Truecaller AB (publ)

Welcome everyone, I'm Allan Mamedy and I'm the CEO and co-founder of Truecaller and with me I have our CFO Odd Bolin. We're happy to announce our interim report for the first quarter of 2023. We'll start with presenting financial and business highlights, then go into some developments on the product side from the quarter. Odd will then walk you through our financial performance in more detail. Then we'll wrap up and open up for questions. So let's get started with the highlights of the quarter. I'm pleased to report that our user base continues to grow during the quarter. We closed Q1 with an average of 344 million monthly active users and an increase of 11%. Average daily active users grew to 278 million and an increase of 12%. This brings us to an all-time high DAO to MAO ratio of 81%, meaning that the number of users who engage with TrueColor on a daily basis has grown. We closed the quarter at 387 million Swedish crown in net sales, 3% decrease compared to the same quarter in 2022. As we mentioned in the previous quarter, our advertising revenues have been impacted by the slowdown in demand, which continued in the first quarter. Q1 is also usually the slowest revenue quarter. That said, we continue to operate profitably with an adjusted EBITDA landing at 150 million Swedish crowns at the end of the quarter and an adjusted EBITDA margin of 39%. We continue to have a very strong cash flow with 127 million Swedish crowns in net cash from operating activities before tax payments. In the last two quarters of 2022, we shared that we were observing increased caution by advertisers regarding their marketing investments and that this materialized in a slowdown in demand towards the end of last year. But we're seeing some positive signals. However, we're still very proud to be a profitable high growth tech company, and we intend to continue to move forward with solid profitability, great margins, continued user growth and strong cash flow, despite market conditions. In the first quarter, we continued to grow our user base across markets and on both Android and iOS. Growth was slightly weaker in the beginning of the quarter but accelerated towards the end of Q1. This momentum continued at the beginning of the second quarter and we hit a new record with 350 million monthly active users in mid-April. We saw good traction with Truecaller Premium in the first quarter and our efforts to improve our pricing packages and product offering have driven strong growth with an 18% increase in subscribers and a 20% increase in revenue year on year. We also made great progress in growing our enterprise offering. Truecaller for Business was introduced just two years ago and today we are proud to have over 2,000 customers in 36 countries. We have invested in building out the enterprise offering, including business messaging, which is a more secure and cost effective way for brands to reach their customers. In the first quarter we delivered record volumes with over 1.5 billion messages delivered on our platform, I will cover these in more details in the coming slides. Now, more on user growth, which continued to develop well in Q1. As I mentioned earlier, our monthly active user base grew by 11%, which is an additional 34 million users year on year. Our daily active user base increased by 30 million year on year to 278 million. As I mentioned, this translates into a data mile ratio of 81%. This is an all time high for us. And it's something that I'm incredibly proud of, especially given the market average is below 30%. And only a handful or so apps in the world have this type of daily engagement. This speaks to how even more of our users see TrueColor as a daily essential. Relative user growth was strongest in regions outside of India. For the first time in three years, user growth from the rest of the world was just as high as our user growth in India in absolute terms. We're proud of this continued growth, especially in consideration of the fact that global smartphone sales have not trended positively in the current macroeconomic environment. Additionally, the majority of our user growth continues to be driven by organic growth, and we were able to achieve these figures without increasing our spend on marketing or user acquisition. I want to emphasize that we're a product first company, which means that we continuously invest in developing our product offering to improve the user experience. This not only makes the product better, but also attracts more new users to Truecaller and also leads to existing users to engage with us more frequently. Before we go into the product updates, I want to share something that one of our employees created.

Hi, it's Alan. I left my credit card in the office and my phone just ran out of battery. It's been a really challenging day. Can you please send me the corporate card details to this number so I can pay for the summer party? I'm standing here with the vendor and I'm really stressed. I need your help ASAP so I can get to my next meeting. All right.

