United States
Securities and Exchange Commission
Washington, D. C. 20549
Form 10-K
☒
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended: December 31,
2022
or
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 001-40079
Rumble Inc.
(Exact name of registrant as specified in its charter)
444 Gulf of Mexico Dr Longboat Key, FL 34228
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (941)210-0196
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A common stock, par value $0.0001 per share RUM The Nasdaq Global Market
Securities registered pursuant to Section 12(g)
of the Act: NONE
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Emerging growth company ☒
Non-accelerated filer ☒ Smaller reporting company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal controls over financial reporting
under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No ☒
The aggregate market value of Class A common stock,
par value $0.0001 per share, held by non-affiliates of the registrant, computed by reference to the closing price as of June 30, 2022
was approximately $299,100,000.
As of March 27, 2023,
the registrant had issued and outstanding (i) 111,467,743shares of Class A common stock,
par value $0.0001 per share, (ii) 167,662,211 shares of Class C common stock, par value $0.0001
per share, and (iii) 105,782,403 shares of Class D common stock, par value $0.0001 per share.
Documents Incorporated by Reference
Portions of the registrant’s definitive
proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of
1934, relating to the registrant’s Annual Meeting of Stockholders to be held on June 16, 2023, are incorporated herein by reference
for purposes of Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K. The definitive proxy statement will be filed
with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2022.
Rumble Inc.
Annual Report on Form 10-K
for the Year Ended December 31, 2022
Part I 1
Item 1. Business 1
Item 1A. Risk Factors. 9
Item 1B. Unresolved Staff Comments 30
Item 2. Properties 30
Item 3. Legal Proceedings 30
Item 4. Mine Safety Disclosures 31
Item 6. [Reserved] 34
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45
Item 8. Financial Statements and Supplementary Data 46
Item 9A. Controls and Procedures 47
Item 9B. Other Information 47
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 47
Part III 48
Item 10. Directors, Executive Officers and Corporate Governance 48
Item 11. Executive Compensation 48
Item 14. Principal Accountant Fees and Services 48
Signatures 53
i
Cautionary
Note Regarding Forward-Looking Statements
This
Annual Report on Form 10-K (this “Form 10-K”) contains forward-looking statements regarding, among other things, our plans,
strategies and prospects, both business and financial. These statements are based on the beliefs and assumptions of our management. Although
we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable,
we cannot provide assurance that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently
subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning
possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking. Investors should read statements that contain these words carefully because they
discuss future expectations, contain projects of future results of operations or financial condition; or state other “forward-looking”
information. Forward-looking statements are based on information available as of the date of this Form 10-K and may involve significant
judgments and assumptions, known and unknown risks and uncertainties and other factors, many of which are outside our control. There
may be events in the future that management is not able to predict accurately or over which we have no control. We do not undertake any
obligation to update to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the
date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or
otherwise, except as may be required under applicable laws. The risk factors and cautionary language contained in this Form 10-K provide
examples of risks, uncertainties, and events that may cause actual results to differ materially from the expectations described in such
forward-looking statements, including among other things:
● our recent and rapid growth may not be indicative of future performance;
● we may fail to comply with applicable privacy laws;
ii
● hosting and delivery costs may increase unexpectedly;
● we may be unable to develop or maintain effective internal controls;
iii
Part
I
Item
1. Business
Overview
Unless
the section herein specifies otherwise, references to the “Company,” “we,” “us” or “our”
are to, (a) prior to the consummation of the business combination (the “Business Combination”) contemplated by that certain
business combination agreement, dated December 1, 2021 (as amended, the “Business Combination Agreement”), by and between
CF Acquisition Corp. VI, a Delaware corporation (“CF VI”), and Rumble Inc., a corporation formed under the laws of the Province
of Ontario, Canada (“Legacy Rumble”), either (i) CF VI or (ii) Legacy Rumble, as the context may require, and (b) following
the closing of the Business Combination, Rumble Inc., a Delaware corporation. Unless the section herein specifies otherwise, references
to “Rumble” are to (x) prior to the closing of the Business Combination, Legacy Rumble and (y) following the closing of the
Business Combination, Rumble Inc., a Delaware corporation. References to “ExchangeCo” are to 1000045728 Ontario Inc., a corporation
formed under the laws of the Province of Ontario, Canada, and an indirect, wholly owned subsidiary of Rumble, and references to “ExchangeCo
Shares” are to the exchangeable shares of ExchangeCo.
