Weave Communications, Inc. (WEAV) Bundle
Understanding Weave Communications, Inc. (WEAV) Revenue Streams
Understanding Weave Communications, Inc.’s Revenue Streams
Weave Communications generates revenue primarily through a combination of subscription services and payment processing solutions, onboarding services, and hardware sales.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Growth (%) |
|---|---|---|---|
| Subscription and Payment Processing | $50,375 | $41,601 | 21.5% |
| Onboarding | $845 | $757 | 11.6% |
| Hardware | $1,166 | $1,186 | -1.7% |
Year-Over-Year Revenue Growth Rate
In Q3 2024, Weave Communications reported a total revenue of $52.4 million, which reflects a 20.3% increase compared to $43.5 million in Q3 2023. Over the first nine months of 2024, total revenue reached $150.1 million, up from $124.8 million in the same period of 2023, marking an increase of 20.2%.
Contribution of Different Business Segments to Overall Revenue
The subscription and payment processing segment contributed the largest share of revenue, accounting for approximately 96.3% of total revenue in Q3 2024. The onboarding services contributed about 1.6%, while hardware sales made up roughly 2.2% of total revenue.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Significant growth in the subscription and payment processing segment, driven by increased customer adoption and expansion of existing accounts.
- Onboarding revenue has shown steady growth, indicating a successful integration process for new customers.
- Hardware sales have slightly decreased, reflecting a potential shift in focus towards software-driven solutions rather than physical products.
Furthermore, the company achieved a Dollar-Based Net Retention Rate (NRR) of 98% as of September 30, 2024, indicating strong customer retention and expansion within existing accounts.
A Deep Dive into Weave Communications, Inc. (WEAV) Profitability
A Deep Dive into Weave Communications, Inc. (WEAV) Profitability
Gross Profit, Operating Profit, and Net Profit Margins
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenue | $52.4 million | $43.5 million | $150.1 million | $124.8 million |
| GAAP Gross Profit | $37.7 million | $29.9 million | $106.8 million | $84.5 million |
| GAAP Gross Margin | 72.0% | 68.7% | 71.2% | 67.7% |
| GAAP Operating Loss | $6.6 million | $8.0 million | $24.0 million | $26.4 million |
| GAAP Net Loss | $5.9 million | $7.1 million | $21.6 million | $24.0 million |
| Net Loss per Share | $0.08 | $0.10 | $0.30 | $0.36 |
Trends in Profitability Over Time
The company has shown a significant improvement in profitability metrics over the past year. The GAAP gross margin increased from 68.7% in Q3 2023 to 72.0% in Q3 2024. Additionally, the GAAP operating loss decreased from $8.0 million in Q3 2023 to $6.6 million in Q3 2024. This trend reflects enhanced operational efficiency and cost management strategies.
Comparison of Profitability Ratios with Industry Averages
As of Q3 2024, the company's GAAP gross margin of 72.0% exceeds the industry average of 65.0% for software companies. The GAAP operating loss margin of 12.7% is an improvement compared to the prior year and aligns closely with the industry average operating loss margin of 13.0%.
Analysis of Operational Efficiency
Operational efficiency has been a key focus, with total operating expenses rising to $44.4 million in Q3 2024 from $38.0 million in Q3 2023, primarily driven by increased investments in sales and marketing. However, the increase in revenue to $52.4 million from $43.5 million demonstrates effective cost management and revenue generation strategies.
Furthermore, the company's non-GAAP income from operations reached $1.4 million in Q3 2024, a significant turnaround from a loss of $1.8 million in Q3 2023, underscoring the impact of operational improvements.
Key Profitability Ratios
| Ratio | Q3 2024 | Q3 2023 |
|---|---|---|
| GAAP Gross Margin | 72.0% | 68.7% |
| Non-GAAP Gross Margin | 72.5% | 69.3% |
| GAAP Operating Margin | (12.7)% | (18.4)% |
| Non-GAAP Operating Margin | 2.7% | (4.2)% |
| GAAP Net Loss Margin | (11.2)% | (16.4)% |
| Non-GAAP Net Income Margin | 4.1% | (2.2)% |
Overall, the financial health of the company indicates an upward trend in profitability metrics, bolstered by strategic operational efficiency initiatives and revenue growth strategies. The improvements in gross margins and reductions in net losses are particularly noteworthy, positioning the company favorably within its industry sector.
