Greetings. Welcome to Rumble Inc. Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to, Shannon Devine, Investor Relations. Thank you. You may begin.

Thank you, operator. I'm here today with Chris Pavlovski, Founder, Chairman and CEO of Rumble; Brandon Alexandroff, the CFO; and Tyler Hughes, the COO. A press release detailing our fourth quarter and full-year 2023 results was released today and available on the Investor Relations section of our Company website. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include predictions, estimates or other information that might be considered forward-looking. All forward-looking statements are made only as of the date of this webcast and should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC. Future Company updates will be available via press releases and Company updates via the Company's identified social media channels. I will now turn the call over to Rumble's Founder, Chairman and CEO, Chris Pavlovski.

Thank you, Shannon. To start, I want to talk about 2023, our building year as a Company. In addition to successfully diversifying our content library with several key signings across sports, comedy and entertainment, we were relentlessly focused on delivering on our product commitments. Let me recap this extraordinary year for our world-class product and engineering teams. First, we completely transformed the user experience on rumble.com launching a fully redesigned user interface across all major viewing platforms, while integrating our premium subscription service locals.com to offer more robust monetization opportunities for creators. Second, we acquired Callin in May of last year, which gave rise to the beta launch of our new patent-pending livestreaming tool, Rumble Studio, which is an incredible product that will lay the foundation for future monetization. Third, we built and launched Rumble Advertising Center, which we often call RAC. I'm excited to say within the last 90 days, RAC began deploying pre-roll video ads across our mobile apps, while we are also expanding our inventory by onboarding other publishers to the network. Fourth, on top of all this, we built the infrastructure necessary to support rumble.com, laying the foundation for Rumble Cloud, which we publicly launched just two weeks ago. A completely revamped user interface and integration of a major video platform, a novel livestreaming tool, an advertising network and a cloud all in one year. Today, what we have is a beautiful business with four top-of-the-line products. Our team has worked tirelessly around the clock to build the products and services our audience desires. And, I'm not only in awe of these products, but the team behind the colossal effort. What we have built is essentially a mini Google. And when you look at how long it took Google to build their offerings and the capital…

Thanks, Chris. I'll now take you through our fourth quarter and full-year financials at a very high-level before turning the call over to the operator for Q&A. For the full-year of 2023, we reported revenues of $81 million, an increase of 106% when compared to $39.4 million in 2022. For the fourth quarter, we reported revenues of $20.4 million, this compares to $20 million for Q4 2022. The 2023 fourth quarter revenue reflects an increase in other services revenue of $3.5 million offset by a decrease in advertising revenue of $3.1 million. The increase in other services revenue was driven mainly by subscriptions, content licensing, tipping features and provision of one-time content. Cost of services was $39.5 million for the quarter compared to $23.5 million for the fourth quarter of 2022, due to an increase in programming and content costs of $14 million and an increase in hosting expenses and other service costs of $2 million. For the full-year, cost of services increased by $102.4 million to $146.2 million due to an increase in programming and content costs of $98.9 million, hosting expenses of $2.7 million and other service costs of $0.8 million. Moving to our cash position, we ended the year with $219.5 million in cash, cash equivalents and marketable securities, compared to $267 million as of September 30, 2023. We are sitting on sufficient cash to meet our ongoing capital needs. With our monetization assets coming online late in first quarter, we are transitioning from manual processes with a small number of creators to automated processes that scale more easily and therefore yield more predictable revenue generation. First quarter revenues still largely reflect this volatility and as a result will be down slightly from the fourth quarter. However, with the benefits of improved automation, we expect to see a sequential quarterly increase in revenues beginning in the second quarter. Specifically, this anticipated increase in revenues is supported by our experience with RAC throughout the month of March. Before I conclude, I want to reiterate what I stated on our third quarter earnings call. With our revenue engines coming online and our guaranteed creator commitments set to significantly decrease during 2024 and 2025, we continue to move materially towards breakeven in 2025. That concludes my prepared remarks. Before I turn the call over to the operator, I invite you all to join Chris this evening at 7:00 PM Eastern Time for an exclusive post earnings interview with Matt Kohrs to be streamed live on the Matt Kohrs Rumble channel. I will now turn the call over to the operator to open up the line for questions.