Our
Story
Rumble
was founded in 2013, back when the concept of ‘preferencing’ on the internet was simple – it was big vs. small. At
that time, it was clear that big tech social video platforms were beginning to preference large creators, influencers, and brands, while
leaving the small creator behind and thus, creating a market opportunity. At that time, Rumble was founded based on the premise of providing
small creators with the tools and distribution that they needed to succeed.
Fast forward to 2020, when
a new, and much more nuanced world of ‘preferencing’ was evolving online, which included sophisticated algorithms used by
the big tech incumbents for amplification and censorship. In contrast, Rumble never took the approach of black box algorithms to drive
profit and, most importantly, we never moved the goal posts on content policies. This consistency and transparency, along with tailwinds
from the 2020 U.S. election season, led to dramatic growth in our user base from 1.2 million monthly active users (“MAUs”)
in Q2 2020 to 21 million MAUs in Q4 2020.
Soon after this, the preferencing and censorship enforced by big tech
social platforms continued to expand into many other areas of content, including but not limited to the crypto-finance community and pop
culture. As a result, more creators and their audiences found a new home on Rumble. These have included top creators, such as Dan Bongino,
Russell Brand, Kim Iversen, Steve Will Do It, Dave Rubin, Kimberly Guilfoyle, Glenn Greenwald, Matt Kohrs, and Dana White, just to name
a few. As a result, our user base has grown from 21 million MAUs in Q4 2020 to 80 million MAUs in Q4 2022, almost quadrupling in two years.
During
this period of accelerated growth, Rumble announced a business combination with CF VI, a special purpose acquisition company, on December
1, 2021. The Business Combination was successfully completed on September 16, 2022, and our Class A common stock, par value $0.0001 per
share (“Class A Common Stock”) began trading on The Nasdaq Global Market (“Nasdaq”) under the symbol RUM. The
Business Combination and related PIPE investment provided Rumble with gross proceeds of approximately $400 million, prior to transaction
expenses. This capital infusion helps Rumble compete with its big tech competitors. Ultimately, 99.9% of CF VI shareholders elected not
to redeem their shares, which we believe was a strong expression of support for Rumble’s mission, its growth story to date and
its future potential.
For
further discussion of our key performance indicators, including definitions and explanations of the ways that management uses these metrics
in managing the performance of the business, please refer to the section titled “Key Business Metrics” under “Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
1
Our
Portfolio
Rumble
has two core businesses:
1) Video:
consisting of Rumble, our social video platform; Locals Technology Inc. (“Locals”), our subscription platform; and Rumble
Advertising Center (RAC), our in-house advertising platform; and
2)
Cloud: a new Infrastructure as a Service (IaaS) venture that we are planning to launch.
Our Video Business
The video business consists of
three core products: Rumble, Locals and RAC. The vision of our video business is to provide creators with the best monetization toolkit
on the internet. To fulfill this vision, our product roadmap includes the conversion of Rumble, Locals and RAC from three separate products
to a single seamlessly integrated platform.
Rumble
is a free-to-use video sharing platform operated by our Canadian subsidiary, Rumble Canada Inc., on which users can watch, share, like,
comment, and upload videos. Users can subscribe to channels to stay in touch with creators and access video on-demand (“VOD”)
and live content streamed by creators.
Locals,
which we acquired in October 2021, is a platform on which users can purchase subscriptions to access exclusive content in creator communities.
Creators and subscribers can engage through VOD, podcasts, live chat, polls, and community discussions.
Both
Rumble and Locals are available via desktop and mobile web, iOS and Android mobile applications (“apps”), as well as connected
TV apps including, but not limited to Roku, Apple TV, Fire TV and Android TV.
