Truecaller AB (publ)

All right. Hi and welcome everyone who's listening in. My name is Alam Amedy and I'm the CEO and co-founder of Truecaller. Today's presentation will be presented by me and my CFO, Odd Bolin, who are very excited to announce our fourth quarterly report and full year's results. We'll start with me presenting the quarterly highlights, then a product update. Then Odd will walk you through our financial performance. Then I will quickly go through the summary. And then we open up for Q&A. So let's get started. So let's start with the quarterly highlights. Next slide, please. We had an outstanding quarter and closed Q4 at 301 million monthly active users, a 16% increase. We made 392.2 million Swedish crowns in net sales, 111% growth compared to the same quarter the year before. And we had a strong adjusted EBITDA of 196 million Swedish crown and an incredible adjusted EBITDA margin of 50% in Q4. We're super proud to be a high growth tech company with strong profitability and great margins and highly efficient cash conversion resulting in very strong cash flows. And we intend to stay that way as well. Next slide, please. We had a very strong growth in advertising, driven by increased demand from advertisers, especially in India. And on True Call for Business, we're very proud to announce our first great milestone of surpassing 1,000 paying customers. We're seeing a healthy growth through our direct sales team, but also through our reseller partners. Not only are we growing at a healthy speed, we're also growing in several markets in parallel. Some of the True Color for Business customers we highlighted in Q4 was to educate the market and show the power of our product and its impact on many sectors. India Railway was one example, who's the largest employer in India with over 20 million passengers every day, who we're very proud to have as a partner on True Color for Business. Lastly, every Q4 we publish our global scam and spam reports, and we did the same this time as well and got very strong coverage globally. It's important for us as a company to highlight and make societies aware of the growing pain points of frauds and scams, which leaves big marks in people's lives. What came out of this report was a staggering 770 billion calls and messages that were identified by Truecaller during 2021. Next slide, please. Our user base continues to grow. Majority is driven by a strong organic growth, but we're also seeing a healthy growth coming from some of our focus markets through our user acquisition initiatives that we have started to ramp up in Q4. We closed Q4 at an average of 301 million monthly active uses, and it's up 42 million from last year quarter, or 16%. The larger part of the growth came at the end of Q4, which is not visible in the average numbers, but we're growing at a very healthy speed. Our daily active user base is also growing in a healthy manner and closed at an average daily active user base of 239 million users, a 90% increase from last year's quarter. We continue to see an increased engagement of 79% of our monthly active users being active on a daily basis. So it's a very strong and high engagement on a daily basis. Our growth activities on the user acquisition side ramped up in Q4, as I mentioned, and we continue to see very positive returns on ad spends, meaning that the users we acquire becomes net profitable for us early during their lifetime, which is aligned with our strategy. Next slide, please. In Q4, we continue to see a healthy growth on the incoming call volume side, where our users received 291 billion calls during Q4, which is a 16% increase from last year. And this is just to indicate the growth and the need of something like TrueCaller in existing markets and in upcoming markets where we see a healthy ramp up. Next slide, please. So let's go through some of our product updates for the fourth quarter. It's hard to cover everything we do since we have weekly updates on the app side and hundreds of releases on a monthly basis on the backend side, which improves the user experience. But let's go through some of the highlights here at least. But before that, let's recap the product offering first for some of our new listeners. So next slide, please. There are two main areas where we focus on from a product perspective. One is our consumer product, which is available on iOS and Android and being used by over 300 million users every month, where Truecaller is the leading global platform for phone number verification and call blocking. And consumers use our products in order to have a safer and more efficient calling and messaging experience. It's basically their go-to product for their communication needs. The other side of this is our business product that we call True Colorful Business that allows businesses to verify through KYC process and become verified businesses on our platform. They can also integrate their calling and messaging experience directly into our product so they can grow their business more efficiently through features like call reason and much more. As an example, as a consumer, which we call installed on your phone, you can rest assured that when your bank is calling you, we will verify that it's actually the bank and the reason for why they're calling you or your medical insurance company or delivery company and so on. This enables businesses to become more efficient, save time and save money. Our first B2B product that we launched was about a year ago. So let's go through some of the product highlights. Next slide, please. Some of the highlights we have this quarter, which are on the same themes as our previous report, are the consumer offering itself, our premium offering, our machine learning initiatives, and our ads and enterprise products. Next slide, please. In the fourth quarter, we released through caller a new update called version 12 on Android, which includes a fully redesigned user interface, which separates calls and messages into two different views, as seen on this screenshot. The app was redesigned to provide a more streamlined and user-friendly experience across the app, such