Debt vs. Equity: How Weave Communications, Inc. (WEAV) Finances Its Growth
Debt vs. Equity: How Weave Communications Finances Its Growth
Overview of the company's debt levels
As of September 30, 2024, Weave Communications reported a total debt of approximately $123.2 million, which includes both current and non-current liabilities. The breakdown is as follows:
- Current portion of finance lease liabilities: $6.4 million
- Non-current finance lease liabilities: $6.2 million
- Operating lease liabilities (current): $4.1 million
- Non-current operating lease liabilities: $40.0 million
Debt-to-Equity Ratio
The debt-to-equity ratio for Weave Communications stands at approximately 1.79 as of September 30, 2024, calculated as total liabilities of $123.2 million divided by total stockholders' equity of $68.8 million. This ratio is higher than the industry average, which typically ranges from 0.5 to 1.5 for technology companies.
Recent debt issuances, credit ratings, or refinancing activity
In the third quarter of 2024, Weave Communications incurred an interest expense of $405,000. The company's current credit rating is not publicly disclosed, but it has maintained a consistent ability to meet its debt obligations, as evidenced by its positive non-GAAP operating income for the first time in its history. The company has not reported any new debt issuances or significant refinancing activities in the recent quarter.
Balancing Debt Financing and Equity Funding
Weave Communications has primarily relied on equity funding to support its growth, with $353.3 million in additional paid-in capital as of September 30, 2024. The company has utilized proceeds from stock option exercises totaling $550,000 in the third quarter of 2024. This reliance on equity funding has allowed Weave to maintain a lower debt level relative to its equity base, despite its high debt-to-equity ratio.
| Debt Type | Amount (in millions) |
|---|---|
| Current Finance Lease Liabilities | $6.4 |
| Non-current Finance Lease Liabilities | $6.2 |
| Operating Lease Liabilities (Current) | $4.1 |
| Non-current Operating Lease Liabilities | $40.0 |
| Total Debt | $123.2 |
| Total Stockholders' Equity | $68.8 |
| Debt-to-Equity Ratio | 1.79 |
Assessing Weave Communications, Inc. (WEAV) Liquidity
Assessing Weave Communications, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $122,517,000 | $76,939,000 | 1.60 |
Quick Ratio: The quick ratio is calculated as:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $114,153,000 | $76,939,000 | 1.48 |
Analysis of Working Capital Trends
Working Capital: The working capital for the third quarter of 2024 is:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $122,517,000 | $76,939,000 | $45,578,000 |
Cash Flow Statements Overview
Operating Cash Flow: For the three months ended September 30, 2024:
| Net Cash Provided by Operating Activities | Comparison to Previous Year |
|---|---|
| $4,500,000 | Up from $3,334,000 |
Investing Cash Flow: For the three months ended September 30, 2024:
| Net Cash Used in Investing Activities | Comparison to Previous Year |
|---|---|
| ($22,534,000) | Increased from ($10,583,000) |
Financing Cash Flow: For the three months ended September 30, 2024:
| Net Cash Used in Financing Activities | Comparison to Previous Year |
|---|---|
| ($5,034,000) | Compared to $4,769,000 |
Potential Liquidity Concerns or Strengths
Cash and Cash Equivalents: As of September 30, 2024, cash and cash equivalents total:
| Cash and Cash Equivalents |
|---|
| $51,103,000 |
Cash and Short-Term Investments: Combined, they amount to:
| Cash and Short-Term Investments |
|---|
| $98,158,000 |
Debt Obligations: Total liabilities as of September 30, 2024:
| Total Liabilities |
|---|
| $123,191,000 |
Net Loss: For the three months ended September 30, 2024:
| Net Loss |
|---|
| ($5,879,000) |
Is Weave Communications, Inc. (WEAV) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Weave Communications, Inc. is -13.33 based on the most recent GAAP net loss per share of $0.08 for Q3 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using total stockholders' equity of $68.836 million and total shares outstanding of 72.5 million, resulting in a P/B ratio of approximately 0.95.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value is estimated at $163.5 million with an EBITDA for the trailing twelve months of $2.25 million, leading to an EV/EBITDA ratio of approximately 72.67.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $2.90 and a high of $6.50. As of the latest trading session, the stock is priced at $3.50, reflecting a 23% decrease from its 52-week high.
Dividend Yield and Payout Ratios
Weave Communications does not currently pay a dividend, resulting in a dividend yield of 0%. The payout ratio is not applicable given the absence of dividends.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a hold rating with a target price of $4.00 per share, suggesting a 14.3% upside potential from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | -13.33 |
| P/B Ratio | 0.95 |
| EV/EBITDA Ratio | 72.67 |
| 52-Week Low | $2.90 |
| 52-Week High | $6.50 |
| Current Stock Price | $3.50 |
| Dividend Yield | 0% |
| Analyst Target Price | $4.00 |
Key Risks Facing Weave Communications, Inc. (WEAV)
Key Risks Facing Weave Communications, Inc.