RAC
is an advertising marketplace, similar to Google AdSense, designed to facilitate transactions for advertisers seeking to advertise on
Rumble’s platforms as well as publisher platforms with which Rumble has partnerships. In RAC, advertisers can create and set up
banner and video campaigns. We also plan on designing RAC to become a marketplace of host-read / sponsorship advertising, which has the
potential to provide a significant opportunity for creators to further build their businesses. As of December 31, 2022, RAC was in beta
mode during which the system is being tested by a subset of advertisers with a very limited amount of available inventory. The product
continues to be enhanced in preparation for an expected commercial launch later in 2023. As we scale and integrate our platforms, we
expect to eventually drive significant and differentiated value to advertisers and creators through the development of this independent
advertising marketplace. Content creators use Rumble, Locals and RAC to build and monetize their audience through the following:
We
anticipate further enhancing the value proposition for users, creators, and advertisers as we continue to invest in integrating and enhancing
the Rumble, Locals and RAC platforms to provide a seamless experience and fulfill our vision of providing the best monetization toolkit
for creators on the internet.
2
In
addition, Rumble also obtains exclusive rights to distribute and license certain content on third party platforms, as well as on Rumble
and Locals.
Our
Cloud Business
In addition to our video business,
we are also planning to launch Rumble Cloud, a new Infrastructure as a Service (IaaS) business. We anticipate early demand for our cloud
services from businesses that find themselves at risk of cancellation by the incumbent big tech cloud providers, analogous to the initial
market opportunity that we realized in our video business. Offering cloud services is a natural extension of our video business, as we
can utilize excess capacity from our existing infrastructure.
Our
Constituents and Engagement
We have grown rapidly in the past year with our global MAUs reaching
80 million on average in Q4 2022, an increase of 142% from our 33 million average MAUs achieved in Q4 2021, and with minutes watched per
month on our platform increasing from 0.2 billion in Q3 2020 to 11.1 billion in Q4 2022.
Since
Q1 2022, we have secured top content creators across a diverse set of content verticals and have onboarded content creators such as:
● Russell Brand — Comedian, actor, and podcast host
● Dana White and Power Slap – New sports league founded by the UFC President
● Steven Crowder – Prominent political commentator and comedian
● Steve Will Do It – Well-known influencer within the Gen Z demographic
● Glenn Greenwald — Journalist, author, and lawyer
● Fresh & Fit – Popular late-night podcast within the Gen Z demographic
● Dave Rubin – Host of the Rubin Report
● Matt Kohrs — Cryptocurrency and investing content creator
Our
goal is to attract even more top creators to our platform, further accelerating our platform’s growth, and we have offered and
intend to continue to offer incentives, including economic incentives, to content creators to join our platform. We view expanding our
content library and creator base as paramount to attracting more users and driving engagement on our platform. Hours of uploaded video
per day were 10,373 on average in Q4 2022, an increase of 216% from Q4 2021.
As we bring top creators and their
content pipeline to our platform, we believe that we can draw more users onto our platform and keep them engaged for longer, in turn offering
better monetization opportunities for creators, and allowing us to bring on more creators. This flywheel effect is the key mechanism by
which we are approaching growing our video business.
3
Competitive
Strengths
Competitive
Overview
We
operate in a highly competitive environment, and the market for video content is rapidly evolving. Traditionally, video content had limitations
on how it was distributed to consumers, posing challenges for companies aiming to engage consumers across traditional and digital technologies.
Today, video content is consumed across all mediums in various formats, which has both increased the opportunities for consumer engagement
and altered the competitive dynamic for new and incumbent players.
Further,
the market expectation of instant, high-definition delivery and a diversified content offering has altered the strategy and go-to-market
approach for even the most successful video platforms.
We
compete with traditional video distribution platforms, but also with social media networks, entertainment businesses, video on demand
providers, major film and television studios, cable/news television networks, and more. What we believe has differentiated Rumble is
our ability to quickly establish and maintain trust with our users, creating an enjoyable and open viewing experience that welcomes content
of all genres. We take tremendous pride in operating what we view as the go-to neutral video platform in the market, which we believe
has allowed us to maintain our competitive positioning versus incumbent platforms.
A
Significant Market Shift
We
believe that several market friction points are driving creators and users to seek alternatives to incumbent platforms. Increasingly,
household technology names have adopted several principles and behaviors that we believe have opened significant market opportunity for
us to establish a lasting relationship with our community.
4
Our
Competitive Differentiation
We
believe that Rumble is uniquely positioned to address the various concerns in the video distribution marketplace. Rumble is one of the
few neutral, independent, and scaled video platforms that operates with a consistent and user-friendly moderation policy, employing only
reasonable, obvious, and necessary standards of conduct, which are clearly defined. Rumble is unique because we seek to simply distribute
the content how and where consumers want it, with no preferential treatment. We have built a differentiated product for both users and
creators, which has fueled our recent user growth and, we believe, positions us for further widespread adoption.
