RUM Group Inc. 10-K

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: ● “Build your Audience” – As a free-to-use platform with an average of 80 million MAUs as of December 31, 2022, Rumble is designed to provide creators the ability to grow their audience. Creators can generate revenue on Rumble via programmatic advertisements served by RAC, host-read advertising, or sponsorships managed and facilitated by Rumble sales. Livestreaming creators also can drive revenue via tipping, known as ‘Rumble Rants’, through the live-chat functionality. ● “Grow your Super Fans” – As creators build and establish their brands on Rumble, they have the ability to bring their ’super fans’ over to Locals, through which creators can provide exclusive content to paying subscribers. Creators can monetize on Locals via subscriptions, tipping, as well as one-time purchases of content through a feature called Content+. 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. ● “Arbiters of Truth”: “Big Tech” has increasingly adopted strict and evolving content moderation policies on user-generated and other published content. Constant shifting of policies has created controversy among creators and users who may believe their content, or content from other creators, is being restricted by biased practices, policies, and algorithms that have been altered to accommodate evolving trends in the digital ecosystem. This has led users and creators to seek reliable, alternative platforms that would not, outside of clearly defined content guidelines, restrict or shield creators’ content from reaching their potential audience. ● Large Creator Focus: Additionally, our biggest competitors are increasingly catering to the “large creators” that represent individual and corporate accounts, attracting viewers to the content that large creators choose to feature, and creating increasing barriers for smaller creators to distribute content on those platforms. 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