Weave Communications Q2 Earnings Call Highlights

Weave Communications NYSE: WEAV reported second-quarter revenue growth and improved profitability, while management said a transition in its sales organization created a temporary bookings shortfall that prompted a revision to its full-year revenue outlook. Total revenue rose 15.5% year over year to $67.5 million in the second quarter, CEO Brett White said. Payments revenue grew at roughly twice the pace of total revenue, while the company added a record number of new locations on both a gross and net basis. Dental, Weave's largest vertical, added more locations on a gross and net basis than in any of the preceding eight quarters. Weave's non-GAAP operating income reached $3.2 million, compared with breakeven in the prior-year quarter, and operating margin improved to 4.7%. CFO Jason Christiansen said the company converted 34% of its year-over-year revenue growth into incremental operating income during the period. Gross profit increased 16% year over year to $49 million, producing a gross margin of 72.6%, up 30 basis points from a year earlier. Subscription and payment-processing gross margin was 77.9%. Christiansen said customer-support costs declined as a percentage of revenue, aided by technology and AI adoption, product enhancements and self-service capabilities. Those improvements were partially offset by higher messaging usage fees, adjustments to certain vendor invoices and elevated credit-card fees associated with a larger group of customers paying annually in advance. Sales and marketing expense totaled $25.8 million, or 38% of revenue, improving by 160 basis points from the prior year and 240 basis points sequentially. General and administrative expense was $10 million, or 15% of revenue, while research and development expense also totaled $10 million, or 15% of revenue. The company ended the quarter with $78.5 million in cash and short-term investments, up $5.8 million sequentially. Cash provided by operating activities was $10.2 million, and free cash flow was $8.7 million. Weave said it generated positive free cash flow during the first half of 2026. Management said it has been reorganizing its go-to-market organization to improve sales productivity and profitability. The company verticalized its inbound sales force during the first half of the year, assigning specialized sellers to key markets including dental and specialty medical. It also shifted outbound prospecting responsibilities toward a sales development representative, or S.