The Models Belong to Somebody ElseThin moat

Text (TXT) — moat facet

Text builds the agent, the workflow and the data, and rents the intelligence underneath.

Text's resolution rate is produced on top of infrastructure and models it does not own.

The stack, top to bottomText: workflow, integrations, 20 years of transcriptsText: agent, 74% resolution rateRented: language models and inferenceRented: Google cloud, migrated July 2025Cost of goods sold went from 24,2% to 32,4% of revenue in a single year
Text owns the parts that are hard to buy and rents the part that generates the answer.

The company completed a full migration of its infrastructure to cloud servers operated by Google in July 2025, describing it as crucial to improving quality and to being able to offer new products, particularly to enterprise customers1. Its distribution now runs through Microsoft's marketplace, Google Cloud Marketplace and the ChatGPT marketplace2. The layer that actually generates an answer is bought.

That is the normal arrangement in this industry and it has real advantages: Text gets frontier capability without frontier research budgets, and can switch as the field moves. What it costs is control of the input price. Text reports that cloud costs rose during the year and that completing the migration did not reduce them, partly because of price increases in this area regardless of provider3, and warns that heavier use of artificial intelligence may cause further increases4.

What Text does own is the part that is hardest to buy: two decades of conversation data sitting inside its customers' accounts5, the integrations, and the workflow around the answer. Its 74% resolution rate against a 59% industry average6 is evidence that the surrounding apparatus matters, since the underlying models are available to everyone.

The strategic question is whether that apparatus is a durable difference or a temporary one, and Text's own risk factors take the pessimistic side: developments in artificial intelligence are changing how software is built and marketed and could erode the advantage derived from the company's technology and experience7.

Watch what Text pays for its inputs relative to what it charges: cost of goods sold took 32,4% of revenue last year against 24,2% the year before8.

Moat trajectory: Narrowing

The infrastructure migration completed in July 2025 and costs did not fall, partly on price increases regardless of provider. Cost of goods sold went from 24,2% to 32,4% of revenue.

The number that tests this moat
Reported
Cost of goods sold as a share of revenue
32,4%, from 24,2% a year earlier

Text builds the agent, the workflow and the data and rents the intelligence underneath, having migrated its whole infrastructure to Google's cloud in July 2025. It reports that completing the migration did not reduce costs, partly because prices rose regardless of provider. Every automated resolution consumes inference somebody buys. This ratio is where a supplier's pricing power shows up first, and it moved eight points in a single year.

