Summary
Weave Communications posted total revenue of $33.3 million for the first quarter of fiscal 2022, a 30% year-over-year increase. Growth was almost entirely new-customer driven: about $7.0 million of the increase came from customers acquired after March 31, 2021, while existing customers contributed roughly $0.6 million, or 8%. Gross profit was $19.5 million, up 31.3% from the prior-year quarter, and gross margin was 58.7%. The subscription and payment processing line did the heavy lifting with a 72% gross margin, down a notch from 73% a year earlier. Hardware and onboarding both ran at negative gross margins, which management treats as a cost of acquiring customers rather than a defect in the model.
Profitability moved the other way. The operating loss widened to $13.5 million from $8.7 million in the prior-year quarter, and the net loss widened to $13.8 million from $9.0 million. Operating margin was -40.6%. The diluted loss per share narrowed to $0.21 from $0.79, a reflection of a share base that is far larger following the November 2021 initial public offering. Sales and marketing expense rose 38% and general and administrative expense rose 60%, both faster than revenue, while research and development rose 23%. The general and administrative increase included higher liability insurance and professional fees tied to operating as a public company.
Non-GAAP numbers tell a similar story with smaller losses. Non-GAAP loss from operations was $10.1 million against $6.9 million a year earlier. Non-GAAP net loss was $10.4 million, or $0.16 per share, compared with $7.2 million, or $0.59 per share. Adjusted EBITDA was negative $9.1 million versus negative $6.3 million. Cash consumption improved, though. Operating cash flow was negative $4.2 million, better than negative $5.3 million in the prior-year quarter, and capital expenditures fell to $0.5 million from $1.8 million. Free cash flow, which the company defines as operating cash flow less property purchases and capitalized internal-use software, was negative $5.1 million, compared with negative $7.6 million a year earlier.
Retention metrics held firm. Dollar-based net retention rate was 103% at March 31, 2022, up from 102% a year earlier, and dollar-based gross retention rate was 94% versus 92%. Subscription revenue excluding payments and hardware was 92% of total revenue. Deferred revenue stood at $30.2 million, current portion only, and remaining performance obligations were $2.1 million. Weave added two executives during the quarter, naming Brett White president and chief operating officer and Branden Neish chief product officer, and said it reached a milestone in its IT Channel Partners program.
Guidance points to continued losses. For the second quarter of fiscal 2022, management guides to a non-GAAP loss from operations of $11.0 million to $10.0 million. For the full fiscal year 2022, the outlook is a non-GAAP loss from operations of $40.0 million to $36.0 million. A revenue outlook was also provided for the second quarter and for the full fiscal year, though the company did not reconcile the forward-looking non-GAAP operating loss to GAAP because stock-based compensation, a key reconciling item, depends on future hiring and the future fair market value of the stock. Management guides to a weighted average share count of 65.1 million for the second quarter and 66.0 million for the full year.
Risks are the usual mix for a newly public software company, with some company-specific edges. Weave depends on adding new customers and on keeping the ones it has, and it competes against point solutions that small businesses stitch together. COVID-19 still disrupts lead generation: management said trade shows and conferences were cancelled or postponed through March 31, 2022. The Silicon Valley Bank credit facility requires minimum liquidity of $20 million if unrestricted cash at the bank drops below $100 million, and the company carries a full valuation allowance against net deferred tax assets. The lock-up agreements signed by directors, officers and substantially all stockholders terminate on May 6, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $33.3M | $31.8M | +4.5% | — | — |
| Gross profit | $19.5M | $18.2M | +7.5% | — | — |
| Gross margin | 58.7% | 57.0% | +1.6 pp | — | — |
| Research & development | $7.2M | $7.1M | +1.4% | — | — |
| Sales & marketing | $16.2M | $15.8M | +2.9% | — | — |
| General & administrative | $9.6M | $8.9M | +7.7% | — | — |
| Total operating expenses | $33.0M | $31.8M | +3.9% | — | — |
| Operating income (loss) | -$13.5M | -$13.6M | +0.9% | — | — |
| Operating margin | -40.6% | -42.8% | +2.2 pp | — | — |
| Net income (loss) | -$13.8M | -$14.1M | +1.6% | — | — |
| Net margin | -41.6% | -44.2% | +2.6 pp | — | — |
| Diluted EPS | -$0.21 | -$0.69 | +$0.48 | — | — |
| Net retention rate | 103.0% | 104.0% | -1.0 pp | — | — |
Risks
The continued spread of COVID-19 has had a disproportionate adverse impact on SMBs, and in December 2021 we experienced unexpected challenges with sales and installation activities due to the Omicron variant. COVID-19-related cancellation or postponement of trade shows and conferences has created headwinds in lead generation, a channel historically used in our go-to-market strategy.
Our revenue is derived from SMBs, with the majority from small businesses, which have higher rates of business failures, limited financial resources, and greater susceptibility to economic downturns. The COVID-19 pandemic has particularly impacted many SMBs, and customer turnover has historically resulted in part from our SMB focus.
We have incurred net losses since inception; net loss widened to $13.8 million in FY2022 Q1 from $9.0 million in FY2021 Q1, and accumulated deficit was $195.7 million as of March 31, 2022. We expect costs and expenses to increase and may not achieve or sustain profitability.
We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future. These weaknesses could result in material misstatements, failure to meet reporting obligations, or impaired access to capital markets.
We experienced high employee turnover, particularly in customer service and sales organizations in 2021, and over half of current customer service and support staff have been employed for less than one year. This has contributed to increased hold times and some customer dissatisfaction.
We rely on single-source suppliers for phones (Yealink) and point-of-sale terminals and payment processing (Stripe), and on Bandwidth and Telnyx for texting; we have no long-term supply agreements and maintain only small inventory. This makes us vulnerable to price increases and supply chain constraints.
We outsource a substantial majority of our cloud infrastructure to Google Cloud Platform and cannot easily switch providers. GCP may terminate our agreement upon 30 days' prior written notice, and any disruption or interference could materially affect our operations.
Our business relies on integrations with partners such as Dentrix, which provides critical functionality for a significant portion of our customer base under a contract through July 2026 subject to conditions. If integration partners amend, terminate, or fail to perform, or prioritize competing offerings, the value of our platform could be reduced.
Our customers have no contractual obligation to renew subscriptions after the term expires, and a majority pay monthly and could terminate on short notice. We have historically experienced customer turnover, and our dollar-based gross retention rate was 94% at March 31, 2022.
The market is intensely competitive, fragmented, and has relatively low barriers to entry in some segments, with larger competitors that have greater resources and may bundle competing products at lower prices. Competitive pressure could require us to decrease prices and reduce margins.
As we target medium-sized and multi-location businesses, we may incur higher costs and longer sales and installation cycles, require more technical approvals, and face demands for more features, integration services, SLAs, and customization. This could delay revenue and increase expenses.
Our products and services must comply with industry standards, FCC regulations, and state, local, country-specific, and international regulations, including stringent HIPAA obligations for patient information. Changes may require service modifications and increase costs.
We have negative operating cash flow and free cash flow; for FY2022 Q1 net cash used in operating activities was $4.2 million and free cash flow was negative $5.1 million. We may require additional capital, which might not be available on acceptable terms.
SaaS KPIs
All quarters →Free cash flow
Free cash flow margin
Adjusted EBITDA
Dollar-Based Gross Retention Rate (GRR)
Dollar-Based Net Retention Rate (NRR)
Summary, forecast, risks and KPIs are extracted from Weave Communications, Inc.'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.