Ladies and gentlemen, thank you for standing by, and I would like to welcome you to Text earnings conference call to discuss the 2023 annual, as well as April- June 2024, 2025 results. At this time, all participants' lines are on listen-only mode. The format of the call today will be a presentation by the Investor Relations team, followed by a question-and-answer session. So, without further ado, I would now like to pass the line to Łucja Kaseja . Please go ahead.
Good afternoon, everyone. Thank you for joining us today for our webinar. I am pleased to present our financial results for the fiscal year first. Then I will be presenting key performance indicators for Q1 of the new financial year. And then later on, I will shed some light on additional information on products in our company. Once I will finish the presentation, there will be a Q&A session, so we will be happy to answer any questions, sorry, that you might have. For the financial results, our total revenue for the year was PLN 335.3 million, reflecting a 13.4% growth when adjusted for changes in our revenue recognition policy during the year. Then the EBITDA reached PLN 198.5 million, and that is a year-over-year increase of 9.2%. You can also see here that the net operating profit was PLN 179 million, which is an increase by 7.1%.
That led us to net profit, which stood at a very round number of PLN 166.6 million, which is more than PLN 10 million higher than the adjusted profit for the previous year. These data, we present them as we compare them to the revised numbers for the previous year because, as you are aware, we have changed within the year the revenue recognition policy. And that is, we now attribute the revenues exactly to the periods for which they are paid for. Sorry. When it comes to the fourth quarter, we recorded a revenue of PLN 83.3 million. That is -1.4% as compared to revised Q4 of 2022-23. This number was negatively affected by PLN 3 million revaluation of deferred revenues. This number actually fluctuates quite significantly between the quarters.
However, if you think about the annual net effect of those fluctuations in 2023-2024, it was actually PLN 3.8 million. Our EBITDA for Q4 was PLN 46 million, and EBIT, as you can see, 40.9%, sorry, PLN 40.9 million, which is -15.7% as compared with the quarter a year ago. Actually, this is the effect of higher costs that we incurred during Q4. And this is due to at least three reasons. So, first of all, this quarter, we had much higher payouts to the partners in the partner program as part of the revenue sharing. This number for the quarter was the highest in the whole of 2023-2024. And actually, it was 35% higher than a year ago and almost 50% higher than in the previous quarter. So it actually adds almost PLN 2 million to the cost of the quarter.
Then we also had a higher cost of infrastructure and servers. That is an additional PLN 1 million cost. This is actually because we are investing in our infrastructure, and this change actually will stay with us into the next quarters as well. The last thing that was more of a one-off cost in that quarter was the recognition of the bonus that will be paid out to the management board next quarter. But because we already know the value of it, it was recognized this quarter. So that means that actually in the quarter, we have both recognized a paid-out bonus once and then also the one that will be paid in the next quarter. All that brings us to net profit of PLN 38 million. Now I will go into the future revenues.
So actually, with the change of the revenue recognition policy, we now show the annual subscriptions divided per particular month. So only a part of the paid annual subscription is recognized in per quarter. And what is over the periods reported, we recognize that as revenues of the future periods. And actually, this number increases both if you think of the numbers in U.S. dollars and also in Polish złoty. However, the change recalculation of these numbers at the end of the quarter actually creates a non-cash revenue that is translated into profit and loss account and causes fluctuations to revenues on our side. Then it is nice to show here again and again that the earnings per share are growing. So we have earnings per share of PLN 6.63 per share.
Again, here we compare this number with the revised, with adjusted numbers for 2022-2023 to provide the actual comparison. When we talk about revenues and the whole annual data, it is nice to have a look at the revenues by geographies. There are important things that can be seen on this market, on this graph. First of all, the most important market for us is the United States, which is now generating 31% of the revenues. Then we have also other English-speaking countries, U.K., Australia, Canada. And those markets, the U.S. market is actually our focus. So when we create the products, when we think of additions to the products, we talk with our American customers. But also, we have customers from other places. And for the first time, you can see an Asian country which has a share in revenues over 5%, which is Indonesia.
