Truecaller's Share Buyback Strategy: A Value-Driven Catalyst for Long-Term Shareholder Returns

Truecaller AB's 2025 share buyback program has emerged as a masterclass in disciplined capital management, blending strategic repurchases with robust financial performance to create a compelling case for long-term shareholder value. By repurchasing up to 10% of its outstanding shares through Nasdaq Stockholm, the company is not only signaling confidence in its undervalued stock but also leveraging its strong cash flow to enhance earnings per share (EPS) and reinforce its position as a leader in the digital communication sector.

Disciplined Repurchases: A Blueprint for Shareholder Value

As of week 33, 2025, Truecaller had repurchased 925,000 B shares, representing 0.26% of its outstanding capital, at an average price of 61.19 SEK per share. These repurchases, executed through Carnegie on Nasdaq Stockholm, have already reduced the share count by 0.12% since the program's inception, directly boosting EPS. Analysts project that if the current pace continues, the company could see a 0.5% EPS increase by year-end, assuming stable earnings. This is a testament to the program's precision in targeting undervalued shares—Truecaller's stock currently trades at 68.45 SEK, below the analyst price target of 72.57 SEK.

The buyback is funded by a fortress balance sheet, with SEK 1.4 billion in cash reserves as of May 2025 and operating cash flow of SEK 623 million in 2024. This liquidity ensures that repurchases do not compromise reinvestment in high-growth areas like AI-driven fraud prevention tools or enterprise solutions, which are critical to sustaining long-term value creation.

Strong Financial Performance: The Engine Behind the Buyback

Truecaller's financials provide the bedrock for its buyback strategy. In Q1 2025, the company reported EBITDA (excluding incentive costs) of SEK 199 million—a 22% year-on-year increase—and maintained a gross margin of 76.2%. These metrics underscore operational efficiency and profitability, enabling the company to fund buybacks without sacrificing innovation.

The Rule of 40 score—a combined measure of growth and profitability—stands at 67%, reflecting a balanced approach to scaling while maintaining margins. This is particularly significant in a sector where many companies prioritize growth at the expense of profitability. Truecaller's ability to generate strong cash flow (SEK 623 million in 2024) further validates its capacity to sustain the buyback program through economic cycles.

Strategic Reinvestment: Fueling Future Growth

While buybacks enhance shareholder value, Truecaller's reinvestment in AI-driven solutions and enterprise expansion ensures that growth remains a priority. The company's AI-powered fraud prevention tools have already driven a 44% increase in enterprise revenue in 2024, with clients like Uber and Bajaj Auto reporting measurable improvements in ad performance. Additionally, the launch of the iPhone product in Q1 2025 has diversified revenue streams, reducing reliance on any single market.

The enterprise segment is a key growth engine, with the risk product "Number Intelligence" gaining traction in BFSI and credit bureaus. This, combined with a 25% year-over-year increase in iOS subscribers, highlights the company's ability to monetize its user base through both advertising and subscriptions.

Signaling Confidence: Buybacks as a Strategic Signal

Truecaller's buyback program is more than a financial tactic—it is a clear signal of management's confidence in the company's long-term prospects. By repurchasing shares at a discount to analyst targets, the company is effectively communicating that it views its stock as undervalued. This is further reinforced by the alignment of executive incentives with long-term value creation, as evidenced by the use of performance-linked Long-Term Incentive Plans (LTIPs) and a 25% dividend yield.

The buyback also mitigates dilution risks from LTIPs, which could issue up to 5.5 million shares based on performance targets. This strategic counterbalance ensures that the share count remains stable, preserving the value of existing shares while rewarding employees for achieving growth milestones.

Investment Implications and Forward-Looking Outlook

For investors, Truecaller's buyback strategy presents a compelling opportunity. The combination of disciplined repurchases, strong EBITDA growth, and strategic reinvestment creates a virtuous cycle of value creation. Analysts have assigned a "Strong Buy" consensus, with a projected 6.02% upside potential from current levels.

The company's expanding user base (433 million monthly active users in 2024) and geographic diversification—particularly in high-growth markets like India and the Middle East—further strengthen its long-term outlook. With a P/E ratio of 36.98 and a P/B ratio of 17.6, the stock is priced with upside potential, especially as AI-driven initiatives continue to scale.

Conclusion: A Model of Sustainable Value Creation

Truecaller's share buyback program exemplifies how disciplined capital allocation can enhance shareholder returns while supporting strategic growth. By reducing the share count, boosting EPS, and signaling confidence in its undervalued stock, the company is positioning itself as a leader in the Software industry. For investors seeking a balance of growth and profitability, Truecaller offers a compelling case where buybacks and reinvestment converge to drive long-term value.

In a market where many companies struggle to balance short-term returns with long-term innovation, Truecaller's approach stands out as a blueprint for sustainable success. As the buyback program progresses through 2026, the company's ability to execute on its strategic vision will likely cement its status as a top-tier investment.