Digital Transformation And AI Will Fuel Global Expansion

Key Takeaways

• Rapid adoption of AI-driven, integrated suite products and robust cloud migration position Text for increased customer stickiness, premium pricing, and structural margin expansion.
  
• Global expansion and a modular, API-friendly platform unlock a significantly larger addressable market, driving sustained revenue and earnings growth through network effects and enterprise wins.
  
• Dependence on a single legacy product, slow revenue growth, increasing competition, costly enterprise expansion, and late AI adaptation threaten future revenue, margins, and market position.

Catalysts

Develops and distributes online text communication software for businesses worldwide.

• Analyst consensus expects the transition to the HelpDesk platform and suite product to drive higher average revenue per customer, but this likely underestimates the potential network effects and bundled adoption, as early customer feedback suggests accelerated multiproduct uptake could drive a step-change in ARPL and rapidly compound annual recurring revenue growth.
  
• While analysts broadly agree cloud migration will yield cost efficiencies, the completed transition to single-tenant cloud infrastructure and the anticipated SOC2 certification position Text not only for margin expansion but also for outsized enterprise wins, which could structurally elevate net margins as the sales mix shifts toward high-value, lower-churn customers.
  
• The Text App's native AI integration, purpose-built for next-generation automation and collaboration, goes far beyond incremental feature additions; with rapid, "from scratch" adoption by demanding use cases, Text could leapfrog competitors as a best-in-class, AI-first platform, supporting both premium pricing and sustained revenue outperformance.
  
• The combination of international expansion, a Miami hub targeting U.S. enterprise accounts, and a modular, API-friendly platform substantially increases Text's total addressable market, setting up a multi-year runway for double-digit revenue growth as large-scale global organizations migrate away from legacy point solutions.
  
• Unifying cross-product data and automation through the suite architecture enhances retention and drives network lock-in, laying the foundation for long-term customer lifetime value expansion and resilient, compounding earnings growth as Text transitions to a mission-critical role in client operations.

Text Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Text compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Text's revenue will decrease by 0.6% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 43.1% today to 46.1% in 3 years time.
• The bullish analysts expect earnings to reach PLN 159.5 million (and earnings per share of PLN 7.82) by about September 2028, up from PLN 151.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 18.2x on those 2028 earnings, up from 9.0x today. This future PE is lower than the current PE for the GB Software industry at 22.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.92%, as per the Simply Wall St company report.

Text Future Earnings Per Share Growth

Risks

• The company remains heavily dependent on its core LiveChat product, which continues to account for close to 90 percent of total group revenue despite new product launches; this persistent concentration risk leaves overall company revenue and future earnings vulnerable if market trends shift away from legacy chat-based solutions.
  
• Management noted that growth in Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) is currently below expectations, with net customer losses continuing in the core LiveChat product and a stated lack of satisfaction with current single-digit ARR growth; this suggests stagnating top-line revenue growth and potential headwinds to achieving long-term earnings targets.
  
• Even as the company completes major product rollouts and cloud migration, it faces a longer, costlier sales cycle to win larger enterprise customers-signaling rising customer acquisition costs and potential long-term compression of net margins if these efforts do not rapidly scale.
  
• The company acknowledged ongoing and likely future customer churn in its largest product, and admitted macroeconomic and seasonal headwinds, all occurring while industry-wide trends point to increasing competition from open-source, low-cost, and integrated alternatives-risking both topline revenue and average revenue per user in the years ahead.
  
• While management referenced the layering in of new AI features, they also admitted their products were not originally architected for AI-first workflows, putting the company at risk of losing market share, suffering higher R&D costs, or sacrificing margin and revenue if industry disruption from native AI competitors accelerates.

Valuation

• The assumed bullish price target for Text is PLN85.1, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Text's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of PLN85.1, and the most bearish reporting a price target of just PLN56.5.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be PLN345.9 million, earnings will come to PLN159.5 million, and it would be trading on a PE ratio of 18.2x, assuming you use a discount rate of 10.9%.
• Given the current share price of PLN53.2, the bullish analyst price target of PLN85.1 is 37.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.