Greetings and welcome to the Weave First Quarter 2024 Financial Results Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark McReynolds, Head of Investor Relations. Thank you, Mark. You may begin.

Thank you, Paul. Good afternoon and welcome to Weave's first quarter 2024 earnings call. With me on today's call are Brett White, CEO; and Alan Taylor, CFO. During the course of this conference call, we will make forward-looking statements regarding the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations and entail certain assumptions made as of today's date and are subject to various risks and uncertainties described in our SEC filings. We disclaim any obligation to update or revise any forward-looking statements. Further, on today's call, we will also discuss non-GAAP metrics that we believe aid in the understanding of our financial results. Unless otherwise noted, all numbers that 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 as an exhibit to the Form 8-K furnished with the SEC before this call, as well as in the earnings presentation on our Investor Relations website at investors.getweave.com. And with that, I'll turn the call over to Brett.

Thanks, Mark. And thank you to everyone for joining us today. I'm pleased to report that we had another terrific quarter, providing a strong start to the year. At Weave, our aim is to deliver a better healthcare experience. Every patient, every practice, every interaction. We specialize in an integrated customer experience and payments platform built specifically for small and medium-sized healthcare practices. We empower practitioners to prioritize patient care while we streamline office operations, handle payments processing, and deliver practice growth for improved patient communication and engagement. SMBs are a cornerstone of the U.S. business landscape. For the past 15 years, we've dedicated ourselves to developing a solution finely tuned to the unique requirements of SMB healthcare practitioners. Unlike larger healthcare institutions, dental clinics, veterinary hospitals, optometry, and medical practices operate without dedicated IT teams, relying instead on a user-friendly software solution like Weave. Our platform streamlines disparate point solutions often utilized by these practitioners, making it easier to attract, engage, and retain patients. I'm excited to share some of the financial highlights from Q1. We've started the year with solid top-line performance, significant improvements in gross and operating margin, and adjusted EBITDA. Revenue for Q1 was $47.2 million, representing a 19.2% year-over-year growth and $1 million above the high end of the range we provided in February. This is our ninth consecutive quarter of exceeding the top end of our revenue guidance. When we went public, our gross margin was approximately 57%, and we set crossing the 70% mark as an important goal and milestone for our business. We are proud to report that in Q1, gross margin reached 70.4%, marking the ninth consecutive quarter of gross margin improvement. Additionally, our adjusted EBITDA margin is getting very close to break even, improving by over 700 basis points from last year to a negative 0.8% of revenue, compared to a negative 7.9% of revenue one year ago. These results underscore the market's demand for our vertically tailored software and payments platform and our continued efforts to improve efficiency. In our February call, I shared our business focus areas for 2024, and I'd like to highlight some of our progress in the first quarter. Accelerating revenue growth is a top priority with an emphasis on expanding our presence in dental, optometry, and veterinary verticals and growing in specialty medical markets. We are pleased with the growth that we saw across all of these verticals in Q1, with specialty medical being our fastest-growing segment. Partnerships are a vital contributor to growth across our target verticals. Authorized and certified integrations with partner practice management systems and other healthcare systems of record serve to both increase our addressable market and enhance our product market fit by automating and personalizing communications which boost practice growth and efficiency. We aim to become our partners' top choice for patient engagement and communication, allowing Weave to enrich the patient experience and improve data synchronization. Our customers count on Weave to run their business operations, and authorized integrations increase the reliability of their experience. We made great progress in both new and deepening integration partnerships, and I'd like to highlight a few. In March, we delivered our initial integration with Athenahealth, a leading provider of cloud-based healthcare software. We also signed an integration partnership with IDEXX, which serves over 20% of the veterinary market. Scoping and development has commenced on our integration with two of their brands, ezyVet and Neo, whose veterinary software solutions service more than 8,000 veterinary hospitals. In addition to developing new integrations, we are successfully pursuing deeper product integrations and go-to-market programs with existing partners. We have renewed and enhanced our partnership with DrChrono, a leading electronic health record provider serving tens of thousands of physicians. We are deepening our existing integration and working closely to inform their large customer base of these enhancements. We also deepened our partnership with Patterson Veterinary, maker of NaVetor and IntraVet. Lastly, we signed a product integration and commercial partnership with Prompt EMR, a leading electronic medical record provider for outpatient therapy clinics, serving over 8,000 therapists. Our customers' experience is the keystone to retention, and Weave has consistently been awarded accolades affirming our platform's industry-leading performance. Weave has also been named a Top 50 software product for small business for 2024 and is the leader in the G2 grid for patient relationship management. Moreover, we are honored to be recognized for our dedication to building an excellent workplace environment for our employees. For the third consecutive year, Weave received a Top Workplaces USA award and was named to the 2024 Shatter List by the Women Tech Council. In closing, I'm immensely proud of what we have accomplished in Q1. We continue to grow our top-line and hit a significant milestone by crossing the 70% gross margin mark. This success is a testament to our dedication to providing innovative solutions that effectively address our customers' needs. I'd like to extend a big thank you to our customers, partners, team members, and shareholders for their continued support of Weave. With that, I'll turn the call over to Alan to provide more detailed financial results and review our outlook.

