Good afternoon, everyone. It's past 3:00 P.M. in Wroclaw. Today we will be having a call on the annual results for the 2022-2023 financial year. Also we'll cover in that call, the KPIs of the first quarter of the new financial year, and that is the period of April to June, this year. It will be the I.R. team presenting today. My name is Łucja Kaseja, and Marcin Droba is with me on the call.
Hello, everyone. Hello, good morning. Just for start, as some of you probably know, we plan to change company's name at the coming AGM. It's a change which supposed to stress the fact that we are no longer a company of the one product. We now changing our strategy, we speed up with AI, and also at the end of 2022, we bought a very strong domain, text.com. Actually feel invited to visit text.com, check our vision. We actually try to present on this website how we look, how we feel about our company, our place in the ecosystem, and how we feel about industry, what is coming, what we're changing.
We think that you can look at our industry and see some three I think eras of how our industry looks like, what we are doing. The first is the situation when we had a tool which enable agents to communicate online with visitors on the website, and agent can be supported, can have opportunity to check the wisdom gathered, the knowledge gathered in his company. The second stage, and that's what we are doing now with the AI tools, is the situation where agent is actively supported by these tools, which suggesting answers, which brings this knowledge to him.
The third would be, of course, and we coming, we welcome this stage, free with ChatBot 2.0, is the situation when this whole communication is taken from agent and is handled by intelligence tools. Human is still present in that process, but as a trainer or supervisor. Feel welcome to, and, at text.com, and check our actually our vision for the industry.
One thing that I have not said is that we are going to run a 15-20 minute presentation, when we will summarize the year and the first quarter. Later on, of course, as usual, you'll be, you will have the chance to ask questions. Either you can write them already in the chat section, or you can later on raise the hand. Now into the presentation. As always, we are giving a very brief intro to our business that is to welcome the potential investors that might join the call for the first time. We are a global software as a service company. We mainly focus on the U.S., where we generate 40% of our revenues.
22% of the revenues we get from the English-speaking countries, and Poland, where we are headquartered, is now responsible for less than 2% of the revenues. We operate in B2B subscription model, so the companies that buy our software, they pay for a subscription. Important thing here is that they pay in US dollar. We have a very unique customer acquisition model that is mainly through inbound marketing, and it actually allows us high and sustainable margins. As an effect, also, is the fact that we are a dividend-paying company. We have a very long track record of that, and we pay as much as possible from the net profit in form of dividends.
We still have the co-founders on the on the team, we have them on the management board, but also in the supervisory board. More into our business, we have now five products. That is LiveChat, ChatBot, HelpDesk, KnowledgeBase, and last one, OpenWidget, which is actually our first free product that we have. What they all have in common and is the fact that it is a premium service. We very much focus on customer experience. We give a lot of customer support. We have a very open ecosystem, and we actually encourage others to join us. We have, for example, more than 200 integrations now of our products with other products. That will be the very brief summary of the company.
Now, I will go into events. The first one that I want to describe is actually the number of interactions that our customers had within the products that we offer in the past financial year. We are very happy that this number increased by more than 70%. Together, LiveChat and ChatBot, they had more than 1.7 billion interactions. That means chats. This growth that we see in terms of the number of interactions is actually much higher than the increase of the customers that we have. This is exactly the result that we want to see, to see that the customers are very actively using and increasing the.
That the software that we give increases the value and gives opportunities for the businesses to increase their sales or to help better their own customers. Also, in case of HelpDesk, that meant that 5.5 million tickets were sold during through our software. Commenting the past financial year, a couple of days ago, we published the annual results, those are the revenues that we managed to get were PLN 315.7 million, and that is actually an increase of 41.9% over the year. Similarly, net profit increased as well by 44.8% to over PLN 172 million.
That is also due to the fact that Q4 for us, in terms of the revenues in Polish zloty, were very strong. It was an increase of 43% to almost PLN 90 million. The net profit hit was very close to hit PLN 50 million. That could not have happened without the customers. We also give the numbers for the use of products and the number of customers that we have. Those actually include the numbers for the quarter, which has just ended. For April to June, the increase in the number of customers for LiveChat was 704 new customers in that particular quarter.
That means that we have over 37,765 customers of LiveChat. ChatBot has rise to 2,804 customers. That means an increase of almost 100 customers in the quarter. Together with that, with quite good numbers in terms of the acquisition of clients, we have LiveChat ARPU and ChatBot ARPU increase over the whole year on year, by 4% and in case of LiveChat and 19.5% in case of ChatBot. That results through from the price increases that took place during this financial year. Monthly recurring revenue, which for us is one of the key performance indicators.
At the end of June, it was at the level of $6.047 million and that is increase of 34% year-on-year. Last but not least, in this section, the product. We have been very busy with the development of AI-based features. The communication that we have of those features is mainly for the customers because we, it's, we want to build to create the value in the product for them. So if you actually want to follow those changes closely, you can see, you can link to the website, where we not only inform about the functions that are already in the product, but also the future.
