AngioDynamics Inc

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And once again, good afternoon and good morning for -- to everyone. Very nice to see you in the new year. Today, there will be 2 of us presenting, Marcin Droba; and myself, Lucja Kaseja, on behalf of Text Spólka Akcyjna. And today, we will discuss the Q3 key performance indicators for the quarter.

I'm going to start with some good news. Actually, we usually start about our vision and mission of Text company. And just a couple -- actually days ago, we managed to rebrand the last company in our group, not that we have that many and just 2 of them, but our American subsidiary, which used to be LiveChat Inc., now is also Text Inc. So we are now all about Text communication, both in terms of the name of the company.

Previously for some who have joined us more recently, previously, we were listed as LiveChat Software for many years. And now with this new brand, we can go further into the presentation.

So our vision for the company is text intelligence for better customer service. It's actually to help brands provide better customer service at scale. And this is something that we keep close to our heart. We were always into text communication, and we want to make it much better in the future.

I'm going to make a very quick summary of what we -- whom we actually are just because some of the people have -- which are on the call are new to the company, and it will be just 2, 3 minutes.

So we are a global Software as a Service company. We operate from Poland, but actually, our focus is United States, and we get 35% of the revenues from U.S. Poland now is much less than 2% actually in terms of the revenues. But as I said, we operate from here.

We operate in business-to-business model. Actually, it's all about subscriptions. We have a very unique customer acquisition model and quite stable one as well. And it allows us high -- to generate high and sustainable margins through time.

We still have the cofounders within the company. The CEO of the company, Mariusz Cieply, and 2 people on the Supervisory Board have been with the company for the last 22 years now. And with some other key managers, they have formed a consortium, which is a leading shareholder in the company.

We are a dividend-paying company, and a proof of that is actually the fact that we will be paying advanced dividend in just a few days. So on 15th of January, we will be paying advance towards the dividend for this financial year.

And actually, we have the products. Actually what we do in our business, we have 4 premium products, LiveChat, ChatBot, HelpDesk and KnowledgeBase and also one free product, OpenWidget. I'm not going to spend time on the product because, I mean, if you have any questions, we are happy to answer those later, but we have gathered today to discuss actually Q3 indicators for the quarter.

And I'm going to start with the usual metric that we comment. And this metric is the most important one to us. It's monthly recurring revenues. Actually, it's because this parameter is the closest one that describes our business. So it's a picture at the end of the quarter that tells you how many subscriptions we have in terms of the money terms. And it is USD 6.49 million at the end of the year. So for December 2023, it is actually an increase of 0.3% quarter-on-quarter. So it has been -- it has increased, but it's rather been a stable parameter for the last good 3 quarters.

It is 2.2% growth year-on-year. It's actually a return to a very limited but still growth in terms of the value, after a very good dynamics that we were getting and after the change of the prices that we did back in November 2022. This is this jump that you see on the graph.

We also, for many quarters, have presented this slide, and we have left it for purpose. First of all, it tells you how much cash we generated in a single quarter. It used to be quite close approximate to the value of the revenues that we were getting per quarter. And these numbers have been actually one of the best, if not the best actually, but it has been the best quarter in terms of cash received. It was a growth of 12.9% year-on-year and more than 7% quarter-on-quarter. So it's actually been a very good quarter, and sales team has helped us a lot because they were able to close quite a lot of deals that were annual deals.

However, and this is the change that we have made in the previous quarter, we changed our revenue recognition policy. So it's no longer the cash received that are the revenues. It's -- we now split all the revenues into particular quarters or particular month for which such subscriptions or payments are made. And hence, you can see that the cash that we have received is much higher than actually the revenues that we were reporting in the last financial report. And that's because all the payments that we are getting, we split them into actual quarters for which they are paid for.

So now this 21 -- more than USD 21 million are both the revenues of the quarter but also some of the future periods. And because of that, a quarter like this one, which had very good cash flows, it doesn't directly translate into better revenues for the quarter. And that's also because we have a new position in our balance sheet, which is called the future revenue -- future revenues -- paid future revenues...

Revenue of, yes, of future periods.

Contracts. Exactly. So the cash that our clients already paid but for the future periods. And that has amounted to almost PLN 70 million as of the end of September. And a quarter like this one will also add towards this position. But now -- it's okay. But also once we have talked about those cash received and revenues numbers, we will go into much -- some other datas that these are the KPIs for particular products.

And the first one is actually LiveChat. We have rather symbolic increase in terms of the number of customers because this quarter has added just 19 clients. This is something slightly -- well, disappointing to us.

However, there are 2 parts of the -- 2 sides of the pictures. The first one, the gross additions of the clients, which had been good throughout the year and also for this quarter, they were good.

And then the other part of the picture is actually the churn. And the churn for this quarter has been, again, as in the summer months, increased. It had been much higher than the average 3%. It was closer to 3.5%. So that has affected the -- all the -- almost all additions, net -- gross additions that we had.

