Text SA

WSE:TXT

Earnings Call Analysis

Earnings Call Transcript 2024-Q4

[Lucja Kaseja, executive]

Good afternoon, everyone. Welcome to Text Group webinar concerning KPIs for the fourth quarter of the financial year, that is the period of January 2024 to March 2024. I'm Lucja Kaseja, Manager of Investor Relations at Text here with me is also Marcin Droba, the Head of IR at Text. And today, it will be our pleasure, firstly mine and later on also of Marcin to discuss the recent KPIs. And -- so let's start.

The vision and mission for Text remains the same as it's been for a year now. So Text Intelligence for better customer service, but we're also happy to share with you that next Thursday, it will be 10 years of Text, previously LiveChat as a publicly listed company. And we are very grateful to those investors who have been with us for the last 10 years because we have some investors like that. And we will take a very short moment to actually summarize those 10 years because we are quite proud of what we've managed to do as a listed company.

So we started in 2014 when there was the IPO of the company with 7,600 clients of then just LiveChat product. Now 10 years later, we have almost 6x more customers, so actually almost 43,000 of subscriptions for paid products: LiveChat, ChatBot, HelpDesk and KnowledgeBase.

Our annual recurring revenues at the time were USD 6.2 million which is less than we actually have MRR now. And in those 10 years, we managed to increase those by more than 12x. I think we were also very good at growing our earnings per share because CAGR of EPS was 37.5% over that period. And we also were very consistent in paying dividends, which actually outgrew the IPO price. We did not have -- we did not raise the capital at the time of the IPO, but with -- the IPO share price at the time of the offering was [ PLN 18.60 ] and the dividends that we have paid out were over PLN 25. So the dividend per share was actually covered well and the initial share price.

Once again, thank you to those investors who have been with us for those years, and that was the past. I think we will now discuss the present, and hopefully, in the discussions after the presentation, we will be also able to discuss the future of the company.

[Marcin Droba, executive]

Just let me say that I was there at the debut, I remember today. So, of course, on a personal level, it's also a very important anniversary for me because I remember today, it was at the Warsaw Stock Exchange at the event of the debut. So happy to be there and happy to be here now.

[Lucja Kaseja, executive]

And as always, we start with a very brief discussion of who we are. So we are a global SaaS -- Software as a Service business. We sell the products in form of subscriptions with our main markets being United States. We have very unique customer acquisition model, and we still have the co-founders present at the company level. And we also are a dividend-paying company with, as I already mentioned, a very good track record of those.

I won't go into the products in specific because hopefully, more or less, all of you know, LiveChat, ChatBot, HelpDesk and KnowledgeBase, but I will be happy to discuss the KPIs for Q4 of our financial year.

So the very first metric that I'm going to discuss is monthly recurring revenues. So this actually stood at USD 660,000 at the end of March. And it is actually the good results that it is -- it's the result of optimizing the structure of our product price, lists and the usage -- the use of products by our clients. I'm going to discuss that further. But actually, this is the quarter when we -- where we had growth. It was 2.6% year-on-year -- no, sorry, 2.6% quarter-on-quarter growth and 4.1% year-on-year growth, which are a good indication of where we want to go this year.

[Marcin Droba, executive]

Because, of course, it's not like our target, definitely not, but definitely better than that we saw in the last quarter.

[Lucja Kaseja, executive]

The second slide we -- I'm going to discuss is actually the payments received. And as you see, this was, again, a record quarter in terms of the payments. They exceeded USD 21 million. We're actually quite close to USD 22 million. And what is important to mention here is actually that helped us this quarter has been very strong in terms of the growth. As you can see on the slide, you can actually see the green color on the graph.

In case of customers, here, we have quite long perspective because this is for the past 3 years -- this number of customers. Actually, you cannot really see that strong what had been happening in January, February or March this year, but important things took place actually at the end of the year. We started to optimize the price list, and we did couple of things aimed at the way the customers use or the way they use our terms of usage of the product. Those started to operate at the end of the 2023 and early January this year.

And the immediate effect, as you can, I hope, see on this graph is actually that the number of customers went down. That is because we targeted the customers who were using the product not properly, over using. However, if you look at more or less the line for the quarter, it is quite stable because actually, quarter-on-quarter, there was minus 9 customers.

This quite unfortunate event is that the end of the month was actually the weekend and the Easter break, because it's -- usually the way it works with our customer is that we have more -- more churn during the weekend. So actually, if it was Monday or Tuesday, we might have seen a positive number in terms of the customers on a quarterly basis. But still, if you just look on the March data, on this number of customers that we managed to add in March, this is plus 72 customers. So it's actually quite promising.

Then the second KPI for LiveChat product is ARPU. And here again, you can see the history of ARPU for the last couple of years, but something important took place, again at the end of the year. You can see that there was a sharp increase in ARPU in January. This is exactly the time when we started to -- or actually the end of December, it was to start, but the effect was mainly in January. This was when we started to optimize the pricing list and we imposed some limits on the activity of the customers in terms of the number of sessions or number of sessions or the number of chats they could have at the same time.

And the direct result of those actions is increase in ARPU. Such changes to the pricing list and to -- also meant that we were -- we lost some of the customers. So the churn -- customer churn increased. And you can see these numbers or the data, when you look at the number of customers. But at the same time, there is a third component that was improved. So net MRR churn, which at the beginning of the year was improved.

