Rumble's Origin and Early Years Rumble was launched in 2013 with a mission to provide a video-sharing platform that would foster free speech and offer creators an alternative to the perceived censorship and bias of larger platforms. The company was originally incorporated under the laws of the Province of Ontario, Canada as Legacy Rumble. In its early years, Rumble faced significant financial challenges. In 2020, the company reported a net loss of $1.3 million on revenues of $4.6 million. The following year, despite increasing its revenue to $9.5 million, Rumble's net loss grew to $13.4 million. These losses were likely due to the substantial investments required to build out its platform and attract users and content creators.
Despite these challenges, Rumble managed to secure a $50 million preferred stock offering in 2021, providing crucial funding for its continued development. This injection of capital proved to be a turning point for the company, enabling it to accelerate its growth strategy and expand its offerings.
In December 2021, Legacy Rumble entered into a business agreement with CF Acquisition VI, a Delaware corporation. On September 16, 2022, the two companies completed a transaction known as the Business Combination, resulting in CF Acquisition VI being renamed Rumble Inc. and Legacy Rumble becoming Rumble Canada Inc. This move transformed Rumble into a publicly traded company, with its shares and warrants listed on the Nasdaq Global Market.
Navigating the Shifting Landscape Rumble's rise has coincided with a period of increasing scrutiny and controversy surrounding the content moderation practices of larger social media platforms. As concerns over censorship and political bias have mounted, Rumble has positioned itself as a haven for creators and users seeking a more open and permissive environment.
This positioning has paid dividends, as Rumble has experienced a surge in user growth, with its monthly active users (MAUs) reaching 53 million in the second quarter of 2024, up from 40 million in the first quarter. The company's focus on fostering a politically diverse content ecosystem has also helped it attract a loyal user base and a growing stable of high-profile creators.
Diversifying Revenue Streams While Rumble's user growth has been impressive, the company has also made strides in diversifying its revenue streams. In addition to its core video-sharing platform, Rumble has launched a cloud services division, known as Rumble Cloud, that has already secured significant customers, including the Miami Dolphins NFL franchise and the government of Macedonia.
This cloud services business represents a significant opportunity for Rumble, as it taps into the growing demand for secure and scalable cloud infrastructure. The company's ability to attract mainstream clients, such as the Dolphins, suggests that its cloud offerings are resonating beyond the "parallel economy" of conservative-leaning users and businesses.
Navigating Regulatory and Reputational Challenges Like any fast-growing tech company, Rumble has faced its share of regulatory and reputational challenges. The company has been at the center of several high-profile legal battles, including an antitrust lawsuit against Google and a lawsuit against a group of advertising agencies accused of conspiring to limit advertising on Rumble and similar platforms.
These legal battles underscore the complex and sometimes contentious environment in which Rumble operates. The company's commitment to free speech and its perceived political leanings have made it a target for critics who argue that it enables the spread of misinformation and divisive rhetoric.
Rumble has sought to address these concerns by investing in content moderation and strengthening its policies around the types of content allowed on its platform. However, navigating this delicate balance between free expression and responsible content curation will likely remain a key challenge for the company going forward.
Financials Rumble's financial performance has been mixed, reflecting the company's rapid growth and the significant investments it has made in expanding its platform and cloud services offerings.
For the full year 2023, Rumble reported revenue of $80.96 million, up from $39.38 million in 2022. However, the company also reported a net loss of $116.42 million, compared to a net loss of $11.40 million in the prior year. This reflects the significant costs associated with Rumble's growth initiatives, including content licensing agreements, technology infrastructure, and marketing. The company's operating cash flow (OCF) for 2023 was -$92.91 million, while free cash flow (FCF) was -$110.40 million.
In the most recent quarter (Q2 2024), Rumble reported revenue of $22.47 million, a 27% sequential increase from $17.7 million in Q1 2024. However, the company also reported a net loss of $26.78 million for the quarter. The operating cash flow for Q2 2024 was -$21.74 million, with free cash flow at -$25.24 million. Year-over-year revenue growth was -10% due to decreases in advertising fees, which were partially offset by increases in subscription and tipping fees. The decrease in cost of services was primarily due to a $5.6 million decrease in programming and content costs.
