Good day, everyone, and welcome to today's Weave Third Quarter Fiscal Year 2022 Earnings Call. Today's call is being recorded. And now at this time, I'd like to turn the call over to Maria Hocut. Please go ahead.

Thank you, April. Good afternoon and thank you for joining us for the Weave Communications third quarter 2022 earnings call. Joining me on the call today are Brett White, Chief Executive Officer; and Alan Taylor, Chief Financial Officer. Full details of our results and additional management commentary are available in our earnings release, which can be found on the Investor Relations section of the website at investors.getweave.com. Please note that this call will be simultaneously webcast on the Investor Relations section of the company's corporate website. Before we start, I would like to remind you that the following discussion contains forward-looking statements within the meaning of the federal securities laws, including, but not limited to, statements regarding these future financial results and management's expectations and plans for the business. These statements are neither promises nor guarantees and involve risks and uncertainties that may cause the actual results to differ materially from those discussed here. You should not place undue reliance on any forward-looking statements. Factors that could cause actual results to differ from the forward-looking statements can be found in our Form 10-Q filed with the SEC on August 12, 2022, which is accessible on the SEC's website at www.sec.gov and also available on our website at investors.getweave.com as may be supplemented in subsequent periodic reports we file with the SEC. Any forward-looking statements made in this conference call, including responses to your questions, are based on current expectations as of today, and we've assumed no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. The following discussion contains non-GAAP financial measures. For a reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP metric, please see our earnings press release, which is available on the IR section of our corporate website at investors.getweave.com. Now I will turn the call over to Brett White, Chief Executive Officer of Weave. Brett?

Thank you, Maria, and thank you, everyone, for joining us today, and welcome to our third quarter financial results conference call. I'm very pleased to address you today as Weave's new CEO. My tenure with Weave started when I joined the Board of Directors in July of 2020 and continued when I joined the executive team this past April. My history with Weave plus my prior C-suite experience with SMB software and payments company has made for a smooth transition into my new role. As CEO, I'll have laser focus on delivering experience that our customers love, building a scalable foundation for profitable growth and fostering an effective and engaged team that lives our core values. I'm extremely thankful for the overwhelming support that I've received from our Board, our investors and our Weave team members since joining the management team, and I am very optimistic and excited about our future. Before Alan provides details on our Q3 financial results, I wanted to share some highlights from the quarter. We saw continued improvement in our go-to-market execution and results throughout the quarter following the changes that we made earlier this year. This contributed to our record Q3 revenue of $36.2 million, representing year-over-year growth of 20%. The team has been hard at work improving the efficiency of all aspects of our business, which is reflected in our Q3 results. Year-over-year, we've improved our non-GAAP gross profit by 33%. We've reduced our non-GAAP operating loss by 34%, and our non-GAAP operating loss margin from negative 33% of revenue to negative 18% of revenue. Meanwhile, we've increased subscription and payments revenue $6.6 million with only addition of $2.4 million in operating expense, much of which was due to us becoming a public company in November of last year. These trends demonstrate that…

Thanks, Brett. On behalf of Weave, I want to welcome Brett to the CEO role. It has been a privilege to work closely with Brett since he joined our Board in mid-2020. The entire Weave team quickly grew to appreciate his capacity and energy when he joined the executive team in April. Now we all look forward to working closely with Brett as he leads the next phase in the company's journey. Regarding our third quarter financials, in the quarter, our total revenue reached $36.2 million, slightly above the top of our guidance range. The 20% year-over-year increase was almost entirely driven by the new customers we added over the last 12-months. We also had a small revenue benefit from existing customer expansion, as indicated by our net revenue retention rate of 101%. In addition, our gross revenue retention rate remained at 94%, where it has been for the last four quarters, with signals that our specialty health care customers remain stable and avid users of the Weave platform even during the evolving economic conditions. As we have mentioned in prior quarters, our 20% growth rate reflects the impact of changing our nationwide install program that contributed roughly $740,000 to revenue in Q3 2021. Excluding that impact, our growth rate is 23% year-over-year, which is the growth for our subscription and payment revenue. The change we made to our nationwide install program impacts our revenue growth, but it eliminates channel conflict, expands our gross margins, better leverages the expertise of our IT partners and improves the experience for our customers. As I discuss our expenses and margins, I will refer to non-GAAP results. You can find a reconciliation to the related GAAP results attached to the earnings release issued earlier today. We earned a non-GAAP gross profit of $23.4 million…

Thank you. [Operator Instructions] And we'll first hear from Parker Lane of Stifel.

This is Matthew Kikkert on for Parker. Thanks a lot for taking my questions. First off, it seems like you placed a lot of attention on multi-location practices recently. How has the traction been in that opportunity set outside of the Dental Care Alliance that you talked about? And do you have a dedicated go-to-market team for those multi-location practices?

Yes. Thanks for the question. So I'll take the first part. And then Alan, you can follow-up. So yes, we have been seeing traction. We've been spending a lot of time working on the product. We've announced some product enhancements today that improve our capabilities to make the product more attractive to multis. We are building that pipeline. That is a longer sales cycle, for sure, than the individual locations. And yes, we do have a dedicated team. It's a small team, and they're building their pipeline now. Alan, anything to add?

Yes. We're developing a new muscle with respect to really having a sales pipeline to monitor and to report on. And that mid-market team continues to flesh out that pipeline. And these kinds of sales, as you can expect, would behave a little bit more like enterprise sales, but reflect a wonderful opportunity for us to go after as we continue to evolve the product and meet those requirements in the multi-app space and service DSOs and their counterparts in the other markets.