So this was obviously not me talking, but I manipulated recording of my voice using AI. Just by recording a few seconds of my voice from existing interviews that are available online, one of our employees was able to create this as an example of how scamming others is getting much easier, even if you don't have direct access to the person you're trying to impersonate. The current technology is not able to replicate my access or inflection, but we all know how fast AI is moving right now, and we have already started to see articles like this. A scammer cloned her daughter's voice in a fake kidnapping for ransom money. The technology is accessible for everyone today and improves every single day. We have always existed to make communication safer and are committed to solving these challenges as they evolve and become more rampant. When we develop our products, we consider the different tactics that bad actors are adopting and make sure that we build relevant things that protect our users. As we build out true call assistance and our cloud telephonic capabilities, we should be able to detect if a voice is manipulated in the future. I just wanted to give you a glimpse into the future, even if it's a bit scary. So let's get back to our current product offering, but there are some exciting things happening in the TrueColor offices around the world. For those who are not so familiar with what we do, there are two main products that we offer. The first is our consumer product, which is available on iPhone and Android with over 350 million people that use Truecaller every month. And we're proud to be the leading global platform for trusted communication. Consumers use Truecaller 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 Call 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 to prevent impersonation. They can also integrate their calling and messaging experience directly into our product so that they can grow their business more efficiently. This quarter, we continue to make progress around product development for the core offering, TrueColor Premium, our ad tech capabilities, and TrueColor for Business. We continue to invest in our core offering to ensure that we continue to deliver the best communication experience. We continue to improve our data quality through investments in our AI identity technology, which leverages artificial intelligence and machine learning in order to provide users with the most up-to-date and relevant information about unknown numbers in real time. Our efforts to improve our data quality and provide the most comprehensive search experience extended to our partnership with the Indian government. We continue to grow coverage for in-app government directory service and also established a partnership with the Delhi police to help citizens easily identify verified official numbers versus impersonators and other malicious actors. We also made significant progress in improving our onboarding experience and other important parts of the product that resulted in a noticeable increase in retention of new users. These improvements are subtle, but they have a material effect on long-term retention and will be important when we enter more markets, which obviously could contribute to overall user growth. We've also made investments in improving our server infrastructure and verification process that not only have benefits on the user growth side, but also sets us ready for scaling our user base and engagement at a lower cost in the long term. There are more investments to be done here during the year, and we're looking forward to that. In the first quarter, we expanded our AI identity capabilities to cover SMS as well. Our new messaging ID provides a caller ID-like service for text messages and helps users easily verify the authenticity of an SMS sender. This is made possible through our advanced machine learning models. All processing is conducted locally on the user's device, which ensures complete privacy protection. We also updated the iPhone product with enhanced SMS filtering, which uses the same machine learning models that we have on Android. SMS filtering automatically sorts messages in the relevant inbox for a cleaner and more organized SMS experience. These initiatives are important to us because they demonstrate our commitment to developing the best product for all communication needs, not just caller ID. Many of the things we have worked on in the past few quarters have resulted in growth in usage of our app and engagement with our smart SMS feature alone, which grew by 159% year on year. We continue to invest in improving our capabilities on desktop. We've expanded our online search experience, which brings the benefits of using Truecaller to the web and also brings people who are searching for unknown numbers online to Truecaller website. A big focus on this first quarter was improving our localization on the web. This brings a much more relevant experience to each user and also attracts organic traffic from a wider range of markets. We have already seen a big improvement in website traffic with our number of unique visitors growing by 600% versus Q4. We believe we can grow this even more, especially in our focus markets, because what people usually do when they don't know of a service like Truecaller, they Google a phone number. We continue to develop the premium offering by introducing relevant features and continuing to refine our portfolio of subscription plans. For example, by expanding our family plan to include access to TrueColor Assistant for subscribers in the US. Some of these features introduced to our paid offering have generated high interest from users and have had a direct impact on our subscriber base, which grew by 18% compared to the same period last year. We get many questions on when the system will be rolled out to more markets and I'm happy to share that it will be rolled out to several markets during Q2. For premium subscribers on iPhone, we introduced Live Caller ID, which is available to all paying users globally. We're very proud to say that Live Caller ID is the first real-time server-based number lookup solution on the iOS platform. This is a big breakthrough for us in bringing the true caller experience even closer to the one we have on Android. These improvements resulted in positive outcomes beyond increased revenue. Our subscriber base grew by 21%, and we also saw a boost in conversion and increased usage. Now on the ad tech side, we continue to build out our capabilities in order to deliver an even better experience while providing better monetization opportunities for the long term. We remain focused on driving efficiency throughout the advertising lifecycle. As a result of these efforts, we achieved 20% year-on-year growth in impressions. Other KPIs such as ads engagement and click-through rates continue to develop positively. These indicate that we will be in a much stronger position to monetize from advertising opportunities when the market recovers. Our investments in our independent tech stack have yielded positive results, with strong growth in demand coming from our own ad server. The TrueColor ad server now supports more advanced features to support performance advertising and has shown promising indicators in terms of further improving conversion rates, for example, app installs, lead generation, and sales performance. We also continue to build out our demand side platform, which gives direct advertisers a holistic solution for setting up and managing campaigns, both within and outside the Truecaller ecosystem. This is an important step for us as we transition towards becoming a full stack advertising solution partner that caters to a wide range of use cases across the advertising funnel. We'll continue to invest in further initiatives which further improve our effectiveness and monetization potential, which will put us in a very strong position in the long term. Demand for our enterprise offering continues to develop well. We're proud to have on board a number of notable brands this quarter. In the end, brands continue to dominate our enterprise portfolio, but we see growing adoption of True Call for Business in other markets as well. In the first quarter, we welcomed established brands in the range of markets, including Kenya, South Africa, Israel, and Jordan, to name a few. We delivered a number of product milestones during the quarter. Verified Business expanded to include SMS as well, which provides users with assurance that a text message is genuine and from a legitimate business. This is a significant step in the evolution of the verified business offering since SMS continues to function as an important channel for business communication. Verified SMS was commercialized at the end of the first quarter, but has already generated interest from some of the highest volume SMS senders in India, especially from the banking and financial service sector. Other product development efforts in the first quarter focus on facilitating two-way communication between users and businesses. This is extremely valuable as it provides high intent signals from users to businesses. Call Me Back, for example, is an existing feature that allows users to request a callback from a business. In Q1, we upgraded the Call Me Back experience based on user feedback so they can now indicate their preferred time for the business to call them back. This is expected to drive conversion rates for businesses since end users who interact with the feature are more likely to make a purchase or take an action on the call. User feedback was introduced last year and this quarter we made it even better. Now businesses can set up and customize their own surveys and the customer insight from these are accessible to them in real time using the dashboard. Lastly, I am happy to share an update on our business messaging product, a first-of-its-kind service delivered in partnership with Tanla. This product gives businesses a more efficient, cost-effective way to distribute their important messages. Businesses can also analyze their performance on our platform in order to optimize their campaigns. compared to verified business on SMS that I just mentioned in the previous slide business messages are sent through our platform to the user without any carriers involved and also being verified in the first quarter we scaled business messaging significantly and delivered over 1.5 billion messages throughout the platform which is 100 increase in volume from the previous quarter We continue to strengthen our technical capabilities in order to support even higher volumes while innovating on our ability to support more engaging content through rich media messages, attachments, and more. Now over to all to talk about our financial performance.