Rumble's average revenue per user (ARPU) for Q2 2024 was $0.37, up 19% from $0.31 in Q1 2024, indicating improving monetization of its user base.
Liquidity Rumble's liquidity position remains strong, which is crucial for sustaining growth and navigating challenges. As of June 30, 2024, the company had $153.10 million in cash, cash equivalents, and marketable securities on its balance sheet. This robust cash position provides Rumble with significant runway to continue investing in growth initiatives and weather potential headwinds.
The company's debt-to-equity ratio stands at 0.013602113, indicating a very low level of debt relative to equity. Rumble also has a $1.36 million guarantee standby letter of credit available. The company's current ratio and quick ratio are both 4.56, suggesting strong short-term liquidity and ability to meet short-term obligations.
Business Segments and Legal Challenges Rumble operates in two main product segments: Audience Monetization and Other Initiatives. The Audience Monetization segment includes revenue from advertising fees, subscription fees from consumer product offerings like Locals and badges, content licensing to third parties, pay-per-view fees, and tipping and platform hosting fees. The Other Initiatives segment includes digital advertising revenue from ads placed on Rumble's network of third-party publisher websites and mobile applications, as well as revenue from the company's cloud services business.
For the six months ended June 30, 2024, Rumble reported total revenue of $40.20 million, with Audience Monetization contributing $35.09 million and Other Initiatives contributing $5.11 million.
Rumble is currently involved in several legal battles that could impact its future operations and financial performance:
1. In January 2022, Kosmayer Investment Inc. (KII) filed a lawsuit against Rumble and its CEO, alleging fraudulent misrepresentation related to KII's decision to redeem its shares in August 2020. KII is seeking rescission of the redemption or damages worth $419 million.
2. In January 2021, Rumble filed an antitrust lawsuit against Google, alleging unlawful advantage given to YouTube in search engine results and the mobile phone market.
3. In May 2024, Rumble filed a second antitrust lawsuit against Google, related to alleged monopolization of the online advertising market.
4. In December 2022, Rumble and Eugene Volokh filed a lawsuit to block the enforcement of New York's Social Media Law, with a preliminary injunction granted in February 2023.
5. In November 2023, Rumble filed a defamation lawsuit against Nandini Jammi and Claire Atkin, co-founders of an organization that targets news outlets and platforms.
6. In August 2024, Rumble filed an antitrust lawsuit against the World Federation of Advertisers, WPP plc, and GroupM Worldwide LLC, alleging a conspiracy to withhold advertising revenue from Rumble and other digital media platforms.
Future Outlook Looking ahead, Rumble has provided guidance suggesting continued growth. The company expects revenues to increase sequentially throughout 2024, contingent on the performance of sponsorship agreements with advertisers and the anticipated ramp-up of political advertising with the upcoming election cycle.
Rumble also anticipates moving materially towards adjusted EBITDA breakeven in 2025 as it focuses on ramping up monetization while maintaining cost discipline. This outlook reflects the company's strategy of prioritizing growth and market share expansion in the near term, with a shift towards profitability in the medium term.
Conclusion Rumble Inc. (RUM) has emerged as a disruptive force in the digital media landscape, offering a unique value proposition to both content creators and users. While the company has faced its share of challenges, its focus on fostering a politically diverse ecosystem, its diversification into cloud services, and its strong user growth have positioned it for continued success.
As Rumble navigates the evolving regulatory and competitive landscape, investors will be closely watching the company's ability to balance growth, profitability, and responsible content moderation. With a solid foundation, a clear vision, and a strong liquidity position, Rumble appears poised to play a significant role in the ongoing transformation of the digital media industry. However, the company's ability to successfully resolve its ongoing legal challenges and achieve its financial targets will be crucial in determining its long-term success.