Truecaller AB (publ)

Thank you. Welcome, everyone. I'm Alam Amedy, and I'm the CEO and co-founder of TrueColor. And with me, I have our CFO, Odd Bulleen. We're here to announce our interim report for the third quarter of 2023. So 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 details. Then we'll wrap up and open up for questions. So let's get started with the highlights of the quarter. In Q3, our user growth continued to be strong. We closed Q3 with an average of 368 million monthly active users and an increase of 11%. Average daily active users grew to 298 million, an increase of 14%. Our Dow to Mao ratio stayed at the high ratio, 81%. I'm very pleased with the increased growth, which lays the foundation for a long-term financial development. We closed the quarter at 399 million Swedish crowns in net sales, an 11% decrease compared to the same quarter in 2022. This was due to lower income from ads, while consumer subscription and True Gold for Business continues to grow steadily. We report an adjusted EBITDA of 146 million Swedish crowns and adjusted EBITDA margin of 37%. We continue to have a very strong cash flow with 189 million Swedish crowns in net cash from operating activities before tax payments. And in the quarter, we continued to grow our user base across markets and on both Android and iOS. Growth in rest of the world was an all-time high for the second consecutive quarter. And we see good traction in all our focus markets. The absolute majority of growth continues to be organically driven. Over the last year or so, we have focused on improving our subscription offering with new features that make communication smarter and safer for our paying subscribers. This has been paying off and the conversion continues to increase. And we see this both on Android and on iOS with a particularly strong development on iOS. The number of subscribers increased with 20% year over year and the revenue with 19%. The annualized revenue growth in Q3 was about 30%, which partly can be related to the launch of our AI assistant in India. We're currently doing some experiments with pricing and with the different options on how to further develop, but we see opportunities to increase the prices long term. Our growing enterprise offering, True Colorful Business, continues to grow at a healthy pace with revenues up 55% year over year. And we saw good growth coming from both the verified business offering as well as business messaging. And we continue to grow the customer base. In the quarter, TrueQuality for Business expanded into products related to fraud prevention and fraud protection. For us, this is an important continuation in our efforts to offer products to combat fraud and make communication more secure. The strategy to grow our recurring revenue streams, TrueQuality for Business and consumer subscription is paying off and it provides a growing stability to our revenues. I will cover these in more details in the coming slides. More on user growth, which accelerated in Q2 and has stayed on the same high level in Q3. For the second quarter in a row, we added 12 million monthly active users and 9 million daily active users. And we've seen a great boost thanks to a strong virality of organic growth the last two quarters, but expected to get back to a more normal level going forward. This demonstrates that Truecaller and its services remain highly relevant regardless of broader economic trends. Truecaller addressing a growing global issue as well. Increased number of users is the foundation for us to continue to develop well within our revenue streams. So I'm really pleased to see this development. The growth comes from all our regions with the strongest relative growth in rest of the world and with solid development both on Android and iOS. So let's shift focus and look at some of the improvements we made to our products during the third quarter. So in the third quarter, we focused on enhancing the user experience and continuation of the integration of our advanced AI technologies into our services. The goal was to provide immediate and practical benefits to users and prevent fraud. The strategy led to the introduction of additional AI-driven features, improvements in the premium user experience, and new app functionalities. Additionally, there was a significant enhancement in the ad server capabilities, leading to more dynamic and effective ad campaigns. We made significant improvements in our AI identity technology, which leverages artificial intelligence and machine learning models to provide an improved caller ID and spam detection experience that goes beyond names and spam reports. Enhancements made in this area increased AI identity coverage by over 50% during the third quarter. Other important improvements to AI identity include the new anti-impersonation features that indicates if someone is trying to impersonate another person or business using fake names. This new machine learning model protects consumers in a world where impersonation is rapidly growing. Our dedication to fraud protection was further emphasized through the enhancements of the messaging ID, like caller ID for messages, basically. This feature now includes an additional layer of protection, alerting users to the risk of sharing OTPs when they receive a message while engaging in a phone call. We've increased our efforts in proactive prevention to inform users about ongoing fraudulent activities, both globally and locally. By using Truecaller's own messaging platform, we've sent over a billion messages to users, alerting them about relevant and local fraud issues that are trending. We expect to be able to automate this in the future with the help of AI. For the past few months, we have conducted tests to assess the potential impact on user lifetime or user retention in the event