It's 3:00 P.M. Marcin, if you can start recording the presentation, and then I'll start the actual presentation.
Just, just give me a minute. I will start to record. As usual, I have some... I will share presentation once again. Sorry, one, one, just one more time. My bad.
Then once again, good afternoon and good morning, for to everyone. Very nice to see you in the new year. Today, there will be two of us presenting, Marcin Droba, and myself, Łucja Kaseja, on behalf of Text Spółka Akcyjna. And today we will discuss the Q3, key performance indicators for the quarter. I'm gonna 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, just two 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, 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 gonna make a very quick summary of whom we actually are, just because some of the people which are on the call are new to the company, and it will be just two, three 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 US. 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 co-founders within the company. The CEO of the company, Mariusz Ciepły, and two 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 advance dividends in just few days. So on fifteenth of January, we will be paying advance towards the dividend for this financial year. And actually we have the products, actually, the what we do in our business, we have four premium products: LiveChat, ChatBot, HelpDesk, and KnowledgeBase, and also one free product, OpenWidget.
I'm not gonna spend time on the products, 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. I'm gonna 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, we have in terms of the m-money terms. It is 6.49 million US dollars 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 few 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 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. These numbers have been actually one of the best, if not the best, actually. 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 the sales team has helped us a lot because they were able to close quite a lot of deals that were annual deals. However, 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. We now split all the revenues into particular quarters or particular months 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 more than $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 a 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.
Well, 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. A quarter like this one will also add towards this position.
Uh.
But now, no, no, no, it's okay. But also, once we have talked about those cash received and revenues numbers, we will go into much, much, some other data, 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 two parts of the or two sides of the pictures. The first one, the gross additions of the clients, which had been good for 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, during again as in the summer months, increased. So it had been much higher than the average 3%. It was closer to 3.5%. So that has affected 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... has stabilized, so to say, at roughly $156 per customer.
This is slightly, 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 subscriptions that we are getting, especially this quarter. Because, if we sell the subscriptions, 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 a ChatBot 2.0, although it has the name of 2.0, now it's just a ChatBot.
So it's a new chatbot, which is available for all clients, and it has our AI model within the product. It is it has been very well-received by the clients, 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 product ended with 2,956 active paying customers, which is rather flat. However, if you see ARPU, there are some good signs. Marcin, can I have this? 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're happy to present for the second time our HelpDesk product. In July, it has crossed the milestone of 1,000 customers. Now it has 1,121 paid customers. So the progress for this product is going very nicely.
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. This product has now 80 paying customers, but it's also available for free for some of the customers.
It gives you a lot of additional information about the conversations that the client or the customer is having with their clients. As always, we had very good support from one of our very good customers, which is Valley Driving School, the user of actually four of our products and also now 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 linked in the presentation. It's 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 would go much deeper into, 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 0.2% on annual basis. That is, we do not have any more the effect of increased prices that we... 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 the cash flows. So, we got $21.34 million in terms of cash of the payments that the customers 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 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 reason for that would be an economic downturn, because it is seen in all geographies and all sectors. In terms of the updates on the product side, 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 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 on 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, some situations that, some of the customers were misusing the, the product. So their, 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 in 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 or dividend. Actually, it will be paid out on fifteenth of January. And the last but not least, something with 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. We will be happy, me and Marcin, to take your questions, so don't be shy. Thank you.
Thank you. Thank you, Lucja. We have the first questions. 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'd be happy also to discuss all the KPIs we shared. So the very first question from Gregor: "How do you get new customers?" And, yes, a very, very important one, because that's what really differs us from a lot of competitors who actually have a huge sales team, who are spending a lot of money for the customer acquisition, paid customer acquisition. We actually have a lot of channels of customer acquisition.
We don't like to spend too much money on them. The most important, in terms of number of the new customers, is the current partner program, affiliate program, which accounts for some 25% of new customers. And actually, we share revenue with our affiliates, which are coming to us. We deal 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, Square, Magento, BigCommerce, and recently we added Webflow. So, that also important.
At the end of the day, we have like 100—by the end of the month, I should say, we have like 100 or more channels of customer acquisition, some of them very small. So yes. And yes, we spend some money, we spend some money, we're paying for some Google Ads, but actually for us, it's 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 on that's the good 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's less people in that team. They are located both in Poland and U.K., but also in Spain. Not for some specific reason, but we have American citizens who work from there. The team is five people in terms of new business, and some other five 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 couple of dozens 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 if we get the deal, 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, 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 organization really needs some discussions with the sales team, not only about, you know, 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 the idea of having huge and extensive sales team. Yeah?