For example, just this week, we added for the business and enterprise plans, a feature of automatic chat summaries for agents, if chats are transferred between agents. It saves a lot of work for our agents. In another product, so in ChatBot, we are at the very beginning of beta test of a new version of ChatBot 2.0, which will change the way that the ChatBot looks like. Also the last, maybe not the most important fact, but also it shows how we want to see the product and everything that is around the product, so the whole ecosystem.
We are, we have started Text Accelerated, where we chose six teams out of 600 that applied, and they will be working very closely with our people on the team during eight weeks program to monetize their ideas or to work in the expertise of Text Intelligence that we have in the company. A small note here, more of a fun fact. One of the teams got involved in this Text Accelerated program because they have read in our Investor Relations reports on the company about the program. We are having our fingers crossed for that person. We are quite happy that we could have added to that.
Also, we already have the decision of the management board on the dividend proposal of how to split the net revenue, net profit. Out of PLN 172 million of net profit, PLN 153 million will be paid out in form of a dividend. Already the second advance towards dividend was approved by the supervisory board. That means that PLN 1.46 will be paid per share, and that will be paid out on 4th of August. The total dividend value is close to PLN 6 , so that's PLN 5.95 per share. Last but not least, from my section, transition into Text.
We will be proposing at the upcoming annual general meeting to change the name of LiveChat Software Spółka Akcyjna to TEXT Spółka Akcyjna. We will not be changing the name, the names of the individual products and also the individual website domains will remain with the with the with the five products that we have, especially due to the fact that the domains that we already have are very strong domains. We will be actually, we are already displaying the whole product portfolio on the new website, text.com, which we think that is are worth, it is worth reading.
Now we can dive just a little into latest numbers. First, let's start with annual results. As you can see, the net sales grew by almost 42%, and EBIT and net profit by almost 45%. On annual basis, of course, these results are presented in zlotys and are also supported by strong US dollars. If you look at the Q4 alone, the results are even better. Net sales grew by more than 33%, and EBIT and net profit grew by 65% and 64% respectively. Of course, that was that quarter, which was fully based on new pricing of the LiveChat.
That's the full effect of the change our price has seen here. Of course, these results, in our case, translate into very, very healthy cash flow. As you can see that actually, the most important negative position here is cash flow from financial activities, which means dividend, in our case. The situation is very healthy, and even in this tough and uncertain times, we can uphold our dividend policy, and actually, we are doing that. Yes, that dividend policy is confirmed. If you look at the revenue split, geographic split is not changing a lot. Of course, the U.S. is the most important. What we were expecting actually is that new products, younger products will be catching up.
LiveChat, the last quarter was of course, very strong for LiveChat because the change of the pricing had a very strong impact here. Nevertheless, you can see that especially HelpDesk is achieving very healthy growth. We are very happy from these results, and we expect, of course, that in the coming quarters, that the new products will be catching up, definitely. That's the split for the last quarter. HelpDesk still below 2%, hopefully not for very long. ChatBot still about 5%, and that's not gonna change. Contrary, that the ChatBot will be growing faster than LiveChat. That's what we expect.
That were annual KPIs and KPIs for the fourth quarter. Now we can jump into the first quarter April, from April to June, and the actual preliminary results. Here are revenues, which were, will be no longer revenues because we're gonna change our policy of the revenue recognition. That's gonna change. That's no longer data about estimated revenues. What was the difference? Actually, we used to recognize our revenue at the moment when we on the cash flow basis, actually, when we get this money.
After the latest discussion with auditor, we now think it's just this position is now big enough to justify to change that policy, and we will be smash this revenue between the quarters in the terms of the annual payments between the four quarters. I think that that's what is expected by investors. That will be positive thing because that will give a much better overview on our business in the future. We hate really, we hate to take some data from the investors. We want to be very transparent.
Actually, for the Q1, $20.16 million operational cash flow, which would be translated into revenues under old policy. That would be a small growth between quarters, which is the effect of the, I would say, modest number of the annual payments in the last quarter. Yes, that's the number. We still think that the best KPIs for the investors to look, to think about our business is still MRR, you can see that, you know, 2 quarters before we jump on the higher level after changes in our pricing, we are not losing this business.
We are still growing, the MRR account accounted to $6.47 million in the last quarter. This MRR is, of course, a result of the two factors. One is the number of the customers, the second one is the RPU. It was very good quarter. If you think about customer acquisition, that number of LiveChat customers grew by 700 net versus 1,500 during the whole last year. Actually, it's pretty good number. The new customers number, here you can look at RPU and at longer perspective, let's jump to another slide when you can look closer at the latest data.