So actually, those changes that we did to the pricing list to those limits that we imposed on the customers, they have worked, all in all, in a positive direction because ARPU was higher, now at the level of USD 160. But also it meant some more churn in terms of the number of customers. We will be continuing such activities, such optimization into the year. So there will be -- we hopefully will see again an effect -- a positive effect on ARPU, but also there will be some cost of that, so increased churn.

In terms of the same data for ChatBot, for the number of customers of ChatBot product, it was a difficult quarter. Maybe we could even call it a little bit disappointing because we actually -- well, the level was almost stable. We lost on a net level to customers. But what is important, we were very product-focused in terms of ChatBot. So there was -- quite a few new things were added to ChatBot. We were less focused on customer acquisition. But hopefully, especially that we plan to link to more LiveChat product with ChatBot, it will bring new customers to ChatBot.

Although the number of customers was slightly disappointing, ARPU of ChatBot product is still growing. So the new customers that we add to the product, they actually support ARPU, and even this added another USD 2 during the quarter. Also together -- and we've always -- we're saying that without maybe indicating special -- like specific numbers, when you think about ChatBot, there are -- actually, there is a subscription part. So this is ARPU that we see, but also there is additional part that the customers might pay.

So if you exceed the number of interactions that are in a specific plan, you have to pay additionally per each specific -- per each chat. And we have increased the pricing of that. So it used to be $0.01 and it's still $0.01 for the old customers. But now for the new customers of ChatBot, each interaction that is over the limit that is imposed in a specific plan costs $0.3.

What it essentially means is that on top of the part -- the recurring revenue that we're getting from ChatBot, there is also an additional part of the revenues. These are the revenues that we get from those additional chats. And if those additional chats were added to this ARPU that we have on the slide, that would give usually another $30 to ARPU.

We cannot actually show it together because this payments for additional chats, they are not really recurring because they depend on the usage. But if you added another $30, and after the price increase that we had in March, those additional chats would bring another USD 40 to ChatBot's ARPU. So it actually shows you that unlike with LiveChat, where we are -- where we update those -- we'll optimize those price lists; here, we increased the price for additional charts.

And here, we have the data for HelpDesk. We started to show HelpDesk I think, 2 quarters ago, and it is actually proved to be a very good product to describe because this is -- this quarter, it was the best growing product. First of all, you can see that on a net level, we added 42 customers in the quarter. So it was growing very nicely.

Also, HelpDesk is part of the affiliate program for over a year now. But finally, we get this source of new customers working very well. There will be also increased potential from HelpDesk because actually, it will be joined together with a KnowledgeBase. It will -- KnowledgeBase will stop being a separate product. It will be combined with HelpDesk, and it should actually bring more value for HelpDesk, also marketing value. So it will help us to further increase ARPU of this product.

And it is also a slightly different product in terms of the usage because it has actually an excellent product retention. So with -- the essence of HelpDesk is that many people work on tickets on the issues within the product. And it's nice, it is actually nice to add new users of HelpDesk. And for us as a SaaS business, it means that the retention of this product is very, very good.

Also, you can see that on the level of ARPU because the growth of ARPU is very well. And in the last months of this financial year, actually for January to March, this product had a negative MRR churn. So the retention of clients was superb. And that meant that only in March this year, we added 3 -- more than USD 3 to ARPU despite the fact that the initial payments for HelpDesk product in the beginning of the year were very low. So on the level of USD 50. But still the product managed to grow very well. And in this product, the retention is the key.

And we have discussed the KPIs of different products. Now, we will more discuss the product, maybe not roadmap, but the most recent events that we had within the products. So the first one goes for LiveChat. We have now One, the new AI assistant. And this is the companion that helps navigating all agents using LiveChat. So at the very first moment when you open the LiveChat product, the first chat that you see is actually the AI assistant. It allows you to ask questions, ask -- you can ask this AI assistant about your own activity, the number of chats you had or you can ask about the product.

And this is something that we really wanted to show our customers because over the last 1.5 years, we've made a lot of new features, a lot of -- we've invested a lot in AI. But one thing that was not going so well was actually showing the -- and the value to the customers, we saw that many of the customers were reluctant to use AI and some of them even requested AI to be turned off. So in order to be able to show actually the value in our product development in AI solutions, we have -- we now display AI assistant, the One, right in front of the customer.

Also after using our ChatBot, the ChatBot product for the last 4 months, we can share with you the results that are achieved with our own ChatBot. So when you enter livechat.com website, the very first conversation that you have is with our -- with the ChatBot and it is ChatBot, I mean the product -- the ChatBot product. So for those 4 months, AI Bot had 400,000 conversations on its own. So that meant without any human, without a human agent, and that is 80% of all chats that our customers had on our website.

This amount of conversations means that if it was not the ChatBot, we would need an equivalent work of 100 full agents -- full-time agents handling those chats. So that shows that by having this ChatBot on our website, that is equivalent of savings from those 100 full-time agents of USD 3.6 million.

So to show you -- like to be precise here, if we didn't have any AI, any bot in place on our website, you would need many, many more agents. Having this ChatBot on our website allows us to have so many conversations. And what is also important, our ChatBot is on par with human agents with our consultants in terms of the customer satisfaction. So the bot maintains 95% of positive customer satisfaction. And this data, this is based on our own usage of our own products on the website. However, we think that the more you work on the bots, you can actually improve those numbers.

