Text S.A.

Ladies and gentlemen, thank you for standing by. And I would like to welcome you to discussion on Tech's Q4 2024-25 KPI conference call. The call today will be hosted by Marcin Droba, VP of Investor Relations. At the end of the presentation, there will be an opportunity to ask questions. So without further ado, I will now pass the line to Marcin. Please go ahead.

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 the 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 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 costs related to this area 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 US. 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 cryptocurrency 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 HubSpot App Partner program, as the official and high-quality live chat integration with HubSpot has been highly important to many of our existing customers. We are still working on COC2 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% over year to year. 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 these will stay with us long term, but I hope they help you 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 already mentioned large client pays us 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 and more to MRR with Chatbot alone now approaching half a million dollars. This is the one of the mentioned news slide. And this chart shows the share of customers with RPL 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 to positively impact churn, particularly revenue churn, since larger customers tend to be more loyal and get more value from our product. 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% point over the past year. RPL for customers using multiple products increases significantly. For example, having just two products already places RPL 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 live chat customers has dropped significantly. As I mentioned, There was a one-off event related to the sunsetting of the ticketing system in live chat. Customer's 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 charts. Lack of charts historically has been the number one reason for the channel. 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 reason for leaving. so it's not a complete picture. On this slide, you can see that the positive trend for LiveChat continues as this product added $3.3 to RPL this quarter. This is the result of several factors – successful upselling, acquiring larger customers and higher share 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. RPL for this product is stabilizing, partly due to promotional pricing for the initial period. Despite this, chatbot added $3 to RPL over the past month, which is a solid result. It was a slightly weaker quarter in terms of revenue from additional charts, not included in reported RPL, which on average added $30 to RPL for this product during a quarter. As you can see, the helpdesk delivered an absolutely phenomenal quarterly results, both in terms customers growth and as you will see on the next slide, RPL. Of course, this is largely due to sunsetting of tickets in live chat, which has been communicated to customers in advance. However, this should not be seen as typical one of events. It is significant that this product a built-in ticketing system within LiveChat and the separate Helpdesk products no longer compete with each other. Customers who have switched to Helpdesk are getting a real premium tool. And as I mentioned, Helpdesk also performs very well in terms of RPL with an increase of over 7% over months. In summary, our top priority remains progress in transforming into a sweet 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 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 significant changes, we had uncertainty affecting business sentiment. Morgan Stanley recently released an interesting report on SaaS companies highlighting these 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 and 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 the very difficult market condition rather than any weakness in our fundamentals. Thank you very much for your attention. I will be happy to answer your questions.

Okay, thank you. Thank you very much for the presentation. So we are now opening the question and answer section. If you are connected at the telephone and you would like to ask a voice question, please press star 2 on your keypad. That is star 2. If you are connected via the web, you may also ask a voice question or send your question as a text. We'll give a moment or so for the questions to come in. We have received a bunch of text questions. The first question comes from Piotr Basiński from Hermes. Will there be any impact of new US tariff on text business?