Weave munications(WEAV) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Weave Communications, Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q1 2023 Item 1. Financial Statements (Unaudited) This section presents Weave Communications, Inc.'s unaudited condensed consolidated financial statements and detailed notes for Q1 2023 Condensed Consolidated Balance Sheets The balance sheet shows a slight decrease in total assets and stockholders' equity, with a minor increase in liabilities | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (vs Dec 31, 2022) | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------- | | Total Assets | $206,018 | $208,349 | $(2,331) | | Total Liabilities | $126,219 | $125,130 | $1,089 | | Total Stockholders' Equity | $79,799 | $83,219 | $(3,420) | Condensed Consolidated Statements of Operations The statement of operations shows significant revenue growth and improved gross profit, leading to a reduced net loss | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Revenue | $39,565 | $33,272 | +19.0% | | Cost of revenue | $13,031 | $13,753 | -5.2% | | Gross profit | $26,534 | $19,519 | +36.0% | | Loss from operations | $(8,518) | $(13,509) | -36.9% | | Net loss | $(7,859) | $(13,838) | -43.2% | | Net loss per share (basic and diluted) | $(0.12) | $(0.21) | -42.9% | Condensed Consolidated Statements of Comprehensive Loss The statement details the net loss and other comprehensive income/loss components, resulting in a reduced total comprehensive loss | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Net loss | $(7,859) | $(13,838) | -43.2% | | Change in foreign currency translation, net of tax | $(34) | $54 | N/A | | Net unrealized gains on investments, net of tax | $18 | $0 | N/A | | Total comprehensive loss | $(7,875) | $(13,784) | -42.9% | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased due to net loss, partially offset by stock-based compensation increasing additional paid-in capital | Metric | Balance Dec 31, 2022 (in thousands) | Balance March 31, 2023 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Additional Paid-in Capital | $314,884 | $319,339 | | Accumulated Deficit | $(231,636) | $(239,495) | | Accumulated Other Comprehensive Loss | $(29) | $(45) | | Total Stockholders' Equity | $83,219 | $79,799 | - Stock-based compensation contributed $4.513 million to additional paid-in capital for the three months ended March 31, 2023[22] Condensed Consolidated Statements of Cash Flows Cash flows show improved operating activities, increased investing outflows, and a net decrease in cash and equivalents | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Net cash provided by (used in) operating activities | $1,541 | $(4,171) | +$5,712 | | Net cash used in investing activities | $(5,439) | $(908) | $(4,531) | | Net cash used in financing activities | $(2,018) | $(2,017) | $(1) | | Net decrease in cash and cash equivalents | $(5,916) | $(7,096) | +$1,180 | | Cash and cash equivalents, end of period | $56,081 | $128,900 | $(72,819) | Notes to the Condensed Consolidated Financial Statements This section provides detailed explanations of the company's business, accounting policies, and specific financial statement items 1. Description of the Business Weave Communications, Inc. provides an integrated communications platform with software and VoIP services for SMBs - Weave Communications, Inc. sells subscriptions for its integrated communications platform, combining software communication and analysis tools with Voice over Internet Protocol ("VoIP") phone services[28] 2. Basis of Presentation and Summary of Significant Accounting Policies This section outlines the company's single operating segment, significant accounting estimates, and recent accounting policy adoptions - The Company operates as one operating and reportable segment, with the chief operating decision maker evaluating financial information on a consolidated basis[31] - Significant estimates in the financial statements include valuation allowance against deferred tax assets, allowance for credit losses, recoverability of long-lived assets, fair value of stock-based compensation, and amortization period of deferred contract costs[32] - The Company adopted Topic 326 (Credit Losses) as of January 1, 2023, which did not materially impact the unaudited condensed consolidated financial statements[54] 3. Revenue Revenue is primarily from subscriptions and payment processing, with detailed breakdown and deferred revenue recognition | Revenue Category | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Subscription and payment processing | $37,692 | $31,950 | +17.97% | | Onboarding | $784 | $262 | +199.24% | | Hardware (embedded lease) | $1,089 | $1,060 | +2.74% | | Total revenue | $39,565 | $33,272 | +19.06% | - The Company recognized $16.7 million in revenue from deferred revenue balances in Q1 2023, up from $15.1 million in