Weave Communications Q4 2024 Earnings Report

Weave Communications EPS Results

• Actual EPS: -$0.09
• Consensus EPS: $0.03
• Beat/Miss: Missed by -$0.12
• One Year Ago EPS: N/A

Weave Communications Revenue Results

• Actual Revenue: $54.17 million
• Expected Revenue: $53.23 million
• Beat/Miss: Beat by +$941.00 thousand
• YoY Revenue Growth: N/A

Weave Communications Announcement Details

• Quarter: Q4 2024
• Date: 2/20/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 20, 2025
• Conference Call Time: 4:30PM ET

Weave Communications (NYSE:WEAV) provides a customer experience and payments software platform in the United States and Canada. Its platform enables small and medium-sized healthcare businesses to maximize the value of their patient interactions and minimize the time and effort spent on manual or mundane tasks. The company's products include Unified Phone Number; Customized Phone System, a smarter phone system to identify whether incoming calls are from new or current patients, provide information at every call, and manages heavy call times; Softphones to make and receive calls from anywhere with an internet connection; Text Messaging to communicate with patients; Missed Call Text to take action in real time upon notification of a missed call; Missed Text Auto-Reply; Team Chat, a group messaging solution that helps practitioners and their staff communicate with each other from their work stations; and Weave Mobile App; It also offers Weave Reviews and Respond Assistant to request, collect, monitor, and respond to reviews; Weave Email Marketing and Email Assistant; Text Connect to interact with their existing and potential patients online directly through their websites; Weave Payments, a payment processing solution; Practice Analytics provides real-time data on patient retention, appointment scheduling, treatment acceptance rates, and revenue generation; and Call Intelligence. In addition, the company provides Digital Forms to collect patient information; Insurance Verification that provides patient insurance plan details; and Scheduling to send automatic scheduling reminders through text message. It serves customers in dental, optometry, veterinary, medical, plastic surgery, physical therapy, medical spa, and other medical specialty industries. The company was formerly known as Recall Solutions, LLC and changed its name to Weave Communications, Inc. in October 2015. Weave Communications, Inc. was founded in 2008 and is headquartered in Lehi, Utah.

Weave Communications Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the Weed Communications Q4 and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

[Operator]

It is

[Operator]

now my pleasure to introduce our host, Mark McReynolds, Head of Investor Relations. Thank you, Mark. You may begin.

[Mark McReynolds, Head Of Investor Relations at Weave Communications]

Thank you, Matt. Good afternoon, and welcome to Weave's fourth quarter and fiscal year twenty twenty four earnings call. With me on today's call are Brett White, CEO Alan Taylor, CFO and Jason Christiansen, VP of Finance. During the course of this conference call, we will make forward looking statements regarding the anticipated performance of

[Mark McReynolds, Head Of Investor Relations at Weave Communications]

our business. These forward looking statements are based

[Mark McReynolds, Head Of Investor Relations at Weave Communications]

on management's current views and expectations to tell certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings. We disclaim to any obligation to update or revise any forward looking statements. Further, on today's call, we will discuss certain non GAAP metrics that we believe aid the understanding of our financial results. And as otherwise noted, all numbers we talk about today will be on a non GAAP basis. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and in Exhibit two, the Form eight K furnished with the S

[Mark McReynolds, Head Of Investor Relations at Weave Communications]

and P before this call,

[Mark McReynolds, Head Of Investor Relations at Weave Communications]

as well as the earnings presentation our earnings on our Investor Relations website at investors.gitweap.com. And with that, I will now turn the call over to Jack.

[Brett White, CEO at Weave Communications]

Thank you, Mark, and thanks to everyone joining us today. 2024 was a year of remarkable progress and transformation for Weave. I am excited to share key financial and strategic highlights from the past year, as well as our vision for 2025. We've exist to create better healthcare experiences for patients and the practices that serve. Our goal is to make every interaction with a healthcare provider simple, seamless and positive.

[Brett White, CEO at Weave Communications]

For SMB healthcare practitioners, managing a small healthcare business while delivering quality patient care is challenging. We've streamlined operations making it easier for providers to focus on what matters most, caring for their patients. Our vision is to elevate the patient experience through a unified platform that improves business operation, enabling healthcare professionals to focus on patient care and achieve their dreams. Instead of a fragmented set of tools, we have offered an AI powered solution that integrates communication, scheduling, forms, payments and more. Through authorized and supported integrations with leading practice management systems, we unlock deeper functionality without adding complexity.