What we can see here is actually that, especially in the April and May, the new customer base was dominated by very small customers. Yes, we can see a lot of activity on the market, but especially when we think about very small customers and bigger customers, looks reluctant. They planning more, they probably, maybe that's about economics that they are rather changing with, they're waiting with some decision about investments. When they're doing that, they really want to be flexible when it comes to payments. They really don't want to pay annually, not at this moment. They rather prefer, they want to be charged month by month, even if that's more money actually, but they really want to be flexible at this moment. ChatBot, the same KPIs.
The story of the ChatBot is, as you can see, when you think about number of the customers, not very fast growth at the moment, but nevertheless, very constant growth. ChatBot is adding customers each month. Definitely the most important thing now is new version of this product. As we speak, the new version of the ChatBot is being released and will be available for the first customers, which will join our beta testing program probably next week. That's the most important. I mean, we are, well, there's definitely are more room for the growth when we think about ChatBot. ChatBot is growing, ChatBot is adding customers each month.
The RPU is growing, so it's, you know, quite good picture, but definitely, there is a huge change for this product, which is coming. We are very excited about this possibility and what is coming. That's all what we had in store for you, and we'll be happy to answer questions, as we have some of them.
We have several questions in the chat section. I answered some of the technical ones, so if, please have a look at the answered one as well. We can start with the first one from an anonymous attendee that relates to the revenue recognition. We may just once more probably describe what has happened. There was a comment in the press release that you are not giving revenue estimates because you are reassessing revenue recognition following comments from your auditor. Could you please elaborate on this? In fact, when we publish the KPIs, we do not want longer to provide estimated revenues for the period. However, this quarter, in order to be, to provide comparison, we also have given these numbers.
Actually, these are more of a operating cash flow, because that was the basis for our estimated revenues, and it has been given in the report. However, in the future, what we will change is the fact that so far we were recognizing all the revenues, and we were booking them in the period when we received them. No matter whether it was a monthly or annual payment, we were recognizing the whole amount in the period when we received it. Now, we want to distribute these revenues over the periods when we serve, when we serve the service actually.
If a payment is done this quarter for annual contract, for annual subscription, we will be booking one fourth of it this quarter, one fourth of it next quarter, and in the four quarters, the revenues from this particular subscription will be seen. This is what will change in the future. We are now revising the methods of calculating it for the current period. Once we will be publishing it, we will of course, publish the numbers for the past financial year for comparison.
Okay. That's one. I think we have Daniel here, so maybe we can let Daniel ask his question. Hello, Daniel. You're.
Hi, Marcin.
Hi, Marcin. Hi, Lucja. Good to see you. I actually posted one question, I think, in the chat here, but I have another one. The ChatBot RPO was increasing pretty strong, you'd say. Is it still price increases that are flowing through there, or are customers adding seats and features there?
Due to the changes.
Yes, yes. So yes, I would say the most important thing. Yes, we change prices of ChatBot. Yes, we have now new prices, but in the case of LiveChat, actually, we changed pricing for existing customer base after some two months. In the case of ChatBot, we didn't do that. Yes, the new customers which are buying ChatBot are paying new, that they have new pricing. That the existing customer base.
Right.
Is allowed to keep the old pricing. Yes, that is making difference. That's why ChatBot actually is still growing, and there is potential to grow. Very interesting thing, we have in the when you look at the pricing of ChatBot, there is some number of interaction, which is included in each pricing plan. If you, if customers have more conversation, he's charged additionally $0.01 per in the interaction. Actually, we have some each month, we have some additional revenues, but we are not thinking about them as recurring revenues. Actually, it's not included here in RPO, because RPO is based on revenue. Actually, t he real RPO of ChatBot is higher. Is, it depends from the month, how much higher, but it can be $20 or more per month. Yes. The real RPO of the chatbot is even higher.
Understand. Just to be clear there, some of the RPO increase is driven by new customers, being applied on the new pricing tiers. What are you seeing in terms of added or reduced number of seats there? Are you seeing the same as you're seeing with LiveChat, with some removal of the number of seats, or?
I think that was the case in the April. Actually, April wasn't great because we saw that some of the customers were reducing number of the agents, and that's why, actually, why is the absolutely main reason because of the we saw a poor contraction in the LiveChat RPO in the April. In May, it was stable, in June, we returned to growth, but yes, that was what really happened in the April.
Right. In May, June, so change to added seats rather than reduced seats in both.
Yeah.
LiveChat and ChatBot. Okay.
In ChatBot, actually, it's, well, it's not about seats really, because no, you can't have seats in the ChatBot. It's just ChatBot. What is important in ChatBots, the new customers are paying more than old customers. That's the important fact, and actually, more customers are choosing higher plans usually.
Got it. Okay, just a final one then, I wrote it in the chat, but I guess I can take it here. R ight away. It was a bit surprising to see a fast return to strong customer net adds again, considering the current environment. Just curious, what was driving that? If there's anything particular that you would highlight that's driving that change. Yeah, that's not what you're seeing from many other similar companies, I guess.
In this is something that is more for the small customers. We are actually seeing a lot of small companies, and hence, that is not really supported for RPO.