that users can navigate through their calls and messages in a more intuitive way. By doing these changes, we started to see great reviews and adoptions from our users, which is a great sign. Next slide, please. Another highly appreciated improvement in TrueColor 12 is our fully new design profile page. After many iterations and A-B tests, we finally launched it. And because it's the top most visited screen inside of the TrueColor app, where people engage to make phone calls and messages and read community comments and so on, we wanted to make sure we made it 10 times better. We've loaded it with more relevant information about people and businesses and some advanced data insights for more advanced users to get a better understanding of the person or business that they're communicating with. We've also prepared it for some future data options for business profiles as well. And we're expecting to see a higher engagement thanks to these improvements over time. Next slide, please. Another big feature release for Truecaller 12 is Video Caller ID, a way for our users to create a more personalized and unique calling experience. Video Caller ID allows users to deliver personalized video greetings, either self-recorded or selected from our built-in templates that plays automatically when calling a friend or a family. Over time, we'll also open this up for our business customers. In addition to delivering these new experiences to our 300 plus million users, Truecaller 12 is faster and leaner and gives users a smoother UX with improved battery optimization. Next slide, please. We made many improvements to our premium offering during Q4. Just to highlight a few of them, we launched an announced call feature which uses our voice assistant to say who is calling you so you don't need to look at the phone through So you don't need to look at your phone. And through this feature, Truecaller's voice assistance reads out the name of the caller or reads out the contextual information on the type of call as identified by Truecaller's AI identity feature. For example, likely sales call. This is an incredibly popular product that has been enabled by almost 50% of our premium users since its launch less than three months back. So it's a very high adoption. We made a number of enhancements to add value to the premium experience for both Android and iPhone users. In the third quarter, we committed to driving iPhone user adoption by dedicating focused resources on rebuilding the app on the iOS platform with the goal of delivering a true-color app that is as much as possible on par with our Android product. We are on that journey and are progressing very well, I would say. Some of the improvements that have been seen so far on the iPhone have been driven by Advanced Caller ID, which was launched in the third quarter for premium users in the US and Canada. Advanced Caller ID was further developed in the fourth quarter with the launch of Voicemail support as an initial step towards cloud telephony services, which we believe is the future of communication. Lastly, on the page we've enabled purchase of premium through our website, making it much easier to upgrade or give a subscription as a gift to a friend or a family member. This has initially been rolled out in the Indian market and supports 25 different payment methods. More markets will be added in the future, but we see a high adoption and the usage of being able to gift premium to friends and families through an alternative source. Next slide, please. We continue to build on machine learning and AI driven capabilities in order to improve services across functionalities. In the fourth quarter, two machine learning initiative drove significant advancements in our spam detection capabilities in a number of markets. A new machine learning powered spam detection algorithm was introduced, driving drastic improvements to spam detection in several markets. Mainly, we can notice that change in the European and in the US market. Also a model for predictive analytics focused on call center carrier was deployed. This model enables TrueQuality to better identify the likelihood of numbers being identified as spam. This initiative has improved spam detection accuracy significantly and also in similar markets. Truecaller's messaging platform has also been upgraded with AI-driven capabilities, improving incoming messages efficiency, and highlighting the most relevant information from businesses who reach out to them via SMS or instant messaging. The integration of machine learning signals into Truecaller's messaging ecosystem has increased precision in differentiating between relevance, promotions and spam, which has resulted in better visibility on business messages. All these improvements we do are built with a customer first mindset, which means that data processing to enable these capabilities occurs on the device and never leaves a user's device. Next slide, please. On the ad tech side, we made a number of investments designed to deliver a better demand profile, which are scaling well and have shown very promising results. Changes previously introduced to the ad server auction mechanism have scaled well in the fourth quarter, driving overall auction efficiency, improving fill rates and eCPM, and providing more value to our advertisers. In the fourth quarter, ad tech infrastructure has been optimized and new features were introduced, enabling diverse integration path and enhancing Truecaller's ability to work with a wider range of demand partners. These enhancements helps improve demand liquidity and yield management while aligning better with demand side expectations. Optimizations on the supply side have also been a key focus area and some recent initiatives have been propagating very well for us. These improvements contribute to the overall revenue growth in the fourth quarter and we will continue to see these improvements adding value to our business in the future as well. Before jumping over to some of the highlights on True Colorful Business, we would like to play a short video that explains how it works. So let's go with that.

