Truecaller AB (publ)

Thank you. Welcome, everyone. I'm Alam Amedy, and I'm the CEO and co-founder of Truecaller. And with me, as usual, I have our CFO, Odd Bullin. We're here to announce our interim report covering the third quarter of 2024. So today, we'll start with overall highlights from the quarter and then walk you through our financial performance in detail. We'll 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. We closed Q3 with an average of 413 million monthly active users and an increase of 12%. Average daily active users grew to 337 million, an increase of 13%. This brings us to a strong Dow to Mao ratio of 81%. We closed the quarter at 457 million Swedish crowns in net sales, a 15% increase year on year. All three of our revenue streams contributed to this growth. For the first time since Q4 2022, our advertising revenues showed underlying growth, rising by 8% compared to Q3 2023. We estimate that currency effects had a negative impact on revenue growth this quarter, so growth would have been even stronger in constant currencies. EBITDA also increased by 15% to 167 million. This happened despite higher spending on attracting new users and the challenges from unfavorable FX conditions. We're proud that we continue to operate profitably and continue to have a solid cash flow with 166 million Swedish crowns in net cash from operating activities before tax payments. In Q3, we achieved a new all-time high in user growth in absolute terms. We grew by 16 million users from the previous quarter. We're happy that we continue to see our investments in targeted focus markets pay off. In Colombia and Nigeria, for example, we grew our user base substantially with an annualized growth rate of approximately 40%. Our biggest income stream, which is the advertising revenue, made a solid comeback, showing underlying growth even with a muted advertising market in India and some negative currency effects, as mentioned. We did see stronger market development in several Middle Eastern and African markets. During the quarter, we also gradually began scaling up more video ads and other innovative formats. While we have not seen a material impact from these higher CPM ads just yet, we are optimistic about the long term growth potential as we continue to scale them up further. Our enterprise offering, Truecall for Business, continues to develop very well. We see solid traction across both verified business, our flagship product that allows enterprises to get verified on Truecaller, and business messaging, which is our messaging capabilities delivered in partnership with Tanlab. Consumer subscriptions continue to develop well. The growth of our subscriber base continue to outpace the relative growth of our total user base. We continue to invest in initiatives that support subscription growth. And this quarter, we saw improvements in conversion as well as an all-time high in average revenue per paying user. And we continue to see a strong trend on iOS. In the fourth quarter, we will launch our biggest iOS product upgrade yet, bringing caller ID and spam blocking on par with our Android product. This will be a major improvement and allows us to overcome previous limitations on the platform. Despite the more limited product on iOS to date, we have seen strong user growth in recent years, along with a high conversion rate to premium. With the new release, we're shifting our strategy and will primarily position TrueQualify iPhone as a subscription product. This could decrease the absolute number of iOS users, but could significantly boost iOS revenue as iOS users have a higher willingness to pay. We'll cover everything in more detail in the coming slides. On the growth, we continue to see strong user growth, and we closed Q3 at an average of 413 million monthly active users. Compared to the same period last year, we grew, as mentioned, by 46 million users, which is equivalent to 12% year-on-year growth. Our daily active user base grew at a rate of 13%. We ended the quarter with 337 million daily active users. We're happy to see our user growth across different countries and regions happening. We also continue to see strong retention and are proud that over 80% of our monthly active users use Truecaller on a daily basis. We see this as an indicator of our product stickiness and the continued relevance of our services. Now, over to you, Olt.

