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Thank you. Hello, everyone. Thank you for joining us and welcome to the Weave Second Quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Mariah Shilton, Investor Relations. Mariah, please go ahead.

Thank you, Al. Good afternoon, everyone, and welcome to Weave's second quarter 2026 earnings call. With me on today's call are Brett White, CEO, and Jason Christensen, 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 up as of today's date, and are subject to various risks and uncertainties described in our SEC filings. Weave disclaims any obligation to update or revise any forward-looking statements. 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, excludes acquisition-related costs, costs related to certain shareholder matters, amortization of acquired intangible assets, and stock-based compensation.

A reconciliation to comparable gap metrics can be found in today's earnings release, which is available on our investor relations website and as an exhibit to the Form 8-K furnished with the SEC before this call, as well as the earnings presentation on our investor relations website.

With that, I will now turn the call over to Brett. Thank you, Mariah, and thank you all for joining us today. We've delivered strong results in the second quarter. Total revenue was 67.5 million, 15 and a half percent growth over last year, and payments grew at roughly double that rate. Revenue retention measured on a quarterly basis also improved sequentially. added the most new locations ever in a single quarter, both on a gross and net basis. Dental, our largest vertical, had a strong quarter, adding more locations on a gross and net basis than it has in the last eight quarters. On the medical front, we released a significantly deeper integration with the Athena One platform and joined Athena Health's marketplace. making our innovative solutions available to more than 160,000 specialty medical providers.

As part of our commitment to deliver increasingly profitable growth, we made significant progress optimizing our go to market motion. And sales and marketing expenses, a percentage of revenue was down sequentially. Overall, we expanded our operating margin to almost 5% up sharply from roughly break-even in the same quarter last year. Over the last 12 months, we have increased our revenue by $37 million and seen over 19% of that incremental improvement convert to adjusted EBITDA, demonstrating that our business gets substantially more profitable at scale. With that financial context in mind, I'd like to dive deeper into the fundamentals of our business and why we're so confident in our long-term position. Weave is the unified AI-powered patient engagement and payments platform purpose-built for healthcare practices. We bring together AI agents and practice staff interactions across voice and text into unified workflows.

Acting as an always-on teammate, Weave is the orchestration layer that helps practices continuously improve patient relationships, proactively assign tasks for staff follow-up, and deliver insights so practice owners can measure, analyze, and optimize their businesses. Whether I'm talking to owners of independent practices or operators running hundreds of locations, they all share the same need, increasing production. they also share the same three challenges impacting their businesses. scheduling and keeping treatment chairs full, staffing shortages and rising costs, and revenue leakage. Our primary focus at Weave is ensuring that our value to customers in addressing these challenges is a large and increasing multiple of their spending on our solutions. Starting with the most complicated and critical challenge to address, scheduling. Practice owners face increasing margin pressure, making efficient scheduling table stakes and full schedules a top priority. A recent survey found that appointment scheduling and confirmation topped the list of tasks front desk staff wish were automated, with 49% citing it as their primary concern. We've keep schedules full by closing the gaps that drain production.

Our platform has significant advantage because we own the patient practice communication layer through which almost every workflow originates or gets completed. This allows us to execute workflows through the trusted primary business phone number, rather than from a random unknown phone number or a five-digit short code, leading to higher patient engagement with important messages. Weave ensures no call or text goes unanswered and converts inquiries into appointments. The impact is real. One doctor put it, Weave's automated texts in response to missed calls drove a 70% decrease in missed opportunities. Automated recall and reactivation campaigns bring lapsed patients back before they slip away for good. When a cancellation opens up a slot on the schedule, Weave's waitlist workflows can be activated to convert the empty chair to revenue without manual back and forth between the staff and patients. Once someone on the waitlist books, staff are notified instantly, so no one is double booked or contacted about an appointment that's already gone.

Automated smart reminder workflows help keep appointments from being forgotten, and our AI receptionist lets patients book, confirm, cancel, and reschedule appointments by voice or text around the clock. For one Weave customer, staff members spent hours of each day manually calling patients to confirm their upcoming visits, and the practice still suffered from a consistent pattern of no-shows. Rather than hoping staff would find time during their busy workday to call and nudge patients, the practice implemented a customized automated reminder sequence with Weave. Their no-show rate plummeted from multiple missed appointments every day to just one no-show every two weeks. A single automated text sequence captured substantial, otherwise lost revenue, and the doctor noted that the investment in Weave paid for itself almost instantly. Moving to challenge number two, staffing shortages and rising labor costs. Over 60 percent of practices surveyed have experienced a staffing shortage in the last 12 months.

These vacant roles often impact scheduling and office production, resulting in reduced patient volume, lower treatment plan acceptance and longer collection cycles. Additionally, employment costs for these positions have increased significantly due to a shortage of qualified office staff. Weave helps practices streamline their workload by automating the high-volume manual tasks that eat up staff hours so leaner teams can focus on deeper-level work. The goal is simple, give people hours back so they can focus on patients, not paperwork. With Weave's 24-7 coverage, a front office team manages a single unified inbox instead of a backlog of missed calls and voicemails. Workflow automation runs across the entire patient journey, from the first intake form to the final balance collection. Pre-appointment insurance verification and eligibility checks reduce the amount of time sitting on hold with the insurance payers.

The depth and breadth of the work Weave completes alters the way practices think about staffing and expenses. One doctor told us, quote, I conservatively save over $50,000 a year in salary and overhead expenses by automating tasks and running a leaner team with Weave, end quote. Following the departure of their front desk manager, a Virginia-based practice used Weave to automate their front office workflows, which eliminated the need to backfill the role. And in another example, a customer was buried in insurance verification tasks and noted that their practice administrator could spend over an hour on hold with the insurance payer for a single patient. After they implemented WEA's insurance verification, calls to the payers were significantly reduced, and time spent on verification per patient dropped to just a few minutes. Finally, our customers face the challenge of revenue leakage throughout the patient journey from booking to final collection. Revenue leakage often goes unnoticed. According to multiple industry reports, the average dental practice writes off 9% or more of their gross billings annually.

We've plugged those leaks by embedding payments and revenue cycle management solutions directly into patient interaction workflows. It starts before the visit. Insurance eligibility is confirmed and co-pays are collected up front with a card on file or text to pay. Text2Pay sends an automatic payment link from the practice number that patients already trust, helping practices collect money they may otherwise never receive. A practice administrator at a Florida-based dental office was responsible for verifying insurance for 60 to 100 patients a day. After adopting Weed's insurance verification, she went from struggling to finish a single day's work to comfortably completing the work in half the time. In addition to the time saved, those verifications represented timely payments instead of denials landing weeks later. What used to be a source of lost revenue and a real strain on the team became something that they could stay ahead of.

In-house or third-party payment plans are also available through Weave, allowing providers to offer flexible financing options to help payments say yes to critical treatment. After the appointment, Weave automates follow-up for the small unpaid balances that typically fall to the bottom of the priority list. No front desk team wants to spend the valuable time chasing dozens of $30 copays, but those balances add up. After a payment request is created in Weave, reminders are sent automatically so balances don't linger. One doctor told us that we've reduced their billing process to just five seconds per invoice via our text-to-pay solution. A practice administrator in Massachusetts said with Weave Text-to-Pay, payments came in in just 5 to 10 minutes after patients were notified. As a result, they've collected more than $2 million through Weave Payments.

Revenue that once aged in receivables or slipped away entirely is now collected almost immediately. We continue to address these challenges by adding new AI-powered products and features. In just one year, we added 70% more AI-powered features to the Weave platform. In the second quarter, custom AI interactions on our platform totaled 70 million and increased by 165% compared to last year. Call Intelligence, our longest tenured standalone AI product, had a 143% increase in interactions. Customers using call intelligence analyzed more than 14.5 million calls in Q2, servicing 810,000 unscheduled opportunities for staff follow-up. Only a portion of these opportunities were acted upon by staff.

While millions of dollars in production value were captured, millions more were missed, a gap our AI receptionist is uniquely positioned to close. Our AI receptionist helps solve the core problem of 24-7 scheduling automation, keeping schedules full without requiring additional staff, providing clear benefits for single location practices and scalable impact for multi-location organizations. our AI receptions takes action after work hours, or when the front office desk staff are busy. Today, our AI receptionist answers inbound calls and text messages, responds to common patient questions, and books and manages appointments. As communicated on our last call, in May we provided early access to voice capabilities on our AI receptions, representing the first step in moving beyond text to omnichannel patient engagement. The practice now has a complete view of all patient interactions and an agent that acts. Congratulations. Customer feedback has been incredibly positive. A customer in Georgia told us that using this product doubled the effectiveness of the receptionist function in just 30 days.

A dentist's office shared with us that their AI receptionist gave their front desk staff much-needed breaks while ensuring 100% of missed calls received an immediate response. Another customer described the relief of having patient scheduling captured over the weekend. They told us that the best part of Monday morning is now seeing all the appointments the AI receptionist booked while the team was away. As AI agents take on more of the routine administrative work, practice owners are able to run their business with technology working alongside their team. We see this freeing up staff to focus on things machines can't do. Front office teams become the reason patients feel known and cared for. They take on managing and directing the practice's AI workforce.

And they become the engine behind new patient acquisition. In short, AI perceptions isn't just automating tasks, it's elevating the role of the front office. Before I turn the call over to Jason, I want to spend a couple of minutes updating you on our go-to-market strategy. In previous calls, we shared our goal to improve the productivity of our go-to-market functions. We have implemented some key changes in our go-to-market organization with sharper focus on ensuring that function is structured to support stronger growth with expanding profitability as we continue to scale. In the first half of the year, we verticalized our inbound sales function, putting specialized sellers in front of our key end markets. As new locations from Specialty Medical accelerate, we see increasing value in having experts showcase our value proposition and speak to vertical specific pain points.

We have now reached the scale that makes verticalization a cost-effective investment. Additionally, we gradually implemented an SDR model in our outbound sales function so that account executives can focus on demoing and closing. This moves prospecting from our account executives to our specialized SDR team, which now feeds a growing flow of qualified opportunities into the funnel. This change gives us a team of more senior account executives with our top closers running full calendars with higher quality meetings. Early indications from these changes are very positive. As stated earlier, we added a record number of new locations in the quarter, both gross and net, with particularly strong performance in dental. Importantly, we did that while reducing sales and marketing expenses as a percentage of revenue by 240 basis points sequentially.

That is exactly the combination that we are building toward. More growth per dollar of sales and marketing. As with any change of this nature, the transition came with an adjustment period. Over the May to July period, as lead generation gradually moved to our SDR team and our account executives shifted onto demoing and closing, it took time to calibrate the lead distribution with the appropriate execution, resulting in booking slightly below our expectation, despite very strong demand. This impact is reflected in our revenue outlook, which Jason will walk through in a moment. This is a normal cost of moving to a more focused sales model. We have already sharpened lead routing and tightened incentive alignment.

Given how positive the early indications have been, we recently made the decision to accelerate and complete this transition in August to compress the remainder of the adjustment period and build on our momentum. These adjustments to our go to market function set us up for stronger, higher performing business going forward. Our current pipeline is stronger than ever, our sales organization is now operating as designed and our conviction in this model is high. We believe we are well positioned for long-term success with a more efficient operating infrastructure, a growing customer base, and an expanding market opportunity.

