Truecaller AB (publ)

Hi, and welcome everyone who's listening in. I'm Alam Amedy, and I'm the CEO and the co-founder of Truecaller. With me, I have our CFO, Odd Bolin. We are very happy to announce our interim report for the second quarter of 2022. I will start with presenting financial and business highlights for the quarter. I will then provide an update on some of the exciting things we've worked on during the quarter. Odd will then walk you through our financial performance in more details. Finally, I will wrap up with a summary of the quarter and then we open up for Q&A. So let's get started with highlights of the quarter. We had an outstanding quarter and closed Q2 with an average of 321 million monthly active users. It's a 15% increase year on year. Average daily active users grew to 255 million, an increase of 17%. This gives us an engagement of 79% of our monthly active users being active on a daily basis. Our net sales continue to grow, and we closed the quarter at 480 million Swedish crowns, a 100% increase compared to the same quarter in 2021. We also had a strong adjusted EBITDA of 218 million Swedish crowns and adjusted EBITDA margin of 55.5%. We continue to have a very strong cash flow with 281 million Swedish crowns in net cash from operating activities in the quarter. We're also very proud to be a profitable, high growth tech company. And we also intend to continue with that with solid profitability, great margins and strong cash flows. So we continue to grow our user base across targeted regions and have achieved notable malgrowth of about 50% in a number of South American markets. We're excited to maintain our position on sensor tower list as one of the top 20 most downloaded apps in the world for a second consecutive quarter. While we ramped up our user acquisition and intend to continue, the majority of this growth in Q2 is organic, which means we don't buy and add slots to convert clicks to downloads. The majority of them are actually organic. But more on this on the next slide. But before that, Also, we continue to see substantial growth in advertising this quarter. This was driven by user growth in different markets combined with improvements in ad revenue per user. Demand for true color for business continues to grow and the composition of our customer base demonstrates the relevance of our offerings to a wide range of industries. Notable companies onboarded as customers in the second quarter, such as Google, American Express, and DHL Express, among many others as well. We also continue to grow True Color for Business in markets outside of India, and our customer base in South Africa, Egypt, Israel, and Malaysia also grew across different verticals. And lastly, I'm proud to share that we achieved an all-time high in our net promoter score in our customer surveys in India, which confirms our position as one of the most loved brands in the Indian market. So on our user base, it continues to grow. Majority of our user growth, as I mentioned, is driven by strong organic growth. But we're also seeing our investments in user acquisition start to seed upcoming markets that are of strategic importance to us. We closed Q2 at an average of 321 million monthly active uses, which is up by 42 million from the same period last year, or a 15% increase. And we saw a solid growth in markets like India, Nigeria, Egypt, Kenya, Colombia, and so forth. But markets that showed some of the strongest growth were South America overall, Malaysia, Bangladesh, and South Africa. Our daily active use base is also growing at a very healthy pace. We closed the quarter at an average of 255 million daily active uses, which is up by 37 million from last year, or a 17% increase. We continue to see solid engagement. And in Q2, we had 79% of our monthly active users being active every day. And now over to a product. And as a product-first company, we continuously invest in developing our offering to further improve the user experience. As usual, we'll recap the product offering on the next slide. So there are two main areas where we focus on from a product perspective. One is our consumer product, which is available on iPhone and Android. As mentioned, 321 million users use Truecaller every month. And we're proud to be the leading global platform for phone number verification. Consumers use our product in order to have a safer and more efficient calling and messaging experience. It's their go-to product for their communication needs. But also, the other side of this is our business product that we call TrueColor for Business, which allows businesses to verify through a KYC process and become verified businesses on our platform in order to increase trust in their communication with consumers, but also prevents impersonation, which is a big problem today. 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 so forth. Now, let's go into the highlights. Cool. So some of the highlights this quarter includes improvements we made to the consumer product, but also improvements and enhancements to our AI identity and communication offering. We also further developed our ads and enterprise products. And I will also be sharing some exciting things that we have in the works, which includes our investments in driving a better iPhone experience, as well as a better subscription product. Cool. So we continue to develop our core offering in order to provide users with a smarter and safer and more efficient communication experience. In the previous quarter, we were excited to introduce opportunities for users to leave feedback on unknown numbers in the form of comments, up and down votes, and so forth. This new initiative has increased our user engagement and contributed over 30 million community feedbacks. And we developed our AI identity even further this quarter to extract intelligent, actionable insights. and offer even more context to a phone number.

Just one second.

