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Weave Communications, Inc. (WEAV) Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered solid top-line growth and improving unit economics: revenue was $55.8M (+18.3% y/y) with GAAP gross margin 71.6% (+170 bps y/y) and non-GAAP gross margin 72.1% (+170 bps y/y) .
  • Results modestly exceeded S&P Global consensus: revenue $55.8M vs $54.7M consensus*; non-GAAP “Primary EPS” $0.01 vs $0.009*; 7 estimates for both revenue and EPS (beat) . Values marked with * retrieved from S&P Global.
  • FY25 guidance raised on revenue but lowered on non-GAAP operating income to fund TrueLark integration: revenue to $236.8–$239.8M (from $232.0–$237.0), non-GAAP op income to $0–$3M (from $2–$6M) .
  • Strategic catalyst: announced acquisition of TrueLark (AI front-desk automation) for $35M ($25M cash/$10M equity), expected to accelerate AI roadmap and expand TAM to ~$10B in the U.S. (management) .
  • Near-term watch items for the stock: sequential 50 bps decline in non-GAAP gross margin due to seasonal usage costs and partner integrations, Q2 guided to non-GAAP op loss to breakeven as TrueLark investments ramp (could temper margin expectations) .

What Went Well and What Went Wrong

What Went Well

  • Specialty medical delivered a record quarter with strong demand in Med Spa, Plastic Surgery, Primary Care, and Physical Therapy; integrations with Prompt, Practice Fusion, and Veradigm expanded the serviceable market by ~60,000 locations .
  • Payments continued to outgrow the company (more than 2x total revenue growth) and remains accretive; retention held steady (NRR 98%, GRR 91%) .
  • Clear AI narrative: TrueLark acquisition positions Weave “at the forefront of workflow automation with always-on, autonomous patient engagement,” and is intended to be accretive to the bottom line in 2026 (management) .
    Quote: “We delivered a strong start to the year… strong demand in specialty medical, continued progress in mid-market, and solid performance in our payments business.” — CEO Brett White .

What Went Wrong

  • Profitability still fragile: non-GAAP operating income was essentially breakeven ($0.04M) and GAAP operating loss widened y/y ($9.3M vs $8.2M) as operating expenses increased .
  • Sequential margin pressure: non-GAAP gross margin fell ~50 bps q/q due to seasonal spike in variable costs from increased customer usage and partner integrations (management explanation) .
  • Hardware and onboarding remain drags with negative gross margins; Q1 onboarding GM (-124.3%) and hardware GM (-18.9%) weighed on overall mix .

Financial Results

Headline P&L (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$52.4 $54.2 $55.8
GAAP Gross Margin %72.0% 72.1% 71.6%
Non-GAAP Gross Margin %72.5% 72.6% 72.1%
GAAP Operating Income (Loss) ($M)$(6.6) $(7.4) $(9.3)
Non-GAAP Operating Income ($M)$1.4 $1.8 $0.04
Adjusted EBITDA ($M)$2.25 $2.64 $1.02
GAAP Net Income (Loss) ($M)$(5.9) $(6.7) $(8.8)
GAAP Diluted EPS ($)$(0.08) $(0.09) $(0.12)
Non-GAAP Diluted EPS ($)$0.03 $0.03 $0.01
Cash from Operations ($M)$4.50 $6.67 $(0.22)
Free Cash Flow ($M)$3.54 $6.13 $(1.06)

Notes:

  • Q1 2025 y/y: revenue +18.3%, GAAP GM +170 bps, non-GAAP GM +170 bps .
  • Non-GAAP adjustments in Q1 included $9.0M stock-based compensation and $0.37M acquisition transaction costs .

Disaggregated Revenue and Margins (oldest → newest)

Line ItemQ3 2024 Revenue ($M)Q3 2024 GM %Q4 2024 Revenue ($M)Q4 2024 GM %Q1 2025 Revenue ($M)Q1 2025 GM %
Subscription & Payment Processing$50.38 78.3% $52.13 78.1% $53.42 77.4%
Onboarding$0.85 (137.4%) $0.80 (140.7%) $0.89 (124.3%)
Hardware$1.17 (47.6%) $1.24 (44.6%) $1.51 (18.9%)

KPIs and Balance Sheet (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
Dollar-Based NRR (%)98% 98% 98%
Dollar-Based GRR (%)92% 91% 91%
Cash + Short-term Investments ($M)$98.2 $99.1 $98.2 (Cash $53.4 + STI $44.8)

Results vs S&P Global Consensus (Q1 2025)

MetricConsensus*ActualSurprise
Revenue ($M)$54.72*$55.81 Beat
Primary EPS (non-GAAP) ($)$0.0091*$0.01 Beat
# of Estimates7 (rev), 7 (EPS)*——

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)FY 2025$232.0–$237.0 $236.8–$239.8 Raised (midpoint)
Non-GAAP Operating Income ($M)FY 2025$2.0–$6.0 $0.0–$3.0 Lowered
Weighted Avg Shares (M)FY 202575.9 76.5 Higher (TrueLark equity)
Revenue ($M)Q2 2025N/A$57.3–$58.3 New
Non-GAAP Op Income (Loss) ($M)Q2 2025N/A$(1.0)–$0.0 New
Weighted Avg Shares (M)Q2 2025N/A75.7 New

Management notes FY revenue raise includes ~+$2.5M TrueLark in 2025; non-GAAP op outlook lowered to fund R&D and GTM investments around TrueLark .