reaching your potential customers becoming challenging day by day? Perhaps your calls are getting lost in the clutter of other calls. How can you solve this? Introducing the Truecaller Verified Business Caller ID. Now, every time you call your customers, they see the right brand name, the green caller ID, the green verified tick, the right business category, and the right call reason, indicating you're a verified business and not a fake one. This further enhances your brand reputation by adding identity, improves customer experience, and can further improve your call efficiency. You can also make intelligent decisions with AI-powered analytics. That's not all. Truecaller Verified Business Caller ID works across Android and iOS devices and is also a network agnostic solution. So whether it's for your service, security or sales calls, you can make your business stand out of the clutter of fraud and spam calls. So get started today with Truecaller.

So True Color for Business has grown at a tremendous rate and achieved the milestone of serving over a thousand active business customers across India and several other markets in the fourth quarter. True Color for Business has gained traction across a wide range of verticals with the strongest demand coming from banking and financial services, edtech and healthcare. Key customers onboarded in the fourth quarter, including a number of leading brands such as Zomato, IKEA India, TVS Motors, Digit, as well as a major bank in South Africa. Business Call Reason, an add-on feature that allows business customers to provide context for why they're calling before a Truecaller user decides to answer a call, has shown a strong potential with business adoption, quickly growing to 40% since its launch in the third quarter last year. A number of operational improvements were introduced in order to support the growing demand for Truecaller for Business. We launched a self-serve portal for the new business customers to self-onboard directly on our portal. This has had a significant impact as this enablement contributed to 35% of our direct sales in December alone. We're working on building a similar self-serve portal, but for resellers such as CPaaS companies with the goal of increasing new business potential in many more markets using the resellers' help. Now over to Odd to talk about our financial performance.

Thank you. Next slide, please. Well, as you can see, we had an exceptional year in 2021 and also an exceptional quarter during the fourth quarter. We had a very strong sales growth of 111% versus the same quarter last year, 2020. um driven by a number of different factors um obviously we have a continuing strong growth in in users monthly active users but we also saw uh the number of revenue generating impressions ad impressions per user increasing as well as prices we had a positive trend for cpm um during the end of the last year and with an extra seasonal impact during the fourth quarter that had a positive impact on us. We see a situation ahead of us where we will continue to grow at a very considerable rate. We have a continuing strong organic growth in the user base. We have made and we are making further investments in user acquisition and preloads in order to increase our growth rate further in both existing and new markets. And we also see a strong demand, continuing demand, within the two-quarter business area. Next slide, please. Looking at the revenue by business area or service type, you can see that advertising had an exceptional quarter, growing almost 130% versus the same quarter 2020. The true call for business was growing obviously even faster, but from a lower base. While the consumer subscriptions is a little bit slower right now to a considerable extent due to the problems that Google had last year in India with the Reserve Bank of India, that has been solved. But it takes a little bit of time to get back on the growth track we want to be on. As I said, we saw a growing number of ad impressions, which helped boost our ad sales. But we also made a number of changes to our ad service auction mechanism that has scaled very well and that has contributed considerably to the growth rate. Within the consumer subscription space, we see increased ARPO. because we grow in markets with a higher price picture than our initial core market, India. But we also saw that the subscriber growth picked up during the end of the year, during the end of the first quarter. Next slide, please. Gross profit, gross margin improved to 78%. during the fourth quarter, which is seven percentage points higher than we saw the same quarter the year before. There are a number of reasons for that. We sell more through partners that have lower fees. Most of our cost of goods sold comes from commission to partners that we sell through where we use their ad platforms. And we've been selling more through partners where we have lower fees or partners that do not report precise commission figures so that we have to report income through these partners net. which means we have 100% gross margin on these partners in our books. We also saw some effects from the economies of scale we get in terms of server hosting. The pricing of our server hosting does not increase in parallel with the number of ads we are serving. And then we also had an increasing share of direct sales where we don't use any partner for putting our ads to our customers. Next one, please. A little bit on the cost side. we uh our adjusted ebta number um excludes certain non-comparable items such as the cost for the ipo but also the synthetic options that we had previous prior to the ipo that are that are now out of the books the other external expenses here consists of marketing primarily marketing user acquisition and then some other operational costs We do see employee expenses increasing in line with our expectations. We have a very strong operating leverage in our business model, meaning that we don't need to grow our employee base as fast as we grow revenue. But we do, of course, recruit new employees and we see our employee cost increasing over time. In 2022, we expect to continue increasing our investments in growth-focused activities, such as user acquisition, pre-installs of our app on new smartphones, pre-loads as we call it, and marketing. We expect to increase such costs by a factor of two to three compared to the fiscal year 2021. in order to continue our journey with a very strong growth rate. Next slide, please. The adjusted EBITDA margin increased to 50%, which was 9 percentage points higher than the same quarter the previous year. Once again, our operating model has a very high leverage, meaning that when we see an increase in revenue, much of that falls straight down to the profit line. And we also saw that this was partly offset by the increased investments we're doing in use acquisition and marketing. Next slide, please. It is worth pointing out that we have a very high cash conversion ratio, 89% for the full year 2021, meaning that 89% of the BTA profit we reported actually came out as cash flow. So we have a very strong cash flow based on that. We will, over time... We possibly see some decrease in that number due to the fact that we are the true core of the business is growing so fast. But we foresee that we will have a very strong cash flow for the foreseeable future. I believe that was my last slide and then over to you, Anna. Oh, sorry. Financial targets. We want to emphasize that we stand by our financial targets. The financial targets that we published ahead of the IPO, we're still standing by those targets. We are aiming to grow by 45% per year in the medium term, which means up until 2024, according to the definition we decided on. We're also believing that we can reach, not reach, but we can achieve an EBITDA margin of about 35%. over time after 2024. And we expect the combination of revenue growth and EBITDA to stay above 70%, even during the medium term. We have been clear about the fact that we are prepared to invest for growth. We are investing for growth as we speak. We will, as I mentioned just a second ago, we will increase those investments even further But we do believe that we will continue to show a very strong profitability, even in the light of those investments.

