Text S.A. (formerly LiveChat Software) sells customer-service SaaS — LiveChat (83.7% of revenue), ChatBot, HelpDesk/KnowledgeBase — almost entirely in USD to ~150 countries. The economics are as clean as software gets: adjusted NOPAT PLN 111.1m, EP PLN 113.5m (34.5% of revenue), and adjusted invested capital is NEGATIVE (−29.0m) after removing capitalized development — PLN 67m of customer prepayments and a near-total dividend payout fund the whole capital base. ROIC is undefined per house convention; EP carries the quality signal.
The problem is direction, not quality. Reported PLN revenue fell 7.1%, but USD revenue was only −0.5% (~92% of the decline is the 8% weaker average USD/PLN) — the real thesis variable is USD MRR, at 6.93m in March 2026, −2.7% y/y and −0.7% q/q. Flagship LiveChat product revenue fell 12.4% in PLN while HelpDesk (+91.6%) and ChatBot (+9.7%) are not yet large enough to offset. EBIT margin compressed 50.1%→38.6% on cloud-migration double-running (ended Jul 2025), structurally higher infrastructure pricing, AI inference costs and SOC 2/consulting spend.
The next two quarters decide the call. Grandfathered LiveChat plans were repriced in Apr–Jun 2026 (monthly plans migrated; annual on renewal) — if it sticks, MRR and margin lift directly; if churn spikes off the 4%/month LiveChat base, the erosion thesis is confirmed. The bull case is AI-native repositioning: a 74% AI resolution rate vs 59% industry, multi-product share up 7pp to 38.8% of MRR, SOC 2 Type 2 attestation (May 2026) opening enterprise. The bear case is that AI kills seat-based chat pricing faster than Text can re-anchor it.
Reverse-DCF off the record: EV of PLN 1,253.4m at the 8% WACC implies a perpetuity adjusted NOPAT of ~PLN 100m versus 111.1m delivered — the market is pricing roughly 10% permanent erosion. Capitalizing 111.1m at zero growth gives ~1,389m EV, ~PLN 56/share after 58.5m net cash across 25.75m shares, about +10% vs the 50.95 price. Note the FCF caveat: reported FCF of 129.1m was flattered by a 21.7m net tax refund and a ~29m VAT refund — normalized FCF is ~95–105m, below the 142.9m dividend actually paid.
Base PLN 55 (+8%): USD MRR stabilizes post-repricing and margin partially recovers as one-off costs (migration double-run, SOC 2 build) roll off against sticky AI inference spend. Bull PLN 70: repricing sticks, enterprise/Text App traction returns USD MRR to growth and margin retraces toward the mid-40s. Bear PLN 36: repricing spikes churn, AI disintermediation accelerates seat loss, and/or the IP Box ETR reverts toward 19% (−12% NOPAT). 24-month horizon, PLN.
Reverse-DCF panel unavailable: non-positive ic.
| Scenario | 24m target | Upside | Prob. | Driver |
|---|---|---|---|---|
| Bull | PLN 70 | +37% | 25% | Repricing sticks + enterprise/Text App traction returns USD MRR to growth |
| Base | PLN 55 | +8% | 50% | MRR stabilizes post-repricing; partial margin recovery |
| Bear | PLN 36 | -29% | 25% | Repricing churn spike + AI seat disintermediation; IP Box reversion toward 19% |
| Prob-weighted | PLN 54 | +6% | 100% | Scenario-weighted expected value |
LiveChat price rises applied to legacy Team/Business plans Apr–Jun 2026 — sticks → direct MRR and margin lift; the single biggest near-term KPI swing.
38.8% of MRR from multi-product customers (+7pp y/y); HelpDesk +91.6%, ChatBot +9.7% — the offset to flagship erosion.
SOC 2 Type 2 (May 2026), Google-cloud migration completed Jul 2025, Text App suite launched — the toolkit for moving upmarket where loyalty is best.
74% AI resolution rate vs 59% industry per the record's flags — pay-per-use/resolution monetization on top of seats is the bull optionality.
~100% USD revenue on a largely PLN cost base; any PLN weakness reverses the 8% FX headwind that manufactured this year's reported decline.