Earnings Call Themes & Trends (Q3’24 → Q4’24 → Q1’25)

TopicQ3 2024Q4 2024Q1 2025Trend
AI/Technology initiativesLaunched new AI-powered platform and Call Intelligence; AI assistant embedded across app Continued platform momentum implied in execution; FY25 outlook introduced Acquisition of TrueLark (agentic AI) to enable autonomous front-office workflows, expand TAM; accretive to bottom line in 2026 (mgmt) Expanding scope from assistant → autonomous agents
PaymentsNoted growth and platform integration benefits Continued focus; FY commentary on investment areas including payments Growing >2x total revenue, accretive; attach rate <10% of revenue (room to grow) Strengthening growth vector
Specialty medicalOngoing expansion New integrations with Prompt, Practice Fusion Record quarter; integrations expanded serviceable market by ~60k locations Accelerating
Mid-marketEarly progress Building pipeline Dedicated team in place; wins incl. 30-location dental org via partner referral Building pipeline
RetentionNRR 98%, GRR 92% NRR 98%, GRR 91% NRR 98%, GRR 91% Stable/high
MarginsFirst positive non-GAAP op income Non-GAAP op income improved to $1.8M Non-GAAP gross margin down ~50 bps q/q due to seasonal variable costs and integrations Unit economics solid; near-term seasonal pressure
Tariffs/Hardware——Proactive hardware inventory to mitigate tariffs near term Risk managed

Management Commentary

  • Strategic positioning: “TrueLark… will advance Weave’s AI roadmap… position us at the forefront of workflow automation with always-on, autonomous patient engagement.” — CEO Brett White .
  • Growth vectors: “Strong demand in specialty medical, continued progress in mid-market, and solid performance in our payments business.” — CEO Brett White .
  • Profitability path and TrueLark: “We’ll make targeted investments in R&D and S&M… anticipate TrueLark to be accretive to the bottom line in 2026.” — CFO Jason Christiansen .
  • Retention and payments: “Retention held steady… NRR at 98% and GRR at 91%… Payments growing at more than twice the rate of total revenue and accretive.” — CFO Jason Christiansen .
  • Margin color: “We saw a 50 bps sequential decline in Q1 gross margin driven by partner integrations and elevated seasonality in our variable costs as customers’ usage increased significantly.” — CFO Jason Christiansen .

Q&A Highlights

  • TrueLark ROI and cross-sell: Customers view TrueLark as a revenue driver; large DSO feedback indicated it would be the last software they would cut in a downturn; significant cross-sell to Weave’s single-location base expected (TrueLark historically focused on DSOs) .
  • Pricing model and TAM: TrueLark sold largely on subscription per location/contract; management reiterated U.S. TAM expands to ~$10B with TrueLark and highlighted potential international interest .
  • Pipeline/macro: Lead flow and pipeline resilient; TrueLark strengthens ROI-led sales motion; no degradation in macro indicators noted by management .
  • Vertical penetration: Most penetrated vertical is dental (~just north of 10%); specialty medical still <1% penetrated—significant runway .
  • Payments attach rate runway: Attach rate still <10% of revenue; management expects it to grow “well north of 10%” over time .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $55.81M actual vs $54.72M consensus*; Primary (non-GAAP) EPS $0.01 actual vs $0.0091 consensus*; 7 estimates each (beat) . Values marked with * retrieved from S&P Global.
  • Implications for estimates: FY25 revenue guidance raised (including ~$2.5M TrueLark), while non-GAAP operating income range lowered to fund integration and growth investments; expect sell-side to raise revenue and temper near-term profitability assumptions accordingly .

Key Takeaways for Investors

  • Top-line momentum intact with multi-quarter beat cadence and record specialty medical performance; integrations materially expand the addressable opportunity in medical .
  • The AI narrative is upgrading from assistant features to autonomous agents via TrueLark—supports a potential multiple story if execution stays on track (management sees 2026 bottom-line accretion) .
  • Near-term margins may be choppy (seasonality and integration-driven variable costs); Q2 guided to non-GAAP operating loss to breakeven as TrueLark spend ramps .
  • Payments remains a structural growth lever (>2x company growth) with attach rate still sub-10%—material mix/ARPU upside if attach increases .
  • Retention stable at healthy levels (NRR 98%, GRR 91%)—supports durable subscription base through macro cycles .
  • Trading lens: Positive revenue beat and raised FY revenue guide are supportive; lowered FY non-GAAP op income and Q2 margin guide could cap near-term upside—watch execution milestones on TrueLark integration and mid-market pipeline build .
  • Diligence focus: Monitor onboarding/hardware drag, pace of payments attach gains, and evidence of TrueLark cross-sell uptake (especially single-location) through 2H25 .

Values marked with * retrieved from S&P Global.

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