All right, cool. Sorry, we had some issues there. And we also upgraded our calling feedback functionality that made the call log load up time 13 times faster than before. And the call screen now supports over five times more call entries than before. Let's see here. Sorry, we're losing some slides here. All right. So on the messaging and SMS side, we started to see strong traction from improvements rolled out in previous quarters, especially through increased engagement with our messaging products. We also introduced some new features. Since transactional and personal information in messages becomes more and more common, our users have asked for an extra layer of protection, which is why we now have the option to set a passcode lock on their messaging tab. The passcode lock is easy to set up and supports biometric and fingerprint authentication. We've also made some changes to improve the UX for Smart SMS, which categorizes and highlights the most important messages for our users. The search experience within Smart SMS is now more intuitive, and it's now easier to find what you're looking for. We also made improvements to better accommodate coupon codes sent on SMS, an incredibly popular marketing channel used by businesses in many of our markets. Users can now easily find coupon codes and interact with them more efficiently through smart SMS. We really want to thank our users who kept feeding us with feedback and great ideas. And these are the ideas and inputs that we take into our roadmap when we develop the product further. On our paid offering, we continue to work to give our subscribers more value. This quarter, we launched Messaging Caller ID, which is a new feature available to premium users on Android, which brings our ability to identify unknown senders to other popular messaging platforms, which extends our core capability beyond the Truecaller ecosystem. On our paid offering, we continue to work to give our subscribers more value. This quarter, we launched messaging caller ID, a new feature available to premium users on Android, which brings our ability to identify unknown senders to other popular messaging platforms and so forth. All right. So on the next theme, which is ad tech and true call for business, our advertising business continues to grow, driven by improved access to demand, investments in ad tech and optimizations on the inventory side. We continue to improve our auction setup, which allows us to integrate even more demand partners more easily. We now offer the ability to onboard virtually any demand partner, irrespective of their integration preference, buying type or geographical strength. We've also started to deploy more innovative and engagement-driven ad units that drive performance for advertisers. From a data perspective, we continue to invest in advanced analytics and machine learning in order to improve our understanding of the ad engagement. This feeds into better targeting, trafficking, and yield management for further optimized different aspects of the ads business. And we're proud to be a chosen publisher for a wide range of brands across different industries, as this indicates the versatility and industry agnostic nature of our advertising platform. Next is the demand for our B2B, of course, product, True Colorful Business, also continues to grow across a wide range of industries. We onboarded a number of notable companies in the second quarter, including a few global brands wanting to take advantage of our scale in India. As you see on this slide, of course, demand for Truecall or business-facing solution in markets beyond India, such as South Africa, Egypt, Israel, and Malaysia, continue to grow as well across other verticals. And Truecall for business has grown at a great pace since we introduced it to the market less than two years ago. We've therefore been investing in improving our operational capabilities in order to serve such growing demand. In our previous reports, we talked about the self-serve portal that we developed for both resellers and direct sales. In the second quarter, we developed and launched even more features to our reseller portal. This gives resellers more comprehensive control and visibility over the deal management cycle. We also invested in automated market intelligence capabilities in this second quarter, enabling more efficient sales operations. On the business product itself, we continue to explore new use cases and develop more value-added services in addition to the core business offering. Our reseller partnership for business messaging with Tandla was commercially launched in the second quarter. Within one month of commercial launch, the partnership has successfully delivered millions of business messages and is expected to ramp up in volume over the year. Now on to some of the exciting things we're actively working on. We've invested in completely rebuilding our offering on iPhone and it's planned to be released later this year. Our team progressed significantly on revamping the iPhone app, which will deliver a brand new experience for both free users and subscribers. The new iPhone experience will offer a refreshed look and fundamentally better user experience from end to end, including a faster and smoother search and caller ID experience that we believe is much closer to what we offer on Android. The upgraded app will also provide a new premium experience on iPhone to support new plans. Some of the plans will include the Truecaller Assistant, which is a fully integrated offering from our acquisition of CallHero. And we're very excited that after only a few months of acquiring CallHero, we'll soon be ready to introduce the Truecaller Assistant to the market. Truecaller Assistant is an enhanced call screening solution for both Android and iPhone that automatically answers calls, filters spam, and shows the user what the caller wants in real time. We believe that Truecaller Assistant will take call screening to the next level and will be a strong addition to our premium offering. The fully integrated product will be made available to premium users in select markets in the second half of this year. Now, over to Ald to talk about our financial performance.

