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, 2023
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, 2023 was approximately $699.2 million.
As
of March 22, 2024, the registrant had issued and outstanding (i) 115,126,670 shares of Class A common stock, par value $0.0001 per share,
(ii) 165,153,628 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 14, 2024,
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, 2023.
Rumble
Inc.
Annual Report on Form 10-K
for the Year Ended December 31, 2023
Part I 1
Item 1. Business 1
Item 1A. Risk Factors. 7
Item 1B. Unresolved Staff Comments 31
Item 2. Properties 32
Item 3. Legal Proceedings 32
Item 4. Mine Safety Disclosures 33
Item 6. [Reserved] 35
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46
Item 8. Financial Statements and Supplementary Data 47
Item 9A. Controls and Procedures 48
Item 9B. Other Information 49
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 49
Part III 50
Item 10. Directors, Executive Officers and Corporate Governance 50
Item 11. Executive Compensation 50
Item 14. Principal Accountant Fees and Services 50
Signatures 55
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
iii
● hosting and delivery costs may increase unexpectedly;
● we may be unable to develop or maintain effective internal controls;
iv
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, when the concept of ‘preferencing’ on the internet was simple – it was big vs. small. At that
time, it was clear that the incumbent 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 incumbents for amplification and censorship. In contrast, Rumble never moved the goal posts on its content policies.
This consistency and transparency, along with tailwinds from the 2020 U.S. election season, led to dramatic growth in Rumble’s
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 the incumbent 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, Dave Rubin, Kimberly Guilfoyle, Glenn
Greenwald, Matt Kohrs, and Dana White, just to name a few. As a result, our user base has more than tripled in three years, growing from
21 million MAUs (UA) in Q4 2020 to 67 million MAUs (GA4) in Q4 2023.
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 has helped Rumble compete with its big tech and other incumbent 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.
With
this capital in place, Rumble set out to execute on a growth strategy with the following four key tenets: 1) invest in content to grow
and diversify the content library and user base; 2) build Rumble Advertising Center, an in-house advertising marketplace and network;
3) create the infrastructure to support the Rumble video platform and future Rumble Cloud go-to-market needs; and 4) hire across the
organization to support domestic and future international growth. Today, Rumble is a high-growth video and cloud services provider on
a mission to protect the free and open internet.
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
is comprised of two segments: Rumble Services and Rumble Cloud.
1) Rumble Services:
2) Rumble Cloud:
Rumble
Services
Vision,
Products and Differentiation
Rumble
Services consists of three core businesses: Rumble Video, Rumble Studio, and RAC. The collective vision of Rumble Services is to provide
creators with the best monetization toolkit on the internet. To fulfill this vision, our product roadmap is focused on the progressive
integration of these businesses and underlying products into to a single seamlessly integrated platform, which has the potential to unlock
a variety of differentiated feature sets to users, creators, advertisers, and publishers.
Rumble
Video is enabled primarily through our flagship product, Rumble.com, a free-to-use video sharing and livestreaming platform 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. In addition, Rumble Video also offers a premium subscription service
via Locals.com, where users can access certain free content and purchase subscriptions to support creators and access exclusive content
in creator communities. Both Rumble.com and Locals.com are available via desktop and mobile web, iOS and Android mobile applications
(“apps”), as well as connected TV apps including Roku, Apple TV, Amazon Fire TV, LG, Samsung, and Android TV. In aggregate,
Rumble Video provides a platform for creators to benefit from our growing advertising business and revenue share model.
Rumble
Streaming Marketplace is enabled by Rumble Studio, a new, patent-pending application designed to enable a first-of-its-kind livestreaming
and monetization service for creators. Using Rumble Studio, creators can establish a variety of custom settings for their livestream,
set up, go-live and control their livestream across multiple social platforms, while also benefiting from a variety of custom and programmatic
monetization opportunities, including host-read ads and sponsorships. Rumble Studio is currently available via desktop and mobile web,
as well as iOS and Android mobile applications.
Rumble
Advertising Center is our proprietary advertising marketplace and network designed to facilitate transactions for advertisers seeking
to access Rumble.com traffic and also traffic from other publishers in the RAC network. Within the platform, RAC offers a unique set
of advertising opportunities for advertisers, including traditional display and pre-roll/mid-roll video advertising in addition to creator
sponsorships. Furthermore, the automated technology designed to make creator sponsorship opportunities available to advertisers either
programmatically or through direct deals is planned to launch to general availability in 2024, which will be a fully differentiated offering
in the market and augment the current manual sales effort for this revenue stream.
