RUM Group Inc. (RUM) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to RUM Group's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] This call is being recorded on Monday, August 10, 2026. I would now like to turn the conference over to Shannon Devine, Investor Relations for RUM Group.

Thank you, operator. I'm here today with Chris Pavlovski, Founder, Chairman and CEO of RUM Group; and Mike Masci, CFO. A press release detailing our second quarter 2026 results was released today and available on our Investor Relations website. Before we begin the formal presentation, I'd 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 the release and the company's identified social media channel. I will now turn the call over to RUM Group's Founder, Chairman and CEO, Chris Pavlovski.

Good afternoon, everyone, and thank you for joining us. Last quarter, I told you this would be the last call before Rumble meaningfully entered the cloud and agentic AI era. Today, I'm glad to say that reformation is complete. On June 17, we closed our acquisition of Northern Data, securing approximately 85.2% of its outstanding shares. And with the deal closed, we renamed our parent company, RUM Group Inc. We now operate 2 distinct synergistic business units, Rumble, our video platform and Quake AI, our new cloud and AI infrastructure business, combining Rumble Cloud with Northern Data as a state of roughly 22,000 NVIDIA H100 and H200 GUPs. To kick off our first earnings call as a combined company, I'm thrilled to announce that our revenue for the second quarter was $40.4 million, up 61% from $25.1 million in the second quarter of 2025. I'm proud to say it's been nearly 5 years since we announced in public and are still posting all-time records for our company, and we anticipate that we will post another all-time record in the next upcoming quarter. I want to spend a minute on the strategic logic here because I think it's important for everyone on this call to understand where we are headed. Rumble spent years building its own rail as a speech platform, our own bare metal compute, our own CDN and the network to deliver low latency streaming at scale, combine that now with an AI compute as a service business like Northern Data and you get a compelling end-to-end AI infrastructure company, that's Quake AI and it's going to be the financial engine of RUM Group going forward. On execution, Quake AI's existing GPU estate is running at more than 85% utilization today, up sharply from where it stood not long ago. That improvement reflects a deliberate focus on customer support, software and infrastructure as a service execution, and it's what gave us the credibility to win the next stage of growth. In June, we signed a multiyear agreement with Together AI to deploy NVIDIA HGX B300 GPU capacity, establishing RUM Group as a credible independent provider of large-scale AI infrastructure outside the traditional hyperscaler ecosystem. It validates that our customers trust our execution enough to partner with us and that NVIDIA is willing to support us with the supply allocation keep growing. The next stage for this team is monetizing our 250 megawatts of power targeted for 2027. The grid connections and agreement that put us in position for real deployment next year. That capacity spans our marquee 180-megawatt powered site near Atlanta, Georgia, one of the most important Internet points of presence in the country. We continue to see strong customer momentum as well as meaningful progress on the site development, where the substation is already built and the transformers are on site. In addition, we also have a smaller site in Pittsburgh and 2 European sites, roughly 50 megawatts in Sweden and roughly 20 megawatts in Norway. We continue to see encouraging and unprecedented growth in demand for AI compute as a service. our customer and demand pipeline remains strong, simply monetizing 250 megawatts on of currently unmonetized capacity represents what we believe is a $3 billion-plus annual run rate opportunity for RUM Group. Turning to our Video business. Average global monthly active users were $57 million in the second quarter and ARPU was $0.48, up 20% quarter-over-quarter. Our management team's focus is to continue to increase revenue by bringing in brand advertising. Additionally, with the recent formation of Quake AI, we are quickly learning from our AI clientele that Rumble may have a much more compelling monetization opportunity. As the AI industry moves into the robotic era, in the coming years, Rumble's spatial and pearl data, otherwise known as video data becomes increasingly valuable and very important to robotic learning. For example, contextual data, like what Red it has, is a prime example of the value in today's world of AI but we believe in one to 2 years, this will shift heavily towards video data. And only a week ago, it was reported in the news that Amazon was exploring ways to tap into Twitch's video data. In fact, Quake AI clientele have have already expressed interest in our video data. Our team is looking at various ways to capitalize on this opportunity and add another bucket of potential revenue for the creator community. With significant spatial temporal data on Rumble, combined with the AI compute rails we are building and deploying at Quake, RUM Group sits in a very unique position compared to today's neoclouds. Like them, we can offer scaled AI compute, but unlike them, we have a [ ToBA video ] data and a creator community that can help power the robotics era. In short, we have data, we have the rails and we have the community to power the future of AI, which we believe is the robotic anagenic AI era. With that, let me turn the call over to our CFO, Mike Masci, who will walk you through the quarter in more detail, along with some important on our guidance process and reporting on our businesses going forward.

