Truecaller drops 32% on lower revenue

Shares of Truecaller dropped as low as 35%, $35.95 to $24.47, before recovering slightly Friday after the Switzerland-headquartered firm, known for its eponymous caller ID app, reported lower than estimated revenue.

Truecaller, listed in Stockholm, reported a revenue of SEK 399 million ($35.88 million) for the quarter ending September, an 11% year-on-year decline. JP Morgan last week anticipated Truecaller’s Q3 revenue to be SEK 469 million.

Truecaller is a caller ID and spam blocking mobile app, though it also offers a growing range of other services. Since launch in 2009, the company has amassed about 368 million global monthly active users (~75% in India), and handles over 3.2 billion calls each day. The bulk of its revenues (~80%) come from in-app advertising.

“Contracted revenues SEK398.7m are -11% y/y (Q2 +7.9%) and a material 13.3% below company consensus. In the mix, ad revenues are weak at -19.9% (cons -3.7%), whereas consumer +19.4% (cons +18.4%) and other +43.8% (cons +48.9%) are relatively in-line. Looking at ad revenues we note average MAU growth remains strong with the base at 368m implying adds of +12m (cons +10m). However CPM has dropped to SEK0.96 (similar to Q1 0.94) when cons was modelling 1.03. Management note YTD CPM has been stable if we ex out the Q2 IPL boost,” JPMorgan analysts wrote in a note Friday.

“The challenge is that if CPM were only to remain stable through FY24, rather than rebound, it would imply 10% risk to consensus FY24 revenues (and presumably more at EBITDA). Truecaller notes it has conducted tests to assess the potential impact on user lifetime (retention) in the event it needs to make adjustments to certain data in light of the new Digital Personal Data Protection Act in India. These tests involved presenting different search results to distinct user groups on a large scale, and with the help of AI identity technology. Truecaller notes the initial results are highly promising, as it has not observed any material change in retention.”