Rumble Inc. (RUM) Q3 2026 Earnings Call Transcript

Operator: Greetings and welcome to Rum Group Incorporated Third Quarter 26 Earnings Conference Call. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Shannon Devine.

Shannon Devine: Thank you.

Operator: You may begin.

Shannon Devine: Thank you, Rob. I am here today with Christopher Pavlovski, Founder, Chairman and CEO of RUM Group. And Michael Masci, CFO. A press release detailing our third quarter 26 results was released today and available on our Investor Relations website. Before we begin the formal presentation, I would like to remind everyone that statements made on this call may include predictions, estimates, or other information that may be considered forward looking. All forward looking statements are made only as of the date of this call, and should be considered in conjunction with the company's cautionary statements in our earnings release. And the factors included in our filings with the SEC. Future company updates will be available via press release and the company's identified social media channels. I will now turn the call over to Run Group's Founder, Chairman and CEO, Christopher Pavlovski.

Christopher Pavlovski: Good morning, everyone, and thank you for joining us. Before we begin, on this Veterans Day, we want to thank every man and woman who has served and their families because the freedoms we build on every day, including the freedom to speak openly, were earned by their sacrifice. This was a very strong quarter for RUM Group. We posted record revenue. We beat guidance. And we were profitable on an adjusted EBITDA basis for the first time as a publicly traded company. Our company is ideally positioned for today's market. We have real assets running real AI workloads for real customers generating real cash. We believe we have 1 of the least levered balance sheets among the larger public neo clouds, we have a Quake AI team that is experienced as anyone in our industry. I also want to be direct with you today about what is changed in the market. What it means for our projects, and how our management team is navigating it. Let me tell you how I view the Q3 results. Let's start with record revenue of 96.6 million nearly 4x what it was a year ago. But the story is not just the size. it is the mix. In its very first full quarter as part of RUM Group, Quake AI contributed more than 70% of our revenue. That is a brand new profile for this company. A year ago, our revenue came almost entirely from video. Today, AI infrastructure is the core of our business and the engine of our growth. On guidance, Mike will walk you through the details. What matters more to me is that every quarter we operate as a combined company, we get a clear view of how this business runs, and we will keep sharing that view with you as it sharpens. Profitability is the part I am most proud of. And I wanna put it in context. In the early years, I bootstrapped this company. Every dollar mattered. Because there was not another 1 coming. Then as an early public company, we made a deliberate choice to invest. In the platform, in our team, and in the assets that got us here. Those were the investment years, and we were open with you about that. Now Rum Group is maturing into a profitable business 1 that generates returns for you, our shareholders. that is the turn this quarter represents. And we are just getting started. The turn is being driven by Quake AI, We run approximately 22,000 GPUs today, 1 of the largest GPU states in Europe. As of the third quarter, we are running at 85% utilization, which means we are nearly sold out. This is the cash engine of our business. And the market is moving in our favor. Supply is low, demand is high, and we do not see that changing for the foreseeable future. That manifests as increased pricing, which has been observed across the GPU market. With the majority of our contracts coming up for renewal by early 27, management's plan is to optimize our contracts for the market we are in. To be clear, we and our customers expect prepayments and higher pricing. Now as I promised at the top, let me turn to the market and our projects. I view AI infrastructure and, in particular, AI compute as similar to the oil industry. And as markets realize the value and returns, I believe capital will keep flowing into it But over the past several weeks, as you have all seen in the news, the financing markets have become quite difficult for data center and AI build outs. Execution challenges at some Neo Cloud and data center builders on large scale projects have put a spotlight on permitting, power, and team experience. Lenders and investors are doing more vigorous diligence on every customer and every operator. So let me be direct about what that means for us. First, message from our customers has been very clear. The need for us to deliver on AI compute has never been greater. And we believe our customers wanna find a way for us to deliver that compute. Second, regarding our Maysville site, we are an discussions with our customer on an alternative path forward to deliver that AI compute. While this path is still in the early stages, we are optimistic it could represent a more financeable project despite market. Current market conditions. While still delivering attractive economics. Notwithstanding, the recent market challenges, we remain optimistic about the assets we have, including our GPU estate which I mentioned earlier. As the political dynamic changes, as AI compute supply continues to become more scarce, I believe our GPU estate assets will increase in value. We have seen this throughout 2026, and I believe we will see this continue in 2027. The only debt we hold today is a favorable note from Tether, In our existing estate of 22,000 GPUs generates meaningful cash flow. Now let's turn to the Rumble Video business, we are applying that same discipline. In the third quarter, we began a cost reset in video, tied to a refocus strategy. We expect to start seeing those savings through 2027. That strategy comes down to 2 core elements. First, product led automation, driving monetization essentially through Rumble Studio. Second, creator-led economics. In October, we announced the new Rumble partner program, which gives eligible creators up to a 90% rev share on video ads. Including host read sponsorships. Together, these make the video business leaner, sharper, and well positioned for growth. And while we implement the new model, engagement on the platform remains strong, During the US midterm elections this month, Rumble hosted 3 of the top 5 largest US independent streams. According to StreamCharts at around 9PM on election night. We also launched a long term distribution and content partnership with the WWE, which makes Rumble the new home of the weekly premium program WWE main event. As we grow, diversify, and lean into a more automated model, I am excited about the path ahead for our video business. I will leave you with this. We know the market feels uncertain right now, but as a leadership team, we could not feel more confident about the AI compute market and we are excited about our future. Our revenue is nearly 4x what it was a year ago. We are profitable. Our GPUs are running, and our customers are asking for more. You will keep seeing us focus, execute, and deliver. With that, I will turn it over to Mike.