2
The
continued scale and integration of the Rumble Video, Rumble Studio, and RAC platforms will bring a truly differentiated offering to the
market, which is the key to fulfill the Company’s vision of providing the best monetization toolkit for creators on the internet.
How
We Generate Revenue
Our
portfolio of services enables a diversified set of revenue streams, which includes:
● Advertising:
● Subscriptions, Pay-Per-View and Tipping:
We
share revenue generated from advertising, subscriptions, pay-per-view and tipping with creators in a revenue-share model.
Sales
& Marketing
A
vast majority of the substantial user growth experienced by Rumble.com between 2020 and 2022 was organic, driven largely through user
and creator advocacy. As a result, very minimal marketing spend was deployed during that time. In 2023, while the organic growth continued,
the Company made several investments to bring in new content creators consistent with our goals during the de-SPAC, which in turn attracted
new audiences to the platform. Going forward, we will look to build our brand across multiple audiences, driving user growth and video
consumption through (1) selective content creator partnerships and advocacy, (2) continued strategies to earn unpaid media coverage and
recognition, and (3) increased marketing spend, primarily through digital paid media channels, particularly as advertising revenues increase.
Our
advertising platform, RAC, is designed as a self-serve platform where advertisers can sign up, build a campaign and bid on traffic leveraging
various targeting tactics. As a result, paid marketing strategies will be employed as inventory is released into the network in an effort
to attract new advertisers into the system. In parallel to this and other growth strategies, we will make continued investment into direct
sales, account management and creator success teams to drive incremental business across display and video advertising, as well as sponsorships.
Lastly,
for creators, the Company made several direct investments into large creators in 2023. These investments helped attract high-profile
creators to the platform given that, at the time, our advertising revenues were minimal and creators’ earnings on the Rumble Video
platform were generally not competitive with the earnings potential offered by the incumbent platforms. With the Company now focused
more on growing the advertising business and driving revenue, we believe that creators are now better-positioned to earn money on Rumble,
which we believe in turn will bring more content and creators to the platform, thereby yielding more engagement and ultimately driving
more advertising revenue.
3
Competition
We
operate in a challenging and rapidly evolving environment. We compete with other online video distribution platforms, including
YouTube, and confront conduct by YouTube and Google that we believe is highly anti-competitive (see Part I, Item 2, “Legal Proceedings”
for further information). We also face significant challenges in obtaining advertising revenue because advertisers have numerous
options for allocating their advertising budgets. Rumble Video seeks to compete with other platforms by establishing and maintaining
trust with our users, creating an enjoyable viewing experience that welcomes a variety of video content. We seek to operate a neutral
video platform in order to meet the challenges presented by Big Tech.
Rumble
Cloud
Origin,
Vision, Products and Differentiation
After
its initial beta phase, Rumble Cloud was launched in Q1 2024, and is an Infrastructure as a Service (IaaS) offering designed to service
a wide variety of businesses from startups to small and medium sized businesses (SMBs) to enterprise clients.
Rumble
Cloud was built based on the following key premises: 1) it was existential for us to invest and build out the infrastructure to support
Rumble Video and insulate ourselves from arbitrarily enforced terms and conditions and unfavorable economics offered by the incumbent
cloud providers, and 2) given the significant amount of compute, storage and bandwidth requirements of Rumble Video, it was a natural
extension of the business to offer excess infrastructure capacity to the cloud market. Moreover, we saw an opportunity to capitalize
on a product-market fit by specifically addressing the chronic customer pain points in the cloud market, including censorship, trust
with data, vendor lock-in strategies, as well as unfair and unpredictable pricing.
Backed
by our mission to protect a free and open internet, the vision of Rumble Cloud is to empower businesses and allow them to take control
of their IT budgets by providing the most predictable and fair pricing model in the cloud market.
Rumble
Cloud launched and currently operates with the infrastructure and essential computing and storage necessary to run a wide array of workloads
and applications, including:
● Cloud compute;
● Load balancers;
● Object storage;
● Kubernetes orchestration;
● Block storage; and
● Virtual private cloud.