Okay. That's great to hear. And then secondly, as part of your revamped go-to-market motion, do you anticipate continued hiring throughout the remainder of the year? And then are you still focused on solely talent in Utah? Or are you expanding to remote salespeople as well?

So we will, although the good news there is that the attrition is slowing. But more than anything, we're going to be focused on the improvement in sales productivity. We see many more ramped sales head count, obviously, as we've gone through the year, which is positive for us. And that sales productivity is really going to be the focus of what we do there.

As far as locations, we're going to be focused on hiring where the talent is. There is a lot of sales talent in Utah. But certainly, we won't limit ourselves if we can find great talent in other locations.

Okay. Thank you very much for taking questions.

[Operator Instructions] Next, we'll hear from Michael Funk of Bank of America.

Yes, thank you for the questions this evening. You mentioned a few times about the flywheel effect for revenue growth and of the sales -- sorry, the productivity has increased. You also mentioned the negative effect from forms. So how should we think about the sales cycle first as productivity does ramp and then the sequencing of revenue growth the next couple of quarters as that productivity improves and you bring those forums back in-house?

The forms, we are -- we already had the forms product in place. We were growing and developing that product as we were still working with the partner. As I mentioned, it became necessary for us to do that a little more quickly given the developments in the third quarter. So we've done that. We were in a very low-margin situation with the prior forms. So even though the rev top line implications are a little more significant, the bottom line, actually, the margin improvement in our in-house forms is going to be very good for us from a margin perspective. It will take us a little while to replace the top line revenue. We anticipate that taking no longer than six months, but it won't take us long at all to replace the bottom line impact.

And then on kind of just overall revenue trajectory, so we've given you Q4. We're in the process of finalizing our annual operating plan for 2023. We'll finalize that, get it through the Board for approval, and then we'll be sharing our outlook for next year in our next earnings call.

Got it. And then one more, if I could. Appreciate the commentary you also gave on industry conferences and in-person. Maybe even just, kind of, qualitatively or comparison-wise, where are we now with gross additions as those events ramp up and productivity increases, as well relative to where you were, say, a year ago or even 24 months ago?

Sure, I would respond. It's very encouraging to have had our best month in September that we've had since the pandemic hit. The events and seeing people come back, it's not at pre-pandemic attendance levels. But even so, it becomes a productive way for us to both sell deals at the show, as well as come back with an armful of leads that can be worked from the home office. The one other thing that we believe these events do is they have a halo effect of marketing that those that attend these events see the energy around the Weave booth. They're able to view the Weave product. And that presents an opportunity for them to become exposed and enthusiastic or at least positive about the Weave products so that when they're called or contacted later, we have a higher probability of success.

Great. Thank you for the questions. I appreciate it.

[Operator Instructions] Alex Sklar of Raymond James has our next question.

This is [Jonathan] (ph) on for Alex. Thanks for taking the question. It will just be one from us. Alan, I know we don't get the location count any longer. But can you talk about how subscription revenue per location has trended? You have a lot of new product developments, including Review Analytics and Online Scheduling. So just kind of curious if these are contributing to increasing price points or more of a future growth opportunity there. Thanks.

So thank you for the question. We've been very stable and trending slightly up on MRR. We do have products in the queue that, obviously, we are enthusiastic about improving that. But so far, we've seen stable annual contract values or monthly revenue amounts for our customers. So that's a positive sign of growth despite the economic conditions we're facing.

Was there anything else caller?

No, thank you.

Mark Schappel of Loop Capital has our next question.

Hi, thank you for taking my questions. Alan, starting with you, I was wondering if you could just talk about what you saw with respect to customer churn in the quarter. Was it within the normal range?

It was. We track that obviously very closely. You can see from our gross revenue retention rate, they remained at 94%. That's a positive result. So we're not -- from a customer's churn standpoint, we're not seeing anything out of the ordinary. It's been consistent through the course of this year. And so we're very pleased about that.

The other thing that I would add is -- let me just add one thing. When -- often, when folks think about SMB, they think about a churn-y customer base. Our customer base is incredibly resilient. These are individuals, who basically dedicated their lives to their craft. They've gone to school. They built businesses. They don't really have another option to go do something else. So business turnover, business churn is very low. And I can tell you for an SMB company, our churn, our gross retention is very, very good, and our churn is very low.

Great, thanks. And then Brett, I was wondering if you could just give us a few more details on what you're seeing with respect to customer responses like in the macro environment. I think last quarter, it was noted that maybe some sales cycles were starting to extend a little bit. What are you seeing this quarter?

Yes. So happy to share what we're seeing. It's actually pretty interesting. So we're seeing -- so historically, maybe the office administrator would make the purchase decision. And now maybe the doctor is getting involved, getting maybe involved. Maybe if there's a couple of doctors in the practice, they're both getting involved. So like we mentioned in our last earnings call, sales cycles appear to have elongated a bit, but not -- it's not dramatic. The other thing we're seeing, as Alan mentioned, is pretty steady gross retention. I think all customers, SMB business owners, are all looking to ensure that they're getting value for their spend. And the Weave product is holding up quite well against that review. And so that's one of the things we're just super focused on is making sure that our customers are happy. They're getting value for our product and that we're continuing to release new features and new functionality to deliver even more product -- more value in the products that they have. So the other interesting thing is on the new sales, the price point is holding up very, very well. And so that's another encouraging sign.

Great. Thank you.

[Operator Instructions] It appears there are no further questions at this time. Also, that does conclude today's conference. You may now disconnect.