Thank you. [Operator Instructions] Our first question is from Jason Helfstein with Oppenheimer & Co. Please proceed.

Thanks everybody. So, I'll ask like several questions and then I'll go back in the queue and, depending if there are other questions I could kind of ask them more. So, maybe just talk about the drivers of the lower just some of the engagement drivers in the fourth quarter. So, as far as like the maybe weaker minutes, was most of that YouTube-related or did some of that have to do with just less premium content from your paid creators? I'll just do them one at a time.

Hey, Jason, this is Chris Pavlovski. With respect to the uploaded hours, that definitely had a -- we had an impact when YouTube cut off the auto sync that we disclosed back in January, I think it was. So, that definitely had an impact on hours uploaded. With respect to the estimated bandwidth consumption, minutes watched based on bandwidth consumption, you'll notice that, if you remember in Q3, we've been migrating over to our CDN. We continued that migration in the fourth quarter and that also had an impact. And, if you recall the, that's an estimate based on bandwidth consumption. So, the CDN had an impact on that. And, also in addition to that, the - our MEs were really strong based on one-off sporting events such as the Street League Skateboarding that did extremely well in the fourth quarter in December in specific.

Okay. So yes, so the focus will be more MAU than, I mean, just given some those factors. And then, you beat our gross profit estimate by a nice amount even on lower revenue, which would suggest like you manage content costs pretty well in the quarter. I mean just maybe, Brandon, can you talk a little bit about that? I mean, how much of that was you were able to manage it versus you just had less content that had minimum guarantees? And just talk about the dynamics on gross profit in the quarter? Thanks.

Yes, sure. So, just as a reminder of what the components are of cost of services, there's three main components. So, the first one is the revenue share that we give to the creator. So, for advertising, we share 60% of the revenue to the creator. So, that's one component of cost of services. The second component, which at the moment is the largest component, are the guaranteed contracts that we're giving to those creators. And so, as we scale, we expect those to decline over time. And, the third component of cost of services, which is the smallest amount, relates to network hosting costs. So, yes, I mean, we're continuing, as we said, to focus on those minimum guarantee contracts. And, as they come off of contract, the plan is that we don't have to renew those, because as the monetization tools start kicking in, the creators will actually start earning that 60% ad revenue, and we don't have to extend those contracts.

And then, I'll do one more and go back in the queue. So again, maybe give us an update on reducing creator guarantees later in '24, and you've talked about meaningful progress towards breakeven in '25. So just, given that EBITDA I think was better EBITDA and cash burn was better than I think we were looking for in the quarter. Just how should we think about I guess those metrics for the rest of this year, and are you willing to say if you're targeting positive EBITDA in '25?

Yes. I mean, our plan is to move materially towards breakeven in 2025. And as I said, it's coming from two main reasons. Number one, we're turning on the monetization engine. So, that's going to start kicking in. You'll see sequential growth starting in the second quarter of this year. So, the revenue starts kicking in and then those minimum guarantee costs start declining through the rest of ‘24 and into ‘25, which allows us to get towards breakeven in 2025.

Okay. I'll go back in the queue. Thanks.

Our next question is from Tom Forte with Maxim Group. Please proceed.

Great. Thanks. Chris and team congrats on the quarter and year. Like Jason and I have several, I'm going to ask three, and then I'll get back in the queue as well. And, I'll go one at a time. So, the first question I had was, Reddit is off to a very impressive start as a public company. Chris, I was wondering how you see the mission of Rumble as similar to Reddit and how you think it's different?

Yes. So Reddit, it's been around for a very long time. When I look at Reddit and I compare it to Rumble, there, in a way it started a lot, I would say, 10 years ago. One of the original founders was a lot in common in terms of free speech and freedom of expression. But I think that's changed a lot as the business has changed over the last decade. But, one of the things that kind of like stick out to me with Reddit is that, I think they did like was it $400 million in R&D, whereas with Rumble, our R&D spend and building the cloud and building the Rumble Advertising Center and building the video platform really kind of stands out in terms of what our team is capable of doing versus what a company that's been around for several decades almost now has been doing. So, I see there's like heavy contrast there and I'm very prideful about that and what we've done with the size team that we've done and the amount of capital needed to get it done in comparison to Reddit.

