Release Date: July 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Truecaller AB (TRUBF, Financial) saw a 12% increase in both monthly active users (MAU) and daily active users (DAU), reaching 397 million MAU and 325 million DAU.
- The company achieved its third-highest quarterly net sales ever, despite a 12% year-on-year decrease, closing at SEK456 million.
- Subscription revenue on iOS grew by more than 60% compared to the same period last year, showing strong results from targeted efforts.
- Truecaller for Business hit an all-time high in revenue growth, driven by new pricing strategies and increased demand.
- The company continues to operate with strong profitability, maintaining a solid cash flow with SEK213 million in net cash from operating activities before tax payments.
Negative Points
- Net sales decreased by 12% year-on-year, primarily due to lower ad revenues and effects related to the Indian Premier League (IPL).
- EBITDA decreased by 31% compared to the same quarter last year, impacted by lower ad revenues and larger investments in user growth.
- Ad revenue decreased by 22% compared to the second quarter last year, with a significant impact from IPL-related revenue declines.
- Currency effects negatively impacted net sales, particularly in some of the largest markets in the Middle East and Africa region.
- The digital ads market remains challenging, with subdued sentiment for at least six quarters, raising concerns about a potential structural change.
Q & A Highlights
Q: You met expectations on advertising overall, but I was a bit surprised by the weak CPM. What is the limit of the number of ads per day? Do you measure how customers react to this? And how much is accepted by users?
A: We believe there is much more room to show ads without annoying users. We always prioritize user experience. Regarding CPM, it's a hard metric to look at due to various factors, including supply adjustments and user base growth in different markets. The ads market looks stable, and we are focusing on recurring revenue streams like Truecaller for Business and subscription user growth.
Q: On the new prices implemented for Truecaller for Business, what is the magnitude of these, and what are the outcomes from companies where you have renegotiated terms?
A: We have seen substantial price increases for Truecaller for Business. Customers have renewed their packages without pushback, as annual price adjustments are common. The new pricing reflects the enhanced value of our current offerings compared to the past.
Q: My line broke when Odd was talking about the negative FX impact on revenue. What was the SEK15 million impact in the first quarter?
A: The SEK15 million impact is an estimate and one of the largest we've seen. It disproportionately impacts ad revenue rather than subscription or Truecaller for Business, primarily from certain markets in the Middle East and Africa.
Q: The ad market sentiment has been subdued for six quarters. Can you give us tangible reasons why you think it will recover?
A: The Indian ad market is expected to follow the same growth trajectory as the US and Western Europe. Certain verticals are still not spending as they used to, but we are working on other partnerships to improve this. Diversifying our revenue streams will help mitigate these seasonal effects.
Q: When did you start rolling out the price updates for Truecaller for Business, and when will we see the largest financial impact?
A: We started rolling out the new price plans during the second quarter. New customers start with the new price plan, while existing customers will transition over the next 6 to 12 months. The full effect will be seen during this year or early next year.
Q: Could we get an update on video ads in terms of ramping these and launching them?
A: We expect to see some impact later this year, probably by the end of the year. We are currently testing video ads with a limited percentage of users and adjusting frequencies. We have also introduced rewarded video ads to unlock premium functionalities.
Q: Is it possible that some sectors are not spending on Truecaller but are doing so on other platforms? Have you improved click-through rates for your ads?
A: Some verticals have shifted spending to e-commerce platforms like Amazon or Flipkart. However, Truecaller offers unique reach, and we continue to see spending on our platform. The levels are lower, but we are not being cannibalized by other platforms.
Q: Any updates on the telco bill in India and the CNAP service trial? How might this impact your future user growth rate numbers in the country?
A: We haven't seen any impact from the CNAP service trial. We continue to grow, and if CNAP gets rolled out nationwide, we expect Truecaller to continue growing. Similar services in other markets have not hindered our growth.
Q: Regarding the opening of iOS and enabling caller ID, will you focus more on general user growth in the US rather than only going for subscription growth?
A: We will likely continue focusing on converting users to subscribers in the US to ensure a return on investment.
Q: Will you be able to show ads on your after-call screen on the new iOS like you do on Android?
A: We will not be able to show ads on the after-call screen on iOS. However, for verified business customers, we will provide a similar experience indicating a verified business call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
