Truecaller Aktie

Hello, everyone, and welcome to our Q1 report webcast. I'm Rishit Jhunjhunwala, the CEO of Truecaller. And with me, I have Odd Bolin, our CFO, as always.

Today, I'll talk about how we performed in the quarter in a few important areas. Then I'll hand over to Odd to talk about the financial performance, and then we'll open up for Q&A.

In Q1, the average MAU was 463 million, which is a growth of 12% year-on-year. Our average DAU was 403 million, which is 13% growth year-on-year, and we continue to have a very healthy engagement with a DAU/MAU ratio of 87%.

Net sales decreased with 27% year-on-year in SEK. Our EBITDA decreased by 57%, and we reported a margin of around 18%, including incentive costs. As you are aware, our headline numbers during the year have been affected negatively by the strengthening SEK, which is something Odd will cover more in his part of the presentation.

In terms of user growth, we added 9 million users this quarter, surpassing an important milestone of 0.5 billion people around the world using Truecaller today. This growth came from all regions, even though we reduced our spending to acquire users given the current revenue challenges we've been seeing.

CNAP in India still remains at a partial rollout, similar to what we said in the Q4 2025 report. So far, the impact on our user growth is limited, which is -- while this is a good sign for us, as I've said multiple times in the past, we do expect that CNAP might have some impact on user growth in that region, but it remains to be seen as it rolls out.

We are also very excited about the growth we are seeing in multiple regions around the world. We believe we can add value to people across the globe, and hence, this has been a big focus area for us. While our top markets continue to grow, there are numerous countries where we grow really well, mostly organically. And we believe that our focus on this is what will get us closer to our 1 billion user mark in the coming future.

Now I'll talk about our 3 revenue streams. Let's start with the advertising revenues first. In Q1, we continued to have challenges on programmatic advertising that has persisted for 2 quarters earlier as well. The year-on-year comparison looks especially weak given that Q1 and Q2 last year included a large contribution coming from the Real Money Gaming sector in India in connection to the IPL season that takes place around this time. Of course, the situation in the Middle East also reduced our revenues from that region. Our direct sales, however, excluding RMG, started to show promising signs with some growth sequentially as well as year-on-year.

As mentioned earlier, we have a robust plan to reverse our revenue trend on ads and have been working hard on it. The progress in Q1 met our expectations, and we're looking forward to seeing results of this in the coming quarters.

On the programmatic side, we've made good progress transitioning to a more competitive auction-based bidding model. Around 30% of our user base are now on this new architecture. The next step on this is to roll this out to a wider user base within this quarter itself. Post the wider rollout, we will begin growing yield per ad impression by implementing a new programmatic model.

On the algorithm change we saw from our largest demand partner last year, we've done several fundamental optimizations on our inventory in Q1, which we believe will increase the value of our inventory and eventually get us back to better revenue levels than we've been seeing recently.

And on the direct sales side, an important part of our strategy, of course, we recently announced several partnerships in India and other regions, which extends our reach with our high-value proprietary ad offerings. This too, over time will yield results for us.

Moving on to our premium revenues. Our premium revenue grew exceedingly well, 37% year-on-year, which is 52% in constant currency. Our subscriber base grew 43% year-on-year and the conversion rate as well grew by 27% with steady ARPU development.

Let's now go a bit deeper into the premium revenues. You can see that the geo mix of this revenue stream looks different compared to the total mix of Truecaller's revenue. Compared to last year, all regions are continuing to show significant revenue growth. And remember that this is in SEK, which was negatively impacted by the strengthening of the SEK. So the underlying growth is actually even higher.

The monthly ARPU and the conversion to premium, what you can see right now on your slide, varies a lot between different regions. As you can see, conversion in markets outside of India and EMEA is 5x as high as in India, but it is important to note that all regions have been increasing over time.

I'd like to now call out a few exciting markets on premium revenue for us. You can see here there are several markets where we have more than 50% year-on-year on premium revenues and higher ARPU than our average on premium revenues. This is a focus area for us, and we're very bullish on growing these markets where we actually have a lot more headroom left to grow.

As you can see in the previous slides as well as this one, our focus on this area is clearly paying off. Not only do we have sustained revenue growth, but the rate of converting free users to premium subscribers is growing both on iOS as well as Android. Although Android might look like a laggard here compared to iOS, it is important to see the rapid growth in conversion during the last few quarters. Given the huge user base we have on Android, it is, of course, very promising for us in the long term.

Now on to Truecaller for Business, our third revenue stream. Net sales declined 25%, amounting to SEK 59 million this quarter. It is important to understand that this decline is an effect of 2 primary things: FX movements, which were quite significant during this period; and a deliberate change in the business model for Business Messaging.

Our ARR for Verified Business declined in SEK, but grew 19% in constant currency. The growth rate for Verified Business is lower as indicated in the last quarter due to lower new bookings in Q4, which shows up as lower growth in Q1. As compared to the lower new bookings in Q4, just to talk a little bit about Q1, we did see some recovery in Q1 with more customers being signed on for the core Truecaller for Business offering.

Now Truecaller for Business has grown well for several years now. In the last quarter, we pointed out that we're seeing competition from telco offerings in India, which only shows the name of the business calling you. We're still confident we add more value than just showing the name of the business, and that's what our product development has been focused on. Businesses face multiple challenges when communicating with their audience, and we're staying focused on expanding our offering to become the CX platform of choice. We believe this is the right strategy to fight off competition and come back to the higher growth levels we've seen earlier in this part of the business.

On Business Messaging, new partners are ramping up, and we're signing up additional partners as well. This was an expected phase with our move earlier this year from a single exclusive long-standing partnership to a more diversified partner approach. We're currently trending around 10% of last year's volumes, but we are growing each month.

Now on to a few product highlights for the quarter, and then Odd will take you through the financial performance. The first part is Truecaller Lite. First-time smartphone users and some users in emerging markets often have a limited mobile phone. Truecaller's philosophy has always been to ensure every phone can use Truecaller's core proposition because this seeding leads to sustained user growth over time. In Q1, we launched Truecaller Lite to better serve entry-level phones, which widens the addressable audience and eventually compounds to solid organic growth. You will hear more about progress on this in the future as we expand markets and beef up the product as well.

Family Protection, which we launched in select markets earlier, is now fully rolled out globally. This is a unique way of tackling the fast-growing fraud problem by empowering what we call the family CTO to protect the entire family. Millions of families have already enabled this capability, and we will continue to make this more powerful in the coming quarters.

We also launched voicemail in India in Q1, mainly to let users send unknown callers to their mailbox if they want to know more about the call. This also creates a whole new use case for Truecaller, something we believe is an important part of our strategy going forward. We're already seeing 5 million voicemails a day on this feature and are excited to see how people use it for different use cases.

With that product update, I will hand over to Odd.

Thank you, Rishit. So let me, as usual, walk you through the financials in more detail. This quarter has been characterized by 3 major factors, namely a continuing very good growth for our premium revenues, as Rishit has pointed out, substantial ads headwinds and then the currency effects.

Like before, to make it easier to understand the underlying development for our business, we will give you the net sales and EBITDA development in both SEK and in constant currencies this quarter. The constant currency figures are our best estimates based on the information available to us. Like I've said before, we don't have full information on how partners like Google are managing exchange effects, which limits the precision we can achieve, but this is our best estimates.

So in Swedish krona, our net sales decreased by 27%. But looking at it in constant currencies, the decrease was 16%. EBITDA decreased by 57% in SEK and 44% in constant currencies. The EBITDA margin was 17.8% in SEK, but slightly higher 20.1% in constant currencies. Now like last quarter, we are obviously not happy with these figures. I'll give you the causes of the mediocre -- of these pretty mediocre results, while Rishit gave you more insight into how we intend to evolve the business to position a stronger growth and profitability going forward.

Net sales decreased, like I said, by 27% versus '25 Q1 first quarter last year or 16% in constant currencies. As you can see in the waterfall graph, most of the decrease was due to the weakening demand for our ads inventory that primarily is an effect of the partner algorithm changed in the third quarter of last year. Truecaller for Business also contributed to the decrease due to the previous Business Messaging partnership coming to an end, thereby reducing revenue from that particular partner very sharply. Premium continued to grow and gave a substantial contribution to overall net sales. The currency effects continue to have a material negative impact as the Swedish krona stays strong versus USD, INR and other currencies.

Looking at ads. Ads revenue decreased by 44% versus the same quarter last year and 34% in constant currencies. Currency effects obviously continue to have a material negative impact. Again, most of the decrease was, however, due to the weakening demand for our ads inventory. That's an effect of the partner algorithm change last August.

Now the Real Money Gaming ban that was also introduced last summer in India has decreased overall demand in the market and thereby also the auction pressure, resulting in material negative impact on our ads revenue versus the same quarter last year. This is particularly true for Q1 and also for Q2, when IPL historically has been a strong market driver, but where the RMG ban has profound negative demand effects.

The geopolitical conflict in Q1 has caused some MAU and ad revenue decrease in that region, but nothing substantial on overall numbers so far, I should say. We don't see any signs of that changing. But given the uncertain situation, we're obviously well aware that things can change. Overall, demand has seen a slight decline, which impacts revenue from other programmatic partners, too.

Within Truecaller for Business, the Verified Business portion continued to grow year-over-year in constant currencies, although at a lower rate than earlier. Rishit gave you some of the background on that previously. Business Messaging dropped sharply as the previous Business Messaging partnership ended, like I have mentioned. And once again, the strong SEK versus mainly INR continues to negatively impact financials and pretty much counteracted the organic Verified Business growth this quarter.

Looking at recurring revenues, they continue to grow well, 23% in constant currencies. Obviously, this quarter, that was entirely driven by premium. But recurring revenues in total now make up 47% of our overall revenues, and their share has been growing constantly for the last few years, even though we've seen a weaker TfB quarter now. Some period last year was only 32%. We continue to have this as a core focus area to create more resilient revenue distribution going forward.

Now looking at profits. Gross profit decreased by 33% year-over-year in SEK, while gross margin declined to 70.9% versus 77.3% last year. This margin decrease is due to primarily 2 factors. Lower revenues impact the margin directly as cost for service and verification, which is part of our cost of goods sold, is not directly linked to revenues. So when revenues decrease, that cost becomes a more important driver of gross margin.

And then improved transparency on ad partner fees lowered the margin from the fourth quarter 2025. Some of the ad partners that we have been working with have finally been able to give us more precise information on the fees that they take out, and we can then book that as cost of goods sold in a way we can't do it before in accordance with our accounting principles.

Looking at OpEx, our staff cost has been stable, but will decrease from the announced cost reduction programs that we did in Q1 and the one that we're now doing in Q2 by at least 20% versus a seasonally adjusted monthly figure at the beginning of 2026. When I say seasonally adjusted, there are certain factors that change month-over-month like change in vacation pay, and that can have a rather substantial impact on a specific month. But adjusting for that, we will come down with at least 20%.

No restructuring cost was taken in Q1. Instead, we'll let the salary decreases coming from the Q1 cost reduction program take effect gradually as affected employees leave the company. And most of those total employee cost reductions from that cost program in Q1 will materialize in Q3. For the Q2 cost reduction program that we are doing now, we will, as opposed to the previous program, take a one-off restructuring cost of approximately SEK 23 million that will hit Q2, but we will then have no further costs associated with the employees that are forced to leave us this time. Other expenses were lower during the fourth quarter due to the efficiency initiatives that we took at the beginning of the year as well as lower investments in user acquisitions.

Tax rate was 32%, 28% 1 year ago. This is, as we explained after the fourth quarter, due to the fact that a high proportion of group profits are now attributable to India due to the algorithm change from this large partner that we have that -- where we recognize the revenue in Sweden. Now we see more -- a larger share of our profits being made in India, meaning that the Indian tax rate has a more important -- becomes a more important driver for the group tax rate.

Looking a little bit on incentive costs, what I like to call the dilution cost was higher in year-over-year, mainly due to the introduction of the long-term incentive program in 2025. They are, however, expected to decrease from Q3 onwards when the LTIP 2022 vest in June. Now the program that we are -- the cost reduction program that we are initializing now will also have some effect of that, decreasing the cost of the program.

Now the vesting event that we will see in June this year will have a cash flow impact similar to what we have reported in '25, Q2 and '25, Q3. That was due to the vesting of the same program last year.

Looking at operating profit, including incentive costs, due to lower ad and TfB revenues, EBITDA decreased from SEK 264 million versus SEK 149 million in the corresponding quarter last year. In constant currencies, EBITDA decreased by approximately 39%. EBITDA margin, including incentive costs was 17.8%, which is a substantial decrease from 30% last year. Now excluding incentive costs, EBITDA decreased to SEK 103 million versus SEK 199 million in 2025. Once again, constant currencies, the decrease was 37%. And the EBITDA margin then became 28.6% versus 40% last year.

A little bit on cash flow. Net cash flow from operating activities, excluding paid income tax and changes in working capital, was SEK 106 million versus SEK 189 million last year. Accounts receivable were stable. We continue to work hard to ensure that we're paid on for our services in a timely manner. And so far, we have been quite successful. We can always do more, and we work hard in order to do better, but we are in a position that is well under control.

As of today, Truecaller holds 22.3 million B and 5 million C-shares, corresponding to approximately 7.8% of the outstanding capital. The Board have proposed cancellation of 16.3 million B-shares or approximately 4.6% of the capital. As you may remember, we need a certain amount of B-shares in order to cover some previous long-term incentive programs. So that's the reason why we're not canceling all of them.

We have approximately SEK 900 million in cash and short-term funds available. Our revolving credit facility of SEK 500 million is still not utilized, but continue to be available for interesting M&A opportunities, and we continue to actively evaluate such opportunities, either when we get inbounds coming our way or due to the fact that we are -- that we see areas where we could further strengthen our product and services portfolio and reduce time to market for important initiatives if and when we can find the right fit.

And finally, in accordance with the dividend policy, the Board proposes a dividend of SEK 0.28 per share to the Annual General Meeting later this month.

And with that, I give the word back to Rishit.

Thanks, Odd. So I want to talk about what we communicated this morning that we are reorganizing ourselves and creating a more nimble and a focused organization. In early Q1, we undertook initiatives to reduce our cost base. This was primarily due to the revenue downturn we saw in our advertising business. Now given the revenue situation, it is very important for us to stay healthy as a business while we work hard on getting the revenue back on track. Like Odd mentioned earlier, we're taking further steps to cut down our costs by reducing our organization by approximately 70 people. We're also using this as an opportunity to simplify our org structure so we can be laser-focused on high-priority items, which will give us the long-term growth that we aspire to have.

The financial implication, like Odd spoke, is that our staff cost, excluding incentive cost, is expected to reduce by at least 20% from Q3 onwards compared to the Q1 levels we see. And during Q2, we will also take a one-off restructuring cost of approximately SEK 23 million. Needless to say, this was a very tough decision for all of us to make because Truecaller is a very close knit group of people, but it was strategically an important one to take.

Now I'll summarize the quarter, and then we'll open up for questions. In summary, this quarter, we continue to grow our user base and now have more than 0.5 billion people across the world using Truecaller. This growth continues to validate the need for the product and the solution we provide. What we have been experiencing in the last couple of quarters are challenges in part of our old monetization structure, something we are now working hard on resolving.

Our recurring revenues are growing driven by continued strong development of our premium offering. Our ads business transformation is underway, and we will continue to drive that change in the coming quarter. While we are experiencing revenue challenges, we are restructuring our organization to simplify our structure, centralize various parts of our business. And because of this, we will see a lower cost base from Q3 as an effect of this initiative and from a somewhat lower accounting burden on incentive programs as well.

The execution in the coming quarters is critical, and the entire team and I won't rest until we are satisfied. Once we are past this phase, I'm confident we will start seeing gains on the investments. And in the meantime, we will make sure that the company is lean enough to be agile and laser-focused. Thank you very much.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

I want to start by asking a few on business -- on the business side. So you signed new partners here. And to what extent are they ramped with their engagement with you and how much is remaining? And what is a realistic revenue trajectory here for H2 and onward? And can you give some kind of time line perhaps on when you expect that volumes can return to kind of the pretransition level that you had before this?

Yes. So in Q1, we started sending traffic through the other partners, which was not the partner that we had exclusively earlier. We have multiple partners already sending traffic our way. We are at, I would say, about 10% of the traffic that we used to have on average last year. I think that's a healthy growth so far that we've seen. This number does grow month-on-month as well with the existing new partners we have, and we're signing on further new partners as well.

In terms of expectations, it's hard to say, Predrag, honestly. We are growing month-on-month, and we are bullish that we will reach over time the same volumes and maybe even more volumes than we did earlier. But it is a factor of these partners going to enterprises, selling the Truecaller platform, the Business Messaging platform. The enterprises have to try the Truecaller Business Messaging platform and then take it from there. So we are confident and bullish about it, but it's hard to expect when it would come back to the same volumes.

Okay. And then a similar question, but on the ad side, you discussed the aucs-based or auction-based ad structure. How large percentage of your users are using this? And also here, how quickly do you expect this to ramp?

Yes. It's important to understand how we are structured today and where we're moving to. We're right now, I'd like to call it a waterfall model. We have 30 million users, like we spoke about in the presentation that have moved to this new architecture. This 30 million audience is our test base, and we continue to test on them. This rollout is increasing as we speak. Actually, every day, we do increase this rollout. And as we see stable metrics, we expect this rollout to be complete in this quarter. Once that rollout is complete, it gives us the ability to be able to orchestrate our programmatic revenues much better than we used to do earlier. So the journey has begun. We've made progress. We will complete the rollout exercise in this quarter. And from there onwards, we will start doing things that will help us extract the right value from our inventory.