Text is the rare negative-invested-capital compounder — customers fund the business and EP runs at 34.5% of revenue — but the flagship is eroding in USD terms and the price already reflects roughly the base case: ~10% implied NOPAT erosion vs a zero-growth value of ~PLN 56. HOLD, medium conviction; base PLN 55 (+8%).
The catalyst is defined and dated: the first post-repricing MRR prints (Apr–Jun 2026 quarter onward). Two consecutive quarters of USD MRR growth would open the upgrade path toward the bull case; a churn spike confirms secular erosion, where no EP margin saves a shrinking subscription base paying out more than it earns.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Revenue FY2025/26 | 329,073 | Consolidated statement of comprehensive income / p.6 📄 p.6 | Fiscal year Apr 2025 - Mar 2026 just closed, so FY = LTM exactly. PLN -7.1% y/y but USD revenue only -0.5% (88.2 vs 88.6 MUSD) — decline is almost entirely the 8% weaker average USD/PLN. |
| Operating profit (EBIT) | 126,931 | Consolidated statement of comprehensive income / p.6 📄 p.6 | EBIT -28.4% y/y; margin 38.6% vs 50.1%. Compression driven by third-party services +PLN 19.5m (cloud migration double-running until Jul 2025, AI inference costs, SOC 2 consulting) on an FX-shrunken PLN revenue base. |
| R&D capitalization reversal | -6,999 | Note 2 Intangible assets / p.26 📄 p.26 | Capitalized development additions 31,566 less amortization of completed development 24,567; the net 6,999 EBIT boost is reversed — mttssn expenses development as incurred. |
| Capitalized development removed from IC | 82,762 | Note 2 Intangible assets / p.26 📄 p.26 | Net carrying: completed development 77,294 (LiveChat 44,566, Text App 21,200, others) + in-progress 5,468 = 82,762 — the entire intangibles line is internally developed software; removal flips adjusted IC negative (-28,996). |
| Derecognition loss add-back (one-off) | 800 | Note 12 Other operating expenses / Note 2 / p.35, 26 📄 p.35 | Legacy capitalized development derecognized when functionalities were consolidated into Text App (gross 29,886 / acc. amortization 29,086). Non-cash one-off; double-counted under our expense-as-incurred treatment. |
| Total equity | 109,965 | Consolidated statement of financial position / p.5 📄 p.5 | Equity fell 136,418 -> 109,965 because dividends paid (142,912) exceeded net profit (116,608) — deliberate near-total payout policy. NCI = 0, accumulated FX reserve -179 (immaterial). |
| Cash and equivalents | 62,780 | Note 6 Cash / p.29 (BS p.5) 📄 p.29 | Operational cash = 2% of revenue = 6,581; excess 56,199 subtracted from IC. Zero interest-bearing debt at year-end (PLN 10m VAT-bridge revolver drawn and repaid intra-year, Note 17). |
| Lease liabilities (excluded from IC) | 4,258 | BS / Note 8 Lease liabilities / p.5, 33 📄 p.5 | Non-current 3,292 + current 966. Office premises only — peripheral, lease_liabilities_in_ic = false. |
| Effective tax rate 7.95% (IP Box) | 10,072 | Note 14 Income tax / p.36 📄 p.36 | Polish IP Box gives 5% CIT on qualified IP income (5,655 of 8,961 current tax at 5%), blending to ~8% effective. Used since FY2020/21 — structural, so applied to NOPAT; note elevated Polish tax-interpretation risk flagged by the company. |
| Company EBITDA (only APM) | 153,327 | Management report, Selected financial data / p.5 📄 p.5 | EBITDA = EBIT 126,931 + D&A 26,396, ties exactly; no add-backs anywhere. APM bridge run vs reported EBIT: our adjusted EBIT 120,732, divergence -4.9%, PASS. |
| MRR USD 6.93m (-2.7% y/y) | 6,930 | Management report, KPIs / p.12-14 📄 p.13 | Group MRR USD 6.93m at Mar 2026, -2.7% y/y and -0.7% q/q; ARR USD 83.1m. The recurring base is eroding slowly in USD — the real thesis variable, ahead of any PLN P&L line. |