Summary
Weave Communications posted second quarter revenue of $50.6 million, up 21.4% year over year. Year-to-date revenue reached $97.8 million, up 20.3%. Gross profit rose 28.8% to $36.1 million in the quarter. GAAP gross margin was 71.4%, up 4.1 percentage points from the prior-year quarter, while year-to-date gross margin was 70.7%, up 3.5 percentage points. Management attributed the revenue gain largely to new customer locations. The company also reported non-GAAP gross margin of 71.9%, up 400 basis points.
The profit picture improved even as revenue grew. GAAP loss from operations narrowed to $9.3 million from the prior-year quarter. GAAP net loss narrowed to $8.6 million, or $0.12 per diluted share, from the prior-year quarter. Operating margin was negative 18.3%, up 5.3 percentage points year over year. Non-GAAP loss from operations was $1.0 million, down from $4.0 million, and non-GAAP net loss was $0.3 million, down from $3.1 million. Adjusted EBITDA was positive $5 thousand, compared with negative $3.0 million in the prior-year quarter, the first positive adjusted EBITDA in company history.
Cash generation swung sharply. Operating cash flow was $22.7 million in the quarter, up from the prior-year quarter. Free cash flow was $21.2 million, up from $0.9 million, a $20.3 million increase. Year-to-date operating cash flow was $3.0 million, down 5.4% from the prior-year period. Capital expenditures were $0.7 million in the quarter, up 239.9%, and $1.3 million year to date, up 49.6%. Deferred revenue was $40.6 million, up 10.1% from the prior-year quarter. The cash flow comparison reflects a new billing system that deferred March 2024 subscription billings, which weighed on first quarter operating cash flow and free cash flow and then boosted second quarter collections.
Operationally, Weave added over 20 new and deepened partner integrations year to date, opening more than 86,000 locations. New integrations include eClinicalWorks, ezyVet, InfiniteVT, and Shepherd. A commercial partnership with Patterson Dental allows its sales team to sell into roughly 100,000 locations. Weave launched Weave Enterprise in June for multi-location practices and hired Greg Leos as general manager of Weave Payments. Dollar-based net retention was 97% as of June 30, 2024, up from 96% a year earlier, while gross retention was 92%, flat from 92%.
Guidance points to continued momentum in the business. For the third quarter, management guided a non-GAAP loss from operations between $1.2 million and $0.2 million. For the full fiscal year, it guided a non-GAAP loss from operations between $3.8 million and $1.8 million. The full-year weighted average share count is expected to be 71.7 million, with 72.1 million expected for the third quarter. A reconciliation of the non-GAAP operating loss guidance to a corresponding GAAP measure is not available on a forward-looking basis because stock-based compensation depends on future hiring and retention needs and the future fair market value of the common stock.
Risks include the ability to attract new customers, retain existing customers, and increase customer use of the platform, the ability to manage growth, competition, and unfavorable economic conditions and macroeconomic uncertainty. The company also cites customer adoption of the platform and products, customer acquisition costs and sales and marketing strategies, the ability to achieve profitability in any future period, service interruptions, and increased regulatory fees on texting and phone calls. Tax risk stands out as well: a full valuation allowance covers domestic net deferred tax assets, including net operating loss carryforwards. Weave holds cash, cash equivalents, and short-term investments of $99.0 million as of June 30, 2024, with no outstanding balance on its $50.0 million credit facility.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $50.6M | $47.2M | +7.2% | $41.7M | +21.4% |
| Gross profit | $36.1M | $33.0M | +9.5% | $28.0M | +28.8% |
| Gross margin | 71.4% | 69.9% | +1.5 pp | 67.3% | +4.1 pp |
| Research & development | $10.0M | $9.6M | +3.2% | $8.6M | +16.0% |
| Sales & marketing | $21.9M | $19.6M | +11.5% | $17.5M | +25.4% |
| General & administrative | $13.5M | $11.9M | +14.0% | $11.8M | +14.3% |
| Total operating expenses | $45.4M | $41.1M | +10.3% | $37.9M | +19.8% |
| Operating income (loss) | -$9.3M | -$8.2M | -13.5% | -$9.8M | +5.9% |
| Operating margin | -18.3% | -17.3% | -1.0 pp | -23.6% | +5.3 pp |
| Net income (loss) | -$8.6M | -$7.2M | -18.7% | -$9.0M | +4.8% |
| Net margin | -16.9% | -15.3% | -1.6 pp | -21.6% | +4.7 pp |
| Diluted EPS | -$0.12 | -$0.10 | -$0.02 | -$0.13 | +$0.01 |
| Net retention rate | 97.0% | 96.0% | +1.0 pp | 96.0% | +1.0 pp |
Risks
Weave Payments depends on Stripe under payment service provider agreements expiring after 2028; any termination or disruption could delay or prevent offering Weave Payments and decrease revenue. Weave also relies on single-source suppliers for phones (Yealink), point-of-sale devices, and messaging (Bandwidth and Telnyx).
Substantially all cloud infrastructure is outsourced to GCP, and the agreement runs through 2027 with no renewal right. Weave cannot easily switch providers, so disruptions, capacity constraints, or service-level changes could harm platform availability and customer trust.
Weave's platform relies on integrations with practice management systems, including Dentrix, which provides critical functionality to a significant portion of the customer base under a contract through July 2026. If providers amend, terminate, or compete more directly, platform value and results could be materially harmed.
Revenue is derived from SMB healthcare practices, which are more susceptible to economic downturns, inflation, and interest rate trends than enterprises. Weave notes current and prospective customers may decrease budgets or delay contract signings and renewals, and a majority of customers are on monthly subscriptions and can terminate on short notice.
Growth depends on retaining existing customers and expanding use of products such as Weave Payments. A majority of customers pay monthly and have no contractual obligation to renew; Weave has historically experienced turnover partly because its customers are SMBs. Dollar-based net retention rate was 97% and gross retention rate was 92% as of June 30, 2024.
Weave continues to incorporate AI solutions into its platform and warns that these investments may negatively impact cost of revenue and gross margins until revenue increases enough to offset them. Competitors may incorporate AI more quickly or successfully, and AI features may create legal, regulatory, and reputational exposure.
Weave intends to expand into medium-sized and multi-location healthcare businesses, which may bring higher costs and longer sales and installation cycles. Larger customers may require more approvals, features, integration services, and contractual terms, making timing less predictable.
Products must comply with industry standards, FCC regulations, and state, local, and international rules, and changes could require service modifications or increase costs. Weave also handles protected health information and is subject to HIPAA and contractual indemnification obligations for data compromises.
Approximately one-third of customer service and support staff has been employed with Weave for less than one year, which may reduce support quality. Weave also expects significant competition for AI expertise as it incorporates AI solutions and features into its platform.
The market is highly competitive and fragmented, with competition from point solutions, PMS systems of record, and larger competitors that can bundle products at lower prices. Weave may need to reduce prices, harming margins, if competitors develop comparable functionality.
SaaS KPIs
All quarters →Free cash flow
Free cash flow margin
Non-GAAP gross margin
Net Revenue Retention
Dollar-Based Gross Retention Rate
Non-GAAP Loss from Operations Margin
Summary, forecast, risks and KPIs are extracted from Weave Communications, Inc.'s SEC filings for Q2 FY2024 (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.