Summary
Weave Communications opened fiscal 2023 with revenue of $39.6 million, up 18.9% from $33.3 million in the prior-year quarter. Most of the growth came from new logos. Management said $5.8 million of the $6.3 million increase, or 92%, came from customers acquired after March 31, 2022, and 8% came from customers already under subscription a year earlier. Gross profit rose to $26.5 million from $19.5 million, and GAAP gross margin expanded to 67.1% from 58.7%. Lower cloud infrastructure, phone hardware and connectivity costs helped, along with a mix shift toward customers whose phones are fully depreciated.
Losses narrowed sharply. Operating loss was $8.5 million, an improvement from $13.5 million a year earlier, which lifted operating margin to -21.5% from -40.6%. GAAP net loss was $7.9 million, or $0.12 per diluted share, against $13.8 million, or $0.21 per share, in the first quarter of 2022. On a non-GAAP basis, loss from operations was $4.0 million versus $10.1 million, and non-GAAP net loss attributable to common stockholders was $3.3 million, or $0.05 per share, versus $10.4 million, or $0.16 per share. The gap between the two sets of numbers is largely stock-based compensation, which totalled $4.5 million in the quarter.
Cash flow turned positive, and that is the result management leaned on. Net cash provided by operating activities was $1.5 million versus $4.2 million used in the first quarter of 2022. Capital expenditures were $0.6 million, up from $0.5 million. Free cash flow, a non-GAAP measure that also subtracts capitalized internal-use software, was $0.6 million compared with negative $5.1 million a year earlier. Adjusted EBITDA was negative $1.9 million versus negative $9.1 million.
Retention is the soft spot. Dollar-based net retention rate was 97% as of March 31, 2023, down from 103%, and gross retention was 93% versus 94%. Weave reports customer location counts only with annual results, so there is no updated location figure here. Product news included Response Assistant, which drafts replies to patient reviews with one click, and Bulk Texting for sending a single message to thousands of patients. The company also extended its partnership with Stripe and named Marcus Bertilson chief strategy services officer. Leadership transitions appear among the risk factors in the 10-Q.
Guidance points to modest sequential growth. For the second quarter ending June 30, 2023, Weave guided revenue of $39.5 million to $40.5 million and a non-GAAP loss from operations of $4.0 million to $5.0 million, on 66.8 million weighted average shares. For the full year ending December 31, 2023, the company guided revenue of $160.5 million to $163.5 million and a non-GAAP loss from operations of $15.5 million to $18.5 million, on 67.3 million shares. The company said its plan for the year targets exiting with positive free cash flow.
The balance sheet provides runway. Cash and cash equivalents plus short-term investments were $112.6 million as of March 31, 2023, while the accumulated deficit stood at $239.5 million. Deferred revenue, the current portion only, was $34.6 million, up 14.6% from a year earlier. The company had $10.0 million drawn on a $50.0 million revolving credit facility and amended that SVB agreement in April 2023, extending maturity from August 2023 to August 2025 and setting EBITDA covenants for fiscal 2023. Other named risks include competition, unfavorable economic conditions, service interruptions and rising regulatory fees on texting and phone calls.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2023 | Q4 FY2022 | QoQ | Q1 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $39.6M | $37.7M | +5.0% | $33.3M | +18.9% |
| Gross profit | $26.5M | $24.9M | +6.4% | $19.5M | +35.9% |
| Gross margin | 67.1% | 66.2% | +0.9 pp | 58.7% | +8.4 pp |
| Research & development | $7.7M | $8.2M | -6.0% | $7.2M | +6.8% |
| Sales & marketing | $17.2M | $16.1M | +6.8% | $16.2M | +6.2% |
| General & administrative | $10.1M | $10.4M | -2.3% | $9.6M | +5.6% |
| Total operating expenses | $35.1M | $34.7M | +1.1% | $33.0M | +6.1% |
| Operating income (loss) | -$8.5M | -$9.7M | +12.6% | -$13.5M | +36.9% |
| Operating margin | -21.5% | -25.9% | +4.3 pp | -40.6% | +19.1 pp |
| Net income (loss) | -$7.9M | -$9.3M | +15.2% | -$13.8M | +43.2% |
| Net margin | -19.9% | -24.6% | +4.7 pp | -41.6% | +21.7 pp |
| Diluted EPS | -$0.12 | -$0.14 | +$0.02 | -$0.21 | +$0.09 |
| Net retention rate | 97.0% | — | — | 103.0% | -6.0 pp |
Risks
The March 31, 2023 dollar-based net retention rate was 97%, compared with 103% at March 31, 2022, and the dollar-based gross retention rate was 93% compared with 94%. The filing states retention drives future financial performance and gross margin improvement.
MD&A attributes approximately $5.8 million of the $6.3 million revenue increase for the three months ended March 31, 2023 to new customers acquired after March 31, 2022, with only 8% from existing customers. The filing also states it expects revenue growth rate to decline as the business scales and penetration in existing vertical markets increases.
Revenue is derived from SMBs, with the majority from small businesses, which the filing says often have higher business failure rates, limited budgets, and greater susceptibility to economic downturns, inflation, and higher churn.
Weave Payments relies on Stripe under payment service provider agreements. The filing states any termination or disruption of Stripe, including past limited interruptions, could decrease revenue and require substantial delays and expense to integrate an alternative.
Dental PMS product Dentrix provides critical functionality to the platform for a significant portion of the customer base under a contract through July 2026. If the agreement is amended or terminated or the partner competes more directly, platform value could decline.
The company reported a net loss of $7.9 million for the three months ended March 31, 2023 and had an accumulated deficit of $239.5 million as of March 31, 2023. The filing states it may not achieve or sustain profitability.
The filing states a substantial majority of cloud infrastructure is outsourced to GCP under a 60-month term through 2027 with no renewal right, that switching is not easy, and that disruptions or capacity constraints could harm operations.
Revenue is concentrated in specialty healthcare vertical markets such as dentistry, optometry, and veterinary. The filing states future growth and profitability depend on continued expansion within these verticals and penetration into new vertical markets.
The filing states fees charged by network service providers may change daily or weekly and that it has recently experienced higher fees associated with text messaging. Because customer pricing does not change as rapidly, this could compress margins.
Interest expense increased to $0.5 million for the three months ended March 31, 2023 from $0.3 million in the prior-year period due to higher average interest rates on the variable-rate credit facility. The SVB credit facility includes liquidity and EBITDA covenants and was amended in April 2023.
SaaS KPIs
All quarters →Free cash flow
Free cash flow margin
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 FY2023 (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.