So to summarize, next slide, please. We had an exceptional year in terms of growth and profitability, growing net sales with 130% and also a strong 41.9% adjusted EBITDA margin for the full year and 50% in Q4. With this strong revenue growth and a slower increase of OPEX, it resulted in a very strong profit margins, which exceeded our long-term financial targets, as Odd mentioned. We've always been a product first company and we'll continue to serve our customers first. This can clearly be seen in our execution, but also building monetizable products such as Truecall for Business that benefits both consumers and the businesses. A very exciting announcement in Q1, but the work began already in Q4, was the acquisition of CallHero, which will strengthen our product on iOS and Android around the world, especially in the US, which is one of our focus markets long term. Their technology and knowledge will accelerate our bets in the cloud telephony space, which will open up many opportunities for our product with the digital assistant that will change the way we receive phone calls in the future. Once you start using it, you won't be able to live without it. The integration work is happening as we speak, and we hope to launch it in a couple of months for our community. lastly i'm very proud of the team at true color for all the great accomplishments but also the major milestones we reached in the single quarter such as 300 million active users surpassing a thousand customers on true colorful business but also surpassing a billion crowns in net sales and closing the year at one point one three basically so now over to q a

Thank you. And just before we start, I just want to confirm that the speakers can still hear me on this line. Is that right?

Yep.

Perfect. Great. So to the participants, if you wish to ask a question, you have two options. You can submit them via the webcast screen. Alternatively, if you do wish to ask these via the phone, you can do so by dialing 01 on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question has been answered before it shall turn to speak, you can dial 02 to cancel. And we have a few questions in the queue already. The first is from the line of of Carnegie. Please go ahead. Your line is open.

Thank you very much, Operator. Hi, Alan. Hi, Aude. And congratulations. It was quite a strong report today. I have a few questions, but I think I'll start with this one because this is where we receive a lot of incoming questions and that comes down to, you know, Apple, Google, new changes into how data is being handled. And there seems to be a mixed view here. So we hear from those engaging in advertisements, they say this new sandbox from Google, it's a gift to advertisers, but we've seen also the market punish, you know, stocks with ad driven businesses. So it'd be quite valuable to hear your opinion here. Can you spend some time in talking about how this might affect Truecaller going forward?

Yeah, absolutely. I can start. So actually, I didn't see any companies taking a hit on Google's announcements. And I believe that, first of all, Google is very transparent. We actually think this decision is going in the right position to serve the customers first. But we also have to remember that this is something that Google announced already a year ago, and they've been working on it since then, which we were aware of. And Google also have different sentiments. They are not like Apple in that way. And what we have learned so far is that we won't see any changes, at least for the coming two years. And during that time, they're building out their SDKs for their advertising partners. So I believe that in two, three years, we'll start seeing a solution that is probably better than exists today that will benefit the consumers and the advertisers.

All right, that's very clear. Thank you very much. And to Odd, you had very good commentary on the gross margin and what has impacted it so far. But thinking ahead, would you say the level we are at now, maybe looking at the four quarter rolling, is that a good starting point when you think about this for the coming years?

Yes, I think it is. Out of the IPO, we thought we would be closer to 75% and 78%, but the fact that we have reached a bit higher than that is really due to these changes in the mix of partners that we work with. As I said, some of those partners don't give us precise numbers on the commission that we pay them. We know roughly what we pay them, but they don't give us precise enough numbers for us to put in the books, meaning that we do have 100% gross margin on those sales. And we've seen more sales from these partners that has taken up the gross margin, but we don't see that there will be any major change in that mix going forward. If it is, we will obviously be transparent about that in order to give you the best possible insight into the gross margin. But right now, our best estimate is that this is a level that is sustainable.

Okay, perfect. And then on True Color for Business, I believe we asked something similar a quarter ago. This seems to be scaling quite nicely. Is the result here, is that a snowball effect? You see one company from one specific sector hopping on, seeing results, others joining. Is it your sales efforts? Is it the partnerships you have? Can you discuss a little bit on what drives these new additions in terms of Truecall for Business users?

Yeah, I think it's a combination of many things. I mean, as I mentioned, our self-serve portal that we launched end of Q3 in December stood for 35% of the sales that came in in just one month. So that one is, of course, scaling up. The team is scaling up as well. We have some very talented folks in the Truecall for Business team. And as you said, there is a certain FOMO where people in the same vertical, when they see their competitors becoming a customer, they also want to participate. So that's definitely helping us. But we're also seeing opportunities now like with onboarding IKEA in India. I believe it will be much easier for us to onboard IKEA in another market as well when we have the same company as a reference customer in the neighboring country. So I think that will help us as well. I do believe that given the demand we're seeing on the reseller side through CPAS companies investing now in the in the portal to make it easier for them to onboard customers to our platform will definitely help us. So there's a lot of things going on at the same time in parallel. And it's a very exciting business area that we're fully committed to. But it's also a very new business area for us. And the positive side of that is, of course, that we can move pretty fast. We can make changes quickly if we want to do that. So, you know, it's super exciting. And it's also... adding a lot of value in them to our users.