Thank you, Alan. So, as usual, it is time to take a more in-depth look at our financial performance this quarter. And as always, we start with the revenue, revenue development. This quarter, we grew revenues by a total of 15% compared to the third quarter last year. We also managed to grow revenues marginally compared to the significantly strong second quarter this year, which we're happy about. All our three revenue streams contributed positively and with ad revenues returning to growth for the first time since the fourth quarter 2022. That's when we saw, so do we see underlying ads revenue growth again, which we're also very happy about. Recurring revenues, subscriptions, and true code for business continued its stable growth. Currency effects, like Alan mentioned, had a negative impact on net sales compared to Q3 last year, with the largest impact being on our ads revenues. Weaker currencies in some of our largest markets in the Middle East and Africa region and a stronger Swedish crown versus INR were the main difference. The effect cannot be quantified precisely due to the So you know the indirect nature of our currency exposure. But our estimate is that the impact on growth was in the order of five percentage points. Now, let's look in some more detail on our three different revenue streams, starting with ads, where we saw, like I said, a growth returning with 8% year over year. Positive contributions came from a stronger demand in general and pricing trend in important markets in the Middle Eastern Africa region, as well as increased direct sales, primarily in India. Overall, ads demand in the Indian market seem to have stabilized. We see positive signs with our tests with other formats than the traditional banner ads that we did. The scaling of other formats had a small positive contribution, but there's still much to be done. And the improvements will become more visible as we continue to scale them up. As mentioned many times, we do not focus on CPM or fill rates, but rather on the maximizing overall ad revenues. And given that strategy, we think a more relevant measurement is ad revenues per Dow, where we saw a small decline of 5% year over year globally, which is a far more stable development than one would guess when purely focusing on the CPM. The somewhat lower ad revenue per Dow is mainly a result of the supply inflation in India, which has lowered prices in the banner market. And our strategy is to increase engagement in the app, which allows for more advanced and higher price formats in the future. Although the underlying banner ad market in India continues to be somewhat subdued, the improvements we have made in terms of both more available impressions and new ad formats, in combination with improved momentum in other parts of the world, we hope to continue to see a more positive momentum going forward. Our strategy to focus on strengthening our subscription offering with more advanced features continue to show solid growth. The subscription revenues are sticky and stable revenues, and we have a strong incentive to continue to drive adaption of subscriptions as we earn 10 times as much on a premium subscriber compared to a free user, quote-unquote. Our recurring subscription revenues grew by 25% compared to last year, and the conversion continued to be improved as well as the annual revenue per user. An important driver of revenues from subscriptions continued to be our improvement on iOS, where the conversion rates and willingness to pay is substantially higher than on Android. We are, as mentioned earlier, close to the launch of the improved product in iOS, which will be a premium feature with the potential to grow iOS subscription revenues further in 2025. True Cool for Business continues to show healthy trends. These are SaaS revenues that are sticky and where we see many more opportunities. The current product offerings can be expanded much further with higher adoption, larger geographic spread, and to other segments of the market. But we also see other untapped product needs for businesses to, for example, safeguard themselves from becoming victims of fraud. In verified business calls, we continue to see many positive things happening, many new large customers, longer contracts, and more advanced pricing plans. We're growing revenues both with new agreements as well as expanding current partnerships. The new price structure that we introduced in the second quarter this year continued to have a positive impact on revenues. Volumes within business messaging continue to grow strongly and also contributed to the growth in revenues year over year. So, as mentioned, we continue to scale our two recurring revenue streams, consumer subscriptions and true corporate business, and continue to see a lot of future potential. The two recurring revenue streams together grew by 35% this quarter and constituted about 29% of net sales compared to 25% a year ago. The annualized revenue run rate has now surpassed 500 