Michael Masci: Thanks, Christopher, and good morning, everyone. This is our first quarter reporting in 2 segments. Rumble Video and Quake AI. As we committed to you in our last call. I will walk through the consolidated results, then the segments, then our outlook for the fourth quarter. Revenue for the third quarter was 96.6 million an increase of 71.8 million or 290% compared to $24.8 million in the third quarter of 25. Of that increase, 68.2 million came from Quake AI and 3.7 million from higher Rumble revenue. Cost of services was 43.6 million up from 25.2 million a year ago. The increase was driven by $16.4 million of incremental data center expenses from Northern Data and 3 million of higher programming and content costs. Partially offset by a $1.1 million decrease in other cost of services. General and administrative expenses were 39.5 million up from 10.5 million Northern Data contributed $24.6 million of that. Mainly lease costs, payroll, and other administrative costs. Excluding Northern Data, increase primarily reflects $3 million of higher professional fees. Research and development expenses were 7.7 million up from 4.5 million and sales and marketing expenses $7.7 million up from 5.1 million with Northern Data accounting for part of the increase in both. Adjusted EBITDA was a positive 4.4 million our first positive quarter as a public company. that is compared to a loss of $15.1 million in the third quarter of 25 and a loss of $16.6 million in the second quarter of 26. Net loss for the quarter was 91.7 million or $81.5 million attributable to RUM Group. Compared to a net loss of $16.3 million a year ago The increase is primarily noncash. Amortization and depreciation rose to 85.8 million including 39 million in related to the fair value step up of the Northern Data assets in purchase accounting. Quake AI generated revenue of 68.2 million and adjusted EBITDA of 23.5 million and adjusted EBITDA margin of roughly 34%. Revenue was primarily from GPU cloud computing services, with a smaller contribution from hosting and colocation. Rumble generated revenue of 28.4 million up 15% year over year, driven by $5.6 million of higher advertising revenue. That was partially offset by a $1.2 million decline in subscription revenue, and a 700,000 decline in licensing platform hosting, and other revenue. Rumble's adjusted EBITDA loss was 12.1 million compared to a loss of $10.9 million a year ago. Corporate and other costs not allocated to the segments represented an adjusted EBITDA loss of 6.9 million We ended the quarter with total liquidity of $142 million consisting of $134 million of cash and cash equivalents and 94.68 Bitcoin valued at 7.9 million. Now let me turn to guidance. When we gave our first formal outlook in August, I told you building a credible track record was a priority for me. Part of that is being clear about what is in our numbers. We reported 96.6 million against a range of $87 million to 93 million but Q3 included items that we do not expect to repeat. So it is not the right baseline for modeling. Q3 included certain items that we do not expect to repeat in the fourth quarter, including our work with 1 customer as a part of a barter agreement which had more accelerated revenue than expected with a little over 3 million in the quarter. But with a larger drop off in Q4 than expected. Excluding those items, Q3 revenue would have been roughly at the top end of our range. that is the run rate we are really working from. For the fourth quarter of 26, we expect revenue between $88 million and 94 million This will be the last quarter where our existing fixed H100 contracts signed back in 2025 are in place, and we will see some small impacts on revenue as we begin to transition certain clusters for their renewal at hopefully significantly higher rates starting in the first half of 27. This is accounted for in our guidance. As Chris mentioned in his remarks, we continue to work with our customers on key projects, And as a seasoned operator with 1 of the least levered balance sheets, among the large public Neo Clouds, and an estate of 22,000 GPUs generating significant positive cash flow, I believe our Quake AI team is well positioned to take advantage of the extremely favorable supply demand dynamics in the AI compute market. With the changes in the financing markets over the past few weeks, that gives us an even greater need to have a disciplined operating and financial model. First, with increased cost of capital, it is critical that our GPU per hour rates increase. Christopher mentioned the pricing dynamics across the GPU market, And with the majority of our H100s coming up for renewal by the end of Q1 27, I am excited for the tailwind this dynamic is expected to have to our bottom line. Second, many public neo clouds have used dilutive financial instruments to raise project equity in support of key deals. With the increased demand and scarcity of compute, we believe our potential customers will be more willing to fund substantial project equity needs via prepayments. The bottom line is, our Quake AI business, is taking a disciplined capital approach. Our GPU rates are increasing, our margins are improving, and we believe we have the opportunity to leverage customer prepayments for project equity. We are taking the same disciplined approach in our Rumble Video business with significant OpEx reductions taken in Q3. Including a reduction in force and other recurring expenditures. Rumble Video has significant growth prospects ahead and with a refocused strategy, and reset cost basis, we will actively manage towards a more profitable trajectory. In summary, Q3 was our first full quarter with Quake AI, which is now more than 70% of our revenue. And our first quarter of positive adjusted EBITDA, We will continue to focus first on execution. Renewing our existing 22,000 GPU estate at better economics, execute on our new operating model to deliver project financing and execution, and grow this business in the disciplined way we have committed to you. That concludes our prepared remarks. Operator, we are now ready to open the line for questions.