Okay.
I t looks like, they are the ones that have to do the business no matter what, no matter the conditions. They are, this part of the market is still active, so small and medium-sized. Whereas, within the bigger customers, more enterprise customers, we definitely see what the others are seeing. First of all, less or more reluctant approach to adopting new software. Also, for example, we see that the bigger companies, they are reluctant also to pay upfront, for example, for annual payments, and they require more, less, like more elastic approach to be able to start the deals.
Okay.
Which can be from additional color, can be geography. As it looks like, you know, US and Asia leads the way. Europe is weak.
For us, Poland is very weak. U.S., of course, we try to be focused on the U.S. market. U.S. and Asia leads the way, I would say.
Okay, perfect. Understand. Maybe just a final one, which I always tend to ask you. The number of employees at the half year end, I don't know if you disclosed that in the release, but you usually don't mind telling it. Was it a bit less than in March, or if you can comment on it, perhaps, yeah.
We ended the financial year with 282 people on board. Now it is slightly less.
Okay, got it. Okay, perfect. Thanks, guys. Always good to see you.
Thank you. Thank you very much.
Take care.
It's great to have you here. Thank you. We have William Sewell here also. Hello. Okay.
Hello?
Hi, can you hear me?
Yes, yes. Great, thank you.
Hi, Lucja. I've got two questions on headcount. The first one, I understand that the last financial year was a year where you added headcount, you grew the company. Q4, the headcount reduced. I just wanted some detail on why when you were hiring in previous quarters, you decided to shrink headcount in Q4, and maybe which teams were affected?
Yeah.
Indeed, we, for the majority of the year, we were hiring. However, it was we had in mind that around the team of a size of around 300 people will be the complete team in terms of the size of the teams and the particular positions that we had to fill. Since then, first of all, we started to be very much concentrated on AI and automation, and that as you could have read in the letter of the CEO, this is in first, firstly, applies to ourselves, and we want to automate the work that we do on a daily basis.
It's not, the reduction of the team is not actually through layoffs, but it is more of, when people are leaving, we do not fill the positions. That's one thing. We try to cover for those people in some other ways. Also an important thing is the fact that we are really concentrated on optimizing and automating the tasks that we do. For example, we no longer have Chief Operating Officer. The Piotr Bednarek, who was the COO, now has the position of Chief Automation Officer. This, although it's, it looks like just a name change, like the change of the name of the position, it really is what we do within the company. We want to operate smoothly and to have a lighter version of ourselves.
In terms of the particular teams, since the last in the last two quarters, indeed, some changes were made. For example, we no longer have a social media team. We had this approach of working on social media. However, it did not bring the results that we wanted in terms of, like, we really want to, for all of what we do, to have either to be worth more in terms of a product for our customers or to have the client acquisition. It was not working well. That's why we asked those people to either join some other teams, like in the content team, or to fulfill the their careers in social media, but at some other place.
Some other teams that were affected, we no longer have, manual, testing-
QA.
QA. We went for automatic one, so that also meant some changes. On team level, as like on the teams level, that's I think it's what mostly happened. Also in terms of the to give you more context in terms of the how we are organized within the company, we have now a much smaller teams in like five, seven people in terms of the size of the team, to have the job done faster and more smoothly. This really, like, this automation thing really is down deep in the company, not only to make the automation for the customers, but also to have it within our own team.
Actually, AI automation is affect us as organization. It change things. Actually, that's the change which affect us as organization. HR is the team which is affected. That also will be smaller, much smaller. What is important to say, of course, we are still hiring. We have some open position, you can check at text.com, there is link, there is, of course, the section called job. Yes, we are looking for some people, mostly technical, like data engineer, data scientist. We have this team, we have know-how, we really want to strengthen that team. Yes, in some areas we are hiring, but it's definitely all about automation. Yes, we should be able to have even smaller team.
Thanks. That's really helpful. I think the follow-up question was, I feel like you mentioned that you thought 300 people was a complete team in the past. Now, considering these automation targets, do you have a new number in mind, or, and as well, you know, maybe could you add some detail on, you know, with ChatBot 2.0, like, how many new staff would you need to hire in the next few quarters, say, to fully develop that product?
Not a lot, actually. I think if we, especially when you think about ChatBot 2.0, we have team, we have that team. I don't think we need to hire more people. I think the great thing about AI, that there is also a lot of tools, a lot of technologies, different, not only OpenAI, a lot of other we can use, which can be used, which can be somehow used during our work. We but AI, no, AI is not only ChatBot, of course, we have this data team, we have different ideas. We are working on some features for other products. Yes, we need some more people.
I think we have, like seven, maybe eight open positions as we speak. Something like that. I would say seven, eight, not a lot of people. We don't have a very strong target for the whole team, but I think that, yes, we definitely will have smaller team next year when we will meet, maybe by 20, 30 people, something like that. Not a very specific number. Don't think about that as a, you know, a number written in the stone.