[Brett White, CEO at Weave Communications]

These integrations enable practices to automate and personalize patient communication, while embedding fintech solutions such as Text2Pay, Text to Pay online bill pay and payment plans directly into the communication workflows. By streamlining payment processes, we have accelerated collections, reduces write offs and improves practice profitability. Technology isn't just about efficiency and revenue growth for healthcare practices. It's a key factor in attracting and retaining top talent. 61% of practitioners agree that hiring high quality employees is easier when their practice leverages the latest office technology and almost 70% say that retaining great staff is significantly improved with modern tools in place.

[Brett White, CEO at Weave Communications]

Investing in the right technology enhances the workplace experience and reduces burnout. We've platform gives practices a competitive edge, not just in patient engagement and payments, but in building strong successful teams. By helping healthcare practices attract, engage and retain patients, we've enabled providers to focus on what they do best, delivering excellent care while growing their business. For many, their practices is a lifelong dream and Weave is here to help them achieve it by simplifying operations, reducing burdens and empowering them to build thriving patient centered practices. The dental, optometry, veterinary and specialty medical verticals we serve give us access to an addressable market that we believe exceeds $7,000,000,000 in The U.

[Brett White, CEO at Weave Communications]

S. Alone. Before Alan shares more details about our financial performance, I want to share a few key highlights. In Q4 'twenty four, we delivered another outstanding quarter with strong revenue growth of nearly 19% and continued improvements of both profitability and free cash flow. Gross margins improved again for the twelfth consecutive quarter, reaching 72.6%.

[Brett White, CEO at Weave Communications]

Q4 also marked our second consecutive quarter of positive operating income resulting in full year profitability for the first time in Wheaton's history. We achieved $6,100,000 in free cash flow in Q4, more than doubling year over year and representing a free cash flow margin of 11%. We produced free cash flow of $10,400,000 for the year, representing nearly 60 percent year over year growth. Finally, we are very pleased to have exceeded the high end of the revenue and profitability guidance we gave a year ago. These results underscore the strong market demand for our solutions, driven by the disciplined execution and a clear commitment to efficient growth.

[Brett White, CEO at Weave Communications]

At the start of 2024, we identified several key focus areas to open up and expand new vectors of growth, including expanding into specialty medical verticals, strengthening integration partnerships, enhancing solutions for multi location practices, elevating payments as a core component of our product and delivering AI powered innovations. Today, alongside our financial performance, I am excited to share the significant progress we have made in each of these areas. In 2024, we laid the groundwork for success and we are already seeing strong early traction. As a result, in 2025, we will be expanding these initiatives and investing to further accelerate momentum. Let me provide some additional color into each of these key growth factors.

[Brett White, CEO at Weave Communications]

In 2024, we identified a set of specialties within the SMB medical vertical as strategic expansion opportunities. Revenue from specialty medical practices led by primary care, med spa, plastic surgery and physical therapy grew at twice the rate of the overall company revenue in 2024. Specialty medical remained our fastest growing market segment in Q4 with more active medical locations added than in any previous period. Our momentum in this space was fueled by the release of new authorized integration with practice management software including eClinicalWorks, Athenahealth, Doctor. Chrono and NextGen expanding our reach and deepening the value of our platform.

[Brett White, CEO at Weave Communications]

The SMB medical market in The U. S. Spends 29 specialties representing an addressable opportunity that is more than twice the size of the dental, optometry and veterinary markets combined. With less than 1% market penetration in this vertical, we are only beginning to unlock its vast potential. We began 2025 with the launch of authorized integrations with PROMPT and Practice Fusion, further expanding our presence in the medical vertical.

[Brett White, CEO at Weave Communications]

At the same time, we are expanding our go to market efforts by broadening our target specialties, increasing demand generation investments and advancing sales enablement programs. These initiatives will accelerate our growth in high potential medical specialties and solidify Weave's position as a category leader while expanding our market share. Turning to partnerships, in early twenty twenty four, we launched a dedicated partnerships team led by an experienced executive to drive new growth opportunities. This investment expanded our serviceable market by over 100,000 locations through new and enhanced integrations across all of our vertical markets. Our strategic partnership with Patterson Dental announced in June significantly broadened our market reach through co marketing and co selling efforts resulting in increased bookings and payments revenue in the latter half of twenty twenty four.

[Brett White, CEO at Weave Communications]

Additionally, our commercial and integration partnership with PROMP, which launched this month, marks a major milestone in our expansion in the physical therapy market. Since launch, we have actively driven adoption through co marketing efforts, engaging both shared customers and new prospects. To build on this momentum, we are launching a dedicated partner sales team in 2025 that will work closely with our commercial partners. By embedding within their go to market strategy, we aim to deepen collaboration, increase engagement, drive referrals and accelerate revenue growth. Given the strong early success of our partnership strategy, we will continue to invest in 2025, strengthening both sales and marketing resources to further expand our market presence and accelerate growth.