Operator: Thank you. At this time, we will be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 1 moment please while we poll for questions. Our first question comes from Jason Stefan with Lake Street Capital Markets. Your line is now live.

Jacob Stefan: Hey guys, appreciate you taking the questions. Congrats on a nice quarter here. I guess, just first, I want to touch on the 52 megawatts that you said may slip beyond 27. I guess your prepared remarks kind of implied that it would be on the Maysville side, but I wondered if you could just clear that up for me.

Michael Masci: Yeah. Hey, Jason. And, first, just welcome So glad to have you on the call. So we have been very disciplined about not publishing specific timelines on projects until we got to places of firm certainty. Because we are a company, frankly, that what we say we are going to deliver to. So we mentioned in our disclosure, and you mentioned it before, we are not gonna do projects specific guidance. But, you know, overall, we do expect a portion of the 250 megawatts to move beyond 2027. But we are still targeting a portion of that to land in 2027. As Chris mentioned in his remarks, we are working closely with our key customer on a new potential construct that we are very excited about. And so we will provide you further details as we go along, but just going back to our philosophy, we are very much a we do not put out information until we know that we can hit it, and we are a high execution firm.

Jacob Stefan: Okay. Helpful. Maybe just on the H100 repricing, I think your numbers imply that it was, like, $1.40 or so this quarter. But maybe if you could kind of help us think through where you expect those rates can, be repriced at. And maybe how the certain clusters kind of roll off into higher priced contracts over the next quarter or so.

