Thirty-Eight Percent, Down From FiftyThin moat

Text (TXT) — moat facet

The margin is this moat's report card, and it lost 11,5 points in a single year.

Text's operating margin was 50,1% in the year to March 2025 and 38,6% in the year to March 20261. Almost nothing about the business changed. The costs did.

Operating costs by type (zl m)140,3Third-party services FY25159,8Third-party services FY2626,4Depreciation FY266,5Employee benefits FY26Total costs rose 13,8% to 201,3m zł while revenue fell 7,1%
One line took the margin: third-party services, now 79% of everything Text spends.

Total operating costs rose 13,8% to 201,3 million złoty while revenue fell 7,1%2. Nearly all of the increase sits in one line: third-party services went from 140,3 million to 159,8 million, and now account for 79% of everything Text spends3. That line contains the contractors, the cloud and the consultants.

Text explains the components without flinching. Cloud infrastructure costs rose; the migration to new infrastructure completed in July 2025 after more than a year during which a significant portion of those costs was duplicated; and completion did not reduce them, both because prices rose regardless of provider and because Text chose to expand the scope of services it buys4. Consulting for the SOC 2 work, legal and public relations costs all increased5. The team grew 6,7%6.

Then there is the currency. Revenue is earned in dollars and a large part of the cost base is incurred in złoty, so the 8,0% fall in the average translation rate7 compressed the margin from the revenue side without touching the costs.

The company expects more pressure, not less: it says heavier use of artificial intelligence may cause further cost increases8.

The number that matters is not the level but the direction. Text says it intends to maintain its business model and its high profitability9. Two consecutive years of margin decline is the evidence against.

Moat trajectory: Narrowing

Operating margin fell 11,5 points in a year as third-party services rose to 79% of costs, and the company expects heavier use of artificial intelligence to add more. The June quarter held at 37,7%, which is the first sign of a floor.

The number that tests this moat
Reported
Third-party services as a share of operating costs
79% - 159,8m zł of 201,3m zł

This one line contains the contractors, the cloud and the consultants, and it grew 13,9% while revenue fell 7,1%. It is where the margin went. Text attributes the rise to cloud prices that increased regardless of provider, a deliberately expanded service scope, SOC 2 consulting, legal and public relations, and a larger team - and expects heavier AI use to add more. The direction of the operating margin is the test; it has fallen two years running.