that we need to make adjustments to certain data in light of the new data protection bill or the new Digital Personal Data Protection Act in India. These tests involved presenting different search results to distinct user groups on a large scale. And with the help of our AI identity technology, The initial results are highly promising, as we barely observed any change at all in retention. This reinforces our previous statement that we do not expect the new regulations to impact either user experience or monetization. Moving on to Truecaller Premium. The third quarter marked a pivotal period characterized by substantial product launches aimed at enhancing monetization and user retention. The adoption of Truecaller Assistant has seen considerable growth globally, with subscriber numbers surging significantly, marking more than a 5x increase quarter over quarter, driven by the launch in India at the end of the second quarter. Specifically in India, the introduction of the assistant plan played a central role in revenue growth, as well as subscription growth, which grew with 39% year over year in India and with 20% globally. Preliminary tests indicate that higher pricing for such an advanced product as Assistant does not adversely impact conversion rates. This indicates that we are advancing in the right direction in terms of delivering a higher value offering for communication services, which renders the opportunity to charge a higher price. iOS has emerged as a key driver of growth in subscriptions this quarter, outpacing the growth in monthly active users with 13% increase quarter over quarter. Call recording introduced in the second quarter was launched in more countries during the third quarter. Plans are in progress for the introduction of new advanced features during the upcoming quarter as well as introducing new languages with the help of the new improvements made in voice transcription. Next, we'll explore ads in relations to product enhancements. But despite broader market challenges during the year, we have continued to diversify our access to demand by collaborating with a diverse set of partners, advertisers and agencies and pioneering new use cases and business models. We launched new proprietary ad formats, enhancing the diversity and impact of ad placements. These includes post click experiences, which is an innovation like click to video offer, which increases engaging content for user post engagement. The introduction of sponsored bubbles and animated ads on the after call screen provides dynamic and visually appealing content for users. And then we have brand sponsored icons and carousel ads, which offers a rich interactive experience, further enhancing the user engagement. In a recent initiative, we collaborated with Amazon Prime for the premiere of a major film. The campaign's objective was to increase awareness and foster user engagement through an innovative approach. The strategy involved a concentrated effort leading up to the film's release using the click to experience ad format. Insights from the agency and client led to the development of a custom audience segment targeting OTT users with semi-premium and top tier smartphones in India's top eight metros. The campaign resulted in engaging a wide and diverse audience while delivering a substantial number of impressions. The performance metrics focused on enhancing user engagement and creating a compelling experience. So shifting our focus to Truecaller for Business, since its launch in 2020, Truecaller for Business has emerged as a pivotal solution in secure business communication, now serving customers across 36 countries and standing as our most rapidly expanding revenue source with a 55% year-over-year growth. Notable new customers during the quarter were UNICEF India, Union Bank of India, Yes Bank, Bosch Bank, MISR, and Say Hi South Africa, among many others. Business messaging continues to redefine customer interaction, offering a secure messaging platform exclusive to verified businesses on Truecaller. During the third quarter, more than 2 billion messages were delivered from verified businesses to their customers on the Truecaller platform. This product stands out for its ability to support rich media content, extending beyond traditional text to include image and videos and documents. The platform is predominantly used for transmitting information like OTPs, service updates, and transaction summaries. Business messaging offers the extra security layer that is needed. We'll launch business messaging with more partners and globally during 2024 and are excited about the future opportunity here. In response to the rising incidence of fraud globally, the focus has been on developing a robust solution to safeguard businesses effectively as a part of the TrueCall for Business offering. The risk intelligence API is about to go public and is a scoring engine that provides enterprises with an assessment of risks associated with a mobile phone number using proprietary machine learning models to analyze patterns and anomalies in aggregated data from a mobile numbers activity. The product was built during the first half of the year with a commercial launch plan for quarter four. We're very excited about this product launch. Adjacent to this, in the beginning of quarter four, we announced the acquisition of a company called TrustChecker, a SaaS platform known for its efficiency in verifying customer information and assessing fraud risks. With the integration of TrustChecker capabilities, TrueCall for Business is set to offer unparalleled security insights, harnessing external and internal fraud signals. Safe communication is rapidly grow. It's a rapidly growing space and we see huge potential and are very excited about the future. Now over to all to talk about our financial performance.