Thank you.
Yeah, it's how it looks now.
Yeah. Thank you. That's very helpful.
Thank you. Thank you.
Have a good day.
Have a great day. Thank you.
We are now coming back to the questions from the chat, and there is one from José Ignacio Caro: "Is there any plan to list the company in the U.S. stock exchange in the future?". I would say just as we have recurring revenues, this is also a recurring question. This is we are first of all, in our business, very much looking at the U.S. This is our target market. Actually, the U.S. customers are the customers that we think of when we do changes in the products, and U.S. has been always the market that we were looking at.
Also in terms of the stock exchange, at the time when we were deciding whether to list in Warsaw or somewhere else, U.S. was considered as well. However, this should be treated as a long-term plan for the company, a vision of the CEO or the company should be at some point. In the next few quarters, nothing will change.
That was always ambition. I mean, 10 years ago, that was ambition for us, and it still is. As you can see, it can take a time. It still can take a time. Of course, that would be great. Even if you think about the currencies and then how we are affected by that's not something we like. It would be great to report in US dollar, to pay dividends in US dollar. Our business is in the US. We are very focused on the US market. Definitely that one, something we'd like to do, and like a lot of things like that, there is always something, you know, which is require a whole attention.
from our team, from our management, CEO, and now it start obviously, this AI and this opportunity, and huge challenge, of course, and risk related to that. Don't expect anything adverse, but it's, you know, it always was ambition. Even I would say personal ambition of the, of the LiveChat founders. Okay, next question.
Yeah, again, from anonymous attendee, actually, a set of three questions. If you had a silver bullet and could take one competitor out of business, which one would it be?
I would take this. I will start with that. No, we have nothing but respect and really love for our competitors. They actually, you know, you know, they, that's the great companies, and they motivate us, and a lot of them actually are coming to that market with their own customers. I think that's a great situation. We had this story in Poland that when Facebook actually announced that it will publish how it's called, Messenger, they actually made it possible to use Messenger on your website. Yes, Messenger plugin.
Which actually was perceived as a direct threat to LiveChat. Actually, I can understand that. I fully understand that the Polish investors, the Polish shareholders were really frightened, and our shares lost a 20% of the value in the one day, and it was just beginning. Actually, we're happy. We're happy about that because we didn't think about Facebook as a competitor, but we were convinced that they coming to the market with their own customers. They will bring a lot of new customers into our market, and maybe some of them later will look for more advanced tools. We were very happy about that. Shareholders not. Actually, we were right then.
I remember one story, actually, that is very long story. That company is not exist. Actually, it was bought. It was company called Zopim. As I said, they don't exist as a company, and they were bought, so maybe I can tell that story because what they were doing, it was like 12 or more years ago, they were doing a really shitty marketing, and they were, you know, they were targeting us and our customers. That was unfair, and we really weren't happy about that. We never responded in the public. That was the one, maybe the one only case when we really had some negative feelings towards some of competitor.
That was just the what, first part of the question. The next one, what is the key competitive advantage for LiveChat? The third one, in 10 years from now, where should LiveChat be under ideal circumstances? Well, we had this, we had this traffic in our office, in our office. It would be great to show that, but I'm not the office, that virtual background. We have the timeline of the LiveChat, our history on the wall, printed on the wall. We have this story, and some people actually marked when they come to our company, and there is a line into the future, and I believe it's like 2060.
It's the point at the end of this line, and there is called, there is HQ on Mars. Yeah, fingers crossed for Mr. Musk and the class. That's the official plan. You can come to our HQ and check. It's I would say it's almost official, but seriously, of course, that's the serious discussion about competitive advantage about it. That's a huge team because we compete with very different companies. We compete with providers of the free solutions. Yes, we have to compete with the companies that are giving some tools for free. At the same time, we are compete somehow, maybe not so directly with companies like LivePerson, providers of the great tools which are designed for the enterprises.
Our niche, our sweet point, I would say, is someone in between. Long story short, I think we are very good in giving a lot of value to the small or medium companies, which are able to pay for premium solution, but are not big enough to use and pay and be charged for some enterprise-level solution. Maybe these solutions are just not good for them because they have their own limitation. We have this sweet point, we have this niche. We are really very good at understanding this niche, these companies. We are very close to them. We are very flexible. We are the first user of our self tool, each of them.
We are really very good at understanding where is the real value for the customers. We are also. I think we are very flexible when it comes to change something, some things in our tools. What I mean is from the opinion, 1, about one of our competitors, they have a very good tool, which are really outdated look and UI and feel, and we are really changing a thing very often. As I said, we are using them. Yes, I think that's some of our advantages. I think we are very efficient when it comes to customer acquisition. I think that's not something I have to prove. You can look at the numbers.
At the end of the day, it's about value for the, for the customers. Lucja, do you want to add something?
I think nothing.