Thank you. Okay, thank you, Alan. It's time to look a bit deeper then into the financial performance this quarter. And we'll start as usual with the revenue development. And... as you can see in the report, and then I'm happy to say that it continues to be strong. The revenue growth that we saw during the quarter kept being driven primarily by the stronger developments we've had in advertising, which in turn is an effect of both the sustained growth in the user numbers in many different geographies, but also in combination then with continued growth in revenue growth Generating ad impressions per user. CPM prices increased by 42% compared to the second quarter last year. CPM is not something we see as a key driver. It's more of an outcome of the revenue maximizing strategy that we use. But it's obviously a good sign that we see a continuing increase in prices due to more demand for our ad space. As Alan also mentioned before, we saw a continued positive trend for our business and business offering, True Cool for Business, which is growing very nicely, both when it comes to customers, but also in terms of revenue. Our subscription business is also contributing in a good way again, which we're very happy about. The underlying development is strong, although we have also been helped by some short-term factors positively impacting our revenue growth rate this quarter, which is worth mentioning. The exchange rate has gone our way, and the Swedish crown has kept losing value versus pretty much every other currency on the planet. and in particular then INR and USD, which are important factors or important currencies for us. So we see a positive impact on our income and results from that. We are paid, as we have pointed out previously, primarily in Swedish crowns and US dollars by partners like Google, mostly Swedish crowns and to some extent US dollars. Which means we cannot quantify the actual currency exposure that we have precisely because we don't know exactly how they manage the revenue streams that we get from the end users. But we estimate that the currency effects that have impacted our revenue growth rate by slightly more than 10 percentage points this quarter versus the same quarter last year. It's also worth mentioning that IPL, the Indian Premier League in cricket, the majority of the income this year came during the second quarter, whereas last year it was spread over primarily the second and the third quarter due to the COVID situation at that time. And also, generally speaking, the COVID situation last year dampened demand during the second quarter 2021, which is obviously good for our growth rate looking back now from the second quarter 2022. As Alan also mentioned, our ads machinery is getting smoother and smoother by the quarter. We have improved across the board, both when it comes to improving demand competition, improving supply side, and doing technical enhancements, which we can leverage on and also having the right tools to constantly continue to improve. Within ads, we've also helped by the IPL season that I mentioned, but also seen increasing prices. The IPL season is a boom for our demand in the Indian market during the season and that also have a positive impact on pricing. It's also something that's worth mentioning when we talk about these sort of seasonal or semi-seasonal effects that the Indian festivities, Diwali last year, impacted both Q3 and Q4, while this year, due to some delays, it will primarily affect Q4. When looking at our subscriptions, you can see that we grew our income by 21% compared to last year. The largest growth is coming from iOS and from markets outside of India, where we have a higher pricing than we have in India. And as Alan mentioned, we will, during the second half of this year, launch additional features, such as the TrueCore Assistant, which we are very, very happy and excited about. But also the new IOS product, which should further increase the growth potential in this area. Truecall for Business is developing well with many large new enterprise clients. Some of them pointed out previously, like Google. We're now present in 29 countries and we continue to improve our capabilities and we see that more and more customers have longer relationships with us, which is a positive development. It clearly shows the long-term demand for the services that we offer. So we continue to improve our offering and we have recently launched new price plans that are also more focused on a longer-term relationship with our customers. Gross margin-wise, we saw a 3% gross margin increase versus the same quarter last year, but it's been very stable during the last quarters. As we pointed out previously, the improvement that we have seen over the last year or so mostly comes from growth with partners that have lower fees or that are not... transparent enough on their fee structure for us to book the revenue gross. We book the gross net and we then have a 100% gross margin from those partners. We continue to see a stable situation at the level we have right now. When we turn to costs, you have heard us talking about ramping up the growth-focused investments. We started doing that at the beginning of this year. To some extent, that has been true, but the increase has been somewhat delayed compared to what we previously planned. And the reason for that is that we have focused on building the right team and the competence to have the capabilities internally that we needed to be able to get a good return on investment on the investments that we do in data and user acquisition. Now, shipping of preloaded devices have started somewhat more slowly than we anticipated. Nothing has changed in terms of volumes and number of phones that are going to be distributed eventually. But it's been a slightly slower start than we anticipated. But it will ramp up over the next quarters. This quarter, you also see employee expenses taking a jump, which is due to some different factors. We have a larger number of FTEs. That's obvious because we're growing. We had an annual salary revision in April this year. But you also see increasing incentive costs. As you know, we implemented our first incentive program as a public company. We weren't really public at that time, but we started that end of last summer, just ahead of the IPO. That was primarily based on warrants and options. We started a new program this year, which is warrants and restricted stock units. And the restricted stock units show up in a different way in our profit and loss account. We see a cost that we need to book for IFRS reasons has no cash flow impact at this time and won't have any cash flow impact until at earliest 2024 when we have to pay social security fees for the values of the shares that are being given to our employees in Sweden at that time. Now, the cost for this year's program, the RSU-based program, will increase going forward. The second quarter this year only included those costs during one month. And obviously, for future quarters, we'll see the full three-month impact. This cost could also potentially be pretty volatile, depending on the share price development. But in our reporting, we will break out costs of incentive programs to help you and every other investor and analyst see the development, both including and excluding the incentive programs. I understand fully well that some of you will look at this, including incentive costs. Some of you will be more interested in the non-incentive costs related employee costs. Looking at profitability, our adjusted DBTA more than doubled and the margin increased to 45.5%. If we were to exclude the incentive cost, we would have been very close to 47% during the quarter. As pointed out earlier, we are continuing to gradually ramp up the investments in long-term growth, preloads, data and user acquisition, and branding campaigns. Obviously, the startup or the release of the new iOS version in the US, for example, will justify some marketing campaigns. We have strengthened our teams and more expertise within these fields, and we are ready to accelerate these investments further. And taken together with increased costs for incentive programs, this is expected to have an impact on our margins going forward. But we're also seeing that that will enable very good returns and growth for the longer term. Well, you've heard me saying this before. We're strongly cash generating. We had a free cash flow of 281 million Swedish crowns from operating activities this quarter. Part of that was due to a decrease in... in working capital, but we translate a very large share of our EBITDA into free cash flow. We now have 1.6 billion Swedish crowns in cash and short-term investments, and we have another 500 million that we could use in our rolling credit facility if needed. We believe this is an excellent position to be in at this time. There's a lot of microeconomic uncertainty around us. And we see falling valuations for tech companies that are not profitable and might have a tough time in raising capital. We have a super strong financial position. And although we don't see any... material impact of the macroeconomic situation on our business, we stand ready to face whatever comes our way. And we will come out stronger out of any sort of downturn in the market that might happen. We also constantly scan the market for potential M&A, but it must also provide a really good return on investment. We are constantly scanning the market, but we have only, as you know, made one acquisition so far, and we are very careful to only move forward with the opportunities that we find will give a strong return to our shareholders. We have also been given by the AGM, the board has been given a mandate to do buybacks, which is something we want to have in our toolbox in order to use that in the future in order to manage our capital structure, if that turns out to be beneficial for our shareholders. Now we continue to beat our financial targets, strong growth and solid profitability. We have stated that earlier, but comparison figures are getting tougher and we will increase our growth investments going forward. That said, I think the targets are still very valid and something we'll continue to strive to outperform. So with that, I'll hand back to Arlan to wrap things up before we start the Q&A.