Michael Masci: Yeah. Sure. Great question. So, I am I am not gonna go into the specifics on pricing, but I can speak to the market and some of the dynamics of, you have a choice between often the duration or the length of the contract. And you have a choice between how much you choose to do in terms of prepayments and also then, the rates. But what I can tell you is the prevailing rates of H100s today by any metric that you see are firmly with a 2 handle on them. And we definitely are seeing market rates that are similar in our discussions with our customers. So we will provide more specific guidance later as we get commitments toward it. But we are definitely in a really good spot, and we are liking where the market is today. We are gonna make optimized portfolio decisions based on duration, prepayment, etcetera. And then to your second question, the vast majority of our H100s will have their contracts roll off by the end of Q1 of 27.

Jacob Stefan: Okay. Got it. And maybe just last 1 for me. Touching on the video business, you guys talked about a cost reset there. Wondering if you have, some sort of, you know, annualized savings target or, maybe, any update on the video data licensing that we have talked about

Michael Masci: Yeah. Let me do the first 1, and then I will hand it off to Christopher for the second 1, because I know he is excited about that, and that is a great opportunity. So to answer your question, we have not released the exact numbers on what some of those actions will ultimately manifest. But let's just call them significant. Think of them in excess on a run rate basis of 20% plus, run rate on OpEx. And we felt like we can do that in a way that was, still gonna drive growth for the business through the automation and some of the constructs that Christopher mentioned before. So a significant reduction getting us into an OpEx space where we can be positioned for growth.

Christopher Pavlovski: Hey. This is Christopher. I will also add on the with the things we have introduced to the platform, like boosted and premium, we see that we can push a lot of growth there with the 90% that we are giving on the other items. But the most important part, which will come in the second half of 27 that we are gearing up for, is the potential for the creators to tap into data licensing on their IRL content and their video content. So we are in the process of, designing and moving forward a market marketplace that will allow AI robotic companies or AI companies in general to tap into that and grab content that creators may want to license to them on the spatial temporal data front. So we are super excited about that. that is something that we have not seen in the market, and we obviously have an enormous community that can generate an enormous amount of IRL content and video content across the spectrum. So, our target for that is late 27 to roll that out, and, hopefully, we will see some more meaningful updates in the first half of 27 as well on that.

Jacob Stefan: Got it. I appreciate all the color. Thanks, guys.

Operator: Our next question comes from Param Singh with Oppenheimer. Your line is now live.

Param Singh: Yes. Hi, thank you so much for taking my questions. Firstly, if I could kind of dive into the cost of the 52 megawatt build out and the financing on it. Wanted to understand, you know, how are you thinking about it? Because by my math, it should cost about, you know, $11 billion to $12 billion say, a Rubin to build out that capacity. And, how much are you thinking is gonna come from customer payments? Was it a secured financing? Or equipment financing and other ways you are thinking about funding that growth? Thank you. I have a follow-up.

Michael Masci: Yes. No problem. Welcome, Param. So we have not given specific CapEx guidance and we do not plan to today. But to your question and to our overall operating model and how we are thinking of it moving forward, I think that customer prepayments are really going to be a large portion of the financing for projects that is necessary for the project equity. And then I do think that the debt markets, in spite of the fact that there is a potentially higher cost of capital. I think that as they become more discerning about the operational execution of the companies to whom they are issuing the debt, I think that is gonna be really beneficial to folks like us who are experienced operators, who have a trust and belief in terms of folks within the market. You know, the other thing I would mention to you is that the 250 megawatts and of the opportunities we are looking at, there are different flavors and styles of customers that we have, so not every deal we would paint with the exact same brush in terms of the operating model. I think the discipline will hold regardless, but I think that the circumstances may be different in terms of the mix between how much would be needed to be prepayment, how much is financeable via debt, etcetera. So we will continue to monitor, and we will release to the. To shareholders and more information as it becomes available.

