⚠ The Input Price Is Set ElsewhereModerate threat

Text (TXT) — threat to the moat

A company that has just finished moving everything onto one supplier has limited leverage with that supplier.

Text has moved a large part of its cost base into markets where it is a price taker.

Cost of goods sold (zl m)63,6m złFY202485,6m złFY2025106,8m złFY2026Text reports cloud prices rose regardless of provider, and expects AI use to add more
A company that has just moved everything onto one supplier has little leverage with it.

Cost of goods sold rose from 85,6 million złoty to 106,8 million in a single year, taking it from 24,2% to 32,4% of revenue1, and third-party services — the line containing cloud and contractors — reached 159,8 million złoty, or 79% of all operating costs2. The company attributes part of the increase to price rises in cloud infrastructure that occurred regardless of provider3.

That phrase is the important one. Text migrated its entire estate to Google's cloud in July 2025 to get better capability4, which is a reasonable trade, and it did not get a better price; it reports that completing the migration failed to reduce costs at all5. A customer that has just finished moving everything onto one supplier has limited leverage with that supplier.

The exposure grows with the strategy. Every automated resolution consumes inference, and Text concedes it cannot yet say how much of that cost ends with customers and how much stays with the company6.

There is a genuine offsetting argument, which Text makes: rising AI costs press hardest on rivals giving their products away, since a freemium provider absorbs inference on unpaid users7. Text charges for everything, so it at least has a bill to pass on.

Gross margin is the falsifier, and it held up in the most recent period — 69,6% in the June quarter against 67,6% for the year8. That is the strongest evidence available that Text is managing this rather than being managed by it.

References
  1. Moat Explorer calcCost of goods sold rose from 85,6 million złoty to 106,8 million in a single year, taking it from 24,2% to 32,4% of revenue, and third-party services - the line containing cloud and contractors - reached 159,8 million złoty, or 79% of all operating costs.
    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 ↗
  2. Moat Explorer calcCost of goods sold rose from 85,6 million złoty to 106,8 million in a single year, taking it from 24,2% to 32,4% of revenue, and third-party services - the line containing cloud and contractors - reached 159,8 million złoty, or 79% of all operating costs.
    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 ↗
  3. ReportedThe company attributes part of the increase to price rises in cloud infrastructure that occurred regardless of provider.
    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 migrated its entire estate to Google's cloud in July 2025 to get better capability, which is a reasonable trade, and it did not get a better price; it reports that completing the migration failed to reduce costs at all.
    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 ↗
  5. ReportedText migrated its entire estate to Google's cloud in July 2025 to get better capability, which is a reasonable trade, and it did not get a better price; it reports that completing the migration failed to reduce costs at all.
    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 ↗
  6. ReportedEvery automated resolution consumes inference, and Text concedes it cannot yet say how much of that cost ends with customers and how much stays with the company.
    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 ↗
  7. ReportedThere is a genuine offsetting argument, which Text makes: rising AI costs press hardest on rivals giving their products away, since a freemium provider absorbs inference on unpaid users.
    Text Group Management Board report for 2025/26, strategy, products and market (the Service on Offense goal of turning customer service teams into revenue-generating centres, with the suite monitoring live traffic, recognising visitor intent, identifying returning visitors, enabling proactive outreach and tracking steps to monetisation or a qualified lead; a Go-To-Market period expected to be a long-term process requiring marketing expenditure with effects observed gradually; over 20 years of experience; competing solutions named as Fin, previously Intercom, Zendesk and Freshworks; the live-chat market valued at USD 1,06-1,17bn in 2024 growing 8-11%, the chatbot market at USD 0,7-6,95bn and the helpdesk market at USD 9,82-12,5bn; and Datanyze counting more than 210 different live-chat technologies, a substantial number offered freemium, with monetisation of free users judged difficult and ineffective) — FY2025/26 · publ. June 2026 · source ↗
  8. ReportedGross margin is the falsifier, and it held up in the most recent period - 69,6% in the June quarter against 67,6% for the year.
    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 ↗
Sources
Generated September 24, 2026