With
Rumble Video as the first anchor tenant of Rumble Cloud, we built our infrastructure from the ground up to run on the latest generation
equipment, including 4th generation AMD EPYC processors. In addition to NVMe SSDs, Rumble Cloud virtual machines run atop fully dedicated
vCPUs, ensuring fast and consistent performance.
4
How
We Generate Revenue
Rumble
Cloud launched and currently runs on a subscription model. Relative to the unpredictable and volatile consumption-based pricing models
that can cripple a business due to rampant hidden and unexpected costs, Rumble Cloud introduced the concept of a Resource Tier pricing
model, which is designed to provide a transparent and predictable pricing model to its customers and offers unlimited usage within a
given pool of hardware resources for a fixed monthly price. With Rumble Cloud’s Resource Tiers, customers will have the freedom
to grow and scale at a pace that works best for their needs, without surprises on their monthly bill.
Sales
& Marketing
The
front end of Rumble Cloud, rumble.cloud, is designed to support a self-serve customer acquisition model. Marketing efforts
will be focused on attracting leads and converting through the marketing funnel via traditional paid, earned and owned media strategies.
Rumble’s video business has cultivated an ecosystem of tens of millions of users and creators. Activating this community is a core
piece of our marketing strategy for Rumble Cloud.
To
complement the self-serve customer acquisition component, we plan to drive demand for Rumble Cloud using a direct sales and channel partner
approach. Channel partners will include referral, reseller and managed service partners, who are well positioned to help us expand our
mid-market, enterprise and specialty segments.
Competition
We
operate in a challenging environment, with a majority of the cloud services market owned by the major cloud hyperscalers, Google Cloud,
Microsoft Azure and Amazon Web Services. These companies have significantly greater resources than us and significant existing customer
bases that may be difficult for us to penetrate, especially given the potential for high switching costs in the cloud services market.
Given the market trends of rising multi-cloud strategies and continued complexity and unpredictability in cloud pricing, Rumble Cloud
arrives at an opportune time to enter the market and present a new way for businesses to save money and regain control of their IT budget.
Human
Capital
We
believe that our employees are our most significant resource. As of December 31, 2023, we had 158 full-time employees, of whom 37 were
based in Canada and 121 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 programs are to attract, retain,
and motivate key employees and directors through the granting of stock-based compensation awards.
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 additional laws that regulate streaming services or online platforms.
5
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 Canadian laws governing our foreign operations, as well
as Canadian and U.S. laws that restrict trade and certain practices.
Intellectual
Property
Our
intellectual property includes trademarks, such as RUMBLE in the United States and Canada, pending international applications
to register the trademark RUMBLE, and several pending U.S. trademark applications, including applications for LOCALS, RUMBLE
CLOUD, RUMBLE STUDIO, and RAC; the domain names rumble.com and locals.com; copyrights in
our source code, website, apps and creative assets; a pending patent application for technology related to Rumble Studio; 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.
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.
In
May 2023, we acquired Callin, a San Francisco-based podcasting and live streaming platform founded by technology entrepreneur and investor
David Sacks. Callin’s technology laid the foundation for Rumble Studio, which was launched in Q1 2024.
In
October 2023, we acquired North River Project Inc., an entity created to develop what became RAC, an advertising technology solution,
specifically for Rumble. RAC includes an advertising marketplace and network between advertisers bidding and publishers selling display
and video advertisement as well as advertisers bidding on creator sponsorships. RAC continues to be enhanced and represents a significant
milestone in Rumble’s monetization efforts.
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).
6
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.
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 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;
7
8
● our management team has limited experience managing a public company;
● we may fail to comply with applicable privacy laws;
9
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.
High
inflation rates in the U.S. and globally 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 Open Market Committee of the Federal Reserve has raised, may again raise, or
may delay lowering the target federal funds rate in response to concerns over inflation risk. Higher than typical interest rates impact
the cost of any borrowing that we may make from time to time and could impact our ability to access the capital markets. Higher than
typical 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, reduced demand for our cloud services offerings, and potential adverse impacts on our competitive
position if there is a decrease in consumer spending.
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;
10
● 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.
The
growth of our user base, as measured by our current key performance metrics, including monthly active users (MAUs), may not be sustainable
and should not be considered indicative of future levels of active viewers and future performance. In addition, we 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 services, 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 our 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, the unavailability of certain popular content creators for extended periods of time due
to personal or other reasons, 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.
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
strain on our management, customer experience, research and development, sales and marketing, administrative, financial, and other resources.