Q1 2022[57] - Amortization expense for deferred contract costs was $3.0 million for the three months ended March 31, 2023, compared to $2.6 million for the same period in 2022[58] 4. Fair Value Measurements This section details the fair value of cash equivalents and short-term investments, primarily money market and government securities | Asset Category | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash equivalents (Money market funds) | $46,257 | $41,213 | | Short-term investments (US government and agency securities) | $36,382 | $36,607 | | Short-term investments (Commercial paper) | $20,147 | $14,733 | | Total Fair Value | $102,786 | $101,533 | - As of March 31, 2023, the weighted-average remaining contractual maturities of available-for-sale securities was approximately 5 months[63] 5. Property and Equipment Property and equipment, net, saw a slight decrease, with details on depreciation and amortization expenses | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change | | :-------------------------- | :----------------------------- | :----------------------------- | :------- | | Property and equipment, net | $10,621 | $10,773 | $(152) | - Depreciation and amortization expense on property and equipment was $3.0 million for Q1 2023, down from $3.4 million in Q1 2022[67] - $1.9 million of the depreciation and amortization expense in Q1 2023 was related to phone hardware finance ROU assets and data center equipment, included in cost of revenue[67] 6. Accrued Liabilities Accrued liabilities, primarily payroll-related, increased slightly from December 2022 to March 2023 | Accrued Liability | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change | | :------------------------ | :----------------------------- | :----------------------------- | :------- | | Payroll-related accruals | $10,048 | $8,747 | +$1,301 | | Total Accrued Liabilities | $14,798 | $13,636 | +$1,162 | 7. Leases This section details lease expenses, cash outflows from finance and operating leases, and weighted-average lease terms | Lease Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Total lease expense | $3,641 | $3,863 | $(222) | | Operating cash outflow from finance leases | $273 | $204 | +$69 | | Financing cash outflow from finance leases | $1,960 | $2,176 | $(216) | | Operating cash outflow from operating leases | $1,385 | $841 | +$544 | | Lease revenues (phone hardware) | $1,089 | $1,060 | +$29 | - As of March 31, 2023, the weighted-average remaining lease term for operating leases was 9.8 years with a discount rate of 3.9%, and for finance leases, it was 2.0 years with a discount rate of 9.1%[70] 8. Income Taxes The company reports a provision for income taxes and maintains a full valuation allowance against U.S. deferred tax assets | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Provision for income taxes | $19.9 | $32.5 | | Effective tax rate | (0.3)% | (0.2)% | - The Company maintains a full valuation allowance against all U.S. deferred tax assets due to historical losses[79] 9. Current and Long-Term Debt Details on the revolving line of credit with Silicon Valley Bank, including outstanding balance and recent amendments - The Company has a revolving line of credit with Silicon Valley Bank with a total borrowing capacity of up to $50.0 million[80] - As of March 31, 2023, the total outstanding balance on the line of credit was $10.0 million, classified as a long-term liability due to the ability and intent to refinance on a long-term basis[80] - In April 2023, the credit agreement was amended to extend the maturity date from August 2023 to August 2025 and set new EBITDA financial covenants for fiscal year 2023[80] 10. Stockholders' Equity This section details stock-based compensation expense, unrecognized compensation, and recent RSU grants | Stock-Based Compensation | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Total stock-based compensation | $4,513 | $3,425 | +31.8% | - As of March 31, 2023, unrecognized stock-based compensation expense for stock options was $7.5 million (weighted-average vesting period of 1.3 years) and for RSUs was $32.1 million (weighted-average period of 2.2 years)[87][92] - In April 2023, the Company granted 2,056,200 RSUs with a combined grant date fair value of $10.2 million, vesting over three years[105] 11. Related Party Transactions No related-party transactions were reported for the three months ended March 31, 2023, and 2022 - There were no related-party transactions during the three months ended March 31, 2023, and 2022[98] 12. Commitments and Contingencies The company is not involved in material legal proceedings and has standard indemnification arrangements - The Company is not involved in any legal proceedings anticipated to significantly impact its financial condition, results of operations, or liquidity[99] - The Company enters into standard indemnification arrangements, but the maximum