[Brett White, CEO at Weave Communications]

Another key focus of our strategy this year is expanding our mid market customer base. In Q2 of twenty twenty four, we launched an enterprise solution on our platform to meet the unique needs of multi location practices. We added a proven sales leader in Q3 to accelerate our progress and in Q4, Affordable Care, the nation's largest dental service organization for tooth replacement shows Weave as its platform of record for patient engagement and payments. In 2025, we are expanding our mid market sales capacity and increasing our marketing investments. These efforts will deepen engagement and expansion in existing accounts, drive pipeline growth and position we for sustained success in this segment.

[Brett White, CEO at Weave Communications]

In line with our other focus areas, we are seeing strong traction in our payments business. In 2024, we appointed a General Manager of Payments and doubled the size of our operations and in engineering teams. We integrated payments with some of the largest practice management systems in our space, including Open Dental and Patterson's Eaglesoft and Fuse to deliver more streamlined communication and collection workflows for our customers. We enhanced our payments product suite with payment plans and payment reminders, which help improve case acceptance and reduce outstanding accounts receivables for our customers. Timely payments are crucial for the financial health of any practice and Weave Payments is designed to make that easier.

[Brett White, CEO at Weave Communications]

74% of practices believe they get paid faster by offering text to pay and 62% say it helps prevent overdue invoices. Affordable Care selected the Weave Enterprise solution to improve collections and reduce write offs with integrated digital payment solutions like Text to Pay. By leveraging mobile terminals, flexible payment options and embedding payments into patient communication workflows, affordable care practices using leave have seen significant revenue cycle management improvements. In 2025, payments will be a core element of our product and go to market strategy. Payments are now seamlessly integrated into our initial sale, reducing time to value for our customers.

[Brett White, CEO at Weave Communications]

We are also investing in dedicated payments team focused on adoption and increasing usage within our customer base. We believe that these resources will result in a scalable resilient payments business that is well positioned to drive continued growth in the coming years. Another important aspect of our strategy is AI. Last year and last year, we made meaningful strides in this area. We launched our AI Power Platform for both single and multi location practices.

[Brett White, CEO at Weave Communications]

Weave AI is embedded throughout our platform to help streamline communications between a practice and its patients through review responses, email marketing creation, message tagging and prioritization and voicemail transcriptions. In Q4, we announced our AI powered call intelligence product. This revolutionary technology transforms how healthcare practices analyze and leverage call data, enabling them to elevate patient experiences, boost operational efficiencies and unlock new revenue streams. 88% of practices say technology is crucial to delivering a great patient experience. In 2025, we will continue advancing AI powered solutions to transform patient engagement and optimize complex practice operations.

[Brett White, CEO at Weave Communications]

By automating workflows and enhancing communication, Weave is leading the way in intelligent, automated healthcare solutions, making our platform an essential tool for the modern healthcare practice. In summary, in 2024, we laid the foundation for expansion, achieving early success across multiple growth areas. In 2025, we will continue making disciplined strategic investments where we see the greatest traction we gained in 2024 reinforces our confidence that these investments will strengthen our market leadership and unlock new revenue streams. With a strong team, a clear vision and proven ability to execute, Weave is well positioned to accelerate growth and drive long term success. Finally, Weave continued to earn recognition for our dedication to delivering exceptional customer experiences and the outstanding performance of our team and our platform.

[Brett White, CEO at Weave Communications]

In G2's Winter twenty twenty five report, we have ranked first of 23 categories and was once again named the leader in the grid for patient relationship management. We was also selected as an Inc. Power Partner Award winner. We are committed to fostering an exceptional workplace and We was named a Top Workplaces Culture Excellence winner in 2024 for innovation, employee appreciation, employee well-being, leadership and compensation benefits. In closing, I am deeply proud of the Weave team's accomplishments over the past year.

[Brett White, CEO at Weave Communications]

We achieved robust top line growth, advanced profitability and introduced groundbreaking products that address the evolving needs of our customers. These results highlight our unwavering focus on delivering value and driving innovation. As I sit here today, I am more confident in our opportunities and outcomes than I was just twelve months ago. A heartfelt thank you to our customers, partners, team members and shareholders for their continued trust and support. Before I turn the call over, I'd like to take a moment to address the announcement we made earlier today.

[Brett White, CEO at Weave Communications]

Our Chief Financial Officer, Alan Taylor, will be retiring at the end of this quarter. As part of a planned succession, Jason Christensen, Weave's Vice President of Finance will be replacing Alan as Weave's new Chief Financial Officer and will join the executive team upon Alan's retirement. I would like to thank Alan for his significant contributions to the company. During his nine years at Weave, he built our finance function and guided Weave along the journey from start up to successful Pampersley public company. I want to express my gratitude for his partnership and for his commitment to ensuring smooth transition before he embarks on his well deserved retirement.

