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1. Company Snapshot

1.a. Company Description

Text S.A. develops and distributes communication software for businesses worldwide.It offers LiveChat, a tool that allows to communicate between Website visitor and its owner; ChatBot, which allows the creation of conversational chatbots for customer service teams that automates corporate communications; KnowledgeBase, a platform that lets companies to create knowledge bases for employees and clients; and HelpDesk, an application that enables companies to simplify team efforts for customer service via email.The company was formerly known as LiveChat Software S.A. and changed its name to Text S.A. in September 2023.


The company was founded in 2002 and is based in Wroclaw, Poland.

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1.b. Last Insights on TXT

Text S.A.'s recent performance was impacted by uncertain market conditions, with the pan-European STOXX Europe 600 Index experiencing stability amid interest rate policy assessments and trade uncertainties. The company's ability to generate consistent earnings and robust cash flow may be challenged in this environment. Although no recent earnings release data is available, the company's dividend stock status may be evaluated by investors seeking reliable income sources. Any potential rating downgrade could affect investor sentiment. There is no information on share buybacks.

1.c. Company Highlights

2. Text Group Q1 MRR Holds Steady Amid Strategic Upsell

The quarter ended with MRR at $6.93 million, a modest $50,000 dip from the prior period, yet still reflecting a 0.4% year‑over‑year lift and a 3.1% rise versus the preceding quarter. Revenue growth, while modest, signals resilience as the company maintains a healthy recurring base. Operating margin data are not disclosed, but the firm’s focus on high‑margin AI product lines and the positive net effect of ending grandfathered pricing on LiveChat suggest potential upside. EPS remains undisclosed, with analysts noting a projected revenue growth of 2.5% next year. Valuation multiples underscore a highly attractive proposition: a P/E of 7.73, P/B of 8.71, and EV/EBITDA at 5.66, indicating that the market values the company’s recurring revenue engine at a discount to peers.

Publication Date: Apr -13

📋 Highlights
  • MRR Decline Slows:: Q1 MRR dropped $50K to $6.93M, a smaller decline than prior quarters, with March's drop attributed to churn and unpaid subscriptions.
  • Payment Growth:: Collective payments rose 0.4% YoY and 3.1% QoQ, showing resilience despite MRR challenges.
  • Client Composition Shift:: Larger clients (ARPL >$500) grew 1pp, and multi-product customers reached 38.8% of MRR (up 10pp YoY).
  • AI Performance:: AI agents achieved 74% resolution rate, surpassing the industry average of ~59%, with STS client satisfaction at 82-85%.
  • Rebranding & Strategic Moves:: Text App rebrands to 'Text' with a May campaign; PR, influencer, and customer story efforts to drive growth.

MRR Dynamics

MRR slipped slightly in March due to a shift in the acquisition funnel and heightened churn from unpaid subscriptions. Despite this, the quarterly decline was less severe than the previous two quarters, suggesting that the company’s retention strategy is stabilizing. The 0.4% YoY growth in collected payments signals a modest but steady improvement in cash flow capture.

Client Mix & Upsell

Large‑account penetration improved, with the share of customers paying over $500 per month rising by one percentage point. Additionally, the proportion of customers subscribing to multiple products climbed to 38.8% of MRR, a ten‑percentage‑point jump from a year ago, underscoring successful cross‑sell initiatives.

Product Innovation

Recent releases—allowing multiple AI agents per workspace and a custom skills feature—enhance scalability and differentiation. AI agent resolution hit 74%, comfortably outpacing the industry average of 59%, a figure highlighted by staff in the earnings call.

Growth Initiatives & Brand Refresh

The firm will ramp up PR, influencer partnerships, and customer‑success storytelling. The rebranding of 'Text App' to 'Text' will launch a communication campaign in May, aiming to boost brand equity and attract new prospects.

Pricing Changes & Impact

The termination of grandfathered LiveChat pricing is expected to lift MRR significantly this quarter. Management anticipates a net positive effect on recurring revenue, mitigating the prior decline and setting a trajectory for stronger quarterly growth.

Competitive Positioning

Text Group defended key deals and retained major clients, while planning a more aggressive stance against competitors’ solutions. The firm’s ability to secure and expand contracts in education, finance, and sports betting showcases its competitive moat.

International Expansion

New clients were secured across multiple countries and sectors, with education, finance, and sports betting emerging as the strongest growth drivers, positioning the company for geographic diversification and risk mitigation.

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.00%)

6. Segments

Software Solutions

Expected Growth: 7%

Text S.A.'s Software Solutions segment growth is driven by increasing demand for digital transformation, adoption of cloud-based services, and rising need for data analytics. Additionally, the company's strategic partnerships, innovative product offerings, and expanding presence in emerging markets contribute to its 7% growth rate.

7. Detailed Products

Text Analytics

A natural language processing (NLP) solution that enables businesses to extract insights and meaning from unstructured text data.

Language Translation

A machine translation solution that enables businesses to translate content in multiple languages and reach a global audience.

Content Generation

An AI-powered content generation solution that enables businesses to automate the creation of high-quality content.

Chatbots and Conversational AI

A conversational AI solution that enables businesses to build custom chatbots and virtual assistants.

Sentiment Analysis

A sentiment analysis solution that enables businesses to analyze customer opinions and sentiment from text data.

Entity Extraction

An entity extraction solution that enables businesses to extract specific information from unstructured text data.

8. Text S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is moderate due to the presence of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the availability of multiple options and the ability to switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's strong relationships with suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple competitors and the need to differentiate products and services.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.52%
Debt Cost 7.32%
Equity Weight 99.48%
Equity Cost 7.32%
WACC 7.32%
Leverage 0.52%

11. Quality Control: Text S.A. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sword

A-Score: 6.0/10

Value: 4.2

Growth: 5.6

Quality: 5.5

Yield: 9.4

Momentum: 4.0

Volatility: 7.3

1-Year Total Return ->

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Stock-Card
Text

A-Score: 5.9/10

Value: 5.7

Growth: 8.4

Quality: 9.0

Yield: 8.1

Momentum: 0.5

Volatility: 3.3

1-Year Total Return ->

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Sapiens

A-Score: 5.0/10

Value: 1.3

Growth: 6.2

Quality: 7.6

Yield: 3.8

Momentum: 9.5

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
Quadient

A-Score: 4.8/10

Value: 7.8

Growth: 3.3

Quality: 4.5

Yield: 5.6

Momentum: 2.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Admicom

A-Score: 4.1/10

Value: 0.6

Growth: 5.6

Quality: 8.0

Yield: 3.8

Momentum: 2.5

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Media and Games Invest

A-Score: 3.6/10

Value: 3.6

Growth: 8.2

Quality: 3.2

Yield: 0.0

Momentum: 5.5

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

39.02$

Current Price

39.02$

Potential

-0.00%

Expected Cash-Flows