Summary
Weave closed fiscal 2023 with fourth quarter revenue of $45.7 million, up 21.2% year over year. Full year revenue was $170.5 million, up 19.9%. Gross profit was $31.6 million in the quarter, up 26.7%, and $116.1 million for the full year, up 30.7%. Gross margin reached 69.1% in the quarter, up 3.0 percentage points, and 68.1% for the full year, up 5.6 percentage points. Customer retention drives part of that improvement, since older cohorts carry mostly depreciated phone hardware and lower onboarding costs.
The company still runs at a loss, though the losses are smaller. Fourth quarter operating loss was $8.0 million, narrowing 18.0%. Full year operating loss was $34.4 million, narrowing 30.9%. Net loss was $7.0 million in the quarter, narrowing 24.0%, and $31.0 million for the full year, narrowing 37.6%. Full year diluted EPS loss was -$0.46, an improvement of $0.30, or 39.5%. Operating margin was -17.5% in the quarter, up 8.4 percentage points, and -20.2% for the full year, up 14.8 percentage points. Stock-based compensation remains a large non-cash expense and is excluded from the non-GAAP measures.
Cash flow swung hard in the right direction. Operating cash flow was $3.7 million in the quarter, up $6.6 million from the year-ago quarter, and $10.2 million for the full year, up $23.0 million. Free cash flow, a non-GAAP measure that also nets out property purchases and capitalized software, was $2.9 million in the quarter and $6.5 million for the full year. Capital expenditures were $0.18 million in the quarter, down 74.7%, and $1.69 million for the full year, down 10.8%. Deferred revenue was $38.9 million at December 31, 2023, up 13.8%. Non-GAAP loss from operations was $1.7 million in the quarter and $11.5 million for the full year. Non-GAAP net loss was $0.8 million in the quarter and $8.2 million for the full year. Non-GAAP gross margin was 69.7% in the quarter, and Adjusted EBITDA was negative $0.8 million in the quarter and negative $7.8 million for the full year. Cash and cash equivalents plus short-term investments totaled $108.8 million at December 31, 2023.
The customer base kept growing while retention slipped. Total customer locations reached 31,002 at December 31, 2023, up from 27,193 a year earlier, with 3,809 net new locations added during 2023. Management said the company had more than 28,000 customers in the United States and Canada. Dollar-based net retention rate was 95% at December 31, 2023, down from 99% a year earlier, and dollar-based gross retention rate was 92%, down from 94%. Weave added ACH Debit and Payment Plans to the platform, naming David McNeil as Chief Revenue Officer, and ranked first in 27 different categories in the G2 Winter 2023 Report. The company also reported 92% of 2023 revenue from recurring sources.
Guidance points to a wider top line in 2024 with less red ink. For the first quarter of 2024, management guides to a non-GAAP loss from operations between $2.5 million and $1.5 million. For the full year 2024, the non-GAAP loss from operations is guided between $6.0 million and $2.0 million. The revenue outlook covers both the first quarter and the full year. Guidance assumes weighted average share counts of 70.5 million for the first quarter and 71.7 million for the full year. Management gives no GAAP reconciliation for the non-GAAP loss guidance because stock-based compensation depends on future hiring and share prices. Management expects sales and marketing expenses to fall as a percentage of revenue in 2024 and general and administrative expenses to decline as a percentage of revenue over time. Risks named in the filing include attracting and retaining customers, growing customer use of the platform, managing growth, competition, unfavorable economic conditions, and service interruptions. A compromise of protected health information is another exposure, given the indemnification terms in some customer and partner contracts.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2023 | Q3 FY2023 | QoQ | Q4 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $45.7M | $43.5M | +4.9% | $37.7M | +21.2% |
| Gross profit | $31.6M | $29.9M | +5.5% | $24.9M | +26.7% |
| Gross margin | 69.1% | 68.8% | +0.4 pp | 66.2% | +3.0 pp |
| Research & development | $9.1M | $8.6M | +5.9% | $8.2M | +11.6% |
| Sales & marketing | $18.3M | $17.8M | +2.8% | $16.1M | +13.5% |
| General & administrative | $12.2M | $11.5M | +5.4% | $10.4M | +17.1% |
| Total operating expenses | $39.6M | $38.0M | +4.3% | $34.7M | +14.1% |
| Operating income (loss) | -$8.0M | -$8.0M | +0.4% | -$9.7M | +18.0% |
| Operating margin | -17.5% | -18.4% | +0.9 pp | -25.9% | +8.4 pp |
| Net income (loss) | -$7.0M | -$7.1M | +1.5% | -$9.3M | +24.0% |
| Net margin | -15.4% | -16.4% | +1.0 pp | -24.6% | +9.2 pp |
| Diluted EPS | -$0.46 | -$0.10 | -$0.36 | -$0.14 | -$0.32 |
| Customers | 28,000 | — | — | 25,000 | +12.0% |
Risks
Dollar-based net retention rate declined to 95% at December 31, 2023 from 99% at December 31, 2022, and gross retention rate declined to 92% from 94%. Many customers pay monthly and have no contractual renewal obligation, so SMB churn can pressure revenue.
The vast majority of revenue comes from SMBs, and inflation and interest rate trends have adversely impacted SMBs and can cause decreased spending, delayed sales, and subscription terminations. MD&A states the company serves SMB healthcare practices, which may be more vulnerable to economic uncertainty.
Revenue is concentrated in healthcare verticals such as dental, optometry, and veterinary. The platform depends on integrations with systems of record, including Dentrix PMS, whose contract provides critical functionality through July 2026 subject to conditions; termination or competing provider offerings could lower platform value.
Weave Payments relies on Stripe as its sole payment service provider, phones come from Yealink, messaging is powered by Bandwidth and Telnyx, and a substantial majority of cloud infrastructure is outsourced to GCP under a 60-month term through 2027 with no renewal right. Disruption or fee increases could decrease revenue.
The company intends to expand among medium-sized and multi-location businesses, which may require more technical approvals, higher costs, and longer sales and installation cycles, making close timing less predictable. MD&A cites expansion among medium-sized businesses as a strategic focus.
The company is incorporating AI solutions and features into its platform and business. It may not realize anticipated benefits, and investments could negatively impact cost of revenue and gross margins until revenue offsets them; competitors may incorporate AI more quickly, and evolving AI laws could increase liability and compliance costs.
Rapid employee growth and churn create operational challenges, especially in customer service and sales. Approximately one-third of current customer service and support staff has been employed less than one year, which may impair support quality and customer retention.
Network service provider fees can change daily or weekly, and providers have instituted additional fees due to regulatory or industry changes. MD&A states cost of revenue is affected by increased regulatory fees on texting and phone calls.
SaaS KPIs
All quarters →Free cash flow
Adjusted EBITDA
Dollar-Based Gross Retention Rate (GRR)
Dollar-Based Net Retention Rate (NRR)
Number of locations (at period end)
Total customers
Summary, forecast, risks and KPIs are extracted from Weave Communications, Inc.'s SEC filings for Q4 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.