• Revenue: $54.2 million in Q4, reflecting nearly 19% growth year over year.
• Gross Margin: Improved to 72.6% in Q4, marking the 12th consecutive quarter of improvement.
• Net Income: $2.4 million or $0.03 per share in Q4.
• Free Cash Flow: $6.1 million in Q4, representing 109% year-over-year growth.
• Total Revenue for 2024: $204.3 million, a 20% increase from the previous year.
• Operating Income: Positive $1.8 million in Q4, a $3.5 million improvement from the previous year.
• Net Revenue Retention Rate: 90% in Q4, up from 95% last year.
• Cash and Short-term Investments: $99.1 million at the end of the year.
• Customer Locations: Nearly 35,000 on the platform, a 15% increase.
• 2025 Revenue Guidance: Expected to be in the range of $232 million to $237 million.

• Warning! GuruFocus has detected 2 Warning Signs with GRAL.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Weave Communications Inc (NYSE:WEAV) reported strong revenue growth of nearly 19% in Q4 2024, exceeding the high end of their guidance.
• The company achieved its second consecutive quarter of positive operating income, marking full-year profitability for the first time in its history.
• Gross margins improved for the 12th consecutive quarter, reaching 72.6%, indicating enhanced operational efficiency.
• Weave Communications Inc (NYSE:WEAV) produced $6.1 million in free cash flow in Q4, more than doubling year over year, with a free cash flow margin of 11%.
• The company successfully expanded into specialty medical verticals, with revenue from these areas growing at twice the rate of the overall company revenue in 2024.

Negative Points

• The guidance for 2025 indicates a potential slowdown in growth, with expected revenue growth of 15%, which is lower than the 19% achieved in 2024.
• The company anticipates negative free cash flow in Q1 2025 due to the timing of annual employee bonuses and certain one-time expenses.
• Weave Communications Inc (NYSE:WEAV) faces increased compliance costs in 2025 due to new regulatory requirements under Section 44B of the Star Bank Act.
• Despite strong growth, the net revenue retention rate decreased to 90% in Q4 2024, down from 95% the previous year.
• The company is making significant investments in new growth areas, which could impact short-term profitability as they establish dedicated teams for these initiatives.

Q & A Highlights

Q: Can you provide more color on the 2025 guidance and the expected impact of incremental investments on growth? A: Alan Taylor, CFO, explained that the focus remains on growth, with investments in partnerships, new markets, and AI. Brett White, CEO, added that small, targeted teams are being set up to accelerate growth in these areas, expecting growth to accelerate in the second half of the year.

Q: How is the payments solution contributing to growth, and what are the expectations for 2025? A: Brett White, CEO, noted that the focus is on integrating payments into office workflows. The sales compensation model has been adjusted to incentivize closing payments, and the company expects payments to continue contributing positively to growth and margins in 2025.

Q: Is the 15% growth guidance for 2025 conservative, or are there specific challenges anticipated? A: Alan Taylor, CFO, mentioned that the guidance reflects a typical conservative approach, with a tough comparison in Q2 due to last year's price adjustments. However, the company is optimistic about growth opportunities from new initiatives.

Q: How does the multi-location and enterprise strategy focus on the dental vertical versus other markets? A: Brett White, CEO, stated that the primary focus is on the dental vertical due to existing brand strength and partnerships. The strategy involves starting with dental and then expanding into other areas like optometry and specialty medical.

Q: How will AI products like call intelligence be monetized? A: Brett White, CEO, explained that AI products are included in higher-tier bundles or sold as upsells. The strategy is to deliver value through these products, which supports higher pricing, especially in the multi-location segment.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.