This is something that has been growing for a good few quarters now. So Asia is slightly over 25% of our revenues. However, there are important distinctions between the users, our target American clients, and also the Asian clients. So the U.S. clients on whom we want to focus are much more loyal. They stay much longer with us. Whereas the Asian countries, the customers from this region, they are actually much quicker also in terms of the communication. So the messages they share, the way they interact are very quick messages, but a lot of them. So in our case, it means that the service usage, for example, for this type of the customers is higher. And then Poland, where we are based, is actually now quite stable, 1.4% in the revenues, but it's quite surprisingly only top 15 countries, whereas a year ago it was top 10.
We continue to generate good cash, and we managed to generate PLN 84.8 million of cash at the end of the period. Whereas among the financial activities that require paying out the cash are the dividends, both the annual dividends and also interim dividends that we pay out throughout the year. Together with the annual results, we, the company, but more importantly, the management board decided to propose, and this proposal was accepted by the supervisory board to pay out PLN 5.98 per share as a dividend. And it means that we will be paying out PLN 153.9 million out of our profits in form of a dividend. Of course, that has to be approved by the annual general meeting. Now we go more into division between the products in terms of the revenue.
So the LiveChat product is still the most important one for us in terms of the revenues. It has shown good growth in terms of the annual growth, which was 22%, not so much of the last quarter, which was just 8% increase. The other two products, ChatBot and HelpDesk, are enjoying much higher growth rates. And year-on-year, they become more important, which you can see on the next slide, where we present the revenue split of the products. So LiveChat still dominates 91.1% of the revenues, but ChatBot has 6.5%, and HelpDesk is each quarter, it is adding revenues, currently 2.1%. And as the products have KnowledgeBase and HelpDesk will be together in the future, that is already 2.4% together.
As a little summary of this section, the most important things are in terms of the annual results, the total revenue, which was PLN 335.3 million, that was a growth of 13.4%, of course, adjusting for the revenue recognition policy changes. EBITDA and net operating profit enjoyed one-digit growth, respectively 9.2% in terms of EBITDA and 7.2% in terms of net operating profit. And that led us to a net profit of PLN 166.6 million for the entire year. The margins, although they are still at the very high levels, well above 50%, they were impacted by the higher costs and also by the change in the revenue recognition policy this year. Q4, we finished with PLN 83.3 million in terms of the revenues, but that was negatively affected by this revaluation of deferred revenues. If we didn't have that, the revenues for the period would have been higher.
The EBITDA and EBIT numbers in the quarter were affected by higher costs of the success fees paid to Partner program, then a higher cost of external services. That is mainly servers and infrastructure, and also a provision for the bonus of the management board. Having said that, now we fast forward to the current quarter. So almost three days ago, we finished our Q1 quarter. And we can also now discuss more recent data, which I think is something that interests everyone even more than the annual results, than the financial results. So first of all, we start with MRRs for all of the products. In June, at the end of June 2024, that was PLN 7.07 million, which is an increase both in terms of the quarter and year-on-year increase. It was the result of the changes in the product. And we enjoyed the growth of MRR.
Also, in terms of the payments received, this quarter was a very, very, very, I can even say a record quarter for the payments. So at the company's level, we had $22.62 million paid in the quarter. And now we can discuss exactly the KPIs, so what is actually behind the numbers, both MRR and cash flows. So I will discuss the number of customers and RPU per each product. First of all, we start with LiveChat. LiveChat, we ended the quarter with 37,523 LiveChat clients. And if you compare it to the last quarter, it's actually a negative of 321 clients, partly because of the churn that we have within the product, but also it is a result of our own change in the definition of the customer. So we deducted almost 200 clients from the number of customers.
That is because we changed the definition. So previously, it was just for the customers who were paying for the product, but we added also a condition that they have to have active access to the application. So what it means is that it, for example, excludes the customers who are on annual subscriptions but already stopped using the product. Within the quarter, we also very actively optimized price lists. So some of the customers were moved from the remaining customers from per-seat to per-agent model. And that added to increased churn. So not only the tough market that we see for small and medium-sized customers, but also small and medium-sized companies, but also this was an additional factor for the churn in the product.