Thanks, Brett. Good afternoon, everyone. Before providing my financial update, I'd like to address the Q1 fluctuation in free cash flow. We successfully implemented a new billing system in Q1 that necessitated deferring March subscription billings into April. This resulted in a one-time increase in our accounts receivable balance at the end of March and a corresponding decrease in free cash flow of approximately $15 million. Since the vast majority of our billings are done via credit card, cash is received within a few days of billing, and our accounts receivable balance will return to normal levels in Q2. There will be an associated positive impact on Q2 free cash flow of approximately $15 million. Also, as I mentioned last quarter, we paid out our 2023 annual employee bonuses in Q1 of this year, amounting to approximately $7 million. In prior years, annual bonuses were paid out in Q2. Excluding the impact of both the delay in billing and the timing difference of the bonus payout, free cash flow would have been positive for Q1. Moving on to the financial update, we had a great quarter delivering first quarter revenue of $47.2 million, reflecting a 19.2% growth year-over-year. This represents a $1.5 million or 3% beat over the midpoint of the range we provided in February. As we called out in our last earnings call, in 2023, our revenue growth rate benefited from an increase in onboarding revenues. Those revenues grew by 150% last year, and a new agreement with Stripe early last year also increased our payments take rate. Both the improvement in onboarding revenue and the increase in our take rate for payments remain in place for 2024, but we do not expect to see the same growth rate in these components of our revenue as we did last year. Our net revenue retention rate increased from 95% last quarter to 96% in Q1, primarily due to positive adoption of payments and software upsells. Our gross revenue retention rate remained at 92% for Q1, among the best in class for SMB retention, and logo retention has been consistent for over 2 years. Transitioning to operating results, as a reminder, I will be referring to non-GAAP results unless stated otherwise. Our Q1 results showed significant improvement across the board. Gross margin was 70.4%. This represents a 280 basis point increase year-over-year. Payments continue to be the fastest-growing component of our revenue, and the average selling price for our subscription product has increased over the last few quarters due to the uptake of our higher-end product bundles. Our operating expenses were $34.6 million, a $3.9 million increase from last year compared to a $7.6 million increase in revenue for the same period. Our operating loss was $1.4 million, an improvement of $2.6 million, or 66%, compared to last year, and $600,000 better than the midpoint of the guidance provided in February. The operating loss margin of 2.9% is a significant improvement from the operating loss margin of 10.1% last year. Our net loss was $400,000 or $0.01 per share in the first quarter based on 70.5 million weighted average shares outstanding. This is compared to a net loss of $3.3 million or $0.05 per share last year, representing a $2.9 million improvement due to revenue acceleration and operating efficiencies. Adjusted EBITDA loss was $400,000, a $2.8 million improvement year-over-year. The adjusted EBITDA loss margin of 0.8% is a significant improvement compared to the 7.9% loss margin reported one year ago. Turning now to our outlook for the second quarter and full year 2024. For the second quarter of 2024, we expect total revenue to be in the range of $48.2 million to $49.2 million and non-GAAP operating loss to be in the range of $2.5 million to $1.5 million. For the full year 2024, we are raising our full year outlook and expect total revenue to be in the range of $197 million to $200 million. We expect the range for our full year 2024 non-GAAP operating loss to be from $6 million to $2 million. We expect to have a weighted average share count of approximately 71.7 million shares for the full year. To summarize, Weave delivered solid results in Q1. Our performance demonstrates strong demand for our platform, and we remain excited about the opportunity ahead.

If you'd go ahead and turn it over for questions now, we'd appreciate it.

It sounds like a really good quarter, so good to see that continued deliverance and outperformance. Just a quick one from me, especially around specialty medical. I think you called out strength there. So can you touch on maybe the sales cycles that you're seeing within specialty medical specifically, given Weave has a little bit more name brand recognition, a more holistic platform, and a tenured sales force? And then as a follow-up, can you give any update around hiring, given I believe that you mentioned last quarter intentions to continue hiring this year? So just any color around those would be great.

Sure. I'll take it. This is Brett. So yes, specialty medical is quite fragmented. Our #1 vertical is dental, and we've been there for a long time. Specialty medical has a significant need for the solution that Weave offers. Our approach has been to build the integrations with practice management software providers in those sub-verticals and go into those markets with the reputation we have in our dental, optometry, and veterinary verticals. The result has been terrific; it's our fastest growing vertical. As I said in our call last time, it moved from #4 to #3. There's a real demand. Those businesses are doing well in the current economic environment. We've got good product market fit, and we're able to generate leads. The lead volume grew in Q1 versus Q4. We've got good demo and close rates, and we're rolling out the playbook very methodically and programmatically. On hiring, yes, we will be hiring throughout the year. We expect to add sales capacity, probably some engineers, and then other parts of the business just as our customer count grows.

