Truecaller shares drop 7% as FX drives Q2 revenue, EBITDA miss

Truecaller AB (ST:TRUEb) shares declined 7% following Q2 results that missed revenue and EBITDA consensus, with reported figures up 9% and 5% year-on-year, respectively. However, the company highlighted significant underlying strength, with constant currency revenue growth accelerating to 21% and EBITDA up 38%, as reported misses were attributed to foreign exchange impacts. The quarter also saw robust net operating cash flow of SEK262 million, exceeding analyst estimates, alongside continued user expansion and new ad product initiatives, despite a decline in ad revenue per daily active user.

Analysis

Truecaller AB's (ST:TRUEb) shares fell 7% after its Q2 results missed consensus expectations on reported revenue and EBITDA, which grew 9% and 5% year-over-year respectively. The market's negative reaction, however, contrasts with significantly stronger underlying fundamentals when currency impacts are excluded. The revenue miss was fully attributed to foreign exchange headwinds, as constant currency revenue growth accelerated to 21% year-over-year, driven by robust performance in Subscriptions (+48%) and Business (+53%) segments. Similarly, EBITDA on a constant FX basis and excluding incentives rose a strong 38%. While user growth remains a key strength, with daily active users increasing by 11 million to 367 million, a notable headwind is the 15% year-on-year decline in ad revenue per DAU. The company is actively addressing this monetization challenge with new ad products, including an in-house AI recommendation engine. A significant positive was the net operating cash flow of SEK262 million, which substantially beat analyst estimates of SEK153 million, underscoring strong working capital management and financial health.

Key Decisions for Investors

• Investors should look beyond the headline revenue and EBITDA misses, as they were fully attributable to foreign exchange, and instead focus on the accelerating 21% constant currency revenue growth as a more accurate gauge of operational strength.
• Closely monitor the ad revenue per DAU metric, which fell 15% YoY, but also track the performance of new AI-driven ad products, as their success is critical to reversing this trend and improving monetization.
• The 7% share price decline may present a valuation opportunity for those focused on fundamentals, especially considering the robust operating cash flow which significantly beat expectations and signals strong financial discipline.