[Brett White, CEO at Weave Communications]

I have had the privilege of working closely with Jason throughout his four year tenure at Weave. His extensive experience in our business, understanding of our strategy and deep insights into our customers make him the ideal successor. Having personally been and served as the CFO for over twenty years, I'm confident in Jason's ability to continue to scale lead and drive continued growth and performance for many years to come. With that, I'll turn the call over to Adam.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Thanks, Brad, and good afternoon, everyone. It's been a great privilege to serve as the CFO that we've for the last nine years and to work with Section Credit team. I'm looking forward to the next stage in my life and I have enormous confidence in Jason as he takes the reins as CFO. Jason has extended finance experience and leadership for integral to our IPO and last few years business transformation group. In addition to leading financial planning and analysis, Jason has played a central role in driving strategic corporate initiatives, including business technology and business intelligence and developing our payments business strategy in advance of hiring certificate of General Manager.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Jason's deep understanding of leads is aligned with our mission and is the embodiment of our core values make him well suited for this role. Jason will join us for Q and A after my prepared remarks. Starting with Q4, we had an excellent quarter and continue to execute well across the board. In Q4, we delivered revenue of $54,200,000 reflecting nearly 19% growth year over year, exceeding midpoint of our guidance by $1,100,000 or 2% fee. Revenue growth was driven by new customer acquisitions, payments, up sales and ongoing momentum in our specialty medical verticals, which continues to grow rapidly.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Notable successes were achieved among the primary care, med spa, plastic surgery and physical therapy verticals. Our net revenue retention rate is 98% in Q4, up from 95% last year. This reflects positive contributions from AIMS customers and price adjustments for additional functionality made to select customer cohorts and products throughout 2024. Growth revenue retention or GRR remained strong and ramped to 91% in Q4, which is a minor decrease of 20 basis points from Q3 twenty twenty four and thirty basis points from a year ago. Our GRR has consistently reached between 9194% over the past four years, positioning us among the top performers in SMB's potential.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Turning to operating results, I'll be referring to non GAAP figures unless otherwise stated. In Q4, gross margin improved 72.6% representing a two ninety basis point increase year over year and our twelfth quarter of sequential improvement. Our total operating expenses as a percent of revenue improved to 69% this quarter, down from 73% in Q4 of twenty twenty three, reflecting disciplined cost management and operational efficiencies. We saw the biggest improvement in general and administrative expenses, which were $9,300,000 or 17% revenue, down from 19% revenue last year. Sales and marketing expenses came in at $20,000,000 or 37% revenue, a slight decrease from 38% in the same period last year.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Research and development expenses for the quarter totaled $8,300,000 representing 15% of revenue down from 16% of revenue in the year ago. These improvements highlight focus on efficiency and productivity. In Q4, we achieved our second consecutive quarter of non GAAP operating income with 1,800,000 of profit, a $3,500,000 improvement compared to last year and $800,000 higher than the top end of our guidance. The corresponding operating income margin of 3.3% is a significant improvement in the operating loss margin of 3.8 last year. Our net income was $2,400,000 or $0.03 per share in the fourth quarter based on 72,900,000.0 weighted average shares outstanding, reflecting a $3,200,000 improvement year over year.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Adjusted EBITDA for Q4 was $2,600,000 improving by $3,400,000 year over year due to revenue growth and operating efficiencies. Turning to the balance sheet and cash flow, we ended the year with $99,100,000 in cash and short term investments, up from $98,200,000 last quarter. Cash flow generated from operations in Q4 was $6,700,000 a $2,900,000 improvement year over year. Free cash flow was $6,100,000 in the fourth quarter, representing year over year growth of 109%. We're particularly pleased with the profitability and free cash flow progress that we made in 2024.

[Alan Taylor, Chief Financial Officer at Weave Communications]

We anticipate operating income and free cash flow will remain positive for the full year 2025. So Q1 will likely show negative free cash flow due to the timing of the payout of annual employee bonuses and certain one time releases. Before reviewing our guidance, I'll provide a brief recap of the full year results. In 2024, total revenue grew 20% to $204,300,000 The script entertainment revenue grew 21%, up from 19% last year. Our gross margin improved to 71.9

[Alan Taylor, Chief Financial Officer at Weave Communications]

a

[Alan Taylor, Chief Financial Officer at Weave Communications]

a significant improvement of an 86.8% margin in 2023. We made substantial progress on free cash flow in the year having generated $10,400,000 up from $6,500,000 last year. We ended the year with nearly 35,000 customer locations on our platform, landed at 34,997, up 13% year over year. We are pleased with our progress this year and would like to thank all of our team members and we, our customers and partners for their contributions throughout the year. I'd like to provide some color regarding outlook for 2025.