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 few hundreds agents. However, important thing here to say is that we are not very much concentrated in terms of the large customers.
Important thing 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 a huge customers. Hello, Dan, we have some questions from Dante. 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 related, what is your average customer lifespan? Wow, that's huge topic, and 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 very enthusiastic, very optimistic about the new product, but, you know, it's LiveChat is still responsible for some 94% of revenue, so definitely most important. And what is actually happening at the moment? Well, what you can see in the results is very much determined but by churn. 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 gonna lose 3% of our customer base during the month. Which for some of you is probably big number when you think about it.
For some of them, it's not a huge number because actually, if you have a SaaS business with customer base dominated by small 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, and 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 business than MRR. And pretty important, more than a year ago, we changed prices, and actually that was pretty big increase, like 25% across the board.
Of course, churn spiked, which is, you know, 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 at this 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 a very high number for us. And of course, it's very important to understand what is happening, because, obviously, if that's problem with us, with our product, that would be a huge problem. If that would be, if that reasons would be that some of our competitors are doing great job, that would be also a big problem.
But what we are seeing, it's rather problem with economic environment. So a lot of our customer base have huge problems with the business, with 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 get a lot of new customers, but we're losing much more.
Yes, 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 for 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, in other channel of communication. You need to have a lot of chats, and then you benefit from having LiveChat.
And some of them, customers don't have a lot of chats, and it's very difficult to fight off this kind of churn. So that would be definitely the number one reason of the churn overall. And of course, we are being harsh on ourselves, showing this number at 3%, because we have also a lot of customers who are buying LiveChat and using LiveChat on seasonal basis or, for example, when they have some project like, you know, conference. So it's actually using LiveChat only for some time. So yes, that also some part of churn. So yes, I would say that that's the main... That's how churn looks like at LiveChat, and that's the main reasons.
And to some point, that looks very much the same, the case of ChatBot and also HelpDesk. But as a whole, churn, especially in the case of ChatBot, would be usually higher. Why? Because LiveChat is extremely easy to jump in, to start 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 weren't able really to build the first scenarios to properly start working with ChatBot. And I think that's the new version of ChatBot based on an AI response to that problem partly.
I think I would be happy to answer some more questions, but of course, our time is, well, not maybe that limited, but we definitely like to address other questions and discuss other KPIs. So if you have some more questions, please, of course, I will be happy to continue, but now we can jump. I think we will jump to the next questions.
The next question is from Peter Løtrup. Have we considered-
We have one. Okay, sorry.
Yes.
There's another question about from Robert-
About churn.
About churn. So, I think we answered that.
Exactly. And so we have a question, whether we consider to do 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 have we generated from Square.com partnership? And so-
No, we don't. We actually never are giving precise numbers about some partners, because that would be, you know, unfair to communicate that way about them without their knowing about it. So no, but that's a good cooperation. That's a good cooperation. We're very happy with this cooperation. Squarespace is also doing well. We are very excited-
Very.
-about Webflow, definitely. A lot of good, you know, cooperation from the Webflow. So yes, we're happy. We're happy with that, 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 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 automation, 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.
Of course, looking just after numbers is not something which is most important for us, because of course, this company is safe, the company is doing good, we are profitable, we're making money, we're still growing. But of course, we are not happy with the pace we had in the last quarters. Yes, of course, if you look at just the financials, the return to growth would be good. Looking at the numbers, just reducing customer churn to this 3% we used to see would be a great deal for us, because that would mean that instead of having like growth of 10 customers per quarter, that would be like easily 500 quarters.
So yes, that would be extremely important to deal with this churn. But if that affects from the economics, you are right, it's very difficult for us to do something about that, but we need to be ready. It's really not like we just staying, resting and waiting for environments, you know, to looks better. No, we definitely have a lot of things we are doing in the company. And actually, the very next question is about very important thing we are doing. It's from Guillaume Buor. 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 Buor. 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?
This is-
So, yes.
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 churned 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, high usage, and the, the margin on this particular clients for us, is almost non-existent. 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.
Yeah. Exactly. So that would be process. 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. Mm.
Then we have a question from Bosco Ojeda. If I pronounce it wrong, forgive me, please. How can you describe how long-
You know, as a podcast 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 people from different countries interested in Text, and it's great to have you here. So sorry if we are, you know, making some faults here.