Fantastic. Thanks, Alan. And just as a final question, maybe if you can give us an update on your ambition to grow Truecaller in new countries. You mentioned the US where you have a long-term vision to grow in and reading through your global spam report. you the us the uk is quite rapid growth in spam um so if you could put maybe a timeline context to that as well thanks as soon as possible crystal clear thank you very much guys thank you thank you thank you and our next question comes from the line of actual dot tatani of jp morgan please go ahead your line is open

Yeah, hi, good afternoon. Thanks for taking the questions. Maybe if I could start with your CPM and some of the comments you made during your introductory comments. You flagged that obviously Q4 had quite a nice sequential step up, but I think you mentioned there were some seasonal factors as well as some structural factors. So I wonder if you could maybe just unpack that a bit for us. and maybe help us understand as we look over the next couple of years, what you can do to try and drive the CPM up further, given obviously you've done a great job on volumes, but it seems like there's a big opportunity on CPM going forward. So that's the first question. The second question is, I think Odd mentioned that, and I don't know if I understood the comment, completely, but he said something about investment costs in 2022 would step up two to three fold versus 2021. So I guess I was just keen to understand what specific buckets of costs he was talking about and what the focus areas are. So where are you investing to step up? And then the final thing was just on B2B. You obviously mentioned the strong success you've had so far and obviously the need to be dynamic as you continue to grow the business. I guess it was just a big picture question to understand as you think about the journey for B2B going forward, do you think this is something that you leverage by yourself and this is something as a business yourself, you have the scale and or can build the scale that you need to really leverage that platform properly? Or do you think more and more this becomes more of a partnership model where maybe you collaborate more with other players that do things in the same sort of space? Thanks a lot.

All right, thank you. Maybe I can start with the CPM. When it comes to CPM levels, it's something that is, of course, driven by a seasonality in the sense that in Q4, there's usually a lot of things happening with Christmas, Diwali in India and other type of holidays coming up, which means that the demand is pretty high and in the auction bidding model, of course, it drives up the price. That's one side of it. The other side of it is now that people are going back to office and life is becoming more and more normal, That also means that our sales team can go out and meet our customers. So we've definitely seen a ramp up in the direct sales side as well, which is enabling new inventories for our advertisers, which, of course, also drives up the price and the average CPM levels. But these are just a few examples. But there are many of these things that plays in that also controls it. So I would say the seasonality is around many of these aspects.

Saying something about the investment investments, what we're saying is that investments in user acquisition, preloads and marketing will increase. We expect that those investments to increase by a factor of two to three in 2022 versus 2021 full year. And what we're saying here is that we have been continuously and gradually increasing those investments. We have been building the necessary infrastructure and capacity in-house in order to do all the investments that we see that we can do in a profitable way. And we will be able to do more in 2022 than we did in 2021. The basic reason why we're doing these investments is to further boost our growth rate and ensure our long-term growth targets. Is that?

Maybe I can answer the last question, which is around tricolor for business and what will be the driving factor. And I think it will be a combination of all the things that I mentioned, the self-serve portal where businesses can go in and sign up themselves or a sales team reaching out to the businesses and then also the reseller side. I think what is important for us in order to scale is to have these three in place. But I think we are also cautious and making sure that we own the relationship with the important customers. And we have an advantage here because we know who the big clients are. And those are the ones we're reaching out to.

That's clear. Thanks a lot. It does. Yeah. Thank you.

Thank you.

Thank you. Our next question comes from the line of Yemi Falana of Goldman Sachs. Please go ahead. Your line is open.

Hi, Alan and Anod. Thanks for taking my questions. Firstly, all growth is welcome, but I think investors will be particularly excited that the rate of user growth in what you classify as rest of world is outstripping growth in India and the Middle East and Africa. Can you perhaps provide some color on the key drivers or the key markets behind that growth within that rest of world bucket? Secondly, any early indications you can give on the user reception of CallHero within the US market and the timeline before you'd expect to roll that out across your markets more broadly. Thank you.

Thank you. Well, what I can say about Call Hero, since it's been public and been used by users mainly in the US, is what we can read in the app reviews and so forth. It's a highly rated app with lots of great reviews. We've also made our own due diligence and called customers to understand And I think the founding team, two very technically strong product people joining us to sort of help us build this and own the Cloud Telephony part, I think that will add a lot of value to our customers. And once we roll it out in a couple of months to a part of our users, we'll start getting more and more feedback and We'll improve the product as we go. We're quite bullish on this and we think the opportunities is really big. You want to take the first question?

