Text S.A.

Good morning, everyone. I will try to go as quickly as possible over the data trends and events from the past quarter, and then, we will move on to questions.

Our absolute priority remains development of the suite. Over the past quarter, we have undertaken many actions related to this process.

Some have already impacted our results, while most will only do so in the future. Between January and February, we finalized the long announced Sunsetting of the native ticketing system in LiveChat.

It's worth noting that this system was quite basic (ph) and had not been developed or supported for a long-time. As expected, this had a significant negative impact on the number of LiveChat customers, but at the same time, it boosted the upselling of HelpDesk.

We also launched a joint trial of LiveChat and ChatBot and continue making changes to our cloud infrastructure. This is absolutely critical for us, but what may be relevant for you is that the past quarter should be the last one in which cost related to this area (ph) increased.

Starting from the next quarter, we expect to significantly reduce them. As previously announced, we are changing the way our sales team operates, making it more active offline.

This quarter, we attended events in New York, Miami, and Barcelona. In the coming months, we expect to have a small team operating locally in the U.S.

These efforts are already yielding results. We have secured our first customers with an annual contract value of $1 million.

This was achieved through upselling to an existing client already using our product. The contract is for two years with quarterly payments.

Responding to customer signals, we are introducing crypto currency payments in our enterprise plan, and we anticipate a significant transaction in this area in the coming weeks. This quarter also brought new partnerships, including in our Partner program.

However, I want to highlight, our entry into a HubSpot app Partner program, as the official and high quality LiveChat integration with HubSpot has been highly important to many of our existing customers. We are still working on SOC2 certification, where we may experience some delays.

SOC2 largely describes how software is developed, and we are introducing changes related to the suite in that area. However, the certification itself is not at risk.

Regarding KPIs, our most important metric, MRR, grew by 6.9% year-over-year (ph). To compare a year ago, this growth rate was 4.1%.

A quarter ago, many of you were concerned about the level of received payments. But as you can see, they have returned to a high level increasing by 3.3% year-over-year and 4.8% compared to the previous three months.

Now, we will move to our traditional set of KPIs supplemented with a few additional slides. I'm not sure, if Text (ph) is will stay (ph) with us long-term, but I hope they help you and better understand what's happening inside our business.

Payment received increased by 3.3% over the year and 4.8 compared to the previous three months. I want to emphasize that the over -- already mentioned large client, pays as quarterly.

So there is no extraordinary items in these figures. MRR continues to show a 6.9% year-over-year growth despite a just slight quarterly increase.

ChatBot and HelpDesk are contributing more – into more to MRR with ChatBot alone now approaching $0.5 million. This is the one of the mentioned new slide, and this chart shows the share of customers with ARPL above and below $500 as a percentage of our total MRR.

As you can see, the share of larger customers steadily increasing. It has grown by 8 percentage point over the past 12 months.

This isn't visible yet, but at some point, this should start how to positively impact churn, particularly revenue churn, since larger customers tend to be more loyal and get more value from our products. These slides present a similar view, but focus on the share of customers using more than one product within our total MRR.

A similar trend can be observed here. The share of this group has grown by 9 percentage point over the past year.

ARPL for customers using multiple products increases significantly. For example, having just two products already places ARPL at the multiple of the average for our entire customer base.

This is, of course, at the least pleasant slide in today's presentation. The number of LiveChat customers has dropped significantly.

As I mentioned, this was -- there was a one-off event related to the Sunsetting of the ticketing system in LiveChat. Customers churn remains high at over 4%.

When looking at the reasons provided by customers, the most common one reason for churn, was closing the business or changing the business model. The second most frequently cited reason was, lack of chats.

Lack of chats, historically, has been the number one reason for the churn. Price and competition came as the reason much lower on the list.

But keep in mind that this data only reflects customers, who explicitly provided a reasons for leaving. So it's not a complete picture.

On this slide, you can see that the positive trend for LifeChat continues as this product added $3.3 to ARPR this quarter. This is the result of several factors, successful upselling, acquiring larger customers, and higher churn among the smallest customers.

As you can see, ChatBot is regaining traction in customer acquisition. We still expect more from this product, but as for now, the joint trial with LiveChat is proving helpful.

ARPL for this product is stabilizing, partly due to promotional pricing for the initial period. Despite this, ChatBot added $3 to ARPL over the past month, which is a solid results.

It was a slightly weaker quarter in terms of revenue from additional charts not included in reported RPL, which on average added $30 to ARPL for this product during the quarter. As you can see, the HelpDesk delivered an absolutely phenomenal quarterly results, both in terms of customers' growth and, as you will see on the next slide, ARPL.