Of course, if you want to ask to be more specific, we can continue this discussion. Maybe we can contact and have one-to-one meeting and discussing. Thank you for this question. I mean, it's great. Yeah, we don't want to kill our competitors, really. There is space for more than one company here.
Should we go to the next one?
Yeah, definitely.
Any idea when ChatBot 2.0 will be released, and do you expect this to cannibalize your LiveChat Inc. product? ChatBot 2.0 will be released to the customers, should be re-released within a week.
From the technical standpoint, it's worth released today. Yes, we will invite customers to try it next week. Sorry about that.
It will be running. In terms of the cannibalization with the product, with LiveChat, it has worked along well, along LiveChat. We see a lot of examples when both of the products are used. Chatbot for filtering out spam or answering the most common questions. With more specific ones, people are transferred to a human agent, and that is through a LiveChat product. It's one cannibalize, although what we are really hoping to ChatBot 2.0 work, like, what should work well is the fact that It will be much easier to build, to run those chatbots than in the past.
This was one of the obstacles or challenges for us, for chatbot products, that you had to spend more time on, setting all the things, and now it will be done automatically. You will be able to adjust or to tune the new bot more towards your needs, but the majority of the work that has to be done initially will be done already in the product.
Yes, of course, a very important thing, we are working on automation in LiveChat. We are creating a lot of features which are supporting automation within LiveChat. In the future, LiveChat will be on the market, and will be much more automation within LiveChat. That what is happening. That what is happening. Yes, we are creating a lot of tools, a lot of features. Some of them are released, most of them are released as beta for willing customers using enterprise or business plans. These features together are creating AI Assist, I would say. That's a system of AI Assist, which are helping agents. In that case, yes, you still have agents, but he can be much more effective.
There is another question connected to that, just, two questions below. I'll already answer it. The one, are all ChatBot customers already LiveChat customers, or are they mostly new to the company? Actually, 2/3 of ChatBot customers are also users of LiveChat, whereas the product is also sold standalone. This one third of the customers are using ChatBot only.
Actually, a lot of chatbot users are using chatbot integrated with Facebook Messenger. You can see this Facebook, which was seen as a huge threat to us at some point, actually created a new market for chatbot solution. That is interesting thing, of course.
The next question, if AI presents a significant opportunity for the business, why does it still make sense to distribute most of the earnings as dividends instead of reinvesting AI-related growth opportunities?
We are doing that. If you think about our business, we actually have, we are investing. We discussed this scheme for employment, that we will be able to reduce team because of automation, thanks to automation. Yeah, no, we are hiring. We are hiring a lot of people. We are hiring some expensive people, and we are doing that, and that's the expense for us. We are not hesitating, spending money for some AI solution we can use. Actually, as we speak, we spend, we don't spend a lot.
For example, in the OpenAI, we would be happy spending more because that would mean that the usage of this new AI solution is better. Actually, we were expecting that some customers, the customers would be much more eager to try some of them solutions, some of the features. We can see that for example, some of them are very careful, which is great thing. Some of them worry about the data, for example, which is, you know, absolutely great thing. We are very happy about that because that's what, of course, is then the next competitive advantage for us. That's something we really care for.
I'm not sure if your data is really safe if you're using free solution, and definitely not if you're using free AI solution, because probably you are paying for that free solution, giving your data out. We're using OpenAI, but it's more expensive for us because actually we opt out from the option. We use opt out when it comes to using data for training of OpenAI solutions. Yes, we don't ha-- we are not really, we... That's not the point. We will spend as money as we need. Definitely, you can be sure if that would be necessary to spend like $2 million tomorrow for the access for OpenAI or other tool, we are doing that.
That's not the plan, of course, not today, but no, definitely, that growth is very important. Actually, what you can see as a net profit at the end of the day is the what's left after this investment. For us, the investment is the work of the people.
The next question is on the cost side. What was from Max Steinberg, what was the reason for the lower operational costs in Q4 compared to Q3? As I understand, it relates to the lower cost of sales from the disposition. Actually, what is mainly in disposition are the cost of support and marketing, but also the cost of providers and commissions to the partner program. Those vary depending on the on the on the deals, for example, signed by the by the partners. It's more of a fluctuation, not a change that like gives an answer for the future. The next question, can we please talk about any planned product pricing changes in fiscal year 2004?
We have nothing planned for this particular year. However, as we said, when we were increasing the prices, at the end of the last calendar year, those. First of all, to increase the prices, we have to give more of a value of a product to customers, and this is something that is the most important thing. Obviously, we want to make those price changes more often. It won't be that you would have to wait years for the price changes, but nothing is on the place currently.
It can sound like marketing, but it's true. I mean, I think that's our competitive advantage, actually. Some of our competitors probably think how much we're prices. We have this freedom, to think about how to create value for the customers, and then we can think how to monetize that value. It can be done because what actually our, we can see, what we can learn from the last quarters, yes, our customers are willing to pay more if there is value for them, and they can understand that we are changing prices. Yes, we have this freedom, we have this comfortable situation. Yes, we can think about how to create value for the customers. If the value will be there, customers will pay for that.