Value
Proposition for Users
We
aim to allow consumers of our content to see content that they desire, with no preferential treatment for “large” creators
or algorithms that suppress certain viewpoints. We have attracted and retained a global user base on the simple premise that Rumble offers
our community the best experience in the market — which is the single most important component to our strategy. Our open search
algorithm allows our community to access our entire content library within the search function. As our content library continues to expand,
this value proposition will only continue to expand opportunities and create an even better experience for the Rumble community.
Value
Proposition for Creators
Many
key elements of our value proposition to users also benefit our creators. We are focused on attracting the best talent to the platform
and have built tools to facilitate content production, distribution and monetization. Simply put, if a creator uploads quality content,
our goal to make sure that this content is seen. This creates favorable monetization opportunities for the best content on the platform
and highlights the value of our offering to content creators of all magnitudes.
Our
offering includes a world-class SDRM (social digital rights management) service for our creators, helping them to manage libraries and
ensure maximum efficiency on and off the Rumble platform. This feature further enhances our relationship with our creators and allows
us to capture, record and enhance our product through data analytics.
As
we continue to develop our in-house technology, we expect that our competitive differentiation will extend beyond distribution to infrastructure,
offering a similar value proposition to both markets: being a neutral platform built to meet the needs of our community.
Our
Growth Strategy
We
are focused on the following areas in an effort to drive our growth:
Content
Acquisition
Our
user base and user engagement growth are directly driven by the content available on our platform. We have on-boarded several top content
creators onto our platform over the last year which has enabled our significant consumption growth. Our goal is to attract even more
top creators to our platform, further accelerating our platform’s growth, and we have offered and intend to continue to offer incentives,
including economic incentives, to content creators to join our platform. These incentives have included and may continue to include equity
grants or cash payments, including arrangements under which we may agree to pay fixed compensation to content creators (in certain cases,
for multiple years) irrespective of whether the actual revenue or user growth generated by the content creator on our platform meets
our original modeled financial projections for that creator.
5
Video Product Development
Our
vision is to offer the best monetization toolkit for creators on the internet. To fulfill this vision, we plan to develop a seamless
integration across Rumble, Locals and RAC. In doing so, we strive to unlock full monetization potential across programmatic advertising,
host-read ads / sponsorships, tipping, subscription and pay-per-view. We anticipate that realization of this vision will greatly accelerate
creator onboarding to the platform, providing incremental value to users and advertisers, and ultimately drive platform consumption and
revenue. While we continue to develop new functionality on each component of the platform, we focus on integration that will drive value
to users, creators, and advertisers.
Cloud
Product Development
While
our Cloud infrastructure services offerings are still in early stages of development, our tentative roadmap includes: video player (player
and encoding), networking, storage, and cloud services (secure, sizable compute capacity). We expect Rumble Cloud to enter the beta stage
in 2023, during which we will continue to refine our go to market approach and product in preparation for an expected commercial release
in 2024.
International
Expansion
Historically, we have focused
on growing our U.S. and Canadian user base; any historic consumption from international countries has been purely opportunistic. We anticipate
boosting our international expansion once the video product and associated integrations are ready for scale across multiple languages
and markets. We believe that there is a significant opportunity for a global expansion of our content, user base and revenue.
Marketing
and Advertising
Users
and Creators
With the significant organic growth that we experienced to date, most
of our marketing efforts have been focused on amplifying earned media and accelerating the word-of-mouth momentum through creator advocacy.
As a result, we have been able to build our user base and brand with relatively minimal marketing costs. In the future, we will look to
build our brand across multiple audiences, driving user growth and video consumption through (1) content creator partnerships and advocacy,
including by offering incentives, including economic incentives, to content creators to join our platform, (2) continued earned media
strategies, and (3) increased marketing spend, primarily through digital paid media channels. Like many other major social media companies,
we rely on paid advertising in order to attract users to our platform; however, we cannot be certain that all or substantially all activity
that results from such advertising is genuine.