Of course, this is largely due to sunsetting of tickets in LiveChat, which has been communicated to customers in advance. However, it should not been seen as typical one off events.

It is significant that this product, the built in ticketing system within LifeChat and the separate HelpDesk product no longer compete with each other. Customers who have switched to HelpDesk are getting a real premium tour (ph).

And as I mentioned, HelpDesk also performs very well in terms of ARPL with an increase of over 7% over a month. In summary, our top priority remains progress in transforming into a suite company.

Some of this quarter's efforts are visible to you, while others are not, but all of them are important. Even without, the effect of this transformation, our business remains secure, stable, and growing organically.

Our new products are performing very well. ChatBots with 26% (ph) MRR growth over the year and HelpDesk with an impressive 126%.

The current growth rate for the whole company does not match our ambitions, but we have achieved these results in a challenging market environment for businesses marked by a significant changes with uncertainty affecting business sentiment. Morgan Stanley recently released an interesting report on SaaS companies highlighting Text challenges.

And if you have that opportunity, I highly recommend it to you. Looking at ChartMogul Benchmarks, our revenue retention has consistently been in the top quartile at even of the ChartMogul Benchmark.

So we are one of the best SaaS in the world at this moment when it comes to revenue retention. But even if you check the benchmark for customer retention, we are above the median.

This reflects that very difficult market condition rather that any weakness in our fundamentals. Thank you very much for your attention.

I will be happy to answer your questions.

So as I believe, these tariffs are on the product. So I don't think that there will be any impact.

As for now, we'll observe situation. We will learn now.

So I hope that’s right (ph). I hope this, I would say, great conflict.

We will not expand to new areas. But if I'm right, according to my best belief, this tariff has on product.

So it shouldn't affect us. Of course, you definitely, we will be observing situation.

Hello, Henry. I'm very, very happy to have you here.

So as for the last quarter, definitely, we had this one-off situation, one-off event, sunsetting ticketing systems. So some of our customers decided to buy HelpDesk, instead of the -- in place of sunsetted ticketing -- tickets, system of the LiveChat.

But a lot of them decided to quit, because they decided that without that value, they don't want to pay more and we lose them. So that was something we expected definitely.

So I think in that quarter, we lost for that reason, some few hundreds customers additionally simply because of that decision. Of course, at the same time, we got a lot of new customers for the HelpDesk.

So that's what happened in that quarter. Quarter-to-quarter customer churn, look very similarly above 4%, and I mentioned the reasons in the -- during the presentation.

So if you have some more detailed questions, if you want to jump in, of course, we are open to that discussion. So thank you for that questions.

Maybe that's faster, but that's the first part. I I'll answer the first part -- the first questions.

How switching costs are for your software suite? So if you mentioned this cost of making changes in our cloud infrastructure, if you are mentioning that, we are at this moment, we are forced to doubling the expenses of the cloud infrastructure we are using because we -- at this moment, we are using the infrastructure of two providers.

And this quarter will be, this quarter, we will discussing quarter ended in March, will be that quarter when the this cost will be at its peak. And then from the current quarter, from the quarter, we just begin, we will -- we should be able to significantly reduce, this cost as some migration are done, are finished, and we can proceed.

So in the comparing quarter-to-quarter in Q4, our Q4 of the financial year, the cost related to cloud infrastructure can grow -- that can be growth by some PLN1 million plus. And from the current quarter, from the Q1, we should be able to reduce that position cost related to that position by some PLN3 million.

And you can go to the next question.

So thank you for that question. Actually, we are introducing this crypto payments because our customers, our perspective customers were asking for that.

So that's the only one reason. And we will not see, actually, the crypto on our side.

So, actually, from our point of view, that will be dollar transactions, and so for us, it will be U.S. dollars.

So no crypto reserve.

So thank you. TeamChat will be very important part of our suite, and I think all going well with that product, but, sorry, no update.

No update on that. Not -- there is no -- nothing's new already on that matter.

And there is another question since I can see that a very similar question, the same question about workflows. I would say, no.

Nothing new. We are very focused on the suite.

We are pushing with the suite. Both TeamChat and WorkFlows will be very important part of the suite, and some update on how suite is going will come in the next quarter.

But we are -- I think we are quite happy with both project. TeamChat is being tested.

WorkFlows is used by group of our customers. So it's, daily work, product are developed.

So sorry for nothing really new, nothing -- no exciting news, and the focus is on the suite, and we are really pushing the suite on.

Okay. May begin with the whole question.