Okay. And when you move more on this journey, what does this imply for general ads pricing? Are you able to improve this compared to historically?

The aim is absolutely to improve the pricing of our ads as well. It's not just about how much we fill on ads, but also the pricing of ads is something that we do aspire to increase over time. Just this move that I'm talking about in Q2 to the new architecture is not something that will grow our revenues. The move is about moving to a new architecture, which we have to do gradually because it's a complex change in our ad stack. So Q2, I wouldn't expect dynamics to change dramatically. But from there onwards, we are capable of doing a lot more.

Okay. And then on the cost cuts that you made today, they are quite substantial. Are you turning down certain functions because of this, such as sales or R&D? Or do you not expect any concessions there?

No, we are not -- I think what I should clarify is that these cost cuts are important at this stage as we reset some of the revenue streams that we spoke about. But they don't come at a cost of growth. We will not compromise on any aspect of user growth or revenue growth during this time. We believe that doing these cost cuts will actually let us take -- let us freely take swings at making fundamental changes to our revenue setup without necessarily worrying about every single percent of profitability at this moment because we will have healthier profits due to the reduction in cost.

Okay. Very good. And then just a final quick one. You mentioned, Odd, you see some effect from the conflict in the EMEA region. Can you quantify that? And what do you expect for Q2? What have you seen so far in the second quarter?

Well, we have lost a small number of users in the affected areas. And we have seen a slight decrease in ads revenue from that region, but we are talking a handful of millions of Swedish krona. And of course, we don't know what will happen going forward, but so does no one else. So we just have to take it as it comes.

The next question comes from Thomas Nilsson from Nordea.

So premium continues to be the strongest growth engine and conversion has improved to 0.8% of the total user base, while iOS conversion is above 4%. How do you think group level conversion rates can go over the medium term?

Thanks, Thomas, for your question. You're right. Premium has been a fantastic growth driver for us. We have the conversion rates that you mentioned. Where can this go from here? We believe both on Android and iOS, we have a lot more headroom left. If you look at industry standard of premium conversion on many of the other apps, they range much, much higher than where we are today. And that's the reason why it's a focus area, and we're very confident and bullish about this area for the future.

Okay. And a final question for me. We now see recurring revenue represents 47% of total net sales. Where do you see that ratio going in the, say, next 3 years?

Yes. The ratio of recurring revenue has grown not only because recurring revenue has grown, but also because there is a decline in our ads business. I think that's important to point out.

Where do we see it going? Like we've said for several years now that recurring revenues is a more predictable, more resilient revenue type, and we have been focusing on it, and that has got us this far. Having said that, the ads business is a significant part of our business. And we know that with the reach we have of 0.5 billion users, we will have a robust growing ads business someday. So it's hard to say how the revenues -- how this ratio of recurring versus nonrecurring will pan out. But we definitely are bullish about our recurring revenues, and it is a big focus area to create a revenue mix that has a large portion of recurring revenues.

The next question comes from John Karidis from Deutsche Bank.

I have a few questions. Maybe starting with a big picture question, Rishit, if possible. Would you mind sharing with us what you can regarding thoughts of monetizing your existing user base in more ways than you do today? And how advanced are you in that respect?

Thanks for the question. That's a good question. We always have beliefs that we can monetize in multiple different ways on our user base. A simple example of that is even today, we monetize our user base in 3 different ways. We do have plans of adding other ways of monetizing our massive reach that we have and the high engagement product that we have. You should hear about it over the rest of this quarter and the next quarter. But I can't say more than that, but we are definitely working on it.

Great. And then 3 quick questions, a number of questions for Odd, if I may. Firstly, to butter you up so that you can answer those questions. I genuinely thank you for giving us greater visibility of all the sort of moving parts within each revenue type. So that was very useful. Thank you.

Now the questions are: where I'm sitting, I don't really know where the gross profit margin will go. I know the reasoning you give every quarter, but I don't know what that means for the future, if you can sort of help me.

Secondly, as far as the tax rate is concerned, I know what the average is in Sweden, and I know what the average is in India. But realistically, how high could the tax rate go and over what period of time?

And then lastly, just a point of detail, what was the ARPU for the iPhone premium customers during the period? A year ago, it was SEK 14.04. What was it for the current period, please?

Do you remember the ARPU number top of your head?

The -- let's start with the other ones. The tax rate can hypothetically go to the same number as you have in India, 35% approximately. It all depends on how we distribute our revenue and profits between those 2 units. Now we are in the process of updating and modifying our transit pricing model in such a way that Sweden that takes on a substantial part of the operational cost of the group will also get a larger share of the revenue irrespective of issues like the one we have right now with this large programmatic partner. So I don't expect it to actually end up at 35% and certainly not over time.

We will modify the transfer pricing model in such a way that more revenue will come to Sweden, more profit will be made in Sweden and the Swedish tax rate will have more of an impact. However, that is an ongoing process. And it's also a process that involves tax authorities in India and Sweden. So it's not happening overnight. But we do expect that to have impact in the not very distant future. But once again, theoretically, it could end up at 35%.

Now looking at the gross margin, the -- one of the 2 factors that I mentioned, the fact that we have some more visibility from certain partners on the fees that are -- they're charging us and that we recognize as cost of goods sold is -- I wouldn't call it a onetime thing, but it's a very small part of our revenue that -- where we don't know that fee whenever that fee is applicable, precisely enough to recognize it. We managed to squeeze the information out of some partners this last year, and there are not very many partners left where we don't have that information available already. It could be a little bit more coming, but we're talking very small numbers here.

The other effect, namely that the cost for verification, et cetera, is irrespective of number or the revenue, obviously means that if revenue were to come down further, we would see higher or lower gross margin. But when revenue bounces back up, we'll see a higher gross margin again. So it's very much directly associated with the revenue as such. I hope that gives you enough information to do your modeling.

Now the final question that you had on iOS, we were about SEK 13 this year -- this quarter as opposed to SEK 14 last -- same period last year.

The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

The first question is around MAU growth. It continues to be healthy. So -- but you mentioned that you're taking a more disciplined approach to the low ARPU geographies. So how should we think about the trade-off between the user growth and monetization going forward? Do we think that the growth rate can be sustained at this level? And a further follow-up to that one is like any impact at all you're seeing from CNAP, which you said that there's going to be a new version in March or something?

Right. We are taking a more disciplined approach in various markets, including the low ARPU markets. We don't expect it to have a material impact on our user growth as such because a lot of these markets were seeded well with our user acquisition. And once they -- it reaches a critical mass, the organic growth actually takes over. We're also focusing a lot on product improvements and product tweaks in each of these regions, which make it more suited for each of that market, and it feels more native to that market, and that too facilitates growth a lot. We've launched Truecaller Lite, which also serves exactly this purpose of creating a more addressable -- larger TAM for us essentially.

The second part of your question was the impact on CNAP, the impact of CNAP that we are seeing. The rollout was expected in -- by the 31st of March as the authorities announced. That date was postponed to first week of March -- sorry, first week of April, if I recall correctly. But since, I would say, Q4 last year, what we are observing is a similar rollout all the way through, and it hasn't dramatically changed yet. We possibly have some impact of CNAP in India right now with quite an extensive rollout already happened, but it has not rolled out fully. So we still -- we are waiting and watching when it rolls out and how it rolls out and what is the impact on us. We've, of course, beefed up our product adequately over time, and we do believe that we provide a lot more value than CNAP and it should not have an impact on us, but we do need to wait for the full rollout for me to be able to give a definitive answer to this.

Sure. And when you say full rollout, do you mean more in terms of the product itself or in terms of the users that are being targeted by the CNAP program?

It's the latter. It's the set of audience which are targeted by CNAP because CNAP is not 100% consistently available right now in India on even my phone, for example.

Okay. Understood. And you -- last quarter, you mentioned in Q4 results, you mentioned that the Truecaller for Business might have some impact from this. Was there any impact at all? Or is it more driven by what you already described?

It's what we described. We said in Q4 that we do expect an impact on Truecaller for Business, the Verified Business part of it. And we said that we do expect to see lower growth rates as compared to what we've seen earlier. This is primarily on the fact that new bookings in Q4 did slow down, and that results in lower growth in ARR in Q1. In Q1, we saw some recovery on new bookings, but it's not at the same levels that we have experienced in the past. So that is entirely the business CNAP impact. And we continue to believe that business CNAP is a small part of our offering, and it doesn't solve the problem that enterprises have to communicate with their audience. And the Truecaller for Business platform solves a lot more problems, and we are still a standout platform. So we are continuing heads down on product development, continuing to build differentiation against business CNAP. And I believe we'll come out on top of this.

Very clear. And I just have one more question on the ad side of things. In terms of the weakness, is there any quantification on how much of it was driven by RMG, how much by the Google algo change and how much by macro kind of weakness? And then also, should we expect some kind of stabilization here from Q2? I know you mentioned it's going to be soft, but is there -- just wondering if there's any further downside risk there?

If you had a chance to see the presentation, there is a waterfall on the ads business that quantifies thus exactly what you were asking for in the first -- in your question.

Okay.

And I guess the second part was, do we expect any further downturn in Q2 on the ads business? Like we said, we're not expecting to bounce back in Q2. But will we have further downturn? We don't have signals of that as yet, but we need to wait and watch with all the factors taking place in the world today.

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

Thanks, everyone, for joining the webcast. I appreciate that you bear with us in this transformation period that we are going through. We are very confident that we'll make Truecaller thriving business once again. See you next quarter.

Hello, everyone, and welcome to our Q4 report webcast. I'm Rishit Jhunjhunwala, the CEO of Truecaller. And with me, I have Odd Bolin, our CFO. Today, I'll talk about how we performed in the quarter in a few important areas. Then I'll hand over to Odd to talk about the financial performance. And after that, I'll talk about our next phase of growth, and then we'll open up for Q&A.

So let's get started with the highlights of the quarter. The average MAU in Q4 was 454 million, which is a growth of 14% year-on-year. Growth has been steady all through the year, and we have increased our DAU/MAU ratio during the year, reaching 86% by the end of 2025.

Net sales decreased with 14% year-on-year in SEK. In constant currency, it was a decrease of 1%. EBITDA decreased by 49%, and we reported a margin of 23%. Excluding items of a one-off nature, our EBITDA margin was 30%. As you are aware, our headline numbers during the year have been significantly negatively affected by the strengthening SEK, which is something Odd will cover more in detail in his presentation.

Other notable highlights in this quarter were the sustained growth rate of recurring revenues. Excluding one-off items, we grew our recurring revenues with 46%, and the annualized run rate of our recurring revenues is now around SEK 750 million. Premium revenues showed the strongest growth as we continue to grow both on iOS and Android. And this quarter, we reached an all-time high when it comes to subscriber intake on Android, and we're growing steady in all regions as more users understand the strength of our Premium offering.

Our other recurring revenue stream, Truecaller for Business, grew strongly in constant currency and all 3 product areas, Verified Business, Business Messaging and the risk products we have contributed. I would especially like to highlight the strong growth we're experiencing in TfB outside of India. For ads, we have not been able to solve the algorithm issue with our largest demand partner. We continue to work on the problem, but we do not expect the revenues from this partner to rebound, and we instead focus more on our efforts on delivering our revamped strategy, which will decrease the dependency on any single programmatic partner in advertising.

When it comes to our core product offering, Q4 was an intense period with the launch of Family Protection, a vastly improved core data product, more contextual data points and the launch of an intelligent voicemail function in India as well as the updated Assistant solution that can warn users about potential fraud attempts in real time.

Moving on to user growth. In terms of user growth, we continue to grow steadily. In India, there has been much talk about the imminent rollout of CNAP. CNAP is partially being rolled out and so far, the impact on our user growth is limited. As we have said in the past, we expect that CNAP might have some impact on user growth, but that remains to be seen as CNAP reaches a full rollout. Our focus continues to be on delivering a superior product. And as you are aware, the consumer can choose to have CNAP and Truecaller in parallel where we provide a lot more information and a lot more context and various other solutions for the consumer.

We have, over the last couple of years, focused more on global growth, and we now see really good growth rates in many large markets with good unit economics and high propensity to buy premium services as well. This is visible in our geographic distribution of revenues where revenues from Middle East, Africa and the rest of the world show strong growth.

Now let's have a look at some of the important product updates in this quarter as well. What may visually look like a small update is actually the biggest addition to caller ID that we've done in many years. Two updates here. Firstly, we added contextual signals for calls, for instance, first-time caller. We add this value in real time using AI by processing calling patterns on the device, and this provides a very important piece of context to incoming calls.

What we also did was we added really strong signals that we get from the community alongside the name, showing new relevant information about a caller that our users have contributed with. So if John Smith calls you, we can now also say that this was, for instance, a plumber, which gives a distinct signal to the generic name. Compared to CNAP and other such telco or OEM solutions, which only show a name, we think this is the gold standard of caller ID and leverages Truecaller's largest moat, its community.

Another big release in Q4 was Family Protection. This is an important step we've taken in providing an elevated protection for your loved ones. Members of the family can be added into a group where status, protection level and insights are shared. For instance, the group admin is able to see information such as battery level as well as remotely setting the max protection level and even share block lists.

The key feature here is that we can send live alerts when there's a bad call that an elder is on, and we then give the ability for the family CTO to remotely hang up that call. Of course, we're just getting started in this space. We've had a very encouraging release in a few markets. We will -- and I'm sure we'll grow this product into a very important part of Truecaller, and we can protect the entire family for our users.

With that, I'll let Odd walk you through on the financial performance.

Thank you, Rishit. Okay. So let me, as usual, walk you through the financials. This quarter has been characterized by 3 major factors, namely continuing very growth for our recurring revenues, some substantial ads headwinds and then currency effects. Like before, to make it easier to understand the underlying development for our business, we will give you the net sales and EBITDA and in constant currencies this quarter.

The constant currency figures are our best estimates based on the information available to us. We don't have full information about how partners like Google are managing exchange effects, which limits the precision we can achieve.

In Swedish crowns, our net sales decreased by 14% this quarter. But looking at it in constant currencies, the decrease was 1%. EBITDA decreased by 49% in Swedish crowns and 36% in constant currencies. The EBITDA margin was 22.8% in Swedish crowns, but slightly higher 24.8% in constant currencies. We're obviously not happy with these figures. I'll give you the causes for these mediocre results, while Rishit then will talk about how we intend to move forward to position stronger growth and profitability.

Now our ads revenues saw a 31% decline in Swedish crowns, 22% in constant currencies. This is obviously something we are fundamentally unhappy about. And like Rishit has described, we are taking a number of actions to mitigate this, both short and long term.

However, let me just reiterate the main causes for the weak ads revenue. Our largest ad demand partner in mid-August, August 13, to be specific, made a change to their ads algorithm, meaning that our click-through rates, we initially believed this was an issue that could be resolved quite quickly, but we have now learned otherwise. We have worked diligently to mitigate this change in a number of ways, but we have now reached a point where we have concluded that we are better off spending that energy on developing the rest of our ads business.

While we will continue to work on the problem, it strengthens us in our belief that we must continue diversifying our demand partner network and decrease dependency on a few large players that tend to set and change the rules as suits them.

The ban on Real Money Gaming in India reduced auction pressure on demand in the overall ads market and thereby reducing both fill and prices. And this then came on top of the general uncertainty we have seen since the present tariff controversies that very much involves India.

Now like I've already mentioned, we are on a path to become less dependent on external factors outside of our control. Rishit will give you a more in-depth description of what we do in this respect.

Our recurring revenues continue to grow well, 46% in constant currencies. I believe we have some -- here we go. Here we go. Thank you. The recurring revenues grew 46% in constant currencies, both Truecaller for Business and Premium subscriptions contributed. The annualized revenue run rate was approximately SEK 750 million during the fourth quarter. When excluding one-offs, recurring revenues now make up 45% of our overall revenues, and the share has been growing constantly for the last few years. We continue to have this as a core focus area to create a more resilient revenue distribution going forward.

Looking at subscription revenue specifically, it grew by a very good 53% in constant currencies, 37% in Swedish crowns. We reached 3.7 million users on average with the conversion rate increasing from 0.61% to 0.71% -- 0.75%. Although this figure still is small, we continue to believe very strongly in the growth potential in this business and aim to grow the conversion rate substantially over time based on ever more important functionality for our users. Monthly revenue per user also continues to grow with more iOS users being a contributing factor. So for subscriptions, all underlying metrics are pointing in the right direction at this time. We already have a strong product market fit, which is obvious from the growth rates on both iOS and Android.

Geographical revenue distribution is healthy with all regions growing well. We see good growth rates in markets with high potential, both short and long term, such as Nigeria, South Africa, LATAM, Brazil, Europe and the U.S. We also have a number of markets where our conversion rates already are up between 5% and 7%, 8%, such as the U.S., Chile, the U.K. and Indonesia. This motivates us to work ever harder in increasing conversion in markets where it still is low or very low. It is obvious to us that our product is such that the potential for further monetization is large. iOS revenue growth continued to be good, and iOS now makes up 48% of our Premium revenues.

Over to Truecaller for Business. TfB also grew at a good rate during the fourth quarter. The growth rate in Q4 was a healthy 48% year-over-year in constant currencies, although in Swedish crowns, it came out at 22%. Truecaller for Business gets all revenues in INR and USD, which has been hard hit by the strengthening of the Swedish crown. The growth in TfB revenues came from good growth numbers for all the revenue streams. Verified Business is growing rapidly outside of India. This quarter, the growth rate outside of India is 75%.