So this is something that we are very proud to have. But one thing to be said as well is the fact that it doesn't exclude -- it doesn't mean that we want to exclude agents. In our case, the most skilled customer support people are now helping with developing more complex solutions for our customers to be able to serve them better into the future.

And now the highlights of the quarter. And after that, we'll go into the questions. So for the quarter, we had an MRR growth of 2.6% compared to the previous quarter, and 4% year-on-year. So we entered -- actually the calendar year with growth in terms of the MRR. Also, we had recurred in terms of the value of the payments received in the quarter, and that was an increase of 8.6% over the last year. And it is important to say that we -- our sales team, they had quite good quarter and some successful customers.

We have not shared in our presentations these numbers, but a little thing to be proud of maybe as a kind of a starter, we have now 59 customers paying for all 4 products. And 2 of the -- sorry, 10 of them were added during the fourth quarter.

In terms of the product, we started the year with the road map of optimization for all of the products. So with LiveChat, these are the actions to optimize the price list and the usage of the product by the customers. And this quarter, it's translated into growth of ARPU, but also meant that the customer churn was higher during the quarter. But we also have a road map for further optimization activities in the following quarters. And that means, for example, removing the legacy plans that we had in place for LiveChat product.

In LiveChat, we also have this AI assistant, One, implemented, and it is to show the customers the value of AI in the product. In ChatBot, we are very much focused on the product side, but we also made some price updates. So there is this increased price for additional chats for the new customers. To be able to show a better value of help this product, which is anyway doing very well, it will be merged with KnowledgeBase.

And for us, it will -- it means it will have a better marketing potential as a combined product. And we are also continuing works on new products and revenue streams. And hopefully, we will be able to show some numbers with the presentation of the next quarter KPIs. And that's all on my side this time. We're happy to answer any questions that you have.

[Marcin Droba, executive]

And we have I think one question for now. So let's start. [Operator Instructions] Okay, we have the first [indiscernible]. Thank you, Lucja.

We start with this written questions. From [indiscernible], good afternoon. Thanks for the presentation and congratulations for Text's excellent KPIs.

Thank you. You are very kind.

It starts an update with the possibility of share buybacks. The current valuation of the stock is very cheap and buybacks at this moment would create value for the long-term investors.

Thank you for that question. I mean we received actually during a quarter, last quarter, we received a lot of voices like that about that buyback, and we have this discussion. So we have internal discussion on the buyback right now at the moment. Of course, we have a dividend policy at place. We started to gather some feedback from investors from different groups and investors and the feedback is mixed.

I mean the feedback is mixed. I think, rather, foreign investors are in favor of some buyback and we can see reasons behind that voices because, now definitely the share price is now where it is. So of course, reasonable.

At the same time, some long-term investors who are with us from these 10 years even, like [indiscernible] are not in favor of that. So no decision yet, no decision made. We have this discussion. If you have some additional points you would like to make, we are open to hear that. For now, we -- no decision made. Just discussion on that point. But, thank you. Thank you for raising that topic.

And maybe we will let [ Lucas ] ask questions.

[Unknown Analyst]

I have a question regarding the ChatBot, and please correct me if I'm wrong. So you said that around $40 came from the interactions which were above the limit. So is it correct to think that around like 30%. So if we add that to the ARPU, the current ARPU of ChatBot is $134 plus like $40 gives you $174, which means that around 30% of the revenues of ChatBot came from that interactions above the usage limit. Is that correct?

[Marcin Droba, executive]

For March -- for March, it is correct. It used to be -- in the previous months, it was rather $30, it was rather $30. I mean, March was very good in terms of the usage, and we have some new customers who are at the new prices. So yes, the March was extremely good, was record high. But yes, it's like $40 additional in March would be added to RPO.

[Unknown Analyst]

Okay. And how much would you say that number has been on average in the past, like in terms of like more close to $30 or more close to $40?

[Marcin Droba, executive]

$30. It was around $30.

[Lucja Kaseja, executive]

$30. So on average, in a quarter, we're receiving below [ $40 ] per USD 300,000 from these additional chats. And in terms of ARPU, that meant on average, [ $40 ] additionally.

[Unknown Analyst]

And can I ask another question? Okay. So I mean, can you please tell us 1what the outlook look like for HelpDesk, right? I mean you're now going to be merging that with HelpDesk and -- so how do you see that product in 5 years?

[Lucja Kaseja, executive]

I mean, it is quite difficult for us to see where the product will be in 5 years' time. However, we were always saying that HelpDesk market is actually much bigger in terms of the size than LiveChat or ChatBot. So definitely, the market is huge and the potential is there, but we also have very well positioned already other players. So it will be difficult to take the first place.

However, one thing about HelpDesk is actually that it is much more sticky for the customers because once you use it for -- for your organization, it first of all, usually requires more agents. And then once you have that system installed at your company, you stay with the product much longer. So it's slightly different to, for example, LiveChat.

[Marcin Droba, executive]

So sorry for not being more, I mean, maybe exact when it comes to forecast, but very long perspective. It is now something very difficult for us to really make responsibility. But we were -- I mean, even now looking at HelpDesk is doing very good. I mean, definitely, we'd like and we really hope that we'll be able to grow faster. But even looking at revenue retention, I mean that's absolutely perfect situation for the SaaS product when you have a negative net MRR churn. That's something you really would want to achieve. That would be perfect to have such results on permanent basis for the LiveChat.