We have not changed any channels of acquisitions. Actually, we're able to add some. But generally, we think that this is the effect of general economic condition, so general economy because we've seen similar numbers across geographies and across sectors.

When we talk about ARPU. ARPU has been stabilized, so to say, at roughly USD 156 per customer. This is slightly lower than the numbers that we saw 12 months ago when this was at the level of $160. Now this is mainly the effect of the larger number of annual payments that -- or annual subscriptions that we are getting especially this quarter because if we sell the subscriptions at -- in annual plans, they are actually slightly cheaper, roughly 15%. So this affects ARPU.

Then I can comment also the second product, so ChatBot. There had been quite interesting things about ChatBot that took place this year. First of all, this quarter, the one that has passed, we introduced ChatBot 2.0, although it has the name of 2.0. Now it's just the ChatBot. So it's a new ChatBot, which is available for all the clients, and it has our AI model within the product. It is -- it has been very well received by the client. And also, it was awaited, especially by bigger clients. And the results we are seeing are quite good.

In terms of the numbers, the ChatBot ended -- the product ended with 2,956 active and paying customers, which is rather flat. However, if you see ARPU, there are some good signs. Marcin, can I have the second?

Yes. Of course. Of course.

So as you can see, we still see that ARPU is increasing for ChatBot. And this is -- also, if you look at initial ARPU, it adds towards the value in the quarter. Also, something that we do not normally count for MRR, but it's always good to remember in case of ChatBot product that any excess chats that are made within the plans, they are charged additionally. And for us, it means that there is additional revenue that we are getting from ChatBot.

And then we are happy to present for the second time, our HelpDesk product. In July, it has passed the milestone of 1,000 customers. Now it gets 1,121 paid customers. So the progress for this product is going very nicely. And also, if you look at the ARPU of the product, it also increases with time. So new clients add higher value to the product.

Also in terms of HelpDesk, we had made some integrations between HelpDesk and OpenWidget. Also HelpDesk was included into our solution program. So there are other ways or new ways of selling HelpDesk to the customers.

Now something that we're very happy to present. So actually, we have another -- we do not call it yet product, but an add-on for LiveChat, which is called Insights. We have -- this product has now 80 paying customers, but it's also available for free for some of the customers. And it gives you to a lot of additional information about the conversations that the client or the customer is having with their clients.

And as always, we had very good support from one of our very good customers, which is Valley Driving School, the user of actually 4 of our products and also now add -- the user of add-on. If you would like to read more about how they use it actually, you can go into the website that we have in the -- we have linked in the presentation.

Basically Insights, this is -- basically, the path that we want to go into the future with our product. So it is about text intelligence, about analyzing the data, about looking at the trends. And this is exactly what Insights gives the customers. So it tells you what are the most frequent questions asked, the trends that are getting friction. And you can actually analyze all the information, all the chats within minutes, unlike if you want to go through chat-by-chat, through your conversation. So it's actually something very valuable for the customers. And as you can see, they are willing to pay for it as well.

Now a little bit of a summary of the quarter. But of course, if you would have any questions, we will go much deeper into those issues later on in Q&A session. But most important things that took place in this quarter. So in terms of the operational KPIs, monthly recurring revenues, they grew to 2.2% on annual basis. That is -- we do not have any more the effect of increased prices that took place in November 2022. And there is an increase of 0.3% quarter-on-quarter. That's a change as well because last quarter, we did not have an increase. It was -- the parameter was flat.

We had a very good quarter in terms of cash flows. So we got USD 21.34 million in terms of cash of the payments that the customer has made. And that is an increase of almost 13% year-on-year and slightly more than 7% quarter-on-quarter. That was partly due to very good work that has been done by the sales team this quarter.

In terms of the number of customers, these numbers are not satisfactory, but they were -- what we think is that they were hampered by first of all, that we know for sure by high churn, much higher than the usual one. But because it is across the customers, the single most -- the single reason for that would be an economic downturn because it is seen on all geographies and all sectors.

In terms of the updates on the product side, the first -- the most important one is the launch of AI-based ChatBot that is available to all the customers now. We have new features and add-ons for the customers including Insights that we have presented to you. We also constantly work on new channels of customer acquisition. And an example of that was including HelpDesk to our solution program but also an integration with Webflow, so a tool to make online web pages. And we also have many other smaller or bigger things that we are working in terms of potential growth for the customers.

We are reviewing our subscription plans. And this is an important thing because we want to make our customer base much healthier. So we have not seen the price increases. However, we have seen across the plans and some situations that some of the customers were misusing the product. So there, for example, activity in terms of the chat interactions was much higher, and we think it would be much better suited if they were in a higher plan, for example. So we have made some changes to the plans so that the customers will be allocated appropriately to the plans according to their usage.