With that, I'll turn the call over to Jason to walk through the financials in more detail. Thanks, Brett, and good afternoon, everyone. The second quarter of 2026 was a solid quarter for Weave, with continued revenue growth and much improved operating income as we continue to execute across the business. In the second quarter, we produced $67.5 million in total revenue, which represents 15.5% year-over-year growth, driven by payments, which grew at roughly twice the rate of total revenue, and acceleration in new location additions in the last 12 months. Q2 was another record quarter in gross and net location ads. The largest increase was in specialty medical, with accelerating growth in all three of our more established verticals, dental, optometry, and veterinary. A slight headwind to Q2 revenue was a quarter-over-quarter and year-over-year decrease in onboarding revenue due to lower setup fees.

Moving forward, we are renewing our focus on consistently collecting these one-time setup fees. Gross profit grew 16 percent year-over-year to $49 million. Gross margin for the quarter was 72.6%, representing a year over year improvement of 30 basis points. Customer support continues to be a source of leverage as expenses have decreased as a percentage of revenue through technology and AI adoption, product improvements, self-serve capabilities and other operational improvements focused on elevating the customer experience. improvements were offset in part by increased usage fees for messaging and shrewd up invoices on certain vendor agreements q2 also has our largest cohort of customers who pay annually in advance which results in an increase in credit card fees tied to the payment of customer invoices these last two points comprise the gross margin decrease of 60 basis points sequentially. Subscription and payment processing gross margin was 77.9%. Turning to our reported dollar-based revenue retention rates, GRR was 89% and NRR was 92%, holding steady. With the increase in revenue retention rates, with continued improvement in the monthly net revenue retention rate through Q2.

As a reminder, our reported dollar-based revenue retention rates are weighted average of the previous 12 months monthly retention rates. As such, it can take multiple quarters for improvements to show through in reported metrics. Total operating expenses for Q2 were 68% of revenue. General and administrative expenses were $10 million and decreased over 200 basis points year over year to 15% of revenue from 17% in Q2 2025 as we held these expenses flat year over year. year. Research and development expenses were also $10 million, or 15% of revenue, and decreased by 40 basis points compared to the prior year. We saw significant improvement in sales and marketing expenses as a percent of revenue, which totaled $25.8 million, or 38% of revenue. This represents a 160 basis point improvement from last year, and more importantly, a sequential improvement of 240 basis points.

We expect improvements in our sales and marketing efficiency to continue as the go-to-market changes Brett discussed get reflected in our results. Operating income for the quarter was $3.2 million compared to break even in Q2 2025 and exceeded the top end of our guidance. Operating margin was 4.7%, a 460 basis point improvement over the prior year, and an 80 basis point improvement sequentially. The improvement in sales and marketing directly contributed to these profitability improvements. Additionally, we converted 34% of the Q2 revenue growth year over year into incremental operating income, which we are really pleased with. That is a significant improvement over the 13% incremental margin in Q2 2025 and the 26% incremental margin in the prior quarter. in cash flow we ended the quarter with 78.5 million dollars in cash and short-term investments an increase of 5.8 million dollars sequentially Cash from operating activities in Q2 was $10.2 million and free cash flow was $8.7 million. We were free cash flow positive for the first half of 2026.

Looking ahead for the full year 2026, we now expect total revenue to grow to be in the range of $273 million to $275 million, which reflects the impact of the go-to-market transition adjustment period Brett discussed. As a result of the same initiatives, we are raising our non-GAAP operating income guidance to reflect the improvements in operating efficiency and now expect it to be in the range of $12 million to $14 million. We expect our enhanced go-to-market model to support sustained revenue growth, supported by a more focused and efficient sales and marketing organization. This should enable continued operating leverage as we scale and create a clear path to greater profitability over time. For the third quarter of 2026, we expect total revenue to be in the range of $68.6 million to $69.6 million. We expect third quarter operating income to be in the range of $3 million to $4 million. We expect our weighted average share count for Q3 to be approximately 80.2 million shares and approximately 79.8 million shares for the full year.

With that, I'll turn the call over to the operator for Q&A. We will now begin the question and answer session.

If you would like to ask a question, please press star then one to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from... Alex Sklar from Raymond James. Your line is now open.

Great, thank you Brett and maybe maybe for you too Jason, but a couple questions on the revenue outlook to start here. Can you just help reconcile the comments about the record gross and net locations in the quarter? I think I heard payments continue to be 2x the growth rate of kind of core subscription with your your comments on kind of the go-to-market disruption that you saw inter quarter and how that all plays together with the lower growth outlook. Thanks.

Yes, thank you. So as Brett highlighted in his presentation, just prepared remarks. So I guess let me back up. We had really strong growth in Q1 and Q2 from a location ads perspective. We've seen good strength there. Most of that is continued flow through from new deals sold up to that point. As we got to the sales transition, that period between May and July that he referenced is where we'll begin to see some of the impacts of um of just some of the challenges on new sales as they came through. The demand remained very strong through that period. And there were some challenges with the lead distribution side as we talked about.

And so that's something that's really just going to flow through in the back half of the year.

from a revenue guidance perspective. And that's what you're seeing within the revenue guide is the impact of that. Yes, so, you know, booking shortfalls in May, June and July would only a bit of it would actually show up in Q2 and it's going to show up, you know in q3 and then um you know the waterfall of that into q4.

Okay. I appreciate that, Collar. Maybe just a quick follow-up on that. In terms of linearity since you've made these go-to-market changes, any color on that May to July period? Did you already start to see improvements? It looks like kind of Q4 maybe embed a little bit of a improvement versus third quarter. Is that because you're already starting to see improvements? Is that AI receptionist coming in? And then related, any update on the relative size of the overall team now on the sales as a marketing front. It sounds like more weighting to the STR. Our quota heads down. Is it kind of the same size team? We're just splitting them up a little bit differently in terms of verticals, just a little bit more color on go-to-market. Thanks.

Sure, so as far as timing and progress, we have actually two things that we did there. We verticalized the inbound team and we've seen positive results on that. we verticalized them kind of in the Q1, and that's part of what we saw the improvement in dental, and also strong location ads there. So that would be, we're already seeing positive indicators there. On the outbound side, that's the part that got disrupted May to July. We originally planned to do a... a phased hybrid transition that was going to go, I think through October. And we actually pulled that transition completion date forward to the first week in August. So we've just completed the transition. you know, first week in August.

And so now, you know, we'll see through August and September how the, um, how the impact flows through. The early indicators are that the team likes the changes because we're putting our top sellers, we're giving our top sellers the best leads and they don't have to do prospecting anymore. So that just makes a more efficient model And so the optimism is high on the team, and we just need to execute on the new model. And then as far as... The team size is smaller. We did reduce the size of the outbound team. And some of the former sellers were actually offered SDR positions and accepted. So the good news is a number of the new SDR positions that were created were actually those jobs were filled by existing team members.

So that gets the ramp time is much quicker, but the team is smaller for sure.

Okay, great color on that. Maybe just squeeze in one more for me, just on specialty medical specifically, Brett, you talked about the deeper integration with Athena Health. appears to include some better payment workflow there. Can you just talk to us about the opportunity within specialty medical specifically versus those other verticals in terms of like, where the average revenue per customer size is today and how some of these deeper integrations offer.

offer you from an upsell unlock perspective. You bet. So one of the things that the data shows is, and we've talked about this a lot, you enter a vertical, you get the deep integrations, your over time, your ASP goes up, your retention rate goes up, and your CAC goes down. And that is driven by verticality. vertical, but it's also most importantly driven by integrations. The deeper the integrations, the better the unit economics are. And this data just proves out time and time again. you know because we are relatively new and specially medical versus dental opto vet we had fewer integrations we were newer to the market so ASP was lower retention rates were lower and CAC was higher. Getting a deeper integration into Athena Health is huge. First of all, it's a big platform.

It serves a lot of sub-verticals, but specifically in the sub-verticals where we are, they've got 160,000 locations, I think. And we went from, you know, our integrations go from level one to level five. And with this integration, we went from one to four, which which is fantastic. So that'll definitely improve our revenue opportunity, retention rates and over time retention rates, ASP. But the integrations are the key and going deeper in such a broad and significant platform is a big deal. We expect to continue to play this playbook through the medical vertical, which will improve those unit economics over time, which will obviously increase the average unit economics for the business.

Awesome, I appreciate that color and exciting opportunity there. Can I add just a couple of things? Just as a reminder, level one integration is part of what makes Athena very exciting. Brett talked about the level one integration. That's basically just a contact sync where we're reading patient information. patient names, basic information, phone numbers. Level four is where you start getting read and write capabilities across multiple tables within the EHR. which that's a significant step to go from a level one to a level four. And just to address your question about ASPs within the space, as you think about integrated versus non-integrated, in those areas within primary care and plastic surgery where we've got these integrations, we already see that we're able to start getting the improved ASPs that we talk about. But you have to follow more of the integration strategy, and that's already starting to show.

Perfect. Thank you both. The next question comes from Hannah Rudolph with Piper Sandler. Your line is now open.

Hi, guys. Thanks for taking my questions today. I just wanted to double click on the go-to-market changes. It totally makes sense that there would be disruption from these changes, but Jason, as you were resetting the guide, I guess, how did you think about how long the disruption could persist? And said kind of another way, how confident do feel in the guide and would you view it as de-risked here and what assumptions are you embedding in the guide around bookings, you know, net ads and AI adoption?.

Yes, the guidance reflects our best, our best best thinking and projections right now based on these changes. You know, we accelerated the timeline here to August for when we took action to fully cut over to some of the changes that Brett talked about with full closer versus full, um, uh full sdr motion sourcing motions and with that you know We anticipate that within the next couple of months, we should be back to executing more in line with what we had originally anticipated.

Got it. And just want to make sure there's nothing you're seeing beyond the internally executed changes and sounds like you're saying no changes in the demand environment, but have you seen any changes to things like sales cycles or budget scrutiny and things like that?.

So I recently was at DICOMA, which is a very large DSO event in Denver. It's actually the largest DSO event in the US. several weeks ago and met with our largest customers. And also really large prospects. And one message that just came in over and over and over as we talked to these CEOs is their need to, to standardize workflows across all of their practices. So a DSO may own hundreds of practices and they don't all have the same infrastructure. They may have different practice management platforms. They may have different, but there's just this new sense of urgency around standardizing the workflows. And when we sit and talk to them about what we can deliver as far as standardizing across hundreds of locations, just standardizing the front office locations, um, what we can deliver and what's on the roadmap.

And when we talk to them about what AI receptions can do for them, their eyes light up. So I felt left there and subsequent conversations really optimistic around the industry's need for solutions that we offer. So I felt really good coming out of there. You know, we've got this, we own, I think, what could be classified as the most defensible position in SMB healthcare, and that's the patient practice communication layer, which essentially all workflow originates or gets completed. So I think we're in a great position, and I haven't seen any slacking, of the demand environment certainly this hiccups we had in this sales transition was not demand related at all In fact, the SDR motion, actually one of the reasons we had this hiccup is the SDR motion was doing so well, they were beating their targets as far as setting up the appointments that the AE's calendars actually just got too full with lower value opportunities as opposed to still having free time on their own to prospect some of the higher value opportunities. So I'm not seeing anything on the demand side. I'm super optimistic about our future.