Advertisers
We
currently use several third-party advertisement networks and exchanges to fill our advertisement inventory. By developing our own network,
we will be in position to drive our value proposition and expand our advertiser base. In January 2022, we announced the deployment of
an alpha version of RAC, our own advertising marketplace. Several advertisers have begun using the new system, and eventually, we plan
for all ads on the Rumble platform to be served through this marketplace. We further expect to drive significant and differentiated value
to advertisers through the development of this independent advertising marketplace.
Human
Capital
We believe that our employees are our most significant resource. As
of December 31, 2022, we had 70 full-time employees, of whom 24 were based in Canada and 46 were based in the United States. None of our
employees are covered by collective bargaining agreements. We believe we have good relationships with our employees. Our human capital
resources objectives include identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees.
The principal purposes of our equity incentive plans are to attract, retain, and motivate key employees and directors through the granting
of stock-based compensation awards.
Competition
We
compete primarily with companies (many of which are much larger and more well capitalized than us) that also provide video and streaming
platforms to content creators, including YouTube, Roku, TikTok, Snapchat and Facebook. We compete with these companies to attract, engage
and retain users and subscribers.
6
Government
Regulation
We
are subject to domestic and foreign laws that affect companies conducting business on the internet generally, including laws relating
to the liability of providers of online services for their operations and the activities of their users.
Because
we host user-uploaded content, we may be subject to laws concerning such content. In the U.S., we rely, to a significant degree, on laws
that limit the liability of online providers for user-uploaded content, including the Digital Millennium Copyright Act of 1998 (“DMCA”)
and Section 230. Countries outside the U.S. generally do not provide as robust protections for online providers and may instead regulate
such entities to a higher degree. For example, in certain countries, online providers may be liable for hosting certain types of content
or may be required to remove such content within a short period of time upon notice. As we expand internationally, we or our customers
may also be subject to laws that regulate streaming services or online platforms, such as the EU’s Audiovisual Media Services Directive
or EU Regulation 2019/1150, which regulates platform-to-business relations.
Because
we receive, store and use a substantial amount of information received from or generated by our users, we are also impacted by laws and
regulations governing privacy and data security in the U.S. and worldwide. Examples of such regimes include Section 5 of the Federal
Trade Commission Act, the EU’s General Data Protection Regulation (GDPR), and the California Consumer Privacy Act (CCPA). These
laws generally regulate the collection, storage, transfer and use of personal information.
Because
our platform facilitates online payments, including subscription fees and tipping, we are subject to a variety of laws governing online
transactions, payment card transactions and the automatic renewal of online agreements. In the U.S., these matters are regulated by,
among other things, the federal Restore Online Shoppers Confidence Act (ROSCA) and various state laws.
As
a U.S.-based company with Canadian operations, we are subject to a variety of foreign laws governing our foreign operations, as well
as Canadian and U.S. laws that restrict trade and certain practices.
Product
Development
With
relatively limited access to capital for most of the Company’s history, our product and engineering teams have worked in an environment
based on efficiency and speed with a stringent focus on end-user value. With new access to capital upon consummation of the Business
Combination and the ability to scale, it will be critical to maintain this culture as we look to bring new innovations to our users and
creators.
Infrastructure
Guided by our overarching philosophy to technology, our business plan
contemplates spending considerable resources and investment on the underlying infrastructure that supports our products, such as building
out and networking multiple points of presence (PoPs) and optimizing at a scale of billions of minutes of video consumption on our platform
every month to millions of users, which requires significant investments in IT equipment, servers, bandwidth and data centers and data
hosting/storage. We have made initial investments in= 2022 and, as our business continues to grow and scale, we expect such investments
to grow proportionately over time.
Intellectual
Property
Our
intellectual property includes trademarks, such as RUMBLE in the United States and Canada, pending international trademarks for
RUMBLE, and a pending U.S. trademark application for LOCALS; the domain names rumble.com and locals.com;
copyrights in our source code, website, apps and creative assets; and trade secrets. In addition, our platforms are powered by a proprietary
technology platform. We rely on, and expect to continue to rely on, a combination of work for hire, assignment, and confidentiality agreements
with our employees, consultants, and third parties with whom we have relationships, as well as trademark, trade dress, domain name, copyright,
and trade secret laws to protect our brands, proprietary technology, and other intellectual property rights. We intend to continue to
file additional applications with respect to our intellectual property rights.