Source: Text Group consolidated financial statements for the year ended 31 March 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Input Price Is Set Elsewhere
A company that has just finished moving everything onto one supplier has limited leverage with that supplier.
References
  1. ReportedThe company completed a full migration of its infrastructure to cloud servers operated by Google in July 2025, describing it as crucial to improving quality and to being able to offer new products, particularly to enterprise customers.
    Text Group Management Board report for 2025/26, corporate events (the Text App suite reaching first existing customers in June 2025 and opening on text.com in August, with the first new customers acquired organically in the following quarter; full migration of infrastructure to Google cloud servers in July 2025; SOC 2 Type 1 attestation in December 2025 and Type 2 in May 2026 audited by Sensiba, described as significant support in acquiring enterprise-class customers especially in the United States; Meta Business Partner status in January 2026; products introduced to the Microsoft marketplace in February 2026; a partnership with Golden Whale for the iGaming industry in April 2026; the closure of the traditional sales department with responsibilities assumed by the customer support team; the new visual identity and Go-To-Market campaign in May 2026; and the end of price grandfathering, with LiveChat Team and Business prices raised in September 2025, customers on older price lists notified in March 2026, monthly payers transferred from April 2026 and annual payers transferring as their subscription periods expire) — FY2025/26 · publ. June 2026 · source ↗
  2. ReportedIts distribution now runs through Microsoft's marketplace, Google Cloud Marketplace and the ChatGPT marketplace.
    Text Group results for the first quarter of the 2026/27 financial year, published 28 August 2026 (revenue of PLN 83,20m, down 1,9% year on year and up 4,1% on the previous quarter; net profit PLN 29,11m down 6,2%; operating profit PLN 31,36m down 11,0%; EBITDA PLN 38,56m down 7,4%; revenue in US dollars of 22,61m up 2,1%; MRR of USD 7,46m at 30 June 2026, up 4,0% year on year and 7,6% on the previous quarter, giving ARR of USD 89,52m against the USD 100m goal, with the chief executive attributing the growth largely to the completion of price grandfathering for LiveChat customers; a record PLN 77,2m of deferred revenue and net operating cash flow up 22,2% to PLN 41,5m on a high share of annual payments; margins of 69,6% gross, 37,7% operating, 46,4% EBITDA and 35,0% net; SOC 2 Type 2 attestation in May 2026; the new visual identity and Go-To-Market start in May 2026; purchase of the livechat.ai domain and a seventh US patent in June 2026; a Klaviyo integration and Google Cloud Marketplace listing in July; a MarTech Breakthrough award and an official ChatGPT marketplace listing in August; and the annual general meeting of 6 August 2026 allocating PLN 109,7m to dividends, PLN 4,26 per share) — Q1 2026/27 · publ. 28 August 2026 · source ↗
  3. ReportedText reports that cloud costs rose during the year and that completing the migration did not reduce them, partly because of price increases in this area regardless of provider, and warns that heavier use of artificial intelligence may cause further increases.
    Text Group Management Board report for 2025/26, margins, costs and cash (gross profit margin on sales of 67,6%, operating margin 38,6% and net margin 35,4%; cloud infrastructure costs rising, the migration completing in July 2025 after more than a year of duplicated cost, and completion not translating into cost reductions because of price increases regardless of provider and a deliberately expanded scope of purchased services; increased consulting, legal and public relations costs; fourth-quarter costs falling on cloud optimisation; a warning that more intensive use of artificial intelligence may cause further cost increases and that rising AI costs should press hardest on competitors offering free or freemium products; operating cash flow of PLN 161,6m and PLN 62,8m of cash; and a dividend policy of allocating the highest possible part of profit to shareholders) — FY2025/26 · publ. June 2026 · source ↗
  4. ReportedText reports that cloud costs rose during the year and that completing the migration did not reduce them, partly because of price increases in this area regardless of provider, and warns that heavier use of artificial intelligence may cause further increases.
    Text Group Management Board report for 2025/26, margins, costs and cash (gross profit margin on sales of 67,6%, operating margin 38,6% and net margin 35,4%; cloud infrastructure costs rising, the migration completing in July 2025 after more than a year of duplicated cost, and completion not translating into cost reductions because of price increases regardless of provider and a deliberately expanded scope of purchased services; increased consulting, legal and public relations costs; fourth-quarter costs falling on cloud optimisation; a warning that more intensive use of artificial intelligence may cause further cost increases and that rising AI costs should press hardest on competitors offering free or freemium products; operating cash flow of PLN 161,6m and PLN 62,8m of cash; and a dividend policy of allocating the highest possible part of profit to shareholders) — FY2025/26 · publ. June 2026 · source ↗
