WEAV - WEAVE COMMUNICATIONS: GROWING WITH SMALL AND MEDIUM-SIZED BUSINESSES
WEAVE COMMUNICATIONS: GROWING WITH SMALL AND MEDIUM-SIZED BUSINESSES
Weave Communications, Inc. (NYSE: WEAV) is a leading all-in-one customer communications and engagement software platform for small and medium-sized businesses. The Company’s platform enables business owners to maximize the value of customer interactions and minimize the time and effort spent on manual or mundane tasks by bringing multiple workflows into an all-in-one platform.
Weave Communications, Inc. (NYSE: WEAV)
Market Cap: $507.08M; Current Share Price: $7.60
Data by YCharts
The Company and its Products
Weave’s platform consolidates telephony, messaging, scheduling, payments, employee collaboration, digital forms, insurance verification, customer review management, and marketing into one simple, easy, and elegant solution.
Before Weave, SMBs focussed much of their time on entering data forms, scheduling, collecting payments, responding to missed calls, and finding new customers. With Weave, businesses can instead use their time to focus on customers, grow revenue, and expand profitability.
Weave has over 75 integration partners, which help drive customer value and deeper vertical penetration and provide powerful partner marketing opportunities.
As of December 31, 2022, Weave had more than 27,000 locations under a subscription and more than 25,000 customers in the United States and Canada, representing many industries, with the majority being in dental, optometry, veterinary, medical specialty services, home services, physical therapy, audiology, and podiatry.
The Company presents a unique growth opportunity – it has the potential to disrupt traditional payment processors because it manages all points of interaction between a small business and its customers. Other than that, the following vital elements enhance the Company’s growth prospects.
- Consistent track record of innovations and expansion
Over the years, the Company continued to add new products and functionality to its platform, broadening use cases and applicability for different customers.
Specifically, this year, the Company launched Online Bill Pay. This feature allows small businesses to create, send, and embed a link for customers to pay their bills online whenever it’s most convenient for them. Weave also launched Response Assistant, which enhances the product to further save customers’ time by using AI to draft responses and other content, and Bulk Texting to give customers the ability to simultaneously send a single text message to thousands of their patients.
The Company continues to expand as its platform is flexible enough to encompass most of the functionality needed for communications and engagement across industry verticals. For entering new industries, the Company establishes critical partnerships. It identifies, evaluates, develops, and launches a platform solution with vertical-specific functionality integrated with the primary systems of record in that vertical.
Weave started with Patient Communications and Engagement (CC&E) for dental and is currently involved in CC&E across healthcare, including payments solutions. The Company aims for even deeper penetration in healthcare & payments adoption and is consistently working towards the same.
So far, in 2023, Weave has launched nine new integrations in veterinary practices, deepening its impact in one of its core healthcare verticals. Additionally, as a testimony to its excellence, Weave was named a leader in five categories in G2’s 2023 Spring Report – Patient Engagement Software, Patient Relationship Management, Optometry Software, Veterinary Software, and HIPAA Compliant Messaging.
The Company has a long track record of recognition within its core specialty healthcare markets. In 2022, Weave won a Dentaltown Townie Choice Award® for Best Patient Communication System, an EyeVote Readers’ Choice Award for Patient Engagement Systems, and a Vetty Award for Marketing Excellence. It was named a Best Healthcare Technology Solution Finalist for SIIA CODiE Awards.
Weave has a robust set of channels and methods that helps it to drive growth – some of these include channel and IT partners, integrations, live events and trade shows, digital marketing motions, direct sales team, and existing customer upsell. As the Company continues to utilize these methods and channels, it will go from strength to strength.
- Large Total Addressable Market
Currently, Weave’s Total Addressable Market in the U.S. stands at about $12.5 billion, which includes specialty medical verticals like Med Spa, General Practice, Chiropractic, Mental Health, Audiology, Podiatry, and Physical Therapy.
Historically, the Company’s focus has been Dental, Optometry, and Veterinary. For this, the market size is about $1.9 billion, while the market size for Dental, Optometry, Veterinary, and Medical is about $5 billion.
The Company’s trailing 12-month revenue (Q2 FY22 through Q1 FY23) stood at about $.15 billion. Thus, Weave has a massive opportunity to grow in its target market significantly as it expands into more verticals.
- Dependable Financial Performance
The Company has displayed steady revenue growth over the last few quarters. Weave reported total revenue of $39.6 million, up 19% YoY.
For FY22, total revenue was $142.1 million, representing a 23% YoY increase compared to $115.9 million in FY21.
The Company also displayed an impressive track record of operational efficiency. Over five consecutive quarters, Weave improved both Non-GAAP Operating Margin and Non-GAAP Gross Margin. While the former showed more than 2,018 bps improvement in Q1 FY23 compared to Q1 FY22, the latter showed more than 849 bps improvement over the same period.
For Q1 FY23, Non-GAAP loss from operations was $4.0 million, compared to a non-GAAP loss from operations of $10.1 million in Q1 FY22. For FY22, Non-GAAP loss from operations was $31.0 million, compared to a non-GAAP loss from operations of $36.3 million in FY21.
In Q1 FY23, the Company also reported a positive free cash flow of $0.6 million, up from a negative free cash flow of $5.1 million last year.
Also worth mentioning is that the Company added 3,362 net new customer locations in 2022 and had 27,193 as of December 31, 2022. Also, on the same date, Dollar-Based Net Retention Rate (NRR) was 99%, and Dollar-Based Gross Retention Rate (GRR) was 94%. These figures indicate the Company’s ability to add new customers and retain existing ones successfully.
For FY23, the Company expects total revenue in the range of $160.5 – 163.5 million and Non-GAAP loss from operations in the field of $21.3 – $17.3 million.
From the above information, the Company seems to make steady progress when tapping into the vast and underpenetrated market opportunity. Its business model also seems efficient enough to deliver solid revenue growth and improved profitability.
The Company has received several accolades, which point to the popularity of its platform among consumers and indicate consistent revenue growth in the future. Thus, Weave Communications seems like a Company poised for growth and worth watching.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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Reference:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1609151/000160915123000004/weav-20221231.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/1609151/000160915123000021/weav-20230331.htm