Great. And then, my second question is, historically you've experienced spikes in usage and engagement on your platform during elections. How should investors think about the potential for that to occur again this year with the upcoming presidential election?

Yes. So, I think that like what we saw in the 2022 mid-terms was a good picture of what we can see in 2024. Obviously, this is a presidential, so it's going to be different. And, how that shapes out to be remains to be seen. But definitely, the major difference here between 2022 and 2024 is that, in 2022, our products was lacking, it needed a lot of changes, a lot of updates, a lot of upgrades. We are now there. So, what excites me about this year is that, we have a real opportunity to capture that growth. And hopefully, I'm very confident that we're going to be able to not only capture it, but be able to keep it and be able to really grow subsequent to that. So, I think that's the major difference. We have a solid product now. The video product has really come a long way, and we're really looking forward to taking advantage of this election year into the future years.

Great. So, one more, and then I’ll get back in the queue. So, RFK Jr. is running as an independent for President and is on your platform. How has he done on Rumble? And, can you provide an update on left-wing independent and influencers outside of politics joining and using Rumble?

Yes. So, we recently announced that RFK, not only is he an account on Rumble where he's live streaming, he just live streamed his event yesterday where he announced his VP, but he also has become a cloud customer using our cloud. So, that's been an important development. With respect to like expanding content into different areas that are not political, we in this quarter, in the first quarter of 2024, we closed a partnership with Barstool Sports, which was a very important one in the sports category. And, what I liked most about that partnership with Dave Portnoy is that, he was more interested in taking equity in Rumble, and really believing in the mission than taking more cash. So, the deal is mostly equity and some cash. And, on the equity side, it's not material on the share issuance side of things.

Great. I'll get back in the queue.

We now have a follow-up from Jason from Oppenheimer. Please proceed.

Thanks. A few more. So, maybe just on Barstool, I mean, obviously, there's a lot of content on the platform. Like, could we actually see the Barstool distribution partnership as a potential driver of engagement? I don't know, like in second quarter or just you have a lot of content and while it's quality content, it just, it doesn't move the needle. Just can you get some perspective like, should we expect a bump on that distribution deal?

Hi, Jason. So, with respect to Barstool, what we did see in January versus over February is they definitely grew on the platform and pushed more viewers. In terms of like providing like guidance on them specifically, I can't do that. But generally speaking, what we're trying to do here is really kind of build the Rumble sports category in a way that kind of really allows and keeps the sports users onto the platform for longer. And, that's kind of been, that was kind of the strategy with politics. As you grow the political side, there's one creator that someone might watch, they find another creator and it's all kind of within the same area. The same thing we kind of see with sports, you bring in a massive sporting event like Power Slap or Street League Skateboarding and you kind of want to keep them, you kind of want to know, you want the user to know that they can also find Barstool, and they can find 75 different podcasts that Barstool might do. So, I call that drifting into different categories a little bit, and different types of content, but that's kind of the reason why we wanted Barstool on the platform to really kind of broaden that sports category. But like as a whole, the amount of content in all the different verticals, I don't see a single creator, well, in the sense moving the needle in any significant way, although we did see Street League Skateboarding in the fourth quarter really kind of moved the needle in December. So it could happen, but hard to say.

Okay. And then just on RAC, I mean, obviously, there's always risk in any business, but I mean, just given where you are with the product development, and it sounds like the numbers you've seen in March, I mean, is that what's ultimately driving your confidence in the second quarter revenue ramp, just that like RAC is out and you've actually seen kind of numbers now that it's in full execution?