I mean HelpDesk, it's not so easy to embrace. It's not so easy to onboard that LiveChat or LiveChat Advantage. But when you get HelpDesk, when you start to work with HelpDesk, it's a really sticky for you. So very excited. Market is huge. So we're very optimistic when it comes to HelpDesk.

And we have some, next, written questions. Question From Mr. [indiscernible]. How is LiveChat performing versus the market and versus competitors?

[Lucja Kaseja, executive]

That's a very broad question.

[Marcin Droba, executive]

So what, maybe, referred. What we can track easily in terms of market performance of the LiveChat, is the share in the -- when you look at the number of the LiveChats installed on some website. So it's not exactly the full market. And definitely, it's not about the market share in terms of the revenue. But it's about how many websites these are using each LiveChat technology.

It's not a perfect picture, but it's easy to crack. So it's actually is something which is -- which is easy to see. And we can see that although there is a lot of new entrants, a lot of changes, actually, our shares for some years is very -- I would say, is very constant. Our market share is like 6%, 7%, which gives us some #5 position.

But saying that, the most popular are 3 solutions, a very simple solution, which actually are offered for free. The most popular is solution called, tawk.to. The next is Facebook messenger website plug-in, which allows you to use messenger on your website. And the #1 among the premium providers is Zendesk -- Zendesk [ SSO ], Zendesk Chat.

So it's very stable. It's a very strong position if you look at the premium providers. And which is very important when you think about LiveChat versus a free solution. We really are not perceiving them as competitors in that sense, that we really don't think they're getting some customers from us. Well, it happens. But it's usual. It's a situation when some of our customers don't have chats.

If they don't have a lot of chats, they may like this, to have that opportunity, to have that kind of solution, but they don't want and they don't need to pay for solutions like that.

So -- but what they're doing for us, especially Facebook is they actually bring some customers to our space. At some point, we are able to monetize such customers. Also, Facebook Messenger is also a communication channel for the ChatBot. So actually, if you look at the ChatBot customer base, more than 60% of the ChatBot users are using ChatBot integrated with LiveChat, but 10% -- no more -- some 30% are using LiveChat -- our ChatBot solution, integrated with Facebook Messenger. So for us, it's good to have them around actually.

[Lucja Kaseja, executive]

And the next question we have from [indiscernible].

Are you planning to expand originally into new geographies in order to start growing number of clients?

And I would say that it would be rather opposite. As we have now, again, a very strong focus on the U.S. market. That is because the U.S. customers are much more sticky. Their behavior is much better fit to our ideal customer. We've actually seen that indeed different geographies, they have different type of customer behavior and there won't be a different approach. I mean, the U.S. is the focus of Text company.

[Marcin Droba, executive]

So let's be clear. I mean we are in 150 countries. We are in every industry. So it's not -- so we have some data on how customers behave when the opportunities are. And definitely, the U.S. market is not mature yet, but it's by far biggest and definitely, part of our strategy is to be focused even more on the U.S. market.

[Lucja Kaseja, executive]

What's the main reason for not investing more and paying out less in dividends. Do you not see more opportunities for reinvestments?

So actually, we invest as much as we need to. We won't be spending money for acquisitions. That's not how we want to grow. So actually, we will be staying to our dividend policy.

[Marcin Droba, executive]

Yes. I mean, at some point, I think we even over invest that, in the terms of the team. So at some point, we even had too much people in our team. And when you look at our needs, yes, we'd like to invest more, but we want to be a flexible company. We want to do [indiscernible], and we really don't like the idea of spending more for customer acquisition because paid customer, channels of customer acquisition, they don't work -- still don't work well for us.

And a question from, yes, from [ David O ]. Are you seeing any competitive threats from old AI powered [ LLMs ], which might enable clients to create an own low-cost ChatBot or might allow competitors or new entrants develop new ChatBot?

[Lucja Kaseja, executive]

It is a very important question to our market. And actually, I'm glad that we have heard that this question was asked. This is also a question that links to a press release of one of big companies right before their IPO. So actually, we think that the very big companies might be investing in their own bots, ChatBots or the bots built, for example, on Open AI. However, not every company is able to spend $2 or $3 million for building such bots. And the smaller companies, just like our clients will be much better off when they will pay $200, $300, $500 monthly to providers such as us to have not only the products covered, but also the risk of processing the data, for example, covered with a third-party solution like ours. So we think there is a place actually for both.

[Marcin Droba, executive]

Yes. I think David also mentioned an opportunity to create a very cheap ChatBot. So yes, I think one is the case when you can spend like up some $3 million to build your own bot versus a bot who -- versus, I don't know, let's say, [indiscernible] annual for buying solutions like ours with the support which is handled, which is coming with the support, which is keeping up to date et cetera, et cetera.

And of course, you can try create cheaper in-house SaaS on bot [indiscernible] but I'm really not convinced. I mean there's a lot of risk. I mean, you have also some regulation coming like AI Act in Europe. I think, very strict and not entirely clear act which is coming today and really probably -- of course, I'm not entirely neutral here. But I think that, that could be brave to handle that case on your own than to care about data you proceed when you run your business. Also usage of the AI is not something you can have for free. It's not working like that.