7
Acquisitions
In
October 2021, we bolstered our value proposition for content creators by acquiring Locals, a solution for (1) creators looking to monetize
their content through subscription, and (2) for users to gain access to premium content from their favorite content creators. The acquisition
was designed to accelerate our subscription revenue model and brought approximately 86,000 subscribers to our platform. Prior to our
acquisition of Locals, we did not offer a consumer-facing subscription service.
Facilities
We
are headquartered in Longboat Key, Florida, and maintain offices in both the United States and Canada. A number of our U.S. employees
work remotely. All of our facilities are leased. We believe that our current facilities are adequate to meet our current needs. We intend
to procure additional space in the future as we continue to add employees and expand geographically. We also believe that, if we require
additional space, we will be able to lease additional facilities on commercially reasonable terms.
Terms
of Service
Our
content policies, which are available at rumble.com/s/terms, contain politically neutral terms that ensure a safe and respectful
exchange of views on the Rumble platform. Among other things, they prohibit content that infringes on the rights of third parties, violates
any law, is pornographic or obscene in nature, promotes or supports violence or unlawful acts (including content that promotes or supports
Antifa, the KKK, white supremacist groups, and entities designated by the U.S. or Canadian government as terrorist organizations), or
exploits minor children (including disclosing personally identifiable information about minor children).
In
June 2022, we announced the first phase of an updated content moderation process and released a new set of proposed content policies
and removal and appeals process, which are intended to formalize our current practices and procedures and ensure a consistent and transparent
process. The proposed policies include (i) automated flagging for copyright infringement and pornographic material, (ii) a manual ad
hoc review of other potentially contravening content and (iii) an appeals process by which a creator can appeal the removal of any of
its content to a panel of Rumble Quality Control Community Members, consisting of Rumble creators with a proven track record of consistent
and active content creation, who are in good standing within the Rumble community, and have a sufficient following on the platform, as
determined by Rumble. We have published our proposed content policies and removal and appeals process on our website and are continuing
to solicit feedback from our community of creators and other users. We have no obligation to implement any changes to these policies
and processes. We initially planned to implement changes in 2022 and now expect to implement any changes by the end of 2023.
Our
website address is included in this report for informational purposes only. Our website and the information contained therein or connected
thereto are not deemed to be incorporated by reference in, and are not considered part of, this Annual Report on Form 10-K.
Available
Information
All
periodic and current reports and other filings that we are required to file with the SEC, including our annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant Section 15(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”), as amended, are available free of charge from the SEC’s website (www.sec.gov).
Such documents are available as soon as reasonably practicable after electronic filing of the material with the SEC. Copies of these
reports (excluding exhibits) may also be obtained free of charge, upon written request to: Rumble Inc., 444 Gulf of Mexico Dr, Longboat
Key, Florida 34228.
We
also post our Code of Ethics on our website. See Part III, Item 10 for more information regarding our Code of Ethics.
8
Item
1A. Risk Factors
Risks
and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements
contained in this Form 10-K and other public statements we make are described below. Investors in our securities should carefully consider
these risk factors, in addition to the risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking
Statements,” together with all of the other information included in this Form 10-K and in our other filings with the SEC. The occurrence
of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances,
may adversely affect our ability to realize the anticipated benefits of the Business Combination, and may have an adverse effect on our
business, cash flows, financial condition and results of operations. We may face additional risks and uncertainties that are not presently
known to us, or that we currently deem immaterial, which may also impair our business, cash flows, financial condition and results of
operations. The following discussion should be read in conjunction with our condensed consolidated financial statements, which are included
in Part II of this Form 10-K.
Summary
of Risk Factors
The
following summarizes risks and uncertainties that could adversely affect our business, cash flows, financial condition and results of
operations. You should read this summary together with the detailed description of each risk factor contained in this section. Such risks
and uncertainties include, but are not limited to:
● we may fail to maintain adequate operational and financial resources;
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● our management team has limited experience managing a public company;
● we may fail to comply with applicable privacy laws;
Risks
Relating to Our Business
Weakened
global economic conditions, including the effects of heightened inflation, may affect our business and operating results.
