• Revenue: $50.6 million, 21.4% year-over-year growth.
• Gross Margin: 71.9%, a 400 basis point increase from last year.
• Adjusted EBITDA: Positive for the first time, at $5,000.
• Net Revenue Retention Rate: Improved to 97% from 96% last quarter.
• Operating Loss: $1 million, a 76% improvement from last year.
• Net Loss: $300,000 or $0.00 per share, compared to $3.1 million or $0.05 per share last year.
• Cash and Short-term Investments: $99 million, an improvement of over $16 million sequentially.
• Cash Flow from Operations: $22.7 million in Q2.
• Free Cash Flow: $21.2 million in Q2.

• Warning! GuruFocus has detected 5 Warning Signs with MDXG.

Release Date: July 31, 2024

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

Positive Points

• Weave Communications Inc (NYSE:WEAV) reported a 21.4% year-over-year revenue growth for Q2, surpassing the previous quarter's growth of 19.2%.
• The company achieved a significant milestone by reporting positive adjusted EBITDA for the first time in its history.
• Gross margin improved to 71.9%, marking the 10th consecutive quarter of gross margin improvement.
• Weave Communications Inc (NYSE:WEAV) expanded its total addressable market with new integrations, including a partnership with Patterson Dental, opening up access to over 86,000 locations.
• The company launched Weave Enterprise, a new solution for multi-location practices, built on a next-generation platform to streamline operations and revenue cycle management.

Negative Points

• Despite the positive adjusted EBITDA, Weave Communications Inc (NYSE:WEAV) reported an operating loss of $1 million for Q2.
• Sales and marketing expenses increased to $20.2 million, representing 40% of revenue, up from 39% in the same period last year.
• The company is still less than 0.5% penetrated into its total addressable market in the specialty medical vertical, indicating a long road ahead for market capture.
• Research and development expenses, while reduced as a percentage of revenue, still totaled $7.8 million, reflecting ongoing high costs.
• The macroeconomic environment remains uncertain, which could impact future growth and customer spending in the SMB healthcare sector.

Q & A Highlights

Q: Can you discuss the traction you're seeing in the specialty medical sector and how your go-to-market strategy is aligned with these areas? A: Brett White, CEO: We're seeing traction in physical therapy, med spa, plastics, and general practice. Our go-to-market strategy involves brand marketing to seed these new spaces, followed by our usual marketing motions to generate inbound leads, complemented by an outbound motion targeting these segments.

Q: What is the timeline for rolling out the new platform, and what features might drive expansion or retention? A: Brett White, CEO: The new Weave experience includes Weave Enterprise for multi-location practices, offering centralized management and multitasking capabilities. The SMB app now allows dynamic resizing and auto-updates, improving usability. We are currently demoing these products, which have generated significant interest.

Q: How has the integration work impacted your installed base, and what does the upsell motion look like? A: Alan Taylor, CFO: About 10% of our customers are on non-integrated products. The upsell team targets these customers with new integrations, offering features like call pop and appointment reminders. Deepened integrations also enhance upsell opportunities by making higher-end bundles more attractive.

Q: Can you elaborate on the Patterson Dental partnership and its potential impact? A: Brett White, CEO: The partnership with Patterson Dental involves a Weave-Fuse bundle, allowing Patterson to sell Weave to about 100,000 locations. This collaboration includes lead sharing and joint market efforts, already resulting in added ARR and positive traction.

Q: What factors contributed to the strong sequential growth in subscription and payment revenue? A: Brett White, CEO: The growth was driven by strong sales performance, new customer acquisition, regular price adjustments, and payments growth. We also saw an expansion in our net take rate.

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