million Swedish crowns. The ambition going forward is simple, continue growing the business and increasing the recurring revenue streams share of total revenues, thereby adding more stability and diversification to the overall revenue mix. We're also pleased that our gross profit grew with 18% year over year and the gross margin improved to 77%. The driver behind the improved margin has been our successful work with improving efficiency when it comes to server and verification costs. Going forward, we expect the gross margin development to be rather stable at the 75-76% level. Small variations between quarters like this quarter are due to factors such as the balance between sales channels as well as balance between different methods of verification, verifying new users. Time now to move the focus of costs. Truecall has a very robust business model with very high operating leverage. But efficiency is key in order to deliver solid margins. I think generally we continue to do a reasonably good job in managing our overall cost base. Q3 usually comes with somewhat lower staff expenses. Excluding incentive costs, so also this year, incentive costs increased with a new long-term incentive program in 2024 that was decided upon in the second quarter, but also with the increased share price that increased the social security costs for these incentive programs, where there will continue to be volatility depending on the share price development. Late last year, late Q4 last year, we started to increase investments in targeted growth markets. This is mainly digital performance marketing efforts and preloads to boost growth in targeted geographical regions where we see long-term revenue potential and ability to further boost our user base as well as a continued diversification of our geographical mix. These investments are easy and quick for us to turn on and off depending on where we see best results. We continue to be pleased with the results we get out from the investments. And we expect to continue to do investments at about a similar level going forward. But of course, we continuously fine tune where we get the best long term return on investment. With the launch of our new improved iOS product, it is reasonable to think that we will do some extra marketing efforts to make use of the new improved product. As we have previously stated, our tax rate is a combination of the Swedish corporate tax rate and the Indian tax rate. We have expected the tax rate to increase somewhat as our Indian business direct sales and true call for business grows. This quarter, the tax rate was approximately 26%, and for the year to date, it's 25%. For the longer term, we continue to think that 25-26% tax rate is reasonable, but with possible variations in quarterly numbers. EBTA grew by 15%, even though we did substantially higher growth investments compared to last year. With our high gross margins, any change in revenue has an immediate effect on the bottom line. Our EBTA margin was 37%, which is stable compared to last year. Excluding incentive costs, the margin was about 41%. We're pleased that we're able to continue to deliver margins above our long-term financial target. even as we see a somewhat muted ads market, and with our increased investments in long-term growth. Our cash flow conversion continues to be strong, and the cash flow creates opportunities to continue to give back money to our shareholders through buybacks and future dividends, as well as continuing to grow investments in growth and scan the market for potential M&A. We continue to be in a very favorable position with no debt and 1.1 billion Swedish crowns in cash and short-term investments. We also continue to generate cash at about the same pace as we have been doing buybacks. During the quarter, we bought back more shares and with the current mandate, we have ample opportunity to buy back up to 25.6 million shares more. Then lastly, our financial targets. We did grow revenues rapidly in 2021 and 22 with strong markets for ads. But since 23, the challenging digital ads market has put a temporary break on our overall revenue growth. The strong growth we continue to see in subscriptions and true call for business has not been able to make up for the shortfall in ad revenue growth. But this quarter, we saw an improvement. The euro is still out there as to whether we will reach our medium-term growth targets of 45% annually. This is a category 21 to 24. However, the growth targets were set in a very different macroeconomic environment. And we are confident that once digital ads demand in India bounces back some more, we will get back in an overall growth trajectory, stable growth trajectory. On our EBITDA margin, we continue to deliver about 35% with our increased investments. And even though this target really doesn't take effect until 2025, We are very happy with the situation that we can do that already now and have been doing so since our IPO. Now with that, back to you, Alan.

