Greetings, and welcome to the Weave Communications Q1 2023 earnings conference call. At this time, all participants are in listen-only mode. A brief question- and- answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark McReynolds, Head of Investor Relations. Over to you, sir. Thank you, Danai. Good afternoon, thanks for joining us for our Q1 2023 earnings conference call. Joining the call today are Brett White, CEO, and Alan Taylor, CFO. Brett will open the call with an overview of Weave's performance; Alan will discuss our financial results in more detail. After the prepared remarks, we'll take questions. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Please refer to the cautionary language in the earnings release and in Weave's filings with the Securities and Exchange Commission, including our most recent Form 10-K and 10-Q, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. We'll also discuss financial measures that do not conform with generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our investor relations website at investors.getweave.com. With that, I'll turn the call over to Brett. Thank you, Mark McReynolds. Good afternoon, and thank you all for joining us today. I'll start my remarks by sharing the highlights from the quarter and then follow with a broader company update. I'm very pleased to share that we kicked off the year with strong results. Our total revenue for Q1 was $39.6 million, representing 19% year-over-year growth and above the high end of our guidance for the quarter. Q1 was an important milestone for us as this was the Q1 in which the year-over-year revenue growth rate increased sequentially since 2019. This growth was driven by strong demand for our platform and our growing customer base. In Q1, we also continued to make significant progress toward our profitability goals. Our gross margin for the quarter was 67.6%, up 850 basis points from 59.1% in Q1 2022, and up 90 basis points from last quarter. Additionally, we reduced our operating loss to 10% of revenue from a loss of 30% of revenue one year ago. Our Q1 adjusted EBITDA loss was 5% of revenue, compared to 27% of revenue last year. Our operating loss for the quarter was $4 million, a 60% improvement over last year and $1 million above the midpoint of the guidance that we gave in February. In last quarter's earnings call, we shared that we built our plan for 2023 to accelerate our revenue growth and our path to profitability, with the goal of being free cash flow positive by the end of 2023. We are pleased to report that through revenue overachievement and continued operational improvements, for the first time in the company's history, we delivered positive free cash flow in the amount of $587,000 in Q1. I'm proud of the Weave team's intense focus on serving our customers and delivering these excellent results. As these results clearly demonstrate, we are making progress in delivering on this large opportunity, and our business model enables us to deliver a combination of strong revenue growth and improving profitability. I'd like to provide additional color on our top-line growth for Q1. In our last earnings call, we shared with you that we experienced improved sales momentum in the third and Q4s of last year. We are pleased to report that momentum continued into Q1 with both the number of new customers sold and the average sales price for new customers increasing over Q4 of last year. Both our digital marketing and our event channel results improved sequentially in Q1 as well. Historically, in-person industry events have been one of our most important sources of new business growth. In Q1, we doubled the amount of in-person event sales compared to the Q1 of 2022, despite attending slightly fewer events. We are investing more in larger events, sending broader teams, not only salespeople to engage with prospective customers, but also customer success teams to engage with current customers. This has resulted in an increase in the number of leads generated and closed from this important channel. We are encouraged by the increased demand that we are seeing coming out of these events and expect to continue our investments in this channel. To handle the increased demand, we continue to grow our go-to-market capacity. We increased the number of sales reps by 15% year-over-year, and 80% of our sales reps are now fully ramped, which represents 41% increase in ramped sales reps year-over-year. Our overperformance also enabled us to accelerate several additional go-to-market initiatives in the quarter. Turning to payments. Our payments offering enables our customers to collect their fees faster and with less effort and administrative burden. Our solution streamlines the billings workflow, and we continue to see increased adoption across our customer base. We are encouraged by the trends that we are seeing in the payments data. For example, payments volume per location in Q1 was up over 10% year-over-year, which speaks to the health of the industries and individual customers that we serve. We announced in March that we signed a multi-year agreement to extend and deepen our partnership with Stripe as our payments processing partner. As part of this agreement, our customers will have access to more Stripe platform, and we plan to leverage additional features later this year as we endeavor to expand our payments