  5. ReportedWhat Text does own is the part that is hardest to buy: two decades of conversation data sitting inside its customers' accounts, the integrations, and the workflow around the answer.
    Text Group Management Board report for 2025/26, margins, costs and cash (gross profit margin on sales of 67,6%, operating margin 38,6% and net margin 35,4%; cloud infrastructure costs rising, the migration completing in July 2025 after more than a year of duplicated cost, and completion not translating into cost reductions because of price increases regardless of provider and a deliberately expanded scope of purchased services; increased consulting, legal and public relations costs; fourth-quarter costs falling on cloud optimisation; a warning that more intensive use of artificial intelligence may cause further cost increases and that rising AI costs should press hardest on competitors offering free or freemium products; operating cash flow of PLN 161,6m and PLN 62,8m of cash; and a dividend policy of allocating the highest possible part of profit to shareholders) — FY2025/26 · publ. June 2026 · source ↗
  6. ReportedIts 74% resolution rate against a 59% industry average is evidence that the surrounding apparatus matters, since the underlying models are available to everyone.
    Text Group Management Board report for 2025/26, the chief executive's letter (the statement that on the financial results the past fiscal year was not a successful one, with dollar revenue similar to the prior year but lower after conversion to złoty and costs incurred in both currencies; an artificial-intelligence resolution rate of 74% against an industry average of 59%, a figure said to include customers who have not yet trained the models on their own data; the intention to measure success in dollars earned rather than dollars saved on customer support, building an ecosystem that becomes a growth engine for customers rather than a cost centre; and the assessment that Text operates in a market with strong competitors, many with enormous resources they can and sometimes must allocate to customer acquisition, that Text must be smarter, more creative, harder-working and more efficient, and that success is not guaranteed) — FY2025/26 · publ. June 2026 · source ↗
  7. ReportedThe strategic question is whether that apparatus is a durable difference or a temporary one, and Text's own risk factors take the pessimistic side: developments in artificial intelligence are changing how software is built and marketed and could erode the advantage derived from the company's technology and experience.
    Text Group Management Board report for 2025/26, risks and key factors (currency risk arising because revenue is generated in US dollars while a significant portion of costs is incurred in Polish złoty, affecting reported results and the dividend, with the company not hedging its open foreign exchange positions; competition risk from more innovative or cost-effective solutions and from rivals allocating far greater funds to development and promotion, and from AI changing how software is developed and marketed in a way that could erode the advantage derived from the company's technology and experience; distribution risk from the loss or reduced effectiveness of channels such as Google, Shopify or BigCommerce, and from traditional search engines being replaced by LLM models or AI assistants in a way that may harm the SEO activities of the company and its affiliate partners; product concentration risk, since Text generates almost all revenue from LiveChat products; and risk from entities using patents to enforce compensation) — FY2025/26 · publ. June 2026 · source ↗
  8. Moat Explorer calcWatch what Text pays for its inputs relative to what it charges: cost of goods sold took 32,4% of revenue last year against 24,2% the year before.
    Moat Explorer calculation - arithmetic on figures Text reports: monthly churn of 4% compounded over twelve months (1 - 0,96^12 = 38,7% of logos a year); revenue per team member (329 073 thousand złoty over 271 people = 1,21m); third-party services as a share of operating costs (159 821 of 201 291 = 79%) and employee benefits as a share (6 458 of 201 291 = 3,2%); operating cash flow against net profit (161 552 over 116 608 = 1,39); the dividend payout ratio (109,7m over 116,6m = 94%); the gap to the ARR target (100,0 less 89,52 = USD 10,5m); the fall in operating margin (50,1% less 38,6% = 11,5 points); the tax saved under the IP Box (126 680 at 19% less the 10 072 charged = about 14m złoty); the market value in dollars (1,08bn złoty at 0,2688 = USD 0,29bn); Text's share of the live-chat market (89,52 over about 1 100 = a twelfth); the largest new contract against revenue (seven figures over USD 88,2m = about 1%); and 500 dollars a month expressed annually (6 000 dollars); the price-to-earnings multiple at each financial year end (market value over net profit: 3 687 over 155,261 = 23,8 times, and 967 over 116,608 = 8,3); cost of goods sold as a share of revenue (85 588 over 354 178 = 24,2%, and 106 753 over 329 073 = 32,4%); and the effective tax rate (12 323 over 178 876 = 6,89%, and 10 072 over 126 680 = 7,95%) — FY2025/26 · publ. September 2026 · source ↗
Sources
Generated September 24, 2026