And in fact, We announced a partnership with the American Dental Association, I think back in March. it's doing really well. It's already, it's moved ahead to our second most productive affiliate program in just a few short months. So the industry needs to standardize. The industry needs to solve the three problems that I talked about. And those are not... going away. Those are getting more intense. And so I'm just super optimistic about our future.

Super helpful caller. Thanks, guys. The next question comes from the line of Parker Lane with Stiefel. Your line is now open. Please go ahead.

Hey guys, good afternoon. Thanks for taking the questions. Brad, if I heard you guys right, I think it was the most locations for dental in about eight quarters. So I was wondering if you could dig into that. that a little bit more if there's anything in particular this quarter either from demand perspective or some of the changes you've made that contributed to that and how do you view the sustainability of the trends you're seeing on the net ads basis in the vertical in particular.

Yes, hey Parker. I think I attribute it to focus, you know, verticalizing the inbound sales force really got got focus and got us putting the top sellers with industry expertise in front of our highest value leads. So instead of having a seller split their time between a dental lead and a medical lead, we now have enough volume that we can split those up and really get focused conversations and the ability to address industry vertical specific pain points. So that would be one. We've made a number of changes on the marketing side as well on how we manage drive leads and that's shown I think real progress.

Anything you would add? No, I think it really comes down to the focus, the verticalization across sales and marketing is highlighted, I think. Things like the American Dental Association leaning into relationships like that and I All indications from my vantage point are that this is not a fleeting opportunity that I think we're as encouraged as we've ever been on the opportunity long-term. and the position that we hold as we look forward and the need for these practices as they modernize and standardize and digitalize their practices and their workflows. I think it's a real opportunity for us. So long-term outlook, the opportunity's still there for us. We haven't lowered our long-term prospects in view of our growth trajectory. We view this as more just a, I'll say a ripple in the path that we're working through. Got it. Thanks for the feedback guys.

The next question comes from the line of Mark Schappel with Loop Capital Markets. Your line is now open. Please go ahead.

Thank you for taking my question. Brett, AI engagement continues to grow as reflected in the growth of AI interactions across the platform that you spelled out. I was wondering if you could just talk a little bit about how that's translating into financial results, though. Specifically, are you expecting or seeing AI in the future?.

driving, say, higher ARPU, just better retention, or just other revenue opportunities? Could you just address that? Sure. So I think it's – so first of all, most of these products are modules that are priced additionally. and or they're part of an upsell to a higher bundle. So we monetize the key AI products that I mentioned, call intelligence, AI receptionists, et cetera. So that would be number one. the you know it's been proven time and time again that the more functionality you offer on your platform the stickier the platform is and especially and this I think one is underappreciated since we own the trusted practice phone number and all interactions happen on the trusted practice phone number, the more functionality that we offer across that trusted phone number, the stickier the overall solution is. So for sure adding more functionality that takes place across our communication rails makes us stickier. Another thing is it makes the product easier to sell because we're moving away from being a software tool that practices use to an actual 24-7 teammate side-by-side that actually is a system of action that performs tasks. that previously staff either couldn't get to or, you know, are just incredibly time consuming, often fall through the cracks. And it's getting easier and easier to prove ROI, especially with some of these AI tools where you say, okay, just give it a try, just turn it on, it on during lunchtime.

Just turn it on at night. Just turn it on the weekends. See what happens. And the proof points are really apparent. So, you know, additional monetization, additional stickiness, easier to sell, you I think all of those things result in higher ARPU, higher LTV, lower CAC.

kind of all the good things that you want. And I'll add something to that, which, you know, if you think about our framework for how do we price and monetize AI and AI adoption, we really look at the capabilities that we're delivering and whether it's incremental to the existing solutions customers are already using that would just make those products stickier. Those ones we don't necessarily monetize explicitly. For instance, that's like our reviews assistant. which helps you draft very context-aware responses to online reviews that you would get. That's not one that we monetize, but helps make the reviews products stickier. Then there are the other ones like Brett talked about that are just that new incremental capabilities like AI receptionist.

I think one other thing to think about here is not only do we monetize the subscription piece, but it also gives us greater opportunity. on the payment side. So the more of these workflows that result in collecting balances, either before the appointment or after the appointment, we were able to monetize all the payments workflows. And actually our first half, this is a statistic you can't see, but I'll share it with you. our first half growth in payments volume is greater, you know, the growth in payments volume in the first half of this year is greater than the growth in payments volume in the first half of last year. So we've got accelerating payments volume growth, and I think we're just scratching the surface on how some of these AI technologies can drive greater payments volume.

That's helpful, thanks. There are no further questions at this time.

I will now turn the call back to Brett White for closing remarks. Okay, well, thank you. You know, a huge thank you to the Weave team, our customers, and our shareholders for your continued support. And we look forward to talking to you again next quarter. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Greetings, and welcome to Weave's First Quarter 2026 Financial Results and Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions]

I would now like to turn the conference over to your host, Moriah Shilton, Investor Relations. Thank you. You may begin.

Thank you, Tara. Good afternoon, everyone, and welcome to Weave'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 disclaims any obligation to update or revise any forward-looking statements.

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 comparable GAAP metrics can be found in today's earnings release, which is available on our Investor Relations website and as an exhibit to the Form 8-K furnished with the SEC before this call as well as the earnings presentation on our Investor Relations website.

And with that, I will now turn the call over to Brett.

Thank you, Moriah and thank you to everyone joining us today. I'm very pleased to share that Weave delivered another excellent quarter marked by acceleration in revenue growth and further expansion in operating margin. Both revenue and profitability came in above the high end of our guidance. This marks our 17th consecutive quarter of meeting or exceeding the high end of our revenue guidance.

Revenue growth accelerated to 17.4% year-over-year and operating income was $2.5 million, a significant improvement from breakeven last year. This continues our track record of strong execution, consistent growth, expanding margins and disciplined operations. We are well-positioned for long-term success with a growing customer base and an expanding market opportunity. We see a clear path to building a significantly larger business with our growing suite of solutions by expanding market share and increasing average revenue per location.

We added the most locations ever in a quarter and revenue retention improved in Q1. We saw strong performance in our upsell sales motion with new products like Insurance Eligibility and AI Receptionist. Additionally, payments revenue growth accelerated in Q1 as our customers increasingly used Weave for their payment processing.

Weave is purpose-built for health care. We serve over 40,000 customer locations and billions of patient interactions flow through our platform. That data, combined with nearly 2 decades of experience, underpins a platform that supports growth and executes that work end-to-end. Weave's workflows begin with pre-care operations focused on acquiring new patients, reengaging existing patients for follow-up care and keeping schedules full. Once a visit is scheduled, we automate administrative tasks like confirming appointments, collecting patient information through digital forms and verifying insurance eligibility to ensure appointments are kept and streamline patient intake.

During the clinical visit, we handle payment processing and help staff address patient financing needs that improve treatment plan acceptance. Following treatment, our platform helps manage the practice's online reputation through reviews and manages accounts receivable by following up on unpaid bills and enabling patients to make payments from their mobile device. Throughout the patient journey, Weave manages communication and engagement behind the scenes, reducing time spent on repetitive tasks and empowering staff to focus on the personal side of patient care. Health care practices are resilient businesses, but they face significant operational pressures, higher cost of goods, rising labor expense alongside talent shortages and elevated patient expectations. The day-to-day demands of running a practice often pull skilled staff away from face-to-face patient care. Weave harnesses the power of AI to automate repetitive tasks. Rather than managing paperwork, practice teams focus on people work.

Our deep understanding of health care workflows guides how we deliver and use AI through our platform. Our customers start with a Weave core solution that typically includes communications, reviews, appointment reminders and patient recall to fill schedule openings and ensure schedules stay full. Customers pay for these solutions through standard bundles and we have released several AI-powered enhancements that streamline practice operations and make these bundles more valuable. More than 50% of our customer locations use at least one of these embedded AI solutions, such as intelligent reviews response and always-on messaging assistance.

Additionally, we have developed AI-powered products that we sell as add-ons to their chosen bundles. These products include Call Intelligence, Insurance Eligibility, and our AI Receptionist. Weave Call Intelligence is an AI analytics product that transcribes every call and creates a task list for office staff to follow up on. It highlights missed revenue opportunities and unhappy patients.

A physician owner of a primary care practice in New Jersey implemented Call Intelligence as a coaching tool for his front desk team. Rather than operating without clear visibility or manually reviewing every call, they use AI-generated summaries and transcripts to pinpoint the exact moment patient sentiment shifts, dramatically reducing the time required to identify training gaps and freeing them up to provide more one-on-one coaching. After implementing Weave Call Intelligence and updated training, their unhappy call rate dropped by over 40% in just 2 months.

A multi-location med spa in Philadelphia describes a similar transformation. Every Wednesday, using Call Intelligence, they review the flagged unhappy calls and follow up with a personal note. They report a 100% client retention rate among those follow-ups. They shared that they wouldn't have known who needed outreach without it. Our solutions provide these practices with protection from otherwise invisible and preventable revenue leakage.

Our customers are increasingly reliant on our AI functionality. In Q1, our platform handled over 300% more AI interactions than Q1 last year. The growth is being driven by both expanded AI features and products and increased customer adoption. Today, our text-based AI Receptionist directly handles appointment scheduling and answers common questions such as office hours and accepted insurance providers. Our customers have highlighted a number of ways the AI Receptionist has increased the production of their dental practice. One is by reducing no-shows and appointment cancellations. Another is effectively converting leads to new patients.

A dental practice recently reported that using our AI Receptionist, they saw patient -- new patient volume grow 37%. This had a meaningful impact on the business' financial profile as their new patients spend 3x as much per visit than existing patients. Next week, we will release our omnichannel AI Receptionist to customers on select integrations, which will significantly increase these capabilities by supporting both voice and text modalities. We anticipate that the agent will be more broadly available late this quarter. Weave delivers seamless task execution, transcription and summarization and preserves context through a single unified view of conversations and analytics across every bot-to-human handoff. We are uniquely positioned to deliver this capability. Because we own the full stack, we make the entire experience connected, visible and actionable.

Initially, the agent will be able to effectively manage dozens of workflows, including scheduling, answering common questions and completing handoffs between AI and humans. We have mapped out hundreds of additional workflows, which will steadily be added to the agent's skill set. It will become a more effective and skilled teammate every week.

Customers who are using this latest solution are getting significant value from it and it is changing the way they operate. One dental office signed on to the pilot because the staff was completely overwhelmed by voice mail and increased call volumes on Mondays. By implementing our AI Receptionist, patients got their questions answered more quickly and more appointments were kept. The doctor highlighted, "We only get paid when patients come in, so protecting the schedule matters. We have had several instances where patients started to cancel at the last minute, saw the cancellation fee warning from the AI agent and decided to keep the appointment."

A dental practice in Florida joined the pilot to address miss calls outside of business hours and an overwhelmed front office team during the day. The result is that miss calls have dropped by roughly 80% with a similar decrease in weekend voice mails. An additional benefit is that an improvement -- is the improvement in care continuity. Patients dealing with emergencies or last-minute scheduling conflicts can now get help when they need it most. For the front office team, the day simply runs smoother with fewer interruptions, less time managing calls on hold and a lighter start to the week.