Thank you, Alan. So there is time to look a little bit deeper into our financial performances quarter. As usual, we start with our revenue development. Our overall revenues declined somewhat compared to the same quarter last year. This is a consequence of the general lower demand for digital ads, which started to impact our revenues from the end of the fourth quarter last year. The sentiment from the fourth quarter remained during the first quarter, although we could see some positive signs at the end of the quarter. Important to notice this year is that all ads related to IPL will be recognized in the second quarter. Last year, part of the IPL income was realized already in the first quarter, so that affects comparison. If we were to adjust for that, we would have seen a small revenue growth in the first quarter this year in comparison with the first quarter last year. Just as during the fourth quarter, the lower demand for ads was somewhat offset by the improvements we made in our ad tech platform, which enabled a substantial increase in monetizable ad impression. We did also see small signs of improvements during the quarter. And given that we now are a bit more than a month into the second quarter, I can also add that the second quarter has started up well due to the increased demand from IPL, where our investments in enabling more ad impressions is paying off. In individual days, we have actually recorded all-time high ad income due to us making more impressions available, which scales very well when we see higher demand in the market. Should be noted that IPL is a temporary effect that will impact the second quarter. How the more general demand will develop during the second half of the year remains to be seen, although we are, of course, hopeful that it will be better than during the first half. We continue to develop our premium offering, and here we see a steady development with an increase in the number of subscribers across platforms and geographies, and most importantly, a general higher conversion, which is promising for the future. For business, which consists of our verified business solutions and the business messaging product, which we deliver in cooperation with Tanla. Income grows strongly on a year-over-year basis, but we saw a slowdown on a quarter-over-quarter basis, which I will come back to in the next slide. Now, let's look a bit more in detail on our three revenue streams, and let's start with the largest one, ads. The general decrease in demand, which became more apparent during the latter part of the fourth quarter, was sustained during the first quarter, as I mentioned, as we mentioned in our previous earnings call. With the global depressed macro that we see, the risk sentiment has changed and more companies have focused on profitability versus growth, which impacted demand in markets like India, where the underlying economy still is expected to continue to develop very well. On the other hand, we continue to continue to improve our platform through our tech improvements. And during the quarter, we were able to increase the number of impressions substantially. We continue to optimize for revenue per user rather than pricing or fill rates. And in combination with the general decrease in demand, this meant that we accepted more low price ads, which took down our overall CPM. The increasing impressions were made possible as different stages of the ads cycle were optimized, ranging from ad requests, catching, serving, etc., which led to an increase in monetizable impressions within the existing ad slots. These improvements help us now, but more importantly, when demand bounces back, it will generate a significantly higher return. This has already proven to be true at the beginning of the second quarter. when we on certain days reached like i said new record levels of advertising revenue which was tied to the increased demand in connection with the ipo Although the second quarter has started better with the help of a strong demand, our assessment of a more muted demand for the ads market in the first half of 2023 is likely to remain true. It is not unreasonable to believe that the second half of this year will be somewhat stronger than the first half, but forecasts are very difficult to make in the current economic climate that we're in. When looking at our subscriptions, you can see that we grew our revenue by 20% compared to last year, which is the highest growth rate we've had for a while. The relative growth in the number of premium users is exceeding the relative growth in monthly active users, which is encouraging. We see growth coming from many different markets in both iOS and Android. We see good growth from the new plans we have introduced in the last quarters, and I can especially highlight that we see good traction in India, where the conversion historically has been low. True Call for Business continues to grow the customer base, and we're now present in 36 countries, and we continue to improve our capabilities with new features, and more and more customers have longer and longer relationships with us. During the quarter, new sales slowed a little bit in True Call for Business as the challenging macro means that sales processes take longer time than they did during last year. We continue to roll out new features during the year, which are anticipated to help us grow our revenue in the future. Growth rates for business messaging increased late in the quarter. This did not have any material financial impact on the quarter, but it is encouraging for the future, and if continued, it will have a positive impact going forward. Looking at it a bit, the gross margin, the gross profit, our gross margin has stabilized around 75% of the level, which is in line with the levels we talked about in the connection with our IPO. We see a somewhat positive trend quarter of a quarter, but a decline year over year, which is mainly due to increased cost per service and hosting, which comes to a larger extent from our larger customer base, user base, and also higher verification costs for new users. we are continuing our investments to become more efficient and we think there is potential to decrease cost of goods sold over time but doing that comes from server verification costs decreasing and we see a long-term trend long-term benefits in our investments when our user base and engagement continues to grow Looking at the cost side, we can see that in the last quarter report, we talked about focusing more on efficiency as macro has made it tougher on the revenue side. The focus has really paid off with many parts of the business contributing to make our daily operations more efficient. Underlying costs are down as much as 20% compared to the fourth quarter, which we're pleased with. And our focus here is to be more efficient on a day-to-day basis without hurting our growth ambitions. it comes to staff costs they are stable and during the year we expect to grow our teams that focus on user and market growth and revenue growth that will contribute to an increase in fds with no more than five or ten percent during the year looking at the cost development year over year um the cost excluding exempted programs are are stable And note for the coming and upcoming quarters is that the annual salary increase will start impacting costs from the second quarter and onward. As we have previously stated, our tax rate is a combination of the Swedish corporate tax rate and the Indian tax rate, and that we have expected the tax rate to increase somewhat. This quarter, the tax rate was approximately 26%. The taxes we pay are partly based on our transit pricing policy, and the purpose of the policy is, of course, to ensure that we pay taxes directly from the perspective of both the Swedish and the Indian Tax Authority. Looking at profitability, thanks to our investments, to the investments we made in our check, we are able to deliver a fairly healthy 39% EBITDA margin in the quarter. which is our seasonally weakest quarter, which I think is a good achievement, and the efficiency gains that we have done puts us in an even better position when the macroeconomic situation improves. Cash flow-wise, with our solar profitability, we continue to generate cash at a good rate. We now do tax payments on a quarterly basis, which impacts year-over-year comparison. When instead of looking at the cash flow from operating activities before taxes paid, it's mounted 227 million with a constant Q1, which is stable compared to Q1 in 2022. As always, we have some movements in working capital due to timing of invoices, etc., but nothing that is out of the ordinary. At this point, we have 1.6 billion Swedish crowns in cash and short-term investments, and we also have still access to another 500 million in an unused, unutilized, revolving credit facility. We continue to think this is an excellent position to be at this point in time with a macroeconomic uncertainty. during the quarter we bought back shares to trim the capital position and that is a tool that we could continue to use and we also continue to stand the market for potential acquisition the board has asked the AGM this year for a mandate to buy back up to 10 percent of the outstanding shares that mandate would include the shares that have been bought back up until the AGM so that includes the share that we already bought back this year And then looking at how we track compared to our financial targets that were reset by the board in connection to the IPO. The medium term financial targets were set in a different economic climate than we're in today. And in the current macro climate, the revenue growth target is clearly somewhat less relevant than when evaluated on an annual basis. However, even though the financial targets are based on average results during the period of 21 to 24, we and the board still believe they make sense also on an annual basis in a more normal macro environment. As mentioned last quarter, with a shift in macro and with outstanding performance we had in 21 and 22, it is fair to say that 23 will be a more challenging year on a revenue growth basis, but we intend to continue to deliver well when it comes to profitability. When it comes to the ads business, it is difficult to assess when we will see the general demand pick up again. And in the meantime, we focus on continuing safeguarding the profitability and making sure that we are in a better position once the general demand in the market increases again. With that, I will hand back to Alan to wrap things up before we start the Q&A.