offering for our customers. On the new product front, we launched bulk texting on our platform in Q1, which is one of the most requested features by our customers. Bulk Texting gives our customers the ability to send a single text message to thousands of their patients at once, and helps improve efficiency and boost revenue for practices by engaging more patients with personalized and targeted text messages with much less administrative burden on the practice staff. Text messages have more than a 99% open rate, with 90% of messages being read within the first three minutes of being received. An appointment vacancy can cost a practice up to $200 per occurrence if left unfilled, and Bulk Texting allows our customers to quickly engage patients that are due for an appointment, increase bookings for the practice, and keep their schedules full. Earlier this week, we also announced Response Assistant, which is a major enhancement to Weave Reviews. Reviews are very important for healthcare practices as more than half of patients look at online reviews before scheduling an appointment. Response Assistant is our first AI-driven feature, and it allows our customers to use AI to draft a thoughtful and personalized response to a patient review in just seconds with one click. The users can then edit the reply before submitting if desired, increasing the personalization of the response and improving response time as they manage their critical online reputation. Our focus on innovative automation has been a core strength since our founding, and we intend to continue leveraging AI to make patient communication and engagement easier and more effective for our customers. Weave continues to receive positive recognition and validation from our customers that our platform delivers best-in-class communications and engagement results. In Q1, we were named a leader in five different categories in G2's 2023 spring report. Recognition in the list is based on customer reviews and highlights the best software products for small healthcare businesses. In addition to being named a leader in multiple categories, our platform was also recognized for its ROI, being named Best Results in Patient Engagement Software among small businesses. We will continue to listen to our customers to ensure that we are providing an excellent experience in delivering requested feature improvements. In last quarter's earnings call, we introduced the concept of a boomerang customer, one who leaves Weave for a competitive solution only to come back a short time later. In Q1, we saw this customer category accelerate, and we counted 45 new boomerang customers in Q1 alone, compared to approximately 100 in all of 2022. We believe this trend provides another data point and further validates the breadth and value delivered by the Weave solution. Lastly, I'm excited to announce that we have added a key member to our executive leadership team. We announced earlier this week that Marcus Bertilson has joined Weave as our first-ever Chief Strategy and Services Officer, leading our strategy, onboarding, customer support, and customer success teams. Marcus has nearly two d ecades of revenue growth and strategy experience. Before joining Weave, he served as the Senior Vice President of Revenue and Strategy at Thumbtack, a home services management platform for the small-medium business, where he successfully led and scaled global revenue, strategy, and customer-facing teams serving their over 100,000 SMB customers. Prior to Thumbtack, Marcus was with McKinsey & Company, where he collaborated with numerous Fortune 100 clients and specialized in growth strategy, innovation, and company transformations. We are excited to leverage Marcus's experience to seize upon the vast opportunity that we have in front of us. In conclusion, we are very pleased to be off to a great start for 2023. Our customers are the North Star in every decision that we make, and I'd like to thank them for their continued trust in Weave, enabling us to grow together. I'd also like to thank the entire Weave team for their tireless dedication in bringing innovative, industry-leading products and services to our customers every day, enabling them to serve their patients and clients and achieve their professional dreams. With that, I'll turn the call over to Alan to take you through the details of our results and guidance, and then we'll take questions. Alan? Thanks, Brett. Good afternoon, everyone. We delivered Q1 revenue of $39.6 million, reflecting 19% growth year-over-year. This represents 4% or $1.6 million over the midpoint of the range we provided last quarter. Our net revenue retention rate was 97% in Q1. The primary cause of the decline from Q4 is the ongoing impact from our former third-party forms provider. We launched our internally developed product and have seen positive adoption by customers, but the transition will continue to negatively impact net revenue retention through the Q3 of 2023. Excluding the impact of the third-party forms provider, net revenue retention was 100%. Gross revenue retention rate was 93% in Q1, a slight decrease from last quarter and within the range we've seen for the last seven quarters. Moving on to operating results. As a reminder, I'll be referring to non-GAAP results unless stated otherwise. Our Q1 results showed consistent improvement across the board. Gross