We also launched Truecaller for Business in Europe in October. We are in the process of creating a full customer experience platform, where we manage a larger share of our customers' user interactions. 75% of our larger customers have now added Call Reason to the services they buy from us, and both Call Me Back and Video Caller is gaining -- Video Caller ID is gaining traction. Customers using these add-on services almost doubled year-over-year.

However, competition in India is growing in this business. Simpler but cheaper operator-based solutions such as Business CNAP and 1600 numbers have been introduced. We see customers wanting to benchmark those services against our offerings. We are confident that our superior functionality will withstand those attacks, but we acknowledge that the growth rate for our Indian Verified Business calls will be substantially lower this year as alternative solutions are being tried out by many enterprises. Outside of India, we see no such effects at this time and continue to grow at a very healthy pace, although from rather low levels.

Our Number Intelligence product offering continues to scale up well, so far primarily in India, but we are having discussions on international expansion.

Business Messaging is an area where we are in the process of broadening our footprint by signing up more partners. We have had an exclusive agreement for a few years, but we have now decided to move on. Canceling the exclusivity arrangement will have some initial impact on our traffic volumes, but we see this as a necessary step in order to expand our market potential.

Moving over to gross profit. Our gross profit declined by 20% year-over-year, while the gross margin decreased to 71.2%. The primary reason for this pretty large decrease in gross margin is that we couldn't compensate for the decrease in revenue by adjusting server and verification costs during the quarter. So they had a larger impact on gross margin that they have had previously.

Moving to the cost side. Apart from incentive costs, employee expenses were stable. Other external expenses, including user acquisition preloads, marketing, et cetera, decreased somewhat versus the previous quarter as an effect of the cost reduction program we put in place, which we, in a certain sense, started already during the fourth quarter by decreasing investments in user acquisition and preloads.

Year-to-date tax rate was 35 -- I'm sorry, the quarterly tax rate was 35.6%, substantially higher than previously. The reason is once again the issue with our largest programmatic partner. Revenue from that partner is being recognized in Sweden. And when it dropped by -- from mid-August, the profit level in our Swedish entity dropped too. That tilted the profit balance sharply towards India and consequently, the Indian tax rate dominated the group tax rate mix. Note that we haven't -- this hasn't caused us to pay a lot more tax than we would have done otherwise, but the tax rate changes dramatically.

Incentive costs, the IFRS part of our incentive costs increased by SEK 30 million in the fourth quarter. The reason is that it is fulfilled performance criteria that resulted in a higher provision for our 2022 incentive program. This effect covers entire [indiscernible] of the 2022 program, and it is, in that sense, a one-off cost. The total incentive costs are expected to come down from Q3 in 2026 when the 2022 program has exercised.

It is important to remember that although incentive costs have a substantial impact on our bottom line, they give limited material insight into our operational performance. Part of the costs are accounting figures that reflects the potential dilution that options and RSUs eventually may have. Part are accrued social security fees that only will impact cash flow when and if these instruments are in the money at exercise. Our operational performance and our operational leverage is best understood by also looking at our profit, excluding these costs.

EBITDA, including the incentive costs decreased by -- to SEK 103 million from SEK 201 million. In constant currencies, the decrease was 36%. EBITDA margin was 22.8% and without the items of one-off character, the margin was 30%. EBITDA, excluding incentive costs, decreased to SEK 160 million from SEK 231 million in constant currencies, the decrease was 20%. The EBITDA margin, excluding incentive costs, came in at 35.4%.

Cash flow. Cash flow conversion continues to be good with no financial costs and the working capital that develops in a manageable way. As our direct ad sales and Truecaller for Business grows, more of our revenue comes from end customers and partners other than Google, Apple and Meta. This has increased our DSO compared to the situation 2, 3 years ago since payment terms on most of our markets generally are longer than what we have with Google, et cetera. However, we are in a good control of our accounts receivables, and they are not growing any faster than revenue from these customers and partners.

We still have no financial debt and approximately SEK 1 billion in cash and short-term investments. Our revolving credit facility of SEK 500 million is not yet utilized, but available for interesting M&A opportunities. We continue to actively evaluate such opportunities, either when we get inbounds coming our way or due to the fact that we have -- that we see areas where we could further strengthen our product and services portfolio and reduce time to market under right fits. This year, the Board has decided to propose to the AGM a dividend in line with our dividend policy, 25% of profit after tax, approximately SEK 0.28 per share.

Now it's time for a little bit of an outlook. The revenue, like I have said, from our largest programmatic partner that was hit by the algorithmic change that they made in August is not likely to rebound. I mentioned that already earlier, but I want to reiterate that we don't see that as a likely outcome. We're still working on this issue, but we have seen no meaningful change since we -- since it happened in August. What we do instead is we focus very strongly on building our wider ads business, and Rishit will take you through that -- those initiatives very soon.

Truecaller for Business revenue growth rate is expected to be lower in 2026. The discontinued partner exclusivity for Business Messaging that we've had is lowering revenues short term. We are we are building relationships with many other players than the one we have been using so far. And we believe that the total market potential becomes much larger that way. But as an effect of canceling the exclusivity, we will see initial impact on our revenues from Business Messaging, while we are building the new revenue sources with new partners.

Increasing competition in India from considerably less comprehensive, but also cheaper solutions is having an impact on our Verified Business, our Verified Business calls operations. We see that there are enterprises and also customers of ours that want to benchmark what we do and what we can deliver with these cheaper or free solutions. We are confident that our solutions will prove to be superior, but we also acknowledge the fact that there will be a phase now when some enterprises will do this sort of benchmarking, and that will impact our growth rate.

We are continuously building stronger functionality to ensure long-term product superiority. And we do see very strong growth outside of India, although from low levels. For [ Premium for Business ], we see a continuing growth trend. We don't see anything right now that should impact that one. We both grow both on Android and iOS in many countries, and we're seeing higher and higher conversion numbers in multiple markets, some of them already being very high. So we consider a lot of potential here.

With that being said, I'll give you the word back to Rishit.

Thanks, Odd. I want to talk about the next phase of growth for the company. We have a really strong foundation with almost 0.5 billion users globally. We add around 1 million more users per week. We are growing very well in several different regions. We are well profitable. We are well capitalized. And therefore, there is a need now to enter into the next phase of growth of Truecaller, a phase that capitalizes on this global reach that we have and capitalize on the problems that we already solve for our users.

I've been in my role for a year now, and I now believe that I have the clarity and conviction on how we will get the exponential growth that we strive for in Truecaller. I'll unpack that a bit for you in the following slides.

So I'll talk about 3 different areas and what is the focus area in each of them on product, on user growth and on revenues. So firstly, on product, while we've added a lot of value to our large user base over several years, I believe we've only scratched the surface even now. There are 3 needs that we are building the product for now.

The first one is that the phone number has become the central point of everyone's identity and communicating using this phone number is becoming increasingly important in everyone's lives. We're all seeing that. I'm sure a lot of you are seeing that as well. However, the phone number hasn't evolved with the times. There is a need for powerful tools to supercharge mobile phone communication. For instance, in the past, we've added Assistant, which answers the calls on your behalf, and AI-powered voicemail that we launched in India in Q4. We also have an existing road map of capabilities, which supercharges your phone number.

Now as this happens, the second focus area emerges. Scams and fraud continue to rise at a global scale at unprecedented rates. Surfaces of attack are growing, and Truecaller is perfectly well positioned to continue building on this and solving the problem at scale. For instance, Family Protection that we launched in Q4 to protect elders in your family and also SMS scams, which is something we're actively working on right now. We're going to work really hard on solving the problem of scams and fraud that are growing across the world.

The third one is AI. AI is creating a new set of challenges for us as well as opportunities around communication. AI voice deepfakes, for example, which our AI voice scanner aims to protect users against, but also solutions like AI voicemail and AI-powered digital Assistant, which leverage AI to improve your communication. So it's both a challenge as well as an opportunity. This expansion of our core product will continue with more focus and urgency because we're seeing the opportunity grow every day for us. [Technical Difficulty]

Then moving on to user growth. We are a household name in India. As we well know, in various other countries that we are a household name as well. But there are many large and lucrative markets that we're very excited about. Brazil, Mexico, Colombia, United Arab Emirates are a good example of this. We've been focusing on new market growth for a while now by seeding and facilitating growth, which has given us some results. Now we have the clarity that the next phase of growth will come from our product.

We will be focusing on creating product variants that suit countries better, obsess about finer details and make a significant difference in people's lives like we do in India. For example, in India, we have special functionality for blocking unwanted calls. And in Colombia, too, now we have the same. This focus of creating strong product market fit is what will eventually give us the real growth we want from markets outside of India.

Now coming to revenues. Recurring revenues has been a focus area for a while now, and we've seen solid growth, as Odd described, in this stream of a higher quality of revenue. At the same time, we've seen cracks in our ads business because of our reliance on programmatic revenue and a single large ads partner. It is now evident that our next phase will be driven by recurring revenues, reducing the relative contribution from advertising eventually.

On Truecaller for Business, we've scaled up globally. We've diversified our product into several areas of value to enterprises becoming an entire CX platform. Like Odd mentioned earlier, we are seeing some competition from telco-powered business CNAP, coupled with the 1600 reserved number series in India. We are confident that our platform has competitive advantages. We're very focused on building our platform to go deeper into the enterprise, build tools for them to grow faster and make them more efficient. We're also focused on growing globally because we've seen great traction in several markets and businesses can see a lot of value in our Truecaller for Business platform.

On Business Messaging, we had an exclusive partnership, which had hit a ceiling. We had to open up the platform to other partners to unlock the full potential and already other partners have been signed. Additionally, we continue to build capabilities to further differentiate our Business Messaging offering from other mediums. Overall, this is an important phase to go through to really capture the true scale that Truecaller for Business can achieve.

Moving on to the consumer subscription business, we've seen strong acceptance of our Premium offering. We've also seen that globally, the propensity to pay for mobile services is growing. And therefore, we believe that focusing on Premium is the right strategy. We're going to constantly build more product around the areas that we've spoke about and grow the Premium offering over the course of 2026 as well.

On the advertising business, our focus is now clearly on revamping it. The issue with our programmatic partners since August that we've had that Odd spoke about as well, hasn't been resolved, although we continue to work on it. It is now time to operate in the mode that it won't fully get resolved. It might or might not and instead focus heavily on creating the Truecaller ad exchange.

Now what does this Truecaller ad exchange really mean? It means, firstly, to have an inventory auction that has no dependency on any single partner. This is very different from where we are today. Then we expand and we create sophistication in our direct sales offering. This means having products that are suited for direct sales that cannot be bought programmatically. That means restructuring the teams to be more in tune with the markets. That means signing up resellers across the globe where they have specialization in certain important advertiser categories.

All of this, combined with our first-party data, which is something that only Truecaller holds. It is powered by phone numbers that are verified on Truecaller and using our AI platform adVantage to match the right audience to the right brand. Once all of this comes together and creates an exchange, we can then further look at opening up this exchange to other publishers as well. This is the direction that we're heading in on ads. We will talk more about this entire strategy that I'm laying out for growth -- for the next phase of growth in an Investor Day that we plan to hold in Q2 this year.

To reiterate and kind of summarize, we have the clarity now on how we are going to get to the next phase of growth. 2026 is going to be a formative year for us where we're going to build on our foundation to create more value for our users, our customers and our shareholders as well.

With that, thank you very much. We will open up for Q&A.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

I think first off, if you can discuss the long-term investments that you mentioned in the report, if this will be an increase in overall cost or more of a reallocation, where will you target those? Maybe it's for what you just said, Rishit, on the long-term strategy, but some more clarity on that would be helpful.

Absolutely. So you're right, it is about reallocation of costs. It might mean a marginal increase in costs as well, but nothing dramatic.

The areas of the investment are going to be primarily in 3 different areas: Product development, where we believe we can add many more capabilities for our users and create a larger moat for Truecaller and create this entire ecosystem of Truecaller that users have already been loving for the last 16 years.

The second area of investment will be growth once again on product towards markets that are beyond India. We believe there is a lot to be unlocked in those markets. We're already seeing great organic traction. We have seeded them with marketing activities and user acquisition activities. The next phase of growth will come from product variants suited to these markets.

The third area of investment is going to be in our revenues, which is going to be primarily driven by the Truecaller for Business product and its expansion, the Business Messaging product and its expansion. The Premium business has been doing really well. We believe that's going to be a continued area of focus. And then on the ads business, where we're heading towards building an entire ad exchange.

So those are going to be the primary areas of investment for us, but it's more reallocation and clarity and focus that we need to focus on these investments for the long term to create the kind of scale of Truecaller that we desire to have.

Okay. Great. And then double-clicking a bit on Truecaller for Business. I mean what is the reason? You gave us quite a few arguments, but is it so that you are seeing a slowdown already in the first quarter, which is why you call it out? And what kind of level here are you suggesting? Because the wording considerable slowdown can mean a lot of things coming from roughly 40% growth now in the fourth quarter, even 25% growth is a considerable slowdown, but it's a good figure. Is it 20%, 10%, 15%, 5%, what figures are you looking at?

Yes. I would love -- we would have loved to give you a sharper number on that on what we mean by considerable slowdown. But the honest truth is that it's very early in the year. It's hard to say how much of a slowdown that we will see in Truecaller for Business' growth.

We do believe we will still have growth in Truecaller for Business, but I don't think we'll have the same blistering pace of growth we have because we have seen that Business Messaging, we used to have a partner that we don't -- that we currently don't have an exclusive arrangement with anymore. We have to see how the other partners shape up.

And we have seen that the 1600 series and the CNAP offering, while it's much cheaper, it's also very limited, but enterprises do want to -- some enterprises do definitely want to attempt to try that other offering and see the impact over a quarter or 2 because that's the time it takes to judge the impact and then decide.

There are also second order impacts of the business CNAP that we're seeing. For example, when contracts come up for renewal, there is generally pricing pressure now because there is a cheaper offering, even though it's limited, there is a cheaper offering available. So we have second order impacts also on TfB. And it's, therefore, important -- it's quite impossible to quantify this as this is the amount of growth slowdown we will see.

The next question comes from John Karidis from Deutsche Bank.

Firstly, can I ask what is the revenue mix for TfB between verified calls, Business Messaging and risk products? And also, what's the mix geographically, India, non-India?

The mix in TfB, most of the revenue is the core Verified Business offering as opposed to the risk products. The risk products are growing really well on a smaller scale, though. We are optimistic about it. But at the moment, it is a smaller share of TfB revenues.

The second question was the revenue mix between India and rest of the world. It is about close to 90% of Truecaller for Business revenues are India. So it's a major chunk of it, 10% from rest of the world where, once again, we're seeing high growth rates.

And also to clarify a little bit, John, the Business Messaging makes up roughly 1/4 of the Truecaller for Business revenue, while Verified Business Calls makes up most of the remaining 75% roughly.

Okay. Secondly, when you talk about reallocating costs in answer to the first question, where are you taking these costs away from, please?

That's a great question, John. So focus comes from defocusing from something else. And there were various aspects that we were doing in product development that were focused more on short-term gains. There were optimizations that we used to do to grow engagement by a few percent or smaller activities like that.

We've come to the realization that we should be focusing on the forest, not on the trees, even if it takes us time, let's focus on the bigger product developments that we need to do because we believe that is what will give us the gain. So it is defocusing from a lot of the other aspects of product and focusing specifically on building superchargers for communication and solving the fraud problem.

So it's really focusing within the organization more than anything else, where we take people from certain development projects that we feel have limited long-term value and put them into other projects where we have -- see much more long-term value. Simple as that.

Okay. And then I guess, related to this and your cost efficiency measures, in a sense, I'm interested in 2 things, sort of examples of this, but also some assurance that essentially by cutting your costs now, whether it's preloading or whatever, you're not jeopardizing your growth -- your user growth prospects from year 3, 4 onwards. Can you talk about that as well, please? And then I have one tiny question...

We would never jeopardize long-term growth at the cost of a few percentage of profit. We would never do that. The cost cuts were not about that. And what user acquisition, marketing, preloads do is they facilitate and seed markets. And now that we have done that seeding, we will still continue to have spends on user acquisition and marketing and preloads. We're not -- they haven't fallen to 0. We've just cut those spends. But we believe product will actually get us the next phase of growth that we need.

Okay. And then I guess, lastly, I totally understand that it's very difficult to keep sort of trying to work with your largest programmatic partner if you don't know what the rules of engagement are. And I sort of tip my hat to you for trying for as long as you have to battle this. I just want some sort of comfort or assurance, if you can give it that you've done as best as you can, but there aren't sort of weeks or months where you seem to be taking a big step backwards. So it's all to do with essentially the proportion of your inventory that gets flagged. Is it now at a level, but it doesn't sort of change massively from week to week or from period to period?

Good question. So just to clarify, it's not that we are not going to work on solving the problem. We still engage with the partner in whatever limited manner we can. We still run experiments, but that is not a focus area for us anymore. Me and the management team are not tracking that track as closely as we're tracking the revamped ad strategy and the Truecaller ad exchange track. That is our focus area now. But it's not like we are forgetting about the problem completely. We're just letting it chip away at it.

Your second question was about the levels and do they vary week-on-week. They do vary week-on-week. Some weeks dramatically, some weeks, not so dramatically. But the levels are a fraction of -- a very small fraction of what they used to be in August, but that hasn't moved the needle as such for us, right? It's not improved our revenue as such. So we've conducted experiments. We've learned from this. We've applied our learnings, and we'll continue to chip away. But we have to operate -- we literally have to operate under the assumption that this will not get fixed. This is the new normal is how we should be operating. That's what I'm trying to convey in this message.