Thanks, Chris, and good afternoon, everyone. This was a landmark quarter both operationally and financially. And let me start by walking you through the high-level financials. First, revenue for the second quarter was $40.4 million, an increase of $15.3 million or 61% compared to $25.1 million in the second quarter of 2025. Taking a turn to our expenses. We continue to make strategic investments to best position ourselves for high growth in AI. Cost of services were $30.6 million, up from $26.5 million a year ago, driven by higher programming and content costs as well as the incremental data center expenses from the Northern Data acquisition. General and administrative expenses were $16.3 million, up from $11.7 million, again, primarily driven by Northern Data, which contributed $5 million of payroll and other administrative costs. Excluding Northern Data, the remaining increase reflects higher payroll and other administrative costs, partially offset by lower professional fees. Research and development expenses were $6.8 million, up from $4.8 million. Sales and marketing expenses were $10.4 million, up from $7.9 million attributable to higher marketing and public relations spend, increased payroll and other sales and marketing-related expenditures. Adjusted EBITDA loss for the quarter was $16.6 million, an improvement from a loss of $20.5 million in the second quarter of 2025. Net loss for the quarter was $80.3 million or $79.1 million attributable to RUM Group Inc. compared to a net loss of $30.2 million in the second quarter of 2025. the year-over-year increase in net loss was primarily driven by $28.3 million of acquisition-related transaction costs associated with Northern Data close, along with higher noncash depreciation and amortization following the acquisition. We ended the quarter with total liquidity of $220.5 million consisting of $203.3 million in cash and cash equivalents and [ 293.14-bitpoint ] valued at roughly $17.2 million. But before I get into guidance, I want to talk you through an important change in how we will report going forward. This will be the last quarter we present MAU and ARPU as headline metrics for the company. Those numbers described a single video audience business and following the Northern Data acquisition, that's no longer the full picture of what RUM Group is. Beginning with our third quarter report, we plan to move to segment reporting. Rumble Video and Quake AI, each with its own revenue and profitability metrics. I think that's a far more useful way for all of you to understand where we're allocating capital and how each part of our business is actually performing. And it's the reporting structure I'll be building around as I get further into the seat. So that brings me to guidance. For the first time, we are issuing formal revenue guidance. For the third quarter of 2026, our first full quarter reflecting Quake AI, we expect revenue between $87 million and $93 million. We've heard directly from many of you that formal guidance would help you better understand this business and now that Northern Data is closed, with strong contracted revenue, high utilization, we felt this was the right moment to give you that visibility. Over time, as our forecasting visibility continues to improve, we plan to build this out further, including longer-term views. Building a disciplined credible guidance process is something I'm personally focused on as we establish our track record with all of you. So in summary, this was a transformational quarter, record revenue, both including and excluding Northern Data. We closed Northern Data and established Quake AI as a leader in AI compute as a service. We signed a marquee agreement with Together AI. And we are now focused as a team on converting our 250 megawatts of unmonetized power targeted for 2027 and into what we believe is a $3 billion plus annual revenue run rate opportunity. I was excited when I came on board at the end of March. And today, I'm more excited about where RUM Group is headed, and I look forward to updating you on our progress. That concludes our prepared remarks. Operator, we are now ready to open the line for questions.

[Operator Instructions] and your first question comes from the line of Tom Forte with Maxim Group.

This is Henry Dare filling in for Tom Forte. I got 2 questions. Firstly, Chris, there's some debate amongst investors as to what happens for the pricing for AI when capacity catches up with demand. I would appreciate your thoughts on that one.

Henry, this is Chris. So yes, there's been a lot of debate about that. The way I look at it right now and the way what we see right now in our window is that we're still in the early stages of AI. In particular, I think that with inferencing and agentic AI coming on exploding in the coming years, the demand for AI compute is going to continue to increase. I don't see at this point any time in the near future, any point where capacity is going to catch up to the demand on the AI compute side. I think it's scarce. It's very scarce. And I believe at this point in time, I don't see any point in which we're going to have capacity meet that demand in the next 1 to 2 years.

Okay. And this may be too early as you just finished the Northern Data transaction, but I would appreciate your current thoughts on your strategic M&A strategy and types companies you consider adding moving forward.

Yes. Like you said, it's pretty early in our process in terms of how we're thinking about moving forward in terms of growth. I think right now, as a management and leadership team, we're really focused on that 250 megawatts capacity. I think we're always going to look at opportunities in terms of value creation for customers and for shareholders. But like you said, I think right now, we're focused on that 250 megawatts of.