These are just 2 examples, but the early results confirm that providing our customers with an always-on teammate to autonomously fulfill daily tasks will change the way these practices do business. This makes Weave more mission-critical than ever by increasing the production and revenue capture of the practice, which provides an additional way to grow our revenue per location by competing for a portion of the labor budget.

We plan to monetize the omnichannel AI Receptionist through a hybrid subscription model, largely aligned to consumption. Our ability to monetize will grow as practices expand their utilization of this always-on teammate that manages the complete patient life cycle. In the future, we expect to capture even greater payment processing volumes as we process co-pays by intelligently managing the intake process and collecting outstanding balances.

The future of Weave is agentic and proactive, converting leads to booked appointments, filling holes in the schedule with patients on the verge of slipping through the cracks, collecting critical patient data in advance of appointment, recommending financing options to drive higher treatment plan acceptance, garnering online reviews and collecting on outstanding patient balances. Our current and future success with AI is a result of nearly 20 years of data and deep domain expertise that informs the development of health care-specific workflows. Most patient-facing workflows for a practice originate from or terminate through a phone call or a message. Our communication platform gives us a significant advantage as Weave owns and manages this control point and natively executes these workflows through the trusted primary business phone number, which leads to higher patient engagement. These interactions often require data transfers with practice management systems and we have the largest library of authorized practice management systems integrations available.

Weave is the all-in-one partner that practices can use to standardize work and efficiently grow their business. Practices that use Weave are smarter, built to scale and feel more human. Weave focus on the day-to-day operations, so the rest of the practice team can focus on the people they care for.

To close, I want to thank the Weave team for their continued focused execution. Q1 was a great quarter and our future is bright. I'm very excited about the recent product launches and what we have on the horizon. Our financial results improved while delivering increasing value for our customers. We are well-positioned for success in the new AI frontier. We will continue to lean into our strengths and our scale to deliver innovative solutions that help our customers improve their business outcomes. I also want to thank our customers, partners and shareholders for your continued trust.

With that, I'll turn the call over to Jason to walk through the financials in more detail.

Thanks, Brett and good afternoon, everyone. The first quarter was a great start to 2026 for Weave with improved revenue growth, strong gross margins and much improved operating income as we continued to execute across the business. In the first quarter, we produced $65.5 million in total revenue, which represents acceleration to 17.4% year-over-year growth, driven by payments, which again grew more than twice the rate of total revenue and the addition of new locations. We added more gross and net locations in Q1 than in any previous quarter and the specialty medical vertical continued to be the largest contributor.

Gross profit grew over 19% year-over-year to $47.9 million. Gross margin for the quarter was 73.2%, representing a year-over-year improvement of 110 basis points. This margin improvement in Q1 was primarily driven by scale in our customer support model, ongoing efficiencies in our cloud infrastructure and hardware device costs and the growing contribution of higher-margin payments revenue.

Customer support has been able to scale partly due to the benefits of using AI to deflect calls and effectively manage the case load tied to a growing customer base. We also saw strong growth in the number of locations using our payment processing solutions, increased processing volume per location and a higher net take on payment transactions. These factors contribute to an expanding subscription and payment processing gross margin of 78.4%.

In aggregate, the underlying progress and growing mix of high-margin payments revenue clearly highlights a path to achieving our target long-term gross margin profile of 75% to 80%.

Turning to our dollar-based revenue retention metrics. We believe our reported metrics found the floor in Q1 as monthly retention rates positively inflected in the quarter and were higher than the second half of 2025. Our dollar-based net revenue retention rate in Q1 was 92%. Our dollar-based gross revenue retention rate was 89% and remains very strong for companies serving SMB customers. As a reminder, our reported dollar-based revenue retention rates are a weighted average of the previous 12 months' monthly retention rates. As such, it can take multiple quarters for improvements to show through in reported metrics.

Total operating expenses for Q1 were 69% of revenue. As mentioned in our previous conference call, Q1 expenses are seasonally higher due to the reset of payroll tax limits and benefit renewals taking effect.

General and administrative expenses were $10.2 million and decreased over 180 basis points year-over-year to 15.6% of revenue from 17.4% of revenue in the prior year. Research and development expenses were $8.6 million or 13.1% of revenue. Research and development expenses decreased slightly year-over-year due to the increased capitalization of software development costs in Q1 2026 as development efforts tied to new products have increased. Our omnichannel AI Receptionist development has been a key contributor.

Sales and marketing expenses totaled $26.6 million or 40.6% of revenue. Sales and marketing expenses increased year-over-year, largely due to increased advertising expenses and sales costs. Q1 is seasonally higher in advertising expenses due to increased events and prospect reengagement after the holidays.

We added a payment sales team and channel sales team in 2025, expanded our inbound, upsell and mid-market sales teams and most recently reintroduced a sales development team. We continue to optimize our sales and marketing activities to deliver more profitable growth and we anticipate some improvements in sales and marketing efficiency as a percentage of revenue starting in the second quarter of 2026.

Operating income for the quarter was $2.5 million compared to breakeven in Q1 2025. Operating margin was 3.9%, a 380 basis point improvement over the prior year and more than a 20 basis point improvement sequentially. We are really pleased with how the quarter developed as we converted 26% of the revenue growth year-over-year into incremental operating income. The 26% incremental margin is a significant improvement over the 6% incremental margin produced in Q4 2025.

Turning to the balance sheet and cash flow. We ended the quarter with $72.7 million in cash and short-term investments, a decrease of $9 million sequentially. Cash used by operating activities in Q1 was $5.7 million and free cash flow was negative $7.1 million. Q1 cash flows and March 31 balances on the balance sheet are impacted by large seasonal disbursements, including the payout of our annual bonuses and significant prepaid software renewals, which will not recur until Q1 of next year. Additionally, we used $1.6 million in cash on the net settlement of vesting equity awards, which reduces dilution from RSU vests. We expect free cash flow to be positive for the first half of 2026.

Looking ahead, we look to build on our strong Q1 and are encouraged by the opportunities in front of us. We remain committed to delivering improving margins while maintaining our bias toward growth. We continue to make targeted investments in growth initiatives, which reflects our ability to balance growth while making investments into our business. For the second quarter of 2026, we expect total revenue to grow to be in the range of $67.2 million to $68.2 million. We expect second quarter operating income to increase from Q2 last year to be in the range of $2.1 million to $3.1 million.

As a reminder, Q2 operating expenses will increase sequentially as annual merit increases take effect in early Q2. For the full year 2026, we are raising our outlook and expect total revenue to be in the range of $275 million to $278 million. We are also raising our outlook for non-GAAP operating income and expect it to be in the range of $10.5 million to $13.5 million. We expect our weighted average share count for Q2 to be approximately 79.6 million shares and approximately 79.8 million shares for the full year.

With that, I'll turn the call over to the operator for Q&A.

[Operator Instructions]

Your first question comes from the line of Alex Sklar with Raymond James.

Brett, first one for you. Just in terms of the record locations added, where do you see that incremental pickup versus some of the prior quarters? And what are you seeing in terms of the land sizes relative to a year ago across your different bundles?

Sure. So we had really strong performance across all of our verticals and all of our motions. So I think, as Jason mentioned, medical was strong. The dental was actually quite strong as well, which was terrific to see because that's the largest part of our business. So I think broad performance across all verticals for new locations added.

And then also all of our motions, we had a strong bookings quarter in mid-market, added some good logos there. Both inbound and outbound performed well, adding locations. And then on just adding the NRR, not location-based, our upsell team had a terrific quarter. All the new products that we've released over the last 12 months are really getting traction now, which is terrific to see.

And then on the land side, on ASP, I think it's pretty consistent with what we've seen over the last several quarters. Obviously, the upsell motions add to the average revenue per location for the businesses that are adopting those products.

Great color there. And then a follow-up on payments. I don't know if you want to take this or Jason. You talked about higher usage in the quarter. Maybe just some color on what drove that. And then the enhanced payment integrations with some of those bigger practice management vendors, what's the potential unlock there from that announcement?

Thanks, Alex. Really, we saw very strong payments performance across a number of vectors. I think the thing -- some of the product functionality that we talked about at the end of 2025 that we delivered, which includes bulk collection capabilities, the ability to send multiple collection requests through 1 motion, the payment reminders, the follows-up on unpaid invoices and then the surcharging capabilities, all of them contributed to the additional pickup. Surcharging was a very strong quarter for us. We saw the most adoption -- increase in adoption of surcharging here in Q1 as we've seen. So really encouraging across those use cases.

And then you can't discount the impact that adding payment integrations has on the payments business. We're still pretty early stages. We've got a handful of payment integrations, done with more to come. And I think that continues to -- that will continue to just be an unlock for us as we're able to really just streamline some of the office workflows, the pain points that the staff experiences and help these practices reduce their days sales outstanding and their AR balances.

And so AI Receptionist is going to be a part of that story as we look forward as we're able to become more proactive in collecting on those balances and also help introduce the collections on the front end as part of the intake process.

Your next question comes from the line of Hannah Rudoff with Piper Sandler.

It's nice to see the growth acceleration in Q1. I just wanted to ask on AI Receptionist. You talked about hybrid subscription and consumption pricing. I guess, Jason, could you just expand on what this looks like? I know you've talked about tapping into labor budgets in the past. And I guess, have you thought about pricing this on more of an outcome-based pricing model?

Sure. So what we mean by hybrid is we'll have a monthly fee for the product, which will come with a number of phone calls, a number of phone interactions that are handled by the agent. And as your usage increases, then you can move to a higher tier, which gives you more phone calls that the agent will take. So basically, you can scale the receptionist up and down and the monetization is really tied to the number of calls it handles. So you could imagine a practice may want to use it just for nights and weekends. So that would probably be on the lower end of the call handling, or they might want to use it 24/7 to actually be a fully always-on teammate, in which case the number of calls handled would go up and then the pricing would go up as well. So right now, that's the pricing that we're launching with.

And as far as outcome-based pricing, yes, it's absolutely on our pricing team's radar. But we're going to start with kind of this hybrid usage model and test that and see how that goes.

The one thing I would add to that is as we think about some of the additional workflows that we deliver, there is built-in or inherent pricing on that side when you think about payments. As we integrate payment workflows into the AI Receptionist, we'll also be able to collect on the outcomes of actually collecting balances on behalf. But there's a lot more thought going into it that we'll continue to iterate over time.

And maybe one thing just to highlight on the AI Receptionist that Brett alluded to where offices will be able to scale the utilization up or down. One of the unique things about Weave and our ability to do that or support that is because we own the full communication stack on the back end, offices can insert the agent anywhere they want within the interaction flows. So offices will have the control to dial that up, to scale that back hours where they want it in, like for calls coming in, where they want it in the call tree, where they don't, when they want it to escalate it or hand it off to a human and when they don't. And so that's part of the adoption that Brett is talking about is offices might start with nights and weekends and see how it starts to actually deliver in real meaningful bookings and see the same results that the customers we highlighted are getting.

They'll be able to inject it more and more directly with how their practice operates. And that's unique to us because of the full stack that we own, where it's all in one place.

Yes. To expand on that a little bit, if I could, Hannah. We recently showed one of our large DSOs this functionality. Basically, you pull up the screen. It's basically a flow chart and you grab the AI Receptionist and you move it wherever you want. So you can say, I want it to pick up only at lunch or you can say, I want it to pick up only after the third ring or I want it -- and so just showing this -- the capability and the flexibility of moving the agent anywhere you want in the call tree is really, really powerful. And I'm sure that practices will experiment with it and see how it works best for them.

