Text SA
AI beneficiary or victim?
Exchange: Poland
Marketcap: 2.33B PLN
Industry: Software
EV/EBITDA: 11
PE: 12
1.Products
2.Competition
3.Innovation
4.Market
5.Route to Market
5.Recent results
6.Conclusion
Text SA is the new name for a known Polish quality company in investor circles that was called Livechat Software prior to it’s name change.
There have been numerous write ups detailing the great metrics of the company. The past is pretty clear. To make a long story short, the growth is amazing, the ROIC is excellent (they almost don’t invest and it is organic growth, so the ratio is amazing but not really relevant), the valuation is attractive, and they pay almost everything as dividends.
It was set up by a founder developer, and grew organically.
Here is a summary of revenue and net income in Koyfin. (Affiliate link for discount) I like this overview page that I built for myself as I can quickly see revenue growth, net income growth and valuation with three metrics.
At the forward P/E of 14, a dividend yield of 6.5%, for that growth, it seems like a great deal.
The quantitative factors being quickly validated, I will focus on the qualitative perspective, is it worth it at current valuations?
In this review, Let’s really focus on the business, the products, the innovation, and market development. I will not focus on who is the CEO and the details of the financial statements. I will analyse the AI risk and opportunity, the product and how they are integrated.
The company is a global provider and has only 1.5% of customers in Poland.
The main product is still called Livechat and amounts for 90% of revenues. This is the Chat window on the website that you see and allows you to chat with a representative.
The Livechat system also works for your agents in the back end to receive every chat coming from different websites in a centralised interface.
The other 10% of revenues are made by a chatbot, a ticketing system and a knowledge base system. These are all kind of related because you could have all the four products as a customer.
So why would someone add Livechat to their website?
By adding Livechat to your website, you get a preferred communication method for customers. Customers on aggregate prefer chat over phone and email and sms. Having this method available on the website makes them more likely to continue the purchase process or to buy more products.
Without the chat, they could have a big doubt about shipping or the product, be unsure about buying, not have the time or energy or social confidence to call customer service, and just browse away.
With livechat, you can boost your sales. You can also engage the customer after certain conditions.
Another use case is if the customer is starting to pay but stops in the middle of the process, you can contact them to find if they have a doubt. It is the old store sales associate for the internet.
Overall, people are more likely to purchase after chatting. Your team can also provide responses immediately and not lose a time window (email) where the customer could lose interest and buy from another company.
You can gather metrics automatically on what pages drive the chats, where are the chatters from, what do they enquire about and fix pain points in your shopping experience. This is an intelligence tool.
The customers pay per agent. This allows the company to grow within one customer account if more chats are opened by end customers. This is why Text SA insists more that the number of customers is not the most important metric anymore, because it can grow within a customers account.
Lastly, you can save money versus phone calls which require one full time agent with a local accent or native level of English while a chat can be answered by a bot or an outsourced agent.
Recenty, Livechat has launched an AI assistant to help the agent in answering the chats. This is powered by OpenAI (the company behind ChatGPT).
Lets continue with the other products, the competition, the AI risk or opportunity, the route to market and the conclusion.
Chatbot:
Chatbot is a mix of rules and AI, and is optimized for e-commerce. It is a bot that will provide the answers to your prospect or customer.
Livechat is the pop up window, and chatbot is replacing the agent answering the chat.
Prior to the Launch of AI driven chatbot, this product was more rule based, and it is only 5 months ago that it was relaunched with AI.
Bots are created by preparing a detailed conversation scenario in the form of a “tree”. It is based on the drag & drop method, it is intuitive and simple, and therefore also available to people who do not have specialized programming knowledge.
The user controls the future process flow that it will follow based on the customer response, with many optimizations for e-commerce.
This is done with the visual builder, a visual easy tool to set up the chatbot.
https://www.chatbot.com/features/visual-builder/
The company notes that it has “no dependencies on third-party providers like OpenAI, Google Bard or Bing AI.”
This is an internally developed AI. So on one hand, it should not be as advanced as the large AIs, and on the other hand it is easier to implement:
To make your own chatbot with OpenAI and train it on your website it is a more complex issue… (continued).
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