Thank you. I'm proud of what we have achieved this quarter amidst the challenging operating environment. Despite declining smartphone sales, we continue to grow our user base and saw this develop very well, not least in markets outside of India. Our advertising business was affected by macro conditions as well as timing effects, but in general, somewhat more positive outlook throughout the first quarter compared to the beginning of it. Second quarter has started off a bit more encouraging with a demand boosted by IPL. Our subscriptions revenue has developed well with a good growth in terms of both revenue and number of subscribers, especially in India. We continue to see healthy development with Truecall for Business and continue to innovate in order to serve growing demand and the evolving needs of enterprise customers. finally we've always prioritized efficiency and engineering excellence but an enhanced focus and investments this quarter enabled us to deliver good profitability ratios overall we're proud that we continue to be in a good position with solid financials solid cash flow and strong organic growth Our strong position and our continued growth means that we will still continue to make strategic investments. And even in a time of uncertainty, we will continue to take advantage of our strong position and find opportunities to continue growing. We want to share some insights into what we are focusing on, both short-term and long-term. As always, product innovation is a priority for us. The problems that we solve are constantly evolving. And so it is always a priority for us to ensure that the product stays ahead of these challenges. For example, one feature that we are excited to put into production soon is the extension of AI identity and our caller ID service to platforms outside the Truecaller ecosystem, for example, WhatsApp. On the advertising side, we continue to invest in improving our technology to offer a best in class experience while improving our monetization potential. In recent quarters, we invested significantly in building out our advertising capabilities to set the foundation for our transition towards becoming a full stack advertising solution partner. This will allow us to cater to a much wider range of use cases across the advertising funnel, meaning that in the medium to long term, we will be able to serve more advertising needs in addition to being a top tier publisher. Regarding user growth, our focus remains on investing in targeted markets with high potential alongside the organic growth that will continue to drive our overall expansion. This might not show up in the quarter or two, but in the long term, we believe this will pay off. With subscriptions, we'll continue to invest in introducing even more relevant value add features, especially taking advantage of our cloud telephony capabilities. We'll work on continuing to grow this income stream, especially in markets with higher subscription adoption. We're encouraged by the upward trends in subscription rates in our largest market, India, and are working on continuing to grow the subscription base as well. Truecaller has always been a company that values efficiency in everything we do. That's why we're only 400 people serving over 350 million users. To continue to have a big operating leverage is key for us, and we have more investments to do to maximize server utilization and optimizing server costs. With our strong profitability, cash flow, and balance sheets, we will continue to pursue relevant investment opportunities. We're confident that our continued operational improvements set us up well for growth and continued profitability once the broader sentiment improves. As always, a big thanks to our users, the great partners that we work with, and the phenomenal Truecaller team across the world. And now we're happy to take your questions. So we're opening up the floors for the Q&A.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Akeel Dettani with JP Morgan. Please go ahead.