And we also have some advanced works on new revenue streams. We are not yet ready to talk more on that, but we are quite advanced in terms of the actions that we are making.

And company-wise, we have introduced new revenue recognition policy, something that was commented along the way, especially by our American investors. So now we are reporting the revenues. They are very much on line with our MRR because all the revenues are split accordingly towards the periods for which they are paid for.

I have already said that we have an advanced payment toward dividend. Actually, the -- it will be paid out on 15th of January.

And the last, but not least, something which I started the presentation. So we completed our rebranding in terms of the names. And now our subsidiary in the States is also called Text Inc.

And with that, that's the end of my presentation. Thank you for your attention. And we will be happy, me and Marcin, to take your questions. So don't be shy. Thank you.

Thank you. And thank you, Lucja. We have the first question. Thank you for that, all of them coming from Mr. Gregor Nadlinger. And -- well these are rather broad questions. But since we get this one, we start with them, and we'll be happy also to discuss that -- all the KPIs we shared.

So the very first question from Gregor, how do you get new customers?

And yes, a very important one because ChatBot really differs us from a lot of competitors who actually have huge sales team who are spending a lot of money for the customer acquisition, paid customer acquisition. We -- actually we have a lot of channels of customer acquisition. We don't like to spend too much money on them. The most important by term of number of the new customers is the currently partner program, affiliate program, which accounts for some 25% of new customers. And actually, we share revenue with affiliates, which are coming to us. We deal always with the customers.

Google positioning is extremely important. Of course, we are very strong, and strong domain names like livechat.com, chatbot.com, helpdesk.com, et cetera, are extremely helpful for us. But we are also available on many marketplaces like Shopify, Squarespace, Magento, BigCommerce. And recently, we added Webflow. So that's also important.

At the end of the day, we have like 100. By -- at the end of the month, I should say, we have like hundreds of more channels of customer acquisitions. Some of them, very small. So yes. And yes, we spent some money. We're paying for some Google Ads, but actually, for us, it is not very efficient. So of course, we try to learn how to spend money effectively, but we really don't like to overspend for that.

The next question, that's they got for Lucja. How strong is your sales team? Where they are located?

So we have actually changed quite recently the way the sales team works. So in terms of the numbers, there is less people in that team. They are located both in Poland and U.K., but also in Spain, not for some specific reasons, but we have American citizens who work from there.

That team is 5 people in terms of new business and some other 5 people in -- well, maybe slightly more in terms of account managers. And they are working now mainly with much bigger customers, those who have like dozens of -- a couple of dozen people in the company.

However, what is to be said is the fact that the sales team, actually, they work in the same manner as the whole company. So we do not do outbound. It is all about inbound leads through different channels. And we -- if we get the deal and the leads from those bigger companies, they need some more attention in terms of negotiations, payment details, but sometimes also in terms of compliance or some law issues. And then the sales team comes in and makes it much easier for the companies to find their fit and also to answer the issues that those customers are having. But we do not do outbound.

Yes. And sales process is actually very refined, and it's very much automated. Actually, you don't need to contact us to smoothly start working with our product. But some bigger organizations really need some discussions with the sales team not only about money but also about some KPIs, what they can achieve, how they can use product. So yes, it's important to have this team, but we don't like to -- idea of having a huge and expensive sales team. That's it. Yes.

Question is what is the largest customer in terms of license in U.S. dollars?

We won't name it, but it's an Asian logistics company. And they have a few hundred agents. However, important thing here to say is that we are not very much concentrated in terms of the large customers.

Important things which should be said. We have some big names among our customers, but also to be honest, some of them are not really big customers in terms of MRR because some of them are using LiveChat in some departments, in some countries, in some use cases. So yes, all the big names we are showing all of them are legit but some of them are not really huge customers.

We have some questions from Dan Chace. It's great to have you here, Dan. Can you please discuss customer attrition rates for each product? What are the main reasons for attrition. And relatedly, what is your average customer lifespan?

Well, that's a huge topic, Dan. Personally, I could discuss that for like for hours and because it's also extremely important, yes. So maybe let's concentrate on the LiveChat because, of course, we are enthusiastic, very optimistic about the new products, but it's LiveChat that is still responsible for some 94% of revenue so definitely most important.

And what is actually happening at the moment. What you can see in the results is very much determined by LiveChat. So we used to see a churn customer, monthly customer churn rate at the level of the 3%, which means that we used to think that we're going to lose 3% per customer base during the month, which, for some of you, is probably a big number when you think about it. For some of them, it's not huge number because actually, if you have a SaaS business with customer base dominated by smaller and medium customers, this 3% is not a bad result really from what we know. So yes, that's the 3%.