[Alan Taylor, Chief Financial Officer at Weave Communications]

As we outlined in 2024, we continuously refine our pricing strategy to align with market dynamics and business objectives. While we will continue to make adjustments as necessary, we do not anticipate the same magnitude of price changes in 2025 as we implemented in 2024. The most significant pricing update occurred in Q2 of twenty twenty, making Q2 our top zero year comparison of 2025 as we lap the effects of that cohort. However, excluding the impact of these adjustments, we anticipate growth in our core business in 2025 to exceed 2020. As Brett mentioned, we are investing in payments and AI to deliver innovative workflow based solutions, which we believe will unlock greater lifetime value and expand wallet share in the next few years.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Additionally, in 2024, we launched a new platform, secured some transformative partnerships and made great strides in our mid market business. We are still in the early stages of these opportunities and we're encouraged by the green shoots we see, but we're not assuming significant contributions in the first half of twenty twenty five from these new vectors growth. On the expense side, 2025 will be the first year that we will be required to comply with Section four zero four of the Sarbanes Oxley Act. And as a result, we are expecting an increase in compliance and occupancies compared to 2024.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Getting more color on expenses

[Alan Taylor, Chief Financial Officer at Weave Communications]

and seasonal factors that result in a sequential increase in expenses in Q1, including the reset of payroll tax returns, benefits for use taking effect and the timing of the annual product fees, which are weighted more heavily in Q1. For the first quarter of twenty twenty five, we expect total revenue in the range of $54,000,000 to $55,000,000 and non GAAP operating income in the range of negative $700,000 positive $300,000 For the full year 2025, we expect total revenue to be in the range of $252,000,000 to $237,000,000 We expect the range for our full year 2025 non GAAP operating income to be from $2,000,000 to $6,000,000 We expect to have a weighted average share count approximately 75,900,000.0 shares for the full year. As we wrap things up in this final earnings calls we need to express our credit incredibly fortunate on the end to have been a part of the lead team for New York City. This last chapter of my business career, Sean, it was an opportunity to work with the founders of me. Brandon Rod, Jared, Clint Barrett, they are remarkable people and capable leaders and the success that we presently enjoy science its root in their vision and determination to build something extraordinary.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Brandon is one of the most serious and optimistic people I've ever met and I'm truly grateful for the opportunity he gave me to work with. Finance team is best in class, committed and delighted to work with them. The investors and board members are sharp and excited as well as being great friends and mentors. What we do is we do provide a part of our healthcare practitioners and their staff take care of people. Our people in our platform help

[Alan Taylor, Chief Financial Officer at Weave Communications]

them deliver extended experience for their patients.

[Alan Taylor, Chief Financial Officer at Weave Communications]

That's an important goal and it's been hugely rewarding to watch what we've basically a weak team is starting to realize. We've been able to tap into a market with great potential, the greatest portion of which is still ahead. As for me, retirement means I can look forward to spending more time with my sweetheart, Paula, who like every family member loved one of those who work with me make their own special contributions to our success through their love, sacrifice, patience and support. I'm grateful to Paula and to the extended we family were such an important part of making it all happen. Paul and I look forward to spending more time together with our 16 grandchildren, so I'm fairly confident on plenty to keep you busy.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Brett and his great management team that is in place will not miss a beat if we're joined by Jason, who is already 100% because they have witnessed its capacity and performance for four years. Looking ahead, I'm very confident that we will continue to capitalize on new opportunities because the entire organization is passionate about the mission and will be disciplined in executing. We use exceptional wealth to position to grow and succeed in years to come. With that, I'll turn the call over to the operator for Q

[Operator]

Great. Thank you. At this time, we will be conducting a question and answer session. First question here is from Alex Sklar from Raymond James. Please go ahead.

[Alexander Sklar, Vice President at Raymond James Financial]

Great. Thank you. Alan, congratulations on the retirement and Jason on the new role.

[Alexander Sklar, Vice President at Raymond James Financial]

First question for me is

[Alexander Sklar, Vice President at Raymond James Financial]

just on the 2025 guide. It implies kind of a step back in the rule of framework. I know we saw something similar with how you approach the 2024 outlook, but could you just provide some more color on what you're factoring from an incremental investment perspective and when we could expect those to contribute to growth?

[Alan Taylor, Chief Financial Officer at Weave Communications]

Alex, thanks. Hey, I'll start. So we made it clear last year, this year and going forward that our guidance is going to be towards growth. And so the investment profile with all of the things that we have in terms of the partnerships, the new markets we're going into, especially medical markets, our investments in AI, those are the areas where we will continue to invest so that we can lay the groundwork for just continuing to grow. And so that's I think fairly consistent with what we've been saying all along in terms of the way that we'll plan on going forward with growth.

