Truecaller AB Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Predrag Savinovic - DNB Carnegie Investment Bank AB - Analyst : Firstly, on ads, you said that the ads market started a bit weaker in Q2, ended stronger. Could you give some flavor into how Q3 has started? Because intuitively, one could assume that the exit rate from the second quarter falls into the third. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 11:00AM, TRUEb.ST - Q2 2025 Truecaller AB Earnings Call

Question: Predrag Savinovic - DNB Carnegie Investment Bank AB - Analyst : Okay. And then if you could discuss a little more on the direct sales strategy on the ad side. I think first off, what kind of share of revenues are direct sales? Where do you think these can be towards the end of this year and next year? And if you could discuss the gross margin dynamics. I would assume that because you don't rely on Meta and Google, that this is probably 90% or higher on the gross margin side. So that should, over time, be very positive to the overall margin of the company.

Question: Predrag Savinovic - DNB Carnegie Investment Bank AB - Analyst : Okay. And in terms of a target on what share of revenues you think this can be over a few years' time, is it going to reach [50], can reach [60]? Do you have such a level to share?

Question: Ramil Koria - Danske Markets Equities - Analyst : Maybe I'll try to condense myself. I wanted to pick your brain on two topics mainly. If we start on the advertising side, I'm just trying to reconcile things a little bit here because perhaps I'm getting FX wrong here. But CPM, flat year over year in SEK terms. DAU up 16%, and ad revenue flat year over year. Yet on page 9, you say that the number of ad impressions that Truecaller monetizes was stable compared to the same period last year. So like, am I missing something here or --

Question: Ramil Koria - Danske Markets Equities - Analyst : Okay. Yeah, that's clear. So if I -- and I know you don't like to talk about CPM or ad load separately. But if you assume that CPM in Q2 of this year was the same of Q2 of last year, at the revenues you generate on the advertising side in Q2, that would imply quite a hefty step down in really ad impressions monetized. Does that have to do something with sell-through or --

Question: Ramil Koria - Danske Markets Equities - Analyst : Okay. That's very clear. And then perhaps just a follow-up on this. Could you elaborate a little bit about your positioning with other prices vis-a-vis competition in India? Would you assume that the demand with other ad channels has come down as much as it has with you, or do you think there are any company specifics to this?

Question: Ramil Koria - Danske Markets Equities - Analyst : Okay. And just another question on ads before I'll ask a question on iOS and then hand over to the next one. But with the new ad initiatives and -- understandably, no one can predict where FX is going. But should we expect that ad revenue per DAU should move up going into H2? Or when do you think that metric on a constant currency basis will inflect upwards?

Question: Ramil Koria - Danske Markets Equities - Analyst : Okay. And then on iOS, finally, perhaps I'll divide this question into two. ARPU was down a mere 2.5% quarter over quarter on iOS, and that's despite material FX headwind. It seems like mix remains quite good. Could you talk a little bit about the geographical exposure? I know you said that India picked up throughout the quarter. But seemingly, there seems still to be quite a positive mix effect there. And then secondly, as we enter H2, looking at the subs intake on iOS per month throughout Q2, it seems like it was rather flattish May to June. And understandably, a month is not a trend. So could you talk a little bit about what we should expect for subscriber intake on iOS for H2?

Question: Ramil Koria - Danske Markets Equities - Analyst : Sorry, Rishit. Yeah. So if you break it down a little bit, if I may, 55,000 new subs on iOS in April and the 90,000 in May, roughly, and then another rough 70,000 in June. So clearly, going into H2, should we extrapolate, say, May, June trends? Or do you think that Truecaller is geared to accelerate that iOS subscriber intake?

Question: John Karidis - Deutsche Bank AG - Analyst : The first set of questions are focused on ad revenue per DAU. Number one is, how does the ad revenue per DAU from direct sales compare to the average that you report? I would imagine it's higher than average, given that you're using different ad formats, but I just wanted to confirm that, please.

Question: John Karidis - Deutsche Bank AG - Analyst : Okay. The second question is, I'm trying to square the fact that ad revenue per DAU was down 5% on a constant currency basis in the second quarter and 6% in the first half, which implies that, in the first quarter when there wasn't any Indian-Pakistan conflict, there wasn't the Iranian conflict. That metric was down 7%, if my arithmetic is correct. And I'm trying to square -- that basically tells me that the ad market overall keeps getting worse quarter on quarter on quarter, more so given your answer about direct sales. So how would you advise me to square this? Because just these numbers suggest that this thing keeps getting worse. And I don't understand why that is. And I don't really understand what would change this. I know you were asked about what would happen in the second half, but it just feels like a falling knife to me.

Question: John Karidis - Deutsche Bank AG - Analyst : I mean, these answers -- just these answers in aggregates imply that the year-on-year decline on a constant currency basis should disappear in the second half going forward, unless, of course, there's another India-Pakistan conflict. Coul I also -- sorry?

Question: John Karidis - Deutsche Bank AG - Analyst : Yeah, indeed. But could I also respectfully say to you that when you restated numbers, you didn't restate it going back far enough. So we can't really check what Rishit just said about year-on-year decline in ad revenue per DAU being flat last year because we didn't get the ad revenue per DAU the year before, but just as an aside.

Question: John Karidis - Deutsche Bank AG - Analyst : Okay. And then my second and last area of questions, or just one question, basically, LTIP. So as you know, certainly, the sell side got caught out in the first quarter because the LTIP costs were arguably much higher than what we expected. So you'd expect most of us to have had some pretty -- a number of conversations with your good selves for the second quarter, but we seem to have been caught out by that again, if you look at how the actual results compared with the consensus numbers. Why do you think that is? Why were we, on the outside, still caught out quite significantly on the LTIP front?

Question: Bharath Nagaraj - Cantor Fitzgerald LP - Analyst : Just two questions remaining from my side. It appears you reduced your marketing spend in the second quarter. Correct me if I'm wrong there. If so, what was the reasoning behind it or what were you thinking? Why did you do that? And what level of marketing spend you expect in the second half? And the second one is like just a modeling question. Given the tax rate increases that you have already commented on, what kind of level of -- what level of the tax should we be modeling for 2025 and beyond?

Question: Bharath Nagaraj - Cantor Fitzgerald LP - Analyst : Just a quick follow-up. Like given the tax rate in Sweden is 21% and the one in India's 25%, like we are now seeing close to 29%. I'm just trying to make sure that I understand this properly. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 18, 2025 / 11:00AM, TRUEb.ST - Q2 2025 Truecaller AB Earnings Call