potential future payments are not determinable, and no costs have been incurred to date[100] 13. Net Loss Per Share This section provides basic and diluted net loss per share, along with weighted-average common shares outstanding | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss per share - basic and diluted | $(0.12) | $(0.21) | | Weighted-average common shares outstanding - basic and diluted | 65,954,521 | 64,583,714 | - 11,563,536 potential common shares were excluded from diluted net loss per share calculation as of March 31, 2023, due to their antidilutive effect[102] 14. Subsequent Events Key events after the reporting period include a sublease agreement, credit facility amendment, and RSU grants - The Company entered into a Sublease Agreement commencing April 2023 for office space, expecting $0.7 million in sublease income for 2023[103] - The revolving line of credit with SVB was amended in April 2023, extending the maturity date to August 2025 and setting new EBITDA financial covenants[104] - In April 2023, 2,056,200 Restricted Stock Units (RSUs) with a combined grant date fair value of $10.2 million were granted, vesting over three years[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operations, revenue growth, gross margin improvement, and liquidity for Q1 2023 Overview Weave is a leading all-in-one customer communications and engagement software platform for small and medium-sized businesses - Weave is a leading all-in-one customer communications and engagement software platform for small and medium-sized businesses (SMBs)[108] - The platform offers an all-in-one solution spanning communications and customer engagement, including phone, scheduling, text reminders, client reviews, payments, and email marketing campaigns[109] - Product offerings have expanded to include analytics (2019), payments (2019), forms (2021), and buy-now-pay-later (2022), with expansion into verticals like veterinary and specialized healthcare[110] Supplemental Financial Information — Disaggregated Revenue and Cost of Revenue This section disaggregates revenue and cost of revenue by category, highlighting recurring revenue and gross margins | Category | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Gross Margin 2023 | Gross Margin 2022 | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------- | :---------------- | | Subscription and payment processing Revenue | $37,692 | $31,950 | 76% | 72% | | Subscription and payment processing Cost of Revenue | $(8,978) | $(8,821) | | | | Onboarding Revenue | $784 | $262 | (171)% | (887)% | | Onboarding Cost of Revenue | $(2,125) | $(2,586) | | | | Hardware Revenue | $1,089 | $1,060 | (77)% | (121)% | | Hardware Cost of Revenue | $(1,928) | $(2,346) | | | - Recurring revenues (subscription and payment processing) accounted for 92% of total revenue for the three months ended March 31, 2023[112] - Onboarding services and phone hardware are utilized as customer acquisition tools and are priced competitively, often resulting in negative gross profit for these categories[113] Factors Affecting Our Performance Future performance depends on attracting new customers, retaining existing ones, expanding products, and entering new verticals - Future financial performance is driven by the ability to attract new customers, retain and expand within the existing customer base, add new products, and expand into new industry verticals[115] - The company aims to expand its customer base among medium-sized businesses, with a particular focus on core specialty healthcare verticals, and has introduced multi-office functionality[116] - Customer retention significantly impacts future financial performance and gross margin, with subscription and payment processing gross margin improving from 72% in Q1 2022 to 76% in Q1 2023[119] Key Business Metrics This section presents dollar-based net retention rate and gross retention rate, indicating customer revenue growth and retention | Metric | March 31, 2023 | March 31, 2022 | | :-------------------------- | :------------- | :------------- | | Dollar-based net retention rate | 97 % | 103 % | | Dollar-based gross retention rate | 93 % | 94 % | - The Dollar-Based Net Retention Rate (NRR) provides insight into the ability to retain and grow revenue from customer locations, while the Dollar-Based Gross Retention Rate (GRR) reflects customer retention without considering revenue expansion or contraction[125][126] Components of Results of Operations This section details revenue sources, cost of revenue components, and operating expenses, primarily personnel costs - Revenue is primarily generated from recurring subscription fees (90% in Q1 2023, excluding payments and hardware) and recurring embedded lease revenue on hardware provided to customers[128] - Cost of revenue includes direct costs such as data center and cloud infrastructure, payment processing, amortization