Thank you, Alan. It's time to look a little bit deeper into our financial performance. And as usual, we'll start with the revenue developments. Our overall revenues decreased 11% compared to the same quarter last year. And that was a consequence primarily of lower demand for digital advertising during 2023 compared to 2022. We are, however, very pleased with improvements coming from our two other recurring revenue streams, consumer subscriptions and Truecall for Business. that both delivers good growth in a challenging macro environment. We continue to develop our premium offering, and we see a steady increase in the number of subscribers across platforms and geographies, and a higher conversion and income grow both on a year-over-year basis as well as quarter-over-quarter. For true quarter for business, which consists of our verified business solutions and the business messaging product, income grew strongly on a year-over-year basis, as well as quarter-over-quarter. Now, looking a little bit more in detail on our three revenue streams, and once again, we'll start with the largest one, ads. 2023 continues to be a challenging year for ads compared to 2022. The general demand is lower than in 22 and muted, but stable during 2023, apart from IPL that took place during the second quarter. And apart from IPL, the demand situation continues to be slow and muted, but it is stable. It's not getting worse, but it's so far no obvious improvements either. The increased demand in the second half of the year that we previously believed was due to happen based on our communication with many other advertising partners and platforms seems to take longer than previously anticipated. We continue to improve our platform through our tech improvements and the growth of the user base. We continue to optimize for revenue per user rather than pricing or fill rates. We continue to increase impressions available to monetize within the existing ad slots. And these improvements taken together help us marginally now, but more importantly, when demand bounces back, they will generate a significantly higher return. We don't yet see any material uptick in underlying demand, and we continue to focus on the factors that we can influence, ensuring that we are in the best possible position once the macro situation starts improving again. When looking at comparison numbers, remember that the general slowdown in demand that we see now started to impact us from mid Q4 last year. So we are still comparing ourselves to a much better demand situation back in 2022. Our expectation for the last quarter of this year is that the general ads demand continues to be muted compared to 2022, meaning that we expect to generate lower income from ads than we did in Q4 2022, but higher than for Q3 2023 due to seasonal trends. Well, looking at our subscriptions, you can see that we grew our revenue by 19% compared to last year and faster than that when annualizing the development in Q3. The relative growth in the number of premium users is exceeding the relative growth in monthly active users, which is encouraging. Our strategy to add more functionality through the cloud platform has started to pay off with the contributions coming from the AI features, true call resistance and call recording, which yields higher subscription prices. As mentioned earlier, we are currently evaluating to increase pricing further, going forward in certain markets over time. TrueCode for Business continues to grow the customer base and the trend with longer and deeper relationships with clients continues. We keep on developing more products to integrate tighter with our clients. The new product lines within fraud prevention, fraud protection and credit assessment are expected to slowly add more revenues from 2024 and onwards. During the third quarter, business messaging also continued to contribute to the revenue growth year over year. Our gross margin development continues to be very stable, and that is our current projections going forward as well. We still see some negative effects year over year on increased costs for servers, hosting, and verifications, but costs have stabilized during 2023. Let's now turn to cost developments. Our overall cost base is lower than Q3 last year. We have increased staff costs due to some more FDs and due to the annual salary review that came into effect from Q2. But for other expenses, we continue to report lower expenses than we had last year. As macro has made it tougher on the revenue side, we have increased our focus on the efficiency and we'll continue to keep a close eye on costs, but at the same time, executing on our growth ambitions. This is important and is helping us to continue to deliver a good profit margin. As mentioned in the last presentation, costs from the incentive program decided by the AGM this year started to impact costs from Q3. And as we have previously stated, our tax rate is a combination of the Swedish corporate tax rate and the Indian tax rate. And as we have expected the tax rate to increase somewhat over time, this quarter the tax rate was approximately 29%, and year-to-date it's about 24%. In going forward, we expect the year-to-date rate to be the best guide for future tax rate. In the quarter, we reported 37% EBTA margin with a year-to-date margin of 41%. The operating leverage we have in our businesses is continue to be very good. And thanks to our lean machine, we're able to deliver solid returns even in a tougher macro. And the leverage when demand comes back is at a broader scale is very substantial. We also continue to have 1.6 billion Swedish crowns in cash and short term investments. And as we continue to generate cash at about the same pace as we have been doing buybacks at the same time. We continue to believe this is an excellent position to be in at this point in time with the macroeconomic uncertainty. During the quarter, we bought back shares to trim the capital position further, and the board has a mandate from the AGM to buy back 10% of the outstanding shares, including the ones already bought back. Share buybacks continue to be a tool that we use, that we can use when appropriate, and we will also keep scanning the market for further potential acquisitions. Let's then take a look at how we track comparator financial targets that were set by the board in conjunction with the IPO in 2021. The medium-term financial targets were set in a very different economic climate, and in the current macro climate, the revenue growth target is, as we have stated previously, clearly less relevant 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, but in a more macro, normal macro environment, which is not obviously the case right now. As mentioned in the last reports, with the shift in macro and 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 ambitions. When it comes to the ads business, it is difficult to assess when we will see the demand pick up again. And in the meantime, we focus on safeguarding the profitability and making sure that we are in a better position once the general demand in the market increases again. And as mentioned earlier, we are very pleased with the continued use of growth and growth in our recurring revenue legs, subscriptions and true corporate business. With that, I will hand it back to Alan to wrap it up before we start the Q&A.