Hi. Good afternoon, Alanod. Hope you're both well. I've got a couple of questions, please, if I may. The first, if I can maybe focus on the comments you've made around the positive signs you've seen to the back end of Q1 and on specific days in Q2. I guess I was just hoping a little bit more color and exactly, I guess, firstly, what do you think is driving that? So what are the things you're seeing from your customers on the ad side that's supporting that positive trend? Secondly, linked to that, when you say record levels of ads, obviously that's positive to see, but in a growing business, it's hard to know what that really means in terms of growth rate. So I guess what I'm trying to understand is, When you think about Q2, you've got quite a tough comp because of IPL. And the fact Q2 last year was your strongest ever quarter. So do you think in that context, revenue trends in Q2 will be better or worse than Q1? And I appreciate it's super hard to call, but any sort of thoughts around the moving parts there, that'd be super useful. And then two other quick ones. One is, Alan, you mentioned obviously the very strong customer growth you're seeing. in Middle East and Africa and the rest of the world. One of the things I didn't quite understand was when I look at Middle East and Africa, your revenue trends were the softest. It was minus 13%. So I couldn't quite square that. So I don't know if there's any currency impacts or other things going on that are why Middle East and Africa is having a particularly softer revenue trend. And then the very last question is more of a bigger picture one. You've talked a lot about investments and opportunities. obviously one move you made in the quarter was buying a stake in mayhem studios. Um, and you talk about the opportunities in mobile gaming, uh, for advertising going forward. Um, I'm sure it's super early days, but I guess it'd be interesting to understand how you think about that. You know, how is it through that state? You might be able to leverage that and, uh, potentially attack the fast growing mobile gaming space. Thanks a lot.