margin was 67.6%. This represents an 850 basis point increase year-over-year. Operating expense was $30.8 million, approximately a $1 million increase from last year compared to a $6.3 million increase in revenue for the same period. We have continued our progress in streamlining our operations while continuing to produce steady growth. Our operating loss was $4 million, an improvement of $6.1 million or 60% compared to last year, representing $1 million over the midpoint of the guidance range we provided last quarter. The corresponding operating loss margin of 10% is a significant improvement from the operating loss margin of 30% last year. Our net loss was $3.3 million or $0.05 per share in the Q1 based on 66 million weighted average shares outstanding. This is compared to a net loss of $10.4 million or $0.16 per share last year. This represents a $7.1 million improvement due to revenue overachievement and operating efficiencies, coupled with a $1 million increase in interest income related to our treasury activities. We also recently entered into a sublease agreement for one floor of our headquarters in Lehi, Utah. This will provide approximately $800,000 annually in other income. Additional detail will be provided in the subsequent events section of our Q1 10-Q. Adjusted EBITDA loss was $2 million, a $7.2 million improvement year-over-year. Adjusted EBITDA loss margin of 5% is a significant improvement compared to the 27% loss margin reported a year ago. We continue to have a very strong balance sheet with $112.6 million of cash and short-term investments on hand as of the end of the quarter. As you recall, last quarter we had $113.3 million, which means we only used $700,000 in Q1. I also wanted to provide a quick update on our line of credit with Silicon Valley Bank. As previously disclosed, we maintain a $50 million revolving line of credit with SVB and had borrowed $10 million against it. The line was set to mature in August of this year. We recently extended this line of credit with SVB, now a division of First Citizens Bank, to August 2025, with the same terms moving this borrowing from current to long-term on our balance sheet. We have no pending plans to utilize any additional funds at this point, we are pleased to extend this line of credit, providing flexibility for potential future strategic initiatives. As Brett mentioned in his remarks, we had our first positive free cash flow quarter in Q1. Free cash flow was positive $587,000, a $5.7 million improvement over Q1 last year. We expect free cash flow to fluctuate from period to period, we do not expect our free cash flow to be positive next quarter due to seasonal payroll factors. We do reiterate our commitment to achieving free cash flow exiting the year. Turning now to our guidance. For the Q2 of 2023, we expect total revenue in the range of $39.5 million-$40.5 million and non-GAAP operating loss in the range of $5 million-$4 million. For the full year 2023, we expect total revenue to be in the range of $160.5 million-$163.5 million. We expect our full year 2023 non-GAAP operating loss to be in the range of $18.5 million-$15.5 million, which assumes continued progress on our path towards profitability. We expect to have a weighted average share count of approximately 67.3 million shares for the full year. To close, we are pleased with our Q1 performance and expect to continue our disciplined approach of driving balanced growth as we move towards profitability. Brett and I will take your questions. Thank you, Phil. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and then one now. A confirmation tone will indicate your line is in the question queue. You may press star and then two if you would like to remove your question from the queue. Again, if you would like to ask a question, please press star and then one now. The first question that we have is from Alex Sklar from Raymond James. Please go ahead. Great. Thank you. Brett, I just want to start off asking for just an update on the multi-location opportunity. Can you just give us an update where the product stands today in terms of ability to address the multi-location? I know you've been making some significant go-to-market investments there as well. Have you started seeing that in the numbers at all driving the success this quarter? Thanks. Sure. The product suite, as it currently stands, can absolutely support multi-location offices. We have a significant number of multi-location offices on the platform using it successfully. I think our next step is kind of a major push into the multi-location domain and, you know, going after larger DSOs. There's a few things that we still want to do to the product just to make it a little bit easier to use from a centralized kind of command and control perspective, and then some functionality around phone routing and things like that. Look for that to come in the second half. You know, Q1 was pretty consistent with prior quarters on number of multi accounts landed. Okay. Great, great color. Then can you elaborate a little bit more, I don't know, Alan or Brett, who wants to take this one on? You referenced higher ASPs in the prepared remarks. I think you've always kinda had a larger land model versus kinda land and expand. Did anything change this quarter in terms of just overall pricing or lack of discounting or initial attach rates to