This is Hannah on for Brent today. Just the first one from me. In David's first full quarter of CRO, are there any learnings he's identified or any low-hanging fruit he has gathered from observing and being a part of the organization?

I think we've got them on a 30-day, 60-day, 90-day plan, and that's really progressing as expected. As I mentioned last quarter, when David was on board, every candidate for that job asked me, 'Okay, what's broken? What do we need to fix?' And the answer is nothing. The sales organization is functioning well. They're executing really well. David's real job is how do we get to $500 million to think ahead. He's very focused on payments, and we've just hired a new payments leader who starts in the next couple of weeks. He's also focused on partnerships. We're seeing a significant shift in our partnership landscape. A year or a year and a half ago, we were seen as competition, but that has changed, and we're seeing much more interest from practice management vendors to partner with us.

On your next-gen app, where are we in the process of early access rollout? And what kind of feedback are you getting from your multi-location customers on that platform?

Great question. We're calling it the new Weave experience. We had a closed beta with a select number of customers in the product, and now we've moved to an open beta. We're seeing a lot of interest there. The new experience has two desired effects: one, providing a flexible workspace, and two, improving the user experience, making it more functionally rich to complete transactions in fewer steps. On the multi-location side, we're building it to be more multi-location friendly, allowing efficient management across multiple locations. This is available both as an app and on the web. We're excited about the positive feedback we're getting from existing and prospective customers.

Maybe just follow-up on those last two questions. In terms of all the product and integration improvements over the last 12 months, can you help frame the magnitude of the increase in your integrated addressable market today relative to a year ago?

Sure. Our serviceable available market (SAM) in dental, optometry, and veterinary is around 200,000 locations, and we've got integrations now with over 90% of those locations. One important thing to understand about integration is that there's several levels. We've been going back and deepening our integrations, moving from basic capabilities to read-write and payment functionalities. In specialty medical verticals, we think there's about 160,000, and we're probably not even a third of the way there with integrations, indicating lots of opportunity ahead. As for lead generation, events have been a big source of leads. We recently attended a Med Spa event and significantly exceeded our expectations. We're also focused on digital marketing and old-school mailers, with an emphasis on product market fit.

Alan, this one's for you. Congrats on the tremendous progress in gross margins since the IPO. What's the new milestone for you guys regarding the potential for gross margins?

Thanks for the question, Parker. We're thrilled with this progress. We've said in the long term, a 75% to 80% gross margin company is where we think we can be. This will be a combination of things, especially as payments grow as a portion of our business. Our engineering team ensures that efficiency is our primary focus as we scale the business and build out our product.

Brett, I'm wondering if you could give us insight into potential prospects or customers that have considered the lack of integrations with recent partnerships before making a purchasing decision. Is this focused primarily on driving customer success?

Deepening integrations makes us much stickier and provides more value. New integrations have garnered a lot more interest at events. It's a fragmented market, and offerings have drawn additional attention, increasing our SAM. We're seeing it in events, marketing, and conversion rates.

This is Matt on for Mike Funk. So my question is on NRR. What's a good upside scenario for NRR going forward? And how important is payments going to be in expanding that?

The NRR that we report is a 12-month trailing metric. We will see that bend upward slowly, as payments will drive that, along with upsell products that are in the pipeline. Retaining our attrition and churn rates are essential to ensuring healthy NRR growth.

We're learning creatures, and we'll adapt our go-to-market motions so that everyone wins—the company wins, the customer wins, and the sales team wins.

Congratulations on the quarter, especially on the gross margin line. Brett, can you talk about the payment solution's attach rates and whether you're seeing any kind of meaningful increase there?

Payment attach rates have been increasing, but they are still below where they need to be. We've made good progress on integrations. Increasing penetration rates will be a key goal for our new General Manager of Payments.

Is there a product component to this? Are there certain capabilities still needed before widespread adoption?

Yes, it's largely about workflow. Processing payments seamlessly within daily tasks is essential. Integration into business workflows and educating our customers will be key to driving adoption.

Can you discuss what you're doing from an incentives perspective to align partnerships, such as co-selling credits or hiring more partner specialists?

We start with a company philosophy focused on win-win partnerships. We've hired a great head of strategic partnerships who knows how to build these relationships. By emphasizing that we don't want to compete but rather collaborate, we enhance partner comfort and open more opportunities.

Good to see the encouraging commentary on specialty medical. Can you remind us of the revenue base today? Is that slightly more discretionary in terms of consumer SMBe spending?

Historically, our mix has shifted, and now specialty medical is our fastest growing segment in ARR. In terms of discretionary spending, physical therapy and primary care are necessary services, whereas medical aesthetics and plastic surgery fall into the discretionary category. However, these are still successful businesses choosing Weave.

There are no further questions at this time. I'd like to hand the floor over to Brett White for any closing comments.

Thank you all for your continued support, and thank you to the Weave team for delivering yet another terrific quarter.

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