Cool. Thank you, Odd. To wrap this up, I'm happy to see the continued steady growth of users. In 2023, our efforts to expand our presence beyond the growing regions, India and MIA, has taken off, and we continue to see the growing need for our services. During the year and going forward, our focus on fraud and fraud prevention is increasing as we see a world where digital fraud is on the rise. This goes for both the developed and the emerging part of the world. Finally, we have a decision on the new data privacy rules in India and implementation is expected next year. Every day we improve our data sets with the input from our huge user base and with more information in our machine learning and AI models. With these improvements, the tests that we have done with different data sets, depending on the interpretation of the new rules, indicates none to very small difference in retention of our users, even in a worst case scenario. And what we've seen with our tests is less than one percentage point in retention difference after 28 days. Our advertising business continues to be affected by macro conditions, as mentioned before, and demand and prices are stable, but at a lower level than we experienced during 2022. The growth opportunities here will be huge when the market recovers. Our focus on the other revenue streams are paying off, and we expect them to continue to develop further. It adds stability and comes with great value for both consumers and businesses. Finally, we've always prioritized efficiency and engineering excellence, but an enhanced focus and investments enabled us to deliver lower cost with a growing business without cutting down on staff. This helps us keep a solid track record with nine out of the latest quarters with an EBITDA margin above 35%. Overall, we're proud that we continue to be in a strong position with solid financials, strong cash flow and strong organic growth. Our strong position and our continued growth means that we still will 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. As always, a big thanks to you, 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.

Thank you, everyone, for listening in, and we look forward to seeing you at our next... If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Akhil Duttani from J.P. Morgan. Please go ahead.

Hi, good afternoon, Alan Odd. Thanks for taking the questions. I've got a couple, please, if I can. Maybe if we can start with your CPM. You mentioned through your comments that we've seen a relatively flattish trend through this year so far if we strip out for the IPL impact in Q2. I wondered if you could help us understand your comfort around this being purely macro driven and there aren't any other factors going on. I think a question we often get from investors is whether there could be other structural impacts within the mix that might be impacting what we're seeing. And I guess the bigger picture around this is obviously we appreciate visibility is very low given the macro environment. But how are you thinking about the outlook? And I'm sure it's hard for you to comment on this specifically, but you can probably see consensus modeling about 25% revenue growth for next year. Any sort of high-level comments you might give how you think about growth would be really interesting. And then the second one is on impressions. You don't report monetized impressions, but if we back this out from your numbers, It looks like you are running at around 13 impressions per user per day up until this quarter. This quarter, it looks like it's dropped to 11. So I just wondered if that's correct or whether it's just a base effect issue. And if it is correct, does that imply that you're trying to pull back volumes a bit given the weaker pricing environment just to protect pricing? So sort of any comments there. And then the very last one is just on margins. You know, margins have been very strong in your business for a very long time. How do we think about your priorities going forward if macro is tough? You know, is it investing in the business, prioritizing growth and looking through macro weakness? Or is it about balancing that with prioritizing profitability? Thanks a lot.