Yes, that's right. RAC is doing a lot of different things now that we weren't doing in the fourth quarter of last year. We're really adding a lot of publishers and bringing a lot more inventory. We have websites like the Drudge Report testing RAC. We have Breitbart testing RAC. We have countless different publishers now testing RAC. You also have Rumble, which is starting to open up pre-roll inventory within the app and that's bringing inventory in. So, we're seeing kind of like the perfect storm of inventory, really kind of adding in and we see a very good path when it comes to being able to add inventory into the system, both through Rumble and publishers. And, we see a lot of open ground there. And, just also on the flip side, we see the advertiser growth happening too, as we bring in more advertisers into the system, we're not seeing the drop off on the CPM that one might expect. We're seeing very, our CPMs are holding as we add inventory, which means we're going to continue to add inventory. And, we've really seen a clear picture here in the last couple of months. And, in particular March is showing -- is really strengthening our confidence on RAC right now.

And last question is, Brandon. We noticed there was an acquisition North River in the 10-K, just a little color there?

Yes, that's the components of RAC basically. So, there's some technology and human capital. It's a company that we acquired, and that's the foundation for us building out RAC.

Okay. Thank you.

Our next question is a follow-up from Tom with Maxim Group. Please proceed.

Great. So, last three for me. Truth Social de-SPAC was one of your first cloud computing enterprise customers. Does the de-SPAC can have any positive implications for Rumble, especially your cloud computing effort?

Hi, Tom, this is Chris. So yes, I think that the de-SPAC is a great development for Truth Social. It puts a lot of capital in their bank and allows them to grow the platform now. So, them being our one of our largest tenants on the Rumble Cloud and the first major one to come onto Rumble Cloud. That's pretty exciting for us that they can they have the capital now to grow and do what they need to do to take Truth Social to the next level. So, as a long-term client and also as an advertising partner where we're monetizing them, they're one of our first publishers as well. This is a very positive development for us that we're very excited about internally.

Excellent. All right. So, then this one, Chris, you're going to have to indulge me. I know you've talked a lot about sports content, but, I'm still in disbelief that Mike Tyson is going to fight Jake Paul in the livestream on Netflix. The whole thing there, I think, is just crazy. But that said, you've done real well in the past with sports content. Can you provide an update on your sports related content, including its popularity?

Yes. So, we saw an incredibly successful event from Street League Skateboarding that kind of surprised us all in the fourth quarter in December. Typically, we didn't see Street League Skateboarding kind of move the needle for us in any way, but they definitely moved the needle in Q4 December with their latest event. And, on the other sporting, we also have Nitro Rallycross racing and then we also have Power Slap that's exclusive. What we're seeing with Power Slap is that we're seeing a very good trajectory on the Power Slap front as well. The last event that we had was a Super Bowl weekend where we had people from like Travis Scott to Charles Barkley to many, many even IShowSpeed and Kai Cenat show up. So, we had a lot of influencers come to that event, really push the event to new levels. So, we're seeing some nice trajectory also in Power Slap. So, in terms of sports and then obviously attaching Barstool on, the Rumble Sports category is doing quite well at this point, and has some good trajectory, especially with the most recent events that it's had.

Great. All right. So, last one for me and thanks again for taking all my questions. So, wanted an updated thoughts on antitrust regulation, including laws being considered in Canada. I was wondering what impact, if any, there'd be for Rumble if TikTok was banned from U.S. app stores. And lastly, would you benefit if Apple had to lower its take rate for its App Store?

I'll start with the take rate, absolutely. For Rants and tipping within the app that would be very helpful to have a lower percentage there. With respect to TikTok, we obviously put that letter out publicly. We're very interested in being a technology partner in any consortium that goes forward with TikTok. We want to be part of that conversation. I do believe that companies like Google and Meta would have antitrust concerns. So, they can't be part of that in my opinion. And, the only company out there that has the experience in video and the experience in managing a video platform and even the experience in working on recommendation engines and algorithms for video, the one that it comes to mind is Rumble. So, obviously we feel like there's opportunity there with TikTok if something happens in terms of divestiture, we'd love to be part of a consortium on that. And the third thing, if I remember correctly, you're mentioning antitrust in Canada. We're concerned, but nothing decided yet.

Thank you, Chris. Thanks for taking my questions.

Thank you, Tom.

That is the end of our question-and-answer session. We will conclude today's conference. Thank you for your participation. You may now disconnect.