Thank you. Let's move to the next slide. Cool. So I'm pleased to report this quarter that our business continues to develop very positively. We continue to deliver strong financial performance in terms of growth and profitability with growth in net sales of 100% year on year combined with a 45.5% adjusted EBITDA margin. Strong revenue growth with a slower increase in OPEX resulted in a very strong profit margin exceeding our long-term financial targets. As I mentioned before, we've always been a product-first company and will always be that. We invested a lot in improving our core product offering and continue to invest in the Antec platform and True Color for Business. Lastly, we're proud to be in an incredible position with solid financials, strong cash flow and strong organic growth, even in a time of uncertainty. we will continue to take advantage of our strong position and find opportunities to continue growing. It goes without saying that none of this would be possible without our users, the great partners that we work with, and the phenomenal Truecaller team across the world. Now, and with that, we're happy to open the floor for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question today comes from Akhil Duttani with JP Morgan. Please go ahead.

Hi, good afternoon and thanks for taking the questions. I've got a few please. Can I maybe start with your CPM performance this quarter which obviously looks very strong, you're up 42% year-over-year. Can you just talk us through what supported that CPM performance? Obviously there are some items you're calling out like the IPL that maybe has some seasonality to it but structurally it looks like through the whole of this year your CPM performance has been really strong. So just some color around what's driving that and how we think about that going forward would be very helpful. So that's the first question. The second question is a bigger picture question on macro. You said yourself that we are in pretty uncertain times and there's been a lot of attention on Snap's results yesterday and the sort of commentary they've given around their outlook on advertising. So I guess I'd love to understand You know, what you're seeing on macro, clearly there's nothing evident at all in these numbers. So just what you're seeing, how you think about it and the resilience of the business going forward. And then the last question was just on odds comments around comps and different moving parts into H2. I guess I'd love to just understand a little bit more how you're thinking about growth. I know you don't guide quarter to quarter, but as we think about tougher comps, timing of Diwali and things like this, how should we start to think about the H2 growth performance? Thanks a lot.

