Q2 2024 Earnings Summary
- Strong revenue growth and sales momentum across all verticals, with revenue reacceleration in Q2 and new customer acquisition increasing. Subscription and payment revenue increased significantly, up over $3 million sequentially, the most in well over 3 years [2, 10]. This indicates robust demand for Weave's offerings and successful execution of growth strategies.
- Improving net revenue retention (NRR) driven by successful upselling of new products and services to existing customers. NRR improved to 97% in Q2, up from 96% last quarter, with a goal to exceed 100% NRR again [5]. The introduction of new products like digital forms, bulk messaging, and insurance verification contributes to growing revenue streams and additional revenue opportunities [5, 13].
- Strategic partnership with Patterson Dental significantly expands Weave's market reach, providing access to approximately 100,000 locations and customers [11]. Early traction from this partnership includes leads being shared, deals signed, and ARR added since June [11]. This partnership provides a strong channel for growth and demonstrates potential for substantial incremental revenue.
- Net Revenue Retention (NRR) rate remains at 97%, below previous highs of 105%, suggesting potential challenges in upselling and retaining customers. The company aims to return NRR above 100%, but currently relies on new customer acquisition rather than expansion within the existing customer base.
- The new Weave Enterprise product is in early stages with longer sales cycles, creating uncertainty around its future revenue contribution. The company is still building its pipeline and has not yet closed deals in the mid-market segment, which may delay expected growth from this initiative.
- Revenue growth was partially driven by price adjustments, including price increases across certain cohorts, products, and customers. This strategy may not be sustainable long-term, potentially limiting future revenue growth if further price adjustments are not feasible.
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Demand Trends and Revenue Growth
Q: What's driving the strong demand and revenue growth this quarter?
A: The strong demand and revenue growth were driven by multiple factors, including robust sales performance with more new customer acquisitions than in previous quarters. Price adjustments over certain cohorts and products also contributed to the growth. Additionally, payments growth was significant, with an expansion in the net take rate. -
Guidance Raise and Macroeconomic Impact
Q: What gives you better visibility into the second half and any macroeconomic comments?
A: The company raised the full-year guidance due to consistent execution and confidence in meeting and exceeding targets, marking 10 consecutive quarters of achieving this feat. The macroeconomic environment has not significantly impacted Weave's customers, as essential services like dental and medical practices remain stable and resilient, continuing to see demand despite broader economic trends. -
Net Revenue Retention Improvement
Q: What's driving the improvement in NRR and where could it go in the future?
A: The Net Revenue Retention (NRR) increased to 97%, driven by growth in payments and upsells of products like forms, bulk messaging, and insurance verification. The company aims to exceed 100% NRR again, having achieved as high as 105% in past quarters. -
Patterson Dental Partnership
Q: Can you provide details on the Patterson Dental partnership and its impact?
A: Weave established a strategic partnership with Patterson Dental, creating a Weave-Fuse bundle that Patterson is now selling to their customer base of about 100,000 locations. The collaboration includes joint go-to-market efforts, training of Patterson's salesforce, and has already resulted in leads and annual recurring revenue (ARR) generated since June. -
Weave Enterprise Launch
Q: Any early feedback on the Weave Enterprise launch and the go-to-market plan?
A: Following the launch of Weave Enterprise, the company is actively demoing the product to middle-market clients, building a pipeline with high interest due to features like multitasking capability. The sales cycle in this segment is longer, requiring a different sales team approach tailored to middle-market needs. -
Lead Generation and Specialty Medical Expansion
Q: How is lead generation tracking, especially with the expansion into specialty medical?
A: Lead generation continues to grow strongly across all core verticals, with dental remaining the largest. The specialty medical segment is experiencing the fastest growth in lead generation relative to its base, driven by formal expansion efforts and new integrations. -
Revenue Reacceleration in Other Verticals
Q: Did other verticals besides specialty medical reaccelerate during the quarter?
A: Yes, the revenue reacceleration is seen across all verticals, not just in specialty medical. While specialty medical is the fastest-growing segment, other areas have also shown significant growth during the quarter. -
Sales Leadership Changes and Impact
Q: Have there been sales changes since the new leadership came on board?
A: New sales leadership has implemented incremental improvements, focusing on small, thoughtful adjustments to enhance performance rather than dramatic changes. There has been an emphasis on developing the middle-market business by crafting a suitable model for the team and leveraging the new product offerings. -
Installed Base Upsell Opportunities
Q: What's the size of the installed base not on integrated bundles, and how are you upselling them?
A: About 10% of customers are on non-integrated products, and the company is actively penetrating this segment through new integrations. The upsell team engages these customers to highlight new capabilities, making upgrades to integrated bundles more compelling. -
Call Intelligence Product Update
Q: Any feedback on the Call Intelligence product and its impact?
A: The Call Intelligence product shows great potential, allowing customers to understand call patterns and improve front-desk interactions. Though still in the early stages, it is expected to become an important tool for upselling and enhancing revenue by analyzing calls for sentiment and effectiveness. -
Boomerang Customers
Q: Any updates on customers returning to Weave after leaving?
A: The trend of Boomerang customers continues at the same rate. Customers who left for competitors offering lower prices often return upon realizing Weave's superior functionality and depth of integration.