Truecaller AB: Unlocking Shareholder Value Through Strategic Capital Allocation and Performance-Linked Incentives

In an era where digital trust is paramount, Truecaller AB has positioned itself as a leader in communication security, boasting over 433 million monthly active users and a 49% year-over-year growth in recurring revenue. The company's recent strategic moves—coupled with disciplined capital allocation and performance-driven executive incentives—paint a compelling picture for investors seeking exposure to a scalable, high-growth enterprise. Here's why now is the time to act.

The Power of Strategic Capital Allocation

Truecaller's 2024 capital allocation strategy strikes a balance between innovation, shareholder returns, and operational resilience. Let's break it down:

1. Shareholder Returns: Dividends and Buybacks

The company's dividend policy—committing to distribute 25% of annual profits—delivered a combined SEK 1.70 per share in dividends in Q1 2025, with plans to cancel 3.9 million shares to reduce dilution. This signals confidence in cash flow stability, as operating cash flow rose 19% to SEK 623 million in 2024.

2. Innovation at Scale: AI and Enterprise Solutions

Truecaller is doubling down on AI-driven security features, such as the AI Call Scanner (detecting AI-generated fraud) and call recording services in high-growth markets like India. These investments are paying off: enterprise revenue surged 44% in 2024, driven by tools like Verified Business Caller and risk assessment platforms. The iPhone product launch in Q1 2025 further expands its reach into a lucrative market, directly competing with Apple's native features.

3. Market Penetration and Diversification

Truecaller's user base grew by 57 million in 2024, fueled by aggressive expansion into Africa, Southeast Asia, and Latin America. This geographic diversification reduces reliance on its core Indian market, while partnerships like the one with Tanla (enabling 13.1 billion business messages in 2024) solidify its B2B moat.

Executive Incentives: Aligning Interests with Long-Term Value

Truecaller's incentive programs are engineered to tie executive compensation to measurable outcomes, ensuring leadership is laser-focused on growth and profitability:

• Performance-Linked Share Programs: Two LTIPs approved in 2025 grant up to 5.5 million shares to executives and key employees, vesting over 2–4 years contingent on revenue growth and adjusted EBITDA targets. For instance, the CEO's 1 million share package requires hitting aggressive milestones.
• Hedging and Flexibility: Equity swaps mitigate delivery risks, allowing the company to retain shares for acquisitions or further buybacks. The recent withdrawal of a bonus share proposal—opting instead to hold shares for incentive delivery—demonstrates strategic pragmatism.

The Incentive Cost Trade-Off

While Q1 2025 incentive costs surged to SEK 50 million (vs. SEK 11 million a year ago), this reflects rising share prices and met performance criteria—a good problem signaling executive success. Excluding these costs, EBITDA grew 22% to SEK 199 million, highlighting robust operational health.

Why Act Now?

Truecaller's recent Annual General Meeting (May 23, 2025) underscored its commitment to disciplined growth:
- New Share Authorization: The board can issue up to 10% of shares for acquisitions or capital structure adjustments, while repurchasing up to 10% to boost value.
- Leadership Transition: Under CEO Rishit Jhunjhunwala, the focus is sharpened on AI-driven fraud prevention and enterprise expansion—a strategic pivot to high-margin, recurring revenue streams.

The company's ISO 27001/22301/9001 certifications and a 40% EBITDA margin (excluding incentives) further validate its operational rigor. With a SEK 1.4 billion cash reserve, Truecaller is primed to capitalize on opportunities while maintaining financial flexibility.

Conclusion: A Compelling Investment Thesis

Truecaller's blend of disciplined capital allocation—prioritizing dividends, buybacks, and high-impact innovation—alongside performance-linked incentives that align leadership with shareholder interests, creates a rare investment opportunity. With its user base, enterprise traction, and AI-first strategy, Truecaller is well-positioned to dominate the trusted communication space.

Investors who act now can capture the upside of a company poised to outperform in both growth and profitability. The question isn't whether Truecaller's strategy works—it's whether you'll be on the right side of its success.

The time to invest in Truecaller's vision is now.