I mean we can use ChatGPT for free for your personal needs and you're paying with your data. You can do that in your business and pay like that with your customers' data, you don't want to do that.

So of course, I mean, AI is creating a change to the market and change is creating a risk, and we are aware of that. And we don't want to play down this risk, but there is effort that we are not understand the coming change and some our peers are doing that much better job. But -- but really, I don't think that's the most important threat, which is now -- we are now facing.

Next question. Congratulations on your 10th year anniversary. When you said churn was higher in Q1, can you please say how much is your churn, monthly or annual numbers?

We are referring to monthly numbers.

[Lucja Kaseja, executive]

Yes. We usually -- when we discuss the customer churn, we refer to monthly. And in the last year and still now, the churn is at elevated level of above 3.5%. But what I was mainly referring to when I discussed the period of January to March is the fact that it is not only the churn that is kind of usual, either voluntary or nonvoluntary, but also some of the churn was caused by our updates to the price lists and to the terms of use. So there was this component that was actually followed -- that followed after our actions.

[Marcin Droba, executive]

Yes. So we are below usually and unusual and historically speaking, we used to have this 3% customer churn monthly. When we change prices more than a year ago, we -- for 2 months, we saw 4%. Now we are below that. And in terms you are -- when some customer reacted to what we change, it was like in the area of 3.8%, which is a lot, but it's something we expected. That we need to be -- so yes, that's how it looks.

And maybe that's important to stress the fact that what we are doing on encoder was changing some things in the terms of the customers who are abusing our policy terms of use of our product, and they were not profitable for us because of that.

[Lucja Kaseja, executive]

So there is another question from David. On a related note, are you using AI in terms of new revenue opportunities or opportunities to cut costs?

So actually, for us, it is both. First of all, since the beginning of the last year, AI helped us, among others, to optimize the way we work at the company. So we were, first of all, investing in terms of AI, also developing the product. And so far, our LiveChat product, the AI features that are in place there are not sources of new revenue. This is something that we have, for example, tried to solve with this One AI assistant to actually showcase the usage of AI in the product. But for ChatBot, it is actually now the better numbers, the better satisfaction is guaranteed by AI usage.

[Marcin Droba, executive]

Question from [ Leonard Drake ].

Great to have you here [ Leonard ]. We're always happy to see you at our webinars.

Your growth seems in some ways to have reached some sort of stagnation. What do you address this to and therefore, example, any competitors taking market share? What are your key focuses going forward to drive future initiatives? Keep a good job and look forward to follow your future.

I mean we really appreciate that. Yes. Definitely, the current dynamics, it's not which we are really happy about, definitely. At the last quarter, January-March quarter, however, was much better than the previous -- 2 previous quarters. So, yes, of course, we're happy [indiscernible] better, even -- not as good as we'd like, but better results at the beginning of the road.

I mean the first thing, the first thing is, which I'm doing is these things we are doing to -- I would say, to improve our business, our price list to concentrate on customers who really brings value. So I'm referring to this optimization process we started.

So what we did in that quarter, in the last quarter was the beginning of the process. We launched the process, and this process will be -- we have a road map for what we want to achieve in some -- next 2, 3 quarters. So we definitely want to clean some offering, some plans we are -- which are not offered any more, which are legacy plans. We want to reduce the number of the customers who are abusing our products.

So we are concentrated on that. And I think there is still a lot of potential. Definitely, there is a lot of potential in the terms of the RPO. So we should be able to do a lot, much more to the LiveChat RPO in the coming quarters.

The open question is what the price is in the terms of customer churn. So how many customers switch which leave because of that. But nevertheless, we believe that the results -- the final result, which will be visible on the MRR will be positive and it will be substantial like it was in the last quarter. But even without that, it's something we have to do. It's something which is required to do to be able to proceed further.

And saying that, we work on some new things. It maybe because that was something we were discussing the last quarter. Yes, we're working on some new things. We're working on some new revenue streams. And yes, in the next quarter, we will be able to show you some new revenue stream. Some new, let's say, product or on way to monetize what we have in store already. I'm not saying that, that would be a huge thing from the day 1, but something we are very excited about, something which is a very interesting initiative for us.

And we work on some other things, which can happen or may not. But we have some new initiatives we are working on.

[Lucja Kaseja, executive]

Now we have another 2 questions from anonymous attendee. What are your capital priorities? And the second one, how is the competitive landscape now? Do you see newer competitors?

So I might start with the second one. In terms of the competitive landscape, we do not see many new competitors. It is quiet as it was in the last couple of quarters. Definitely, there is slightly more competition in terms of the digital presence of particular providers. And of course, AI branding of the products is of greater importance in terms of showcasing or showing the product.

However, especially when we look into the reasons of churn, for example, because that would be indicative of whether there are some competitors attracting our customers. We do not -- no specific names stand out from others.

And in terms of our capital priorities. Well, we are a product company. So the development of the product is the key. We have some investments in the data -- combining the sources of data at the company. And also, of course, AI capabilities, especially with ChatBot. This requires some additional capital. But there are no extensive or especially additional capital needs that we have now.

[Marcin Droba, executive]

We don't plan -- definitely, we don't plan raising a capital now. We confirm -- as for now, the dividend policy is confirmed. So nothing to declare, nothing new here.