Let's start with the CPM issue, Dan. It is important to make a distinction between CPM that we report and sort of general pricing in the market, because we always, and like we have said many times before, we always prioritize revenue per user, meaning that in some instances we focus on price, some instances we focus on fill rates. And the fuel rate could come up and CPM can come down or the other way around. What we are saying is that we see the general price level in the market being rather constant this year. But once again, there are certain instances where we focus more on fill rate because we see that giving us a better revenue per user, meaning that the CPM that we report may come down a little bit. But going back to the basics, we don't see any general further weakening in the market this year. It's been quite stable. No weakening, no improvement. But remember, once again, we focus on revenue per user, meaning that CPM and fill rates may fluctuate a little bit. Impression-wise, what we're reporting and what you're looking at is monetized impressions. And like I said, CPM and impression slash fill rates are something that comes out as a consequence on how we maximize revenue per user. There's been no material change. in the number of impressions that we show and monetize our users in the sense that there are no underlying effects or factors outside of our own priorities that has impacted that. It's all about how we prioritize in order to maximize revenue per user. Margin-wise, I think that During 2023, we have been quite clear about the fact that we intend to stay a very profitable company and also show our investors and the stock market in general that we can be and will be a very profitable company, although also during this pretty challenging demand situation. And we don't intend to change that. We have a very strong operating leverage in our model. meaning that we can show very, very good profit margins, even in a market like the one we have right now. And we have no plans changing that. Of course, we are opportunistic in the sense that if we do see investment opportunities that we believe will create good, strong shareholder value for our shareholders, medium to long term, we will be ready to evaluate that. And if we came to a point where we wanted to do more investments, we would be clear about that in our communication. We are opportunistic, but we're always looking for shareholder value. Hope that answers the question, Akhil.

Yeah, it's really useful. Thanks very much.

The next question comes from Stefan Gorfin from DNB. Please go ahead.

Yes, a couple of questions just to understand the advertising market. So basically, in Q1, you mentioned that demand for digital advertising picked up at the end of Q1. And in Q2, you guided for Q3 being at the level seen end of Q1. But if we look at the combination of CPM, and monetized ads per daily active users it seems q3 is yeah even weaker than the average than for q1 just a comment on on that if things are in fact becoming a bit weaker then secondly you you mentioned during the presentation that um q4 uh is expected to be down on advertising year over year, but up quarter on quarter due to seasonality. I would just like to ask regarding World Cup in cricket, which is currently ongoing in India. And I believe Disney is streaming this for free to smartphone users. Is this expected to have a similar impact or at least some impact on demand in Q4, as we saw with the India Premier League in Q2.

Let's start with the second one. Thank you. The World Cup isn't in any way similar to the IPL in terms of advertising volumes for a number of reasons. But we don't expect the World Cup to have any material impact on our revenue during this time period. In Q4, we have Diwali, which is the largest annual celebration in India. We don't expect that to have a very large material impact either. It has changed over the years, but nowadays Diwali is much less of an advertising happening than IPL, for example. We are talking about the fourth quarter being stronger for seasonal reasons because there are generally speaking more advertising business or advertising activity in the fourth quarter. But the underlying demand situation is constant. And coming back to Akhil's question regarding what we see, we don't know when this is going to change. We see many other advertisers, agencies working with the same sort of digital advertising as we do, and they are just as we are uncertain about when demand is going to pick up again. We are very confident that it will pick up after rain. There is sun. But when it happens, it's not clear to us or anyone else. Regarding your question, the third quarter versus the first quarter. Yes, we did see a little bit of a pickup at the end of the first quarter. At the time, we and many others believed that the second half of this year was going to be slightly better than the first half of the year. It has turned out not to be that way. It is similar. If you take out IPL, we do see a stable development this year. There are some minor fluctuations between quarters, but the general picture is still that we see a situation where we have very little or no improvement, but no further weakening either. You also need to keep in mind there are certain currency effects that impacts us. Some of them or most of them are indirect and we can't quantify them as precisely as we would like to. But you do have them and it is worth pointing out that in two of our markets that are quite large, Nigeria and Egypt, the currencies have tumbled this year, and that has had an impact on our revenue during the third quarter. I hope that answers your question, Stefan.

Yes, thank you very much.