Thank you, Odd. Let's move on to our quarterly product update. So the three areas we will cover are the core product offering, TrueColor Premium, and our ad take capabilities and the TrueColor for business. We continue to work on improving the core product and overall user experience, which in turn positively impacts retention and engagement. In Q3, we introduced upgrades to our calling and messaging features. These improvements offer a cleaner design and upgraded technology for a faster, more intuitive experience. The impact has been notable. We saw higher usage on these features and in-app engagement grew by 35% compared to Q3 last year. We also improved monetization inside the app by making better use of ad space. And we've seen a 10% increase in CTR in these screens since making these changes during the quarter. We also launched a rewards program to test how using gamification elements can boost user engagement. Users earn points by doing things like updating their profile or exploring different app features, and these points unlock rewards that are typically only available to premium users. This initiative supports in driving feature adoption and highlighting the benefits of Truecaller Premium. Early results shows that users in the program are more stickier, more engaged, and much more likely to adopt Truecaller as their preferred calling and messaging app. And over time, we'll be able to play out with video ads in this gamification system. We continue to invest in our AI and machine learning capabilities. During the quarter, we expanded the use of LLMs to our messaging experience with AI-generated message IDs. This enables better message identification and summarization thanks to continuous improvement of the model based on machine learning and voluntary user contributions. Currently, over 290 million business SMS messages are identified and summarized on a daily basis. AI generated message ID is now available in over 40 countries and is set to expand further with the training of the model done on users' devices to ensure privacy while improving functionality. Beyond what we offer on Android and iPhone, we continue to work on creating a broader ecosystem and expanding our services beyond just mobile apps. In Q3, we launched an app for Android smartwatches. This allows users to identify unknown numbers, detect spam, and make calls directly from their wrists, basically. User feedback has been very positive and we see a lot of reviews highlighting the convenience and seamless experience this extension brings to managing calls on the go. By the end of the quarter, the app ranked among top five Wear OS apps in 143 markets. So it's been a huge success. Moving on to our paid offering, earlier this year, we introduced a simplified pricing strategy with a single premium plan and increased pricing in selected markets. This drove consumer subscription, on both Android and iOS in Q3 and resulted in strong growth in both revenue and subscriber base. We continue to enhance the paid products across platforms. For Android users in India, one of the most requested features being verified on Truecaller is now available through government ID verification inside of Truecaller. We continue to develop TrueColor Assistant, one of our premium products. We recently rebuilt the Assistant from the ground up using the latest LLM technology to make interactions more natural and conversational. The new version, which includes instant responses and real-time features like live transcripts, was tested with users late in the third quarter and officially launched in the US in the fourth quarter. The enhanced assistant will be gradually rolled out to more markets very soon. Now on to TrueColor for iPhone. After Apple's announcement of iOS 18 changes, we're focused on maximizing TrueColor's capabilities on iOS to boost premium conversions. The spam auto-blocking feature, which is a big conversion driver on Android, was released to iPhone users as a paid feature in Q3 and is gaining traction, although we have only done limited marketing of this feature so far. We'll launch our biggest iOS product upgrade yet in Q4. With enhanced capabilities of iOS 18.2, we will no longer be limited to a smaller local database and we'll be able to identify all calls for iPhone users. We're now internally testing and are excited to roll out the full experience during the fourth quarter. Like I mentioned, our goal is to make the iPhone experience largely a paid one and explore different pricing strategies to improve conversion and retention. The feedback we're getting from early adopters, alpha testers and employees at TrueColor is that the experience on iOS is magical and we're looking forward to launch it to everyone very, very soon. Now on the advertising side, we continue to focus on improving monetization by increasing user interactions and offering advertisers more valuable ad formats that drive direct sales. Our efforts to improve the ad platform, inventory quality and demand access are increasing ROI for advertisers. The addition of high CPM interstitials, rewarded ads and better video options has driven to higher engagement and revenue potential. The scale of more innovative format has only started and with increased engagement, we will be able to scale this much further during the coming year. We see good interest from advertisers and solid fill rates as well as attractive pricing on these formats. I mentioned this in the Q2 report that we're slowly rolling this out during the year. And in the coming quarters, we'll see this scale to even larger volumes. And during 2025, we should see a much larger scale of this. So we're definitely on track. Now, TrueColor for Business continues to deliver very well for us. We had another standout quarter and achieved a new all-time high in terms of revenues and new logos acquired for the verified business product. Some of the changes we made to pricing and packaging earlier this year have significantly boosted monthly recurring revenue from upgrades and new business deals for the verified business product. This growth has been especially strong in regions like Middle East, Africa and Southeast Asia. New deals have brought in high profile clients with long subscription terms and strong revenue per account. Our team continues to focus on expanding the verified business product with the introduction of verified campaigns. This feature aims to increase customer engagement through personalized content during calls and messages. And now to wrap things up, I'm happy to state that the need for Truecaller has never been bigger than it is today. We've been on a positive trend during the year with increased growth, and this quarter we reached a new all-time high. I would like to remind you that the absolute majority of this growth continues to be organic, people globally having a growing need for a solution like Truecaller. With the targeted growth investments we have done in Nigeria and Colombia with surrounding markets, we have developed a blueprint to grow in markets with a lower penetration, but with a vast need of our product. And we will continue to develop this strategy further in 2025 and onwards. For the first time in seven quarters, we saw an underlying ad revenue growth. We see a positive emerging trend, not mainly from the underlying markets, but from the initiatives we've slowly have started to scale up with newer formats and higher engagement from our users. We'll continue to scale these further and we've also seen a stabilization of the underlying market in India and an improved market in Middle East and Africa. Our strategy to diversify our revenue streams continue to develop well. And as mentioned earlier, they combined grew with 35 cents. As said earlier, our clear ambition is to reach one billion Swedish crowns in recurring revenues in the near to midterm. We have now surpassed 500 million Swedish crowns annualized, and we have a solid plan to continue to develop these revenue streams further. We also continue to be very optimistic about the upcoming changes to iOS, as you've probably heard. We've already made great progress in improving monetization on iPhone before this announcement, and with the limitations that we've had. The changes will enable us to deliver a significantly better experience for our users on iPhone, and this will further boost our monetization capabilities further. We're proud of our profitability, which creates continued opportunities for growth investments, as well as dividends and buybacks. Lastly, as we announced yesterday, 15 years after we founded the company, me and my co-founder Nami have decided to hand over the leadership to Rishit Jhunjhunwala, who's our current head of product and managing director in India. As As I guess you've read, Rishit does not come unprepared to become the global CEO as of the 9th of January. He's been with the company for 10 years. He's today head of product and our India operations, heading our India operations, which is about 70% of revenues and uses. And he manages the majority of Truecaller employees already today. We're extremely confident that Richard is the right person to take over the operational responsibility of Truecaller. Me and Nami will continue in the company until 30th of June next year. And we'll, of course, after that, continue to be active and supportive board members and obviously large stakeholders in the company. As always, a big thank 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. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Predrak Savinovic from Carnegie. Please go ahead.