[Brett White, CEO at Weave Communications]

Yes. And Alex, maybe I'll add to that. So I know the word investment can be a scary word sometimes when giving guidance. So let me just give a little color. In each of these vectors of growth where we're really starting to see the green shoots growing, in order to really capture the opportunity to celebrate them, each of them needs a team.

[Brett White, CEO at Weave Communications]

And so instead of having the existing team turn out work on partnerships or work on payments, we're actually setting up dedicated teams. They're small teams to get us started and to grow. So we're not going crazy. We're just making very targeted small team investments in each one of these growth sectors to really get the kind of traction that we think we can. But these are really important multi year growth opportunities.

[Brett White, CEO at Weave Communications]

And so we're seeding those now with some teams to really get them going. And we mentioned we're going to be more deliver more profit next year than we did this year. We're going to see growth accelerate in the second half. So don't be scared by the investment words. It's just a few teams, but we're levering those up this quarter to really hit the end of the year to hit the second half of the year at Stride.

[Alexander Sklar, Vice President at Raymond James Financial]

Okay. Thank you both for that color. Just one maybe follow-up then on one of those growth factors payments. So you've had a new head of payments in place now. It's top priority, you're talking about seeding more of the team there.

[Alexander Sklar, Vice President at Raymond James Financial]

Can you just kind of update us on where that solution stands in terms of how accretive it's been to growth? And just given some of the learnings from Patterson, how do you view the payments opportunity for 2025 versus 2024?

[Brett White, CEO at Weave Communications]

Yes. So we're the key for us for payments is getting the workflow payments integrated into the office workflow. And so much of this year was hiring ahead of payments. Actually Jason was our acting head of payments for the first half of the year. And then we hired new head of payments and they've really been assembling the team, put together the risk team.

[Brett White, CEO at Weave Communications]

We've doubled the size of the engineering. We've built in some new integration flows. We're working with ACI to bring their payments over to our platform. So I think we've got all the pieces in place and now the rest of the work really is building out the workflows. And then the other major change we've made this year is we've changed the sales compensation model.

[Brett White, CEO at Weave Communications]

So starting January, all of our sales account executives now have a payments number. They all get paid on closing payments and they also get paid on payment residuals. So we've changed the go to market model, we've changed the sales model, we've got many of the integrations done, there's still work to be done. I think we'll be working on the workflow for quite a while, but we make incremental improvements there. We're getting traction with new ads, We're getting traction with partners.

[Brett White, CEO at Weave Communications]

So I would say everything is proceeding nicely and it will definitely continue to have an accretive effect in 'twenty five for both our growth and our margins.

[Alexander Sklar, Vice President at Raymond James Financial]

All right, great. Thank you both.

[Operator]

Our next question is from Brent Breslin from Piper Sandler. Please go ahead.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Good afternoon. Alan, it's been a pleasure working with you. Best of luck in retirement. 16 grandchildren sounds like you're going to remain pretty active. Jason, congrats on the new role, much deserved.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Maybe Alan will double click into the guide. If I go back, your initial guide for 2023 was 11%, actual was 19.9%, twenty twenty four initial guide was 15%, actual growth 19.9%. Are you trying to flag the 15% growth as some near term challenges you see to growing in 2025? Or should we think about the guide as kind of a typical conservative amount of conservatism in the guide this year? Just trying to parse that out if there's something specific you're trying to flag to us or if this is kind of the normal cadence of guidance you give?

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Thanks.

[Alan Taylor, Chief Financial Officer at Weave Communications]

So, Brent, first of all, thank you very much. It's been a pleasure to work with you as well. The only thing that I would point out is what we mentioned in the prepared remarks, which is that we do have a typical comp in Q2. But other than that, this is the same philosophy that we've been using. And so I appreciate that setup that is very germane to this conversation in terms of the way that we work with growth.

[Alan Taylor, Chief Financial Officer at Weave Communications]

The only other thing I would add is the green shoots that we've been talking about, about, these are pretty exciting things. I'm very convinced that we've got some opportunity for things that we will have a room of conviction about as this year progresses. But it's I would read it as status quo with respect to the philosophy behind the guide with one quarter of difficult compared to Q2.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Got it very clear. So the Q2 compares the only kind of thing kind of factoring in to the guide. That's super helpful color. You're clearly excited by these four, five new initiatives, specialty medical partner of payments. When do you think those can start to actually drive an acceleration in growth?

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

I ask because we've had good stabilization in growth the last two years. When do you think the green shoots could be material enough to drive actually an acceleration in top line?

[Brett White, CEO at Weave Communications]

Yes. Thank you, Brent. So in some areas, it's already happening, but you kind of can't see it yet. I think one of the points I wanted to make sure that came through is, as Alan mentioned, we're lapping our price adjustments from last year, which will happen in the final quarter in Q2. And we're not planning the same level of price adjustments in our '25 guide.