Can you repeat the first question so we get it?

wanted to get some color on perhaps the key markets within that rest of world bucket that are driving the user growth there just saw that the user growth there was kind of more than twice the level that you're seeing in um india middle east africa appreciate its smaller numbers but yeah keen to understand the moving part well the the focus markets we have outside of india middle east and africa would be uh southeast asian markets indonesia malaysia but also obviously the us

uh where we where we spend uh where we invest uh considerably in order to to keep growing that's where we also see growth worth adding is also latin america or we see a lot of coming in from which is not classified now we have recently started uh increasing our focus on that in america further so that's absolutely true thank you thank you thank you

Currently, we have one further question on the phone. So just as a reminder to participants, if you do wish to ask a question on the phones, please dial 01 on your telephone keypads now. And that next person is John Cardis of UMIS. Please go ahead. Your line is open.

Thank you. Good afternoon, and thanks for taking the questions. You've been asked about this a number of times. If I may sort of have another crack, if I may, unlike the sort of previous analyst, I sort of noted that the absolute net ads X India in Q4 were not that different to those in Q3. And we've been talking about it now for quite some time that ex India, the growth prospects are awesome. I also know that even if you just keep going in India, you'll have an awesome business. But I wonder if I could sort of encourage you to say something more concrete about what type of growth trajectory you would expect at least in 2022 with things like advanced caller ID and call hero versus what you've, and that's customer growth outside India, please. And then I've got a couple of questions for Aude, please.

Yeah, well, I think, you know, it's hard to project what the growth will be coming from these initiatives. However, these initiatives are to improve the premium offering in these markets where we also see a very high willingness to pay for uses. We do see growth coming in from, you know, many of these markets that are odd mention one thing to keep in mind as well if you compare Q3 and Q4 as I said earlier in this presentation is that these are average numbers and in the fourth quarter we were kind of back heavy where a lot of growth came at the end of it which means that the average is sort of taken down. But we do see maybe more growth than expected in some of the Latin American markets. But the key for us is to continue to focus on our markets that we mentioned before, which is Indonesia, Malaysia, Latin, some big markets in Africa, like Nigeria and South Africa. um but the the list is quite long uh to be honest uh but we're working quite hard to sort of be able to drive growth in parallel in all these markets through the initiatives just want to highlight as well you know one of these things is going to be coming from our partnership with OEM manufacturers, which we announced a couple of weeks back, where TrueCall will be installed on 100 million devices that are going to be shipped in the coming 12 to 18 months, with a big focus on India, but also outside of India, actually. And we're expecting this to sort of help us drive growth and take down the CAC.

Thank you, Alan. From what you said, is it Was I wrong to understand that cool hero will be available only to the premium customers Correct. It's only going to be on premium for now at least that's that's the plan Okay, thank you and then a few questions for all I think it's going to be more than two and on regarding the gross margin and I'd love to know who the advertising partners are and that for whom you sort of assume 100% gross margin and roughly what proportion they make up of your entire business. And I noted that you say the mix is not going to change going forward.

Well, we haven't, and I don't think we're in a position to name specific partners that follow that principle. Today, they make up in the order of 10%. 10% to 15% of our overall revenue within ads. We don't see that. That has increased quite significantly over time. But we don't see that as increasing that much from where we are right now. That's how we see it right now based on what we see and when we talk to them and how we see traffic being channeled.

Thank you. And can you give me a little bit more color or just to understand a little bit the cost that you incur related to pre-installs? So what you pay commission to the handset manufacturers per unit. Is that how it works?

and or per activation. Slightly different models in different cases. We do see that we will invest a substantial amount of money in that in 2022. But we see that as part of the user acquisition investments. And we see that as a model that gives us a higher return than traditional user acquisition. Obviously, not all the people that have their phones with Truecorder pre-installed will activate that. We believe that the hit rate, so to speak, will be good. And as I said, give us a better return than traditional user acquisition can do. Even though we do see very good returns on traditional user acquisition, we think this is a very beneficial step for us.

OK, thank you. I recall about three months ago when you talked about the Q3 results, you were talking about the difficulty it is to find enough right people to be able to spend a lot more on things like user acquisition and marketing. A, has that changed? And B, is it essentially that the pre-installs are the reasons why we will go from 50% EBITDA margin in Q4 last year to a lower number this year in order to sort of square that up with your longer term EBITDA margin guidance.

Yes, as I said, we will increase our investments in use acquisition, including preloads and marketing by a factor of two to three this year versus last year. So that will definitely have an impact, yes. And obviously we do that in order to increase our long-term growth. Finding the right people, though, is still very much of a challenge, not only for user acquisition, but generally speaking, the people that we need in order to continue to build this business. It is a very challenging task to find the right competencies that we need. And we look all over the planet and then we bring them into our offices because finding them locally is often turning out to be too difficult.

