Weave Communications, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied filing does not provide a separate standalone Q4 income statement.
Business context
Weave sells an integrated communications, customer-engagement, and payments platform to small and medium-sized healthcare practices, mainly in the United States and Canada. At year-end it served more than 28,000 customers and had 31,002 subscribed locations, up from 27,193 locations in 2022.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $170.5 million | $142.1 million |
| Revenue growth | 20% | — |
| Gross profit / margin | $116.1 million / 68% | $88.8 million / 63% |
| Operating loss | $34.4 million | $49.7 million |
| Net loss | $31.0 million | $49.7 million |
| Adjusted EBITDA (non-GAAP) | $(7.8) million | $(27.2) million |
| Cash from operating activities | $10.2 million | $(12.8) million |
| Free cash flow (non-GAAP) | $6.5 million | $(15.9) million |
Recurring subscription and payment-processing revenue was $162.7 million, or 92% of total revenue, compared with 95% in 2022. Subscription and payment-processing gross margin improved to 77% from 74%. At year-end, cash and cash equivalents were $50.8 million and short-term investments were $58.1 million. The company reported no outstanding borrowings on its $50 million revolving credit facility; $50 million remained available. Total finance lease liabilities were $12.6 million, and operating lease liabilities were $46.9 million.
Material changes versus FY2022
- Revenue increased $28.4 million (20%); management attributed about $19.1 million of the increase to new customer locations and $9.2 million to existing locations.
- Gross margin rose five percentage points, supported by a more mature customer mix with more fully depreciated phone hardware and lower third-party and data-related costs.
- Net loss narrowed by $18.7 million, while operating cash flow improved by $23.0 million, turning positive.
- Dollar-based net retention declined to 95% from 99%; gross retention declined to 92% from 94%. Locations increased by 3,809.
- Sales and marketing expense rose 8% to $70.8 million; research and development rose 11% to $34.0 million; general and administrative expense rose 8% to $45.7 million. Stock-based compensation increased to $22.8 million from $18.8 million.
Outlook, commentary, risks and unusual items
- Management expects sales and marketing expense to increase in dollars but decrease as a percentage of revenue in 2024. R&D and general and administrative expenses are expected to rise in dollars and decline or remain broadly stable as a percentage of revenue over time. The filing gives no numerical revenue or earnings guidance.
- Management believes cash, investments, available credit, and expected operating cash flows will meet working-capital and capital-expenditure needs for at least 12 months. It also cautions that future losses or negative operating cash flows remain possible.
- Key risks include SMB customer sensitivity to economic conditions, customer churn and retention, competition and pricing pressure, reliance on third-party integrations and suppliers, dependence on Google Cloud Platform and Stripe, cybersecurity and privacy obligations, and communications regulation.
- Other income included realized gains on short-term investments and $0.7 million of office sublease income. The company repaid its $10 million SVB facility balance in November 2023. No legal proceedings were disclosed as expected to have a material adverse effect.
- The company reported effective disclosure controls and internal control over financial reporting at year-end. The auditor issued an unqualified opinion on the financial statements; it did not attest to internal control, consistent with the company’s emerging-growth-company exemption.
Investor verification points
- Track whether declining net and gross retention stabilize or weaken further, and whether customer growth translates into durable revenue expansion.
- Assess progress toward profitability: the company remained GAAP-loss-making, and adjusted EBITDA was still negative despite improvement.
- Reconcile cash generation with working-capital needs, including deferred contract costs, lease payments, and the effect of stock-based compensation.
- Monitor gross-margin trends in payments and hardware, including transaction mix and third-party processing, network, and cloud costs.
- Review credit-facility covenants, available borrowing capacity, and significant lease and purchase commitments; confirm the company maintains adequate liquidity.