Truecaller AB (publ)

Welcome, everyone. I'm Alla Mamedy, and I'm the CEO and the co-founder of Truecaller. And with me, I have our CFO, Ad Bolin. We're here to announce our year-end report covering the fourth quarter of 2024. Today we'll start with overall highlights from the quarter and then walk you through our financial performance in detail. We will then cover some developments on the product side before wrapping up and opening up for questions. So let's get started with the highlights of the quarter. I'm pleased to report that our user base continued to grow during the quarter. We closed Q4 with an average of 374 million monthly active users and an increase of 11%. Average daily active users grew to 305 million, an increase of 12%. This brings us to a strong Dow to Mao ratio of 81%. And we closed the quarter at 425 million Swedish crowns in net sales, a 4% decrease compared to the same period in 2022. Our net sales results continue to be impacted by the slowdown in demand in advertising, but we see consumer subscription and true quality for business continue to grow at a good pace. That said, we continue to operate productively. with adjusted EBITDA landing at 169 million Swedish crown at the end of the quarter and an adjusted EBITDA margin of 40%. We continue to have a very strong cash flow with 229 million Swedish crowns in net cash from operating activities before tax payments. We continue to grow our user base, and in the fourth quarter, we achieved the milestone of hitting 300 million daily active users. Our user growth continues to develop very well. During the quarter, we saw higher relative growth in regions outside of India and the Middle East. Having that said, we're proud to have reached a new all-time high in our net promoter score in India, ending the quarter at an NPS of 62%. We're also pleased with the development of our premium business. The number of paying subscribers increased by 19% compared to the fourth quarter of 2022, which is almost two times the rate of our total user base relative growth rate. In terms of where this growth is coming from, we saw notable traction on subscriptions in India as well as on iPhone users globally. TrueCall for Business developed at a good pace throughout the year, and the fourth quarter was the strongest quarter for TrueCall for Business in terms of both revenue and the addition of new customers. We continue to see healthy demand for our verified business and business messaging offerings. Our newest enterprise product, Risk Intelligence, was also strengthened with the integration of Trust Checker, which we acquired during the quarter. We will cover these in more details in the coming slides. But on our user growth, the number of users is steadily growing. We closed Q4 at an average of 374 million monthly active users, which is up by 36 million from the same period last year, or as I said before, an 11% increase. Our daily active user base grew at a slightly faster rate. We ended the quarter with 305 million monthly active users, a 12% increase from last year. India and the Middle East are regions that we have penetrated fairly well. And as I mentioned earlier, we saw high relative growth in countries outside of these two markets. Majority of our user growth is still driven by organic growth, but the fact that we see faster growth rates in other markets is something we see as an indication that our investments in user acquisition are starting to pay off. As mentioned in Q3, a lower growth compared to the very strong development that we saw in Q2 and Q3 was expected, but we saw user growth start to pick up again towards the end of Q4, and we've begun 2024 user growth on a strong note. That said, we continue to see strong engagement with 81% of monthly active users using Truecaller on a daily basis. We see this as an indicator of our product stickiness and the growing relevance of our services. Now over to Odd.

Thank you. So now it's time to look a little bit deeper into our financial performance during the quarter.

