Business Overview Rumble was founded in 2013 by Chris Pavlovski as a video-sharing platform designed to help content creators manage, distribute, and monetize their content. The company was originally incorporated under the name Rumble in the Province of Ontario, Canada. In its early years, Rumble faced significant challenges as it sought to establish itself as an alternative to larger video platforms. The company was "canceled" by various technology and commercial partners and was forced to shut off access in certain countries due to its commitment to free speech and unwillingness to censor content. Rumble also faced relentless negative media campaigns during this period.
Despite these obstacles, Rumble persevered and was able to grow its user base and creator community. The company focused on expanding its teams, infrastructure, products, and revenue engines to position itself for future growth. Rumble's resolve to protect free speech and provide a platform for diverse voices that were being suppressed on other platforms resonated with many users and creators.
In December 2021, Rumble Inc. (then known as Legacy Rumble) entered into a business combination agreement with CF Acquisition VI, a special purpose acquisition company (SPAC). The transaction, which closed in September 2022, resulted in Rumble Inc. becoming a publicly traded company on the Nasdaq stock exchange under the ticker symbol RUM.
Financial Performance Rumble's financial performance has shown strong growth in recent years. In 2023, the company recorded annual revenue of $80.96 million, up from $39.38 million in 2021, representing a compound annual growth rate (CAGR) of 40.1%. This growth has been driven by the platform's expanding user base and its ability to effectively monetize its audience through advertising and subscription offerings.
For the third quarter of 2024, Rumble reported revenue of $25.06 million, a significant increase of $7.10 million or 39% compared to the same period in 2023. This growth was primarily attributed to higher advertising and subscription revenue. The company's average revenue per user (ARPU) for Q3 2024 was $0.33, slightly down from $0.37 in Q2 2024, as revenue growth marginally lagged user growth.
Despite the impressive revenue growth, Rumble has yet to achieve profitability. The company reported a net loss of $116.42 million in 2023, and the trend continued in Q3 2024 with a net loss of $31.54 million. These losses reflect significant investments in content acquisition, technology infrastructure, and marketing initiatives, all of which are critical to the platform's long-term success. However, there are signs of improvement, as the Q3 2024 adjusted EBITDA loss of $23.5 million showed progress compared to a loss of $35.4 million in Q3 2023.
Operational Highlights One of Rumble's key strengths is its ability to attract and retain a highly engaged user base. In the third quarter of 2024, the company reported an average of 67 million monthly active users (MAUs), a significant increase from the 54 million MAUs reported in the previous quarter. This growth was largely driven by increased political engagement surrounding the 2024 U.S. presidential election, demonstrating Rumble's ability to capitalize on major events and trends.
The company has also made significant strides in its monetization efforts, with the launch of its Rumble Premium subscription service and the Rumble Advertising Center (RAC). Rumble Premium, which offers an ad-free viewing experience and exclusive content, has been a strong driver of revenue growth, with the company reporting a significant increase in premium subscribers in the third quarter of 2024.
Furthermore, the RAC has provided Rumble with a powerful advertising platform, allowing the company to effectively monetize its audience and compete with larger players in the digital advertising space. The integration of mid-roll advertisements into the platform in September 2024 has been a particular success, leading to a boost in both premium subscriptions and overall advertising revenue. The company expects the full impact of mid-roll ads to be reflected in Q4 2024, with management expressing optimism about the RAC's performance in the coming quarter.
Audience Monetization Segment Rumble's Audience Monetization segment is the primary revenue driver for the company, representing 87% of total revenue for both the three and nine months ended September 30, 2024. This segment includes various revenue streams related to its video sharing platform, such as advertising fees, subscription fees from Rumble Premium, content licensing, tipping, and platform hosting fees.
For the three months ended September 30, 2024, Audience Monetization revenue was $21.85 million, an increase of $5.90 million or 37% compared to the same period in 2023. This increase was mainly due to higher advertising and subscription revenue. For the nine months ended September 30, 2024, the segment revenue was $56.94 million, an increase of $2.41 million or 4% compared to the same period in 2023, driven by higher subscription, platform hosting fees, and tipping fees, offset by decreases in advertising fees.
Other Initiatives Segment Rumble's Other Initiatives segment includes revenue from digital advertisements placed on Rumble's network of third-party publisher websites or mobile applications, as well as revenue from the company's cloud services business. This segment accounted for 13% of total revenue for both the three and nine months ended September 30, 2024.
For the three months ended September 30, 2024, Other Initiatives revenue was $3.21 million, an increase of $1.18 million or 58% compared to the same period in 2023. This growth was primarily due to increased monetization of advertising inventory by Rumble's publisher network and an expansion of cloud services offered. For the nine months ended September 30, 2024, the segment revenue was $8.32 million, an increase of $2.28 million or 38% compared to the same period in 2023.
Challenges and Risks While Rumble's growth trajectory is undoubtedly impressive, the company faces several significant challenges and risks. The most pressing is the ongoing legal and regulatory battles it has faced, particularly in jurisdictions such as Brazil, where the company has been embroiled in a high-profile dispute over content moderation and free speech issues.
Additionally, Rumble's reliance on a small number of high-profile content creators and the potential for their departure or loss of popularity poses a risk to the platform's user engagement and monetization efforts. The company's ability to continue attracting and retaining top talent will be crucial to its long-term success.
Another concern is the potential for increased competition from larger tech giants, such as YouTube and TikTok, which have the resources and scale to aggressively compete in the video-sharing space. Rumble's ability to differentiate itself and maintain its unique positioning as a free speech champion will be essential in fending off these competitive threats.
Liquidity and Financial Position As of September 30, 2024, Rumble maintained a strong liquidity position with $130.78 million in cash and cash equivalents. The company's debt-to-equity ratio stood at 0.013, indicating a low level of debt relative to equity. Rumble's current ratio and quick ratio were both 3.94, suggesting a strong ability to meet short-term obligations.
The company had entered into a guarantee standby letter of credit in the amount of $1.36 million as of September 30, 2024, which will be used towards the issuance of credit for running day-to-day business operations. This additional financial flexibility further strengthens Rumble's position as it continues to invest in growth initiatives.
Outlook and Guidance Rumble expects sequential quarter-over-quarter revenue growth to continue for the remainder of 2024. The introduction of mid-roll ads in September 2024 had a larger impact than anticipated, boosting both RAC revenues and Rumble Premium subscriber growth. Management is particularly optimistic about the performance of the RAC in Q4 2024, as it will reflect the full quarter impact of mid-roll ads.
Looking ahead, Rumble aims to move "materially towards adjusted EBITDA breakeven in 2025." The company has also secured its first major brand advertising partnership, set to begin in December 2024, indicating potential for further brand advertiser adoption and diversification of revenue streams.
Conclusion Despite the challenges, Rumble's prospects for future growth remain promising. The company's unwavering commitment to free speech, its rapidly expanding user base, and its successful monetization efforts position it for continued success in the years ahead. The introduction of new features like mid-roll ads and the expansion of the Rumble Advertising Center demonstrate the company's ability to innovate and adapt to market demands.
Moreover, the growing demand for alternative social media platforms that prioritize open discourse and resist censorship presents a significant opportunity for Rumble to cement its position as the go-to destination for those seeking a truly uncensored online experience.
As Rumble navigates the evolving digital landscape, investors would be wise to keep a close eye on the company's progress and its ability to capitalize on the changing dynamics of the industry. With its unique value proposition, strong financial footing, and strategic focus on both audience monetization and cloud services, Rumble appears poised to emerge as a disruptive force in the world of online content and digital infrastructure.