some of the add-on products? I'm curious more behind that comment. Thanks. Sure. I'll start, and I'll give my perspective. I think the biggest drivers are one, we've moved to a bundle, a bundled solution where, you know, we offer now three bundles that can be sold and purchased by our prospects. That has definitely helped the ASP. And then also, you know, as our sales teams get more ramped, get more experienced, they're better qualified, better capable of meeting the customer's needs and helping them make the right choice. I think the combination of higher quality marketing, more targeted marketing, higher performing sales teams, and then just the bundle strategy, all those things together are moving us, moving the ASP up a bit. Okay, great. Thank you very much. I would just add to that the product confidence just on the sales team side, given the boomerangs that we're seeing, they're able to just hold the line on the pricing just because of the quality of the experience our product offers versus competitive. That's a great added color. Thank you both. Thank you. The next question we have is from Matt Stotler from William Blair. Please go ahead. Hey, guys. This is Alex Bastian for Matt. Thanks for taking our questions. Just a couple quick ones for me. Maybe if we could start with the go-to-market transition. Thanks for some of the color on that. Maybe if you could just touch on when you expect that to be fully ramped and any implications that we might see for future period growth. Sure. You know, on a weighted basis, I would not expect us to really ever be more than, you know, kind of 80% or maybe 90% ramped, because now we're actually adding new reps, just due to the demand we're seeing. We will always have a co-cohort of reps that are in the ramping phase. I think, on, you know, percentage ramp, you know, we'll probably get to 80%, 90% and just continue to grow from there. We're adding new account executives, new sales reps now in Q1, and expect to continue to add them as long as demand continues to grow as we're seeing it. So we're pretty excited about that. You know, we just measure it very carefully. We look at results daily and weekly, and we make our hiring decisions based on it. Hopefully, if kind of growth and demand continues, we will always be adding go-to-market capacity. Got it. Awesome. Well, thank you for that. Just one more from me, maybe as a broader question. Can you talk about any of your updated observations you have on the current macroeconomic environment and any updated observations regarding demand, spend behavior, usage patterns, et cetera? Yeah. The data that we're seeing, you know, we shared one data point in our prepared remarks that average volume per location is up 10% year-over-year. That is terrific to see. That says that our existing customer base, their business is growing. That's terrific to see. As far as the demand environment, sales cycles, really no change there. They've been pretty consistent the last couple quarters. The product is doing very well, especially competitively. We've got a lot of, I think, favorable progress, especially due to the improvements we've seen in our services offerings. We've seen a lot of improvements in our onboarding functions and our support functions. Those show up as, you know, kind of positive sales tools for our teams to use. No major changes in the macro or the buying environment, I think. Got it. Understood. Thank you for that, and I will pass it on. Thank you. The next question we have is from Mike Funk from Bank of America. Please go ahead. Yeah. Thank you very much. Thank you for the questions tonight. You know, first question, just, thinking about free cash flow, you know, first, great job hitting that positive metric in 1Q ahead of target. Obviously, you know, always looking for more. You know, any thoughts on incremental efficiencies you can drive out of the business? Understand you've already done a lot. How we should think about the free cash flow progression moving forward from here? I have one more follow-up. We continue to hit both our COGS lines as well as operating expenses. We now have much more robust models to support staffing levels on the COGS side for support, for onboarding. We are, you know, the efficiencies and the economies of scale that we get on our data center costs and the telecom costs associated with supporting our customers, we continue to drive costs out there. We're not done by any stretch. I do think that the pace may slow down a little bit, given the 850 basis points we've seen over basically the last year. We will continue to drive those out. On the operating expense side, we've got, I think that we're trending towards kind of best in class benchmarks on several of those areas. As Brett had mentioned, we're gonna continue to invest in the go-to-market side as we can while still delivering, you know, moving quickly towards profitability. There's additional room to drive the cost out and to deliver, you know, full cash flow and profitability. Yeah. Thank you for that. Our prepared remarks, you mentioned, positive momentum carried over into Q1, you know, I think in terms of both customer additions and pricing. On the customer additions, are there any geographic regions or customer verticals to call out that are driving that strength, or is it relatively broad-based? I would say it's relatively