The next question comes from Thomas Nilsson from Nordea.

Two questions, if I may. First, can you tell us what percentage of growth that comes from direct -- of ad revenues that comes from direct sales versus programmatic? And what is the targeted mix of direct sales versus programmatic going forward?

And second, how do you think about recruiting in 2026? Will you slow the pace of hiring to protect margins and profitability at Truecaller?

Got it. So the first part of your question is direct sales versus programmatic. Currently, the ratio, I think about between 10% and 15% of our revenues on ads are from direct. We definitely aspire to change this mix quite dramatically. We believe that we have taken very important steps over several years now to set up the foundation for transforming this mix. And we believe in 2026, we should be seeing fruit of that. To set a target to it is hard. I mean, honestly, we would love all our revenue on advertising to come from direct sales, which I believe is a tough ask, but we definitely want the share of direct sales to keep growing over time.

Sorry, was there a second part of the question?

Yes. My second question was how do you think about recruiting in 2026 and will slow hiring to protect margins and profitability at Truecaller?

Yes. Philosophically, Truecaller has been a slow recruiter. We don't believe that throwing people at the problem necessarily fixes the problem or create speed on it. We believe in efficiency, and we don't necessarily see that we'll be a very large recruiter in 2026 either.

But if your question is specifically about margins and profitability, what Rishit has been pointing out here is that we are investing for the future. And although we think we can do much of that within the existing cost base, we don't exclude the option of making, for example, critical recruitments in order to achieve the targets, the longer-term targets that we have.

There is no question about it that profitability is a core value for us. But when we look at the situation over the coming year, we will not shy away from important investments that we believe will create more shareholder value in the longer term in order to protect the short term to a larger extent.

The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

For the first time, you actually mentioned about the CNAP solutions impacting your business, starting with DFB. What's kind of changed in the CNAP solutions? Have they become incrementally better? Because at the Q3 results, I didn't -- maybe I missed it, but didn't really hear much about it. And also, are you seeing any impact from the CNAP businesses on your user growth or the Premium business as well? Because just like how the businesses are playing out these new solutions, these -- even the users may try it out. So any impact in 2026 so far because I don't see any impact in 2025 from your numbers? That's the first question. Start there, if that's okay.

So business CNAP as well as the 1600 Reserve series, that is what is -- we've started seeing enterprises try out that solution. Business CNAP was launched on Jio, which, as you know, is the country's -- is India's largest operator, launched their business CNAP service only in October of 2025. And the 1600 number series adoption has also gradually taken up only in Q4 of 2025. That's when we have started seeing this solution coming to life in the form of 1600 plus business CNAP.

The second part of your question is the impact on consumer. Like I've reiterated, we haven't seen any impact on our -- on the consumer side of our business. We believe we have a superior product, and we've greatly expanded and rejigged caller ID in Q4, like we spoke about in the product update. However, I've said for several quarters before, we remain watchful because CNAP is still a partial rollout in India. It has not been fully rolled out. It's significant rollout. It's not insignificant at all. We can see that anecdotally on our phones as well, but also what the regulators are saying.

The launch is imminent. The full launch is supposed to roll out all the way up to the end of March, essentially, it's not too far away. So we definitely remain watchful about the impact, if any, on the consumer side of the business. I've said again before that we could possibly see an impact in the short term, but we believe consumers will understand the difference between just showing a name and using Truecaller and they would come back to us.

Okay. The second question I have is around the ad exchange that you referred to. So where are we with the ad exchange? Has it already been fully built? Do you need to make further tech investments to get there? And also separately, I know you mentioned you're just rearranging your costs, et cetera. So do you need to spend more on a direct sales force to stabilize your ad revenues? And could you quantify any of the investments that you're making either with the tech or with the direct sales force?

Definitely, tech is the investment that we're making. To answer your question specifically, the ad exchange, a lot of the parts of the ad exchange were existing in the form of the Truecaller ad server. This was doing an orchestration amongst all our demand partners, right? However, some partners were getting a higher priority than others for various reasons. And we need to conduct a real auction on our inventory. And that is definitely the tech investment that we're significantly focused on this year.

I can also say that -- we have been working on the Truecaller ad server for several years now. This was always known to us that we need to get to a point when we can build some sort of an ad exchange out. But the last few quarters have accelerated this belief. And now we are single-mindedly focused on building out this ad exchange. Some parts of it are already built. Some very key components have been built in January and rolled out as well, actually. And you'll see more of this in Q1, Q2 as we go forward.

To your question about the direct sales team itself, we will eventually reach a point when we will need to expand our own direct sales team and invest in that area. However, at the moment, our -- and for the last few years, our focus has been on creating our own -- our proprietary direct sales offering, bolstering that with adVantage, our AI platform and using resellers and agencies as an extended sales team essentially.

There will probably come a time when we've grown direct sales on the back of resellers that we might want to expand our own direct sales team, but it would be too early right now to expand. Our problem is not necessarily how many people are going out in the market right now.

Okay. Okay. The last one, a quick one, a clarification really. How much of your Q4 revenue -- ad revenues actually has come from Google now? Is that expected to -- I know you said it's a fraction of what it was in August. Is that expected to kind of go to 0? And who are the newer partners that you've added that you mentioned earlier in the call?

Well, I'm sorry if we expressed this so you misunderstood. It's not that our largest partner revenue is a fraction now of what it was in August. It's still 70% of the business that we had in August from this partner is still there. We lost approximately 1/3 of the traffic from this partner in August. And altogether, it still makes up more than 1/3 of our total revenue.

Now -- in terms of other partners, we have signed up a number of other programmatic ads partners, both in India and outside of India. I don't know if we had been public with any of the names.

No, we haven't. But I mean, it's not hard to look at which are those programmatic partners that operate in most geographies in the market. But we have a huge slew of them actually.

Okay. And sorry, you said 1/3 of the group revenues are still coming from this partner. Do you expect that to go down further? Or is it kind of like -- I know you said you don't expect the issue to be resolved. So is it going to be at a similar sort of level or continue to decline? Sorry, I don't know if you clarified this earlier, but...

Good question also. We definitely don't expect it to go to 0. There is no signal of that at all. Firstly, let me clarify, if we have given any signal like that, it's wrong. We don't have signals at the moment that it will go sharply lower from here.

We -- like I said, we continue to chip away at the problem. It's a track that we do have, but it's not a focused track right now. It's not where we believe we will get our growth from. But we definitely don't expect it to go to 0. We expect it to -- I would say, if I can go out and limb, I would expect it to stay flat.

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

Thanks, everyone, for joining, as always. I just want to reiterate that 2026, we're looking at it as a transformative year for us. We're going to build on this really strong foundation that we have, and I'm really excited to take the company through this journey. I have a lot of conviction and a lot of confidence now that we can truly change the trajectory of where this company is heading. Thank you so much, and see you next time.

Welcome to Truecaller's Press Conference December 2025. [Operator Instructions] Now I will hand the conference over to the CEO, Rishit Jhunjhunwala; and CFO, Odd Bolin. Please go ahead.

Hi, everyone. Welcome to this extra webcast given this morning's update to the market on our ad revenue development. I'm Rishit Jhunjhunwala, the CEO and with me, as always, I have Odd Bolin, our CFO.

So today, I'll quickly summarize [this evening]. We have a few bullets to cover, and then we'll get into Q&A. So in summary, since the middle of August, our ad revenues have been impacted by two events. Firstly, the algorithm changed completely out of the blue by our largest demand partner for all publishers like us. This flagged our inventory in their systems, and this reduced revenue. Secondly, the weakening of the ads market in India with the real money gaming sector being banned completely, and a few other external factors.

Now the incidence of the issue from this algorithm change that we've spoken about, is now substantially lower and it is now only a fraction of what it was in the middle of August, but it hasn't been completely removed. So our efforts are still on. We're definitely not out of the woods yet, but I will take a moment to describe this a little bit more. When an ad publishers' inventory is flagged in the demand partner's system, it eventually causes less ads to flow through the system to us. This hasn't been the case earlier. And because the algorithm changed suddenly, our inventory was flagged, even though we made no changes.

So our primary focus has been to remove the flag entirely, so that the systems are treating our inventory as normal. Numerous experiments have been done during this time. I would say, the last 3, 4 months in war mode, we've been doing experiments on our app inventory some of which failed and some of which succeeded in bringing down the incidents of this flagging. And now we're in a far more stable situation, but we definitely have work to do in the near term.

Therefore, this morning, we shared that our expectations for the quarter is that ad revenue will be in the range of SEK 210 million to SEK 230 million which is a decrease of about 30% in constant currencies compared to last year. And like I mentioned earlier, we are seeing a more stable revenue development around ads but we think that during this time, ad revenues will be muted in the short term. Our focus, of course, continues to be on solving this problem fully and building upwards from there, while continuing to aggressively deliver on our long-term strategy for ads that sets us up for a sustained ad revenue growth.

Now I want to talk a little bit more about the long-term strategy and reiterate some of the things that we had said in Q3. But our strategy includes firstly, launching more proprietary and premium ad units. We've done that already earlier this year with Masthead and Play, and we continue to do more such inventory. These are sold directly by us. We've already seen some good results, and we will continue down this track.

Secondly, using AI on our proprietary first-party data to deliver superior KPIs for the advertiser, where again, we've seen good results already in ROI towards advertisers whenever we have used our AI platform advantage for campaigns that we have run. Thirdly, monetizing our large non-India user base optimally by having salespeople, for example, in the EMEA region using partnership agreements for various markets to be able to increase our reach on direct sales. All of this, we believe, will make us resilient to headwinds which we might face from any single demand partner or even any single region.

We're confident that this will set us up for sustained long-term growth and have a flourishing ads business. Q4 also additionally will have a cost of about -- it will have an additional cost of about SEK 30 million on our incentive plan costs. Lastly, it's important to reiterate that the concerns we have in the short term are around ads revenues but we're happy that our efforts on user growth and our efforts on recurring revenues are bearing fruit. We continue to see positive trends from our recurring revenues and our user growth is steady as well.

So while we're struggling with ads at the moment, the rest of our business is doing well, and we do have a solid plan, and we are executing on that plan to make our ads business grow as well. Our revenue mix, as you know, we've been transforming our revenue mix. Recurring revenue now is more like 40% to 50% of our revenues. And that's something we've been consciously focused on.

So that was a summary of the update and with that, we can open up for questions now.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

I think first, let's just start with the LTIP. On what grounds has there been a revaluation here in the this LTIP program?

Well, the -- when you set up an LTIP program like the ones we have, you value them based on a probability of them actually exercising either because you look at the share price, if there is an option or a warrant program or because you look at performance criteria in the RSU program or an option program. And we have valued them based on an 80% probability of reaching those performance criteria for 2025. Now we can face the fact that we are reaching the performance criteria, and that means that the valuation has to be based on 100% probability rather than 80% probability.

Now when we do this, we have to recalculate every quarter -- previous quarter that we have -- where we have calculated -- used the 80% probability. So we get an accumulated effect in Q4 this year that comes from every quarter since we started the program back in 2022. That's why you have this elevated number in this quarter specifically. You may remember that we had a similar effect from another program at the beginning of this year when we saw that the likelihood of reaching the performance criteria in that program had increased. So we did a recalculation, but that was a smaller effect.

Okay. Okay. And then if the ads impact is dealt with for the most extent, like you said in the introduction, the organic growth in the next few quarters, Q1, Q2, Q3 and so forth in ads should be better than minus 30% on a constant currency basis, correct, are you suggesting?

I think it's important to remember that, first of all, we have 70% of the business that we have from this largest ad partner is still intact and has not been impacted by this algorithmic change in any way. That business continued to do stable -- in a stable manner. And I think there is some growth potential there, too. The impact that we had from the algorithm change, 30% of the total revenue from this partner will be possible to recover to a certain extent. First of all, we need to get to the point where the confirmed click issue is resolved fully. The flags are taken out. Then we can refocus on optimizing revenue from this traffic again.

The changes that we are doing and have done in order to insure -- in order to get to the point where this confirm click flag is being lifted, includes making changes to the ad structure, to the ad positioning, et cetera. And if we -- once we get to the point where the flag is being lifted, there will be work needed in order to get back to an equally optimized structure that we had before this issue occurred during the summer. So it is not -- you cannot expect the revenue to bounce back to where it used to be before this issue happened at the beginning or mid-August just because the confirm click flag is being is being resolved. It will take time in order to build back to that point.

I think I just want to add to that, Predrag, it's a very important point that Odd is raising. It's important to note that the flag that we have, we've been working hard to reduce it and the incidents has come down definitely. We are, firstly, working hard to remove that flag. Once we do remove that flag, then the system will actually learn on its own. And we -- in theory, we should get back more advertisers coming our way because the system believes we are not flagged anymore. Once we've reached that normal state, there are a host of optimizations that we'll have to continuously experiment, and we will bring back programmatic revenues to the same levels. All this is, of course, while we're working hard on direct sales and making sure we grow on that front as well.

Sure. I think that makes sense. But I believe in the intro, you said that you have made certain shifts where the impact now is substantially lower than it was at the peak. I'm thinking in terms of all else equal, now considering you've preannounced the Q4 numbers and heading into the next quarter, are you seeing an unchanged growth trend? Or should it have improved based on the work that you've done, not jump back to the level you had pre the change, but at least improve from minus 30% growth? Is that your assessment?

We still have the confirm click flag. We haven't resolved the problem yet. We still -- we have a lot less of it than we had. We used to have a lot -- a very considerable decrease, but we're not out of the woods yet like Rishit said. And that means we cannot start optimizing our revenue again until we have this fully resolved. Whether that is going to be happening in a week or whether it's going to be happening in a quarter, we don't know. The partner that we're working with is not able or willing to give us the information that would be needed in order to make this a quicker process.

We have to experiment. Each experiment takes a few days in order for us to get the full result. We have to combine different actions in order to find the solution that actually works. So I think at this point, the best assumption that can be made regarding this particular revenue stream that came from -- that was impacted by the confirm click is -- will continue to be where it is right now until we have fixed the problem. And once we have done that, we will be clear about that.

Okay. And finally, what does robust growth mean in terms of Premium and Business?

It means that there is no change in the trends that you've seen historically for each of these businesses or for them -- for the user growth that we have had.

The next question comes from John Karidis from Deutsche Bank.

Can I ask regarding the algo issue? So this happened in the middle of August. If you adjust for the fact that it happened in the middle of August, was September worse than August in terms of the effect of this and was October worse than September?

So September had the full effect of the algorithm change because in August, we had only half the effect, right? So in that sense, September was worse.

But I think, John, if you think about it on a day-to-day basis, the effect was very quick when it happened on August 13. And it has stayed at pretty much the same level ever seen. So it hasn't improved very much, and it hasn't gotten any worse.

Okay. That's useful. And then excuse me, in my brain, I try -- I'm sort of having difficulty reconciling the fact that you're still flagged which I think is a sort of binary thing, either you are or you're not. And then the fact that you said that you've substantially improved the situation. So if you're still flagged, how can you say that you've substantially improved the situation?

That's a good question. So there are -- while we are flagged in the system, for the -- due to the algorithm change, we were flagged in the system. The system does tell us how much of our total inventory is currently flagged. So on August 13, when it came about, almost our entire inventory, almost our entire inventory was flagged. When we started doing the experiments. Some of it succeeded, some of which failed. We've managed to bring down the extent of these issues shown on the system to a much, much smaller number.

So we have learned over all the experiments that we've done, what could have been causing the issue and we have brought it down to far less than it used to be. But we still have some quantity left, and we still have to run some experiments in order to get the flag completely removed. So it's binary, but there is quantity that is displayed to us, and that's the quantity we measure -- we look at very closely.

Okay. And I will try and ask you, even though you haven't disclosed it. So if 100% of your inventory was affected on the 13th of August, what's the percentage today, please? Is it 10% or 30% or roughly what is it? I'm trying to understand what substantially means.

So firstly, it wasn't 100% of our inventory, it was almost 100%. And the reason why we haven't disclosed a percent of what we've reached now is because this number actually evolves every week as we run experiments and we make tweaks and we speak to the demand partner that it actually changes every week. So I can give you an example. There have been weeks when it was less than 1% of the magnitude that we've seen. There have been weeks when it was more like 20% of the magnitude we've seen. And they have -- most of the last few weeks, we've seen it to be a smaller number than that. So that's what we mean by making progress that we've reduced it and we've learned a lot over time.

Okay. I'm sorry, so the implication is that sometimes it goes down, but sometimes it goes up again. It must be driving you crazy, not sort of knowing what the sort of the rules of the game are. I mean how can your partners stay there with a sort of straight face and not help? I mean, what's the story behind this? It just feels completely irrational.

Story is pretty simple. It's a monopoly that we're dealing with, right? For all practical purposes, it is a monopoly and they use their monopoly position to do these sort of things. You can always speculate on whether they have active drivers that makes them do this or which is a passive effect of the system. Doesn't really matter. From our point of view, the clear conclusion is that we need this partner who is always going to be an important player in the market we're in, is going to be the grease in the system but we have to be at a point where they're not the system. And we have come far away from that point now, but we still have definitely a way to go.