We have a question about the headcount. We already discussed that, but just very briefly, the headcount increased from 268 last year to 282. However, it was higher at the end of Q3 and went down in the last quarter of the financial year. The question, what I said about. The recognition of the revenues is no IFRS compliance. That's the statement. That's cash accounting. That's not allowed. Are you 100% sure that was the accounting or this is just sales bookings? Due to the fact that we did not have that many annual payments, annual subscriptions that were into the future, the auditor was allowing us to make those bookings in the way we did. However, due to the fact that the values have changed, they suggested that we should change the revenue recognition policy, and that is what should be taking place since this financial year.
Actually, it was even discussed in the auditor's opinion, so you can check that. It's online on our website. It's translated. Yes, that was a lot of discussion through the year. Yes, we don't have doubt that we had right to do that on our own, and we had no doubt that, yes, we should change that now. We had discussion, we have discussion with auditors about that.
That's how it is and how it will be.
This question, the next question, relates to the previous one, and it's actually I'm happy that Ruben Chariter has asked about it. Is there any cost recognition policy change coming along with the revenue recognition policy change? Indeed, we were making provisions for the service for the whole period, when the, like, for example, for annual subscriptions, and it was booked in the same period when we received the revenues. Indeed, what we will change is that some of the revenues will be put into accurate quarters of the future, and also the associated cost of service will be booked in the future, in particular, quarters.
For us, what it will also mean is that the some of the provisions will be released for the servers. I think we will be ready to talk about exact numbers once we publish the results of the Q1, and also we will be giving the numbers from the past to show how it has changed.
The next question, LiveChat new customers growth trends have improved in the past six months? Yes, that's right. Can you make some comments to what factors has resulted in this? I think the one thing is probably market condition, not so bad as it looks for the especially small companies which are doing business. Every day, they have the business, they look for the tools which can help them, which are very active, they don't think what will happen in two months' time because they have the business here and now, our tools are very friendly for them. That's the one thing. Apart from that, of course, we are still working on the customer acquisition channels. That's what we are doing on daily basis.
Yes, all the time we are improving something. We are adding some integrations. At the end of the last year, we added three important marketplaces. Actually, we entered WordPress VIP, Squarespace, and Square Online. In each of them, we are the first LiveChat on these marketplaces, so it helps. That's not the whole secret, of course. It's not like the growth coming from these three places, but we are working on that. We are adding new things all the time, and some of them are working now. I think these two things. What is coming, of course, the summer.
Summer vacation is, of course, not the best time for the new business, but we will see how it will look like.
A question from Max Steinberg. You have been talking about new products for a while. Is OpenWidget and ChatBot 2.0 what you have been talking about? OpenWidget, actually, yes. We were not thinking about ChatBot 2.0 at the time when we were talking about the new product. Also, some of other products or developments are in the way, but we better not talk about the details now.
Yeah. We have something in store. Also saying that, LiveChat is always about revolution. If you even look at the OpenWidget, we are not hurrying. We are working on that. We released that because we really want to have the first users. It's growing peacefully. We are not spending a lot of money. At the end of the day, I think we really don't spend money for that. We are using. For example, we are using Product Hunt for, to market that solution. We just released some new integration for OpenWidget, integration with Instagram. Actually, it looks great to have this widget installed on some Instagram accounts. It's fantastic. Yes, it's about evolution always.
It's not like, you know, video games, when you have, you know, the huge premiere at a very important day. No, for us, it's about process, it's about trying, it's about the first batch of the customers which are having fun with this product, about learning what we did good, what we did wrong, improving that. It's slow business model.
The next question is about accelerator program? Are we investing equity in these six companies? Could they become acquisition opportunities in the future? Actually, we're working with them, for them, to earn money with us, actually. The thinking here is that they will be part of the ecosystem, and if they will bring clients, we will be earning together. Actually, it is the benefit of both parties. We do not view them as acquisition opportunities at the moment. We are not really acquiring companies. This is not the way we are thinking.
We rather want to think it about the ecosystem, we will be happy to have third parties or those people in the accelerator program developing the products that will be used, integrated with the tools that we have already.
Next question from Ronak Yadav. "Hi, how strong do you see competition from AI plugins?" I don't think that are our competitors. I really don't think that. I mean, what we are competing with, some of our competitors are very advanced on NNI, some of them less. but yeah, I think we are still competing with the, for now, with the same companies, Intercom, Zendesk, Tidio maybe at some point, HubSpot, Freshworks, but... Of course, a lot of happening on the scene. No, I think that's our real competitors still. Maybe that will change. Maybe that will change.
It definitely when a company with some businesses thinking about using AI, it should be a very, I would say, extremely careful about security of the data, about being compliant. Also, a lot of regulation are coming. So yes. We can see that, especially when we discuss these new things with bigger customers. They are careful, and definitely that, how it's supposed to look like.