consistent. You know, our big geos. We're, we're, you know, vast majority, primarily all of our business is in the U.S. Our, our big geos are, not surprising, California, New York, Texas, Florida. That's, you know, continued, you know, that volume trajectory continues. Then, you know, by vertical, it kind of continues to be pretty, you know, weighted pretty consistent with what we've seen, over the last several quarters. Dental being number one, optometry, veterinarian and specialty medical. Great. Thank you for the questions. Sure. And let me give a little bit more color to Alan's response. The operating model that we have developed internally on finding efficiency is it's kind of the deal we've struck with the team is let's go find waste and inefficient spend, and every dollar that we find, we will take some of that and put it back into spend that we know works, that we can really calculate weekly, monthly, we know that spend works. We've got a pretty passionate team here, pretty focused on running waste and inefficiency out of the business because they just know we'll immediately flip some of that back to growth investments. That's part of the question as well. You know, as you're seeing better demand trends, you know, the kind of desire, the focus on reinvesting back into the growth engine of the business as that improves. I think you answered that question. Thank you. You bet. Thank you. Thank you. The next question we have is from Tyler Radke from Citigroup. Please go ahead. Hi, this is Kylie Tobin on for Tyler Radke. Nice quarter, and you had a really nice beat and raise on the quarter. Guidance, you know, raised more than you beat. Is this driven by your new product releases and potential upsell within your Pro SKU or something else? Just on that note, have you disclosed what% of your client base is on that Pro SKU? Thanks. It does represent that and just the continued confidence that as we've just continued that acceleration of execution across the board. It was only a year ago when we did the sales replatforming. We now have got that dialed in and even though we're fully ramped, we will still see some additional efficiencies as we continue forward. That's a pattern that we've seen in the past with some of our more seasoned reps. We'll see both the product enhancements that will be coming forward and the just performance of the sales team. Remind me the second part of your question. Yeah, sure. It was just if you've disclosed what% of your client base is on that Pro SKU. Yeah. Just we haven't described the percentage. Suffice it to say that we land very heavy on the Weave Elite bundle is what we're calling it now, or in the past it's a Weave Plus with premium features. The vast majority of our customers usually land on that package. Okay, great. Thank you. Just one more. Is your newly launched Response Assistant solution, is that leveraging generative AI LLMs? Is this something that would just be available in that Pro SKU? Just on that note, you know, would love to hear more about the opportunities you feel like you have within the pricing and packaging as you continue to add these new features. Thanks. I'll start and then Brett can add in, but yes, the answer is yes, it is using the LLM generative AI. I think the introduction of Response Assistant on the reviews is just the beginning. There are so many things that can be done with respect to chat, appointment and appointment scheduling and responses. The AI is all the rage, as you know, and this really represents something that can take a significant burden out of people, making them able to edit instead of create and personalize information. That gives them much more efficient way of really personalizing and engaging directly with each customer. Thank you. The next question we have is from Brett Bracelin from Piper Sandler. Please go ahead. Hi, everyone. This is Mauro stepping on for Brent. Thanks for taking our questions. Just two from us. As you think about the investments you've made on the go-to-market front, how should we think about how that will affect your net retention metrics as we kind of go throughout the year? Just trying to figure out if 100% X that third-party dynamic is kind of a starting point for the year, or is there just not enough visibility on that front yet? Then my second question, just wondering if there's any qualitative commentary you can provide on how customer conversations or in-person events trended in April. Why don't I take the NRR one, and then maybe Brett can talk to the customer events, and I'll join in. On the NRR, I think that we will see some further degradation there until we clear the full cycle. It's really in Q3 is when that customer forms issue will finally we will have lapped it. We'll see it, but, you know, I don't think it's, you know, it'll probably go from the 97% to maybe 96%. Then we should be able to start taking that back up. As a trailing 12-month average, it takes a while to turn that around, and particularly given the forms issue that we've been talking about now for three quarters. That's where we see that going. We do have plans in place to get that turned around. Yeah. I'm hesitant to kind of report on April. I don't really want to set that precedent. We're pretty happy with how the year is shaping up. Okay. Thank you very much. Thank you. The next question we have is from Kash