Weave munications(US:WEAV)2024-05-09 20:09PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2024, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with accompanying notes Condensed Consolidated Balance Sheets As of March 31, 2024, the company reported total assets of $190.2 million, a decrease from $201.0 million at year-end 2023, with total liabilities at $116.7 million and stockholders' equity at $73.4 million, alongside a significant decrease in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $30,609 | $50,756 | | Total current assets | $119,722 | $129,778 | | TOTAL ASSETS | $190,174 | $201,012 | | Liabilities & Equity | | | | Total current liabilities | $68,360 | $72,853 | | Total liabilities | $116,738 | $122,055 | | Total stockholders' equity | $73,436 | $78,957 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $190,174 | $201,012 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2024, Weave generated $47.2 million in revenue, a 19.2% increase year-over-year, and reported a net loss of $7.2 million, an improvement from the prior year Condensed Consolidated Statements of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Revenue | $47,173 | $39,565 | | Gross profit | $32,987 | $26,534 | | Loss from operations | $(8,155) | $(8,518) | | Net loss | $(7,203) | $(7,859) | | Net loss per share - basic and diluted | $(0.10) | $(0.12) | Condensed Consolidated Statements of Comprehensive Loss Total comprehensive loss for Q1 2024 was $7.5 million, compared to $7.9 million in Q1 2023, primarily driven by net loss and other comprehensive losses from foreign currency translation and unrealized investment losses Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net loss | $(7,203) | $(7,859) | | Other comprehensive loss | $(300) | $(16) | | Total comprehensive loss | $(7,503) | $(7,875) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $79.0 million at year-end 2023 to $73.4 million as of March 31, 2024, primarily due to net loss and equity award settlements, partially offset by stock-based compensation - Total stockholders' equity decreased from $78,957 thousand at December 31, 2023, to $73,436 thousand at March 31, 202422 - The main drivers of the change were the net loss of $7.2 million and $6.1 million for common stock withheld for taxes, offset by $6.8 million in stock-based compensation22 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $19.7 million in Q1 2024, a significant negative shift from the prior year, primarily due to increased accounts receivable and decreased accrued liabilities, while investing activities provided $6.1 million and financing activities used $6.6 million Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(19,701) | $1,541 | | Net cash provided by (used in) investing activities | $6,131 | $(5,439) | | Net cash used in financing activities | $(6,577) | $(2,018) | | Net decrease in cash and cash equivalents | $(20,147) | $(5,916) | Notes to the Condensed Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and financial statement components, including revenue disaggregation, the $50.0 million undrawn revolving line of credit, and $6.8 million in stock-based compensation expense for the quarter Disaggregation of Revenue (in thousands) | Revenue Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Subscription and payment processing | $45,092 | $37,692 | | Onboarding | $960 | $784 | | Hardware (embedded lease) | $1,121 | $1,089 | | Total revenue | $47,173 | $39,565 | - The company has a revolving line of credit with Silicon Valley Bank allowing for total borrowing capacity up to $50.0 million, with zero outstanding balance as of March 31, 20248485 Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Cost of revenue | $239 | $213 | | Sales and marketing | $1,151 | $964 | | Research and development | $1,898 | $930 | | General and administrative | $3,484 | $2,406 | | Total | $6,772 | $4,513 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 19% year-over-year revenue growth primarily to new customer acquisition, with gross margin improving to 70%, while reporting a negative free cash flow of $(20.5) million and an improved Adjusted EBITDA loss of $(0.4) million - Revenue increased by $7.6 million (19%) year-over-year, with 87% of the increase from new customers and 13% from existing customers147 - Gross margin improved from 67% to 70% year-over-year, driven by reduced third-party costs, fully depreciated phone hardware for more customers, and operational efficiencies148149 Key Business Metrics | Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Dollar-based net retention rate | 96% | 97% | | Dollar-based gross retention rate | 92% | 93% | Non-GAAP Financial Measures (in thousands) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Free cash flow | $(20,519) | $587 | | Adjusted EBITDA | $(358) | $(3,114) | - Free cash flow was negatively impacted by approximately $15.0 million due to a new billing system implementation deferring March billings, and by approximately $7.0 million due to the timing of annual bonus payouts158159 Quantitative and Qualitative Disclosures About Market Risk The company's exposure to market risk has not materially changed since December 31, 2023, with detailed information available in its Annual Report on Form 10-K regarding interest rate and foreign currency risks - As of March 31, 2024, the company's exposure to market risk has not changed materially since December 31, 2023186 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting identified during the quarter - Management, including the CEO and CFO, concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective187 - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting189 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, financial condition, or cash flows, though future litigation, particularly intellectual property, remains a possibility - The company is not presently a party to any legal proceedings that would be expected to have a material adverse effect on its business, results of operations, financial condition, or cash flows192 Risk Factors This section details numerous risks, including the company's history of losses, dependence on SMB customers, intense market competition, reliance on third-party providers, potential security breaches, and evolving regulatory compliance challenges - The company has a history of net losses, including $7.2 million for Q1 2024, and may not achieve or sustain profitability in the future211 - The business is highly dependent on attracting and retaining SMB customers, who are more susceptible to economic downturns and have higher failure rates201208 - The company faces significant competition from a fragmented market of point solutions and larger platform providers233 - There is substantial reliance on single-source or key third-party providers, including Stripe for Weave Payments and Google Cloud Platform (GCP) for cloud infrastructure, and any disruption could adversely affect business257266 - The business is subject to stringent and changing regulations, including HIPAA, TCPA, and various data privacy laws (e.g., CCPA/CPRA), and non-compliance could result in significant liability and reputational harm322334342 Other Information This section discloses that on March 6, 2024, Branden Neish, Chief Product and Technology Officer, adopted a Rule 10b5-1 trading plan for the potential sale of up to 100,000 shares - On March 6, 2024, Branden Neish, Chief Product and Technology Officer, adopted a Rule 10b5-1 trading plan for the sale of up to 100,000 shares402 Exhibits This section lists the exhibits filed with the Form 10-Q, including the amended loan and security agreement, CEO/CFO certifications, and financial statements formatted in Inline XBRL - The exhibits filed with the report include the amended loan and security agreement, CEO/CFO certifications (Rule 13a-14(a) and Section 1350), and financial statements in Inline XBRL format404