The next question comes from Erik Larsson from SEB. Please go ahead.

Thank you, operator. Good afternoon, Alan and Odd. I have a few questions. So just to follow up on an earlier question regarding ads or impressions and CPM, I appreciate that you don't optimize for either of them, but it would just be interesting to hear if you have a sort of minimum CPM level that you would not accept if the prices are too low, if that's the case.

It is. At any given time, that is the case. But we don't have a policy that puts a limit on the CPM levels that we would accept, generally speaking. But we do have floor levels that are applicable in different situations, of course. The advertising sales market is quite complicated, actually, and takes a lot of skills in order to master it. But that's one of the many tools that we have in order to maximize revenue per user.

Right. And just to understand your visibility just now heading into Q4, how much normally, I guess, is December of Q4? Are we talking 40 or 50 percent or more?

40 or 50 percent of what?

of advertising revenues in the normal Q4 quarter? How important is December?

it's very difficult to say. You have to define a normal Q4 quarter first. What is a normal Q4 quarter? We do know that demand is weak, whether that is compared to some sort of normal quarter that is, I don't know how to define a normal quarter, whether it's 40, 50% versus something I can't define. Unfortunately, I can't answer the question. But we know it is weak, and We see that every other player in this market that we listen to and work with are saying the same thing. So we do know for sure that this is a systematic issue rather than a company specific issue, which makes us feel very comfortable about the fact that things will come back and we will be able to benefit from that demand whenever it returns. What we can say that doesn't in any way could potentially be an indication of an upturn is that some of the players that are active in the same market as we are have seen some positive signals in the Western markets where they're active, where they have a larger presence than we do. And hypothetically, that could be a precursor for an upturn also in the markets where we have most of our business. But that is just something that is a very hypothetical thing at this point.

Okay, thanks for that caller. Just a final one on user growth, which continues to look very strong across the board, despite your pretty low user acquisition spend and, I guess, low smartphone sales in general. So you touched a bit upon it. It does not seem like there are any specific drivers behind this. It's more broad-based. But what I understood is going forward, you expect this, I guess, number in absolute terms to flatten out somewhat ahead.

Well, we do expect it to come down to more normal levels that we've seen in previous quarters basically. The boost that we've seen in Q2 and Q3 is thanks to a lot of improvements we've done in the onboarding funnel, in the 28-day retention of our users to get them to stay longer. But, you know, we'll continue to see very healthy growth in general. And that's what I'm really proud of as well, because it's a good indication that TrueColor is a product that a lot of people need. So we'll continue to see strong growth.

Okay. Thank you so much. I'll get back in queue.

Thank you.

The next question comes from Pridrak Savinovic from Carnegie. Please go ahead.

Hi, Ellen. Hi, Odd. Thanks for taking my questions. First one on OPEX, just looking into Q4. I know last year you made some extraordinary marketing campaigns and user acquisition. Would you say that the OPEX you have now in Q3, would that be a representative figure for what we should expect in Q4?

We're not planning on anything extraordinary in Q4, nothing like what we did last year. We continue to be conservative on the cost side. We continue, as you know, most of our cost is in MPE costs. They are quite stable. We are doing some limited recruitments for growth-oriented positions. But employee costs are not likely to change very much systematically. Remember, though, that the acquisition that we made, Trust Checker, will be included in our employee cost from Q4. So that will make a little bit of a difference. We took over seven people. That will be included on our salary checks. When it comes to investments in user acquisition and marketing, we don't expect any extraordinary investments of any kind. Preloads are increasing quarter over quarter at a pretty stable rate. So you can follow that over the last few quarters and see what you can expect from the fourth quarter. But nothing extraordinary out of the ordinary that can be expected during the fourth quarter.

And that's very clear. And speaking of user acquisition, I mean, we see in what you referenced today that there's pressure in the ad market, but that should go also for your user acquisition spend. So I would assume you could potentially have some decent ROI on the user acquisition you're doing yourselves. So given you have this type of pressured ad market, do you see interesting opportunities maybe spending a little bit more than what you've done so far this year to maybe boost growth further next year.

