Weave Communications, Inc. Q1 FY2025 earnings call

• Acquisition of TrueLark: Weave signed a definitive agreement to acquire TrueLark, an agentic AI-powered receptionist and front-desk automation platform. This acquisition expands the addressable market to over $10 billion in the U.S., complements Weave's platform, brings AI expertise, and offers cross-sell opportunities within Weave's existing customer base.
• Q1 Performance: Q1 revenue of $55.8 million exceeded the midpoint of guidance, with 18.3% year-over-year growth. Gross profit improved to $40.2 million, up over $7 million year-over-year. Strong performance in Specialty Medical, mid-market, and payments. Launched three new integrations in Q1, increasing the integrated market by approximately 60,000 locations.
• New Hires: Abhi Sharma joined as Senior Vice President of Engineering, bringing deep expertise in building and scaling high-performing engineering teams and delivering AI-driven innovation.

In Q1 2025, Weave reported revenue of $55.8 million, representing 18.3% year-over-year growth. The gross margin was 72.1%, an improvement of 170 basis points year-over-year. The Specialty Medical vertical was a strong growth driver, with new customer acquisition in this segment outpacing others. Payments revenue grew at more than twice the rate of total revenue, contributing significantly to the overall growth. The revenue was broad-based, led by new customer acquisition and payments revenue.

• Q2 2025 revenue guidance: $57.3 million to $58.3 million.
• Full-year 2025 revenue guidance raised to $236.8 million to $239.8 million, including an estimate of approximately $2.5 million of TrueLark revenue. TrueLark is expected to be accretive to the bottom-line in 2026.
• The transaction to acquire TrueLark is anticipated to close in Q2, with investments in R&D and sales and marketing to accelerate integration and growth.

• Trade policy and tariffs: Proactively managing hardware stock to navigate trade barriers and mitigate potential tariff effects.
• Economic uncertainties: Potential impact on elective or discretionary spend verticals, though the majority of Weave's customers are not significantly affected by macroeconomic downturns at this point.

Q: Alex Sklar with Raymond James asked about TrueLark's incremental value to existing bundles and cross-sell opportunity.

A: Brett White responded that there are joint customers, TrueLark brings revenue through appointment booking and lead conversion, and there's a strong cross-sell opportunity to single locations as TrueLark primarily sold to large DSOs previously.

Q: Brent Bracelin with Piper Sandler inquired about pipeline resilience.

A: Brett White stated that the pipeline remains resilient, with leading indicators like lead flow and inbound interest holding steady, and TrueLark integration enhances the pitch and market space.

Q: Parker Lane with Stifel asked about TrueLark's competitive landscape and cross-selling sub-verticals.

A: Brett White mentioned that TrueLark has a proven customer base with strong ROI, and there's opportunity to cross-sell into sub-verticals like MedSpa and fitness where TrueLark has traction.

Q: Michael Funk with Bank of America asked about vertical penetration and economic sensitivity.

A: Jason Christiansen replied that Weave is less than 15% penetrated in all verticals, with dental and optometry having higher saturation. Elective or discretionary spend verticals could be affected, but most customers are not significantly impacted.

Q: Unidentified Analyst asked about payment solution attach rate.

A: Brett White and Jason Christiansen noted that payment attach rate is less than 10% but growing faster than overall revenue, with significant room for growth and TrueLark integration enhancing payments automation