Redeye thinks the Q2 report was slightly better than expected - being in line with consensus estimates on sales but beating estimates on adj. EBITDA by 5%. The key highlight, in Redeye's view, is the impressive growth in Subscriptions (+29% y/y and 3% above consensus estimates). The advertising market in India was unchanged in Q2.

During Q2, Truecaller launched several features that could significantly increase the adoption of premium plans - in particular the fraud insurance. Also, Apple opening iOS for Caller ID is also likely to be a significant booster for iOS adoption, which have 5x the adoption rate to a paid plan compared to Android. Should this be the case, Truecaller is poised to deliver outstanding growth in its recurring revenues. This would imply that Truecaller would become a more predictable and resilient player even in a weak economy with low ad prices.

Following the Q2 report, we only make minor adjustments. Mainly, we raise our estimates for Subscriptions by c7% for 2024-2026e, while we reduce estimates for Ads by 3-6% for the same period. Combined with small downward adjustments on OPEX (-3% p.a.), our EBITDA estimates are lowered by 1-3%. However, we believe now could prove an attractive entry point. The reasons why are 1) all tough comps are now past, 2) the ads market has likely bottomed, and 3) Truecaller increasing its share of recurring revenues, making it more predictable. Redeye increases its Bear Case from SEK25 to SEK28, but keeps Base and Bull case.