11
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, including our cloud services business, 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 and operating results 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 adversely affected.
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.
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 our operating
expenses will increase if the number of platforms for which we develop our product expands. 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 choose not to access
our content or use our apps on their mobile devices and connected TVs or choose to use mobile products or connected TVs that do not offer
access to our content or our apps, or if the preferences of our traffic require us to increase the number of platforms on which our product
is made available to our traffic, our traffic growth, engagement, ad targeting and monetization could be harmed and our business and
operating results could be adversely affected.
12
Our
business depends on continued and unimpeded access to our content and services on the internet. If we or those who engage with our content
experience disruptions in internet service, or if internet service providers are able to block, degrade or charge for access to our content
and services, we could incur additional expenses and the loss of traffic and advertisers.
Our
products and services depend on the ability of users to access our content and services on the internet. Currently, this access is provided
by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies,
cable companies, mobile communications companies and government-owned service providers. Laws or regulations that adversely affect the
growth, popularity or use of the internet, including changes to laws or regulations impacting internet neutrality, could decrease the
demand for our products or offerings, increase our operating costs, require us to alter the manner in which we conduct our business and/or
otherwise adversely affect our business. We could experience discriminatory or anti-competitive practices that could impede our growth,
cause us to incur additional expense or otherwise negatively affect our business. For example, paid prioritization could enable internet
service providers, or ISPs, to impose higher fees and otherwise adversely impact our business. Internationally, government regulation
concerning the internet, and in particular, network neutrality, may be developing or may not exist at all. Within such an environment,
without network neutrality regulations, we could experience discriminatory or anti-competitive practices that could impede both our and
our customers’ domestic and international growth, increase our costs or adversely affect our business.
We
rely on data from third parties to calculate certain of our performance metrics. Real or perceived inaccuracies in such metrics may harm
our reputation and negatively affect our business.
We
track certain performance metrics, such as our MAUs, based on data from third parties. While these numbers are based on what we believe
to be reasonable calculations for the applicable periods of measurement, our third-party providers periodically encounter difficulties
in providing accurate data for such metrics as a result of a variety of factors, including human and software errors. We expect these
challenges may continue to occur, and potentially to increase as our engagement grows. There are also inherent challenges in measuring
usage across our large user base. For example, as further described in our “Key Business Metrics” section, there is a potential
for minor overlap in our usage data due to users who access Rumble’s content through the web, our mobile apps, and connected TVs
in a given measurement period.
Third
parties on which we rely for certain of our key metrics may make changes or improvements to their tools and methodologies. For example,
starting July 1, 2023, Universal Analytics (UA), Google’s analytics platform on which we historically relied for calculating MAUs
using company-set parameters, was phased out by Google and ceased processing data. At that time, Google Analytics 4 (GA4) succeeded UA
as Google’s next-generation analytics platform, which we used to determine MAUs since the third quarter of 2023 and which we expect
to continue to use to determine MAUs in future periods. Although Google has disclosed certain information regarding the transition to
GA4, Google does not currently make available sufficient information relating to its new GA4 algorithm for us to determine the full effect
of the switch from UA to GA4 on our reported MAUs. Because Google has publicly stated that metrics in UA may be more or less similar to
metrics in GA4, and that it is not unusual for there to be apparent discrepancies between the two systems, we are unable to determine
whether the transition from UA to GA4 has had a positive or negative effect, or the magnitude of such effect, if any, on our reported
MAUs. It is therefore possible that MAUs that we reported based on the UA methodology for periods prior to July 1, 2023, cannot be meaningfully
compared to MAUs based on the GA4 methodology in subsequent periods.
In
addition, we rely on third-party service providers to measure our bandwidth consumption, which currently forms the basis for our estimated
MWPM. Starting in the second half of the third quarter of 2023, we began moving from third-party service providers’ content delivery
networks (“CDNs”) to our own proprietary CDN. Based on preliminary testing, our own CDN indicates less bandwidth consumption
than one of our service providers’ CDNs for comparable user activity. Because we calculate estimated MWPM by converting bandwidth
consumption into minutes watched, consumption measured through our own CDN yields a lower estimated MWPM than when measured through that
service provider’s CDN.
Changes
to these tools and methodologies could cause inconsistency between current data and previously reported data, which could raise questions
about the usefulness of our reported metrics or make it more difficult for investors to accurately assess our performance over time.