Hi, Alan. Hi, all. Good afternoon. Start with the ad side. it's encouraging to see that ads are growing again. But in India specifically, there seems to be lots of ads flushing in the last one to years. I think you called it supply inflation. Do you see that this trend is easing now or stopping? Like, for example, we saw in Meta's report that they seem to be stabilizing quite a bit in terms of Is this something you are experiencing as well? And how could this affect you in the coming quarters then?

Well, we have said for a long time that we expect the market to bounce back sooner or later. Whether this quarter, which was a good quarter, is the first quarter on such a trajectory is a little bit too early to say. We are optimistic, but there could be setbacks during the process. There is still a lot of supply out there and demand is increasing only gradually. So like I said, we're optimistic. We see positive signs, but I think it's too early to say for sure that we are on a trajectory that will continue to be stable.

Okay, sounds good. And on true quality for business, you made price adjustments. You announced those in the last quarter. How have new sales developed since you made this change? And given the tenure of the contracts, this does entail then that the revenue growth, all else equal, should improve even further from this level as customers mature into the new pricing contracts, right?

Yeah, I think it's reasonable to believe that we'll see some further effects from the pricing increases we did in the second quarter rolling into the contracts. What we do also see is that more and more customers are on six and 12 month contracts. So the price increases, whether we did do, they didn't in any way negatively impact the majority of our customer base when we came to moving from shorter term to longer term contracts. We did have, or we have had some churn, mostly small or very small customers due to the price increases. But that's really non-material in a bigger picture, so to speak. So we're happy about having done those price increases. They reflected the value of what we offer our customers in a better way. And most of our customers have accepted that and seen that value and continue to stay with us on longer contracts than they had before.

I believe, if I can just add into that, I believe on the price increase, the important and significant customers, on those who have upgraded or renewed their contracts, we've seen, at least on the latest number that I heard, is zero customers has actually churned. So it's an indication that the product is loved by our customers.

Sounds great. And finally, just based on The presentation you just held, the numbers achieved this Q3, it sounds like this growth return could be consistent going forward. Is there any reason to believe that the growth recovery or trajectory will look any different in Q4, Q1, Q2, and so on?

Like I said, it's too early to talk about a stable growth trajectory on ads. There's nothing that makes us think that subscriptions and true call for business won't continue to develop in a very good and strong manner. Ads is just too early to tell. We can't say for sure. We don't have the visibility to say what's going to happen first half of next year, for example. I am not prepared to say anything more concrete about the first quarter. We don't give any guidance. We did have a good third quarter. We do see positive signs, but I will not give you any more concrete than that at this point. Sorry about that.

Okay. Thank you very much.

Thank you.

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

Yes, hello. I have two iOS-related questions. First of all, you mentioned that you plan to make this a premium product. So how do you plan to convert existing iOS users to become paying users? And how should we think about timing relating to this? Secondly, you say that you have chosen this strategy due to the ability to generate ad revenues is more restricted on iPhone than on Android. So can you just explain why that is?

Yeah, so I can start with the second question and then I'll answer the first one. So the way Apple has built this capability is very deeply integrated into the operating system. So once you install TrueCaller and go through the onboarding process and enable full capabilities of TrueCaller, There are not really that many reasons for you to come back into the app unless you want to do a manual search, because our app gets deeply integrated into the operating system that all the search results from incoming calls, et cetera, they go directly into your native phone dialer. And that will mean for us, of course, that the engagement inside the product will decrease over time on iOS. Now, we know that the willingness to pay on iOS is very high. And most iOS users have a credit card connected to their Apple account, which means converting or paying for a subscription service is quite seamless on the platform itself. So for that reason, we do value this service a lot, especially on iOS, and therefore we think it's worth paying for, to be frank. Now, how are we going to get users to convert? Well, I think that's something that the team will obviously look into more in details, and it will be slightly different from market to market. But this is something we've been doing for many years right now, and I would say the last... four quarters, we've become extremely good at it. But to start with, you know, we'll do a simple trial period for our users so they can try it out for free, the caller ID experience, try it out for free for a number of days or weeks. And once they see the real value in it and the magical experience, we will lead the user back into actually subscribing. Now, you know, 7% of our whole user base is iOS today. So it's a very small amount of our user base that is on iOS. However, those users actually contribute with 40% of our subscription revenues. So the potential is, of course, large here. We have a pretty large iOS use base already that will try to convert as many as possible. Obviously, getting 100% to convert will be almost impossible, even though I would love to see that. But I think there is a great opportunity in front of us on that platform. And I think we'll... find out ways to improve the conversion funnel even further. And this is, you know, not a one-off job. It's an ongoing activity, basically.