If you look at RPU and initial RPU of LiveChat, you can see that quite a lot of things happened within the quarter. First of all, you can see that right at the beginning of 2024, we started those price optimizations. We continued them throughout the year. In the last quarter, this translated into an increase of RPU to $170.1, actually U.S. dollars, not Polish złoty as in the presentation. At the end of June, the major change was done in May. You can see that the numbers for June are already much flatter. Also one thing that has changed and quite an important one is that we added one AI Plus paid feature for the new customers starting in June. It is another factor that improves RPU of LiveChat. We have our second product, ChatBot.
From the graph, you can see that the number of customers of ChatBot is actually flat. So if you compare the numbers, it's +2 customers quarter-over-quarter. However, again, here we changed the definition of the paying customer. And by mistake, we had been adding nonprofit organizations to the ChatBot numbers. And we excluded 70 of those between March and April. So actually, when you look at these numbers, June is the third consecutive month of growth of new customers for ChatBot, which is, for us, a positive sign for ChatBot. Also, you can see that ChatBot RPU increased as well. So partly that is because of excluding those customers that were not supposed to be there. But even if you exclude that effect, ChatBot's RPU has increased. And at the end of the quarter, it is $146.2.
We also added here a new slide that explains quite a bit about ChatBot and the way we get the revenues from ChatBot because part of that is subscription, which is taken into account when we calculate monthly recurring revenues. But also, there is an additional part, so additional chats that are paid by the customers once they exceed the number of chats that they have within the subscription plan. And we do not include this additional chat in MRR of ChatBot and not even in RPU. But here on the graph, you see that if we were to add those additional payments for interactions to normal RPU, the combined number for ChatBot would be $198.6 at the end of June 2024. So this component of additional chats actually increases quite a lot, also because of the fact that we have changed the pricing starting in March.
For existing customers, the price for additional chats is $0.01 per additional chat, which is above the plan. For the customers that started to be our customers in March, that cost is $0.03 per chat. The last product that I will discuss in this section is HelpDesk. Actually, we added 32 customers net in the quarter. At the end of June, it is almost 1,200 paying customers for HelpDesk product. In the following quarter, we will be combining the product with KnowledgeBase. There will be a combined offer of those. HelpDesk actually is enjoying a very good growth, partly because it is introduced into new channels of acquisition of customers. For example, we added Webflow within the quarter. There is a plan to add Shopify integration by the end of the next quarter.
Also, we are able to gain much higher in terms of the size customers. You can see that on the RPU graph. So both we are able to expand within the existing customers. Additionally, in June, we added a new subscription plan, business, so a higher plan for HelpDesk, which makes bigger customers to go on a higher plan. So it's another factor that adds up to RPU. That's the end for the summary of the KPIs. However, I would also like to discuss a little bit about the events that took place in Q1. So I will discuss a couple of things, mainly about the product. The first one is OpenWidget, which you know already for a good couple of quarters. But we started to gain traction in terms of OpenWidget. So currently, we have over 1,000 customers.
It started to become a source of growth for LiveChat because we started to see the first migrations from OpenWidget, which is a free product, our only organized in such way. And already through integration between the two products, we have some LiveChat paying customers. Then the second thing, we have shown on our website on text.com, product roadmap mainly for our customers to see where we are going with the products and what they can expect in the future. First of all, it very much underlines our focus on automation and on suite of the product. So unification of all the products that we have, the widgets, and the way the customer will be navigating within the products. We have set a list of quite ambitious goals to fulfill and to release the integrations and some features or some changes to the product by September 2024.
This is something which is a living roadmap. There will be changes on this website, and it is available publicly. If you want to have a look, you can use that link. The next thing in terms of the product is actually how we started to monetize AI. As you know, we have two ways of AI in the product. In ChatBot, we have our own LLM model, on which the ChatBot is based. For other products, we have features which are based on OpenAI currently. We pay the bills for that per usage. Within the last couple of months, we tried to show more of the features of AI to our customers. Currently, at the beginning of June, we also started to monetize it.