Just to add to that, I think the hiring plans we have for this year is to prepare us for next year, basically. And just to mention, since you mentioned mentioned the hiring plans in combination of OEM deals. This is actually one of the great hires we did when building out the partnership team where we hired a fantastic person who brought in people around himself to actually make these deals happen as well. And for us, it's not about the amount of people, but rather the quality and having the best people. given that we are just a bit above 300 people but serving over 300 million users is quite staggering and that's something we're proud of but we'll continue to scale our business that's great thank you both very much and again congratulations to the entire team thank you thank you and there are currently no further questions on the phone so i'll hand the floor back to our speakers

We actually have some questions from the webcast that has come in by email. And the first set is from Pontus Wachtmeister at SEB. uh who wanted you to perhaps elaborate a little bit more on the cpm impressions and if there is any seasonality uh i think maybe we covered that but if you want to add something else and can you give us more details on true quality for business on number of customers average revenue per user levels or churn and the third question is how render rates are developing

Yeah, I mean, so on the CPM levels, the seasonality that we see is that when there are certain festive seasons, the demand always increases. And when demand increases, CPM level goes up. But as I also said, it's a mix of many other things like direct sales, how many ads that we actually want to serve our customers and so forth. So this is, you know, in some way it's an art. So we're not super stuck on delivering a high CPM level, but rather high quality. great yields but also great revenues in them and this is something you know that we can adjust basically on the go where we adapted depending on the you know which season we're in but when it comes to our user base and our growth we don't really see much of a seasonality or the usage of it basically true quality is a product you need every single day basically And sorry, Annika, what was the other question?

Yeah, then there were questions on true quality for business. If you can give any details on the number of customers and how it develops, the R2 levels or the churn. And also how render rates are developing. Okay.

Yeah. So on the true call for business, we don't want to go too much into the details of it. What I do, what I can share is that, you know, during this year, we've, as I said, surpassed over a thousand large enterprise customers and also over 90% of them are still with us and retained. So the churn is actually extremely low if you compare it to many other businesses. And for us right now, we're pricing us in a way where we can actually land grab and win as many customers as possible. But at the same time, not give the product away for free. We believe that, you know, focusing on growth and delivering a great experience to our customers is more important than delivering high revenue numbers or ARPU in the short term.

Great. And we have a number of questions also from Johan Berglund. These are also related to True Color for Business. If we can say anything about how our business to business performs compared to our competitors or peers. If we can elaborate a little bit on the gross margin in True Color for Business, if it's perhaps higher or if there is a difference compared to the rest of the business. And do we see any significant impact on user engagement overall following the Truecaller for Business?

Yeah. So what we can see on the user engagement side is that people actually really appreciate this feature because it gives them more information about the businesses they communicate with and the reason to why. And it also gives them a lot of safety that they know. So I had one user in Florida calling me three weeks back, who's a retired 75 year old man. He got scammed a couple of weeks earlier on $3,500. because someone called him and came to be from the medical insurance company and said the bill wasn't paid. And for him, his medicine is super critical and he needed to, you know, he couldn't afford losing that. So he paid this instead to these scammers. And after that, of course, he became a user of Truecaller. So I think the use cases are and the benefit for these businesses, for these consumers to actually feel safe that these are the real businesses they are communicating with is super valuable. When we look at other peers, there are some smaller competitors in the industry. I'm not sure exactly how they're pricing themselves towards the other, but I do know one thing, and that is who actually owns the last mile experience. In our case, we have a product that people install on their phone. but 300 million people use it and have installed it on their phone. We control the UX, the UI, and what we want to deliver to the consumers and offer to the businesses, while some of these other competitors, or actually all of them, don't own the UI, the product on the device side. It's actually built in or through the carriers and so forth. And I think owning end-to-end and owning the last mile experience is super valuable long term because we're not in control of the distribution of carriers or preloads, like built-in preloads into the operating system. I think that's very important for us long term.

And quickly on the gross margin for True Cold for Business, we have very little or almost zero internal cost of goods sold. So the cost of goods sold that we recognize in the True Cold for Business is related to partners that we work with. as alan said that will be one important factor for our continuing growth and and we do see that that will uh increase the number of partners we work with and how much work they do for us and that will also gradually increase the cost of goods sold and take down the gross market but it's uh still in an early stage and and have no significant impact on the on our overall gross market

Good. Andres Westerberg has a few questions on the monthly active user growth. It's somewhat lower than historically. And is this due to some kind of seasonality pattern or do we see that the market, like the Indian market, has become mature and that we expect less growth there going forward?

For sure not. I mean, we're close to 50% market share in India from a smartphone penetration perspective. And we've been growing from faster actually during the last couple of years. The thing with growth is that when it's organic, it's not as linear or predictable as one might think. Because TrueColor is a brand that people recognize and they install it by searching for TrueColor or being recommended by friends. And as I mentioned before, a big chunk of our growth came at the end of the quarter, which is why the average looks a bit lower. But I think it's not fair to look at the numbers quarter by quarter because this is organic. And for sure, we have not penetrated the market. I think we have a long way to go, not only in India, but everywhere.

