Emerging Mobile And Digital Security Trends Will Shape Future Markets

Key Takeaways

• Strong expansion in emerging markets and increased demand for security features are driving robust user growth and subscription uptake, boosting recurring revenue and profitability.
  
• Diversified revenue streams from B2B services and proprietary ad tech improve margin stability, reduce reliance on ads, and support long-term profit growth through network effects.
  
• Heavy dependence on foreign ad revenues and third-party platforms leaves the company vulnerable to currency risk, market maturity, and unpredictable shifts in advertiser demand and tax rates.

Catalysts

Develops and publishes mobile caller ID applications for individuals and business in India, the Middle East, Africa, and internationally.

• The rapid expansion of smartphone and mobile internet adoption in emerging markets, especially outside India (e.g., Middle East and Africa), is unlocking strong user growth (15% YoY in Q2) and providing a larger addressable market for Truecaller's services, thereby supporting long-term recurring revenue and earnings growth.
  
• Heightened concerns about digital security and fraud are driving greater demand for Truecaller's advanced spam/fraud call detection solutions, which, combined with the company's scale and improved AI capabilities, are reinforcing the value proposition, supporting premium subscription uptake and higher ARPU (Average Revenue Per User), positively impacting both top-line and margin expansion.
  
• The ongoing pivot towards higher-margin, recurring subscription revenue-with notable acceleration on iOS (25% QoQ subscriber growth/50% YoY)-and expansion of B2B offerings (Truecaller for Business, identity APIs) are diversifying revenue streams, lowering reliance on cyclical ad spend, and creating more stable, predictable cash flows and long-term profit growth.
  
• Strategic developments in proprietary ad tech (launch of premium ad formats like Masthead and Play, and growth in direct ad sales) are improving gross margins and deepening integration with advertisers, positioning the business to capture a greater share of ad wallet as digital communication further penetrates emerging markets, with positive implications for net margins.
  
• Truecaller's dominant market share, strong brand recognition, and community-powered data advantages reinforce network effects in high-growth regions, contributing to low churn and reduced marketing costs, further improving net margin stability and supporting robust long-term earnings power.

Truecaller Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Truecaller's revenue will grow by 20.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 24.4% today to 31.8% in 3 years time.
• Analysts expect earnings to reach SEK 1.1 billion (and earnings per share of SEK 2.86) by about July 2028, up from SEK 488.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as SEK838.0 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 28.8x on those 2028 earnings, down from 38.3x today. This future PE is lower than the current PE for the SE Software industry at 35.2x.
• Analysts expect the number of shares outstanding to decline by 0.37% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Truecaller Future Earnings Per Share Growth

Risks

• Truecaller's heavy reliance on foreign (mainly India) revenues exposes it to significant FX risk against the strengthening Swedish krona, which can materially reduce reported revenue and profit growth when translated to SEK, negatively impacting overall earnings and perceived growth.
  
• The majority of ad revenues (85%-90%) are generated through third-party programmatic platforms, making the business vulnerable to external macro factors, softening advertiser demand (e.g., geopolitical conflicts like India-Pakistan tensions), and market-wide CPM stagnation, which can lead to revenue and margin volatility.
  
• While direct ad sales and Truecaller for Business segments are growing, both contribute only a minor share of total revenue (direct ad sales at ~10-15%), so financial performance remains highly sensitive to fluctuations and saturation in the programmatic advertising market, limiting EPS upside if these high-margin streams do not scale fast enough.
  
• With increasing revenue being recognized in India, a market with a higher (35%) corporate tax rate relative to Sweden (21%), the company's effective tax rate is expected to trend upward over time, reducing net profit margins as a greater share of future profit growth is taxed more heavily.
  
• Despite product innovations, the text notes that DAU and user growth do not automatically translate to proportional ad impression or monetizable opportunity growth, indicating possible signs of market maturity or ad load saturation, which could constrain revenue-per-user expansion and overall top-line growth.

Valuation

• The analysts have a consensus price target of SEK77.833 for Truecaller based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK95.0, and the most bearish reporting a price target of just SEK60.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK3.5 billion, earnings will come to SEK1.1 billion, and it would be trading on a PE ratio of 28.8x, assuming you use a discount rate of 6.4%.
  
• Given the current share price of SEK54.3, the analyst price target of SEK77.83 is 30.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.