And as usual, we start with the revenue development. Net sales, like Alan said, decreased by 4% compared to the same quarter last year. And the net sales for ads declined by 12%, while our recurring revenue streams continue to grow in a very material way. Consumer subscriptions grow by 23% in TrueCode for Business, with 42% So this strong growth continued. Now let's look a little bit in more detail on our three different revenue streams. And let's start with the largest one then, ads. It is clear that 2023 was a challenging year for ads compared to 22. In Q4, we saw a small seasonal uptick from Diwali that happened in October. But the general demand was lower than in 2022. And this holds true for all players working with three third-party programmatic ads, as far as we know. The decline has been obvious and has multiple reasons. First of all, global macro and inflation, which impacts overall spending. even among Indian advertisers. Pockets of advertisers that used to drive up prices and demand, for example, risk capital-backed companies, have significantly lowered their spend as they have been forced to focus on profit instead of growth. This has been a global shift and has also been clear in India as in many Western markets. During times when demand decreases, suppliers, as ourselves, have increased supply to counteract the decreased demand in order to save core revenue. On a market level, this has further decreased pricing. Stable spenders can then choose to buy as many impressions as they have done historically, but at a lower price, or spend the same amount and get more impressions. 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 and fill rates, particularly seen in this quarter where we choose to increase impressions at the cost of average prices, but with the benefit of reaching higher revenues than we otherwise would have. We also continue to increase impressions available to monetize within the existing slots. These improvements help us to marginally And now, but more importantly, when demand bounces back, they will generate a significantly higher return, significantly higher return than what we saw before this slowdown in demand. We, at this point, don't see any material uptick in underlying demand. And we continue to focus on factors that we can influence, ensuring that we are in the best possible position once the macro situation starts improving again. In the near term, we do not see any signs of a demand recovery, but things can change fast in the advertising business. When looking at our stable subscription revenues, you can see that we grow our revenue by 23% compared to the same quarter last year. This is sequential growth in revenues also continues. The relative growth in the number of premium users is almost twice the relative growth in monthly active users, which is, to us, very encouraging. Our strategy to add more functionality through the cloud telephony platform continues to pay off, with contributions coming from the AI features Truecaller Assistant and Call Recording, which yields much higher subscription prices. An important driver of revenues on subscription is our growing footprint on iOS, where the conversion rates and willingness to pay is substantially higher than on Android. True Call for Business had a great quarter and continues to grow fast. Remember that this revenue stream started in 2021, and Q4 accounted for 12% of total net sales and also grew 42% compared to Q4 2022. We see many positive things happening here, net additions of customers, longer contracts, and higher pricing plans. In 2024, we will continue to focus on upselling on the existing client base as well as growing further. An important contributor to growth in this segment during 2023 and going forward has been business messaging, where we have signed a new agreement with Tanla, our partner in India, but further we'll grow volumes and revenues here. Our first customers for the new product lines within fraud prevention, fraud protection and credit assessment have come on board and are expected to add revenues from the second quarter this year and onwards. While ADS has higher price volatility and cyclicality by its nature, we have over the last years continued to focus on growing our two recurring revenue streams, subscriptions and true corporate business. Here we have a strong momentum with sequential growth every quarter and we are early in the development of their respective offerings. In 2024, we have a lot in the pipeline when it comes to becoming more advanced in our subscription offering, both when it comes to features and packaging and targeting, as well as looking into potential partnerships with, for example, telecom partners and where we see potential in increased pricing. For our software as a service offering, true call for business, the offering is still young. We have past 2,500 enterprises for verified businesses, but the potential is much larger. We will continue to grow the customer base, but also to upsell on the current base and develop new products and features. We have a low involuntary churn, and we look forward to what our risk intelligence solution and what our improved business messaging solution will add in the future. Today, the two combined recurring revenue streams grow with more than 30% and constitute about 25% in total revenues. The ambition going forward is straightforward. Continued growth and increasing recurring revenue streams, their share of the total revenues, and thereby adding stability and diversification to our business. Our gross margin development continues to be very stable, and this quarter we had a small uptick given the efficiency work that has been done for costs related to servers, hosting and verification costs. Now, let's turn to cost development. As usual, costs are seasonally a bit higher in Q4 with some annual adjustments, but overall, as you know, We have been working on efficiency in technology and staffing in other areas, given the overall macro situation that we see. The incentive cost is low this quarter due to the fact that we are not reaching certain performance criterias in the 2021 long-term incentive program. Efficiency is a key in delivering solid margins and Truecaller has a very high operating leverage. I think we have done a pretty good job here in 2023 in managing our overall costs. As stated many times before, we will not hold back on investments when we see long-term benefit for the company and the shareholders. Therefore, we are now doing selective, concentrated and focused long-term investments with clearly measurable KPIs for each investment, which in the near term will increase our operating expenses and thereby, in the shorter term, also impact our margin. The investments which Alan will come back to are made to boost growth in targeted geographical areas where we see long-term revenue potential and ability to further boost our user base as well as the continued diversification of our revenue streams and also the geographical mix. The investments are easy and quick for us to turn on and off depending on where we see the best results. As we have previously stated, our tax rate is a combination of the Swedish corporate tax and the Indian tax rate, and we have expected the tax rate to increase somewhat over time. This quarter, the tax rate was approximately 26%. Year-to-date, it's about 25%. In the quarter, we also reported a 40% EBITDA margin, and for the full year, the margin came in at 41%. I believe this is a great achievement given stable or slightly decreasing revenues and our continued investments in our product offering. Compared to Q4-22, our EBITDA grew by 24% and earnings per share increased by 43%. Our cash flow was also strong and we continue to be in a favorable position with no debt and 1.6 billion Swedish crowns in cash and short-term investments as we continue to generate cash at about the same pace as we have been doing buybacks. During the quarter, we continued doing these buybacks. And over the last five quarters, we have bought back shares for 842 million Swedish crowns and also done smaller acquisitions. But thanks to our strong cash flow and profitability, we have been able to keep the equivalent amount of cash in the balance sheet. With our strong financials, the board has now decided to ask the next AGM in May to cancel the repurchased B shares, which as of now is about 6.7% of the outstanding capital, and also ask the AGM for a renewed mandate to have the option to continue to buy back shares. Now let's look then at how well we track compared to our financial targets that were set by the board in conjunction with the IPO in 2021. The medium-term financial targets were set in a different economic climate than in the current macro climate. The revenue growth target is, as stated previously, clearly less relevant when evaluated on an annual basis. However, even though the financial targets are based on average results during the 2021 to 2024 period, we and the board still believe they make sense also on an annual basis, but in a more normal macro environment, which is not the case right now. So as mentioned in the last reports, with the shift in macro and with outstanding performance we had in 2021, 2022, 23 was a more challenging year on a revenue growth basis. But with that summary, I will hand things back to Anna.