That makes a ton of sense and it's nice to see that users can completely customize how they use the AI Receptionist. My second question is on NRR. I know we've talked about this metric being a little complicated just with it being location-based. But I guess, how should we think about -- or when should we expect AI to help drive an expansion in that NRR metric?

Yes. I guess I'll just start with highlighting what I talked about in the prepared remarks, which was where we've started to see an inflection within the monthly net retention metrics, not the weighted 12-month average, but the direct monthlies here in Q1. The contribution, there's an interesting thing with our business, which is customers have continued to land heavy whenever we bring new capabilities and we're able to deliver meaningful value. And so how exactly AI starts to drive the expansion of our net revenue retention is tough.

We have a better opportunity today with the release of these new products that we've brought to market and what's coming more than we've had in the past. And so that's something that we're leaning into, we're optimistic about, also realizing that they may continue to land heavy as well and how that dynamic will play out.

The one thing that I anticipate to continue to be true, which is regardless of what happens with net revenue retention as a metric, the average revenue per location, we anticipate that to continue to grow. Q1, we saw growth again in the revenue per location. If you look over the last 2 years, it's grown about 10%. At the same time, net revenue retention has decreased as a metric. And so I think we're very optimistic about what these products can do and contribute though.

Your next question comes from the line of Parker Lane with Stifel.

This is Jack McShane on for Parker. I wanted to go back to the strong quarter of location additions. And I'd be curious to hear if in any way you're seeing the AI product set and road map really resonating with prospective clients and whether this potentially drove the really strong location addition quarter.

Yes. So I'll start. So because of our sales model, what's super interesting is we generally sell what we have available to deliver kind of immediately. So what -- so the majority, I would say, the vast majority of the sales success in the quarter was on the core products that we have now, our core engagement platform, plus some of the newer products that have come out recently.

We don't really sell futures just because of the SMB nature of our customers. However, what resonates very well with larger customers, DSO, multi-location is the road map. So I think that most of the upsell and -- well, I know the upsell and the new additions this quarter were primarily based on or almost exclusively based on our current product set, what they were going to get next week, what they're going to go live on next week, which kind of gets us even more excited about the next 12 to 24 months because then we can go -- we can get these customers on board happy with the core platform and then come back to them with new products, additional products, especially the AI Receptionist.

Yes. No, it makes sense. And then just a follow-up. When you think about the ideal customer profile for the AI Receptionist and what you're rolling out soon with everything around the omnichannel receptionist, is there a portion of your customer base that you think the product makes the most sense for in particular? Maybe it's more relevant in mid-market due to their scale or SMB due to the staffing constraints or maybe even on, like, the vertical side. There may be puts and takes between the old core TAM versus specialty medical in terms of ripeness for adoption.

Yes. So it's a great question. And as we build our personas for our core platform and additional products, we really give a lot of thought to this. So the AI Receptionist is getting really favorable reviews across the board. And they're really different use cases.

So if you're a small practice, you want to cover the phones at lunch over the weekends because all you need to book is a couple of potential lost appointments and it pays for itself. So you can see a small practice. Some small practices say, well, I'll try it because -- but I really want to have that personal experience, but then they find out how many calls they're missing and it's really not a personal experience.

So the value proposition definitely resonates in the low end. And then you think about the high-end practices, multi-location practices, they're very, very serious business operators. They understand the economic value very clearly. And so this -- the upsell products that we have, whether it be -- I mean, Call Intelligence is going really well with kind of larger, more sophisticated practices. We expect the AI Receptionist -- we're piloting with them now. It's been received very well.

So when we look at the personas for the additional products, specifically AI Receptionist, it really works. There is a strong use case kind of all the way across the spectrum.

Yes. And when you look at it by vertical, you see a similar phenomenon with just how they operate, right? Like many dental practices might only be in the office 4 days a week. And so they have extended weekends where they need more coverage that this is really impactful.

If you flip over and you look at, like, a veterinary clinic, they have incredibly high call volumes that flow into their practices. And so the value proposition of a receptionist that can help them manage, especially if there's staffing shortages with the demands of pet owners to bring their sick or injured or whatever it is, the situation is with their loved animal, having a resource in place that can help address their needs is also very relevant. And so it is universal across the end markets that we serve and across the sizes, as Brett highlighted.

Okay. I think that concludes the...

That concludes -- sorry to interrupt. Yes, that concludes the Q&A portion. So I will now turn the call back to Brett White for closing remarks. Go ahead.

Okay. Well, thank you all very much for joining the call and thanks again to the Weave team for such a terrific quarter and I look forward to chatting again in about 90 days.

And that concludes today's call. Thank you for attending. You may now disconnect.

Greetings, and welcome to Weave's Fourth Quarter and Full Year 2025 Financial Results and Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your host, Moriah Shilton, Investor Relations. Thank you. You may begin.

Thank you, Kevin. Good afternoon, everyone, and welcome to Weave's Fourth Quarter and Full Year 2025 Financial Results Conference 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.

We've disclaims any obligation to update or revise any forward-looking statements. 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 onetime acquisition-related costs, amortization of acquired intangible assets and stock-based compensation.

A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our Investor Relations website and as an exhibit to the Form 8-K furnished with the SEC before this call as well as the earnings presentation on our Investor Relations website.

Before I turn the call over to Brett, we want to let you know that we'll be participating in the Raymond James Institutional Investors Conference on March 2 at the JW Marriott in Orlando, Florida. And with that, I will now turn the call over to Brett.

Thank you, Moriah, and thank you to everyone joining us today. We've delivered another strong quarter in Q4 with 17% year-over-year revenue growth, gross margin expanding to a company record of 73.3% and operating income increasing to $2.3 million, our highest level, both in dollars and as a percentage of revenue. This marks the 16th consecutive quarter of meeting or exceeding the high end of our revenue guidance range.

For the full year, we generated 17% revenue growth and 24% growth in free cash flow. These results demonstrate the strength of our model, consistent top line growth, expanding margins and disciplined cash generation while continuing to advance the platform for our customers. We're proving we can scale profitably and deliver new capabilities that deepen Weave's value to the practice. At our core, we serve the professionals who care for patients. Our customers provide care at every stage of life from the first pediatric visits to restorative procedures, chronic care management and everything in between.

They are trusted professionals delivering essential services in their communities. Health care is fundamentally human. AI will not replace providers, it will amplify them. What it can do and what we are building toward is removing the administrative friction that pulls people away from patients. Our vision is simple: elevate patient experiences through a unified platform that improves business operations so health care professionals can focus on patient care. This vision is not a slogan. It guides how we build, invest and operate.

The health care industry is one of the largest and most complex in the world, making it right for AI adoption, and SMB practices have historically been slow to embrace digital transformation. Health care professionals navigate increasing administrative burdens like staffing shortages, rising patient demand and reimbursement complexity. They require technology solutions to manage growth, communication, schedules, billing, insurance and payments, so they can focus on the patient in front of them while staying competitive in the local markets.

Missed patient calls, scheduling challenges and shifting insurance dynamics waste time, reduce patient satisfaction, increase burnout and strain practice revenue and profitability. These operational inefficiencies create a clear and durable opportunity for automation and value creation. That's where Weave comes in. Weave is the unified AI-powered patient communications and engagement platform purpose-built for small- and medium-sized health care practices. We bring together AI agent and practice staff conversations across voice and text into unified workflows.

Weave is the orchestration layer that helps practices continuously improve patient relationships, proactively assigns tasks for staff follow-up and delivers insights so practice owners can measure, analyze and optimize. Weave is a mission-critical practice system of work, built at the center of patient interactions 24/7. All conversations flow through Weave, creating operational data to drive process continuity inside our platform. This continuity extends across communication channels.

A patient conversation can begin on the phone, continue over text with an AI agent and escalate back to a staff member when needed. Our platform treats this as a single persistent interaction, preserving contacts end-to-end, so patient requests are addressed sufficiently. This is coordinated teamwork between the Weave AI platform and the practice staff we support. Weave is powered by authorized secure integrations with practice management systems, making our platform reliable enough to manage scheduling, insurance verification, billing and payments.

This goes well beyond responding to basic inquiries. As customers continue to recognize the value of our agentic workflows, Weave evolves from a product that practices use to an always-on teammate they rely on. We reduce administrative burden, improve conversion and collections and free staff to focus on high-value patient care. Most importantly, we strengthen the patient practice relationship, which ultimately drives more revenue and profitability for our customers.

With communication history, automation and real-time performance insights, all in Weave, practices run smarter, grow faster and build lasting operational resilience. Customer reliance on Weave makes our platform indispensable, strengthening customer retention, expanding share of wallet, increasing customer lifetime value as we continuously add value through AI-powered solutions and additional products that our customers demand. We believe that AI will augment software companies that leverage and deliver its value.

This is especially true in vertical, highly regulated markets like health care where moats and years of expertise matter. Weave has spent almost 2 decades building for the unique needs of SMB health care practices. Health care workflows are highly customized. Scheduling, billing, insurance verification and patient communication vary by specialty and by location. Delivering reliable AI-powered workflows in these environments requires authorized integrations with systems of record, regulatory compliance, scalability and predictable execution.

Most importantly, it requires trust with providers and patients. With almost 40,000 customer locations and billions of patient interactions flowing through our platform annually, we have the data moat at scale that cannot be replicated by horizontal generative AI providers. Our extensive industry-specific data allows us to deliver high accuracy without exposing PHI. This domain expertise and trusted data foundation are durable competitive advantages. Our customers are health care providers, not technologists. Doctor owners are focused on delivering care and running their businesses.

They do not have the time, resources or desire to build and maintain custom applications, particularly in an industry that has historically lagged in digitization and monetization. And that is a huge opportunity for Weave. Practices operate within strict privacy, security and regulatory frameworks. They look to trusted software partners to navigate that complexity. Weave integrates with the practice management system, utilizes the trusted practice phone number, owns the phone hardware and telephony stack and is deeply embedded in daily operations.

We have yet to encounter a customer or prospect planning to replace that infrastructure with a homegrown solution. Instead, practices are seeking greater automation inside the systems that they already rely on. The acquisition of TrueLark added AI Receptionist to our offering, embedding agentic functionality directly into our platform. Our capabilities go beyond reactive automation to deliver proactive execution, scheduling appointments, verifying insurance eligibility, collecting payments, identifying coaching opportunities, analyzing outcomes and escalating to staff for full conversational context is preserved.

This further establishes Weave's role as a system of work inside the practice. Additionally, we recognize that AI has the potential to disrupt some software revenue models such as seat-based licensing. However, we license per location and based on consumption, not per seat. In fact, headcount reductions in a practice lead to even higher usage and dependency on the Weave platform.

As we add agentic solutions to handle additional workflows, we capture share of wallet from the practice's labor budget historically allocated to administrative staff or call centers. This simultaneously reduces practice costs and improves ROI. Adding isolated AI tools does not reduce the cost or complexity of running a health care practice. As AI becomes table stakes, the premium shifts to platforms that can act, not just inform.