[Brett White, CEO at Weave Communications]

So absent the price increases, we believe our core business will grow faster in 2025 than in 2024. So I think there are already the number it's already showing up in the numbers in the business that we really look at. And then I think the second half is when we'll see market acceleration relative to these initiatives, definitely on the partnership front, definitely on the multi location front, definitely on the specialty medical front. So I think if we're able to screen through the pricing adjustments, I think you'd be seeing more of it now. But net of all that, I think you'll see

[Brett White, CEO at Weave Communications]

it mostly in the second half.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

That would be helpful. Thank you. Absolutely. Thank you.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Yes. Thank you.

[Operator]

Next question is from Parker Lien from Stifel. Please go ahead.

[Parker Lane, Managing Director - Equity Research at Stifel Financial Corp]

Hi guys. Thanks for taking the question. And Alan, I'll echo my congrats on the successful career environment here. Maybe the question is for Brett here. When you look at the multi location and enterprise motion, how much of that is aimed at largely the dental vertical where you have the biggest exposure and the history there versus the broader swath of the go to market motion?

[Brett White, CEO at Weave Communications]

I would say currently, if you look at our pipeline and our focus areas, it's primarily dental. And it's just because we've got the brand, we've got the product, we've got the partnerships with the big practice management software vendors and frankly that's where we get the most inbound. So we've totally changed the go to market motion, We've totally changed the team. We're going to be changing the events we go to. So it's a major rebuild of that function and it's off to a great start.

[Brett White, CEO at Weave Communications]

So kind of like the rest of our SMB business, we'll start in dental, get our traction there and then move into probably other areas of Douth Dental, Optometry and then Specialty Medical.

[Parker Lane, Managing Director - Equity Research at Stifel Financial Corp]

Understood. And then, Alan, I know you referenced the pricing increase last year impacting 2Q. When you look at some of the AI functionality you're bringing, things like call recording, etcetera, Why isn't there an opportunity to take more price on those feature sets that you're bringing to the market here in 2025? Or is that something you think about in longer terms? Or simply just customer success and differentiating the platform?

[Alan Taylor, Chief Financial Officer at Weave Communications]

Yes. Parker, I think there will be. The AI functionality that we're seeing, we have capability, call intelligence, for instance, is doing well. We're seeing that uplifted, but when we're talking about price, specifically just increasing the price on existing products or existing customers, I think we're just kind of separating that out a little bit. And so we will take advantage of just some pricing this year, just what we'll not be able to do, but that does not limit what we can do on the AI products and the other upsell products that are presently being sold and will be introduced.

[Jason Christiansen, VP of Finance at Weave Communications]

Can I add something to that?

[Jason Christiansen, VP of Finance at Weave Communications]

We also don't want to do price increases that inhibit our ability to move customers onto the new platform. But we are seeing greater adoption and higher NPS and

[Jason Christiansen, VP of Finance at Weave Communications]

better customer response from that platform.

[Jason Christiansen, VP of Finance at Weave Communications]

And we know that's something that we want to

[Jason Christiansen, VP of Finance at Weave Communications]

move customers towards. And so we're trying

[Jason Christiansen, VP of Finance at Weave Communications]

to be very careful and cautious in how we balance those two in 2025.

[Parker Lane, Managing Director - Equity Research at Stifel Financial Corp]

Understood. Thanks for the feedback guys.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Thanks, Mark.

[Operator]

Next question is from Tyler Radke from Citi. Please go ahead.

[Kylie Towbin, Senior Equity Research Associate at Citi]

Hi, this is Kylie on for Tyler. Congratulations echoing the congrats for Alan on your retirement and thanks again for the question. NRR uptick nicely through the year. I'd just love to hear any directional comments for expectations on NRR trends for FY 2025.

[Alan Taylor, Chief Financial Officer at Weave Communications]

So NRR will continue to be fed by improvements in payments. We obviously have some NRR improvement through pricing last year. Payments is probably the strongest level right now, but the upsells are doing well. And so we got a few vectors that can help us to improve the NRR. I think it's important for all of everybody on the call to make sure they understand we price our offering on a location basis.

[Alan Taylor, Chief Financial Officer at Weave Communications]

And so some of the NRR and the lander is going to be in the process that we go into. And so some of the NRR we take upfront as just the full features that these offices want and yet we still have the opportunity to continue to improve as we have penetration with our customer base and we continue to improve the opportunities for them to take advantage of these products like call intelligence and insurance verification and both texting and so on.

[Brett White, CEO at Weave Communications]

And just one point I would add, just clarification. We measure NRR on a location basis. So we don't measure it on a logo basis. So for example, as ACI has locations over time, that does not positively affect the ACI logo NRR per se. So I think that's a really important one to understand.