Let's start with the, um, the revenue development during the second quarter and in particular ads. What we're saying is that we do see a very strong effect coming from IPL. When you say that the second quarter last year was a strong quarter, that is certainly true, but I remember that the IPL last year was partly also in Q1 so that's an important thing to keep in mind when you compare quarters that this year IPL is Q2 only last year it was partly Q1 and then Q2 now I think it's premature to try to predict what is going to happen after IPL, whether that is going to be starting some stronger general growth or not in the Indian market. What we see now is that IPL is having an impact. We can benefit from that demand in a good way this year because we have opened up so much new ad space. uh that we can now monetize in a way that we couldn't have done a year or two years ago so uh ipl becomes an important driver for us during this uh during april and may but like i said i think it's premature to to say whether that is something that will last going forward Like we said in the call, we hope that, and we think there are reasons to believe that the second half of the year may be somewhat stronger than the first half. But once again, IPL is not necessarily part of that equation.

I think if I can add to what Odd was saying was, you know, if we compare Q4 with Q1 this year, we in Q4, every day looked slightly worse than the previous day, so to say, like we didn't see a trend that was going in an upward direction. this time this year in Q1, every day has started to look slightly better than the previous day. So we're seeing at least some signals and trends that are indicating that know advertising is might come back soon and i think one thing to also keep in mind is that q1 is also the the sort of slowest quarter for us since indian companies close their annual financials end of march basically so the new budget starts in q2 And what we are seeing with IPL is more encouraging sort of investments that companies are doing. So it's moving in the right direction. I think to comment on what was it? Mayhem was another question you had. So. There are a couple of reasons. We met the founders and we like their vision and their big ambitions. And we also like their way of thinking when it comes to revolutionizing the gaming industry in India. And if you look at the Indian market, they have a few hundred million people who play games on a monthly basis. But if you look at the app store rankings, most of the apps in the play stores and app stores are actually not games. It's utilities compared to many other markets around the world where it's usually games. And we believe that that will shift over time. More people will start playing games. And in just a few years, you will have hundreds of millions of people playing games on their mobile phones. And we believe that more gaming studios will pop up in the future in India. We do believe that Mayhem has great potential to become a fantastic gaming studio and they're soon to launch their first game. And we know that it's going to be important for us to develop our advertisements products so that we can deliver good good engagement on these ads towards gaming studios in the future. And the best way to do this is to work close with a gaming studio and learn and measure in real time basically how we're doing and tweak our own product. And if we can do that with a great company like Mayhem, then we think it's a big win for us. And obviously we do think it's a great, we believe it can be a great investment for the company in the future. So that's where it comes from. And it gives us a great opportunity to improve our product, just like we've done in the partnership with Tandla when building out our business messaging product.

And finally, on the Middle East and Africa issue, first of all, we have good traction on the true corporate business in the Middle East and Africa. We see new customers coming on. In terms of advertising, which is still our largest revenue driver in that region too, we have a considerably less less strong market position in most of the markets in the Middle East and Africa than we have in India. And we will always be, not always, but we are at present seeing more variability due to the fact that we are a smaller player in those markets in terms of online advertising, which means that even though we can see new customers coming in at a good rate, We are more sensitive to price changes that we are not able to influence the same way as we are in India. So that's how you can see the fact that we are seeing a decrease in overall revenue, primarily as revenue in this region, while at the same time seeing very good demand for particular truical business offering.

Makes sense. Thanks a lot.

Thanks again. The next question will come from Stefan Goffen with D&B Bank. Please go ahead.

Yes. If I could first start with true quality for business, that has shown a really strong trend since launch, but this quarter it decreased in revenue quarter on quarter. And that is despite that you continue to grow a number of business customers. What explains this and what should we expect going forward? I mean, if you could perhaps explain the different kind of revenue streams you have in this business, just to get us to understand this business a little bit better. Thank you.

Yeah, so I can take this one. And thanks for the question. When it comes to Truecall for Business, what we have seen a bit in the first quarter has been longer sales cycles when closing new customers. It is still growing. And if you compare with the same quarter last year, then obviously you see the growth. But it's also the end of the budget cycle as well. And I think it's important to be aware of that. This is a new fairly new product for us I mean it's just been around for two years so while we're building out the product we're also building out the team, and we're building, you know, filling out the processes around that. I wouldn't put too much emphasis into, you know, the q1 number. It's still a very attractive product for the businesses. The different products that we monetize, I would say, is, you know, sort of simplify it. The first one is verified calls, which we've talked about in the past where businesses can where we see the businesses and they can integrate into the calling experience. The other one is the. The verified SMS messages that we just launched now and got a couple of big customers on board to that where we bring the same experience to text messages. And then we also have our business messaging solution, which sends messages through our infrastructure instead of going through carriers. I would say the three verticals that we're focusing on right now, but we're also, while we're running, we're also building out more things that can help our business customers, our enterprises, but also the end consumer.

