Overview of Weave’s Business

Weave is a leading provider of all-in-one customer experience and payments software for small and medium-sized healthcare businesses. Their platform helps healthcare practices like dental, optometry, and veterinary offices attract, communicate with, and engage patients throughout the entire customer journey. Weave’s software integrates billing, payments, and other key practice management functions into a unified system.

The majority of Weave’s customers are in specialized healthcare verticals, though the company is expanding into additional medical markets. Weave’s platform aims to improve practice operations by consolidating tasks and providing a modern, user-friendly interface with AI-powered features. The company generates revenue primarily from recurring subscription fees for access to its software and payment processing services.

Financial Performance Highlights

In 2024, Weave reported total revenue of $204.3 million, an increase of 20% from the prior year. This growth was driven by a combination of new customer additions and increased revenue from the company’s existing customer base.

Weave’s gross margin improved to 71% in 2024, up from 68% in 2023. This margin expansion was driven by a favorable customer mix, with more customers having fully depreciated phone hardware, as well as the company’s efforts to manage third-party costs and platform usage.

However, Weave continued to operate at a net loss, reporting a net loss of $28.3 million in 2024 compared to a net loss of $31.0 million in 2023. The company’s operating expenses, particularly in sales and marketing and research and development, increased as it invested in growth initiatives.

Recurring Revenue and Gross Margin

Weave generates the majority of its revenue, 92% in both 2024 and 2023, from recurring subscription fees and payment processing services. The company’s recurring subscription and payment processing gross margin was 78% in 2024, up from 77% in 2023.

In contrast, Weave’s non-recurring revenue streams, such as onboarding fees and hardware leases, have historically had negative gross margins as the company uses these offerings to acquire new customers. The company views these customer acquisition costs as necessary investments to drive long-term growth.

Key Business Metrics

Weave tracks several key metrics to measure its performance and growth:

• Number of Customer Locations: Weave had 34,997 customer locations as of December 31, 2024, up from 31,002 at the end of 2023, indicating strong market penetration and expansion.

• Dollar-Based Net Retention Rate (NRR): Weave’s NRR was 98% in 2024, up from 95% in 2023, demonstrating the company’s ability to retain and grow revenue from its existing customer base.

• Dollar-Based Gross Retention Rate (GRR): Weave’s GRR was 91% in 2024, down slightly from 92% in 2023, reflecting the company’s ability to retain customers despite some churn.

These metrics suggest that Weave is successfully attracting new customers while also maintaining strong relationships with its existing customer base.

Factors Affecting Performance

Weave’s financial performance is driven by several key factors:

1. Attracting New Customers: Weave’s ability to continue adding new customers is crucial for growth. The company uses a combination of unpaid channels, like word-of-mouth, and paid marketing efforts to acquire new customers, particularly in its core healthcare verticals.

2. Retaining and Expanding Within the Customer Base: Weave focuses on maintaining high customer satisfaction and developing new products and features to increase its value proposition. The company’s customer retention rates and its ability to cross-sell additional offerings are important for driving revenue growth.

3. Launching New Products: Weave regularly adds new functionality and capabilities to its platform, including the introduction of its enhanced Weave platform and Weave Enterprise solution for multi-location customers. The company’s success in developing and delivering innovative products is a key factor in its ability to win new customers.

4. Expanding into New Industry Verticals: While Weave is primarily focused on healthcare, the company is also evaluating opportunities to expand into additional industry verticals where its platform can be effectively applied.

Outlook and Future Opportunities

Weave’s financial performance and growth prospects will depend on its ability to continue executing on these key drivers. The company is well-positioned in its core healthcare verticals and is investing in product development, sales and marketing, and expansion into new markets to drive future growth.

However, Weave also faces risks and challenges, including competition, economic conditions, and the potential for increased costs and regulatory changes that could impact its business. The company will need to navigate these factors effectively to achieve long-term success.

Overall, Weave’s financial results demonstrate the company’s ability to grow its customer base and generate recurring revenue, though it continues to operate at a net loss as it invests in its future. Investors will be closely watching Weave’s ability to convert its strong customer metrics into sustained profitability and cash flow generation in the years ahead.