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The call was predominantly positive: the company reported accelerating revenue growth (17.4% YoY), margin expansion (gross margin +110 bps to 73.2%; operating margin +380 bps to 3.9%), record location additions, strong payments momentum, rapid AI adoption (300%+ increase in AI interactions) and raised full-year guidance. Key challenges include negative free cash flow for the quarter, a sequential $9M decline in cash, dollar-based net revenue retention below 100% (92%), and elevated sales & marketing spend (40.6% of revenue). Management framed several of the short-term cash and expense items as seasonal or investment-related and emphasized improving monthly retention and product-led upsell opportunities. Overall, the strengths (growth, margin expansion, product traction, guidance raises) outweigh the near-term financial and retention headwinds.
Management guided Q2 2026 revenue of $67.2–$68.2 million and non‑GAAP operating income of $2.1–$3.1 million (noting Q2 operating expenses will increase sequentially for annual merit increases), and raised full‑year 2026 guidance to $275–$278 million in revenue with non‑GAAP operating income of $10.5–$13.5 million; they expect weighted average shares of ~79.6 million in Q2 and ~79.8 million for the full year, reiterated a long‑term gross margin target of 75%–80%, indicated free cash flow should be positive in February 2026, and provided this outlook after a strong Q1 that produced $65.5 million of revenue (17.4% YoY), $47.9 million gross profit (73.2% gross margin, +110 bps YoY) and $2.5 million operating income.
Total revenue of $65.5 million in Q1 2026, representing 17.4% year-over-year growth and coming in above the high end of guidance; the company has met or exceeded the high end of revenue guidance for 17 consecutive quarters.
Operating income of $2.5 million in Q1 2026 versus breakeven in Q1 2025; operating margin improved to 3.9% (a 380 basis point YoY improvement). Gross profit grew over 19% YoY to $47.9 million and gross margin improved 110 basis points YoY to 73.2%.
Payments business grew at more than twice the rate of total revenue in Q1, with increased number of locations using payment processing, higher processing volume per location, and a higher net take; subscription and payments gross margin reached 78.4%, supporting the path to the long-term gross margin target of 75%–80%.
Company added the most locations ever in a single quarter (Q1) and reported monthly retention rates that positively inflected in the quarter. Dollar-based net revenue retention for Q1 was 92%, and dollar-based gross revenue retention was 89% (company stated reported metrics are a 12-month weighted average that can lag recent improvements).
Platform handled over 300% more AI interactions in Q1 year-over-year; more than 50% of customer locations use at least one embedded AI solution. Notable customer outcomes include: a dental practice reporting 37% new patient volume growth using the AI receptionist (new patients spend ~3x per visit), one practice lowering unhappy call rate by over 40% in two months using Call Intelligence, a med spa achieving 100% retention for flagged follow-ups, and pilot recipients reporting ~80% reduction in missed calls.
Successful upsell motion for new products (insurance eligibility, AI receptionist, Call Intelligence); AI receptionist to be monetized via a hybrid subscription/consumption model and expanded to omnichannel capabilities (voice + text) with broader availability expected later in the quarter.
Q2 2026 revenue guidance raised to $67.2 million–$68.2 million and Q2 operating income to $2.1 million–$3.1 million. Full-year 2026 revenue guidance raised to $275 million–$278 million and non-GAAP operating income to $10.5 million–$13.5 million.
Greetings, and welcome to Weave Communications, Inc.'s First Quarter 2026 Financial Results and Conference Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal remarks. As a reminder, this conference is being recorded. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. I would now like to turn the conference over to your host, Moriah Shilton, Investor Relations. Thank you.
You may begin.
Thank you, Kara. Good afternoon, everyone, and welcome to Weave Communications, Inc.'s First Quarter 2026 Earnings Call. With me on today's call are Brett White, CEO, and Jason Christiansen, 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, entail certain assumptions made as of today's date, and are subject to various risks and uncertainties described in our SEC filings. Weave Communications, Inc. disclaims any obligation to update or revise any forward-looking statement. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.
Unless otherwise noted, all numbers we talk about today will be on a non-GAAP basis, which excludes acquisition-related costs, costs related to certain shareholder matters, amortization of acquired intangible assets, and stock-based compensation. A reconciliation to comparabl...