of finance lease right-of-use assets, and personnel-related expenses for onboarding and customer support staff[131] - Operating expenses consist of sales and marketing, research and development, and general and administrative expenses, with personnel costs being the most significant component[133] Results of Operations This section summarizes key financial results, including revenue, gross profit, operating loss, and net loss, both in absolute terms and as a percentage of revenue | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Revenue | $39,565 | $33,272 | | Gross profit | $26,534 | $19,519 | | Loss from operations | $(8,518) | $(13,509) | | Net loss | $(7,859) | $(13,838) | | Metric (as % of revenue) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Gross profit | 67 % | 59 % | | Sales and marketing | 44 % | 49 % | | Research and development | 19 % | 22 % | | General and administrative | 26 % | 29 % | | Loss from operations | (22)% | (41)% | | Net loss | (20)% | (42)% | Comparison of the Three Months Ended March 31, 2023 and 2022 This section provides a detailed year-over-year comparison of revenue, costs, gross margin, and operating expenses | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (Amount) | Change (Percentage) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | :---------------- | :------------------ | | Revenue | $39,565 | $33,272 | $6,293 | 19 % | | Cost of revenue | $13,031 | $13,753 | $(722) | (5)% | | Gross margin | 67 % | 59 % | +8 ppts | N/A | | Sales and marketing | $17,218 | $16,220 | $998 | 6 % | | Research and development | $7,694 | $7,204 | $490 | 7 % | | General and administrative | $10,140 | $9,604 | $536 | 6 % | | Total other income (expense), net | $679 | $(297) | $976 | (329)% | - The 19% revenue increase was approximately 92% attributable to new customers acquired subsequent to March 31, 2022, and 8% to existing customers[148] - The decrease in cost of revenue was primarily due to a $0.4 million decrease in direct costs (cloud infrastructure, phone hardware, telecom) and a $0.3 million decrease in personnel-related costs, reflecting efficiencies[149][150] - The increase in other income was primarily due to additional earnings generated on market securities and other short-term investments, and a rise in average interest rates[155] Non-GAAP Financial Measures This section presents non-GAAP financial measures, including free cash flow and Adjusted EBITDA, with their definitions | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (YoY) | | :-------------------------- | :----------------------------------------------- | :----------------------------------------------- | :------------------- | | Free cash flow | $587 | $(5,079) | +$5,666 | | Free cash flow margin | 1 % | (15)% | +16 ppts | | Adjusted EBITDA | $(1,963) | $(9,123) | +$7,160 | - Free cash flow is defined as net cash provided by (used in) operating activities, less purchases of property and equipment and capitalized internal-use software costs[159] - Adjusted EBITDA excludes interest expense, provision for income taxes, depreciation (excluding finance lease ROU assets), amortization (capitalized internal-use software), and stock-based compensation expense[160][164][165] Liquidity and Capital Resources This section discusses the company's principal sources of liquidity, cash flow from operations, and future capital sufficiency - As of March 31, 2023, principal sources of liquidity were $56.1 million in cash and cash equivalents and $56.5 million in short-term investments[167] - Cash provided by operating activities was $1.5 million for the three months ended March 31, 2023, a significant improvement from cash used in operating activities of $4.2 million in the prior year[170][171] - The Company believes its current cash, cash equivalents, short-term investments, and available borrowing capacity under its senior secured credit facility will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months[169] Critical Accounting Estimates This section highlights significant estimates in financial statements, such as revenue recognition and deferred tax assets - Significant estimates in preparing financial statements include revenue recognition, stock-based compensation, valuation allowance against deferred tax assets, and recoverability of long-lived assets[32][365] - No material changes to critical accounting estimates were made compared to the 2022 Annual Report on Form 10-K, other than changes to lease accounting policies[183] Recently Adopted Accounting Pronouncements This section details the adoption of new accounting standards for leases and credit losses, and their impact - The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2022, requiring lessees to recognize right-of-use assets and corresponding lease liabilities for leases with terms greater than twelve months[184] - ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), was