Hi, Kill. You were breaking up a little bit. I think you were referring to someone else when it came to that market, but we couldn't hear which company, but maybe it doesn't matter too much. I can start, and... To start with the macroeconomic uncertainty, we do see a lot of macroeconomics uncertainty. Of course, we just have to read the newspapers. But it hasn't impacted our business at this point, and we haven't gotten any material signals that it will. What we do see is that many companies, including companies that we have as customers, are, of course – very carefully looking at what's happening and looking at their business and see how they want to run the business. Now, What we do also see is that in the markets where we have most of our exposure, including India, the macroeconomic situation looks a lot better than it does in the Western world. And when we speak to people that are pundits within this area, they all tell us that they expect the market in India to keep growing at a very good rate. And so it's true for many other of the major markets where we're active. We are, you know, we are cautious. We are looking at, we're keeping our eyes open all the time in order to see what's happening. But we don't see any obvious signals that we'll see weakening in demand for our products at this time. I think you should expect CPM to be somewhat volatile because, as I mentioned, we are not looking at CPM as a measure that we use to focus on. It comes out as a result of the activities we do in order to maximize revenue, maximize revenue per user, which includes fill rates and render rates and different ways of managing demand in a more efficient way. But obviously, we see that the demand for our advertising services is growing over time. Remember that we only started monetizing our business efficiently and effectively two years ago, or slightly more than two years ago, we're still in sort of an early stage here. And we see that, not least by looking at other companies that do advertising in the markets that we do, digital advertising, we see there's a considerable upside to our CPM over time. But it is reasonable to expect that there'll be some volatility from quarter to quarter.

Sorry, Akhil, what was the second question?

The last one.

Oh, the last one was the macro.

Oh, I'll do that. Yes, of course, we started this year saying that we are entering into a period now where the comparison figures from 2021 are much tougher than the ones we had in 2020 when we We're in 2021. And we have been fortunate and happy enough to be able to deliver very good growth rates the first half of this year and and we don't see any any slowdown in in the business as such but obviously the the what we stated at the beginning of the year that the comparison figures are much tougher this year still still stands true now we had some tailwind during the first half of the year It is quite possible that we'll have similar tailwind with the currency exchange rates during the second half of the year. We don't know that. And we just wanted to point out that you need to take these kind of effects into account.

Maybe if I can just add to what Ol was mentioning when it comes to the macro. I think another aspect to also keep in mind is the fact that, and you touched a bit on this, is the fact that we're still early in our development phase of our revenue models. Compared to some of the more mature companies within the tech space and ad tech space, they have many years of development in their product while we are a couple of years behind, which means that we still have opportunities that we're aware of that we're grabbing every quarter by building out our platform. So that, of course, will help us to some degree, even if the market would change a bit. I hope we answered your question in a second.

Yeah, you did. Thanks very much.

The next question comes from Predrag Savinovic with Carnegie Investment Bank. Please go ahead.

Thank you very much, Operator. Hi, Arlan. Hi, Aude. And congrats. Quite strong figures today again. I'm going to follow up with a few questions. I mean, based on also what Akilah asked, but let's start with the CPM. You said, though, it's been, you know, it can be volatile. It was up 20% now compared to the quarter before. It's around 40 year-over-year. You say it's volatile, but it's been quite linear since you really started working on the ad tech side. So in general terms, normal volatility for the CPM? Any color you can give on that?

It's difficult. Once again, the key point here is that CPM is not a core measure that we are steering towards. It comes out as a result of the work we do in order to maximize revenue per user. Maximized revenue can be done in different ways at different times. Sometimes it's beneficial for us to focus more on fuel rates sometimes pricing is is a more important factor but we're always trying to maximize revenue per user and the cpm is is an effect of that so um but i think once again as i said the the underlying trend is uh to us at least clear that we will be able to have see better pricing for our ad services going forward because we are We are at an early stage. We're still not a, even though we are also obviously a sort of a big advertising platform in India, we're just two years into this journey and there's a lot more that we can do that will increase both demand and competition for our ad space, which should have a positive impact over time on the prices too.

Right. So more in quarter volatility perhaps, but over time, over the years, you know, steady growth. And then my second question, it's also in the macro, but let's try to put it differently. So you have some core markets which have quite significant economic growth. They are quite behind when it comes to digital adoption compared to the US in terms of the digital ad market. I mean, the spend on a market level is, what, 50% plus. You're early here, you're expanding your market share. And with this background, plus the CPM discussion, is there really a reason to be concerned over the growth trajectory?

We are not concerned about the growth trajectory, if that's what you're asking us. But I'm just trying to give you some flavor on what we see in the market. Ranging from currency effects to macroeconomic situation in our core markets.

Right. Then on the business side, you're continuing to get some quite prestigious customer wins. You're breaking up. It would be interesting to hear more on breaking up.