Okay, and then just to understand, you stated that if adjusting for the uh the cricket season advertising revenues would have been basically flat year over year and this indicates close to 10 percent higher revenues in higher advertising revenues in q1 um so how do you quantify this

Well, I think what we said was we know that the last two weeks of March last year had IPL revenues and we know how much of that spending came from that. If we would exclude that or include that this year, then we'll probably be a bit above last year's revenue numbers.

Okay. Yeah, that's fair enough. Okay, thanks.

The next question will come from Predrag Stevanovic with Carnegie Investment Bank. Please go ahead.

Thank you very much, operator. Hi, Alan. Hi, Odd. So first a question not specifically tied to the report. It's on WhatsApp. We recently entered into a partnership here. We're just curious of the scope here. If you can tell us what does it entail? How can this be expanded? Can this bring more users? Is there a rollout plan? Is it just a testing phase? Just really put the context in what we're looking at here.

Yeah, so I know that some news articles that came out the other day on this nature, we did get a lot of coverage when we logged it because a lot of users are getting a lot of spam and scam calls and messages on WhatsApp. So it's becoming a nuisance on their platform. And we launched this feature to our beta community earlier this week. And some news articles wrote that we have done this in collaboration with WhatsApp. That's actually not the case. We've built out these capabilities on our own to help our users. So there is no sort of official partnership with WhatsApp.

Okay, and the rollout, if you can tell a little bit about the value it brings, basically bringing true caller features into that ecosystem, we should see it.

So the way you should see it is the way the true caller sort of caller ID and after call screen experience works on regular phone calls will also work the same on incoming WhatsApp calls from unknown numbers.

Okay, brilliant. then on the effectivity gains or efficiency gains you made on the cost side so the opex is down a bit q and q and i understand lower marketing spend but what else is there has there been any any certain you know efficiency gain you've made also which we can see benefit from in the in the coming quarter so any color on that side yes unlike some other tech companies we haven't

uh recruited um more than we we needed over the last year so we haven't got to the point where we need to let anyone go have the people we need and and we continue to need them but there are always other things where you can where you can save money and be more efficient so there are many many small areas that taken together have a reasonably substantial impact then of course it is we are more careful with marketing and use acquisition investments now we have like many others decided that we don't get this sort of return on those sort of investments that we get in a more normal market at this point so we have decreased them we also learned a lot over the last years not based in terms of user acquisition how we can do that in the most efficient way and we are continuing to invest in user acquisition in in the areas and in the geographies and in the ways that we that we have learned by now or gives a good return but we are careful about not expanding those investments at this point because we think that the timing of that is not correct so yes we believe that What we have done this quarter will play out also in the upcoming quarters in terms of lower costs than we would otherwise have had.

If I can add some of the investments that we've done on service side efficiency initiatives and also investments we're doing in becoming more efficient on the verification process of getting users on board. These are investments that we've done the last couple of months and we'll continue to do them because we see benefits in the long term that we'll be able to scale with more users at a lower cost, which at some point should show some effect on the COGS basically. But the main ambition internally is to make sure that we build the best possible architecture and the best possible code. And that's always been the case, but there are always ways to improve these. And that's the sort of investments we are continuously doing.

Okay, thank you. And then the final one on the iOS product, which it has improved quite a bit. There are a lot of features, though, that you can receive as a user without really engaging with the application. I mean, I can get a banner passively when receiving a call, for example. So I'm thinking of any strategy on how to also monetize freemium users on iOS. And I know it's much better with freemium users, of course, but you will have the other part of the users there as well. How can you increase that bucket, so to speak?

Yeah, it's a very good question. It's also something that we continuously evaluate. That's why we also decided to make the live caller ID actually a premium feature because we know the willingness to pay is at least 20 times higher on iOS than it is on Android. And we know that the live caller ID feature on iOS is something that people have been asking for since we started the company, basically. So that's one of our ways to sort of monetize further on our iOS platform. But over time, we'll see how we can build more value to sort of bring users back and also build out the premium offering on the platform.

Okay, super. Thank you very much, guys.

Thank you for that. The next question will come from Jesper von Coach with Redeye. Please go ahead.

Hi, guys. Thanks for the presentation. Just some thoughts on the profitability going forward. I mean, you say that you are becoming also like more and more careful about spending UA investments, but I mean, considering the now ongoing IPL season, I mean, how much do you expect that to increase your UA spend?