Now all the customers who start LiveChat, they are presented with the features which are based on AI. They can buy those features additionally to the subscription in LiveChat. This will be a way of, first of all, covering the cost for AI usage in the product. We are effectively after 2 weeks of sales. We already have some customers paying for that. However, because it's just a very short period of time, we do not want to give out the numbers because those might change. We need a little bit more traction. However, we can provide you with the numbers for another thing that we launched since Q1 2024-2025, so API as a Service.
We have communicated throughout the first quarter of 2024 to our customers, to developers, that our API will become a premium product and that the use of the product will have to be paid if the products are not presented in our marketplace. So for example, if the customers or some third parties create products on top of API and they put up those end products on our marketplace, their usage of API is for free. However, if they create a product on top of our API, they will have to pay for the usage. And actually, this monetization started in Q1 of the current financial year. And after the first quarter, we estimate that the revenues that we get from the source are above $50,000. And there is quite a potential growth for a Text platform into the future.
With this slide, I'm going to sum up the latest numbers for Q1. Most importantly, MRR grew by 6.2% if compared to the previous quarter. That is almost a 10% year-on-year growth. We had a record high value of payments received, which were $22.62 million. That's an increase of 12.2%. Within the quarter, we were able to give a boost to RPU of all products. However, still, the increased churn undermines LiveChat number of customers. In terms of the product, there is a lot of things happening in LiveChat. We are still optimizing price lists. However, the developments will not be as dynamic as they used to be in the quarter that has finished. They will be continued on a smaller scale into the future.
We have a public roadmap for the product development, including we added effectively new products, one AI Plus, which is a paid feature for new LiveChat users. OpenWidget is enjoying a growth currently and also is a source for LiveChat customers. And the last but not least, something that quite a lot of people were waiting for, we started to use API as a Service. That already generated revenues of $50,000 in this quarter. With that slide, I'm going to finish the presentation, which already is quite long. We will be happy to take your questions. Thank you.
Thank you very much for the presentation. We'll now be moving to the Q&A part of the call. If you are dialed in via the telephone, please press star two on your keypad. That's star two on your keypad for any voice questions. If you are dialed in via the web, you may ask a text question on the webcast. So that's once again star two for any voice questions and any text questions on the webcast. Okay. It looks like we have no questions on the voice line. I'll pass the line to Łucja and Marcin to continue answering the text questions.
So we have some text questions. Thank you very much. And the first is from private investor, Ben. Do you have the net MRR churn by the individual product, LiveChat, ChatBot, HelpDesk?
Net MRR. We do not provide this data individually per product. However, so far, we had been quite consistent in saying that HelpDesk is definitely enjoying retention over 100%.
With negative net MRR churn.
Exactly.
At the same time, I think if you look at the HelpDesk, this data is very representative and repetitive. Now, if you look at especially LiveChat, when now actually, when you look at that, that net MRR churn in some months looks great, looks absolutely fantastic. It's a negative territory. But that's not representative because that's the effect of the optimization we are talking about. So unfortunately, it's not something, not the real picture of that product. So probably we have to wait when we finish the optimization, and then we will see how it really looks like, how it's working on that level.
Then we have a series of questions from Ben, another private investor. So I will start reading them one by one. The first one is, "Is Text partnering with value-added resellers and system integrators in North America to better target the mid-market clients? If no, what is the strategy to target larger customers versus the current majority SMB base?"
Well, maybe I will take this one. Yes, sure. Yes. That's something we're trying to do. I mean, that's a part of our partner program is solution partner. We have reseller program. So yes, we're trying to do so. If you know some company we should approach, some possible partners, we are very open to meet. So we'll be happy to invite anyone on that. But yes, we have partners like that, and we really would love to see to expand this program and get more this kind of partners.