Okay, perfect. Thank you.

Thank you.

The next question comes from John Caradis from Deutsche Bank. Please go ahead.

Thank you. Thank you. I've got three questions, please. The first one for Aud, and I think the other two are for Alan. Aud, when you said that the FX headwind is 5%, I don't really understand what that means. Does it mean that had you not had that headwind, the revenue growth, instead of being 15%, would have been 20%? Or if not, what does that mean, please?

That was correct.

That's correct. Great. Thank you. And then, Alan, first of all, regarding you and NAMI leaving the company, it's sort of clearly disappointing. And one sort of wonders two things. The first one is, isn't the job there, your jobs there, big enough for you? Why would you be leaving? And more importantly, for shareholders, there's this concern that a few quarters after you leave, there's going to be a significant share overhang for Truecaller. Maybe I can ask you to answer this and then I'll have one more, please.

Yeah, I mean, surely, John, I will miss these conversations with you. So that's number one. But I think the company is in such a great shape right now. We're seeing light in the tunnel regarding ad revenues coming back to growth. We have all the other revenue streams growing like never before. But most importantly, we have a fantastic management team in place that we've hired during the years. And they all... gel really well together. And that makes this decision much easier for me and Nami. And the way we're structured today is that the management team works on the long-term strategy and next year's strategy together with the board. And Nami and I will continue to be board members. Nami will continue to be the chairman. So we will, on an annual basis, work with the management team on this strategy. So we're not leaving the company. We're just taking a step aside and letting the fantastic management team that we have participate. grow in their roles, basically. And I think that's healthy for the company. And for me and Nami, personally, we wouldn't have done this unless we felt really, really comfortable and had a strong belief in the management team and the rest of the organization. And I truly believe we are there today. And that makes this decision much easier. And we will continue to be large shareholders of TrueColor. And I understand that some people might be concerned and might see this as an overhang. Well, I can tell you that my investment in the stock market has not been good. So I'm not a good investor. But what I'm good at is building companies and understanding how to make things grow. And I will continue to do that together with the management team on a board level.

Thank you, Alan. I'll miss you too. Then lastly, forgive me, this is a very blunt question. The stock is down 10%. The day after you promote the MD of India to become Truecaller's MD or Global Chief Executive, the Indian tax authorities raid Truecaller. This looks really bad optically um beyond what you've said in the press release is there anything else you can give us to tell us to give some sort of comfort uh given also what the share price is doing just now i can start and then the odd can jump in uh

This was not expected. And I know it might look really strange from an outside perspective. And it's unfortunate that all of this happened at the same time. It is what it is. You know, I can't do much about it. I wish that their visit would have happened, you know, next week or yesterday. No one would have known. But it just happened to be on the same day as we're announcing, you know, our great quarterly report, us announcing Rashid, who's a great person as the next CEO. So, you know, sometimes things just happens the way you didn't expect them.

Right, and when it comes to the actual tax inquiry, we don't know much. What we do know is that we have a clean conscience. We pay the taxes we're supposed to pay. We have a transfer pricing policy in place that accurately tracks how we do the business and where we add the value. We have nothing to hide. We have never hidden anything. Already when we had this pretty stupid or strange short-sighted report a few years ago, we were very clear and transparent about the fact that we pay taxes according to the rules and regulations in the countries where we are. We don't try to maximize or minimize our tax rate. So we'll just have to wait and see what the Indian authorities are looking for. But at this point, we don't see any reason why we should be worried about their inquiry. We are doing everything the way we are supposed to. And we're also, of course, taking in professional advice from the outside when it comes to issues like the transit pricing policy.

understood thank you very much alan and nami the best of luck thank you thank you john we'll miss you the next question comes from boris nagaraj from kantor fitzgerald please go ahead hi thank you for taking my questions um first one is

How confident are you that the CPMs for banner ads will ever return to, let's say, better levels compared to today? What's your base case trajectory for the banner ad CPMs?