The same participant. Thank you both and congrats on the results. Thank you all. Definitely, we'd like to achieve more. I mean, our ambitions in the terms of the growth of dynamics are definitely -- definitely higher. The last year was flat, really, if you look quarter on, quarter on, quarter on. So I think we should definitely be able to improve annual dynamics in coming quarters. Of course, any statement regarding the future is there's always some uncertainty. It is not like the forecast, but definitely something. We really believe that it's achievable.

Regarding headcount, are we currently stable? Are you -- regarding headcount, are you currently stable? Or are you anticipating any further reduction in line what you reported in the last quarter?

Yes, it looks like stable and probably, we're going to be stable. We have some open position. There is some rotation. So probably, we're going to be more or less stable in the coming quarters.

[Lucja Kaseja, executive]

Again, same person. You mentioned that the number of customers paying for all 4 products is now 59 and plus 10 of those were added in Q4 alone. Were the 10 new customers which signed up for all 4 at the same time? Or were these 10 existing customers that added one or more products to get to 4 total?

It's actually a combination of both, especially when the sales team discusses the contract with the potential customers. Then that's the best actually time to upsell or cross-sell the products. So we had definitely some customers like that. Marcin, do you know if we -- if out of those 10, were new customers?

[Marcin Droba, executive]

Definitely. Some new customers here as well. So yes, that's the mix, and I'm not -- don't know exact split actually, sorry for that. But thank you for bringing that because there is a lot of potential here. We're definitely not very good at branding. We try to improve. Look like HelpDesk and KnowledgeBase is a natural bundle, but they will be matched in the coming quarters. LiveChat plus ChatBot, it sounds like [indiscernible] a bundle. LiveChat, HelpDesk, not so naturally yet, but we have some idea how to actually -- how to improve that link between these 2 products.

And so yes, we're happy for this span new customers with our products, although we're now still not something we -- which is objectively great results. We had also saw some nice upgrades during the third quarter as we've had one customer who added actually 100 new items. So definitely good work from the sales team.

[Lucja Kaseja, executive]

I wanted to ask whether management expects revenue growth to accelerate over the next few quarters? And could you give us more color on that?

[Marcin Droba, executive]

Not a lot of color because we don't have official forecast, but as I said, last year was -- last year was more or less flat -- flattish when you look quarter-to-quarter. We definitely -- even looking just on what we expected to get from this optimization -- let's say, optimization plan we had, that's definitely potential to improve annual dynamics in the coming quarters, at least when you look at MRR and U.S. dollar-dominated results. Because, of course, at end of the day, we reported in zlotys. And zloty-dollar exchange rate is not something we have control on.

[indiscernible]. Any estimate from your side about the size of the market in the U.S. that you are targeting? Is there still under penetration in usage of similar products?

I think we had a very nice take last days from sales -- from our sales team on that.

[Lucja Kaseja, executive]

So definitely, the U.S. market is very special to us because this is where we target and there are many businesses that are opened in the U.S. annually. So there is definitely still room for -- to provide such services as LiveChat to those customers. We still see that those customers that we have that start to use LiveChat are using the product -- this type of product for the first time. So although we do not have like statistics on that, we -- like our feeling is that there is underpenetration in the U.S. market, but also in some other places as well.

[Marcin Droba, executive]

[indiscernible] last week. We had a quarter when we started that was called with our sales team. And actually, we are called that we have -- at this moment, we have more discussions with companies who actually are interested in automation, but actually don't think about AI. They don't think about the [ bots ]. Actually, they're thinking now about moving from voice to text in order to add AI automation in a few years' time. Actually, what they're doing now, they're thinking about moving from voice to text.

So yes, that also, I don't know now it's a huge trend or have just no coincidence until just a few of your customers who appeared [indiscernible] but that's interesting. And definitely, we -- this huge market is a growing market. That's the best opportunity we have.

[Lucja Kaseja, executive]

There is definitely the trend for automation, not necessarily in favor of AI, but in terms of like written text solutions, that's for sure.

[Marcin Droba, executive]

Some of the customers are still, I mean, very cautious about choosing AI. And I think that's a good thing. I mean really it's great that some customers are very cautious about sharing data, about -- thinking about the safety of the data, about how this data is used. They also know that regulation are coming. AI Act EU is, think it was passed. And with having this passed AI Act, we still don't know exactly what -- how it will look in the practice.

So a lot of question signs on the horizon. So it's great that -- some customers or companies are aware of that. And it's also great and nevertheless, some customers who are really behind in the terms of automation and in terms of customer support, are now thinking how to make the next step. I really hope that that's a trend.

The next question from [indiscernible]. You have also mentioned a number of clients with all 4 products. Is still bundling at different RPO price. Would you assume that with more product yields, the lower the churn you would see?

I think that's the rule. I mean that's where very strong control you have in SaaS business, more products, lower churn. These customers are unusual deals with the sales team. If you did include the sales team, you can also discuss price. So if they were discussing price, maybe they got some discount. But nevertheless, the price is -- it's usually something which you discussed. And really, it's not always, even maybe not in most cases, is the most important now. I mean that the most important for you is to being able to discuss what you can achieve about KPIs, you could have achieved having these products.

[Lucja Kaseja, executive]

The next question is, can you tell why customers churn? Are you in touch with recent customers? Does your team investigate the reasons for why customers churn?