[Brett White, CEO at Weave Communications]

So an ACI location is the same as any other and they're measured year over year on the individual location basis, not as a number of locations added

[Brett White, CEO at Weave Communications]

by a logo.

[Kylie Towbin, Senior Equity Research Associate at Citi]

Makes total sense. And then if I could slip in one more, I'd love to hear any comments on demand trends in the quarter. And then keeping in mind that comment that you're more confident than twelve months ago, but just noticing that software revenue did have a slight de sell off of 3Q. What drove the revenue upside and the incremental confidence? Thank you.

[Brett White, CEO at Weave Communications]

Yes. So at the beginning of the year beginning of 2024, we laid out our plan and all of our focus areas. And throughout the year, we just kept adding really good leadership and they were tapping into these veins of opportunity and producing results. And so lots of green shoots, lots of green lights are coming out of our kind of strategic plan for 2024. So as I was preparing for our kickoff, our employee kickoff, I kind of looked at on the same stage twelve months later, how's the view from the stage And it was just a lot better because we have a lot more vectors to pursue.

[Brett White, CEO at Weave Communications]

And so really the question is how aggressively do we want to pursue them on an investment basis. So we're being measured in our investment. We're putting full teams behind each one of these opportunities and demand was terrific in Q4. And so you know, from my seat, things look pretty darn good.

[Operator]

And our next question is from Marc Chappell from Loop Capital Markets. Please go ahead.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Hi. Thank you for taking my question. Brett, and first of all, Alan, congrats on your retirement here. Question for you, Brett. I was wondering I appreciate your comments regarding your investment priorities in the coming year.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

With respect to the sales enablement initiatives to expand your presence in Specialty Medical, is that strategy to go deeper in the current, say, handful of sub segments that you currently play in? Or is the plan to maybe expand into other sub segments?

[Brett White, CEO at Weave Communications]

So kind of the way the model works is we look at demand, we look at product market fit and then we design our integration timing or integration rollout based on those factors. And so really where we really start getting traction in new verticals is when we build the integration. So we build our integration roadmap, we start rolling out integrations and then the go to market falls right behind that. And the concept of sales enablement is let's not try to make our old script and the old verticals work in the new verticals, let's actually make them very, very tailored, very pointed, so our sales teams get more efficient, more quickly. The previous question was, why the optimism?

[Brett White, CEO at Weave Communications]

A year ago, we had, we were looking for integrations to write. We were trying to get partners to sign up with us, so we can write the integration. Now we're exactly flipped. Now we have more partners who want to partner with us, us, more integration agreements signed than we have actually have the capacity to deliver. So we're actively hiring more on the engineering side, so we can meet the demand.

[Brett White, CEO at Weave Communications]

So it's identified the verticals that are the closest product market fit, build the integration, tailor the go to market motion to that integration or to that vertical and then unleash the teams.

[Mark Schappel, Managing Director at Loop Capital Markets LLC]

Great. Thank you. And then with respect to your AI products, specifically Assistant and Call Intelligence, just wondering if you could just provide some additional color on how you plan to actually monetize those products?

[Brett White, CEO at Weave Communications]

So currently, they are included in the top bundle, and then also we can sell them on upsell. So Call Intelligence is an upsell or it's an additional cost in the higher bundle. And I think the results we've seen recently is where our new sales are more biased towards the higher end bundle. We kind of have the standard good, better, best bundling and ASPs are coming up because our sales are more biased towards the higher bundle. So call intelligence is not a freebie.

[Brett White, CEO at Weave Communications]

Some of the other embedded AI technologies come with the new We've Experience platform, but that's one of the ways that we're able to deliver value and therefore get price on both the SMB segment, but really importantly on the multi market segment or multi location

[Brett White, CEO at Weave Communications]

segment.

[Alan Taylor, Chief Financial Officer at Weave Communications]

Great. Thank you.

[Operator]

This concludes the question and answer session. I'd like to turn the floor back to Brett White for any closing comments.

[Brett White, CEO at Weave Communications]

Well, another big thank you to Alan for all his years of commitment and just being a great partner. And thanks to all of you for joining the call and thanks again to the entire WTI team.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

Participants

Executives

• Mark McReynolds, Head Of Investor Relations
• Brett White, CEO
• Alan Taylor, Chief Financial Officer
• Jason Christiansen, VP of Finance

Analysts

• Alexander Sklar, Vice President at Raymond James Financial
• Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies
• Parker Lane, Managing Director - Equity Research at Stifel Financial Corp
• Kylie Towbin, Senior Equity Research Associate at Citi
• Mark Schappel, Managing Director at Loop Capital Markets LLC