Weave is uniquely positioned to be that platform. Turning to our plans for 2026. TrueLark is the foundational building block of our AI Receptionist capabilities. TrueLark accelerated our road map by adding an established text-based AI agent that handles common FAQs, manages inbound leads and automates scheduling and rebooking. The acquisition materially expanded our TAM by extending Weave deeper into the front office automation and addressing -- and directly addressing the single largest component of the practice's cost structure, staffing. This is both the biggest expense and one of the most operationally complex challenges practice owners face.

One of our largest customers is now booking over 1,200 appointments per month using our AI Receptionist, work that would otherwise require full-time front desk staff or just be missed. As that customer put it, "When you're thinking of software cost to cut, it is one of the last things you will ever consider because it is one of the few things that actually is bringing in revenue to the business".

In Q4, we launched a unified inbox that consolidates TrueLark agentic conversations and Weave's staff interactions into a single contextual view, removing the need to toggle between systems. We continued building voice capabilities, enabling the same AI agent to operate across text and phone. In the first half of 2026, we expect general availability of our omnichannel AI Receptionists across all vertical markets. This enables practices to answer calls 24/7 with an AI agent that can address common questions, request or book appointments and intelligently hand off more complex interactions to staff when needed.

These conversations are transcribed and posted into our unified inbox, preserving full context across both AI agent and staff interactions. Weave Call Intelligence then automatically prioritizes important requests and creates follow-up tasks. In the second half of 2026, we plan to extend beyond scheduling to more autonomous intake and payments, including automated payment requests after claims adjudication and the collection of co-pays and pretreatment deposits directly within scheduling flows.

This is a deliberate phased rollout with a larger opportunity to expand AI across front and back-office workflows. We are excited about the opportunity ahead in 2026. Our AI road map expands our TAM, deepens Weave's role in the practice and leverages our market-leading position and scale.

Before Jason dives into the financials, I wanted to recap a couple of additional highlights from our 2025 growth vectors. The specialty medical vertical continues to stand out as one of our most attractive growth opportunities. This space grew to become our second largest vertical by location count in Q2 of '25. That momentum continued, and we added more specialty location -- specialty medical locations in Q4 than in any quarter in our history.

Specialty medical comprises 29 specialties, and we currently focus on just 4: primary care, physical and occupational therapy, aesthetics and medspa. Next, Weave payments grew at more than twice the rate of total revenue in 2025 with strong early adoption of new capabilities like automated payment reminders, bulk collections and surcharging.

Today, we announced a partnership agreement with CareCredit, the leading patient financing solution used by over 285,000 health and wellness locations nationwide. This integration is expected to give Weave customers greater visibility into available patient credit, streamline the credit application process and improve treatment acceptance rates by making care more accessible.

In conclusion, we've delivered consistent revenue growth, expanded margins and free cash flow while continuing to invest in innovation. Just as importantly, the customer successes we see today give us confidence that this value creation is repeatable and sustainable. Weave is defining the intelligent health care front office. We are building a durable, scalable business that delivers on our commitments, and we are excited about the long-term value we can create for both our customers and our shareholders.

Both myself and the Weave management team entered 2026 very excited about not only the opportunity ahead of us, but also our very unique position to capitalize on the opportunities and deliver additional value to our markets. I want to thank our customers, partners, team members and shareholders for your continued trust in Weave. The progress we've made gives us strong confidence in the path ahead.

With that, I'll turn the call over to Jason for a deeper discussion of our financial performance.

Thanks, Brett, and good afternoon, everyone. It was another solid quarter and a strong finish to the year for Weave, reflecting continued momentum in our growth initiatives and disciplined execution across the business. The growth in our product suite this year, including the acquisition of TrueLark, expanded our estimated total addressable market by roughly $7 billion to an estimated $22 billion. We believe there is further TAM expansion on the horizon as we add capabilities to our AI Receptionist.

Across our established verticals, we see a meaningful runway for continued growth. In dental, our initial market, we are in fewer than 15% of U.S. locations, highlighting the depth of opportunities still ahead. For example, we has recently been selected and endorsed by the American Dental Association as its exclusive patient engagement solution, giving us co-marketing access to their 160,000 members and reinforcing our leadership position in the dental market.

Specialty medical is our largest and newest U.S. market opportunity, and we remain in the early stages of penetration with roughly 1% share. We see a clear path to building a significantly larger business with our growing suite of AI-powered solutions, expanding market share and increasing average revenue per location.

Moving to our financial results, starting with the fourth quarter, we produced $63.4 million in total revenue, which represents 17% year-over-year growth, driven by payments and the addition of new locations. Gross margin for the quarter was 73.3%, representing a year-over-year improvement of 70 basis points. We have delivered sequential gross margin expansion in 15 of the past 16 quarters, including a 30 basis point sequential improvement in Q4.

Margin improvement was primarily driven by ongoing efficiencies in our cloud infrastructure and amortization of phone hardware and payment terminals as devices older than 3 years become fully amortized. We also continue to benefit from the growing contribution of higher-margin payments revenue. Total operating expenses for Q4 were 70% of revenue. General and administrative expenses were $9.6 million and provided the most year-over-year operating leverage improvement in our business.

General and administrative expenses improved to 15% of revenue from 17% in Q4 2024, a decrease of over 200 basis points. Research and development expenses were $8.9 million or 14% of revenue, which represents a decrease from 15% in Q4 2024. Sales and marketing expenses totaled $25.6 million or 40% of revenue. As discussed in previous earnings calls, we made a number of targeted investments in 2025. We added sales capacity in mid-market. We grew our upsell team to increase product attach rates, including payments through a new dedicated payment sales team, and we built out a channel sales team that focuses exclusively on selling through commercial partnerships.

We also increased our marketing program spend to increase brand awareness and demand in the specialty medical vertical and in promoting our AI Receptionist to new products. Mid-market and specialty medical sales accelerated in 2025, and we finished the year with strong sales performance and a healthy pipeline to start 2026 behind these investments. We continue to optimize our sales and marketing efforts and anticipate some improvements in sales and marketing efficiency in the second half of 2026.

Operating income for the quarter was $2.3 million, an improvement of over $500,000 compared to Q4 2024. This represents an operating margin of 3.6%, a 30 basis point improvement over the prior year and a 90 basis point improvement sequentially.

Turning to the balance sheet and cash flow. We continue to see strong liquidity and free cash flow. We ended the quarter with $81.7 million in cash and short-term investments, an increase of $1.4 million sequentially. Cash provided by operating activities in Q4 was $6.2 million, and free cash flow was $4.4 million. Free cash flow for the full year was $12.9 million, which represents 24% year-over-year growth.

Our net revenue retention rate in Q4 was 93%. Our gross revenue retention rate was 89% and remains very strong for companies serving SMB customers. As a reminder, our reported retention rates are a weighted average of the previous 12 months retention rates. As such, it can take several quarters for the progress we are currently making to show through our reported retention metrics.

I will provide additional onetime metrics in this year-end recap, which we believe may be helpful in understanding 2025 retention rate trends. First, when looking at gross retention, we implemented a number of initiatives in 2025 that improve the customer experience, including more tailored onboarding, new products and refined product packaging, which along with greater integration coverage and depth across all verticals, helps ensure customers receive the value they expect.

These efforts yielded a steady reduction in churn in the second half of 2025, and Q4 churn returned to our 2023 and 2024 churn levels. We expect gross revenue retention rates to trend back to historical ranges of 91% to 93% over time. Previously, we highlighted how integrations with practice management systems affect churn. Customers who purchase Weave products that are not yet integrated with practice management systems or that have basic read-only integrations typically have higher initial churn rates.

New verticals like specialty medical typically start with higher churn rates, which improve over time as we increase the number and depth of practice management integrations. Additionally, we have seen the ongoing trend of single locations being acquired by larger groups. While we may lose single locations to multi-location groups through acquisition, our investments in mid-market and AI, combined with high customer satisfaction rates, position us to potentially win those businesses back as part of a larger deal.

Transitioning to net revenue retention rates, we discussed previously that our net revenue retention rate in the first half of 2025 was bolstered by the effects of a price increase in 2024, which accounted for approximately 250 basis points of uplift. We lapped the effect of that price increase in the first half, and our net revenue retention rate has subsequently decreased accordingly. It's also important to note that our reported retention metrics are measured on a location basis, not on a customer or logo basis.

Approximately 2/3 of our current customer base is single-location practices. The addition of another location within a multi-location customer does not improve our net revenue retention rate. Looking solely at multi-location groups on a logo basis, our net revenue retention rate is 102%, while our net revenue retention rate is 93% for single-location practices. Multi-locations have a higher net revenue retention rate on a logo basis because of location additions.

My final point is that our ability to expand net revenue retention has been limited because customers often adopt most of our product suite upfront. Customers often consolidate multiple point solutions when they purchase Weave's unified platform. This establishes higher initial revenue capture, though this historically limited our near-term upsell opportunities. We have seen this dynamic reflected in average revenue per location growth, which grew 10% over the past 2 years even as net revenue retention declined over the same period.

However, the addition of TrueLark and faster product development cycles are now meaningfully expanding the upsell opportunity within our installed base. Our insurance eligibility and TrueLark products drove acceleration of upsells in Q4, and our penetration into the installed base for both products is still less than 2%. We ended 2025 with 39,625 active customer locations, an increase of 4,628 locations year-over-year.

Before turning to our outlook, I'll briefly recap full year performance. For 2025, total revenue grew 17% to $239 million. Gross margin for the year expanded to 72.7%, up 80 basis points from 71.9% in the prior year. We delivered full year operating income of $4.1 million, representing an operating margin of 1.7% compared to 0.4% last year. This marks another year of progress in profitability, and I would like to highlight that this year's improvement came while also making targeted investments in growth initiatives, which reflects our ability to balance growth while making investments into our business.

We are pleased with our progress this year and would like to thank our team members at Weave, our customers and partners for their contributions throughout the year. Looking ahead, we remain encouraged by the strengthening foundation of the business and the opportunities in front of us. For the first quarter of 2026, we expect total revenue to be in the range of $64.2 million to $64.8 million. We expect to improve first quarter operating income year-over-year and for it to be in the range of $1 million to $2 million.

As a reminder, there are seasonal factors that result in a sequential increase in expenses in Q1, including the reset of payroll tax limits, benefit renewals taking effect and the timing of the annual audit fees, which are weighted more heavily in Q1. We remain committed to delivering improving margins while maintaining our bias toward growth. We are beginning to benefit from the investments made in 2025, such as those made in sales and marketing, and we will be flowing an increased percentage of incremental revenue into operating income in 2026.

For the full year 2026, we expect to grow total revenue to be in the range of $273 million to $276 million. With the new products Brett discussed, which will be released throughout the year, we expect the impact of these products to positively impact revenue growth in the latter half of the year. We also expect to improve non-GAAP operating income year-over-year to be in the range of $8 million to $12 million. We expect our weighted average share count for Q1 to be approximately 78.7 million shares and approximately 79.9 million shares for the full year.

In closing, I share Brett's excitement about our 2026 road map and our position in the market. We delivered a strong 2025 marked by solid revenue growth, continued margin expansion and improving profitability and cash generation. We remain confident in our strategy and our ability to execute as we continue to balance growth and profitability improvements. With that, I'll turn the call over to the operator for Q&A.

And our first question comes from Parker Lane of Stifel.

This is Matthew Kikkert on for Parker. To start, can you talk a little bit more about the CareCredit integration that you announced this morning? Just curious if that your focus is to drive incremental payments attach rate, more average payments volumes across existing customers or something else?