You need to repeat that last sentence.

All right. Can you hear me better now?

Yes.

Perfect. So, on the two-part business side, there's quite some prestigious customer wins here, particularly Google. It would be interesting to hear your take on how will they use this product and how big can this partnership become. This is really, really growing rapidly on a year-over-year, two-over-two basis, whichever metric one would prefer. So, it would also be interesting to hear what else is in store here going forward in terms of development pipeline for this product category, partnership with Tanla, what could that imply? We have noticed there's been some quite large banks that have started using Truecaller messaging as their messaging service for customer support. So there's quite a lot of things going on here. Just a general flavor on the Google contract, messaging product, and then product roadmap perhaps.

Maybe I can take this one. So I think when it comes to Truecall for Business, we're still early in this phase, but I think what the team has been able to build in a very, very short period of time is quite phenomenal. And the fact that we've been able to attract such big brands like Google, DHL, American Express says a lot about the value that it provides to our enterprise customers. And in this particular case with Google, it's one of their departments, or maybe it was two departments. But it's a great way into more of Google's different departments. I think what we're seeing today is just the beginning of it. There are many, many opportunities. And I think what we've focused on the first half of this year has been building out a more stable foundation in order to onboard new customers, large customers, but at the same time trying to build out the offering. And some of these things we've done, like the call me back functionality, which is a way for users to say, hey, I can't take this call right now, but you can call me in three hours. Where we're seeing great adoption, both from the enterprise customers, but also from the consumers actually who appreciate it. So let's see what happens. We're very excited about the product and we believe that it adds a lot of value in then to our consumers, to our users, which is the most important part. When it comes to Tandla, as Odd mentioned before, it's been ramping up now in Q2. And we're starting to see volumes going up this month as well. So this is something that I think both companies will benefit from. and also the end consumers, actually, because we deliver these messages in a more intuitive way and a more secure way. And we'll have to see in the second half of the year how that ramps up, but it's looking promising.

Okay, that was all my questions. Thank you very much.

Thank you, Frederik.

Next question comes from Jasper Von Koch with Redeye. Please go ahead.

Hi guys and congrats to the very strong quarter. So let's start with the the sequential drop in ad impressions per user. which is after having grown this very fast in the previous quarter. So if you could just explain on what was the reason behind the sequential drop and what are your thoughts on increasing ad load going forward?

Well, I think in the end, what you should look at is revenues. How much revenues are we making? Because that's an effect of a lot of things that the AdOps team works on every day, every minute, every hour, basically, where we, depending on demand, depending on the price levels and so forth, we optimize for revenue growth and not for cpm growth or how many ads we show to our users of course we know that we have an opportunity to show even more ads and and these are things that we're always elaborating on it's more or less a science to be honest so i think where the focus should be should be on on the revenue growth But of course, it's a valid question whether are we losing visibility, add visibility towards our users, which is not the case. We've been through a period where demand has been incredibly high, which means that we have to work with yield management in a different way.

Okay, thanks. And so regarding your plan to release your new iOS product towards the end of Q3, if you could just elaborate on how the experience for iPhone users will change, like how close will it be to that of Android?

You're breaking up.

Sorry, you were saying how close and then we lost you.

I'll take that again. Regarding your plan to release your new iOS product towards the end of Q3, if you could elaborate on the experience for iPhone users, how that will change and how close it will get to that of Android.

Yeah, it's a good question. And we've been working really, really hard to make sure it's as much as possible on par with Android. It's never going to be 100%. But I think some of the improvements that we've done to the client side is going to make a noticeable difference towards our users. Some of them are already in a beta stage where they've noticed a big difference. But once we are ready to roll this out fully, it will be even better than that. And I think some of the big changes will come with the assistant, which will be to start with launched in some selected markets like US, India, and a few more. where you will get more or less the exact experience as on Android. The difference here is that calls are being routed through our phone cloud system. And that's going to be for paying customers. Maybe I should also add there are other improvements into the products besides UI and UX, which are more related to speed, how fast the app starts, how fast it reacts to searches and so forth. These are actually not unimportant improvements. It's actually extremely important improvements. We've been able to take down the app size significantly we've actually been able to half the app size. And the reason why that matters is because in Sweden, we're quite spoiled with fast 4G connections and so forth, while in many parts of the world, that's not really the case. So being able to update your app much faster is important, and it also helps us increase the adoption of our latest versions.

Great. Thanks for that. And also, there was a sequential small drop in the Dow to MAO ratio, mainly from India. Just wondering, is there anything fundamental behind this or just like temporary fluctuation?