So the question is: Can we describe how long would typical client 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, in ChatBot, is exactly the answer that is to this question. So, I'm going to mark it as answered.
Question from William Corbett: In 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 mailed me that, this question, today, and actually, I answered him. And that, 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 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 mature. 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 we're also looking at, for example, in Europe, the market is, in comparison to the 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 do not something we worry about at all. But according to some estimates we saw, it's not really our estimate. As for today, like, that market value can be in the area of $1 billion, chatbot market in the area of a few billion dollars, helpdesk, like $10 billion. For example, LivePerson, actually, sometimes this is discussing so-called conversational market, which is like worth billions of dollars. So that's what we're looking at the market. Uta, do you want to add something?
I think it's a good description. The problem that 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 different sizes of the customers, and that means also that if you take into account 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 revenue based, then 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 the such companies choose us, for example.
Of course, it should be said that there is a lot of competitors on that space. You know, companies which are offering similar query products or adding some chatting features to different kinds of products, which is also important, source of, you know, competitors. So, yes, it must be said. And the next question from Guillaume: Do you have any news related to the next price increase? You know, the changes of prices will be part of this process of what we are doing, looking at our plans. So yes, we definitely think about changing in pricing. I think it will happen, but what will happen, it will probably be a lot of small things.
Not like next huge move, you know.
In 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 starter plan. There will be some features moved, probably, between the plans, but yes, I would say yes, that at the end of the day, we will see some changes in prices, and definitely not the decreases, increases will happen.
So that's done. The next question is from Robert Suszczyk, and he wants us to comment more about the trends in customer acquisition costs. 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 partner program 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, a per quarter cost, but it's long-term work on building those acquisition channels. Among others, this Webflow will be a channel that we've worked on most recently. But 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, that'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's from our perspective, expensive channel of the customer acquisition. But as we paying for the results, it really it's something we are willing to pay. We have got no problem with that. We really have problem with just, you know, 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 złoty-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 charged in dollars. And the costs are split, like, historically speaking, like 50/50 between złoty and dollars. So of course, we can see some negative current, złoty is now much stronger. So that, that's something negative for us. That's something which can affect margins.
Next, anonymous question: Any ideas, is your market share in the LiveChat space at the end of 2023, are you growing market share? And I think Łucja answered that question really, because actually for us, it's very difficult to look exactly at the value of the market. Thinking about value of the market, my guess, but I think rather guess, is that we get some market share. But looking at the number, which is by far not the perfect, you know, KPIs, not the perfect metric. Looking at the numbers of the website with LiveChat technology, it's probably stable. It's like number 5? Like number 5, with 6+% of the market, but please have in mind that actually, looking at that metric, the three solutions are dominant.
So, I think it's very pre-- it looks pretty stable. But of course, looking at that metrics is definitely not perfect. You really can distinguish paid customers from not paying customers. Sometimes you can see some former customers which have not deleted your code from website, in that data, you can see trials. So, it's actually very... Not something I would really love to refer as I know, perfect source of information. And the next question from Guillaume: What is your retention rate? So we used to discuss MRR net churn, which used to be in the area of the 1% monthly, sometimes negative, of course.
Of course, in November last year, it was like -30% after the change rates, that, the, the perfect net MRR churn would be below zero. Unfortunately, it's not. It's also in the last quarter, it also was higher, 31%. It was below one, above 1%, as the customer churn was above this traditional 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 Pitzer. 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 that many companies actually pick up new certain software solutions in the last-
November, looking just at the... It depends, if you look at the whole quarter. I mean, because it's very mixed. I mean, November, yes, we used to, it used to be record, sometimes the best month in terms of the net customer acquisitions. Not a year ago, because actually we had this spike in the prices. We saw, so it definitely wasn't great. And before that, we have pandemics, and pandemics change a lot. Of course, it's affected seasonality, and we had that 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. And actually, looking at the net additions at the last quarter, November was worst for LiveChat because of the churn.
December was better, which is like abomination, because December used to be one of the weakest months, usually. So yes, a churn actually okay high. If you look at the net addition, churn is like game changer. And you know, the growth additions looks of course not so bad, historically speaking, quite solid. The churn change everything, and actually historically speaking, December was usually very weak in terms of the churn and new customer acquisition. So yes, but not really typical whole quarter. If you look at the single months and the whole quarter, the whole quarter was really mixed, with strong November and weak very weak end of the year. And actually, for us, the December, the first half of December was a really decent.