Rangan from Goldman Sachs. Please go ahead. Hey, guys, this is Jacob on for Kash. Appreciate you taking the question. Apologize if this was addressed already. I just hopped from another call. I know the original goal was, I believe, and correct me if I'm wrong, was free cash flow breakeven by 4Q, and that was brought up by, well, three quarters into 1Q, it looks like. Can you just touch on the dynamics that really allowed you to post breakeven free cash flow this quarter and how you expect that to trend going throughout the year? Jacob, the execution of the team, the overperformance on the top line, you know, those are the things that really drove us into the free cash flow positive position. We mentioned in the prepared remarks that we don't anticipate seeing that again in Q2. There are seasonal payroll factors that enter in associated with the way we manage our employees that will that will make it so that we won't achieve that necessarily in Q2, but we do intend fully on exiting the year in Q4 as cash flow positive as well. We're excited about that. It's the first time in company history, obviously, and that it helps us to turn that corner and move rapidly towards both free cash flow positive as well as, you know, GAAP profitability. Awesome. Okay. No, I appreciate that color. Thank you so much, guys. Thank you. The next question we have is from Parker Lane from Stifel. Hi, this is Matthew Pickert on for Parker. Thanks a lot for taking my questions, and congrats on the quarter. You mentioned Digital Forms. I'm curious, what's been the reception like for your new Digital Forms product? Has the success rate been about what you're anticipating? Is there any incremental interest in this solution over the previous partnership and their solution for any new customers that are new to a Digital Forms product? Yeah. Thanks, Matthew. First of all, we are pleased with the ramp of the Digital Forms. We're also pleased with the trajectory we're on with respect to retention of the Digital Forms. I think that the solution that we are offering and the deeper integration that we offer versus our prior third-party partner alternative is going to make us a more compelling solution as we move forward because we've got the write back capability into many of the practice management solutions that we are tied to. That makes it so that when you go into your dentist or your doctor and you fill out the paperwork online in that Digital Form, there's an automatic write back capability into the practice management solution. There are no transcription errors, there's no wasted time in re-entering data. All of those things are features that these customers are really enjoying and that make their offices run much more efficiently. Okay, got it. Secondly, after your announcement of continued relationship with Stripe for payment processing, do you envision payments becoming a larger part of the Weave growth story once again? Is it more of an added feature for the clients? Could you talk a bit about your payments vision there? Sure. I'll start. Yes, we expect payments to be a bigger part of the Weave story. You know, payments currently are growing significantly faster than subscription revenue. And we're, you know, we're quiet, I'd say, under-penetrated in our customer base with our payment solution. Getting greater breadth and greater depth into the Stripe platform with the Weave Stripe integrations offers our customers more functionality, which is terrific. Also, we're just getting more focus internally on our payments business and driving our payments functionality into a larger percentage of our customer base. We definitely look forward to our payments business continuing to grow rapidly and grow as a percentage of revenue as well. Terrific. Thank you very much. Thank you. The last question we have is from Mark Schappell from Loop Capital Markets. Please go ahead. Hi, this is Tim Grieser for Mark Schappell. thank you for taking the question. I wanted to ask with respect to, like, improving the gross margin and streamlining your infrastructure has, like, been a priority, particularly in optimizing the Google Cloud. can you talk about or give us an update on where that initiative stands? Yes. That initiative will always be ongoing. There's been several very nice improvements, both in terms of the efficiency with which we use the Google Cloud, the efficiency in our telecom operations, with our bandwidth providers and in our data centers overall. The engineering team is focused on this. As Brett mentioned, the energy around the whole team really looking for opportunities to drive out the waste is really what we're after. Everyone is really looking at this on the support side and onboarding side. We've got teams that are engaged, that are creative, that are really putting in the work to make sure that we're able to leverage the cost basis we're already at and provide the services to our customers, all while driving higher CSAT scores over the last six to eight months. All of those things are coming together and will continue to be a focus in driving the most, you know, efficient process we can for both attracting customers, getting them onboarded and servicing them. Okay, great. Thank you. Thank you. Ladies and gentlemen, that concludes the question-and-answer session. Thank you for joining us today. You may now disconnect your lines.