And what is also important, we're also looking at the KPIs called net MRR churn. It's about -- actually losing MRR. And this long-term average used to be rather close to 1%. So actually, we are losing more customers than total business -- than MRR. And pretty important a year ago, we -- more than a year ago, we changed prices and actually that was sure a pretty big increase, like 25% across the board. And of course, churn spiked, which is something obvious to 4% in November 2022.

And after that, we saw that churn is going back to normal. So then we again saw for the few months, we saw the churn, customer churn is 3%. And actually, what is happening now, unfortunately, we are seeing the much higher churn again.

And now during the last quarter, it was like 3.5%, which is very high number for us. And of course, it's very important to understand what is happening. Because, obviously, that's a problem with us, with a product that would be a huge problem if that would be -- if that reasons would be that some of our competitors are doing a great job, that would be also a big problem.

But what we are seeing, it's another problem with economic environment. So a lot of our customer base have huge problems with the business. We're doing business at the moment, looking even at the answers because, of course, when customer is leaving, we try to contact them to understand what is happening.

There's a lot more answer that they're going out of the business, they had some financial troubles and things like that. So what we are seeing is, at least what we are seeing is that a lot of our customers have some problems at the moment. And looking at the whole customer acquisition, it looks not so bad. We've got a lot of new customers, but we're losing much more. And yes -- and what we are -- actually, yes, we think that it's about economics right now in the U.S., but not only in the U.S.

What -- looking at the churn not only in the perspective of the last quarter, the main reason of customers for churning is that they're not using LiveChat. Why they're not using LiveChat? We really believe that it's a great tool, but you really need to use that tool to benefit from them. You need to have visitors on your website and in other channels of communication. You need to have a lot of chats, and then you benefit from having LiveChat. And some of the customers don't have a lot of chats. It's very difficult to fight out this kind of churn. So that would be the definitely #1 reason of the churn overall.

And of course, we are being harsh for ourselves showing this number at 3% because we have also a lot of customers who are buying LiveChat and using LiveChat on a seasonal basis or for example, when they have some project like conference, so they starts to actually using LiveChat only for some time. So yes, that's also some part of churn.

So yes, I would say that's the main -- that how churn looks like at LiveChat and that's the main reasons. And to some point, that looks very much the same in the case of ChatBot and also HelpDesk but that's not all, churn, especially in the case of ChatBot would be usually higher. Why? Because LiveChat is extremely easy tool to jump in, to start work with, and that's not the case with ChatBot. So we used to lose a lot of customers at the very beginning of the customer's life cycle because they didn't were able really to build the first scenarios to properly start working with ChatBot.

And I think that the new version of ChatBot based on AI response to that problem partly. So I think I would be happy to precise some more questions, but of course, our time is -- I mean that's limited, but we definitely like to address other questions, discuss other KPIs. So if you have some more questions, please, of course, we'll be happy to continue. But now we can jump. I think we will jump to next questions.

So the next question is from Peter Lottrup. Have we considered...

We have one -- okay. Sorry. Yes. Another question about from Robert about churn. So I think we answered that.

Exactly. So we have a question whether we consider to do the English conference call before the Polish conference call?

And we have done the way it is now for a purpose because we want to -- our American investors to be able to join the conferences. If the English one was earlier, they wouldn't be able to join. So sorry for that.

The second question is how many customers do we -- have we generated from Square.com partnership?

As...

No, we don't think that -- we actually never giving precise numbers about some partners because that would be unfair to communicate that way about them without they knowing about them. So it's no. But that's the good cooperation. That's the good cooperation. We're very happy with this cooperation. Squarespace is also doing well. We are very excited about Webflow definitely. A lot of good cooperation from the Webflow. So yes, we're happy. We're happy with that being done, having these cooperations.

We have another question from Gregor Nadlinger. What are the most important issues for 2024?

And for us, there are a couple of issues or challenges or possible outcomes. So the first one is we very much concentrate on the growth of the customers now. So we have a lot of initiatives that are already being launched or will be launched quite soon that aim to make our products much more demanded by the employees of the -- of our customers. So to make them more used within those companies.

We also -- AI is definitely an issue. We have already, our ChatBot running on our own model. And this model will be enhanced. And also in the next quarters, our models will be launched in other products. So this is something that we very much work on.

And automatization, again, similarly as last year is the key to our products. Then we are going into the direction of as our vision says, text intelligence. So there will be a lot of happening in terms of analysis of the written communication and giving the customers value in this area.

Also, we are looking on other streams of revenues into the future. We have already initiated some things, and we are not really ready to talk more about those. But we think this will -- well, this -- it will -- it should be visible by the end of the year definitely. So more products and more revenue streams will be the topic of this year.

Yes. And of course -- and looking just after numbers not something which is most important for us because, of course, these companies say that the company is doing good. We are profitable. We're making money. We're still growing also. But of course, that we are not happy with the pace we had in the last quarters.