And what happened last summer just reinforces us in our belief that we need to do other things such that we can use this partner and the traffic going through this partner as filling up the holes that maybe we may have from other traffic partners and direct sales, et cetera. We're not there yet, but we are going in that direction, and we are very well aware of the fact that, that needs to be done. What happened last summer was, of course, very unfortunate, it was very -- nothing we could plan for. But it strengthened us in our general belief that this is the way we're going to go because we are aware of the fact that this particular partner treats their partners like they treat us sometimes.

[Operator Instructions] 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 very much once again for attending this webcast. We -- like we've said in the isolated issue that we're having around the ad revenues is something we're dealing with and we have a good plan in the long term to eliminate problems like this arising again. It will take us some time, but we'll definitely get there. While the rest of our business continues to be on a steady track, that's how we are working at the moment. So thank you very much for joining, and thanks for listening in.

Welcome to Truecaller's Q3 Presentation for 2025. [Operator Instructions]

Now I will hand the conference over to CEO, Rishit Jhunjhunwala; and CFO, Odd Bolin. Please go ahead.

Hello, everyone, and welcome to our Q3 report webcast. I'm Rishit, the CEO of Truecaller. And with me, I have Odd Bolin, our CFO.

Today, I'll talk about how we performed in the quarter in a few important areas, and then I'll hand over to Odd to talk about the financial performance, and then we'll open up for QA (sic) [ Q&A ], as always.

So let's get started with the highlights of the quarter. In Q3, while our recurring revenue streams continue to show strong growth, our ads business came in soft, being unfortunately affected by a few external factors. Our recurring revenue grew by 32% year-on-year, 48% in constant currencies, which is a number I'm very happy with. This has been an area where we've invested heavily over the years, and we continue to believe that our broader strategy of growing recurring revenue is falling into place nicely, and it sets us up for long term by having higher quality and predictable revenues that are less affected by external factors.

Truecaller for Business continued growing in established markets and new markets. FX headwinds did have a material impact here, but we're clearly continuing to add more value to enterprises, and we will expand further in this area. Premium subscriptions are showing strong growth too. Multiple markets are showing strong performance. And in fact, we see some markets where we have a conversion of 5% to 8% versus our global average of 0.7%.

Growth came from both Android and iOS platforms with iOS specifically being up 20% quarter-on-quarter, again, something I'm very happy about. In our advertising business, the quarter started out really well, but we had a few setbacks in the second half of the quarter. Our largest demand partner rolled out an unannounced algorithmic change related to click tracking on their platform, which affected several publishers, including us. Additionally, the ban on Real Money Gaming in India affected overall demand as well. And this was all in addition to the uncertainty created by the tariff situation and the GST tax reforms in India. In the near term, we foresee headwinds given the factors mentioned above, but we're working harder than ever before to make sure that our ads business is resilient to such external factors.

Now I want to talk a bit about our ads business in general and our strategy for it. Our ads business is fundamentally a sound business and will continue to be an important revenue source for us. But what got us this far will not take us to the next phase of growth. While programmatic has been the core of our advertising revenue historically, our strategy now is to create a more sophistication in our own direct offerings, reducing the dependence on programmatic advertising. But what do I mean when I say more sophisticated? Firstly, creating proprietary ad products powered entirely through our own AdTech platform as opposed to generic ads, which can be bought programmatically from ad networks at low CPMs.

And to demonstrate how this is impactful, in Q3, more than half of our direct sales revenue came from such premium inventory formats such as Roadblocks, Truecaller Masthead and Truecaller Play, underscoring the need and the growth opportunity for such ad products. Secondly, our AdTech stack will leverage our first-party data, which is a very rare asset that we hold. We have signals that very few platforms in the world have because we are a global communication surface, and we're confident that we can deliver the best ROI to brands globally using our intelligence. And again, as an example of this, we've seen 50% higher click-through rates when our AI recommendation engine, adVantage, was used in numerous proof-of-concept campaigns so far, and we are actively working on making adVantage an important pillar of our AdTech stack. This, therefore, means less dependence on large programmatic partners and more emphasis on direct sales. And we have made progress on this too.

Our 2 largest programmatic partners used to be 71% of our total revenues in 2022, and now it's approximately 45% in Q3 of '25. So we've diversified that a lot, but we still have more to do. Another important part of our ad strategy is our geographical spread. Truecaller is a household name in many markets in addition to India, and those markets show great potential, both on programmatic as well as direct sales. We've increased our regional efforts in these markets and have already started showing encouraging results for us. So all this, we believe, will create a more controllable, predictable and a high-quality ads business in the future and one that is immune to external events that we spoke about earlier. We've been working hard to make all this happen, and I'm confident we'll get to a better stage very soon.

Truecaller continued to show strong growth across the world in the third quarter. We recently announced that we hit 450 million users on Android globally. In India, we grew strongly in this quarter. And outside of India, we're very happy that we have multiple markets growing at over 20% year-on-year now. These are large markets that hold significant promise for the future for us. Many of them are in LatAm, Southeast Asia and Middle East and Africa regions. And not only are we growing, but the engagement on the product continues to stay healthy with 86% of our users using the product daily. So we essentially add about 1 million users each week onto our platform, mostly organic, which very few companies in the world can achieve. We process 9 billion calls through our platform, which demonstrates how useful we continue to be in people's lives. And we're going ahead -- and going ahead, we're going to continue to focus on user growth to lay foundations for long-term sustained growth.

So that was a quick recap from my side on how we fared in Q3 and what are some of the priority areas and how we're thinking about it. I'll now hand over to Odd for the financial performance.

Thank you, Rishit. So let me, as usual, walk you through the financials for the quarter. This quarter has been characterized by 3 major factors or trends, namely a continuing very good growth for our recurring revenues, some substantial ad headwinds and then currency effects. Like before, to make it easy to understand the underlying development for our business, we will give you the net sales and EBITDA development in both Swedish crowns and in constant currencies this quarter. Constant currency figures are our best estimates based on the information available to us.

We don't have full information about how partners like Google are managing exchange effects, which limits the precision we can achieve. That is -- should be kept in mind. Now in Swedish crowns, our net sales grew by a meager 2% by looking -- but looking at it in constant currencies, growth was 14%, a decent figure considering market conditions for ads. EBITDA decreased by 2% in Swedish crowns, but grew by 14% in constant currencies. The EBITDA margin was 34.7% in Swedish crowns, but slightly higher 36.6% in constant currencies. What I really want to emphasize here is the continuing strong growth of our recurring revenues. While the currency effect was substantial in particular for Truecaller for Business, recurring revenues grew by 32% year-over-year or 48% in constant currencies.

Considering the size of this business now, this is a growth rate that we are very, very happy with. Now our ads revenues saw a 10% decline in Swedish crowns, 1% decline in constant currencies. This is obviously something that we are fundamentally unhappy about. And like Rishit has described, we are taking a number of actions to mitigate this, both short and long term. However, let me just reiterate the main causes for the weak ads revenue. Our largest ad demand partner in mid-August, August 13, to be specific, made a change to their ads algorithm, meaning that our click-through rates via that demand partner tanked. We are in the process of mitigating this change in a number of ways, but the final outcome of this is still uncertain. It, however, further strengthens us in our belief that we should continue diversifying our demand partner network and decrease dependency on a few large players that tend to set and change the rules as suits them.

Secondly, the ban on Real Money Gaming in India reduced action pressure -- auction pressure on demand in the overall ads market, thereby reducing both fill and prices. This then came on top of the general uncertainty that we have seen since the present tariff controversies that were initiated that very much involves India. Now like I already mentioned, we are on a path to become less dependent on external factors outside of our control. We work on geographical diversification and expand, for example, in the Middle East and Africa and as well as in LatAm. In Middle East and Africa, our sales grew by 12% in constant currencies during the quarter. We also worked diligently to increase our direct sales. We onboarded 27% more new customers in the quarter than we have done in previous quarters, including logos like Apple, Honda and Swiggy.

We also expand our footprint in industry verticals that have -- where we have had a weak presence previously, such as travel, retail and auto. Importantly, we started monetizing both Masthead and Truecaller Play and did our first 6 successful campaigns based on these products. Last but certainly not least, we did full-scale testing of our adVantage AI ads targeting platform tool, where we could see a 50% increase in click-through rates based on our better user targeting.

Now over to our premium subscriptions. Subscription revenue grew by a very good 55% in constant currencies, 43% in Swedish crowns. I apologize for there being a slight error in the report where we say that we reached 87% -- SEK 87 million during the quarter. That was unfortunately the second quarter number. The real -- the actual number for the third quarter is SEK 96 million, meaning that we grew, like I said, 43% in Swedish crowns versus the same quarter last year. Now we have reached 3.3 million users on average with the conversion rate increasing from 0.59% to 0.69%. Although this figure still is small, we continue to believe very strongly in the growth potential in this business and aim to grow the conversion rate substantially over time based on ever more important functionality for our users.

Monthly revenue per user also continues to grow with more iOS users being a contributing factor. So for subscriptions, all underlying metrics are pointing in the right direction this time. We already have a strong product market fit, which is obvious from our figure -- from our growth rates on both iOS and Android. The geographical revenue distribution is healthy with all regions growing well. We see good growth rates in markets with high potential, both short and long term, such as Nigeria, Colombia, Brazil and the U.S. We also have a number of markets where conversion rates already are up to between 5% and 8%, such as the U.S., Chile, U.K. and Indonesia. This motivates us to work even ever harder in order to increase conversion in markets where it still is very low. It is obvious to us that our product is such that the potential for further monetization continue to be very large.

iOS revenue growth continued to be good, 65% year-over-year during the quarter. Now Truecaller for Business also continues to grow at a good rate. The growth rate in Q3 was a healthy 39% year-over-year in constant currencies, although in SEK, it came out at 21%. Truecaller for Business gets all its revenues in INR and USD, which has been hard hit by the strengthening of the Swedish crown. Revenue churn continues to be low, while all revenue streams within Truecaller for Business continue to do well. The growth in Truecaller for Business revenue comes from good growth numbers for all revenue streams. Verified Business is growing in India, but also rapidly outside of India. This quarter, the growth rate outside of India was 75%. We also launched Truecaller for Business in Europe in October. We are in the process of creating a full customer experience platform where we manage a larger share of our customers' user interaction. 75% of our larger customers have now added Call Reason to the services they buy from us, and both Call-Me-Back and Video Caller ID is gaining traction.

Customers using these add-on services almost doubled year-over-year. Our Number Intelligence product offering continues to scale up well so far, primarily in India, but we're also having initial discussions on international expansion. Business Messaging is about to enter its next phase of growth through international expansion. Our gross profit grew by 1% year-over-year, while the gross margin decreased somewhat to 75.7%. This was an effect of a larger share of our ads traffic coming through partners where we recognize revenue gross since we have full information on the fees paid by the partners and a lower share from partners where you have to recognize the revenue net due to lack of information on the fees get by those partners. We also saw slightly higher server and verification costs during the quarter.

Moving to the cost side. Let's start with the incentive costs that came down materially during the third quarter, although what I like to call the dilution cost increased as an effect of the new incentive program that was set in place by the AGM in May. The decrease in the share price meant that the social security bookings for our incentive programs were negative in Q3. It is important to remember that although incentive costs have a substantial impact on our bottom line, they are -- they give limited material insight into our operational performance. Part of the cost are accounting figures that reflects the potential dilution that options and RSU eventually may have, part of accrued social security fees that only will impact cash flow when and if these instruments are in the money exercise.

Our operational performance and our operational leverage is best understood by also looking at our profit, excluding these costs, and we, therefore, present those -- both those numbers. Apart from incentive costs, employee expenses decreased somewhat due to more vacation taken during the Swedish holiday season. Vacation earned during the year is mostly used in Q3, which decreases our cost base.

Other external expenses, including user acquisition, preloads, marketing, et cetera, were rather stable versus previous quarters. The year-to-date tax rate was 27.9%, in line with our continuing message that as more revenue originates and is recognized in India instead of Sweden, the group's blended tax rate increases. We're managing our tax exposure within the limits set by transfer pricing regulations in order to ensure that we fulfill the expectations from both the Indian and the Swedish tax authorities. EBITDA, including the incentive costs decreased 3% year-over-year. However, in constant currencies, we saw a 14% increase, once again showing how the strengthening of the Swedish crown has been punishing us this year.

The margin was somewhat lower than last year, a direct effect of the ads headwinds during the second half of the quarter. EBITDA, excluding incentive costs, decreased by 1% year-over-year. However, in constant currencies, we again saw a 14% increase. The EBITDA margin, excluding incentive costs came in at still healthy at 39.8%. The margin was somewhat lower than last year, a direct effect of the ads headwinds during the second half of the quarter. Our cash flow conversion continues to be good with no financial costs and the working capital that develops in a manageable way. As our direct sales and Truecaller for Business grows, more of our revenues comes from end customers and partners other than Google, Apple and Meta. This has increased our DSO compared to the situation 2, 3 years ago since payment terms in most of our markets generally are longer than what we have with Google, et cetera.

However, we are in good control of our accounts receivables, and they are not growing any faster than revenue from those customers and those partners. Last quarter, we saw a brief uptick in working capital due to the fact that incentive profits paid to our Swedish employees in June are associated with the pretaxes and social security fees that we pay in July and that are booked as a liability -- that was booked as a liability in working capital by June 30. This obviously had a corresponding impact on cash flow this quarter when we paid those taxes. We still have no financial debt and approximately SEK 1 billion in cash and short-term investments. Our revolving credit facility of SEK 500 million is not utilized, but still available for interesting M&A opportunities. We continue to actively evaluate such opportunities either when we get inbounds coming our way or due to the fact that we are -- that we see areas where we could further strengthen our product and services portfolio and reduce time to market for important initiatives if we can find the right fits.

Now reflecting on our financial targets. It is quite clear that by now -- quite clear by now that we are unlikely to fully achieve the financial target for 2025 as it was defined back in -- at our IPO in 2021, namely an EBITDA margin, including both FX effects, incentive costs, et cetera, of 35%. 2025 has obviously had its challenges for us, primarily in terms of ads volatility and currency headwinds. Disregarding those currency headwinds, we are actually likely to not be that far away from achieving our target of an EBITDA margin of 35% in '25. But including those effects, that seems to be like an unlikely outcome the way things look today. Back at the time of the IPO, we set a revenue growth target for '21 to '24, followed by a profitability target for '25 onwards. This implied that we by now should have reached a point where profitability was a more important metric for us than continued growth. That is not the case.

We continue to see a huge growth potential ahead of us, both for our existing products and services and for potential new products going forward. We have one of the largest digital user bases in the world, and we intend to continue growing our revenues based on that at a strong pace. We continue to invest in our ads business because we see that we are not yet close to reaching the full potential of that revenue stream. However, digital advertising is and will continue to be a volatile business. We, therefore, put even more emphasis on our recurring revenue streams, premium subscriptions and Truecaller for Business. Considering the huge potential that we see based on our user base, we will continue to invest in both products and marketing that may have an impact on our profitability from time to time.

The operating leverage we have in our business model is such that we are confident that an EBITDA margin of 35% is more than achievable over time. But some years, we may not be -- we may be below that level. Some years, we will be above. The bottom line is that it is still far too early to predict when we could reach a point where we will put more emphasis on profitability than growth. From a shareholder perspective, we believe that we should work very diligently to continue fulfilling that potential that we see in the market ahead of us. Now considering where we are today with more than 450 million Android users and a rapidly growing iOS premium user base, we see that the organic growth rate of our Android user base is quite satisfying as is. This is not least in new geographies where we see a huge medium- to long-term potential for all our revenue streams. Like Rishit pointed out, we see 20% year-over-year growth in many of those regions.

But where we at present monetize less effectively than we do in some of our largest markets. We, therefore, consider investing less in accelerating that user growth through user acquisition for the time being. Instead, we will increase our investments in new products and functionalities that benefit our existing user base and customer bases in order to create even more value and increase our monetization potential.

With that, I will hand over to Rishit again.

Thanks, Odd. And now to wrap things up, a summary of the third quarter. We grew strongly, adding 15 million users and had a very healthy engagement ratio, DAU to MAU ratio at 86%. We did have external challenges in our ads business, but we're executing well on our plan for long-term growth. We believe in the ads business and are looking forward to unlock its true potential. If it wasn't for the headwinds we faced in the second half of the quarter, we would have done really well on the ad side as well as well as other parts of our business like we did. Truecaller for Business and premium subscriptions are scaling up well on all fronts, setting us up for even more recurring revenues. Our EBITDA margin was healthy at almost 35%. And lastly, we have an exciting product road map ahead and several products that are almost ready for being made public, further bolstering our growth and our engagement.

As usual, I'd like to say a huge thank you to the phenomenal Truecaller team, our investors, people that support us, people that use Truecaller in their daily lives. Thank you very much. We're very excited in what lies ahead, and we will continue executing on our vision. Right, now we can take some questions.

[Operator Instructions] The next question comes from Ramil Koria from Danske Bank.

Yes. I have a couple. Let's do them perhaps one by one. If we start on the Google changes mid-October, given that it happened halfway through the quarter, could you provide us some sort of breakdowns or details as to how we should think about it moving forward as it gives full effect? And then considering that it happened halfway through the quarter, presumably the latter parts of the quarter saw less dependency of the 2 large platforms than the early parts of the quarter. So could you tell us how large share of sales went through the platforms towards the latter parts of the quarter?

No, we haven't given that sort of granularity in our information. What we have said is that during the quarter as a whole, 45% of our ads revenue came through our 2 largest demand partners, but we have not dwelled into details on first and second half of the quarter, et cetera.

Okay. Okay. And just a brief follow-up on that. I mean, given that the quality of the click-through improves, should you -- should one expect you to be able to recoup some of the volume loss on CPM?