Param Singh: Understood. And then let me think the other side of the equation then. Look, obviously, you will get a chance to reprice higher on the h 1 hundreds, h 2 hundreds. I think it is 30% to 50% higher, and you said it is with 2 handles, so that makes sense. But, as you think about the new capacity, that is predominantly gonna be Rubin or Blackwell, if I am not mistaken. So, you know, whether it is a short duration contract or long duration contract, those are going for significantly higher than the Hoppers. So, is this a $6 billion revenue run rate versus the 3 billion before because of the pricing in the market? Or how are you thinking about the longer term opportunity of a consistent 250 megawatt build

Michael Masci: Yeah. Yeah. Yeah. And, Param, to your point, and you know, I, obviously, we are not gonna give the long term run rate or guidance at this point. But to your point, if you look at any metric on revenue per megawatt at this point on next generation NVIDIA GPUs, you know, I know that SpaceX and others have given indications, but we have seen nothing but increases. I think that depending on how we work between the short term duration the long term duration mix that we have within our portfolio, we will have a fairly material impact on what we think the run rates will look like. But we are certainly seeing significantly higher revenue per megawatt on Rubin in next generation GPUs compared to even the increased rates that we are seeing in our existing hoppers for revenue per megawatt. Perspective.

Param Singh: Understood. Thank you so much. I will get back in line.

Operator: Our next question comes from Jason Helfstein with Oppenheimer. Your line is now live.

Jason Helfstein: Hi, everybody. So 2 questions on the ad business. So given the it sounds like the change around the content acquisition I think particularly around content payment, Do you think that segment can kind of go gross margin positive next year? Or potentially even in the fourth quarter? Just any help there And then Christopher, I mean, should you consider selling the content business if the price was right? Like how important is this asset to your long term strategy versus just the financing if somebody came to you and kinda offered you what you thought was a fair number for that business?

Michael Masci: Christopher is going to want to answer the second question immediately. But on the first question, and I know we have not released the Q yet, that will be released tomorrow But to answer, Jason, the video business was gross margin positive this quarter, and we expect that to be moving forward. But that is not all that we are satisfied with just having positive gross margins We really wanna get to the bottom line. So that is where we made some of the tough calls on OpEx. In reducing the run rate moving forward. We have made some really smart trade offs on existing creator contracts and optimizing more of the economics, as Christopher mentioned before, on the 90/10 split that we think is going to continue to accrue towards gross margin. And overall, we are we are really happy on our path there towards profitability with the video business.

Christopher Pavlovski: Hey, Jason. I will jump in on the second part. So the way we look at the video business, it is almost like a moat for the Quake AI business. Going into the future. And what we are planning to launch on the second half of next year on the AI side for Rumble, we see that as a really, really good opportunity for the entire business. So what we did in just recently by announcing these better economics for creators, we are doing our best to basically stimulate growth as much as possible on the platform to get as much content into the platform going into 2027. And we had a really successful last few weeks, on the platform as we have launched this into beta. And we will be rolling it out into, early 27 to the majority of our users. And by late of next year, where we see the real opportunity here and how Quake and Rumble are really gonna work together in the best way possible is that we are gonna be introducing a marketplace. And that marketplace is going to allow AI robotic companies AI companies, any company that requires data, spatial temporal data, to tap into, and teach their models. And we think as we move into this robotic era, this is gonna be an extremely important dataset for a lot of robotic companies that are gonna need to do trainings. And at the same time, it is gonna create a new revenue stream for creators on the Rumble side that is really gonna propel it into a category of its own versus the competition. So not only are we situating Rumble to be, like, the number 1 place for a creator to generate revenue off their content, But by introducing this AI angle in 2027, we think that we can really, really exceed our competition. In being the absolute number 1 place to generate revenue off of content. So we are really looking forward to that. that is something we wanna see through, and it is something we are going to introduce in late 27.

Jason Helfstein: Okay. Appreciate the color, guys. Thanks.

Operator: Our next question comes from Jason Stuart Helfstein with Texas Capital. Your line is now live.

Jason Helfstein: Also congrats on the quarter as well. Wanted to follow-up on the H100 estate. While not pressing for price, could you perhaps speak to what you would like to accomplish? From a term perspective?