adopted on January 1, 2023, which did not materially impact the unaudited condensed consolidated financial statements[185] Emerging Growth Company and Smaller Reporting Company Status The company qualifies as an emerging growth and smaller reporting company, allowing for reduced disclosure requirements - The Company qualifies as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of reduced reporting and disclosure requirements[187][188] - The Company has elected to use the extended transition period for complying with new or revised accounting standards, which may make its financial statements not comparable to other public companies[187] Item 3. Quantitative and Qualitative Disclosures About Market Risks The company's market risk exposure, including interest rate and foreign currency risks, remains materially unchanged since year-end 2022 - As of March 31, 2023, the Company's exposure to market risk has not materially changed since December 31, 2022[189] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and internal control over financial reporting as of March 31, 2023 Evaluation of Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2023, ensuring timely and accurate reporting - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of March 31, 2023, providing reasonable assurance for timely and accurate reporting[190] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting were identified during the period covered by the report - No changes in internal control over financial reporting were identified during the period covered by the report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[191] Inherent Limitations on Effectiveness of Controls Management acknowledges that controls provide reasonable, not absolute, assurance, and may not prevent all errors or fraud - Management acknowledges that disclosure controls and internal control over financial reporting are designed to provide reasonable, not absolute, assurance, and that inherent limitations mean errors or fraud may occur and not be detected[193] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, exhibits, and signatures related to the company's operations and financial standing Item 1. Legal Proceedings The company is not currently involved in material legal proceedings, though future litigation, including IP claims, is possible - The Company is not presently a party to any legal proceedings that, if determined adversely, would individually or taken together have a material adverse effect on its business, results of operations, financial condition, or cash flows[195] - Future litigation may be necessary to defend against or establish intellectual property rights, and regardless of outcome, litigation can be costly and divert management resources[195] Item 1A. Risk Factors This section outlines significant risks related to business, industry, regulation, intellectual property, tax, accounting, and stock ownership Risk Factors Summary Key risks include growth challenges, customer acquisition/retention, managing expansion, historical losses, and market competition - Key risks include the potential for future growth not matching past rapid growth, challenges in attracting and retaining customers, managing growth efficiently, and serving small and medium-sized businesses (SMBs)[198] - Other risks involve a history of losses, fluctuating quarterly results, maintaining brand awareness, the evolving market for the platform, expanding into new verticals, and intense market competition[198] Risks Related to our Business and our Industry Risks include sustaining growth, reliance on single-source suppliers, cloud infrastructure dependence, and product defects - The Company's recent rapid growth may not be indicative of future growth, and sustaining it depends on effective pricing, product expansion, customer retention, and market penetration[199][200][203] - The Company relies on single-source suppliers for critical hardware (Yealink phones) and payment processing (Stripe), and any disruption or failure from these third parties could adversely affect operations[252][258] - Substantial reliance on Google Cloud Platform (GCP) for cloud infrastructure means any disruption of or interference with GCP services would adversely affect the business, operating results, and financial condition[267] - Defects or errors in the Company's platform or products could diminish demand, harm its brand and reputation, erode customer trust, and subject it to liability[271] Risks Related to Governmental Regulation Risks involve compliance with VoIP and data protection regulations, potential for increased costs, and call blocking issues - As a provider of interconnected VoIP services, the Company is subject to various international, federal, state, and local regulations, including those from the FCC, with potential for increased regulation and compliance costs[311][313][314] - Efforts to