So yes, of course, if you look at -- just at the financial that return to growth would be good. Looking at the numbers, just reducing churn, customer churn to this 3% we used to see would be a great deal for us because that would means that instead of having like growth of 10 customers per quarter, that would be like easily, easily 500 per quarter.

So yes, that would be extremely important to deal with this churn. But if that effect from -- really from the economy, you are right, that is difficult to us to do something about that, but we need to be ready. It's really -- it's not like we just staying, resting and waiting for environment to looks better. No, we definitely -- we have a lot of things we are doing in the company.

And actually that next question is about very important thing we are doing. It's from Guillaume Bu -- sorry, Guillaume. I used to learn French actually. I was learning French from a lot, and sometimes I'm still not sure about pronunciation. Guillaume Buhours, sorry. But the question is important. Could you please come back on the client base management? Did you already restructure the client base or are you currently doing that?

So, yes...

This is -- that I wanted to also add to what you, Marcin were telling. So we are also ready to make some sacrifice in terms of the number of clients, so in terms of churn customers because we want to make our customer base more healthy. And what we mean by healthy is some of the customers are having extensive activity within, for example, the lowest plans. And we are not okay with that because that means high usage. And the margin on this particular clients for us is almost nonexistent.

So in such cases, we will be slightly forcing the clients to change the plans and in that way, make them -- they will be on the plans that are made for them. And we started to do some of those works in the last weeks. So the effects will be seen -- I mean the immediate effect that you might see is -- would be actually the lost customers.

But long term, we think that it will allow us to have the right customers in the right plans, and we will hopefully not have customers who would be abusing the use of the products. So that's something also like the first changes that we will be doing in terms of the plans and the pricing, this will be the ones. And secondly, we will get back to the changes in terms of the pricing.

Yes. Exactly. So that would be processed. I mean that would be a long process, that would be many steps along the way. But the first steps are already made at the end of the year, and some of these changes are introduced.

Then we have a question from Bosco Ojeda. If I pronounce it wrong, forgive me, please. Hi, can you describe how long...

As a Pole girl from Poland, and as Poles actually we used to have our names pronounced badly. And of course, sorry for making some mistakes. It's absolutely great to see everybody from different countries interested in Text. And it's great to have you here. So sorry if we are making some faults here.

So the question is, can we describe how long would typical clients last and rough numbers on churn rates and why it has increased lately?

And I think that the very first question that -- sorry, the very first answer that Marcin was giving about the churn in LiveChat and ChatBot is exactly the answer that is to this question. So I'm going to mark it as answered.

And question from William Corbett. I am trying to understand the size of total addressable markets for the LiveChat and ChatBot. Do you have any figures for approximate size? What percentage of potential customers are currently using a product supplied by either you or your competitors?

Maybe I will start because actually -- some Polish investor actually made me that -- this question today. And actually, I answered him. And actually, according to data, we saw in 2022, 5 million new companies were created in the U.S. And actually, of course, probably lifespan of some of these customers was extremely short. And some of them are probably extremely small companies, small businesses, which really are not probably our customers, are meant to be our customers.

But still, that's a lot of new businesses which are created each day. And we are concentrated on the U.S. So we really -- we don't think that market is saturated even now when you can see that net additions of our business are extremely low. Actually it's like no growth at all. Actually, that's the result of the churn, and actually, the customer acquisition is quite solid. The problem is with the churn. So definitely, we don't think the market is maturated. I know it's part of the answer only.

We still have a lot of potential, a lot of newcomers. And we, of course, we're discussing the U.S. We are concentrated in the U.S., but it also looked at, for example, the Europe, the market is -- in comparison to U.S. very underdeveloped. So yes, we don't worry about saturation of the market. Of course, maybe we are wrong. Maybe we are not right. But really we are -- not something we worry about at all.

But -- so according to some estimates we saw, it's not really our estimate. As for today, LiveChat market value can be in the area of $1 billion, ChatBot market in the area of few billion dollars, HelpDesk like $10 billion. For example, LivePerson actually sometimes, this is discussing so-called conversational market, which is like worth of billions -- a lot of billions dollars. So that's what we're looking at the market. Lucja, do you want to add something?

I think it's a good description. The problem that we were -- we always have is actually there are no good numbers in terms of the penetration of the market or in terms of the respective sizes or respective shares of each of the companies. And that is also because of the different sizes of customers.

And that means also that if you take into account a number of customers, there might be companies that have a lot of them but provide, for example, for free products. But then if you make it revenue, if you try to estimate it's revenue based, the very big names like LivePerson or Intercom with big clients, they have large share in terms of the revenue.

So it's really hard to estimate those. The good thing is that actually there are quite a lot of companies created each year. And so there are still a lot of new entrants as in not the competitors, but new companies who look for such solutions. And this is also something that makes a win for us that such companies choose us, for example.

Of course, it should be said that there is a lot of competitors in that space, companies which are offering similar products or adding some chatting features to different kinds of products, which is also important and source of competitors. So yes, it must be said.