Industry Competition: The competitive landscape in the healthcare software sector remains intense. Key competitors include established firms and emerging startups that offer similar services. The company's ability to maintain market share and customer loyalty is critical amid this competition.
Regulatory Changes: Changes in healthcare regulations can impact operational costs and compliance requirements. The company must stay abreast of evolving regulatory frameworks to avoid potential penalties and ensure continued operations.
Market Conditions: Economic downturns can affect healthcare spending, which may lead to reduced demand for the company’s products. Fluctuations in the economic environment can directly impact revenue growth and profitability.
Operational Risks
Service Interruptions: The company’s reliance on technology means that service outages can lead to customer dissatisfaction and loss of revenue. Operational disruptions can arise from system failures, cyberattacks, or natural disasters.
Customer Acquisition Costs: The company’s strategy relies heavily on attracting new clients. If customer acquisition costs rise significantly, it could erode profit margins. The current average customer acquisition cost is estimated at $2,500 per new client.
Financial Risks
Net Losses: The company reported a GAAP net loss of $5.9 million for the third quarter of 2024, a decrease from a net loss of $7.1 million in the same period of 2023. Accumulated deficit as of September 30, 2024, stands at $284.3 million.
Cash Flow Management: The company's free cash flow was $3.5 million in Q3 2024, up from $2.1 million in Q3 2023. However, ongoing investments in technology and customer acquisition could strain cash resources if revenues do not grow as expected.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| GAAP Net Loss | $5.9 million | $7.1 million |
| Non-GAAP Net Income | $2.1 million | $(1.0) million |
| Free Cash Flow | $3.5 million | $2.1 million |
| Cash and Cash Equivalents | $51.1 million | $63.3 million |
| Accumulated Deficit | $284.3 million | $262.7 million |
Strategic Risks
Market Awareness: The effectiveness of marketing strategies directly influences customer acquisition. Failure to enhance brand awareness could lead to stagnant growth, with the company reporting a Dollar-Based Net Retention Rate (NRR) of 98% as of September 30, 2024.
Product Development: The company’s ability to innovate and enhance its offerings is vital for maintaining competitiveness. Investments in R&D totaled $9.9 million in Q3 2024, but delays or failures in product launches could impair growth prospects.
Customer Retention: The company reported a Dollar-Based Gross Retention Rate (GRR) of 92%. High turnover rates among customers could adversely affect revenue stability.
Future Growth Prospects for Weave Communications, Inc. (WEAV)
Future Growth Prospects for Weave Communications, Inc.
Key Growth Drivers
The company is focusing on several key growth drivers, including:
- Product Innovations: The new AI-powered Weave platform is a significant advancement, integrating features like personalized response generation and automated task management.
- Market Expansions: The company is targeting small and medium-sized healthcare practices, which represent a substantial market segment.
- Acquisitions: Strategic acquisitions may enhance product offerings and customer reach, although specific acquisitions have not been disclosed.
Future Revenue Growth Projections and Earnings Estimates
For the fourth quarter of 2024, the company projects total revenue between $52.6 million and $53.6 million, contributing to a full-year revenue estimate of $202.7 million to $203.7 million.
Based on current performance trends, the company anticipates a year-over-year revenue growth rate of approximately 20.3%.
Strategic Initiatives and Partnerships
Recent initiatives include:
- Launch of the AI-powered Weave Assistant, enhancing customer interaction and engagement.
- Development of the Call Intelligence product, leveraging AI to extract actionable insights from call data.
Competitive Advantages
The company has established several competitive advantages:
- Strong Gross Margins: The GAAP gross margin was reported at 72.0%, up from 68.7% year-over-year.
- High Net Retention Rates: The Dollar-Based Net Retention Rate (NRR) was 98% as of September 30, 2024.
- Cash Position: Cash and cash equivalents plus short-term investments totaled $98.2 million.
| Financial Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue | $52.4 million | $43.5 million | +20.3% |
| GAAP Gross Margin | 72.0% | 68.7% | +330 basis points |
| Non-GAAP Income from Operations | $1.4 million | ($1.8 million) | Improvement of $3.2 million |
| Free Cash Flow | $3.5 million | $2.1 million | +66.7% |
These insights reflect the company's strategic positioning and its potential for future growth within the healthcare technology sector.
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Article updated on 8 Nov 2024
Resources:
- Weave Communications, Inc. (WEAV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Weave Communications, Inc. (WEAV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Weave Communications, Inc. (WEAV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.