You know, we're going now into—probably, we're going 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 it sometimes we get really mixed picture, and something that we take for a trend or for something which is which can be part of some, not cyclical, but something that happens that way is not happening. So, it it's sometimes it's a very mixed picture.
Yes, we really don't want to blast this picture. It's just, I think a lot of the things which came into the 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? 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, 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 Yannick Joecke. 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 one 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 very much hope so.
Well, the changes we made before, some time ago, actually, new way of building scenarios helped a lot, and that's much bigger change. It should help, but yes, definitely, let's wait and see, because yes, we will learn a lot in coming months.
Mm-hmm.
Okay, maybe that one is quick. So maybe the next question from Mark 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, you know, kind of Polish 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 adopt a lot of automation in our work, so structurally, we can do that.
We still hiring, even in the last month, we had two more people, one person, which is, you know, 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, we are scaling down at 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, and now we have still a few less people.
Yes. And of course, about the whole cost, well, I don't think we're able to reduce the whole cost base, but the pressure should be much lower. With you know, with changes on the job market, with the lower inflation, the pressure should be significantly lower. So don't expect a, you know, that we are able to reduce our cost, but yes, it should be... The pressure should be lower.
Mm-hmm. I'm gonna take another question about 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 to determine that increased competition isn't driving the churn? The most feedback that we are getting is, if at all, from the churned 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. 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 reverse the changes quite quickly if we make, for example, price increases, and they 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 for the main question is really easy. Because actually, you can go, you can check website of their current customers and check what he is using. So no problem with that. Of course, maybe if that it would be checked again after some time, that the answer would be different, and some customers can check new competitors or the 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 the leaving customers that they're leaving because of the business. Well, we have three more questions, and I think where to start? The next one, 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. 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 features, so you 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, you know, data security, this new channel of communication which comes with customer support, security of the data, some SLA agreements and so on and so on. So yes.
So not for now, but of course, automation in coming years, maybe even not the quarters, but in coming years, automation will be extremely important. And yes, LiveChat will be more automated, and the role of the human in that product will change more to actually 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 back vision, because we actually we really 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, also a tool when you can organize work of your team, when you can gather all information, also some critical information, important information, when you can analyze that information, maybe using our new solution, Insights. And the bot is just, you know, a very good agent, very efficient agent you can add. Some of our customers are using our ChatBot, and they're using Messenger, Facebook Messenger, as the channel of communication, and the ChatBot is integrated with the Messenger. So of course, 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 changing.
Automation is a huge, huge things, and yes, a lot of things will change. And the next, last two, two questions, and I think maybe Benjamin Gardner: "Could you talk more about how annual plans being offered at discounts drove the decrease in the ARPU? Is this different than your strategy historically?
It's 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 RPU. That's because there were quite a lot of deals signed by the sales team, for example, and they were the annual plans.
Yeah. So, no, definitely, annual plans 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 RPU is 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 the... 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 to compare with them?" A lot, a lot of competitors on the market. A very different one. Some of them are great companies. We have a lot of respect for them. So looking at the whole market, you have some 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 think about LiveChat, just about, is this main functionality, it's something you can have for free.
On the other hand, you have companies like, now I'm thinking mostly about LivePerson, who are dealing with huge, huge enterprise deals, and they offer not only cloud solutions and they're building a dedicated solution for some brands, and they actually have multi-million dollar deals. And we are not them, obviously, but we are something in between. So our niche would be the small or medium-sized companies, but the companies which are making money because of the LiveChat, they really looks actively how to convert the website, the online business, the companies for which really care about the communication process with their customers. For these companies, the communication is important. It's also sometimes the competitive advantage.
They take care about safety of the data, they take care about the sustainability of the service. They provide that, they're using sometimes more than one channel of communications. They work with some data provided in the chat, or they just want to be where the customers want them to be. So they really want to be available for their 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 product.
Looking at the names, I mentioned LivePerson, I mentioned tawk.to, and Facebook are probably the companies which are more direct competitors of ours. I would say Zendesk, definitely, I would say Intercom. Maybe WhatsApp, maybe you want to add something as a direct competitor.
So these two 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 all the 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 a very long day. Of course, we'd be much more happy to having stronger numbers, being able to show you stronger numbers, but definitely, the whole companies are working hard to improve this number, and we have a lot of things in doing in our companies, a lot of initiatives, and we are rather optimistic. Environment is still definitely demanding and challenging, but, you know, we have a lot of things in the company we are excited about and we'd like to see in the making.
Thank you. Thanks again. Let's have a great day.
Very good day.
Thank you. Bye.