Then we have a question. Are there any plans for Text to focus on certain industry verticals? Maybe together with the next one, for the HelpDesk product, are there plans to target IT and HR departments, or the current strategy is to focus on customer support functions? I'm going to take that one. Actually, our focus is, first of all, on customer support functions in terms of all of the products. In terms of the industry verticals, we have some industries which are much more represented than the others. Those include, for example, especially e-commerce, retail, but also we have good representation from financial services, IT services, gaming and gambling as well, then healthcare, but also education. On top of that, we also have customers from many other sectors. Currently, we are not doing any targeted marketing on certain industry verticals.
However, we provide from time to time, especially with, for example, case studies that we present to the potential customers, we tend to cover some of the industries.
Yeah. We have some landing page dedicated to some industries. Sometimes we are launching some campaigns, but probably nothing really very extensive. But I think the beauty of the LiveChat, especially all of our products, is that really we have customers from every industry, even some not really intuitive, I would say. But at the same time, we're working on adding some use cases. So for example, one thing we are working on is to make LiveChat more suitable, more effective for marketing purposes, for example. So that would be an example. So maybe not some industry, but I would say to expand, to add more features which can be useful, for example, for marketing teams. Marketing teams.
Then we have a question on how much is the current revenue for API as a service? pricing for API as a service is usage-based and not seed-based and will not have MRR. That's exactly true. So it is per usage. Also, if you look at the website, the developers, there is some free amount of usage that you can have. And only if you exceed that, you have to pay for the usage. And the last one, as mentioned in the last quarter, so in Q1 2024-2025, the revenue that we got was slightly above $50,000. And the last question from Ben is about Text Labs, so our incubator. Are there any projects currently revenue-generating? So we have 3 projects that are on our marketplace, that they are sold to Text customers.
Actually, when you look at the text.com and Text Labs, actually, it's more than that. For example, we include Insights among these products. So absolutely, this is generating revenue. Sorry for that interruption because I really wanted to mention Insights, which if you look at the website, it's included in the labs. But also, honestly, at this moment, not some huge thing.
Then we also have another question from Romana Hoffman, an individual investor. Can you elaborate a bit further? What are the reasons of churn for LiveChat since SaaS businesses need to optimize their NRR? Churn is a tremendous factor in this equation. Thanks.
So huge, huge topic, of course, a reason of the churn. We definitely are going deep. We're trying to really understand churn, what is happening, why customers are leaving. And we have two types of churn ready, so-called.
Voluntary and involuntary.
Yes, exactly. Thank you. Yeah. So actually, involuntary churn. Well, let's start with voluntary churn. The voluntary churn is the situation where the customer is making a decision that he's going to quit, stop using our product. And involuntary churn is that situation when usually the payment is not processed. So actually, it's on our side to stop giving access. And the main reason for involuntary churn would be not sufficient funds on the card, transaction fails, and so on and so on. The voluntary churn, much more interesting, actually, it's a good thing about this churn is that we can go to this customer and ask him why he made that decision. And the most actual, the biggest reason for the customer churn, for this voluntary churn, is lack of chats.
So actually, yes, we have some small customers who are trying live chat, but they don't have really a lot of visitors on their website. So they're not chatting a lot. And if you're not chatting, you don't want to pay for live chat because you can see no benefits here. With some exception, with some notable exception, one of such exceptions can be real estate industry because in the real estate, you don't need a lot of chats. One chat monthly, which will translate into some transaction, will be enough to justify paying like $50 a month for that tool. But that's the main reason, and it's very difficult to do something about this churn. The next important part of the churn is seasonal business.
So actually, we have a lot of returning customers each month because a lot of them are using LiveChat on seasonal basis or for some projects like conference, something like that. We include that number in the churn. We are very harsh to ourselves doing so. But yes, that's how we look at that. Now, where the change is actually is that we can see a lot of customers who are stating that they're quitting because they actually take closing businesses, they have some problems, they're changing profile of their businesses. And now we have much more customers who are quit churning and claiming that's the reasons versus some a few quarters ago. So that's huge change. And of course, that's not a good thing really to see that situation. And of course, we track different reasons. Competition is like very small thing.