There are such opportunities, absolutely, and we are looking at them opportunistically. If we find something that is where we believe the return on investment will be very good or extraordinary even, We will definitely be able to and willing to make such investments. Like you say, the depressed ads market has a positive impact on us in that respect. But we are very careful about the investment we are doing. We want to be conservative at this point and we invest primarily where we do see a proven record of cost efficient investments in use acquisition. And with that being said, we're always open for interesting opportunities. That's part of the DNA of the company.

I think maybe if I can add to what Odd was saying, Fredrik, is that we do continue to make user acquisition investments, which gives us a pretty good understanding of the ads market globally, because we do acquisitions in various different markets. When we see that, you know, the ROI is good enough or, you know, is fairly short in a certain market, then we ramp it up to levels where it can sort of take off more organically as well. So we're taking the help of preloads, organic growth, and, you know, user acquisition as a tool in that equation, basically.

Okay, super. Thank you very much.

Thank you.

The next question comes from John from . Please go ahead.

Thank you. Good afternoon. I've got a bunch of questions, and I'll take them one at a time, please. Just to make sure that I understand what's been discussed two or three times already, but I understand it fully. So in the third quarter, CPM was comparable to Q1. In Q1, the number of monetized impressions was up year on year. In Q3, it was down year on year and lower than what it was in Q1 also. And you're saying that the market isn't actually getting worse. And that's because in the first quarter, you had some sort of upturn at the end of the quarter. And therefore, the Q1 comps versus Q3 are slightly flattered by that. Is that right?

Yes, I can put it that way.

Okay. Thank you. Secondly, as far as the Q4 outlook is concerned, I hear that Diwali is less of an ad event. So could you help us somehow try to understand the importance of the fact that the downturn started only midway through the Q4 last year, versus this year. So how significant is it that is the fact that the comp, as it were, is in inverted commas easy for Q4 versus Q1 to Q3 this year?

Well, the Q4 comps are obviously easier because the market situation that we're in now started during the second half of Q4 last year. So theoretically speaking, you can say that the first half of Q4 is going to be equally tough from a comp perspective, while the second half is going to be more comparing apples to apples. obviously, and I fully appreciate the challenge that you as an analyst would have in putting that into numbers. But that is really the way it is. And that is, I believe, the way you should think about it.

Okay, I'm used to the analyst life being tough. Thank you. Then, thirdly, if I look at your employee costs before LTIP costs and divide them by the period average employees that you've had, year to date, that number is up only 1%, which means that you've essentially, you've been hiring less valuable people But I suspect that's not the case. Is there any way that you can help me understand why it's up only 1% on a per period average employee number?

The primary reason is that the salary provisions, the vacation provisions that we made for the summer turned out to be such that we had to do certain reversions. after seeing how actual vacation came out. And that has not a very large impact, but large enough to skew the numbers that you're referring to. in such a way that it may look like we have done exactly what you say. But in reality, we haven't done that. We have kept on recruiting, like I said, on a low level, but we have certainly kept recruiting people that are just as skilled as the people that we already have.

If not more skilled. I think, John, another factor into this is that when we do replacements, sometimes it can take several months to replace someone. During that period, we replace it with a consultant, for example. And that doesn't really end up in the FTE numbers. So it's not that straightforward to just look at the FTE numbers and then look at overall employee cost

Okay, thank you both. And then, Alan, at the very end of your wrap-up, you talked about that test to do or the tests to do with the personal data protection bill having an impact of just 1% at the end of a 28-day period. I'm trying to understand what the denominator is here. So if you get 100 and by the end of 28 days, you have 90 as you were. Does that mean for the tests, you end up with 89?

That's correct.

Okay. Thank you. And then, sorry, I have two more things and I'll shut up. It would be really useful if you can start giving us some numbers for trust checker financials. specifically what you expected to do next year? Is it going to be something that we'll be able to see when you report true caller for business numbers from Q1 next year?

