Business context and reporting period
Rumble Inc. (the registrant identified in this filing; formerly CF Acquisition Corp. VI) filed this unaudited Form 10-Q for the quarter ended September 30, 2022. Rumble operates a video-sharing and video-technology platform, with revenue primarily from advertising and licensing and other services. The business combination closed September 16, 2022 and was accounted for as a reverse recapitalization; operating results before the closing are those of Legacy Rumble. Amounts are in U.S. dollars.
Financial performance and position
| Metric | Three months ended September 30, 2022 | Nine months ended September 30, 2022 |
|---|---|---|
| Revenue | $11.0 million, up 431% year over year | $19.4 million, up 198% |
| Gross profit and margin | $3.5 million; 32% (13% in 2021) | $4.8 million; 24% (27% in 2021) |
| Operating expenses | $11.3 million | $21.1 million |
| Operating loss | $7.8 million | $16.4 million |
| Net loss | $1.9 million | $10.5 million |
| Operating cash flow | Nine-month use of $17.0 million |
Quarterly revenue growth reflected higher advertising activity and new advertising solutions, including host-read ads and the Rumble Advertising Center, as well as growth in licensing and other revenue. Creator and publisher payments and hosting costs rose with usage. Sales and marketing expense increased substantially, particularly creator incentives.
At September 30, cash and cash equivalents were $356.7 million, versus $46.8 million at December 31, 2021. Current assets were $368.0 million and current liabilities $13.7 million. Total liabilities were $40.5 million, including a $25.4 million warrant liability and $1.6 million of lease liabilities; the filing reports no variable-rate interest-bearing debt. The warrant liability’s fair-value decrease generated a $5.7 million gain, reducing reported losses; it is a non-cash item, not operating profit.
Nine-month investing cash use was $5.8 million, mainly capital-asset purchases. Financing provided $332.7 million, including proceeds from the business combination, net of transaction costs and other listed transactions. The company incurred $53.9 million of transaction costs related to the combination. The nine-month cash increase was $309.8 million.
Changes versus the prior comparable period
Nine-month revenue increased $12.9 million, while cost of revenue rose $9.9 million and operating expenses rose $17.4 million. The resulting operating loss widened from $2.0 million to $16.4 million. Net loss grew from $2.9 million to $10.5 million, partly offset by the 2022 warrant fair-value gain; 2021 included a $1.1 million option-liability fair-value loss. In the third quarter, gross margin improved year over year, but the company remained loss-making. User and usage measures also increased: average monthly active users were 71 million, up 97%; monthly minutes watched were 9.0 billion, up 14%; and daily video uploads averaged 8,796 hours, up 220%.
Outlook, commentary, risks and unusual items
Management stated that its near-term priority is growing users and consumption rather than maximizing revenue or profitability, and expects operating expense categories to increase in absolute dollars. It said available cash should fund liquidity needs for the next 12 months and that it did not then anticipate needing additional capital. No numerical revenue, earnings or cash-flow guidance is provided.
- Revenue and receivables are concentrated: a few customers represented 72% of third-quarter revenue and 80% of receivables at quarter-end. Google AdSense and Decide together accounted for about 19% of third-quarter revenue and 33% for the nine-month period.
- Creator incentives can include fixed payments that are not tied to actual performance, creating potential margin and liquidity pressure. Hosting and infrastructure costs also rise with consumption.
- Management cited significant competition, dependence on third-party vendors and advertising partners, cybersecurity and privacy exposure, content-moderation and regulatory uncertainty, and the challenge of scaling operations. It disclosed that cybersecurity insurance coverage had expired and that replacement or renewal was being pursued.
- Legal matters include a shareholder lawsuit seeking rescission or alleged damages of $419 million, a patent-infringement suit, and a privacy class action received after quarter-end. The company said it intends to defend the claims and considers payment likelihood remote; outcomes remain uncertain. Rumble’s antitrust case against Google was scheduled for trial in November 2024.
- The CEO held approximately 85% of voting power through high-vote Class D shares. The filing also describes substantial potential share resales following registration and lock-up expirations, and earnout shares contingent on share-price milestones.
- The business combination brought $399.8 million in gross proceeds as reported in the cash-flow statement. The transaction also included a $83 million PIPE, $11 million repurchase of Class C shares, and issuance of Class D shares to the CEO for $1 million.
Important facts for investors to verify
- Whether rapid audience growth translates into durable advertising and licensing revenue, improved gross margins and a path to profitability.
- Customer and advertising-network concentration, receivable collection, and the economics of fixed creator commitments.
- Cash burn, infrastructure investment needs, and management’s stated 12-month liquidity outlook.
- The financial and operational consequences of the disclosed lawsuits, privacy and content regulations, and cybersecurity-insurance gap.
- Potential dilution and selling pressure from warrants, options, earnouts, registered resale shares and lock-up expirations, alongside the implications of concentrated voting control.