And the next question from Guillaume. Do you have any news related to the next price increase?

The changes of prices will be part of this process of what we are doing, looking at our plans. So yes, definitely think about changing in pricing. I think it will happen. But what will happen, it will be probably a lot of small things, not like next huge move...

And products?

Yes, yes, in our products, in our plans. A lot of the plans, now we are concentrated more on the lower plans, on the start-up plan. There will be some features moved probably between the plans. But yes, I would say yes. At the end of the day, we will see some changes in prices and definitely not the decrease. Increase will happen.

That's then. And the next question is from Robert Szusich. And he wants us to comment more about the trends in customer acquisition costs.

And in that area, there are not that many new things or trends. We have more or less the same customer acquisition -- ways of acquiring the customer. Definitely, the program partner is, in some way, a cost to us. So that means we give away 25% at least or more to the most active partners in terms of the revenue.

We do have some paid marketing, although it's a very limited one in terms of it is Google Ads, for example. So for us, there is no direct like per quarter cost, but it's long-term work on building those acquisition channels. And among others, this web link will be a channel that we've worked on most recently. But the -- as such, the costs have not that changed.

I think looking at the trends, it's almost here now. We actually introduced some changes to partner program. Now affiliates can get more than 20%, even up to 30% of the revenue as the revenue share. And this program is important for us, and it's growing. So yes, there's some changes can come from that direction. So that can be changed. That can be some change where, I would say, negative because that from our perspective, expensive channel of the customer acquisition.

But as we paying for the results, here it's really -- it's something we are willing to pay. We have got no problem with that. We really have problem with just burning money. So yes, that -- because of that, customer acquisition cost can be a little bit higher. If you look at from the perspective of the margins for the whole company, I think the zloty to dollar exchange rates will be much more important factor because you should remember that we're generating all the revenues in dollars, even if Polish company wants to buy LiveChat, they will be charging in dollars.

The cost split, like historically speaking, like 50-50 between zloty and dollars. So of course, we can see some negative trend, zloty is now much stronger. So that's something negative for us. That's something which can affect margins.

And next anonymous question. Any ideas, is your market share in the LiveChat space as the end of 2023? Are you growing market share?

And I think Lucja answer that questions really because actually for us, it's very difficult to look exactly at the value of the market, thinking about the value of the market, my guess, but I think rather guess is that we get some market space. But looking at the number which is by far not the perfect KPIs, not the perfect metric looking at the numbers of the website.

With LiveChat technology, it's probably stable. It's like #5, tech #5 with 6-plus percent of the market. But please have in mind that actually looking at that metrics, the free solutions are dominant.

So -- and I think it's very -- it looks pretty stable. But of course, looking at that metric is definitely not perfect. You really -- you can distinguish paying customers from not paying customers. Sometimes you can see some former customers, which are not delighted at your cost from website as -- in that data, you can see trials. So actually not something I would really love to refer as perfect source of information.

And the next question from Guillaume. What Is your retention rate?

So we used to discuss MRR net churn. We used to be in the area of the 1% monthly, sometimes negative, of course. Of course, in the November last year, it was like minus 30% after the change rate that the perfect net MRR churn would be below 0. Unfortunately, it's not. It also -- in the last quarter, it also was higher. That is 1%. It was below -- above 1% as the customer churn was above this transitional 3%. But of course, it's something we're really working on. Retention is definitely a huge focus for us actually at the moment. And we have a lot of ideas and some initiatives which should help us with this in that area.

The next question comes from Grant Pitcher. Has this quarter historically been strong for net customer acquisitions?

And my answer would be mixed actually because for customer acquisition, like the -- not for the enterprise customers, it's not the best quarter. That's because it's actually the quarter with a lot of interactions done by our clients. But not as many companies actually pick up new software solutions in the last...

November looking at -- it depends if you look at the whole quarter. I mean because it's very mixed. I mean November, yes, we used to be record sometimes the best month in the turn of the net customer acquisitions.

Not a year ago, because actually, we have this spike in the prices. We -- so it definitely wasn't great. And before that, we have pandemic and pandemic changed a lot. Of course, it's affected seasonality, and we had the best month actually. It was like April, May and June in 2020. So yes, it depends.

Historically speaking, November used to be a very strong month. Actually looking at net additions until last quarter, November was worst for LiveChat because of the churn. December was better, which is like a [indiscernible] because December used to be one of the weakest month usually.

So yes, churn actually -- if you look at the net addition, churn is like a game changer. And the growth additions looks, of course, not so bad, historically speaking, quite solid. The churn in change of [indiscernible] can actually, historically speaking, December was usually quite weak in terms of the churn and new customer acquisition.

So yes, but not real typical hard quarter. If you look at the single months and the whole quarter, the whole quarter was really mixed with strong November and weak -- but weak end of the year and actually for us that December. The first half of December was harder in the sense. We've been going now into -- probably, we gone into too much details.