address robo-calling and caller ID spoofing (e.g., STIR/SHAKEN framework) could cause competitive harm by leading to calls being blocked or flagged, making services less desirable for customers[315][318] - Compliance with stringent and changing data protection laws like HIPAA, CCPA, and CPRA is critical, and failures could lead to civil liability, fines, reputational damage, and increased compliance costs[333][336][340][342] Risks Related to Intellectual Property Risks include failure to protect IP, infringement claims, and unanticipated conditions from open-source software use - Failure to protect or enforce intellectual property rights (trademark, copyright, trade secret) could impair the ability to protect internally-developed technology and brand, adversely affecting the business[346][347] - The Company could incur substantial costs from claims of infringement of another party's intellectual property rights, leading to litigation, license fees, or the need to redesign products[349][351] - The use of "open source" and third-party software could impose unanticipated conditions or restrictions on commercializing solutions and subject the Company to possible litigation, including claims for intellectual property infringement or breach of contract[353][354] Risks Related to Tax Matters Risks include additional income tax liabilities from law changes or challenges, and limitations on Net Operating Losses - The Company may have additional income tax liabilities due to changes in tax laws, challenges to tax positions by authorities, or the requirement to collect additional sales, value-added, or similar taxes[357][358] - The ability to use Net Operating Losses (NOLs) to offset future taxable income may be subject to certain limitations under Section 382 of the Internal Revenue Code and similar state laws, or due to regulatory changes[362] Risks Related to Accounting Matters Risks involve ineffective controls, incorrect critical accounting estimates, and adverse impacts from changes in accounting standards - A failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could adversely affect the ability to produce timely and accurate financial statements and harm investor confidence[364] - If estimates or judgments relating to critical accounting estimates prove to be incorrect, the Company's results of operations could be adversely affected[365] - Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect the Company's results of operations[367] Risks Related to Ownership of our Common Stock Risks include stock price volatility, future equity dilution, potential sales by existing holders, and concentrated ownership - The stock price of the Company's common stock may be volatile or decline regardless of operating performance due to various factors, including market conditions, financial projections, and competitive actions[370] - Future equity issuances, whether under incentive plans or for investments/acquisitions, could dilute the percentage ownership held by existing stockholders[374] - Sales of substantial amounts of common stock by existing holders, particularly directors, executive officers, and principal stockholders, or the perception of such sales, could cause the market price to decline[375] - The concentration of share ownership (approximately 65.0% as of March 31, 2023) in pre-IPO stockholders, including executive officers and directors, may limit other stockholders' ability to influence corporate matters[379] General Risks General risks include costly legal proceedings, unfavorable economic conditions, and disruptions from catastrophic events - Any legal proceedings or claims against the Company, even if unmeritorious, could be costly, time-consuming, and harm its reputation, diverting management's attention and resources[395] - Unfavorable conditions in the industry or global economy, including inflation and geopolitical developments, could reduce demand for the Company's products and adversely affect its financial condition, particularly impacting SMB customers[396] - The business is subject to risks from natural catastrophic events (e.g., earthquakes, fires, floods, pandemics) and man-made problems (e.g., power disruptions, computer viruses, data security breaches, terrorism), which could interrupt operations and harm the business[397][398][399] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including agreements, certifications, and XBRL financials - Key exhibits filed include the Second Amended and Restated Loan and Security Agreement, Chief Executive Officer and Chief Financial Officer Certifications, and financial statements formatted in Inline XBRL[403] Signatures The report is signed by Brett White (CEO) and Alan Taylor (CFO) on behalf of Weave Communications, Inc. on May 9, 2023 - The report was signed by Brett White (Chief Executive Officer and Director) and Alan Taylor (Chief Financial Officer) on May 9, 2023[409]