Weave Communications, Inc. ((WEAV)) has held its Q1 earnings call. Read on for the main highlights of the call.
Confident Investing Starts Here:
- Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
- Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
The recent earnings call for Weave Communications, Inc. painted a generally positive picture, highlighting significant growth in revenue and strategic acquisitions that are set to enhance future prospects. However, the company faces challenges with increased operating expenses and negative free cash flow, which tempered the otherwise optimistic outlook.
Revenue Growth and Record Performance
Weave Communications reported a robust 18% year-over-year revenue growth for Q1, marking the 13th consecutive quarter of exceeding guidance. The company’s gross margin also saw an improvement of 170 basis points, reaching 72.1%. This record performance underscores Weave’s strong market position and operational efficiency.
Acquisition of TrueLark
In a strategic move to expand its market reach, Weave signed a definitive agreement to acquire TrueLark for $35 million. This acquisition is expected to expand Weave’s addressable market to over $10 billion in the U.S. and enhance its AI and automation capabilities, positioning the company for future growth.
Strong Performance in Specialty Medical
The Specialty Medical segment saw record sales, driven by strong performances in MedSpa and Plastic Surgery. The company also reported continued momentum in primary care and physical therapy, highlighting its diverse and growing customer base.
New Integrations and Expanding Market Reach
Weave launched three new integrations with Prompt, Practice Fusion, and Veradigm, significantly increasing its integrated market by approximately 60,000 locations. This expansion is expected to bolster Weave’s market presence and customer engagement.
Recognition and Awards
Weave’s excellence was recognized as it ranked in the Top 50 on G2’s 2025 Best Software Awards and secured the top spot in 33 categories in G2’s spring 2025 report. These accolades reflect the company’s commitment to delivering high-quality software solutions.
Increased Operating Expenses
The company experienced an increase in sales and marketing expenses, attributed to Q1 seasonality and the addition of sales reps. This rise in expenses impacted the overall financials, presenting a challenge that the company needs to address moving forward.
Negative Free Cash Flow
Weave reported a negative free cash flow of $1.1 million, which was in line with expectations due to the timing of annual employee bonus payouts. This financial metric remains a concern for the company as it works towards achieving positive cash flow.
Tough Year-Over-Year Comparisons
Looking ahead, Weave anticipates Q2 to be the toughest year-over-year revenue comparison of 2025, as the company laps the effects of a price adjustment made in Q2 2024. This presents a challenge in maintaining the growth trajectory.
Forward-Looking Guidance
During the earnings call, Weave provided optimistic guidance for continued strong performance and growth. The company raised its full-year revenue guidance to a range of $236.8 million to $239.8 million, factoring in the acquisition of TrueLark. Non-GAAP operating income is expected to be between breakeven and $3 million, with TrueLark anticipated to contribute $2.5 million to 2025 revenue. Retention metrics remain strong, with a net revenue retention rate of 98% and a gross retention rate of 91%.
In summary, Weave Communications, Inc. delivered a positive earnings call with impressive revenue growth and strategic acquisitions that promise to enhance future prospects. Despite challenges with operating expenses and cash flow, the company’s forward-looking guidance remains optimistic, reflecting confidence in its strategic direction and market potential.