No, not really. I think I even mentioned it in the last quarter when we were at 80% that it goes up and down depending on the number of days of the month and so forth. But it's nothing strange. I would say we'll probably be hovering somewhere between 78 and 80 during the year and forward. That's where we've been.

Okay, good. So my last question about South America, where you've now reached more than 5 million mouths. So what's the current status regarding call or identification rate in this region? And also, have you launched true call to business in any of those markets?

I lost you a bit, but I think I got the whole question. We've seen really, really good growth in many parts of South America or Latin region. But I think what is even more exciting is the product market fit, how great it is, and how big the need of something like TrueColor is in these markets. That's why we're investing even more in these markets. Now, on True Call for Business, I think we actually got a question sent in, which is, what's the user penetration needed in order for True Call for Business to be relevant in these markets? And I think it's hard to answer that question, and I think it's related to what you're asking. But what we've seen so far is that obviously in markets where we have strong penetration, 40, 50 plus percent, it's an easy sell. But even in markets where we have a lower penetration, maybe around 20%, we've still seen that the upsell is not as difficult than might have been expected, actually. Because the business model around this is volume-based. So if we sign up... BHL in Colombia, for example, they only pay us when they call users or customers who use Truecaller. So it incentivizes us actually to invest further in those markets.

Great. Big thanks. That's all for me.

Cool. Thank you.

The next question comes from John Cardiff with Suvis. Please go ahead.

Great, thank you. Just a few questions, please, again, for me. Firstly, I understand what Open Doors does for customers or users. I'm not quite sure what Open Doors does for Truecaller. Is it PR? Is it another source of advertising? What is it? It almost feels like, at first, it Anyway, I'd like to really understand the importance of OpenDoors for Truecaller, please. Maybe I'll stop there.

Okay, sure. And hi, John. Hello. Just to explain to the rest of the audience who might not know what OpenDoor is. So it's a new product, a new app, actually, that we launched last week, which is a more innovative and fun way to actually... communicate with friends and friends of friends so the way it works i open the app i click to create a room basically and then everyone in my phone book who has open doors installed get a push notification saying that alan is is now on open doors ready to chat and then all my friends can join that and we can have a good chat now The other people who join, their friends, who I might not have in my phone book, which is friend of friends, they also get notification when they join. And then all of a sudden you have a group of people having a good conversation. So it's a way to get people who know each other or friends of friends to conversate, basically. Now, we believe that this is a very interesting area of communication. And historically, we've always been trying out new products, not only to learn user behavior, but also to platform. And I think it's important for a company like ours to always be innovative. Try new things. Don't be afraid of it. It's not just to be clear. There are no monetization plans in place right now. So we're not monetizing on this product. But on the other side, we're learning a lot about communication, which is the space we're in. Hope that makes sense.

Yeah. Maybe a longer conversation some other time about this, but thank you. Secondly, in terms of... Yes, I can get the app. The second thing is, I guess what I'm struggling with is you said you have 5 million users in Latin America, and then you mentioned Colombia, and I just sort of Googled the population of Colombia, and it's 51 million, just Colombia. How many monthly active users do you need to have in that region in order to offer people successful searches for identified identities attached to numbers, please?

Sorry, our speaker is acting crazy. Let's see if we can switch.

Would you like me to repeat it, Alan?

One second, John.

Thank you, sir.

Okay. Can you hear us, John?

Yeah, I can. Thank you. I'm just trying to figure out, trying to, in my brain... marry things like you have 5 million monthly active users in Latin America, you need a certain critical mass in order to deliver successful searches for verified identities attached to phone numbers and only Colombia has a population of about 51 million and I assume most of them have phones as well. So could you help me square these things in my head?

Yeah, so Colombia is the largest market for us right now in Latam. But the hit rate and the data coverage is not based on the number of mouths we have today. It's based on how many users we've gained since we started the product or the company, basically. Because every user helps us improve and then they might churn. So in the early phase, we churn users much faster because the data might be poor. But then over time, users stay a bit longer. And then later on, we can see that users who churned in the past are now coming back because the experience is much better. And I would say in a market like Colombia, since you mentioned it, We have definitely passed the threshold in terms of great data quality. That's why we're going more aggressive in this market. So we've been seeding this market for a long time. And now is a good time to make these investments because we know that those who we get on board will be very happy with that experience. So we're in that growth stage, I would say.

great thank you and very lastly um i think it was the last quarter of the quarter before you threw this uh us uh this interesting stats about the number of smartphone uh users in india are likely to double over the next uh four or five years um do do you have any sort of uh similar type of stats for other main markets please for true caller

Nothing on top of my head, but one market I would definitely recommend you to look at is Nigeria. You have 200 million people and more, but a very small smartphone population, which is growing, as I mentioned in the previous quarter. It's growing faster and the African region is one of the fastest growing regions for us right now from a percentage point of view. That's great. Thank you.

