Q1 2024 Earnings Summary
- Specialty medical is Weave's fastest-growing segment, moving from the #4 to the #3 vertical, with increasing lead volumes and successful sales execution, indicating effective expansion into new markets. ,
- Deepening and expanding integrations with practice management systems are enhancing product value and opening additional addressable market, leading to increased demand and improved conversion rates. , ,
- The company's focus on payments, including hiring a new General Manager of Payments and improving integrations, is expected to significantly increase payments penetration in their customer base, boosting revenue growth and net revenue retention. , ,
- Underpenetration in Payments Attach Rates and Lack of Focus: Weave's payments attach rates are increasing but are "way below where it needs to be" due to integration challenges and not having a "super focused, high-level exec focused entirely on payments."
- Incomplete Integrations Limiting Addressable Market in Specialty Medical: In the specialty medical vertical, Weave has integrations covering "probably not even 1/3 of the way there" among approximately 160,000 potential locations, limiting its growth potential in this segment.
- Challenges in Migrating Customers to New Platform: The rollout of the new Weave experience app will "take time to migrate" customers, and existing customers "once they're working with something they like, they're not going to move off," potentially delaying the realization of benefits from the new platform.
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Gross Margin Outlook
Q: What's the new milestone for gross margins, and any new drivers?
A: The company aims for 75%-80% gross margins in the long term, driven by payments growth and vigilant cost management. They're focusing on scaling in the cloud with GCP and upselling to improve margins. -
Specialty Medical Growth
Q: Can you discuss growth in the specialty medical vertical?
A: Specialty medical is their fastest growing segment in ARR, now the third largest vertical after dental and optometry. They see strong demand, with physical therapy and primary care being non-discretionary services. -
Payments Attach Rate and Growth Plans
Q: How are payments attach rates progressing?
A: Payments attach rates are increasing but remain below expectations. They've made progress on integrations and have hired a new General Manager of Payments to improve penetration rates. -
Integrations and SAM Expansion
Q: How has your integrated addressable market increased over the past year?
A: They have integrations covering over 90% of the 200,000 locations in dental, optometry, and vet sectors. In specialty medical, with about 160,000 locations, they're less than a third integrated, offering significant growth potential. -
Partnerships with Practice Management Providers
Q: What incentives are you using to align partnerships with practice management software providers?
A: They've shifted to a win-win partnership philosophy, assuring providers they don't compete in the PMS space. They're working on integration agreements, co-marketing, and payments partnerships to foster collaboration. -
Lead Generation Efforts
Q: Which lead generation methods are most successful currently?
A: Events, especially in dental, are yielding strong results, along with digital marketing, traditional mailers, and focused outbound calling. These channels are effectively driving pipeline growth. -
New Weave Experience App Rollout
Q: Where are you in rolling out the next-gen app, and what's the feedback?
A: The new Weave experience has moved from closed to open beta, offering a flexible workspace and enhanced functionality for multi-location customers. Feedback has been quite positive from both existing customers and prospects. -
Hiring Updates
Q: Any updates on hiring plans, particularly in sales and engineering?
A: They plan to continue hiring throughout the year, adding sales capacity, engineers, and other roles as the customer count grows.
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