Summary
Weave Communications reported third quarter revenue of $52.4 million, up 20.3% from $43.5 million in the prior-year quarter. Year-to-date revenue reached $150.1 million, also up 20.3% from $124.8 million. GAAP gross margin was 72.0%, up 330 basis points from 68.7%. The company posted a GAAP operating loss of $6.6 million, an improvement of $1.4 million from a loss of $8.0 million. GAAP net loss was $5.9 million, or $0.08 per share, compared with $7.1 million, or $0.10 per share.
Gross profit was $37.7 million, up 26.0% from the prior-year quarter. Management attributed the overall gross margin gain to lower third-party costs, a favorable customer mix as more phone hardware became fully depreciated, and efficiencies in customer support and onboarding. GAAP operating margin was negative 12.7%, compared with negative 18.4%. That is a smaller loss on a larger revenue base, but the company still spends heavily to grow. Sales and marketing, research and development, and general and administrative expenses all rose in the quarter.
Net cash provided by operating activities was $4.5 million, up from $3.3 million. Free cash flow, a non-GAAP measure, was $3.5 million, up from $2.1 million. Capital expenditures were $0.55 million, down from $0.68 million. On a year-to-date basis, net cash provided by operating activities was $7.5 million, up from $6.5 million. Deferred revenue, current portion, was $40.2 million, up 6.7% from $37.7 million.
Non-GAAP operating income turned positive at $1.4 million, compared with a non-GAAP operating loss of $1.8 million, an improvement of $3.2 million. The company said this was the first positive non-GAAP operating income in its history. That result excludes stock-based compensation, which remains a large non-cash expense. Retention was steady: dollar-based net retention rate was 98% as of September 30, 2024, up from 95%, and dollar-based gross retention rate was 92%, flat with 92%.
Guidance points to continued top-line growth with only a narrow non-GAAP profit. For the fourth quarter, Weave expects non-GAAP income from operations of $0.9 million to $1.9 million. For the full fiscal year, that measure is guided to $0.0 million to $1.0 million. The company also guided a weighted average share count of 72.7 million for the fourth quarter and 71.6 million for the full year. The non-GAAP outlook excludes stock-based compensation, and Weave does not provide a reconciliation to GAAP operating income on a forward-looking basis without unreasonable effort.
Operationally, Weave launched a new AI-powered platform, including the Weave Assistant and Call Intelligence, and introduced Weave Enterprise for multi-location organizations. Those products are central to the company's push into medium-sized healthcare practices and new verticals. The company also disclosed that approximately 36% of customer locations elected annual prepayments as of September 30, 2024, compared with 40% a year earlier. Weave had no outstanding balance on its $50 million line of credit and was in compliance with SVB loan covenants as of September 30, 2024. The risk list is familiar but real. Weave cites its ability to attract new customers, retain existing ones, manage growth, and handle macroeconomic uncertainty. Competition, customer adoption, sales and marketing costs, service interruptions, regulatory fees on texting and calls, and stock-based compensation all remain swing factors. The company also notes potential indemnification exposure tied to protected health information, though no liabilities were accrued as of September 30, 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $52.4M | $50.6M | +3.6% | $43.5M | +20.3% |
| Gross profit | $37.7M | $36.1M | +4.4% | $29.9M | +26.0% |
| Gross margin | 72.0% | 71.4% | +0.6 pp | 68.8% | +3.3 pp |
| Research & development | $9.9M | $10.0M | -0.9% | $8.6M | +14.4% |
| Sales & marketing | $21.2M | $21.9M | -3.3% | $17.8M | +18.9% |
| General & administrative | $13.3M | $13.5M | -1.5% | $11.5M | +15.6% |
| Total operating expenses | $44.4M | $45.4M | -2.3% | $38.0M | +16.9% |
| Operating income (loss) | -$6.6M | -$9.3M | +28.4% | -$8.0M | +17.4% |
| Operating margin | -12.7% | -18.3% | +5.6 pp | -18.4% | +5.8 pp |
| Net income (loss) | -$5.9M | -$8.6M | +31.3% | -$7.1M | +17.7% |
| Net margin | -11.2% | -16.9% | +5.7 pp | -16.4% | +5.2 pp |
| Diluted EPS | -$0.08 | -$0.12 | +$0.04 | -$0.10 | +$0.02 |
| Net retention rate | 98.0% | 97.0% | +1.0 pp | 95.0% | +3.0 pp |
Risks
Revenue depends on retaining SMB customers, most of whom are on monthly subscriptions and can terminate on short notice. Dollar-based net retention rate was 98% at September 30, 2024 versus 95% at September 30, 2023, but annual prepayment election was approximately 36% of customer locations at September 30, 2024 compared with 40% at September 30, 2023.
The company relies on single-source suppliers including Stripe for Weave Payments, GCP for cloud infrastructure through 2027 with no renewal right, Yealink for phones, and Dentrix PMS integration through July 2026 for a significant portion of its customer base. Termination or disruption of any of these relationships could lower platform value and adversely affect revenue.
The new Weave platform includes an AI-powered Weave Assistant, and the filing states that investments in AI solutions 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 evolving AI laws could require significant changes and expose the company to liability.
The company is pursuing medium-sized and multi-location organizations through Weave Enterprise, which may bring higher costs and longer sales and installation cycles. Decisions may require more technical personnel and management approvals, making sales timing harder to predict.
Substantially all revenue comes from SMB healthcare practices, which may be affected more than enterprises by economic uncertainty, inflation and interest rate trends. Unfavorable conditions could reduce customer budgets, delay sales cycles, or increase churn and chargebacks.
The market is highly competitive and fragmented, and systems of record such as Dentrix PMS providers could build or partner to offer functionality that competes directly with Weave. Larger competitors may bundle products at lower prices, potentially forcing price reductions and margin pressure.
The filing states approximately one-third of customer service and support staff has been employed for less than one year, which may reduce familiarity with the platform and impair customer support. The company also cites significant employee growth and churn, particularly in customer service and sales organizations.
The company must comply with HIPAA and other healthcare data regulations, and it provides indemnification against liabilities for data compromises, particularly protected health information. A security incident or regulatory breach could lead to fines, litigation, and reputational harm.
SaaS KPIs
All quarters →Free cash flow
Free cash flow margin
Net Revenue Retention
Non-GAAP Operating Margin
Gross Revenue Retention
Summary, forecast, risks and KPIs are extracted from Weave Communications, Inc.'s SEC filings for Q3 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.