Global Smartphone Rise And AI Will Expand Verified Digital Identity

Key Takeaways

• Explosive premium subscription and high-margin direct ad growth, coupled with global expansion, signal underestimated upside in recurring revenues and net margins.
  
• Unique digital identity offerings and AI-driven features position Truecaller for sustained ARPU growth and diversified revenue through both consumer and enterprise channels.
  
• Truecaller faces major risks from India market dependence, regulatory changes, built-in platform competition, privacy concerns, and user growth saturation, threatening revenue and profitability.

Catalysts

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

• While analyst consensus attributes subscription revenue growth mainly to the upgraded iOS app and assumes acceleration from Q2 2025, it likely underestimates the magnitude of premium adoption, as iOS subscription growth rates have been exceeding 25% quarter-on-quarter and the ARPU in key non-Indian markets remains structurally higher, pointing to substantially larger upside in recurring revenues and net margins as geographic mix improves even beyond current forecasts.
  
• Analysts broadly agree on the positive impact of the introduction and scaling of premium ad formats and direct ad sales, but the potential is even greater than consensus suggests, with direct ads enjoying over 90 percent gross margins and management indicating the channel could dramatically ramp from its current sub-15 percent share of ad revenues to a majority over time, unlocking a step-change in group profitability and earnings growth that is not yet fully incorporated by the market.
  
• Truecaller's unique positioning as the trusted, default digital identity and fraud-prevention layer for hundreds of millions of users directly addresses rising global security concerns around spam, fraud, and digital communication, providing a powerful pricing and user retention advantage with significant untapped monetization potential expected to drive ARPU and net sales higher for years.
  
• The launch and rapid regional rollout of AI-driven features (such as contextual LLM-powered spam summaries, intelligent call risk signaling, and business-focused Secure Calls functionality) strongly leverage rising global smartphone penetration and regulatory tailwinds, enabling Truecaller to both deepen engagement and embed enterprise SaaS solutions, which should yield accelerated growth in both consumer and B2B recurring revenues.
  
• Truecaller's robust cash position and strong cash flow generation, combined with expanding partner networks and investment in global sales infrastructure, create substantial optionality for strategic M&A or new high-margin product launches, meaning the current valuation does not appropriately reflect its ability to turbocharge revenue diversification and long-term earnings power through both organic and inorganic growth.

Truecaller Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Truecaller compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Truecaller's revenue will grow by 23.4% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 24.4% today to 33.3% in 3 years time.
• The bullish analysts expect earnings to reach SEK 1.2 billion (and earnings per share of SEK 3.64) by about July 2028, up from SEK 488.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 31.1x on those 2028 earnings, down from 36.5x today. This future PE is lower than the current PE for the SE Software industry at 36.5x.
• Analysts expect the number of shares outstanding to decline by 0.38% 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 over-reliance on India makes it highly vulnerable to regulatory changes or economic instability in its core market, exposing future revenues and net margin to significant downside risk if growth stalls or if new privacy/data laws are enacted in that region.
  
• The long-term adoption of AI-driven, on-device caller ID and spam prevention technology by smartphone manufacturers reduces the need for cloud-based third-party apps, directly threatening Truecaller's user relevance and thereby putting long-term user growth and advertising revenue at risk.
  
• Expansion of built-in caller identification and spam-blocking features by major operating systems like iOS and Android could erode Truecaller's value proposition, shrinking its addressable market and negatively impacting revenue and earnings over time.
  
• Increasing global privacy regulations and user pushback towards data collection-especially in developed markets where monetization is challenging-may restrict Truecaller's ability to process required user data, leading to compliance costs, higher tax rates, and reduced profitability or net margin.
  
• Saturation in Truecaller's core user/database and slowdown of marginal utility as user and phone number growth tapers off could hinder upsell opportunities, resulting in a deceleration of subscription and business revenue growth and a limit on future earnings expansion.

Valuation

• The assumed bullish price target for Truecaller is SEK95.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Truecaller's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• 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 bullish analysts, you'd need to believe that by 2028, revenues will be SEK3.8 billion, earnings will come to SEK1.2 billion, and it would be trading on a PE ratio of 31.1x, assuming you use a discount rate of 6.4%.
  
• Given the current share price of SEK51.65, the bullish analyst price target of SEK95.0 is 45.6% 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.