We don't have a base case trajectory that we would communicate. That would be pretty much some guidance. The CPM level that we report is, in effect, a function of the fact that we are maximizing revenue. We could report higher CPM levels if we were to decrease the number of impressions that we show. That would have some impact on our total revenue. We don't do that for that reason. But the CPM levels that we report shall not be taken as a single measure of the market demand that you see out there, or the supply and market demand situation. It's an effect of how we decide to do business every single day. And once again, we always try to maximize revenue. We think that's best for our shareholders. How things are going to develop going forward, like I told Fredrag, it is too early to talk about the stable growth trajectory. Alan mentioned that we think we see a light at the end of the tunnel. But How that is going to impact the near future is very hard to say.

I also want to add that it's important to understand that TrueColor is also growing rapidly in regions where cost per ad is also lower. Not every city or state in India has the same type of prices as maybe in Delhi or in Mumbai. So, you know, you have to keep that in mind as well because these, when you're growing with several hundred million users, it does have an effect on the average cost per ad. With that said, you know, everything odd said also plays in an important way.

Thank you. That's actually useful background. The second question I had is with regards to, I think, or you said that You will continue to invest in digital marketing even going forward to grow the user base and also the subscriptions. How do we kind of quantify that for 2025 relative to 2024, please?

What we're saying is that we intend to keep investing at about the same level that we've seen in 2024. We might decide to do some more aggressive investments as an effect of, for example, the iOS launch that we believe will have a very... substantial and great impact on our subscription revenue. We might see that as a good opportunity to make some further investments to boost that. But generally speaking, we intend to keep investing on the same sort of level that we have seen in 2024, also in 2025. As you may remember, we started doing these more focused investments at the end of 2024, and we communicated at that time quite clearly that this was a test thing, but we have concluded at that time, by now, that it's working well, and we see no reason to stop doing those investments at this level.

Understood. And is that, sorry, just a quick follow-up, is that like on an absolute basis that you're saying that you'll continue to invest at the same level? Or is that like, are you measuring it some other way?

You know, as we grow our revenue, we also grow our potential profit. And that gives us more room to invest with the same profitability. So, yes, you could say that there is a relative component in here.

Understood. Thank you. The last one for me, with regards to the premium subscriptions revenue, I think it's fair to say that you do expect for this to pick up with the product, iOS product to be released in Q4. Is there anything that you can quantify or you can say with regards to how much you expect in terms of growth acceleration for the premium subscriptions in the future, the future quarters? Thank you.

I think it's too early, but with that said, we shouldn't expect anything in Q4. It's going to be rolled out in Q4, and then we're going to do a lot of experiments with trial periods and so forth. But our ambition is to start showing some growth in numbers in Q1 next year. Thank you. Thank you.

The next question comes from Anton Hu from Redeye. Please go ahead.

Hi, can you hear me?

Yep.

Yeah, good. So I have a question regarding the balance here between your programmatic and the direct sales in the ad business. I mean, I think it's fair to say that we have seen some of a trend of companies stepping back to open market and focusing more on direct sales. So it will be interesting to hear your view of that.

Well, we haven't communicated the balance explicitly. What we have said, like you point out, is that we do put more effort into diary sales, and we do see positive developments. Still a rather minor share of our total sales. Programmatic is still dominant. But we do see positive developments and we will continue to focus on direct sales because we think it is important to have a good balance. Programmatic sales are good. Make no mistake. We appreciate our programmatic sales, but they need to be counterbalanced by more direct sales where we talk directly and do business directly with the end customer.

And maybe if you just can expand on how you add formats to improve your opportunities to increase direct sales. I think you wrote that in the report.

Well, of course, the fact that we have better ad formats improves our capacity to win any kind of sale, not least direct sales. What you can say is that certain sectors in the economies where we are active are more interested in certain ad formats, such as fast-growing consumer goods are more into videos than banners nowadays, for example. So by improving our ad formats and making them more attractive, we increase our capacity to win businesses, both in direct sales and programmatic sales.

Good. That was all for me. Thank you.

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.

All right. Thank you, everyone, for listening in. And we look forward to seeing you at our next earning calls, even though I will not be here.

I'm looking forward to it.

Yes, you will. And I will listening and be your biggest fans on the sideline. Thank you, everyone.

Thank you.