Truecaller's Share Buyback Strategy: A Catalyst for Long-Term Value Creation

Truecaller AB's 2025 share buyback program is not merely a financial tactic—it is a strategic cornerstone for unlocking long-term shareholder value. By repurchasing up to 10% of its outstanding shares by May 2026, the company is signaling confidence in its cash flow generation and operational efficiency while directly enhancing earnings per share (EPS) and capital efficiency. For investors, this initiative represents a rare confluence of disciplined capital management and growth potential, warranting a closer look at its implications.

Strategic Rationale: Balancing Buybacks, Dividends, and Growth

Truecaller's buyback program, authorized at the May 2025 Annual General Meeting, allows for the repurchase of up to 10% of its shares on Nasdaq Stockholm. As of July 25, 2025, the company had already acquired 400,000 B shares at a weighted average price of 61.19 SEK, totaling 24.5 million SEK. These repurchases are executed in compliance with Swedish financial regulations and are complemented by a 25% dividend yield, which paid out SEK 1.70 per share in Q1 2025.

The dual focus on buybacks and dividends reflects a balanced approach to capital allocation. While dividends reward shareholders directly, buybacks offer a more efficient use of capital by reducing share count, thereby amplifying EPS. This is particularly impactful for Truecaller, which reported a net income of €490.125 million for the trailing twelve months (TTM), translating to a diluted EPS of €0.13. With operating cash flow rising 19% year-on-year to SEK 623 million in 2024, the company has ample liquidity to sustain these initiatives without compromising reinvestment in AI-driven security tools or enterprise solutions.

EPS Impact: A Mathematical Boost to Shareholder Value

The immediate benefit of share buybacks lies in their ability to elevate EPS. By reducing the number of shares outstanding, Truecaller's earnings are distributed across a smaller base, increasing the value per share. For example, the repurchase of 400,000 B shares (0.12% of outstanding capital) has already reduced the share count from 344.39 million to 343.99 million. Assuming constant earnings, this would result in a 0.12% EPS increase. However, the real power of the buyback emerges when combined with the company's strong EBITDA performance.

In Q1 2025, Truecaller's EBITDA (excluding incentive costs) surged 22% to SEK 199 million, with a gross profit margin of 76.2%. These metrics suggest that the company is not only generating robust earnings but also doing so with exceptional efficiency. The buyback program, by reducing share count, amplifies this efficiency. For instance, if the company continues repurchasing shares at the current pace, it could reduce the share count by an additional 0.5% by year-end, potentially boosting EPS by 0.5% even without earnings growth.

Capital Efficiency: A Test of Discipline and Vision

Truecaller's buyback strategy also demonstrates a keen understanding of capital efficiency. The company's strong liquidity position—SEK 1.4 billion in cash reserves as of May 2025—ensures that buybacks do not strain growth initiatives. This is critical for a company like Truecaller, which is expanding its AI-driven fraud prevention tools and enterprise solutions. For example, enterprise revenue grew 44% in 2024, and the launch of the iPhone product in Q1 2025 opened new revenue streams.

Moreover, the buyback program mitigates dilution risks. With two Long-Term Incentive Plans (LTIPs) approved in 2025, which could issue up to 5.5 million shares contingent on performance targets, repurchasing shares ensures that the share count remains manageable. This aligns executive incentives with long-term value creation, as LTIPs vest over 2–4 years and are tied to revenue and EBITDA growth.

Shareholder Value: A Signal of Confidence

The buyback program also serves as a powerful signal to the market. By repurchasing shares at a price below analyst price targets (currently 68.45 SEK, with a target of 72.57 SEK), Truecaller is effectively communicating that it views its stock as undervalued. This is particularly compelling given the company's valuation metrics: a P/E ratio of 36.98, a P/B ratio of 17.6, and a Rule of 40 score of 67% (a benchmark combining growth and profitability).

Analysts have responded positively, with a "Strong Buy" consensus and a 6.02% upside potential from current levels. This optimism is justified by Truecaller's ability to scale its business profitably. For instance, monthly active users reached 433 million in 2024, and the company's geographic diversification—particularly in high-growth markets like India and the Middle East—reduces reliance on any single region.

Investment Implications: A Strategic Buy-In

For investors, Truecaller's buyback program presents a compelling opportunity. The company's disciplined capital allocation, strong EBITDA margins, and alignment with long-term growth trends make it a standout in the Software industry. However, risks exist. The P/E ratio of 36.98 is above the industry median of 28.55, suggesting the stock may be priced for optimism. Additionally, the success of the buyback depends on the company's ability to maintain its current EBITDA trajectory while funding innovation and LTIPs.

Conclusion: A Model for Shareholder-Centric Growth

Truecaller's 2025 share buyback program is a masterclass in strategic capital management. By combining buybacks with dividends, reinvestment in AI-driven solutions, and performance-linked executive incentives, the company is creating a virtuous cycle of value creation. For investors, this represents a rare alignment of financial prudence and growth potential. While the stock's valuation is not without risks, its strong cash flow, expanding user base, and disciplined approach to capital returns make it a compelling long-term investment.

As the buyback program unfolds through 2026, Truecaller's ability to execute on its dual goals—enhancing EPS and maintaining growth—will be critical. For now, the data supports a bullish outlook: the company is not only returning capital to shareholders but also positioning itself for sustained profitability in an increasingly competitive market.