I think that is a fair assumption that we will be able to recoup some. Whether that is the lion's share or a smaller part is still too early to say. We are doing -- taking a lot of actions to mitigate the -- what happened in mid-August. We believe that there will be some successes. We don't know for certain though when we're going to be able to start recouping that revenue, whether it's going to be in the near future or whether it's going to be slightly longer into the future. So at this point, I think it's prudent to say that hard work is being done in order to fix this particular issue, but it's too early to tell to what extent and when you will see material results from that.

Okay. Okay. And then I'm a [ tiny ] bit surprised about the fact that you're referencing the algo change more than -- well, you haven't spoken too much about the impact of tariffs on the general macro economy in India. I'm a bit surprised by that. But we've also seen recent tax cuts and positive implications on things like discretionary spend in India. I know it's very, very early days, but do you see any impact sort of in the last couple of days/week from the tax cuts?

Yes, that's a good question. We -- I think what you're talking about is the GST reforms that took place in India recently. The GST reforms actually created some uncertainty. I think there were budgets that needed to be reallocated during this time and companies were trying to figure out how exactly they're going to tackle this. So it did create a little more uncertainty. In the recent past, we haven't seen any material difference with this GST reforms, Ramil.

Okay. That's very clear, Rishit. And then just finally for me, I'd love to hear a little bit about your thinking and what the discussion is with the Board of Directors as to new financial targets, given that you set yours in connection with the IPO, things have changed, Truecaller has grown, pivoted, et cetera, et cetera. Should we expect any new financial targets anytime soon?

That's an ongoing discussion, of course, since when we set the financial targets back in -- ahead of the IPO, we did that based on the fact that in order to get listed, you need to have -- you must have short to medium-term and medium- to long-term financial targets, and we set targets that to the best of our understanding at that time made sense. But like I said, they -- the targets that we set implied that by now, we should have more focus on profitability and less on growth, which then itself implies that the growth potential would have, to some degree, been fulfilled already. We don't see that. We see that the growth potential that we have ahead of us is just as large as the one that we had in 2022. So we want to keep growing and we want to keep investing in growth.

Now we think that, like I said, that the existing financial target that we do have, EBITDA margin above 35% is very, very achievable. we have the operating leverage in the business that would take us above that if we were to focus primarily on profitability. But that giving -- but that being said, we still want to be able to continue to invest such that we will not necessarily meet that financial target every given time. Whether the Board wants to change -- make changes to that is obviously something they will have to decide on. I don't have any information on that topic apart from the fact that we have the target we have right now.

The next question comes from Predrag Savinovic from Carnegie.

First, a quick follow-up to some of the questions Ramil asked earlier. But in the second quarter, in Q2, how large share of ads revenues came from the 2 major ad platforms?

Let me say that was more than 45%. But we've had a continuing trend decreasing our dependence on the 2 largest ad platforms ever since 2022 when we were up at 71%. And that has been a rather stable development. So -- but then, of course, like Ramil implied, the fact that we had this algorithmic change made a difference during the second half and took the number down further than we would have seen if it hadn't been for this change. So without giving you any specific numbers since we haven't published any of those, I can say that it was higher than 45%, but not materially higher. The trend is very clear and has been very obvious for quite some time. And this thing that happened in August was just at the end of the day, another kink on that downhill road.

Okay. Fair enough. And what level of ad revenue per DAU is reasonable to expect for Q4 and Q1? What is most representative? Is it the number you show now for the third quarter or a blend of what you've seen so far this year?

That's a very good question. And as you know, we don't give any particular guidance. But I think considering the algorithmic change mid-August and considering that although we are doing -- we're taking a lot of actions in order to mitigate that, but we can't say for sure when we're going to get to a point where that partner of ours where we were in agreement that some of the revenue that we lost in mid-August will be worked. I think that the best guess for now is that things are where they were at the end of the second -- third quarter.

Okay. Okay. And then in terms of the mix that you foresee for 2026, you referenced the 70% to 45% now. Are we tracking towards 40% or 30% or 20% for next year and the next steps also in increasing the traffic on other ad partners as well as on the direct side?

I think it's important to remember here that the work we've been doing in order to diversify away from those 2 ad partners have been ongoing for quite some time. Our new ads manager that started beginning of this year has done a very good job so far, setting the foundation for much more direct sales and also sales through other -- many other ad partners than those 2 large ones.

Now setting the foundation doesn't mean that you see the volume increases right away. But I have high expectations for 2026 when it comes to both direct sales and sales through other ad partners. I think you will see this number continue shrinking. What happened in August gave us some extra boost in the sense that we accelerated even further our work on decreasing the dependency on that ad partner.

But also remember that ad partners like those are an important part of the ecosystem, and we will continue to have -- do work with them and do business with them, but they will no longer be like they were in 2021, '22, '23, the primary revenue source for us within ads. They will be more of the grease in the machinery that we will need to ensure that our entire ads business is working well even though most of the business eventually will come from direct sales and other ad partners.

Okay. Very good. And then finally, on premium, we see very, very healthy growth here. But can you also discuss on the churn on iOS and Android alike as into how important is it to continue maintaining net new subscriber growth all the time to keep this? Or is there not that important because you churn very little, et cetera? If you can discuss those topics, please?

Yes. The growth on premium has been significant. We're very happy with that, both on iOS and Android and also a good combination of India and global. This has happened definitely due to lower churn that we're seeing as well. We're also seeing that markets are getting more used to paying for services like Truecaller as they see the value grow, especially on iOS. And we're also seeing many new markets open up for us, and that is a very encouraging sign as well.

The next question comes from John Karidis from Deutsche Bank.

I'll go one at a time as well, if I may. I just want to try again on the algorithm change, please. How much revenue do you think you lost as a consequence of this? And what I don't understand is how -- is it something that you need to fix? Is this something that you need to live without? So this is a permanent change and you simply have to find something unrelated to mitigate it. And then how long would that take? So can I stop there for this topic, please?

I can start. We lost approximately 1/3 of the revenue from that demand partner at that time.

Sorry, what is that in absolute terms, Odd? We don't really know the absolute numbers.

I know, John, but I'm pretty sure that you can do that math without me.

Well, I'm asking because I can't. I don't know how much that particular partner contributed to the overall sales.

Well, like we said, the 2 largest partners contributed altogether 45% of our ads revenue and that -- the very largest ad partner makes up the lion's share of that.

Okay. And then in terms of -- do you fix this or you -- do you mitigate it?

Yes, I can talk about that. So it is a combination of both. The change in the algorithm is essentially about how the ad partner determines the quality of the click. The quality, of course, is an ambiguous term, and it is to us as well, it's ambiguous. And it's up to us to actually run experiments on various samples of user base and then reach a point when that ad partner says that our clicks are back to the quality that they want. Of course, this was an unannounced change. There was no notice given to us. We didn't have any chance to remedy this. We didn't have any grace period. It affected a set of publishers. It wasn't just us that was affected. So we went down the track and we started running experiments.

We are, of course, in war room mode right now. We have eventually reached a state when the ad partner is seeing light at the end of the tunnel and seeing that we are within the new threshold that they have set. And of course, there is a journey now to roll this out and then see what hiccups, if any, we encounter along the way. So it's a gradual change that we're going to do. But this is a very recent event that we've started seeing better data from the advertising partner. I hope that gave you some answer to your question that it's a combination of mitigation as well as fix. It's not really a issue or a bug that we need to fix. It's a new threshold, a new goalpost that we have to gun for going forward essentially.

Okay. An easy question now before the, I guess, more difficult one. The easy question is direct sales, what proportion of the ad revenue in the third quarter came from direct sales, please?

I believe it was similar to earlier, close to 10%.

10%. Okay. And then I think in the statement, you talk about the ad revenue per DAU on average for the quarter being down 15%, partly because of the issue that we just discussed, but also because Africa has lower GDP for the time being. Odd, you mentioned about ad revenue at the end of the quarter rather than on average and we should go off that going forward. I have no idea what that was. Was it -- can you give us an idea of what that was?

What -- precisely what was?

Well, you said that the ad revenue per DAU was down 15% on average for the quarter, right? And you said that the quarter was strong to begin with, and it was impacted at the end. So at the end of the period, I presume that ad revenue per DAU was down significantly more than 15%. I mean, at the end of the day, all I'm trying to do is when this call ends, this metric was down 7% in the first quarter, 5% in the second quarter and 15% in the third quarter. And I have no idea how to extrapolate from these 3 numbers to forecast ad revenue per DAU in Q4 and next year?

I certainly respect your difficulties here because it's a mix of different factors, right? One is the one that you touched on, namely the fact that the user growth that we see now are to a considerable extent in markets where we see a very strong long-term potential, but where you see a lower earnings potential per user as of today, such as African markets, parts of the Indian market where we're expanding, et cetera. That is contributing. We get more users, which is long term, very, very good for us, while it's good for us short term too. But it does have an impact on our average revenue per user at this time, negative impact, [ so to speak ]. But what differed in Q3 versus Q1 and Q2 is obviously, first of all, the algorithm change.

And secondly, the -- primarily the RMG ban that decreased ads pressure somewhat overall in the market, which took down pricing, generally speaking. So it's not an easy thing to digest, so to speak. There are a number of different factors that has happened. The underlying trend from Q1 and Q2 is still there, namely that we continue to add those 1 million users per week on an average. Right now, they decrease our profitability per user or revenue per user KPI, which was then in the second quarter -- or the third quarter amplified by primarily this algorithmic change.

Like I said, the change happened mid third quarter. We are in the process of mitigating that to the best of our knowledge and our best of our ability. It is still not clear to what extent that mitigation will be successful, and it's still not clear when we will see the effects of that mitigation. So I hope that gives you enough food for thought for your work.

It does.

The next question comes from Thomas Nilsson from Nordea.

Given the record 310,000 subscriber additions this quarter, how sustainable do you think this pace of net adds is?

We definitely have ambitions to sustain. It remains to be seen how we do in the next few quarters, but we are definitely bullish about how premium is doing for us. We are continuing to expand in other geographies. We are adding more capabilities into the premium tier as well. And yes, I mean, it definitely remains our ambition to sustain this growth.

Okay. And the second question, if I may. How close are you to achieving feature parity with Android? And what would you say are the next key monetization steps for iOS in 2026?

So I actually don't think we'll ever achieve feature parity with Android simply because the operating systems are very different from each other. Having said that, I don't think it's the right strategy to have feature parity as well. The Apple ecosystem and its users are very, very different from the Android ecosystem. And we leverage the capabilities of each operating system that they provide in isolation of each other. So I don't think we'll ever have feature parity as such.

The -- both the products have a very different model of premium. The iOS, as you know, when we launched it earlier this year, is a premium first strategy. The Android has a very powerful free tier with advanced capabilities being behind the paywall. And I think we're going to continue on that strategy. Clearly, it's proven well for us. And we'll, of course, add on both platforms, we will continue to make each of them more powerful, possibly in different ways and some capabilities will be the same on both. But it's not a question of parity as such between both.

The next question comes from Daniel Thorsson from ABG Sundal Collier.

Yes. First, a question on premium here. What activities are your key drivers today to convert users into premium users? And also a follow up on that, is the reason mainly that users wanting an ad-free experience? Or do you see any other feature accelerating as a reason recently?

It's a combination of many capabilities. The key one that has driven growth recently has been the ability to automatically block spam calls. It's a capability we introduced a few quarters ago where not only will we identify that this is a spam caller, but you have the capability to block these spam callers automatically. That has been a key driver. In addition to that, the ad-free experience is a driver as well. There's assistant capabilities on the iOS in certain markets that is a big driver. So it's a combination of a few different things in the different markets that create this growth.

Yes. I see. That makes sense. And then a second one on the cost side here. Employees up with 14 people in Q3 on the back of 17 net adds in Q2, which is a bit more than previous quarters. You talked about in the beginning your path for more growth here. You will continue to invest. But where do you invest this product-wise, but also geographically? And should we expect it to continue at roughly this pace ahead in the coming quarters?

Yes, I can take that, Odd, and then you chime in. That's a good question. How are we thinking about people growth? We primarily grow in both our strong geographies, which is Sweden as well as India. The functions that we grow on are areas where we specifically see growth opportunities.

Revenue growth opportunities.

Exactly. So one is in terms of revenues where we see significant growth opportunities. We also see product as a big area for growth. We've grown -- almost all our growth is organic even today, something we're really proud of, and it's our product that gets us this growth. So those are the 2 main areas. The revenue -- all the revenue areas, definitely, we're looking at growing constantly. And the geographies are going to be India as well as Stockholm both.

Yes. And should we expect it to continue at roughly this pace for the coming quarters?

I don't think that is necessarily the best assumption. We are very cautious when it comes to recruiting. We don't want to recruit unnecessarily. We don't want to become bloated. We haven't -- we have the same philosophy now that we've had for many years. We only recruit when we really see a need. We have this rule of thumb saying that we should have 1 employee for every 1 million users, but that would imply 52 new employees every year, and that's not necessarily where we're heading.

We recruit opportunistically and strategically, but always based on where we see a pressing need for more resources or more competence. So we -- the level that we have been at over the last few quarters is not unreasonable, but it doesn't necessarily mean that that's exactly where we're going to be going forward. It could be slightly higher temporarily, but it is also not unlikely that it will be somewhat lower going forward.

The next question comes from Erik Larsson from SEB.

I just have a follow-up on the most recent question here, specifically more though on direct advertising. It's clear you have ambitions here, but I just wanted to hear sort of how many people do you have working with direct ads? Where do you see this going within the couple of 1, 2 years, maybe just as a way to quantify this ambition?

It's definitely an area of investing that we're doing right now. We have invested significantly in people in the direct sales area already this year, and we will continue doing so ahead as well.

And thinking about where we aim to be. Like I said before, the foundation has been laid this year for a much more successful direct sales offering going forward. We did have a small team working mostly with direct sales also previously, but they did not have the resources necessary and they didn't have the -- not necessarily all the experience needed in order to be truly successful in this area. Now we have a much better, stronger leadership when it comes to direct sales with more experience. We keep investing, like Rishit said, but our ambition is to make direct sales a substantially more important part of our sales mix -- ad sales mix than it is today.

Whether that means that we're going to hit 50% over the next couple of years, that's quite possible. But we don't have any such external targets. We obviously have internal ways of looking at it. But now, right now, first and foremost, we want to start building on that foundation that we have by monetizing volume-wise the agreements that we already set up this year, which is with the important logos like Apple and Swiggy and Honda, for example.

Okay. Is it possible

[ This is one step at a time we take ].

Okay. Is it possible to ballpark like how big is the team today? Where is the starting point? I mean it sounds like it used to be a handful of people only.

No. I mean it was more than a handful even earlier, but we have significantly grown it now. So I can also describe that it's not just about throwing people at this problem. It's not that if you have more salespeople, you will get more revenues. It isn't about that. It's about, first, like Odd has mentioned, setting the foundation right for our existing sales team also to be able to perform well in the market. And that's what we have achieved.

And from here onwards, by adding more salespeople, different types of salespeople, whether it's category experts or measurements and analytics experts or even international sales experts, that is how we've been growing so far. And it's definitely an area that we'll continue to invest. I think like specific numbers, we'll stay away from, but I can tell you that we'll always look at it very strategically.

The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

I have a few. I'll go one by one, please. With regards to the direct ad sales, I think you mentioned 10% to 15%, I think you mentioned a similar sort of figure, 10% to 15% of the ad revenues comes from direct. I think you mentioned a similar sort of figure last quarter as well, if I'm not wrong. So are you not -- I mean, if you just calculate that, that basically means you've actually not grown on that direct sales. Is that right? Because given you've been focusing on this for a while, just wondering why you haven't grown if my calculation is indeed correct.

Well, like we said, this year has been about building the foundation. The direct sales team that we had prior to this year has kept doing what they did before, which isn't -- they performed well given the resources they had available. Now with our new sales manager with much more experience on direct sales, international global direct sales, he has been creating a foundation that is much more solid than anything we've had before. Most of the work this year has gone into that. As you can see in the report, we signed up a number of new logos for direct sales this quarter, including, like I said, Apple, Honda, and Swiggy.

Now that is part of building the foundation. The next step is to start monetizing those logos based on the agreements that we now have. That hasn't happened overnight. It's a process that takes a certain time. You need to get up to speed. You need to create the confidence among those logos that you sign up. We're in the middle of that process. But this year has been about building the foundation and also keep doing what we've been doing before, which is the reason why we are -- we haven't really started growing the sales yet, but we have now the tools in place to do that.

And now you could say that, well, the foundation is just a foundation. But what I say when I -- what I mean when I say foundation, it includes setting up the many new agreements, signing up many new customers. The next step is to actually monetize them, and we will.

Okay. Okay. And what's the reason given by your ad partner on the algorithm change? Could it also happen with other partners as well? And I had a follow-up question on the impact, but I think you kind of answered that already with the other people.

Yes. We have many ad partners in addition to the one that we're talking about right now. We've never had an issue with any of them. This is the only specific one that we had this change in algorithm that we've experienced so far. I mean, could it happen again? Yes, I guess it could happen again. I think we need to build a business that is more resilient to changes by third parties, and that's the track that we're on right now, and we're progressing really strongly on that track.

But in addition to that question, we had no advanced warning, but we do know that other demand partners have -- or other publishers like us have suffered from the same algorithmic change. So we are not the only ones that are suffering from this particular change that they did.

Yes. I understand that. But did they give you a reason? Like, I mean, they must tell you something, right?