Our
overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated
to us or our industry may negatively affect us. The U.S. and other key international economies have been affected from time to time by
falling demand for a variety of goods and services, restricted credit, reduced liquidity, reduced corporate profitability, weak economic
growth, volatility in credit, equity and foreign exchange markets, bankruptcies, inflation and overall uncertainty with respect to the
economy. Weak economic conditions or the perception thereof, or significant uncertainty regarding the stability of financial markets
related to stock market volatility, inflation, recession, changes in governmental fiscal, monetary and tax policies, among others, could
adversely impact our business and operating results.
More
recently, inflation rates in the U.S. have been higher than in previous years, which may result in reduced consumer confidence and discretionary
spending, decreased demand by advertisers for our products and services, increases in our labor and other operating costs, constrained
credit and liquidity, reduced government spending and volatility in financial markets. The Federal Reserve has raised, and may again
raise, interest rates in response to concerns over inflation risk. Increases in interest rates on credit and debt that would increase
the cost of any borrowing that we may make from time to time and could impact our ability to access the capital markets. Increases in
interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further
increasing economic uncertainty and heightening these risks. In an inflationary environment, we may be unable to increase our revenues
at or above the rate at which our costs increase, which could negatively impact our operating margins and could have a material adverse
effect on our business and operating results. In such an environment, in which we also face significant competition from larger and well-capitalized
competitors, we may experience rising costs to secure the services of top content creators. We also may experience lower than expected
advertising sales and potential adverse impacts on our competitive position if there is a decrease in consumer spending.
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Our
limited operating history makes it difficult to evaluate our business and prospects.
We
have a limited operating history, which makes it difficult to evaluate our businesses and prospects or forecast our future results. We
are subject to the same risks and uncertainties frequently encountered by companies in rapidly evolving markets. Our financial results
in any given quarter can be influenced by numerous factors, many of which we are unable to predict or are outside of our control, including:
● our ability to maintain and grow traffic, content uploads, and engagement;
● our ability to attract and retain advertisers in a particular period;
● the number of ads shown to our traffic;
● the pricing of our advertising products;
● our ability to maintain gross margins and operating margins; and
● system failures or breaches of security or privacy.
We
may not continue to grow or maintain our active user base, may not be able to achieve or maintain profitability and may not be able to
scale our systems, technology, or infrastructure effectively or grow our business at the same or similar rate as other comparable companies.
While
our key performance metrics, including MAUs and minutes watched per month, have grown in recent periods, this growth rate may not be
sustainable and should not be considered indicative of future levels of active viewers and future performance. In addition, Rumble may
not realize sufficient revenue to achieve or, if achieved, maintain profitability. As we grow our business, our revenue growth rates
may slow or reverse in future periods due to several reasons, which may include slowing demand for our service, increasing competition,
a decrease in the growth of our overall market, an inability to scale our systems, technology or infrastructure effectively, and the
failure to capitalize on growth opportunities or the maturation of our business. We may incur losses in the future for several reasons,
including insufficient growth in the level of engagement, a failure to retain its existing level of engagement, increasing competition,
the failure to continue to attract content creators with large followings, the payment of fixed payment obligations to content creators
who join our platform that turn out to be unprofitable over the term of the applicable contract as a result of actual performance that
does not meet our original modeled financial projections for that creator, as well as other risks described in these “Risk Factors,”
and we may encounter unforeseen expenses, difficulties, complications and delays and other unknown factors. We expect to continue to
make investments in the development and expansion of our business, which may not result in increased or sufficient revenue or growth,
including relative to other comparable companies, as a result of which we may not be able to achieve or maintain profitability.
If
we fail to maintain adequate operational and financial resources, particularly if we continue to grow rapidly, we may be unable to execute
our business plan or maintain high levels of service and customer satisfaction.
We
have experienced, and expect to continue to experience, rapid growth, which has placed, and may continue to place, significant demands
on our management and our operational and financial resources. Our organizational structure is becoming more complex as we scale our
operational, financial, and management controls, as well as our reporting systems and procedures, and expand internationally. As we continue
to grow, we face challenges of integrating, developing, training, and motivating a rapidly growing employee base in our various offices
in multiple jurisdictions and navigating a complex multinational regulatory landscape. If we fail to manage our anticipated growth and
change in a manner that preserves the functionality of our platforms and solutions, the quality of our products and services may suffer,
which could negatively affect our brand and reputation and harm our ability to attract customers.
