Weave Communications, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; the supplied filing text does not provide a clear standalone fourth-quarter financial-results table. Weave sells cloud-based communications and customer-engagement software, primarily to small and medium-sized businesses (SMBs) in the United States and Canada.
Key financial results and liquidity
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $115.9 million | $79.9 million | +45% |
| Gross profit / gross margin | $66.5 million / 57% | $45.4 million / 57% | Margin unchanged |
| Operating expenses | $116.9 million | $85.0 million | +38% |
| Loss from operations | $(50.4) million | $(39.6) million | Loss widened |
| Net loss | $(51.7) million | $(40.4) million | Loss widened |
| Adjusted EBITDA (non-GAAP) | $(33.3) million | $(25.6) million | Loss widened |
| Cash used in operating activities | $(20.4) million | $(15.5) million | More cash used |
| Free cash flow (non-GAAP) | $(30.2) million | $(19.4) million | More cash used |
Recurring subscription and payment-processing revenue was $108.8 million, up from $74.2 million. Its gross margin was 73%, compared with 74% in 2020. Total gross margin held at 57%; onboarding and hardware continued to generate negative gross profit. No customer represented more than 1% of revenue.
At December 31, 2021, cash and cash equivalents were $136.0 million, total assets $187.5 million, and total liabilities $75.2 million. Current assets were $154.4 million versus current liabilities of $54.3 million. Deferred revenue was $29.5 million. Long-term debt was $10.0 million, outstanding under a $50 million SVB revolving facility; the company reported compliance with its covenants. Capital-lease obligations totaled $15.0 million.
Operating, investing, and financing cash flows were $(20.4) million, $(9.8) million, and $110.5 million, respectively. The financing inflow primarily reflected the November 2021 IPO. The filing reports $111.6 million of IPO proceeds net of underwriting discounts in the financial statements and also cites $107.6 million after underwriting discounts and estimated offering expenses; investors should reconcile these figures against the IPO disclosures.
Material changes versus FY2020
- Revenue increased 45%, while subscription locations rose 29%, from 18,539 to 23,831. The company reported more than 22,000 customers in the U.S. and Canada.
- Dollar-based net retention improved to 103% from 102%; dollar-based gross retention improved to 94% from 91%.
- Gross margin remained 57%, but operating expenses increased 38%, led by sales and marketing, research and development, and general and administrative spending. The net loss widened by $11.3 million.
- Cash from financing shifted from a $5.2 million use in 2020 to a $110.5 million source in 2021, principally due to the IPO. Preferred shares converted to common stock in connection with the offering.
- The nationwide installation program was phased out during the second half of 2021; customers thereafter generally engaged independent installers.
Outlook, commentary, risks, and unusual items
- Outlook: The filing gives no specific revenue or earnings guidance. Management expects continued investment and operating losses and negative operating cash flows may continue. It expects sales and marketing expense to remain relatively consistent as a share of revenue in 2022, with that share expected to decline over time; R&D and general and administrative expenses are also expected to decline as percentages of revenue over time.
- COVID-19: Management said the pandemic did not materially harm FY2021 revenue or results, but trade-show disruption and the Omicron variant affected lead generation, sales, and installation activity. Future effects on SMB customers and demand remain uncertain.
- Operating risks: The company has a history of losses, relies largely on SMB customers with many monthly subscriptions, and faces customer-retention, hiring and turnover, competition, technology and service-availability, third-party supplier, and integration-partner risks. Dependence on Google Cloud Platform and Stripe, including for payment processing, is highlighted.
- Controls: Management concluded disclosure controls were ineffective at year-end because material weaknesses in internal control over financial reporting remained unremediated. Prior-period misstatements related to contract-cost capitalization and option valuation had been corrected; no FY2021 misstatements from the weaknesses were noted. Remediation was ongoing.
- Commitments and contingencies: Future operating-lease payments totaled $65.5 million and non-cancellable purchase commitments totaled $13.3 million. The company reported no material legal proceedings at year-end and no material accrued liability for indemnification obligations.
- Other notable items: FY2021 equity-based compensation was $14.1 million, including $3.4 million related to secondary share sales. The company reported an accumulated deficit of $181.9 million. The filing identifies an estimated $46–$50 million of additional operating-lease right-of-use assets and $50–$54 million of lease liabilities expected on adoption of lease accounting in 2022.
Most important facts for investors to verify
- Reconcile reported IPO proceeds and net cash raised, including underwriting discounts and offering costs.
- Track remediation and testing of the material weaknesses in financial reporting controls.
- Assess whether revenue growth, retention, and customer expansion can offset rising operating costs and continued losses.
- Monitor cash burn, liquidity, SVB facility availability and covenant requirements, and scheduled lease and capital-lease payments.
- Review subscription churn and payment-processing adoption, alongside exposure to SMB conditions, COVID-related disruption, key suppliers, and cloud-service availability.