Michael Masci: Yeah. Hey, Jason, and welcome. So, as I mentioned before, I think we want to take a pretty balanced portfolio approach to the H100s. We really love where the spot market is right now, and we really love where the short term is now. I do not think we are gonna do a ton of pure spot. We do have some partners that we work with that both allow us to have potentially fixed term contracts with a baseline with revenue upside potentially for spot increases that they are able to manifest to their customers. So we love those kinds of deals because they get us exposure to upside without the downside. I do think we will do some longer duration contracts, but I do not think we are gonna do 5 years on the h 100. So maybe we could if we if we wanted to. So, you know, think of it as a mix of durations wanting to do fixed plus some upside as 1 of our key opportunities for margin. You know, targeting kind of a relatively short duration style contract. Because, you know, like Christopher mentioned in his remarks, just our view on the market right now is that with all of the dynamics that are happening with the political environment, energy, etcetera. Supply is going to be very challenged to come on the market at least for the foreseeable future, and demand is not slowing at all. So we love the idea of having an estate we wanna make sure we continue to be exposed to the upside in that supply demand dynamic.

Jason Helfstein: Sure. And as my follow-up, maybe we will shift over to the regulatory environment. Have your views on the viability of the targeted 1 gigawatt of capacity changed at any level post the midterms?

Michael Masci: I will tell you the short answer is yes. Just to be transparent. I think right now, with where supply demand is, we are very much focused on do we deliver to the 250 megawatts that we have and how do we deliver the AI compute as soon as we can. Because the ability to be able to deliver compute in the short to medium term with this supply demand environment is extremely lucrative and it is a differentiator within the market. So while we are always gonna look at future and we are always gonna look at opportunities, we have a lot of different geographies that we have been looking at. We have a lot of different countries that we have been working with. But our management and leadership team focus right now is really going to be on the 250 megawatts and getting that monetized.

Christopher Pavlovski: Because the payoff is potentially Perfect.

Jason Helfstein: Appreciate that and certainly a great quarter. Thanks, sir.

Operator: Our last question is from Thomas Forte with Maxim Group. Your line is now live.

Thomas Forte: Christopher, Christopher and Mike, congratulations on the quarter. I have 1 and 1 follow-up. So Mike, you sort of touched on this in the last answer. But I would appreciate it at least at a high level, what are the implications for RUM Group from either a faster or slower pace of data center expansion I would think that there is pluses and minuses for you in both instances.

Michael Masci: Yeah. I think the first big plus is supply has gotten more difficult to bring online. And if you are an operator that has an existing estate of GPUs that are currently operating today. that is a huge tailwind because the demand is just not shaping. So that is the first positive 1. The other positive is when we said and we talked about our 250 megawatts, of unmonetized capacity and opportunity, 1 of the ways in which we really talked about that or why we talked about it is we had the ability to have key power in place, and we had the ability in many cases to have permits already in place. So you know, as you look at how far along a project is, in its lifetime and on its milestones, I would rather be as far along as we are as opposed to starting with dirt and nothing today. And so I think there is probably going to be a differentiation within the market of the maturity of your given projects. And I feel really good about having an existing estate as well as properties which are further along in the process which are gonna become more challenged moving forward, which is permitting power operational execution, to prove to the debt markets that you are somebody that they should bet on.

Christopher Pavlovski: Yeah. I will just add that our 250 megawatts in general is at a much further matured state than many others, and that is what, you know, keeps us super excited about that estate that we have right now. We do not believe and see any kind of, impediment on that on the political side or regulatory side at this moment.

Thomas Forte: Excellent. And then for my follow-up, you have a exceptional track record on strategic M&A I would appreciate just high level thoughts on what your current views are and maybe areas you would consider additions?

Christopher Pavlovski: Yeah. I will take that. Strategic MA has obviously been a big part of our company history, and it is certainly something we continue to look at right now. Obviously, we see as an opportunity presents itself, it is something that we are not gonna be shy about doing. And I will say from the perspective that we are seeing and the way that the market is treating certain companies, there may be opportunities that come and present themselves in the near term or long term. And it is something that is definitely something on our desk that we obviously evaluate on a constant basis. And just to kind of step back, like, a 10,000 foot view, I do think the market is not really appreciating what-- exactly how strong the demand in this market for AI compute really is. And with that being said, that does leave opportunities, for us and other companies to take advantage of, and that is certainly something I like doing.

Thomas Forte: Excellent. Thank you, you, Christopher. and thank you, Mike.

Michael Masci: Thanks, Tom.

Operator: We have reached the end of the question and answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.