Summary
Weave grew fiscal first quarter revenue 17.4% to $65.5 million. GAAP gross margin was 72.6%, up 1.0 percentage point year over year, and non-GAAP gross margin was 73.2%, up 110 basis points. Mix explains the gap between those lines: recurring subscription and payment processing carries a far richer margin than onboarding and phone hardware, both of which the company prices competitively to lower the barrier for practices joining the platform. Deferred revenue, current portion only, was $37.1 million, down 4.6% year over year.
Profitability improved much faster than the top line. The GAAP loss from operations narrowed to $6.0 million, and operating margin improved 7.5 percentage points to negative 9.2%. The GAAP net loss narrowed to $5.8 million, or $0.07 per diluted share. On a non-GAAP basis, Weave reported income from operations of $2.5 million against roughly break-even a year earlier, non-GAAP net income of $2.8 million against a non-GAAP net loss of $0.5 million, and Adjusted EBITDA of $3.7 million versus $1.0 million. Management points to lower stock-based compensation as previously granted awards reached the end of their recognition periods, plus lower general and administrative costs.
Cash is the soft spot. Net cash used in operating activities was $5.7 million, compared with $0.2 million a year earlier, and free cash flow was negative $7.1 million versus negative $1.1 million. Capital expenditures were $0.5 million, up 17.3%. The filing ties the operating cash decline to working capital timing: commissions paid on new bookings, a build in prepaid expenses, and lower accounts payable and accrued liabilities. The $50.0 million SVB revolving credit facility was undrawn at quarter end, and Weave reported compliance with its loan covenants, which require minimum liquidity if cash and investments held at the bank fall below $100.0 million.
Customer metrics warrant a closer look. Dollar-based net revenue retention was 92%, down from 98%, and gross revenue retention was 89%, down from 91%. Both measures exclude the TrueLark acquisition because they require trailing twelve months of data. About 26% of customer locations elected annual prepayments, down from 33%. Management said the quarter delivered the most customer location additions in a single quarter in company history and that nearly 40,000 locations are served, with more than half using the AI tools embedded in the platform.
Guidance for the second quarter of fiscal 2026 and for the full fiscal year 2026 covers profitability rather than the top line in the release. The company guides to non-GAAP income from operations of $2.1 million to $3.1 million for the second quarter and $10.5 million to $13.5 million for the full year, on weighted average share counts of 79.6 million and 79.8 million. A reconciliation of guided non-GAAP income from operations to the corresponding GAAP measure is unavailable on a forward-looking basis because stock-based compensation and other items depend on future hiring and the future fair market value of the stock.
Product news was busy. Weave placed second on G2's 2026 Best Healthcare Software Products list, announced its ADA-endorsed patient engagement platform to 152,000 members, launched Private Communications for practices with multiple practitioners, and extended payments integrations across Dentrix Enterprise, Fuse, Eaglesoft, Athena, NexTech Health, and NT Practice+. The risk list is familiar: integrating TrueLark, attracting and retaining practices, unfavorable economic conditions, competition, and delivering the voice and text AI receptionist across all vertical markets. Higher regulatory fees on messaging and calls and rising cloud costs tied to AI features are also named as pressures on cost of revenue.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2026 | Q4 FY2025 | QoQ | Q1 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $65.5M | $63.4M | +3.3% | $55.8M | +17.4% |
| Gross profit | $47.5M | $46.1M | +3.2% | $39.9M | +19.0% |
| Gross margin | 72.6% | 72.7% | -0.1 pp | 71.6% | +1.0 pp |
| Research & development | $10.8M | $8.2M | +31.9% | $11.2M | -3.0% |
| Sales & marketing | $28.8M | $27.5M | +4.4% | $23.5M | +22.2% |
| General & administrative | $14.0M | $12.5M | +12.0% | $14.6M | -4.0% |
| Total operating expenses | $53.6M | $48.2M | +11.1% | $49.3M | +8.7% |
| Operating income (loss) | -$6.0M | -$2.2M | -178.8% | -$9.3M | +35.4% |
| Operating margin | -9.2% | -3.4% | -5.8 pp | -16.7% | +7.5 pp |
| Net income (loss) | -$5.8M | -$1.8M | -212.2% | -$8.8M | +34.6% |
| Net margin | -8.8% | -2.9% | -5.9 pp | -15.8% | +7.0 pp |
| Diluted EPS | -$0.07 | -$0.02 | -$0.05 | -$0.12 | +$0.05 |
| Net retention rate | 93.0% | — | — | 98.0% | -5.0 pp |
Risks
Dollar-based net revenue retention rate declined to 92% at March 31, 2026 from 98% a year earlier, and gross revenue retention rate declined to 89% from 91%; deferred revenue was $37.1 million, down 4.6% versus the prior-year quarter. Weaker retention or expansion could pressure future revenue.
The company is embedding AI and acquired TrueLark, but management warns AI solutions may not produce desired benefits and may negatively impact cost of revenue and gross margins until revenue offsets investments; competitors may adopt AI more quickly. Rapid AI use cases have caused a global shortage of high-performance computing capacity, potentially disrupting or increasing the cost of AI features.
Weave Payments relies primarily on Stripe, and platform infrastructure relies substantially on GCP through 2027 with no renewal right; it also relies on single-source suppliers such as Yealink, Bandwidth, and Telnyx. Disruption or termination of these relationships could decrease revenue and harm operations.
Operating cash flow was negative $5.7 million for the quarter ended March 31, 2026, down $5.5 million from negative $0.2 million in the prior-year quarter, and free cash flow was negative $7.1 million versus negative $1.1 million. If cash usage persists, the company may need additional capital or draw on the SVB facility.
Breaches of its systems or those of GCP or service providers could compromise protected health information and customer data, trigger HIPAA notification duties, litigation, fines, and reputational harm. The company has been and will continue to be subject to cybersecurity threats and incidents.
MD&A shows sales and marketing expense rose 22% to $28.8 million for the quarter ended March 31, 2026, including a $2.7 million increase in demand generation. The risk factors state that targeting medium-sized and multi-location customers may bring higher costs and longer sales and installation cycles and less predictable timing.
Revenue depends on SMB healthcare practices, which have higher failure rates and limited budgets and are more susceptible to economic downturns; unfavorable conditions could cause decreased spending and delayed sales cycles. The company also notes inflation and interest rate trends can adversely affect SMB customers.
Operations are subject to HIPAA, FCC, state, local, and international rules, and evolving AI regulations could increase compliance costs, constraints, or legal liability. The company says AI offerings may expose it to additional claims and regulatory proceedings.
AI implementation depends on attracting and retaining employees with AI expertise, and competition for those professionals is significant; the company also notes significant employee growth and churn and operational challenges, including in customer service and sales.
Actions by stockholders, including public proposals or strategic combination requests, could disrupt operations and increase costs; MD&A recorded $0.8 million of shareholder matter costs in G&A for the quarter ended March 31, 2026. The company has a cooperation agreement with Engine Capital and 2717 Partners and may incur future distractions.
Revenue grew 17.4% year over year to $65.5 million for the quarter ended March 31, 2026, but the company has expanded operations to India, Latin America, and the Philippines and experienced significant employee growth and churn, straining customer service and sales. Failure to manage growth efficiently could harm results.
SaaS KPIs
All quarters →Adjusted EBITDA
Non-GAAP gross margin
Non-GAAP income from operations margin
Summary, forecast, risks and KPIs are extracted from Weave Communications, Inc.'s SEC filings for Q1 FY2026 (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.