Sorry.

Okay. So, yes, I would say yes.

It's one-off. I mean don't expect the same results from HelpDesk next quarter.

So in that perspective, there is one-off. At the same time, the effect of that change of sunsetting tickets is still not fully visible as some customers are still testing, HelpDesk on trials.

So we will see -- some effect will be visible also in the current quarters. And it's not one-off.

If you think about the fact that HelpDesk is no longer competing with LiveChat that and we will be able to show the value of the HelpDesk better to LiveChat to new LiveChat customers. So it should improve.

So this is something which should also help HelpDesk in the future. So for answer is, yes.

It's one-off, and it's not entirely one-off, if you look at the other perspective. I hope that's -- I hope that that's clear.

Net results, on the net results, yes, we definitely lost some more customers. I think on the -- if you look at the results of the -- of that quarter when we lost 100, 1,400 customers on the net level, there is like, definitely few.

In that numbers, there is, like, extra few hundred of LiveChat customers who decided to quit because of the fact that we sunsetted ticketing system. And we were ready for that.

That didn't surprised us. We were prepared for that.

At tenth of the day, at least in the Poland, it's general meetings decision. So it's shareholders decision.

And, of course, we have important shareholders in management and in the board, but at the end of the day, it's a decision of all shareholders. We don't have this.

We know general meetings didn't agree on that. We -- so this decision belongs to all shareholders at the end of the day.

Yes. That is also, quote that, I -- you mentioned that rising cost will end now.

I didn't say that. I didn't said that cost will not be rising cloud, that was about infrastructure cost, that was about cloud.

And, yes, we will save some money on the cloud infrastructure because now we are paying extra for that. But at the same time, yes, we definitely will invest in sales team.

We will invest in sales team activity. Definitely, the whole acquisition process, acquisition of the customers will be more expensive that in history, not only because we have to rely more on sales, but also SEO (ph) is more difficult this time, and the market is difficult.

So, yes, that will be more expensive. And now, honestly, we can't foresee how much it will cost.

We -- as if someone knows us, if someone knows our DNA, that bar sound can be short, that will be careful about a cost that they really want to be efficient and so on and so on. So, definitely, we want to be profitable.

We definitely want to keep a high margins. At the same time, yes, we are ready to sacrifice some of these margins in order to keep growth.

But now we are not able to really give you a number.

Definitely, I mean that effect will be much, much less visible in current quarter. And that also, -- this is also valid when it comes to positive effects.

So, yes, we can expect that in some month or two, some of our customers will decide to quit, because they're looking for alternative for the HelpDesk, for cheaper alternative, which is not so easy, really. At the same time, some of the customers, which are now trying HelpDesk, which are still trying HelpDesk on free trials will decide to embrace, HelpDesk for good.

But this effect will not be definitely not be as strong as during the last quarter.

I cannot foresee that. If you look at the reasons, which as I mentioned are not giving you the full picture of what is happening because, obviously, not all the customers are giving us that feedback.

The economic motivation is very strong. I mean, the reason called I'm closing business or changing business model is a reason -- was the reason number one, and we really cannot foresee what will happen in the current environment.

So, we are prepared to operate in that situation, in that environment. As you can see, that the business is still growing, although definitely not at a rate we like.

It's still very, very profitable, and we can pushing with suite development. We are pushing with the strengthening sales team.

So we are prepared to operate in very difficult environment, and we are not able to foresee how long it will take.

So this is [indiscernible] this is also something for you, for the closure team. As soon as we get the file, we upload the recording.

Probably, we will have to wait with transcript, because it will take more time. But the recording should be very, very, very soon.

No. We didn't.

We didn't have a voting of that. No one bring the matter (ph).

Of course, management board didn't do that, but any other big shareholder do that. And actually, no, we are discussing the matter internally and the shareholders.

And, I would say opinions are very, very split. So I know that the arguments, I know that's why buyback is very, good options taking the consideration valuation and some other things.

And they are good arguments, at the same times, other shareholders a lot of shareholders are preparing dividends, and dividends are in our official policy. So -- but they never vote -- was vote on that.

We're not voting on that. And, honestly, as a shareholders, I'm not only shareholders, but I'm personally always registering, and I'm attending to the general meeting.

I'm not sure. And of course, I'm very, very small shareholder on my own.

But I'm not sure how my vote would be on that.

Thank you. Thank you very much.

Thank you for all your questions. Thank you for attendance.

Feel free to contact us anytime. We are for you.

So we will try answer all your questions. Thank you.

And have a great day. Bye.

Bye.