The next question is about Text. Is the move towards Text coming from position of defense? I mean, why change something that is working already?
Thank you.
Go on. Sorry.
No, no, I just wanted to say thank you. Lovely.
We are not changing things that are working great in a way that we are not changing the main domain. The domains like chat.com, chatbot.com, and others remain as the places where the customers seek for those software. Text will be the place where we will be displaying the whole product portfolio. We have now five products, and we want to have more in the future, and it will, as of now, it is more of a corporate website. We want it to be the place where all the products will be visible. It will serve its purpose.
Yes. Definitely don't make mistake. I mean, we are very excited about. I mean, we are proud what we achieve. That's the one thing. At the same time, we think that we are still a very small company. That's the one thing. The second thing, yes, we are very excited about what is coming. I mean, the company is run by tech people, tech-savvy people, and they're very excited, but at the same time, it's huge challenge. I mean, that the market is changing, and with these challenges and chances, a huge risk is coming. You can't be happy with this, what you have today. I mean, you have to think about tomorrow. We are not what is... In Polish, we have this saying about fat cat. Yes? Fat cat.
Which is happy about what is happening now, and don't think about future and the challenges. Yes, we have to move forward.
Then we have the last two questions. I think they might be combined. Could you please?
I think no.
Yes. maybe, but maybe not. It can maybe the author can confirm. Could you please expand a bit more on the auditor warning on revenue recognition? As we have expanded, that's why I think that the next one, what generally happens to the customers who turn away, might be connected, but I'm not sure.
Okay. Let's try.
Now, if we could specify, those questions, if not, then, after the call, we can.
No, we don't have any, how would say.
Only last one is missing.
That's missing now. Auditor's opinion is public, it's on the website, and there is, you know, there is no reservation in that. Actually, all we did, all the reports are accepted and approved by our auditor. It's just claimed that it's something we should do, and we are doing that. You know, the all the reports, annual report is accepted. There is no further discussion about that, and we are really comfortable with that.
The question, what generally happens to the customers who churn away? First of all, they churn for different reasons. Some of them, actually, the majority of them, lack the chat or the traffic at their websites, is not enough for them to pay for the service, so they are either just stop using and turn to some free solutions. They may be also customers who return on a recurring basis. For example, they have events or like they use LiveChat on conferences. Once in a while, they become a customer. Also, some of them, they go to our competitors, and we basically try to track the reasons of churn.
Also, for example, the churned customers were approached by us with our OpenWidget solution for them to try a free version of a product. Sometimes we get back to them as well.
Yeah, generally, yes. Yes. Thank you. Thank you. Thank you.
There is the last one, question. Where do we hope to see LiveChat in five years as a vision, not a fixed goal? Best wishes for your success.
Thank you. Yeah, that's definitely automation is the key. Yes, we like LiveChat or should I say Text? It will be Text. A company which is able to achieve this goal we have. I mean, fully automate communication of our customers. I mean, the automation is not the target itself. I, it can be way to differentiate ourselves from other competitors. We have this story. We saw some of investors we've met for the first time, wanted to check our solution and ask us to show some companies which are using LiveChat for the communication.
We chose some of them, and actually, he came back to us, and he had a really awful experience because his experience was very bad. He didn't get a right answer to his question. What we know, that's not problem with our tool. Actually, you know, he just have bad luck, and actually, agent, maybe he wasn't friend, maybe he didn't understand our tools, maybe he didn't understood the questions. Your experience as an end users experience depends not only from us. That would be great to change that.
I mean, the ultimate goal would be to see end user happy to see that some companies, they provide us of their services using LiveChat Text solution, because that would be guarantee of the really, good experience for them. That would be. I think that would be some one of the ultimate goals. Lucja, do you want to add something? We have some.
I think the Text Intelligence is something that is very important to us, and this is where we want to be in the future. We always had this approach of having open environment and of building the whole ecosystem, and that is something that we'll be trying to do in the future as well. We will find a way to do that in the future as well.
Yes. Yes. So that would be something we aim for. Please invite us to text.com. I think when I look at our vision there, I think that's the best way to really understand what we are doing, what we are aspiring to. Please invite us to text.com. Please invite us to contact us, of course. We'll be happy to continue our conversations from today. We'll be happy to meet you again. Of course, we are available. Of course, we have LiveChat on our website. Of course, at this moment, we are with you. We love text communication. Don't hesitate to text us anytime. We have some exciting thing coming to us. We are very excited to, we are waiting for new brand.
We are waiting for AGM to approve new company's name. It was a pleasure to meet you all, even in that form. I repeat that for the, I think, like sixth or seventh time, don't hesitate to contact us, mail us, or jump into LiveChat on our website. Thank you all for being here today with us.
Thank you for the call.
Thank you. Have a great day. Goodbye.
Bye.