So, you know, on that, we have over 2,000 large enterprises being customers of our Tukal for Business product. And our ambition is to build out this umbrella with new products so that we can upsell to our already, you know, onboarded customers, upsell them with new products. And Trust Checker will be a part of this team and will continue to build out the risk intelligence product that we've done. So I'm not sure when in time or if we will sort of split out those revenues because it will be a part of the whole Two Color for Business revenue stream. But we'll definitely keep... you and the market updated on how these products are performing. So far, I would say that every product that we have launched under the Truecall for Business umbrella has been very successful. And I think this is a great, we see this as a great opportunity to leverage the big customer base we have by listening to what needs they have and try to figure out solutions for those problems. And the risk intelligence was definitely one of them.

just as business messaging and being one of them as well okay and then my last question please so you still have a very strong balance sheet and now it's been pretty much a full year since you've been buying back stock but not canceling it and in the meantime all the acquisitions you've made to date have been miniscule pretty tiny and you've also implied that you're unlikely to buy sort of mini true caller databases because you're not really comfortable about with how these databases were put together. So given the sum of all this, do you think that now might be a good time to start saying something more helpful about what sort of assets you'd like to acquire given the firepower that you have and what's been going on in the last year or so?

Well, I think TrustShaker is a good example because it's sure it's in the communication space to some degree, but it's also in the security space. And we're, I mean, we're scouting for businesses that we think can contribute to our overall business, both directly into what we're doing, but also adjacent to our business. But just because we have a lot of money in the bank doesn't mean we should go and buy the first business we find. We want to make sure that a lot of parameters make sense, that the culture is right with the founders and so forth. So we'll just have to, you know, being a public company means that we do get a lot of inbounds. We have a strong team in place that can dive into more companies and do deeper due diligence, which is great. And when we find something of interest, you know, we'll let you know and the market. And that's where we are right now on the acquisition side.

Okay, but the trust checker acquisition, the cost of that was pretty insignificant relative to the 1.6 billion you have on the balance sheet. Is that? Okay.

Yeah, yeah.

That's great. Thank you so much. Okay. Thank you all very much.

Thank you very much, John.

The next question comes from Jesper von Koff from Red Eye. Please go ahead.

Hi guys, and thanks for taking my question. I just have one additional question regarding the TrustChecker acquisition. Would it be possible to quantify the average revenue per customer for TrustChecker clients versus that you have on your existing TFB clients?

That's nothing we have published, and we have no intention of publishing that. Remember what Alan said, that the TrustShaker expertise and the TrustShaker products is something that we will upsell to our existing customers as part under the True Cold War business umbrella. How they have been doing business is, from that perspective, irrelevant. The important thing for us is that we can add a lot of value to our customers, existing customers and future customers, and thereby charging them a higher price.

Yeah, but as I understand it, I mean, you've previously gone towards the kind of support organization, and now this is more towards like a risk management section of your customers. I mean, could you give some flavor of the value add that this brings in relation to just another function for the support organization and so on?

Well, you know, I can give you one example. So we have a lot of insurance companies who are customers of ours. And what we're selling to them today is, among many things, the verified business product, which means when they communicate with their customers and when customers communicate with them, we can make that experience safer and more trusted. what this product brings is more for them when they onboard customers to their platform, that they can reduce their risk, basically. So this is more about integrating into their systems instead of integrating into our product, which Verified Business does. So, you know, it's a multidimensional, True Coffee Business will over time become a multidimensional product for enterprises. And then you can add banks to that as well. You know, how do you minimize default risks and these kind of things where scammers tend to try to scam banks as well, basically.

All right. Thanks for the flavor. And then just one last. Did I hear you correctly saying that your user growth on iOS was plus 13% quarter on quarter?

30%. I believe that was the assistant in India on iOS.

Okay. Perfect. Perfect. All right. Thanks, Pat. That's all for me.

The next question comes from Stefan Gorfin from DNB. Please go ahead.

Yes. Hello. I have a follow-up question just to try to understand. what kind of impact we could have from you getting new partners on the business messaging. So, could you state something around how much, how large share of True Quarter for Business is coming from business messaging today? And then you mentioned you will launch this with your partners and globally in 2024. Do you already have discussions ongoing with these partners? So, that we could expect this to happen early on in 2024. Thank you.

Thank you, Stefan. Yeah, I mean, the true color for the business messaging part of the TFB is definitely not insignificant and it's been ramping up and it is noticeable in the numbers to some degree. As you rightfully mentioned, we're planning to launch this with more partners and do more of a global launch during 2024. And we are definitely in conversations with other partners and existing partners as well. We think this can be a very healthy win-win opportunity for everyone, basically.

Okay, perfect. Thank you.

Thank you.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Great. Thank you everyone for listening in today. And we're looking forward to meet you next time for the fourth and last quarterly report.