Nothing really. There is no direct connection between the IPL season and the revenue that we see from IPL and the spending we do. We do much spending outside of India in order to, like we communicated previously, we seed new markets in order to quicker get to the point where we have a... a minimum of critical mass where organic growth takes off we do some investments in India too because there is a big part of the Indian market that we are we don't own yet and we want to own that too but there is no direct question to the to the IPL season now okay good and then just sorry gone

Yes, but I just wanted to add. So there, as Aud mentioned before, we've learned many things in our user acquisition strategy. One of them is that, you know, when we do this more type of burst campaigns, those, you know, turns out to be more efficient for us. So we spend more money in a shorter period of time in a certain market instead of seeding it in several markets. So we've changed our user acquisition strategy that has become, you know, led to more growth, but also at the lower cost. So these are the optimizations we've been doing and we'll continue to optimize and change our sort of way of working to get as much as possible for that. But then of course, when the ads prices go down, that also means that our user acquisition cost becomes cheaper as well. So we try to take advantage of that situation.

Good. And then just about the geographical development, could you make any comments about the results from the efforts made in Q4? And also possibly in Latin America?

Yeah. I think, you know, we've said this before, that the US market is, you know, something that we have high ambitions of to reach a critical mass. But I've also tried to be, you know, open and transparent that this will take time. What we focused on last year was getting our iPhone product as good as possible. And I think we achieved that. We also made sure that the data coverage or what we call hit rate has become much better. So we've gone from like 55, 60% hit rate to over 85% hit rate. These are the initiatives that needs to be done in order to not churn users as fast as you could if you have poor data quality. What we've started to do now is to identify more like which communities do we want to double down on and we've also started to see a more positive trend on our user growth in the US, but we're far from you know, having any numbers that we can brag about, but it is a focus, but it will take time. On the LATAM, I would say that region or like five, six markets in that region continues to grow really strong. We do help out a bit with user acquisition. But to be honest, I don't think we're past that stage now. We're just boosting it a bit. But we're doing really well, I would say, in many of these markets, including Colombia, Chile, Peru, and so forth. And these are markets with slightly higher CPM levels and higher conversion rates of premium subscribers as well. So it's a growing region for us. That's why we also made sure that we doubled down on localizing everything we do into the different Spanish versions in that region, such as our website, for example, because we are seeing growth coming from these regions.

Okay, good. And then just, just one last bit. I found quite interesting that you said that you are like regarding your investments in growth engineering, you state that it partly aims to enable the product itself to build underlying growth. If you could just elaborate on what that means.

Could you repeat the question?

Like you state that like regarding your investments in growth engineering, that is partly to enable the product to build underlying growth. If you could just elaborate on that.

Yeah, sure. So, you know, we've last year we started to build out our growth engineering team that focus on two areas. One is the organic growth. The other one is the inorganic growth, which means the user acquisition. So what that's the organic team has been focusing on is to make sure that they identify exactly where we churn users, why we churn them and how we can improve that experience. And the initiatives that the team has done the last couple of months has actually returned in 6% higher retention on the 30-day sign-up retention numbers, which is quite significant because if you add it up every single day, then you will see a growth that is much more noticeable. So they have some exciting stuff in the roadmap for this year to improve the onboarding experience and modularize it so that when we focus on new markets, then the value proposition of the service might not be the same as it is in India, for example. So we need to make sure we have a flawless onboarding. People in India who download the app, they know what it does. They know everything about it. They know what to expect. But in a new market that we want to sort of double down on, they don't really know what the promise is. And these are the things that we're focusing on.

So we got a question on... Thank you.

Please go on. I'm done. I'm too happy.

Okay, then we can just bring in a question that we got regarding the buybacks. The question was whether we're going to cancel the shares we bought back. And so far we haven't, and there's no decision made that we will. um it's um even though we have bought them back is a currency that we could use in in case of a potential m a for example um and the next question related that was whether we can actually um fulfill, so to speak, the 10% mandate that we are asking the AGM to give to the board at the present rate of buybacks. Well, first of all, we don't have a 10% mandate at this point. We have a 5% mandate that goes up until the upcoming AGM, this one. And we're still waiting to see whether the AGM will give the board an extended mandate. If they do, we could continue to buy back shares we don't have to buy back shares it's a decision that the board will do from time to time so it's premature to say whether we could use that full mandate but obviously if the board decided to use the mandate and we do get a mandate that goes on to the next AGM next year I'm quite confident we could be able to use up that mandate if we wanted to

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. All right, thanks for all the great questions and thank you everyone for listening in and