Yes. Great to catch up with you, Matthew. The CareCredit partnership, what that really does is open up another avenue for us to capture volumes that otherwise would flow through CareCredit themselves. They are the largest provider of patient financing solutions in the market. And this gives us access through the partnership to some of the volumes that otherwise would flow through them. So there's work now to be done on the integration and bringing that directly to market. So today, we just announced that we completed the partnership, and we'll have more color to provide in the future.

And I would add, this is kind of just the next step in our payment strategy. So kind of starting with basic payment processing, then moving into more additional financial tools, additional financial vehicles that allow our customers to offer their patients. So it makes -- takes our payment solution to basically a financial solution and the practices have more tools to offer their patients, whether it be financing through CareCredit, financing through themselves, using the Weave tools to schedule payments. So it just makes the payment product more attractive, stickier in addition to attaching more volume.

Okay. And then secondly, for 2026, what are your expectations for growth rates across the different subverticals?

Yes. We're starting the year in a great position. We haven't broken out the growth rates for each one of the different -- the verticals that we serve. But we continue to anticipate strong growth across the growth vectors that we've talked about around specialty medical. We just talked about how Q4 was our strongest quarter from an additions perspective there. Mid-market grew nicely in 2025. We expect that to continue. And so not -- I can't speak to the underlying components, but we do anticipate to continue to see momentum and growth through those -- through the same channels.

Yes. And I would add, we expect specialty medical probably will be the strongest grower just because of the opportunity set here and all the work that we've done on adding integrations throughout this year, continue to add them throughout the year. Some of the marketing dollars that you saw that we spent in Q4 is really around developing our brand presence in that sector. So we expect that to grow, continue to be the fastest grower.

I expect all of our verticals to grow nicely. The omnichannel AI Receptionist that we're rolling out is really valuable to kind of all verticals in integrated and not. I mean the tool is quite useful even without a PMS integration. So I think I expect solid growth in all verticals, but I think specialty medical will probably lead the pack.

And your next question comes from the line of Alex Sklar with Raymond James. We'll move on to our next question from Hannah Rudoff with Piper Sandler.

It was encouraging to hear that stat about the one customer, I believe you said who scheduled 1,200 appointments using your AI Receptionist. I guess longer term, as you think about it and you launch more AI capabilities and you complete the rollout of this unified inbox, how do you think about pricing to capture the value that you're delivering?

Yes. So we will definitely be able to monetize it. I think still being worked out is, is it priced as an additional module? Or is it priced as included in a bundle. So for example, you may have stand-alone TrueLark now and if you want to go to the fusion inbox where that brings everything from TrueLark and we -- all together in one place, which is the ultimate destination, is that a premium product that we price for.

The really important concept, though, is that we're now going ability to attach to the labor budget because we can just prove how we save labor and how we drive revenue. So we're very confident that we can monetize the additional AI omnichannel Receptionist functionality, and I think we'll work it out over time. I think a really important point is we don't license by seat. We license by location and then consumption. And we're confident that these tools will produce a lot of value for the practices, and we'll be able to monetize them accordingly.

Totally makes sense. And then, Jason, I really appreciate the additional color you gave this quarter around NRR and the multi-location NRR you shared. I guess you've talked about churn being higher and average sales prices being lower initially in some of your newer verticals as you have newer integrations and some of the solutions are nonintegrated. I guess have you seen these metrics stabilize for some of your oldest specialty medical cohorts? Or does that take longer than a few years to kind of stabilize and average with historical metrics?

Yes. Thank you for the question. We saw the same phenomenon. I highlighted how we saw churn decrease through the second half of the year in Q4 return to 2023, '24 rates. We saw a nice improvement in specialty medical as well in Q4. And so we've already started to see some of the improvements there. We've delivered a number of integrations on that front. We've expanded our coverage on that front. And so as those have started to mature, we're encouraged about making that declaration about where churn will trend back towards because we're already starting to see some of the proof points there that we've been talking about.

Yes. And I would add, Hannah, you mentioned, does it get better over years. And it actually happens more quickly than that. We're seeing it improve over quarters. And it's just as you get your -- improve your integrations, depth, breadth, churn rates come down. And not only do churn rates come down, but CAC comes down over time as you develop a brand, you have more word of mouth, you're more familiar in the trade shows.

So it's a virtuous benefit that comes over -- trends over time. And then if you say, well, how do you know that? It's just from our history, looking through all of our verticals that we enter. And that's one of the reasons we do it as a step function as opposed to just doing a shotgun blast in a lot of verticals because the idea is you go into initial vertical, ASP is lower, CAC is higher, churn is higher. You work through that, ASP comes up, CAC comes down, churn comes down and then you kind of go into a new vertical and you kind of just stage it that way. And I've been in vertical SaaS and payments for over a decade, and this is the pattern I've seen throughout that entire period.

And we will come back to Alex Sklar for your next question from Raymond James. Okay. We will move on to Mark Schappel with Loop Capital.

Can you hear me okay?

Yes, we can.

Okay. Great. Brett, starting with you, I was wondering if you could just kind of walk through your investment priorities and also hiring priorities for the coming year.

Sure. So I think they're the same, our investment priorities and our hiring priorities. So that's good. I think #1 on our hiring and investment priorities are product and engineering, where we've got a really unique advantage with -- since we own the telephony stack, we have the practice phone number, we have the data, we are really uniquely positioned to take the AI Receptionist technology from a text experience to kind of a native inside of Weave and then make it a full voice experience.

And so we are really leaning hard into that, and investing against hiring engineers and product people to make sure that we can execute effectively on that one. I think other investment priorities are on the GTM side, go-to-market side. And we've actually made a couple of changes to our model at the end of this year and into next year, we're actually -- we used to go to -- we used to have a full-service AE model, and now we're kind of moving more to an SDR AE model. It's more efficient, and it seems to be working. So early proof points are good there. And I think those are the big investments we're making certainly in the first half of the year.

Okay. Great. And then as a follow-up, some of your competitors are also highlighting AI in their products. I was wondering if you could just talk a little bit about how Weave is either differentiating or plans to differentiate its AI automation capabilities from those of your competitors?

Sure. So we see lots of companies who are -- some have some products, some just put AI on their website. I think our unique -- well, I know our unique differentiators are kind of what I started with is we own the telephony stack. We've got the trusted relationships, and we own the very specific complex industry-specific workflows. We're a trusted partner of these businesses. And they really -- I meet with customers, and they'll show me all the products they have and they say, what? Which of these can Weave do, please?

They really want to consolidate functionality. So the idea of saying, for example, having an AI chatbot up in one window and Weave up in another window and the PMFs in another window, it just doesn't work great. And so we have the opportunity to bring all of those workflows together. And because we have the full experience, we can retain context through the whole discussion. So you may start with a text or you may start with a call and then the call transitions to text and then the text maybe gets escalated to a specific person and the staff who can handle only -- specifically handle that question.

All of that interaction, whether it's voice or text gets retained in one place. And it also gets analyzed by our Weave call intelligence, so then you can create action items, you can create tasks, you can actually perform work, whether it be issuing an invoice, filing and checking on insurance verification, booking an appointment, rescheduling an appointment. So having the deep integrations, the deep workflows, the subject matter expertise, the relationships and the ability to kind of have seamless handoff is a real, real differentiator. These highly specific workflows are hard, and you have to learn them over time.

If you get an appointment wrong, so for example, someone wants a crown done and you book a 30-minute appointment for a cleaning that really hurts the practice's day. And so having that knowledge, that experience, we've got billions of these interactions, and we know kind of over time, what type of calls result in what type of outcomes, and we can optimize practice operations using that knowledge and that deep expertise.

And we will come back one more time to Alex Sklar with Raymond James.

Can you hear me now?

Yes, go ahead.

It's like third time's a charm. This is actually John on for Alex. Brett, maybe we'll start with payments here. It's great to hear about the continued strength in payments. It's been a nice growth driver for you. I'm curious, though, any comments you can share on growth differences you're seeing by end market? And then maybe how we should think about payments growth and payments attach rate in 2026 and over the medium term? And then I have a quick follow-up.

Right. So I can give you some product growth highlights, and maybe Jason can talk about sectors. So we released this year a couple of really cool new features, bulk collection, but surcharging. Surcharging has been very well received. It's a great upsell product. And that is actually driving some pretty reasonable, almost significant volume growth from the new customers who adopt it. And of course, surcharging is your ability to charge the patient for the credit card fee.

And so that gets us not only a better take rate, but more importantly, it just gets us more volume. So that's in early stages, but we're seeing some very nice green shoots on that one. And I'll let Jason talk about sectors.

Yes. So some of the -- I think the best -- one of the best ways to think about payments in the sectors and how it differentiates for us is when you think about the economics of a practice, the average dentist within a practice will do about $1 million in gross billings a year. And about 50% to 60% of that will go through an insurance process. So the remaining 40%, 50% is our opportunity to go after that.

So when we think about going after the performance in different sectors, what's really important is to understand what the insurance component within each one of the sectors we go after or that we sell to have and what just the nature of their economics are. And so like in specialty medical, when you're dealing with primary care, you're dealing with significantly higher insurance coverage rates. And so the payments opportunity for us in that space isn't as great as it is in like aesthetics or in veterinary.

And so we try to align our go-to-market efforts with the needs of those industries and the opportunity for us to expand revenue per location through them. So that's how we think about the different specialties. And it's a contributing factor. Brett talked about how we approach the different specialties and the next verticals in a step function. we look at the overall economics of those specialties as we decide what are the next specialties or the next verticals that we open up. And it's something we consider there across all the different solutions that we offer.

That was great color there. And then, Jason, maybe just a follow-up on the NRR improvements. I know it's been touched on in earlier questions, but specifically, I do want to understand how additive do you think some of the newer products like the TrueLark and your organic product expansion can be to NRR growth in 2026 and maybe over the medium term, kind of what's embedded in the guide there?

Yes. So what's embedded within the guide, a lot of the growth from the AI receptionist follows the time line and the road map that Brett laid out in his remarks. So it biased more towards the second half just based on the time line for when those products roll to general availability. I think the opportunity for growth is really strong. From a net revenue retention perspective, we're still in the early days of selling that.

The impact it will have, I guess I'm not ready to provide a lot of color on that today. There's a significant upsell opportunity, but we also know that customers have typically landed heavy whenever we bring these new capabilities, which could lead to further average revenue per location expansion without necessarily leading to significant net revenue retention expansion. And so I guess we'll -- I'd like to let the dynamics play out a little bit more as we get more sales experience there, but the opportunity is quite significant, really encouraging.

Let me just add a little bit more color to the earlier question about why we stands out as having an advantage as we move to these omnichannel AI Receptionists and there's a bunch of them out there. In addition to the things I mentioned like domain expertise, a really important one is, frankly, our scale and the fact that because we're a public company, because we have scale, we have to do it right.

So when it comes to data, maintaining the data security, maintaining and ensuring that the data is used properly. compliance. We've got HIPAA, we've got PHI, we've got PCI. We've got all these rules and that we have to comply with and reliability and scalability and security and being able to support the full experience front to back. These are just a lot of things that buyers are becoming more and more concerned about, especially large groups that some of these smaller kind of newer businesses just don't have the scale or the financial ability to comply with or frankly, it's probably not as much of a focus for them. And for us, it's just absolutely table stakes.