Congratulations.

Thank you, John. I just want to add, lastly, on that point, that I would say this is true for most of our markets that we play in, that there's still a big upside on people coming online and getting a smartphone for the first time.

That's great. Congratulations to the entire team. Well done, guys.

Thank you, John. It was good seeing you the other day.

The next question comes from, again, Yemi Falana with Goldman Sachs. Please go ahead.

Good afternoon, Alan, and a couple of questions from me. Firstly, could you maybe talk about the data you've been seeing on usage rates on the back of preloads, pre-installations on new devices? And then maybe drilling in on the user growth side, while it's still likely a small share within the mix, could you talk about kind of Where is the share of paid users within the mix? Is 5% or so the right ballpark this quarter? And how do you see that ramping up over time? And then maybe finally, on the M&A side, clearly you're in a position of strength, but you have been for some time, cash on hand, falling valuations. Is it just a lack of suitable candidates that's been the issue up to now? Or are there other things that we should be aware of? Thank you.

I can start with the last one. It's not necessarily lack of candidates, it's a lack of candidates within our sites, which is also dependent on our capacity to scan the market. We don't have that many resources available to scan the market and and we do get a lot of in inbounds or quite a few inbounds that we're looking at um we haven't found too many of them uh very interesting at this point call here was obviously one that we found very interesting uh but i'm certain there are more opportunities out there that we haven't seen yet or haven't been able to look at. No one has pointed them out. We haven't had a chance to scan those markets. So it's not that there isn't interesting opportunities out there. We probably just don't know about them yet.

I think if I may add to that, it's not like the future of our business is depending on us going and acquiring companies. That's not the case. We're looking at it from a different perspective. If you can and there are great opportunities, then we should take them. It's not because we need it in order to show great numbers in the future. I just want to make that clear since we're getting a lot of questions around companies to acquire and so forth. But on your other questions, we're seeing very healthy activation rates on preloads. Close to 50% of ship devices are being activated, which is way higher than we actually expected. So that's something to look forward to basically when shipments are increasing in the coming quarters. And what was your second question? Sorry.

Apologies. The second question was just on the user growth side. Obviously, CPMs have been strong, but the user growth is the underlying driver. And you were mentioning that paid user acquisition is becoming a bit more of a factor. So I wanted to know if 5% of kind of user growth from the paid channel was the right ballpark at the moment and how that would ramp up over time.

I would say it's probably in the right ballpark, somewhere there. I also want to add that when it comes to paid user acquisition that we do, the strategy is more towards seeding the markets faster so that we can see a higher exponential growth on the organic user base. And that's what we're doing in many of these LATAM markets. And it's also helping us to grow our database when seeding these markets. It's helping us to grow the database in these markets faster. So that's what we're doing a lot. Then, of course, when it comes to some of the tier two and tier three towns in India, we see obviously great opportunities there, which we've been ramping up a bit as well, not only on the user acquisition side, but also from a marketing and branding perspective.

Very clear. Thanks, guys, and congrats on the quarter.

Thank you.

The next question comes from Eric Larson with SEB. Please go ahead.

Yes. Hi. Good afternoon. Just two quick questions from me. First off, being top 20 downloaded globally is surely impressive, but I can't help but also notice that the WhatsApp business is also up there, so I'm just curious on your thoughts on competition from them. Are you going head to head with them or are you sort of coming from different angles? And then just if you have any ballpark figure where you are in terms of a number of customers in B2B, that would be appreciated as well. Thanks.

Thank you. Good questions. We're not announcing the number of enterprise customers that we have, but it's definitely growing according to plan. When it comes to the top apps, yes, WhatsApp for Business is there. I would say we're definitely not competing with each other. They're solving different needs when it comes to businesses with a focus more on the small businesses, which are harder to monetize. But I also want to give more of a reality check that WhatsApp only works on one device. On one single device, you can only connect one phone number to WhatsApp. The reason why people download WhatsApp for business is because they have dual SIMs on their phones. And that's a cool hack that people use in order to have WhatsApp on both of your SIMs that you have on the single device. So that's obviously contributing to their growth.

Okay, great. That's all from me. Have a good one.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Alan Mehmedi for any closing remarks.

Cool. Thank you, everyone, for listening in. We're extremely proud of a great quarter. And given this is our fourth quarterly report that we've delivered since we went public in October last year, we're obviously very, very proud of being able to deliver these kind of numbers. And we're excited about the future and looking forward to see you on our next quarterly report. Thank you.