But still, for example, although Marcin discussed low numbers for December, for example, for the sales team, this quarter has been excellent actually. So -- and on contrary, last year, the last quarter wasn't so good whereas the beginning of the year was very good. So sometimes we get really mixed picture and something that we take for a trend or for a something which is -- which can be part of some not cyclical, but something that happens that way is not happening. So it's -- sometimes it's a very mixed picture.

Yes. We've really -- we don't want to blast this picture. It's just I think a lot of the things which come into that picture.

I think, I'll leave the next question for later, and we'll start -- we'll answer the questions about the current quarter first, and then we can return back to like more general questions if that's okay.

So the next question is from David Nelson. Does the increase in churn prompt you to defer future price increases?

And partly that has been answered. However, what we will do is, first of all, we'll try to make our customer base healthier. And as such, this will imply some changes to the pricing model and to some mixes between the plans and in the future also to some price increases.

However, like the most important thing for us now is to make sure that the right customers are in the right plans. This is the very first thing that we want to tackle.

Then we have a question from Yannic Joekel. If ChatBot had higher churn in the past due to many clients having problems with scenarios, how did churn rates with the new ChatBot products evolve during the quarter, as it is now ChatBot 2.0? How about the churn from LiveChat, did you see pickup in churn?

The second part we have discussed. The first part, we actually have seen only 1 month with the full ChatBot 2.0, and this churn was much lower. However, that wouldn't -- like I wouldn't be -- I mean, I don't want to take it for a trend actually. So it's too soon for us to see whether it has changed the things for the customers, although we will very much hope so.

While you take changes we made before sometimes ago, actually a new way of building scenario helps a lot, and that's much we got change. It should help, but yes, definitely, let's wait and see because, yes, we will learn a lot in coming months.

And okay, maybe that one is quick. So maybe the next question from Max Stenberg. How many employees do you have now? How does the operational cost base look going forward?

Of course, from the formal point of view, we don't have employees. That's kind of employee-specific, but let's not go into details. The team is smaller. We are scaling down as a team, as an organization, not because we have to, not because we feel some pressure but because we can do that. We have a lot of automation in our work. So actually, we can do that. We're still hiring even in the last month, we had 2 more people, one person which is skilled data specialist. And we looked for the people like that for data engineers, data scientists. We have some needs in that area. But yes, but we are scaling down. What you were referring to these numbers in the previous call.

Well, so at the end of 2022, we had 295 people, so almost 300. At the end of September, it was 265. And now we have still a few less people.

Yes. And of course, about the total cost, well, I don't think we are able to reduce the whole cost base, but the pressure should be much lower. With changes on the job market, with the lower inflation, the pressure should be significantly lower. So don't expect that we are able to reduce our costs, but yes, it should be -- the pressure should be lower.

I'm going to take another question about the churn now. So from anonymous attendee. Clearly, the macro environment is driving some of the churn, but how do you intend to figure out whether or not increased competition could be the primary driver of churn? Do you think you are far enough in the process of reaching out to customers that determine that increased competition isn't driving the churn.

The most feedback that we are getting is, if at all, is from the churn customers. So we know and we also track whether they are going to some other providers. And that's not usually the case. The part that we do not see is actually the minds of the potential customers who are choosing between the providers. And that is something that we wouldn't be able to know.

However, on the enterprise side, when our salespeople talk to the customers, we think that we know slightly more on the subject. And we know that the price actually is not the most important factor in the decision process of such companies. Of course, for some it is. For some, it isn't.

We -- I mean many investors and also analysts have pointed out to the fact that we might be getting the competition from AI providers or the providers who use extensively AI in the products. What we see is the fact that the companies -- the bigger companies are still not ready for that. And actually, our 20 years presence on the market is to some, a huge advantage.

So I mean, from the feedback that -- and information that we were getting, that's not really the case. Although we are -- I mean we are also -- we can take -- I mean we can reverse the changes quite quickly if we make, for example, price increases and they will be -- the things will be going badly. So I mean we have this agile approach that we will definitely try in the future with the prices.

But yes, the main answer -- the answer for the main question is really easy because actually you can go, you can check website of the churned customers and check what he is using. So no problem with that.

Of course, maybe if that -- it would be checked again after some times that the answer would be different and some customer can check new competitors, new provider after some time, but nevertheless. And definitely don't get me wrong, we are not saying that there is no migration, that we are not losing some customers to other providers. It's happening. Of course, it's happening all the time, but no, not really, no change here. More answers from their leaving customers that they're leaving because of the business.

Well, we have 3 more questions, and I think where we have to start. The next anonymous, maybe with that one from the anonymous. Are there any apprehensions regarding the potential impact of ChatBot on cannibalizing LiveChat?