Of course, maybe not all customers like to admit, but that's something we actually can track so we can check in if the churn customers is choosing another solution. Actually, that's a very rare situation. I mean, that's just a few customers really choosing other solutions, and especially other premium solutions instead of LiveChat. Of course, the next, probably the last reasons we discuss is the price. Usually, the price is not a huge thing. When we change pricing, of course, that became a thing that actually the churn, when customer declared that he quit LiveChat because that was too expensive, gone back to the previous level. Now we have more customers who are quitting because of the price, because of the optimization we're doing. For some customers, for different reasons, LiveChat became more expensive than it used to be.
Now we have a question from Eric Altman from Arrington. Are there ambitions to monetize OpenWidget in the future, or will it be used as a funnel to increase the number of users in other products? So initially, our plan was for it to be free of charge. And the thinking was that it will be able to provide the potential live chat customers in the future. And it took a little bit longer. So now we are gaining traction. And as we have mentioned, we have first customers who are paying for live chat products, and they started with OpenWidget. And into the future, that OpenWidget might get its paid version. But currently, in the closest future, we have no such plans.
And the next question from Yasin Gurbanov, which private investor. What is the total revenue beside the MRR? I understand that is API plus chatbot interaction. Anything else with the AI Plus will be counted as ARR? So yes, yes, the AI Plus will be included in MRR and have the effect in ARR. Yes, that's recurring revenue. And yes, you're right. The biggest single position would now, that would be additional interaction from ChatBot. That would be the biggest position. And the API would be the next. What else? The marketplace. Some services, that's small, but they are some services for the enterprise customers. Is there something else?
That's it.
That's it. That's it. That's it. If actually, if we would like to include that position into MRR, that would be like addition of some $300,000 on MRR monthly. So something like that at the moment. Am I right? Yeah. It looks like. Yeah. We have managed to answer all the questions that there were on the chat.
If there are still any questions, please ask them. There's also a possibility to ask them via phone. If not, we thank you very much for. And for the questions that you had. And the recording of the presentation together with the transcript will be put on the website. But we still have one question, so.
Yes. Giacomo Borgo, private investor. Are you expecting further margin erosion from server cost in the upcoming quarter? I think that's a good question. Yeah. Server and infrastructure cost will be growing because we are growing. We are spending more not only because we are growing and we want to grow and we're going to use the more of this infrastructure, but also for the quality reasons. We definitely also want to we think that we are leaders in the terms of the quality, but we want to uphold that position.
Also, AI usage is on the rise and definitely something we expect. So that's also something which generates cost. So yes, that's correct. That cost definitely don't think that there is no chance to reduce that cost. We don't want to do that. But now, speaking about margins, we definitely can see that there is room to improve, especially if you compare those margins to really bad Q4. I mean, Q4 was impacted by a lot of unfortunate events, actually. So yes, definitely we'd like to see higher margins. There is a chance for that. Currency would be very important in that perspective because the costs are split like 50/50 between złoty. and dollar. But the net revenue is generated in dollars, so stronger dollars should help. Weaker dollars will also impact margins negatively. But we definitely would like to see at least slightly better margins. That's coming Q4.
We have just got a question. Can you tell a bit about the idea of integration with Shopify? Anything you are looking specifically from this integration? Thanks. Can you tell a bit more about? Okay. That is, again, the same question. We are not only integrated with Shopify, but also with some other e-commerce platforms, with BigCommerce, with Square, Squarespace, what else? Square Online. Exactly. And basically, our integration is in their marketplace. And whenever the client thinks, when they have a specific product, when they want to add also live chat, we want to have this integration with our product ready on the market so that it is very easy to get this solution.
And it works for live chat. So we assume definitely we'd like to do the same with HelpDesk.
Exactly. All right. With that question, I think we've finished Q&A session. Now, once again, thank you very much for your attendance and for the questions. We will speak to you in three months time.
Thank you. But meanwhile, please text us if you have any questions, via email or live chat. Thank you very much. Have a great day.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.