Good. And on that note, this is also asking about South America that we haven't spoken so much about before, but we seem to see good growth potential there. Could we say anything about the kind of potential we see and when we expect it to materialize?

Yeah, so what we usually do when it comes to growth is that we let it grow organically. We let the data become so good that people start to share it with their friends and tell their friends how great the service is. And that phase, as we call it high growth phase, we've passed that in many markets in Latin America, such as Colombia, Chile, Peru, and so forth. And all that growth is actually coming in organically without us doing anything. And I think an easy way to sort of verify what I'm saying is to just look at App Annie, just look at Twitter, and you will see during certain hours of the day, depending on which time zone you're on, you will see that tweet starts coming in in Spanish and Portuguese. Where we are right now in terms of data accuracy and the organic growth, we've sort of hit the tipping point where we can start boosting this through user acquisition to grow it faster in the organic way. And you can't do that until the market has reached a certain maturity. And that is happening right now, which is also why we've started to focus some of our investments on the user acquisition side in some of these Latin American markets, such as Colombia.

Great. And one last question from Andreas Vesterberg is regarding ad impressions and inventory. If we feel that we have optimized this so that we're done, or do we have further potential in terms of these two factors?

Yeah, it's a good question. Today we're serving around 3 billion ad impressions on a daily basis. I would say we're far from done with optimization. It's an ongoing thing that can never be perfect. And that's what our AdOps team are focusing on and working on. Having that said, there are also other opportunities when it comes to opening up more inventory, but we're doing things in a certain speed and pace that makes sense for us.

Great. Philip Helmroth is also wondering about average return on ad spend and how this has developed over time. Do we feel confident in the numbers we've named earlier that we have one month payback in India and three to four months in the US, for example?

Yes, we're seeing the same trends. We did expect that number to change a bit the more we scaled it up, but so far we're still on the same ballpark. And just to have it said as well, when we do these investments in user acquisition, We want to see some sort of a profitability during the user's lifetime. We're not in the business of wasting money and just walking away. We want to see this business grow on all lines, basically. And we'll continue to see TrueColor being a profitable business.

Perfect. So one last question from the webcast is from Ramil Kori at SEB. The interpretation I have made from pre-integrated Truecaller installs based on previous communication from you is that engagement levels are lower with customers funneled through that channel. Is that fair to assume it will be this time around as well, or will the requirement to install something lead to high intent users being converted instead of a broader base?

Yeah, so we did preloads in the past. This was in 2015. And what Ramil and I talked about a couple of months back when we discussed this was the activation rate is not 100%. It's much lower. And we do expect to see an activation rate that is... fairly OK. However, the good thing here is that we pay per activation in the most cases. And we've also seen that combining preloads where we pay on activation with advertisement to target these users increases the activation rate quite significantly and also increases the engagement. And the reason for that is because the user don't need to download the app when they get, you know, when they click on the ad, it actually opens the app instead and they can start registering themselves. So what Ramil and I talked about before was not engagement in the product itself, but activations. And as I said, most of these preloads are activation rates. So we only pay for these things, but doing it in a combination, I think will be really good. and we've also this time worked with the OEM partners to make sure that Truecall becomes as visible as possible on the first screen when you set up your device for the first time okay great nothing more from the webcast

Okay, yeah, and actually we do have one further question coming through on the phone as I say this. It's a follow-up from John Caritas of Numis. Please go ahead. Your line is open.

Thank you, and I'm sorry to have a second bite of the cherry. I recall about three months ago it was said that there aren't many sort of mini-true callers to acquire in other markets. And I just sort of wonder, and of course it's an awesome, lovely problem to have, but at what point will you say, well, you know, we're significantly under leveraged given everything that you discussed today and the EBITDA conversion rate to cash or have your M&A or your acquisition opportunities changed or are they changing? Thank you.

No, I would say we are far from that point. There are, as you say, not that many miniature callers out there, but there are a few of them that we would be interested in looking at. We have quite a few inbounds, people that have realized that we are listed and they're not. We are large and they're not. And there are potential acquisition targets for us. There are also technology companies. Cold Hero was a technology acquisition. There are other potential technology acquisitions out there. Some of them could be quite a bit more expensive than Cold Hero, but we would need more resources in order to require them. I think we're a long way from a point where we feel that we are underleveraged. That may happen. We have, as you know, a very, very strong cash flow, but we're not there yet.

Great. Thank you very much.

Thank you, John. Thank you. There are no further questions from the slides at this time. Okay.

Then I guess we have one last slide, which... is the thank you slide. So just want to wrap this up together with Odd and say big thanks to all our users, of course, our employees and our partners for a phenomenal year. And we're looking forward to, yeah, killing it in 2022. Thank you everyone for listening in.