No. No. No reason whatsoever.

Post the change. Post the change, you didn't get any reason?

No.

Okay. All right. With regards to the premium subscribers, you said that you aim to maintain a similar level of growth as you have so far. Do you need to continue to spend a similar level on marketing expenses going forward as well to do that? If not, how are you going to sustain that?

Well, most of our premium subscriber growth is converting premium users to premium users. And we obviously have a good communication channel open with all our premium users. Every day, every time they receive a call, every time they make a call, we have a communication opportunity with our users. And that is primarily how we convert premium users to premium users. It's not about going out in the market and do marketing, et cetera, and win new users for premium. That is, of course, something that happens in parallel. But we have -- the good thing about only having 0.7% of your premium users being premium users is that you have 99.3% of your user base, which, in our case, means 450 million users as potential premium users. So we have a lot of people that we are addressing in order to convince them that they should become premium users without spending much time on marketing, et cetera.

I think that's a very important point. A great question also that you brought up. Like Odd mentioned, we don't need to spend more and more on marketing to get more premium users. Our product is an extremely strong product. We have great product market fit already, not just in India, but in many other markets as well. We see conversion rates all the way up to 8% in numerous markets. And we don't feel the need to grow our marketing spend in order to grow our premium revenues.

The next question comes from Ramil Koria from Danske Bank.

Guys, just a quick follow-up. I mean that the magnitude of the revenue drop with the DSP that changed the algo [ makes ] the question of like how are their policies now compared to other DSPs? Do you see a risk that others will align their policies with the change made because the 1/3 drop from that specific platform seems quite hefty? Yes.

I mean also a good question. Thanks for that. So we don't know honestly. We don't know what the threshold was before the change. We don't know the threshold now. It's a bit of a black box because it is a DSP, like you pointed out. So we honestly don't know.

What we do know is the experience that we've had with a very large set of demand partners, and this is the only one where we've seen this problem arise of change in threshold overnight. So none of the others have ever told us anything like this. And I don't think it's -- I think each one's platform is specific to themselves. I don't think there is a one-size-fits-all threshold or algorithm that can be applied. So each one has their own. And I don't think that others necessarily will change anything because we've never had a problem with them.

And it's important to point out and emphasize what Rishit just said, we don't ever have a problem with them. We are definitely one of the most attractive advertising channels in all the markets where we have a substantial user base. And the fact that this particular partner is acting up the way they are, we believe that there are completely different reasons for that. That has no connection whatsoever to our attractiveness as an advertising partner as such.

We see that the demand for our services and our advertising channel is huge, not least in a market like India. We see this as a hiccup, an unfortunate hiccup, of course, we -- nothing we are happy about in any way, but it's an hiccup. We see that the work that is now being done on direct sales and also signing up new advertising partners is going super good. We see that the attractiveness of our channel is such that this hiccup is going to be nothing more than just a small hiccup if you look back at this sometime into the future.

But just to test my numbers with you Odd a little bit, and I appreciate that answer. But if you -- going into Q3, the 2 DSPs, the 2 main ones constituted say, 50% of total and then the larger one, which made the changes constitute, say, 2/3 of that, that implies like a 10% headwind on advertising revenues solely stemming from the policy change. Is that ballpark correct?

That is -- the reasoning is sound as such.

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

Thank you, everyone, for listening in. We look forward to seeing you at our next earnings call. Again, we're very excited with what's coming ahead. We believe we have a lot of room left for growth across the world. And the love that we get from our users to touch 450 million users already is something we're really proud of, and we'll continue to grow in the future as well. Thank you, everyone.

[Operator Instructions] Welcome to Truecaller Q2 Presentation for 2025. Now I will hand the conference over to the CEO, Rishit Jhunjhunwala; and CFO, Odd Bolin. Please go ahead.

Hi, everyone. Welcome to our Q2 report webcast. I'm Rishit Jhunjhunwala, the CEO of Truecaller and with me, I have Odd Bolin, our CFO. We'll start with the overall highlights of the quarter and then walk you through our financial performance. After that, we'll cover product highlights and then open up for questions.

So let's get started with the highlights of the quarter. We continue to show growth trends this quarter as well. Our user growth, revenues and profitability all remain healthy. Currency fluctuation did have an impact, which we'll talk about in detail. And therefore, we're going to talk both about constant currency as well as SEK converted numbers.

Right. So in terms of user growth, we did an average of 427 million monthly actives in the quarter, which represents a strong growth of 15% year-on-year. This continues to be the cornerstone of our business and highlights our dominance in this space. We also had an average of 367 million non-iOS daily actives which translates to a very healthy stickiness metric of 86%. In SEK, our net sales grew 9% to SEK 496 million and our EBITDA, excluding incentive cost grew 20% to SEK 212 million. This translates to an EBITDA margin, excluding incentive cost, of almost 43%, which is a great improvement from last year. If we include incentive costs, this margin was close to 35%.

Now if we then look at numbers in constant currencies, which is basically our estimation of how financials would look like if we had the same currency rates as we did in Q -- in Q2 2024, then our net sales for the quarter grew 21%, crossing SEK 0.5 billion. Our EBITDA, excluding incentive costs, grew to 38% -- grew 38% to SEK 245 million, which is an EBITDA margin of 44%. If we include incentive costs, our EBITDA is almost 37% in constant currency. So we continue to operate very profitably, which, as you know, has been a very conscious effort for many years now.

Now let's go into more detail on users as well as our financials. We grew an incredible 55 million users from the same period last year, which represents 15% growth in our non-iOS user base globally. We, therefore, now have an average of 427 million people, excluding iOS using Truecaller in Q2. Our daily actives also grew very well at 16% and we hit an average of 367 million people using Truecaller each day.

With that, I'll hand over to Odd for an update on our financial performance.

So let me walk you through the financials. As anticipated, the quarter was heavily impacted by the somewhat surprising for us that have been around for a while, strengthening in the Swedish Krona. Indirectly, we earn almost all our revenues in foreign currencies. So a stronger SEK has a substantial impact on us. Back to some of the details later on, but just in order to make it easier to understand the underlying development for our business, we will, as Rishit started out, give you the net sales and EBITDA development in both SEK and in constant currencies this quarter. Constant currencies, meaning the same exchange rates as we had during the second quarter last year.

The constant currency figures are our best estimates based on the information available to us. We don't have full information by our partners like Google or managing exchange effects, which limits the precision we can achieve. The most important exchange rate for us is, anyway, the INR versus the Swedish krone as India is our largest market. SEK has on average strengthen 12% versus INR since Q2 last year and with 8% compared to Q1 this year, which is a pretty major significant change for us.

At the end of the financial presentation, I will sum up all the effects we see to our numbers from the FX fluctuation, but for now, let's look at the top line and then profitability. In Q2, our net sales grew by 9% in Swedish Krona. However, in constant currencies, net sales grew by approximately 21%. And we continue to see a strong underlying development for our recurring revenues, driven by a continuing strong demand for both Truecaller for Business as well as a strong conversion to paying users. Our ads revenue saw a decline of 1% in Swedish Krona with a growth of approximately 11% in constant currencies. All regions showed good growth in constant currencies with the strongest development continuing to be in the Middle East and Africa. We increased our partner network with more global partners during the quarter, and we expect to continue increasing it further during the year.

The underlying ads market was quite stable compared to last year, although we did see some impact in terms of demand softness in relation to the geopolitical uncertainty with India, Pakistan conflict that we had some time ago, the Middle East situation and from the continuing global tariff discussions. We did, however, not see any major price changes in ads segment. For ads, an important part of our strategy is to increase our direct sales. And in Q2, we saw high relative growth, albeit from still pretty low levels. Apart from creating more stability and better visibility and increasing share of direct sales also results in a better gross margin for us as will be mentioned later.

Subscriptions continued to trend well. We grew revenues in SEK by 35% and by approximately 48% in constant currencies. The growth rate increased gradually during the quarter as we saw strong subscription intake. Once again, all regions contributed to the positive numbers, and we see a solid revenue trend in -- on both Android and iOS, with iOS being somewhat stronger than Android. Truecaller for Business grew by 34% in Swedish Krona and by approximately 53% in constant currencies. The revenue in Q2 was marginally lower than Q1 in Swedish Krona, but grew by approximately 7% in constant currencies. All 3 revenue contributors within Truecaller for Business, namely Verified Business, business messaging and our risk product contributed to the growth.

Now Verified Business is the most important part of our business revenues and we are now starting to see good growth in markets outside of India, especially Middle East and Africa, where we grew annual recurring revenues with more than 50% compared to last year. Ads still continue to be our largest revenue stream and is, as already mentioned, we grow in constant currencies, but saw a small decline in Swedish Krona compared to Q2 last year. Our ad revenues per DAU decreased somewhat while the average price per impression was stable compared to last year. During the quarter, we saw a gradual improvement in fill rate, which contributed to a steady revenue run rate from third-party partners towards the end of the quarter. And as already mentioned, Direct sales showed strong growth compared to last year with a growth of more than 50% from -- although from still quite low levels.

Our new management of the ads team is working diligently on both ensuring a good third-party business and in particular, increasing direct ads revenues where we work directly with the end customers. The competence and experience we have on board now is already substantially improving both our product and services portfolio and our market positioning versus large ad buyers. We expect to see considerable effects coming out of these efforts over the next year.

For subscriptions, all underlying metrics are pointing in the right direction, and it continues to be a good revenue driver for us. We grew the number of subscribers by 28% and the average revenue per subscriber by 10%. iOS subscriber growth accelerated during the quarter and the number of subscribers grew by 25% on iOS in Q2 alone by more than 50% compared to the same period last year. iOS reduction in India started us slightly slower than some other markets, but gradually during the quarter, we started to see an increased adoption of iOS subscriptions in India, too.

Truecaller for Business also continues to grow at a good rate. The growth rate in Q2 was 34% constant currencies, like I mentioned before, 53% year-over-year. Revenue churn continues to be low, and we see new business coming in both -- coming in both India and the rest of the world. Business Messaging has had a good growth too. We have scaled up the volumes during the last year, but they have been quite stable during the last few quarters. This is primarily because we have been very focused on just sending the right kind of messages to our consumers and users and not allowing any unwanted messages. The next phase of growth in this area would come when we start also utilizing the business messaging outside of India to a larger degree.

Additionally, we're slowly but steadily scaling up our risk products as a part of this vertical. Our strategy is to focus on recurring revenues, premium subscriptions in Truecaller for Business continues to do well, and the combined growth rate was 35% in Swedish Krona and approximately 50% in constant currencies. As mentioned before, business momentum continues to stay strong, and we see much more growth waiting to be captured.

Now our gross profit grew by 12% year-over-year and the gross margin improved year-over-year to 77.3%. We see positive impact on gross margin from increased share of direct sales, like I mentioned briefly, but also from increased revenues of Truecaller for Business as well as some further efficiency gains when it comes to serve and verification costs. Going forward, we expect the gross margin to be rather stable around -- at around this level with some possible variations between quarters.

Now time to move the focus to costs. As mentioned last quarter, in every Q2, we see the effect of the annual salary review. We have also grown the number of employees somewhat during the first quarter, and this combined increases our employee costs somewhat. Incentive costs increased compared to last year, but were lower than Q1 as the share price was more stable during the quarter compared to the strong trend we saw in the first quarter.

Other external expenses increased somewhat compared to last year, but were lower in Q1, where costs were higher temporarily mainly due to the campaigns we did in relation to the iOS launch. Our tax rate is a combination of the Swedish corporate tax rate and the Indian tax rate. This quarter, we saw some impact due to temporary timing effects. However, as we do an increasing share of our business out of India, primarily Truecaller for Business and also direct ad sales, more of our revenue is being recognized here, and we see the effective tax rate gradually increasing from historical levels due to this. We're managing our tax exposure within the limits set by the transit pricing regulations that we are -- that we have to adhere to in order to ensure that we fulfill the expectations about the Indian and the Swedish tax authorities.

For incentive costs, the breakdown this quarter was SEK 29 million in dilution cost and SEK 10 million in social security fees. The social security cost was much lower than in Q1 when the share price increased substantially, which directly impacts the social security fees.

Now again, like I've said before, it is important to remember that although incentive costs have a substantial impact on our bottom line, they do not give any material insight into our operational performance. Part of the cost are accounting figures that reflects the potential dilution that options and RSUs eventually may have, part of recruit social security fees that only will impact cash flow when any of these instruments are in the money at. Our operation performance and our operational leverage is best understood by looking at our profit, excluding these costs, I believe.

Now turning to our proper development. Let's start with the proper development, excluding incentive costs. Excluding those costs, EBITDA grew by 20% and our margin improved to 42.6%. In constant currencies, the growth was approximately 38%. And as you can see from the chart, we continue to deliver a quite stable profit margin, excluding incentive costs. When we look at the EBITDA, including the incentive costs, we increased EBITDA by 5% year-over-year. The margin was somewhat lower than last year but improved compared to Q1. In constant currencies, the EBITDA growth was approximately 24%, including the incentive costs.

Our cash flow conversion continues to be good with no financial costs and the working capital that develops in a manageable way. As our direct ad sales in Truecaller for Business growth, more of our revenues comes from end customers and partners other than Google, Apple and Meta. This increases our DSO since payment terms in most of our markets generally are longer than what we have from -- with Google, et cetera. However, we work very hard to ensure that both payment terms stay reasonable and also low from a market perspective and that we're receiving payments on time. It is unfortunately not unusual for customers to try to use us as a bank, but we tend to be able to convince them that paying us on time and not losing our services is a better option. This is, however, a never-ending struggle that only can be managed through hard and consistent work. Fortunately, we have a strong credit control team and a good understanding from our business managers.

During the quarter, we saw an uptick in working capital due to the fact that our incentive profits -- that the incentive profits paid to our Swedish employees in June are associated with employee taxes and social security fees that we pay in July and that are booked as liability and working capital by end of June. We still have no financial debt and approximately SEK 1 billion in cash and short-term investments after the dividend of almost SEK 600 million that we did during the second quarter. Our revolving credit facility of SEK 500 million is not being utilized, but available for interesting M&A opportunities. We have recently agreed with our bank on an extension of the facility -- or that facility from 2026 to 2028 in order to keep our options open.

We have been and we continue to be -- to act in a position of strength with this strong cash flow and the financial profile of the company. And like I've already touched on the strengthening of the Swedish Krona. Now like I've already touched on the strengthening of the Swedish Krona had a material impact on both revenue and profitability this quarter.

To summarize in constant currency, the revenue growth rate would have been approximately 21% instead of 9% and EBITDA, excluding incentive costs, would have been grown by approximately 38% rather than 20%. Now considering the indirect nature of our currency exposure, we cannot, like I pointed out already, quantify the currency effects as precisely as we would like. We have to make certain assumptions as to how the actual exposure looks as Google, et cetera, they don't give us a full insight. However, based on the total information that we do have, these numbers are our best estimates, and they give a reasonable view, I think, of not only how currency fluctuations affect us, but also how our business is performing operationally how we succeed and compete in local markets.

So with that, I'll hand over back to Rishit again.

Thanks, Odd. Now let's take a look at a few significant product updates during the quarter. Through the quarter, we made significant progress in three main product areas. I'll talk more about these three areas.

Firstly, fighting communication-based fraud is an important part of Truecaller's mission. And in Q2, we deployed new models that significantly improved our fraud call detection capabilities. These new models were rolled out across all our focus markets leading to millions of additional fraud calls being accurately identified every single day. Fighting fraud is also a multipronged effort. And one of the initiatives is educating our users about new and different types of frauds that may be used to target them. Scanfeed our initiative in this area so important product improvements last year -- last quarter that increased engagement by around 87%. The Truecaller community of 450 million users worldwide is our biggest strength and this gives us a unique advantage when it comes to collecting feedback and data points associated with numbers. This feedback is received in the form of user -- user reported names, comments, spam, fraud reports and many other signals.

In the previous quarter, we combined this user feedback with the power of large language models to accurately summarize community feedback and show this as contextual information alongside the name on important screens such as the Caller ID, the optical screen and other screens. Within a few days of launch, we were showing 500 million such LLM powered summaries every week, highlighting Truecaller's unique scale and strong AI capabilities.

Last quarter, we also fully rolled out a brand-new revamped calling experience for our Android users. This major update focuses on a modern, intuitive, highly functional user interface, featuring a simplified design that prioritizes essential information. In addition to details like the name of the caller, users will clearly see vital details like business identity, potential spam risk, priority of the call and so on, allowing them to make informed decisions about the incoming call. The redesign also significantly improves accessibility, offering both light and dark themes, enhanced support for smaller screens, larger fonts, and various display sizes for consistency experience across devices.

A key new feature is the floating call screen, which keeps your active call accessible even when you're navigating other apps. Underpinning these improvements are substantial performance gains, particularly noticeable on entry-level and older phones where speed has improved by up to 20%. This update solidifies Truecaller's commitment to delivering simple, reliable and thoughtfully crafted communication experiences.

Now let's talk a bit about ad tech, a very critical area for us for long-term monetization and growth. Our relentless focus remains on delivering highly valuable and attention grabbing properties for our advertising partners. During the past quarter, we are particularly excited to have advanced our offering with two significant offerings. Firstly, I'm thrilled to introduce Truecaller Masthead. This is a truly premium advertising property strategically positioned right to the heart of the Truecaller's experience, which is in connection with an incoming call. Imagine the power of the moment with the user's full undivided attention.