Yes. And well, we -- I think it might be a good time to discuss that. We -- out of customer churn, we have 2 types of churn. One is voluntary. So that means when it is the customer who wants to quit, who wants to stop using the product. And in such -- if it's the case, we can ask the customer about the reasons of churn. And the most popular ones that we get is actually others. So a lot of different reasons. But out of those, which are very specific is either lack of chats or not enough traffic on the website. So that means usually those customers would go to free solutions.

Then we also have a reason such as closure of business or difficult -- changing the scope of the business, and that's -- in the last few quarters, that's been up. Also, some of them are price increases. And this is usually a very small one, quite stable, although from time to time, it increases, especially at the times when we touch the price lists. And so was the case at the beginning of this year when we did some adjustments and also some of the customers leave for other providers.

And so this is the churn that we can actually track, but also there is a separate type of customer churn, which is involuntary, and this is strictly connected to the fact that there is a problem with processing the payment. And it may be because the card is invalid or there are not enough funds on the card. And in such case, the subscription ends. And we have no way of knowing exactly what happens, although this has been the case of increased churn for some Asian countries recently.

[Marcin Droba, executive]

So yes, the biggest -- I think the biggest difference now between what we can see now during last year versus what we saw previously, if you look at the voluntary churn, I have problem with -- a business problem, I'm out of the business, I am changing the profile of my business. That difference -- the main difference is here in that area. But of course, that's not the full picture, but that's where the difference is most visible.

And we are very harsh for ourselves, actual accounting churn. Because we have also a lot of customers who are using LiveChat on seasonal basis. Actually, we have a lot of returning customers each day. And actually we count them in churn. So yes, actually, a lot of them are returns at some point.

The next question, do you have any channel partners helping to sell your products.

[Lucja Kaseja, executive]

And I'm going to combine that with another question, which is 2 questions down. So I'm going to read that out as well. I feel like there are many people with online businesses who could benefit from products such as LiveChat, but don't even know about the solutions like this exists and how these solutions could help them increase conversions. Would you consider sponsoring popular YouTubers with a large following of business owners to increase awareness?

And this is something that our partner program does. So we indeed have partner program where we sell -- where we share -- sorry, the revenue with a potential partner once they bring the customers. So they get a specific link and they do the marketing or target the customers. And if they bring the customers, we shared the revenue, very much -- like how much we share depends on the effectiveness or the number of customers that such partner converts. But it is indeed a very important source of new customers because it is roughly 25% of new customers come through that source.

[Marcin Droba, executive]

Yes. So now it's the single most important channel of customer acquisition in terms of the number of new customers. And if by any chance, we have a popular YouTuber here, just look at our partner program, look at text.com and the list of partners and really that's a good deal. Looking at the industry standard, you can get from 20% to 30% of the revenue we get from your customers, customers who came for us using your link. And that's the good deal, really a good source of very sustainable income. We will be very happy to share this revenue with you. So yes, a good program and growing program.

[Lucja Kaseja, executive]

I think the next 3 questions, again, I'm going to combine into one. So the read is, in late 2022, you were able to base prices ARPU for LiveChat significantly without a material impact on total customer numbers. Are you planning any further similar step change in prices in the future, not including future prices, optimizations? If not? Why?

Then another question was how much can you increase ARPU in LiveChat via future optimizations in the coming quarters? And then could you please explain what the optimization plan would entail in terms of actions? Would it be primarily turning off legacy plants and stopping customers from over using the products?

So I think all those questions touch exactly the same. So our ability to change the prices. And first of all, optimizations and what can we do? So our thinking is that, first, instead of increasing the prices for everyone, we have to ensure that we have a healthy customer base. So that means that, first of all, we checked where we have the margins in each particular plan. And we -- and when -- where the actual usage of the product is the highest, but not necessarily bringing us money. Because actually, the more chats customer has -- the cost of servers, for example, for us, is higher.

So we wanted to make sure that each and every customer is properly placed into a specific plan, and we started doing those things at the beginning of the year. The first thing we touched was the starter plan, so the cheapest plan. Then we will continue to optimize other plans as well. Marcin mentioned that we will change those legacy plans. So we have some old pricing plans still with some of the customers. We will be changing that. And also some legacy like pay per agent remaining like -- few dozens remaining customers.

So these things will be taken care of so that we have -- the entire customer base is on the same plan -- on the same plans and same pricing plan. So once we do that, and actually, the -- there will be 2 parts of that optimization. ARPU should increase, but the cost of that will be, of course, the customer churn. So those who will not be satisfied with the changes we churn, and we are ready to accept such changes provided that the overall impact on MRR will be positive.

So some of the churn, we will have to accept. And once that will be done, and -- there's quite a lot of things that can be actually done this year. We will start to reconsider the price increases.

[Marcin Droba, executive]

Yes. The next question is from [indiscernible]. Hello [indiscernible]. Absolutely great to have you here. [indiscernible] [ Srikanth Viswanathan ]. Sorry for the spellings. I mean, it's great to have you here. For people from Poland, it's sometimes extremely difficult to pronounce [indiscernible]. Maybe, during our next one-to-one call, we make some classes, some exercises. Anyway, the question across the 4 products, what is the percent of your customers are smaller employees, 100 employees versus enterprise employers?