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To
manage growth in our operations and personnel, we will need to continue to grow and improve our operational, financial, and management
controls and our reporting systems and procedures. We will require significant capital expenditures and the allocation of valuable management
resources to grow and change in these areas. Our expansion has placed, and our expected future growth will continue to place, a significant
drain on our management, customer experience, research and development, sales and marketing, administrative, financial, and other resources.
We
anticipate that significant additional investments will be required to scale our operations and increase productivity, to address the
needs of our customers, to further develop and enhance our products and services, to expand into new geographic areas and to scale with
our overall growth. If additional investments are required due to significant growth, this will increase our cost base, which will make
it more difficult for us to offset any future revenue shortfalls by reducing expenses in the short term.
Users
are increasingly using mobile devices and connected TV apps to access content within digital media and adjacent businesses, and if we
are unsuccessful in attracting new users to our mobile and connected TV offerings and expanding the capabilities of our content and other
offerings with respect to our mobile and connected TV platforms, our business could be adversely affected.
Our
future success depends in part on the continued growth in the use of our mobile apps and platforms by our users. The use of mobile technology
may not continue to grow at historical rates, users may not continue to use mobile technology to access digital media and adjacent businesses,
and monetization rates for content on mobile devices and connected TV apps may be lower than monetization rates on traditional desktop
platforms. Further, mobile devices may not be accepted as a viable long-term platform for several reasons, including actual or perceived
lack of security of information and possible disruptions of service or connectivity. In addition, traffic on our mobile platforms may
not continue to grow if we do not continue to innovate and introduce enhanced products on such platforms, or if users believe that our
competitors offer superior mobile products. The growth of traffic on our mobile products may also slow or decline if our mobile applications
are no longer compatible with operating systems such as iOS, Android, Windows or the devices they support. If use of our mobile platforms
does not continue to grow, our business and operating results could be harmed.
Our
traffic growth, engagement, and monetization depend upon effective operation within and compatibility with operating systems, networks,
devices, web browsers and standards, including mobile operating systems, networks, and standards that we do not control.
We
make our content available across a variety of operating systems and through websites. We are dependent on the compatibility of our content
with popular devices, streaming tools, desktop and mobile operating systems, connected TV systems, web browsers that we do not control,
such as Mac OS, Windows, Android, iOS, Chrome and Firefox, and mobile application stores, such as Apple’s App Store and the Google
Play Store. Any changes in such systems, devices or web browsers that degrade the functionality of our content or give preferential treatment
to competitive content could adversely affect usage of our content.
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A
significant portion of our traffic accesses our content and services through mobile devices and, as a result, our ability to grow traffic,
engagement and advertising revenue is increasingly dependent on our ability to generate revenue from content viewed and engaged with
on mobile devices. A key element of our strategy is focusing on mobile apps and connected TV apps, and we expect to continue to devote
significant resources to the creation and support of developing new and innovative mobile and connected TV products, services and apps.
We are dependent on the interoperability of our content and our apps with popular mobile operating systems, streaming tools, networks
and standards that we do not control, such as the Android and iOS operating systems. We also depend on the availability of the Rumble
app on mobile app stores, such as Apple’s App Store and the Google Play Store, and if our access to such stores is limited or terminated,
regardless of the legitimacy of the stated reasons, our ability to reach users through our mobile app will be negatively impacted. We
may not be successful in maintaining or developing relationships with key participants in the mobile and connected TV industries or in
developing content that operates effectively with these technologies, systems, tools, networks, or standards. Any changes in such systems,
or changes in our relationships with mobile operating system partners, handset and connected TV manufacturers, or mobile carriers, or
in their terms of service or policies that reduce or eliminate our ability to distribute and monetize our content, impair access to our
content by blocking access through mobile devices, make it hard to readily discover, install, update or access our content and apps on
mobile devices and connected TVs, limit the effectiveness of advertisements, give preferential treatment to competitive, or their own,
content or apps, limit our ability to measure the effectiveness of branded content, or charge fees related to the distribution of our
content or apps could adversely affect the consumption and monetization of our content on mobile devices. Additionally, if the number
of platforms for which we develop our product expands, it will result in an increase in our operating expenses. In the event that it
is more difficult to access our content or use our apps and services, particularly on mobile devices and connected TVs, or if our users