Weave Communications, Inc. (WEAV) Q2 2025 Earnings Summary

Executive Summary

• Q2 revenue was $58.5M (+15.6% y/y) with GAAP gross margin 71.7% and non-GAAP gross margin 72.3%; management cited a “record sales quarter,” accelerating payments, and strength in Specialty Medical (now second-largest vertical) as key drivers .
• Non-GAAP EPS was $0.02 vs S&P Global consensus ~$0.00*, and revenue beat by ~$0.7M vs ~$57.8M*; gross margin (GAAP) was ~71.7% vs 72.1%* consensus, a slight shortfall .
• FY25 guidance was maintained for revenue ($236.8–$239.8M) and raised for non-GAAP operating income to $1.2–$3.2M (from $0.0–$3.0), signaling improved profitability expectations in 2H25; Q3 revenue guided to $60.1–$61.1M and non-GAAP operating income to $0.0–$1.0 .
• Catalysts: continued payments attach/usage growth, mid-market traction, AI automation ramp via TrueLark integration (closed mid-May) and new EMR/PMS integrations (e.g., Ortho2 Edge, IDEXX Neo) expanding reach to “thousands of new locations” .

What Went Well and What Went Wrong

What Went Well

• Payments outpaced subscription growth and contributed to the revenue beat; attach and volume capture both improved, with “massive opportunity” remaining given underpenetration .
• Specialty Medical delivered a record quarter and rose to Weave’s second-largest vertical by customer count; integrations (Veradigm, Practice Fusion, Prompt) and new additions (Ortho2 Edge, IDEXX Neo) broadened TAM and demand .
• Positive cash generation: Q2 operating cash flow $5.4M and free cash flow $4.5M; year-to-date FCF of $3.4M vs $0.7M last year indicates improving liquidity and operating efficiency .
  Selected quote: “We delivered... improved gross margins, and increased free cash flow... Specialty Medical has grown to be our second-largest vertical... We also closed our acquisition of TrueLark” — CEO Brett White .

What Went Wrong

• Retention moderated: GRR fell to 90% (from 92% y/y) and NRR to 96% (from 97%), reflecting some attrition and softer expansion vs last year .
• GAAP operating loss widened to $(10.2)M from $(9.3)M y/y as Weave accelerated sales hiring and absorbed one month of TrueLark opex; non-GAAP operating income was modest at $0.1M .
• Gross margin was below S&P consensus (71.7% actual vs 72.1%*), though it improved y/y and q/q; onboarding and phone hardware remain gross-loss contributors .

Financial Results

Headline metrics vs prior periods

Q2 2025 vs S&P Global consensus

Values retrieved from S&P Global.

Disaggregated revenue

KPIs and cash generation

Note: Q2 2024 cash+ST investments not disclosed in Q2’24 tables provided.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered revenue of $58.5 million, representing 15.6% year-over-year growth and marking our 14th consecutive quarter of exceeding the top end of our revenue guidance.” — CEO Brett White .
• “Gross margin rose to 72.3%... we also exceeded the top end of our guidance range for operating income… generating $4.5 million in free cash flow.” — CEO Brett White .
• “We ended the quarter with $77.8 million in cash and short-term investments… We generated $5.4 million in cash from operating activities and delivered $4.5 million of free cash flow.” — CFO Jason Christiansen .
• “TrueLark’s momentum in multi-location healthcare is highly complementary… we remain confident that this will be an accretive asset in 2026.” — CFO Jason Christiansen .

Q&A Highlights

• Specialty Medical trajectory: lands initially on lower bundles without deep integrations, moving up as integrations deepen; ASP rises and churn falls over time (12–36 months) .
• Payments: attach rising and usage capture improving; still “significantly underpenetrated,” remains a focus for NRR expansion .
• TrueLark integration: joint pipeline with mid-market; install-base cross-sell planned to begin Q4; single-location rollout targeted for Q1 with a unified inbox experience .
• Mid-market profitability: CAC “terrific” despite longer cycles; multi-location customers show NRR >100% when measured on logos expanding locations (not reflected in reported NRR) .
• Macro/tariffs: demand remains resilient; limited macro headwinds across core verticals; payments showed no unusual seasonality in Q2 .

Estimates Context

• Q2 2025 beats/misses vs S&P Global: revenue $58.47M vs ~$57.81M* (beat); Primary EPS $0.02 vs ~$0.00* (beat); GAAP gross margin 71.7% vs ~72.1%* (slight miss) .
• Implications: modest upward bias to 2H revenue/EPS estimates given Q3 top-line guide ($60.1–$61.1M) and raised FY25 non-GAAP operating income range ($1.2–$3.2M). Margin expectations may normalize slightly below prior consensus near-term given integration spend and go-to-market investments, with management still guiding modest GM improvement through 2025 .
  Values retrieved from S&P Global.

Key Takeaways for Investors

• Execution remains solid: consistent revenue outperformance, improving gross margins, and positive FCF provide a foundation for operating leverage into 2H25 .
• Growth vectors are working: Specialty Medical momentum (integrations driving demand), payments acceleration, and mid-market pipeline quality support sustained double-digit growth .
• Profitability trajectory improving: FY25 non-GAAP operating income guidance raised; reiterated GM improvement through 2025; opex investments are targeted and controllable .
• AI as a differentiator: TrueLark expands product breadth into autonomous workflows with clear cross-sell into the base and strong mid-market door-opener; key product milestone will be unified inbox rollout .
• Watch retention and onboarding/hardware drag: GRR/NRR softened modestly; onboarding and hardware remain loss-making, but mix shift toward subscription/payments should help margins .
• Near-term trading setup: upside risk on continued payments attach and mid-market wins; catalysts include install-base TrueLark cross-sell (Q4 start), Q3 print vs guide, and incremental EMR/PMS integrations broadening TAM .