So I'm not sure if I had the very exact data on that. Definitely looking at the customer -- that all customer base, the customer base is still dominated by very small companies. Lucja, do you think we can be more specific at this very moment?

[Lucja Kaseja, executive]

I mean the usual data that we give is that with the -- but it's not against the size of the company, but against the size of what our customers are paying that our top 50 customers, they are -- they represent 8% of our MRR, but that's not really answering the question about the size of those customers. So we would have to work on this data, I think, to have it right.

[Marcin Droba, executive]

Yes, as we're looking at the number of the agents, obviously, and looking at the LiveChat, still some half of the customers -- some 50% of the customers are paying for new One agent account. So yes, definitely small businesses.

[Lucja Kaseja, executive]

And we have a question from [ Julien Roger ]. Good work, and thanks for your humility. I wanted to know if you're working on lost clients. Also, why do you think Text will be able to return to 2 digits growth in the future?

So yes, of course, we are working with the churn customers. During some specific times of the year, we have bargains for the churn customers. We also target them with, for example, our new developments or new products that we have. For example, that was the case with OpenWidget. So yes, we try to keep them into the loop actually. Especially, some of the churn customers are returning customers.

We've discussed that on the Polish call that we have some seasonality in terms of the customers who are coming back to organize like specific events, but also that use the product just for a part of the year. So they are important clients as well for us.

[Marcin Droba, executive]

Yes. And yes, of course, we are working on the huge numbers, on the big numbers here. So it's more or less automated in that area. We have the contact for these customers, and we have some offers for them. Usually around autumn before Black Friday/Cyber Monday, we are coming with some special offers usually for them, and we try to activate them. So yes, we definitely trying to work with this group.

And about this 2-digit growth. Definitely, it's -- as I said, on the statement about future app, no, it's definitely not like -- very hard to forecast. But I would say that last year was flattish, and we can -- we know what we want to achieve. We are RPO over the LiveChat. And definitely, we are -- we think that [indiscernible], it's achievable, and that number should be substantial.

But the question is about the price we will pay on the churn side. So the question is on that side. But looking at the LiveChat RPO, we definitely have some plan and exact plans and we know what we want to achieve and that should be a growth engine for the coming quarters. And that would be enough because really last year wasn't really great when you look quarter-on-quarter.

The question from Marcin Nowak. Regarding bundling, is there a ChatBot client that does not have a LiveChat solution?

Marcin, once again. Actually, a lot of them, a lot of them really. I think in the area of 35% of the ChatBot are only ChatBot customers. One of the ChatBot feature is so-called Chat Widget. Actually, you don't need a LiveChat to use, and you can integrate with Facebook Messenger as well. So you don't need a LiveChat. At the same time, we have some other bots, which are integrated with LiveChat.

[Lucja Kaseja, executive]

Another question to follow up on your answer about the affiliate program. The limitations with these affiliate programs is that you are relying on people to find you and ask to be your affiliate, but I think you should consider finding YouTubers with large and high-quality flowings that can bring this solution to more people. I believe this would be a much better effective investment to grow the revenue base and other revenues of paid advertising like Facebook ads?

Thank you for that.

[Marcin Droba, executive]

We, yes, of course, thank you. We try different things when it comes to paid customer acquisition. I mean, it looks like Facebook didn't work for us, whereas Google Ads are making some sense for us. Facebook didn't work pretty well. But yes, I think you had your point. I mean now, we're spending some money on marketing. It's not like we are not really spending nothing.

We spent some money for marketing. We spend more than we used to spend in the past. Not a lot of money, but more than the history. And actually, we rather don't try to target potential customers. We try to focus more on potential affiliates, potential partners. So yes, we try to spend more money to target [indiscernible]. Historically speaking, YouTube didn't work great for us.

We used to, for example, invest more than we're doing now for creating our own content -- video content. But maybe we should try again. Definitely, we're looking for different opportunities.

And I think the last question for today, the last question we have from [ David Nelson ].

I gathered the optimization [indiscernible] RPO plus remove loss-making misusers?

Yes, that's definitely your own point.

Could you give us a sense of what the potential improvement in profit per user is?

I don't think so. I don't think that at this moment, especially that would be probably also AI costs will be higher because the One we launched. So we probably spent more on the AI just for using. Because our customers will use more, so actually what we gain from that optimization program, we'll probably spend because we will have more AI usage in coming quarters. Saying that, being profitable is important for us, and we will aim at the level -- at the company's level, 50% on net profit margins is something we'd like to say is that kind of that.

It's not like -- it's not like that would be most important focus to keep this profitability, but it's something we'd like to see on a company's level. Of course, that's a lot of things which will impact that level of margins -- level of profitability because that U.S. dollar-Polish zloty would be extremely important for that, but I would say that that's some targets at some level.

And I think we have still [ Lucas ]. You have raised hand. Do you want to add something, ask some last question?

[Unknown Analyst]

No, no. Sorry, I...

[Marcin Droba, executive]

No problem, no problem at all. So I think that's all the questions. Thank you very much. Thank you for your patience. Thank you for being here. We'd be happy to answer all your questions you may ask in the future. And yes, Lucja, do you want to...

[Lucja Kaseja, executive]

No, no. Thank you for your time that you've spent with us, and see you next quarter.

[Marcin Droba, executive]

See you. Bye.