presidential election, and you found even better outcomes after the election. Can you highlight why you feel that way?

Thanks, Tom. Having a partner like Tether is a major confidence booster. They're an enormous company and one of the most profitable companies per employee that I'm aware of. Having them back Rumble Inc. instills confidence in a way we haven't seen before. We had a strong election cycle and excellent results that should be positive for the business. I expect advertisers to open up, and while direct response remains our core today, we have substantial headroom to grow with brand advertisers. Currently our brand advertising is effectively at zero; if brands start coming in, it could materially increase our revenue. I'm also optimistic about international growth using Tether's user base and their willingness to support Rumble Inc. with advertising and partnership resources. Importantly, we are aligned with Tether on taking on Google. We've already taken share from YouTube, and there is a real opportunity on the cloud side. We are also exploring adding more products to the Rumble product line beyond cloud and video, such as email and other services where our audience and Tether's audience could benefit. The difference now is that we have a partner like Tether that believes in this vision and has stepped up to help. So yes, I'm very optimistic and looking forward to the coming year.

Excellent. Very encouraging. Thank you.

Thank you. Ladies and gentlemen, it appears we have reached the end of our question and answer session. Thank you for attending. You may now disconnect your lines.