With Masthead, we are offering advertisers an unparalleled placement reaching billions of brand moments every single day. This high-impact format will begin hitting the market during this current quarter, and we have strong early interest already. Secondly, we just launched Truecaller Play, this represents a productification of all of Truecaller's video advertising capabilities. It's designed to highlight our innovative engaging elements and is exceptionally well positioned to capitalize on the upcoming festive demand periods where brands seek deeper connection with customers.

Play will also begin its phase rollout during this quarter. So both Mast and Play are more than just new ad units. They are concrete demonstrations of our strategic dedication to capturing greater market share in advertising. These formats enable us to offer deeper commitments to our partners leading directly to higher gross margins for Truecaller.

Now moving on to premium offering. I'm delighted to report another great quarter for us. Very strong performance, particularly driven by accelerating sales on iPhone. In May, we hit a very significant milestone. We crossed 3 million premium subscribers globally and iOS passed 1 million subscribers. The growth on iOS was very strong. We registered 25% quarter-over-quarter growth and an impressive 50% year-on-year growth. This robust growth underscores the increasing value proposition of Truecaller premium on the iOS platform as well now. Beyond iOS, we continue to see strong uptake on Android, demonstrating the widespread appeal of our premium features across our entire user base. Our consistent delivery of crucial functionality within our internal tools has been instrumental in driving these sales. We've also significantly enhanced our spam blocking capabilities on iOS and observed a very positive interest in our new improved blocking options on Android as well, further reinforcing the core value of Truecaller premium.

And now moving to Truecaller for Business, which continued an impressive growth trajectory in the previous quarter as well. In the quarter, we introduced a truly unique and crucial product, SecureCalls, our aim with SecureCalls is to drastically reduce the prevalence of spoofed calls. For our business customers who integrate with us via the API, we now offer an automatic signing of all their outgoing calls. This is a game changer of our trust and authenticity in communication directly addressing a major pain point for both businesses as well as individuals by ensuring that the verified call is truly from the caller it claims to be.

We're also pleased to see strong and consistent interest in our CallMeBack functionality, feedback from several of our business customers highlights a compelling strong ROI when utilizing this feature. This truly demonstrates the competitive advantage we possess through our unparalleled device presence and direct connection with our user base.

Lastly, number intelligence, Truecaller's solution that aims to provide businesses with information to help in areas such as fraud detection and customer onboarding continue to show healthy and steady momentum in bookings and revenue buildup with API consumption increasing multiple during the quarter.

Right. Now to wrap things up a bit, just a summary of the second quarter. We continue to be on the growth path, firstly. Our user base continues to grow at a strong pace and mainly being organic. Growth continues in India, but we also grow in many other markets globally. We're increasing our efforts in those markets as well by putting boots on the ground, we're localizing our product more and we're increasing our sales efforts in those regions too.

The relative growth rate in markets outside of India continues to be stronger and will continue in the same manner going forward as we strengthen those efforts. As Odd described in detail, while our financials were impacted by the strengthening of the SEK, the organic growth underlying was strong across all our revenue streams. In ads, for example, we saw high growth in direct sales, and we launched two new packaged products which makes it easier for our advertising customers to buy our inventory directly. We've also been focusing a lot on the baseline for programmatic advertising revenues to stabilize, and we saw a positive impact in the latter part of the quarter, which is promising for us for the future.

We will continue to add more partners for the rest of the world to further increase price and inventory competition in these markets where our presence has increased a lot during the last few years. Subscription growth accelerated in constant currency. We've had a very good subscriber intake as well. We continue to develop more capabilities that our community loves and are willing to pay for. And we also expand even further on iOS, where this quarter alone, we grew the subscription base by 25%.

Truecaller for Business, we had a great quarter 2, where we continue to expand our suite of offerings while expanding on our existing customer relationships as well. So overall, a healthy quarter with growth on all fronts. I think we've already highlighted it, but we continue to deliver on the strategy that we've set out, which contains user growth in all revenue streams with an extra focus on growing our recurring revenues, which now makes up 1/3 of our revenues, and they've also doubled in the last 2 years' time. We continue to see multiple avenues of sustained growth for all of these revenue streams.

Of course, all of this is backed by a highly profitable business model, and we believe that's the right way to grow the business as well. So as usual, a huge thank you to the phenomenal Truecaller team, the people who love and use Truecaller in their everyday lives. We're very excited at what lies ahead, and we will continue executing on the vision that we've set up. With that, we can take some questions.

[Operator Instructions] The next question comes from Predrag Savinovic from DNB Carnegie.

Firstly, on ads, you said that the ads market started a bit weaker in Q2, ended stronger. Could you give some flavor into how Q3 has started? Because intuitively, one could assume that the exit rate from the second quarter falls into the third.

Thanks, Predrag. So exactly, as you said, the ads market grew stronger towards the end of Q2. It's hard to say how Q3 is going to shape up, honestly, because there's a lot outside of our control, and there's lots going on in the world as usual, but we definitely are optimistic about Q3.

Okay. And then if you could discuss a little more on the direct sales strategy on the ad side. I think first off, what kind of share of revenues are direct sales? Where do you think these can be towards the end of this year and next year? And if you could discuss the gross margin dynamics, I would assume that because you don't rely on Meta and Google that this is probably 90% or higher on the gross margin side. So that should, over time, be very positive to the overall margin of the company.

Yes. Direct sales are definitely a higher gross margin business for us. But strategically, direct sales are important because we then have a direct relationship with the advertiser or the agency and it also leverages a lot of the proprietary tech that we create ourselves in our ad tech stack. So our strategy is -- to answer your question about the ratio, about somewhere between 10% and 15% of our ad revenues are direct sales. This is a growing number as well. I believe it grew close to 15% year-on-year, something that we're really happy about because over the years, not only have we strengthened our product and our tech for enticing more direct sales, but we've also become much more closer to agencies, advertisers. We've also expanded the organization.

We now actually have sales team in Dubai for Middle East and Africa region, where we have more than 100 million users now. So we've been working hard over the years to bolster our direct sales both in terms of the sales organization as well as the offering itself, which is now starting to bear fruit.

And to add to that, the gross margin -- yes, the gross margin for Truecaller business is higher. And you see that already that we have had a gross margin increase over the last few years as Truecaller for Business has grown. Direct ad sales also contribute, but so far, Truecaller for Business has been the major driver of the strengthening gross margin that we've seen.

Okay. And in terms of kind of a target on what share of revenues you think this can be over a few years' time? Is it going to reach 50, can reach 60, do you have such a level to share?

I think it can reach any number really, but whatever our internal targets are, we're not communicating that. We have pretty aggressive targets for our salespeople to do more direct sales for sure. But on the other hand, we don't think programmatic third party is going to be without growth. So -- and they're working with the team.

The next question comes from Ramil Koria from Danske Bank.

Maybe I'll try to condense myself. I wanted to pick your brain on 2 topics mainly. If we start on the advertising side, I'm just trying to reconcile things a little bit here because perhaps I'm getting FX wrong here, but CPM flat year-over-year in SEK terms. DAU up 16% and ad revenue flat year-over-year, yet on Page 9, you say that the number of ad impressions that Truecaller monetizes was stable compared to the same period last year. So like am I missing something here or...

No, you're right, Ramil. Thanks for your question. Monetizable opportunities don't necessarily grow as our user base grows because we have to fill that ad space as well. So it could easily happen that -- while we don't focus on CPMs, we actually focus on revenues anyway. Revenues can have a different trajectory from our user base as well because it's a factor of fill in the end, which is basically the demand from advertisers.

Okay. Yes, that's clear. So if I -- and I know you don't like to talk about CPM or ad load separately, but if you assume that CPM in Q2 of this year was the same of Q2 of last year at the revenues you generate on the advertising side in Q2, that would imply quite a hefty step down in really ad impressions monetized. Does that have to do something with sell-through or...

Yes. It's purely to do with demand from advertisers. As you know, about 85%, 90% of our revenue is programmatic advertising, 10% to 15% is direct. So direct sales is something that we can push and we affect and we can bolster our offering. Programmatic is programmatic by nature, and that is largely dependent on the demand coming in from advertisers.

Okay. That's very clear. And then perhaps just a follow-up on this. Could you elaborate a little bit about sort of your positioning with other prices vis-a-vis competition in India? Would you assume that the demand with other ad channels has sort of come down as much as it has with you? Or do you think there are any company specifics to this?

Yes. We reflect pretty much the market dynamics. Our positioning with advertisers is a unique one, however. We are one of the few publishers in the market that can offer the scale that we operate in and the sophistication in ad targeting and sophistication and ad units that we can offer. So -- and that's the reason why we've been focusing a lot on direct sales while continuing to add more and more demand partners on programmatic as well because both those revenue streams are important to us in the end but we don't see any specific different trend when we speak to some of our larger programmatic partners. It's not a different trend with others as compared to us. If anything, I think we might be just marginally better than some of the others.

Okay. Okay. And just another question on ads before I'll ask a question on iOS and then hand over to the next one. But with the new ad initiatives and understandably, no one can predict where FX is going. But should we expect that ad revenue per DAU should move up going into H2? Or when do you think that metric on a constant currency basis will inflect upwards?

I think it's very hard to comment on that, honestly. We, of course, are optimistic, but there are things that we have to see how they play out. So it's impossible for me to say that.

Okay. And then on iOS, finally, perhaps I'll divide this question into two. ARPU was down a mere 2.5% quarter-over-quarter on iOS and that's despite material FX headwind. It seems like mix remains quite good. Could you talk a little bit about the geographical exposure? I know you said that India sort of picked up throughout the quarter, but seemingly, there seems still to be quite a positive mix effect there. And then secondly, as we enter H2 looking at the subs intake on iOS per month throughout Q2, it seems like it was rather flattish May to June. And understandably, a month is not a trend. So could you talk a little bit about what we should expect for subscriber intake on iOS for H2?

Right. So the first part of your question was about the mix -- the region mix for iOS subscriptions. We grew well in India, which is, of course, our largest existing user base, but we grew really well in various markets outside of India as well, and that is one aspect of what makes it very encouraging for us. This will -- this mix, however, might change quarter-to-quarter as we have different offers, as we get promoted by the app stores in different regions, there are various dynamics at play. And that mix, therefore, might change over time.

The second part of your question was it about how does H2 look or was it about Q2's monthly numbers?

Sorry, Rishit. Yes. So if you break it down a little bit, if I may, 55,000 new subs on iOS in April and the 90,000 in May, roughly and then another rough 70,000 in June. So clearly, going into H2, should we extrapolate say, May, June trends? Or do you think that Truecaller is geared to accelerate that iOS subscriber intake?

No, we absolutely gone for accelerating that growth. The monthly numbers and the trend that you see now are a factor of various set of things that we've spoken about in the last quarter. It's about users upgrading to the right OS, upgrading to the right version of the Truecaller app, discovering that Truecaller now has full capabilities on iOS, going through the trial period and then becoming subscribers. So monthly, the trends might change and we remain optimistic, of course, to accelerate, and we'll do everything we can to accelerate the growth also in Q3 and beyond.

The next question comes from John Karidis from Deutsche Bank.

The first set of questions are focused on ad revenue per DAU. Number one is, how does the ad revenue per DAU from direct sales compare to the average that you report? I would imagine it's higher than average, given that you're using different ad formats, but I just wanted to confirm that, please.

Yes, it is. both for the reason you said, the former and -- partly different forms, but also because we have a better control of the pricing discussion with the ad buyer in a direct sales situation.

Okay. Thank you,. The second question is, I'm trying to square the fact that ad revenue per DAU was down 5% on a constant currency basis in the second quarter and 6% in the first half, which implies that in the first quarter when there wasn't any sort of Indian Pakistan conflict, there wasn't sort of the Iranian conflict, that metric was down sort of 7%, if my arithmetic is correct. And I'm trying to sort of square -- that basically tells me that the ad market overall keeps getting worse quarter-on-quarter-on-quarter, more so given your answer about direct sales. So how would you advise me to square this because just these numbers suggest that this thing keeps getting worse? And I don't understand why that is. And I don't really understand what would change this. I know you were asked about what would happen in the second half, but it just feels like a falling knife to me.

I think the ads market over the last few quarters has actually been stable. The Q1 numbers were primarily IPL numbers. As you know, it's a big cricket tournament that takes place, and it's a big advertising spend season. Q2 is less of IPL but was affected by the geopolitical conflicts that we spoke about, tariff wars that we spoke about. So I don't have a good answer, honestly, for the ad revenue per DAU difference between Q1 and Q2. But they are two very different quarters essentially and had different reasons. But we haven't seen any difference in the ad market between Q1 and Q2.

And also to add to that, the -- like Rishit mentioned, we did see some, let's call it, geopolitical uncertainty during the second quarter. The most important one from our point of view was definitely Pakistan, India, where we did see a material slowdown in the Indian ads market, not for very long, but for some time. And that decreased our revenue, which also means decreasing revenue per DAU, of course, because number of DAUs didn't change. So that would be -- that would be the -- by far, the most important single factor impacting both revenues and revenue per DAU during the quarter. And with us having most of our users and most of our revenues from India and India, Pakistan being a -- an important and very material issue here, it did have a material impact.

Thank you for these. I mean these answers, just these answers in aggregates imply that the year-on-year decline on a constant currency basis should disappear in the second half going forward, unless, of course, there's another India-Pakistan conflict. And which also sort of -- sorry?

Which we really hope won't happen for many, many reasons, right?

Yes, indeed. But could I also respectfully say to you that when you restated numbers, you didn't restate it going back far enough. So we can't really sort of check what Rishit just said about year-on-year decline in ad revenue per DAU being sort of flat last year because we didn't get the ad revenue per DAU the year before, but just as an aside.

Just to emphasize that the numbers that we give in constant currencies are our best estimates. There are approximations. We do have to make certain assumptions and we do not guarantee that they are correct to the very last decimal. It's our very best effort, but you need to take them with a little bit of salt because the situation is the way it is, and we can't do much about it. We just have to take the information we have available to us and calculate these constant currency numbers as well as we possibly can.

Okay. And then my second and last area of questions or just one question, basically, LTIP. So as you know, certainly the sell side got caught out in the first quarter because the LTIP costs were arguably much higher than what we expected. So you'd expect most of us to have had some pretty -- a number of conversations with your good selves for the second quarter, but we seem to have been caught out by that. Again, if you look at how the actual results compared with the consensus numbers. Why do you think that is? Why were we on the outside still caught out quite significantly on the LTIP front?

Because it's very difficult and very complex to calculate those numbers. We have programs for four different years with different types of instruments running and doing the calculation on how this impacts our cost base is very complex. And I fully appreciate and acknowledge the fact that from the outside, it's impossible to make anything more than a sort of a best guess. We are trying to give as much -- we don't give guidance for revenue and profit, but we try to give as much guidance as possible for this particular issue and this particular number, we obviously weren't good enough during the second quarter, and we'll try to do better. But you certainly shouldn't many on the outside because making these calculations is -- well, let's call it a super computer job almost. It's complicated. And we'll do our best to improve in our communication on that subject. I'm sorry about that.

The next question comes from Bharath Nagaraj from Cantor Fitzgerald.

Just two questions remaining from my side. It appears you reduced your marketing spend in the second quarter, correct me if I'm wrong there. If so, what was the reasoning behind it? Or what were you thinking? Why did you do that? And what level of marketing spend you expect in the second half? And the second one is like just a modeling question. Given the tax rate increases that you have already commented on, what kind of level of -- what level of the tax should we be modeling for 2025 and beyond?

On marketing, we did a marketing campaign focusing on iOS in the first quarter. It was a good campaign. We spent quite a bit of money. We had little bit of bad luck with the timing because Apple were still having some bugs that impacted how our users could use our iOS solution. But it was a good campaign. We didn't do anything similar in the second quarter. We will do other campaigns going forward. And I think a reasonable way to look at it is to see the first quarter as being a bit higher than we would normally do and the second quarter being a bit lower than we would normally do in terms of marketing spend.

On the tax rate, that's an interesting question, of course. As you know, the tax rate is a combination of the Indian and Swedish corporate tax rates. India is 35%. Sweden is 21%. Historically, we have had most of our revenue being recognized and most of our profit being recognized in Sweden. Now that is changing. And the reason that it's changing is primarily because we do more business out of India. We do more direct sales, which is an Indian business. We do more Truecaller for Business, which is also an Indian-based business. We have -- we're increasing the number of Indian paying users. And all of this taken together takes us to a point where more of our profits are being taxed in India. So the balance between India and Sweden is slowly moving upwards.

We will continue to make substantial profits in Sweden because profit -- Sweden is where we have the brand name, we have the material properties, et cetera, et cetera. So we will continue to make substantial profits in Sweden, but we will for some time, continue to see profits being made to a larger extent in India. Not that profit is going to go down in Sweden, but more of the profit growth that we see is going to end up in India. And that will increase our tax rate over time. This particular quarter, we had some timing effects that added an extra -- slightly more than an extra percentage point to the tax rate. But the trend is quite clear. And we try to manage that. We try to manage our entire tax situation as well as we can within the limits set by transfer pricing regulations, like I mentioned. We want to make sure that we are sort of good citizens wherever we are active in Sweden and in India and follow the expectations that we have from both the Swedish and the Indian tax authorities.

Just a quick follow-up. Like given the tax rate in Sweden is 21% and the one in India 25%, like we are now seeing close to 29%. I'm just trying to make sure that I understand this properly.

35% in India. 3-5.

There are no more questions at this time, so I hand the word back to the speakers.

Okay. Thank you, everyone, for listening in. We look forward to seeing you at our next earnings call. Thank you very much.