So of course, ChatBot is and not only our ChatBot, but also other bots are around for the few years. And actually, we didn't saw a lot of cannibalizing. Now it's like single situation when actually some of our customers chose ChatBot over the LiveChat. You can do that because actually in our case, in our ChatBot, the so-called chat widget is one of the ChatBot's feature. So it can actually use only ChatBot.

In many cases, you really need bot, but you really need also this channel of communication. And of course, among features of LiveChat are also -- and also data security, this new channel of communication which comes with customer support, security of the data, some first -- that agreements and so on and so on.

So yes, so not -- for now, not. But of course, automation in coming years, maybe even not the quarter but in coming years, automation will be extremely important. And yes, LiveChat will be more automated. And people, that role of the human in that product will change more to -- actually, we test a lot of -- we showing our vision and what we are thinking about this change on text.com. So absolutely, you should go to text.com and check our vision because actually we are showing what we think about this change.

So yes, in the future, there will be changes. As for today, LiveChat is the channel of communication as at all when you can organize work of your team, when you can gather also information, also some critical information, important information, when you can analyze that information maybe using our new solution, Insights.

And the bot is just a very good agent, very efficient agent. You cannot -- some of our customers are using our ChatBot, and they're using Messenger, Facebook Messenger as the channel of communication. The ChatBot is integrated with the Messenger.

So of course, that the future is coming with some changes, but definitely from what we saw in the last year that we don't see -- we didn't saw a lot of cannibalization. But a lot of change in automation is a huge, huge things. And yes, a lot of things will change.

And the next -- last 2 questions. I think maybe Benjamin Gardner. Could you talk more about how annual plans being offered at discounts drove the decrease in ARPU? Is this different than your strategy historically?

It' definitely not. Because always the annual subscriptions were offered at lower price. However, this quarter, it's exceptionally this factor has -- well, not added actually, but it was the main one behind the decrease of ARPU. That's because there were quite a lot of deals signed by the sales team, for example, and they were the annual plans.

Yes. So no, definitely annual plan is something we try to show you as our customers. We actually try to sell you an annual plan. If you go to our website, you will see actually the annual plans, as I highlighted. So yes, it's not -- for us, it's not something negative. That's something we try to encourage you to pay annually. So yes, that's something positive and very slightly lower ARPU is that at the price we're willing to pay for that. It's good to have more annual plans definitely. No doubt about it.

And the next question, not -- sorry for that because it definitely wasn't the last question asked. But the last we will answer probably today from [ Robert Park ]. Who are your main competitors and how do you compare with them?

A lot. A lot of competitors in the market, a very different one. Some of them are great companies. We have a lot respect for them. So looking at the whole market, you have some strong companies which are offering very simple free solutions. And of course, it's not something new, always was like that. You have a very popular solution offered by a company called tawk.to but also by Facebook. And actually, if you feeling -- think about LiveChat just about this main functionality is something you can have for free.

On the other hand, you have companies like now I'm thinking most about LivePerson, who are dealing with huge, huge enterprise deals. And they offer not only cloud solutions and building a dedicated solution for some brands. And they actually have a multimillion dollars deals. And we are not [indiscernible] obviously, but we are something in between.

So our niche would be small or medium-sized companies, but the companies which are making money because of the LiveChat they really looks actively how to convert website, the online business, the companies for -- which really care about the communication process with the customers. For these companies, the communication is important in sense of sometimes the -- a competitive advantage, they take care about safety of the data, they take care of about the sustainability of the service, they provide that. They're using -- sometimes they're using more than one channel of communications to work with some data provided in the chat, or they just want to be where the customers wants them to be. So they really want to be available for the customers in different channels of communications.

And yes, we are in that niche. So we are -- and it's not so small niche. And of course, we like to expand. So we definitely like to broader offer. That's why we are adding new products. And looking at the names, I mentioned LivePerson, I mentioned tawk.to and Facebook are probably that the companies which are more direct customers of ours. I would say Zendesk definitely. I would say Intercom. Maybe, Lucja -- maybe you want to add something as a direct competitor.

We -- these 2 definitely are the closest ones. We get into competition with some other ones like in specific areas. For example, marketing, when it comes to marketing, it's HubSpot, for example. But the ones Marcin mentioned are the ones we mostly talk about if we compare ourselves with other providers.

So that's the all questions. That was definitely more than an hour. Thank you for being with us. Thank you for the questions. Thank you for your time. It was a pleasure to meet you. It was very long day. Of course, we'd be much more happy to having stronger numbers, being able to show you stronger numbers, but definitely that our companies are working hard to improve this number. And we have a lot of things and doing in our companies, a lot of initiatives. And we are rather optimistic.

And environment is still definitely demanding, challenging, but now we have a lot of things in the company we are excited about and we'd like to see in the making. So thank you. Thanks again. Having -- let's have a great day.

Very good day.

Thank you. Bye.