Source: Text Group consolidated financial statements for the year ended 31 March 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Cloud Bill That Did Not Come Back Down
Text finished a year-long migration, stopped paying twice, and its infrastructure costs still rose.
References
  1. ReportedText's operating margin was 50,1% in the year to March 2025 and 38,6% in the year to March 2026.
    Text Group annual results press release of 26 June 2026 (consolidated revenue of PLN 329,1m and net profit of PLN 116,6m, down 7,1% and 29,1% respectively; revenue in US dollars of 88,2m, down 0,5%; MRR of USD 6,93m at 31 March 2026, down 2,7%, and ARR of USD 83,12m against a strategic goal of USD 100m; operating profit PLN 126,7m down 28,7% and EBITDA PLN 153,3m down 23,9%; margins of 67,6% gross, 38,6% operating, 46,4% EBITDA and 35,4% net; and a recommended dividend of PLN 4,26 per share including two interim payments, the first of PLN 1,15 paid in February 2026) — FY2025/26 · publ. 26 June 2026 · source ↗
  2. ReportedTotal operating costs rose 13,8% to 201,3 million złoty while revenue fell 7,1%.
    Text Group consolidated financial statements for the year ended 31 March 2026 (revenue of PLN 329 073 thousand against 354 178; operating profit 126 931 against 177 367; profit before tax 126 680; net profit 116 608 against 164 418; earnings per share 4,53; 25 750 thousand shares; operating cash flow 161 552 against 179 489; revenue by product line of LiveChat 275,495, ChatBot 28,694, HelpDesk 23 466 and KnowledgeBase 1 418; revenue in US dollars of 88 162 thousand against 88 595; approximately 95% of consolidated revenue generated through the group's subsidiary in the United States and Polish sales of 4 837; costs by type including depreciation 26,396, third-party services 159 821 against 140,300, employee benefits 6 458 and total operating costs 201 291 against 176,876, split as cost of goods sold 106 753 against 85,588, selling expenses 68 457 and administrative expenses 26 081; total assets 195 923 against 226 705; equity 109 965 against 136 418; cash 62 780 against 77 704; current contract liabilities 65 502 and non-current 1 539; trade payables 10 284; no credits or loans; and income tax at 19% on other income and 5% on qualifying intellectual property rights under the IP Box regime, with the deferred portion computed at 6,87% against 7,43%) — FY2025/26 · publ. June 2026 · source ↗
  3. ReportedNearly all of the increase sits in one line: third-party services went from 140,3 million to 159,8 million, and now account for 79% of everything Text spends.
    Text Group consolidated financial statements for the year ended 31 March 2026 (revenue of PLN 329 073 thousand against 354 178; operating profit 126 931 against 177 367; profit before tax 126 680; net profit 116 608 against 164 418; earnings per share 4,53; 25 750 thousand shares; operating cash flow 161 552 against 179 489; revenue by product line of LiveChat 275,495, ChatBot 28,694, HelpDesk 23 466 and KnowledgeBase 1 418; revenue in US dollars of 88 162 thousand against 88 595; approximately 95% of consolidated revenue generated through the group's subsidiary in the United States and Polish sales of 4 837; costs by type including depreciation 26,396, third-party services 159 821 against 140,300, employee benefits 6 458 and total operating costs 201 291 against 176,876, split as cost of goods sold 106 753 against 85,588, selling expenses 68 457 and administrative expenses 26 081; total assets 195 923 against 226 705; equity 109 965 against 136 418; cash 62 780 against 77 704; current contract liabilities 65 502 and non-current 1 539; trade payables 10 284; no credits or loans; and income tax at 19% on other income and 5% on qualifying intellectual property rights under the IP Box regime, with the deferred portion computed at 6,87% against 7,43%) — FY2025/26 · publ. June 2026 · source ↗
  4. ReportedCloud infrastructure costs rose; the migration to new infrastructure completed in July 2025 after more than a year during which a significant portion of those costs was duplicated; and completion did not reduce them, both because prices rose regardless of provider and because Text chose to expand the scope of services it buys.
    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. ReportedConsulting for the SOC 2 work, legal and public relations costs all increased.
    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. ReportedThe team grew 6,7%.
    Text Group Management Board report for 2025/26, team, intellectual property and shareholders (a team of 271 people at 31 March 2026, up 6,7%, consisting of independent persons and sole proprietors called Partners on civil-law contracts, with the company having no employees under employment contracts, a rotation rate of 22% and turnover of 15%, mostly working from Wroclaw on a hybrid basis with 95% Polish citizens; the disclosed risk that because no team member works under an employment contract copyright does not vest automatically, transfers require individual agreements, Polish law forbids contracting for all future works of a given type, and an absent contract leaves the company dependent on the creator's will and open to dispute; a seventh United States patent granted in June 2026 for configuring a communication widget directly on a website; and 25 750 000 shares of 0,02 złoty each, one vote per share and none privileged, with a shareholders' consortium holding 10 625 752 shares or 41,27% of votes and two Polish pension funds above 5%) — FY2025/26 · publ. June 2026 · source ↗
  7. ReportedRevenue is earned in dollars and a large part of the cost base is incurred in złoty, so the 8,0% fall in the average translation rate compressed the margin from the revenue side without touching the costs.
    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 ↗
  8. ReportedThe company expects more pressure, not less: it says heavier use of artificial intelligence may cause further cost 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 ↗
  9. ReportedText says it intends to maintain its business model and its high profitability.
    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 ↗
Sources
Generated September 24, 2026