There are no further questions at this time. I will now turn the call back to Brett White for closing remarks.

Well, thank you all for joining the call. We're super excited about 2026, and thank you again to the entire Weave team for posting an incredible 2025. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Greetings, and welcome to Weave's Third Quarter 2025 Financial Results and Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions]

I would now like to turn the conference over to your host, Mr. Mark McReynolds, Head of Investor Relations. Thank you. You may begin.

Thank you. Good afternoon, and welcome to Weave's Third Quarter 2025 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. We've disclaims any obligation to update or revise any forward-looking statements.

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 onetime acquisition-related compensation. 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 the earnings presentation on our Investor Relations website.

Before I turn the call over to Brett, we want to let you know that we'll be participating in the Stifel 2025 Midwest One-on-One Conference on November 6 at the Waldorf Story in Chicago and also at the Raymond James TMT and Consumer Conference on December 8 at the Lotte New York Palace Hotel in New York City.

And with that, I'll now turn the call over to Brett.

Thank you, Mark, and thank you to everyone joining us today. We are very pleased to report that the Weave team delivered another strong quarter, marked by accelerating revenue growth, non-GAAP profitability and free cash flow as well as significant advancements across our product road map.

Weave is a vertical SaaS platform that delivers AI-powered patient engagement and payment solutions, purpose-built for the unique needs of small and medium-sized healthcare practices. Our platform powers communication, scheduling and payment workflows that free teams from repetitive manual work, giving them time to focus on meaningful patient relationships and higher-value activities.

We combine operational insights into one seamless experience to help practices grow and improve the efficiency of their teams. The result is a fuller schedule, stronger revenue capture, happier patients and teams empowered to focus on people rather than paperwork.

We solutions work around the clock to convert missed calls into booked appointments, helping to ensure practices never miss an opportunity. Our AI is trained on over a decade of real-world patient interactions, including billions of phone calls, voice messages and text messages. This gives us a deep understanding of how practices and patients actually communicate. Weave integrates directly into a practice's system of record through authorized APIs, which allows us to deliver automated workflows that feel like an extension of the practice.

This quarter, we generated $61.3 million in revenue, accelerating our year-over-year growth rate to 17.1%. This also marks our 15th consecutive quarter of exceeding the top end of our revenue guidance.

Gross margin reached a record high of 73% this quarter, more than 15 percentage points higher than our gross margin at our IPO 4 years ago. We again exceeded the high end of our operating income guidance. This strong performance translated into another solid cash flow quarter with $5 million of free cash flow. This continued improvement reflects our disciplined execution and underscores the efficiency and scalability of our business.

The SMB healthcare market is evolving rapidly with technology playing a greater role in how practices attract, engage and retain patients. We believe the future of software and SMB healthcare will deliver intelligent automation that works hand-in-hand with office staff to improve patient experiences.

As we execute on this vision, we are laying the foundation for our next chapter of growth. Patient care will remain deeply personal, while routine operations quietly run in the background. We believe that the most successful practices will adopt technology purpose-built for modern patient interactions with automated workflows, actionable insights and intelligent agents that anticipate and act.

Dental service organizations or DSOs and other group practices understand and share our vision for a connected automated front office. Industry momentum is clearly moving in this direction as healthcare practices look to adopt unified, intelligent solutions built with compliance, reliability and patient experience at the forefront.

Weave is uniquely positioned to lead in this next phase of transformation. Our scale, brand and deep expertise in SMB healthcare gives us an advantage. Our platform is differentiated by our authorized integrations with leading practice management systems. In an environment where lawsuits are putting unauthorized integrations at risk, Weave's secure architecture and HIPAA-compliant infrastructure gives practices confidence and peace of mind. Security, regulatory compliance and reliability are table stakes in healthcare, but we believe they are also barriers that our competitors may not understand and cannot afford to meet.

One of our largest customers recently shared with me at a trade show. He said, "We're so glad you acquired TrueLark because of your proven scale, security and reliability." When I looked at some of these other companies, we have no idea what's under the hood. Weave's vertical focus gives us a unique advantage. Unlike horizontal platforms and general purpose automation tools, we understand healthcare workflows, regulatory requirements and the nuances of patient interaction. That level of precision is critical in an industry where even small errors or misbooked appointments can damage patient relationships and business performance.

No other vendor serving SMB healthcare combines unified communications, deep system integrations, intelligent automation and enterprise-grade privacy and security in a single trusted platform. We believe this combination creates a durable competitive moat and positions Weave to capture long-term market share as practices modernize the patient experience.

Our strategy builds on this strength by focusing on deepening customer reliance on Weave and expanding our share of practice spend. With each new feature, we are striving to enhance automation, engagement and efficiency for our customers, driving stronger retention and expansion across our base. As intelligent automation becomes more deeply embedded within our unified platform, we believe it will unlock new recurring revenue opportunities and strengthen the long-term economics of our business.

This advantage is not theoretical. It's already transforming how healthcare practices operate. Across healthcare, the front desk is the hub of the patient experience. For years, practices have been constrained by staffing shortages, fragmented software, disconnected workflows and missed call from patients seeking to book appointments. Staffing remains the #1 challenge for SMB healthcare practices. More than 70% report difficulty in hiring and retaining front desk staff, a problem that disrupts patient communication and daily operations.

By helping practices operate reliably regardless of staffing levels, weave solves one of the biggest operational risks in healthcare today. One of our largest customers, a leading dental group comprised of hundreds of practices nationwide, was facing these same challenges across its network. Before Weave, their average answer call rate hovered around 60%, meaning 2 out of every 5 patient calls went unanswered. A regional leader who oversees 50 of their practices decided it was time for a change. She and her team turned to Weave to bring patient interactions together, phones, messaging and scheduling, all in one place. The results have been extraordinary. Today, nearly all of those practices run on Weave with answer rates now exceeding 90%.

In addition, 17 of these practices have recently adopted our AI receptionist powered by TrueLark to automate the handling of after-hours calls and scheduling. In just 1 quarter, those locations booked more than $320,000 in additional appointments with 75% of those appointments scheduled without any staff involvement. As a result, new patient volume has increased by over 25% year-over-year.

This is a powerful example of how Weave unites communications and automation to help practices grow efficiently while delivering a superior patient experience. Results like this demonstrate how Weave is delivering the next generation of intelligent communication. We are solving the real problems that every practice faces.

Throughout the patient journey, our AI receptionist delivers always-on engagement and ensures consistent service even when staff levels fluctuate. It acts as a true extension of the practice, answering questions, confirming appointments and managing scheduling 24/7. Over the next few quarters, we intend to expand its capabilities meaningfully. Later this quarter, we plan to introduce voice capabilities, enabling the AI receptionist to handle incoming patient calls directly and intelligently route complex inquiries to staff. It will complete tasks via voice or text, including scheduling, confirmations, backfilling cancellations, all within the same unified conversation thread our customers rely on every day.

We continue to deepen the integration between TrueLark and Weave. As we laid out in our last call, we began the go-to-market integration by introducing our AI receptionist product to the mid-market accounts. And this month, we extended sales efforts to our existing single location customers, where we are already seeing strong interest. In November, we plan to launch sales to new single location customers, incorporating our AI receptions directly into our standard sales motion.

In addition to our AI receptionist, we are building a range of AI solutions that reinforce Weave's position at the forefront of intelligent automation in SMB healthcare. Over the last year, we've seen strong adoption of call intelligence, an AI-powered analytics engine that transforms every phone interaction into actionable insights. Call intelligence analyzes call recordings, detects customer sentiment and identifies both patient needs and additional revenue opportunities.

One recent customer example illustrates its impact. Call intelligence flagged a missed call from a patient who reached out about a dental emergency and staff followed up the same day. The patient received the treatment and decided to move forward with an $80,000 cosmetic treatment. As the practice manager explained, opportunities are everywhere and tools like this help you catch them before they slip through the cracks.

In coming quarters, we're expanding call intelligence capabilities to provide visibility across every conversation, whether automated or handled by staff. It will proactively surface action items to guide next steps for the AI receptionist or the front desk. By unifying all human and intelligence-driven interactions into a single conversation thread, Weave uniquely enables practices to capitalize on opportunities for revenue growth, improve patient experience and continuously coach teams for better performance.

Finally, our AI-powered in-app assistant serves as a true copilot for busy front office teams, helping practices work smarter, faster and more efficiently. In the coming quarters, it will simplify setup and assist with customized workflows to help practices get the most out of Weave's advanced features. The opportunity ahead of us is significant. The combination of strong demand, a proven platform and AI innovation positions Weave to drive sustainable growth and long-term shareholder value. Weave is leading this transformation, unlocking the full potential of intelligent automation to power the next generation of connected, efficient, patient-focused practices.

In addition to the developments in AI, we continue to make positive strides in the other growth vectors we outlined earlier this year. Specialty medical continues to emerge as a key growth driver for Weave. This vertical delivered record results again this year with the highest number of medical location additions in company history. As a reminder, the specialty medical vertical is more than triple the size of the dental, optometry and veterinary combined, underscoring the significant long-term opportunity it represents for Weave.

Mid-market also continues to be a powerful growth engine for Weave with expanding traction across multiple healthcare segments. Our mid-market pipeline continues to diversify with meaningful contributions coming from outside the core dental base. For example, we've recently signed a contract with a 600-plus location specialty medical group. The initial phase includes roughly 50 locations, which have already begun onboarding. This account has the potential to be one of our largest customers. This group came to Weave through an EMR partnership and is a great example of the opportunities that we can unlock when we partner closely with practice management systems.

Over the past several quarters, we've launched multiple new integrations. In the first year after launch, sales of the integrated solutions have grown 2x to 5x year-over-year, demonstrating strong demand and the immediate impact of integrated offerings. These integrations are expanding our reach and reinforcing Weave's position as the most connected platform in small and medium-sized healthcare.

Payments continues to be one of our strongest growth drivers with Q3 revenue growing at more than double the rate of total revenue. We continue delivering on our payments platform road map, focusing on the most requested customer features. At the top of this list, were surcharging and bulk collection features, both of which were recently launched. Surcharging helps our customers manage rising costs by enabling them to pass credit card fees on to the payer if they choose. Bulk payments allows practices to initiate multiple payment requests simultaneously. This capability saves significant time for office staff and strengthens our value proposition for multi-location and enterprise customers.

To conclude, I want to thank our customers, partners, team and shareholders for your continued trust and belief in Weave. Looking ahead, we are incredibly excited about the future we are building with our AI platform, which we expect to transform how practices communicate, automate workflows and deliver care. With the foundation we've built and the innovation ahead, I'm very optimistic about the future for Weave.

I'll now turn the call over to Jason for a deeper discussion of our financial results. Jason?

Thanks, Brett, and good afternoon, everyone. It was another solid quarter for Weave, reflecting continued momentum in our key growth initiatives and disciplined execution across the business. We delivered revenue of $61.3 million, exceeding the midpoint [Audio Gap] an acceleration of our revenue growth rate to 17.1% year-over-year.

Excluding TrueLark and the effect of last year's price increase, Q3 revenue grew more quarter-over-quarter than any quarter in the past 4 years. Specialty medical, where we are still less than 1% penetrated, grew more than -- more in Q3 than in any previous quarter as it continues to ramp. Payments revenue again grew more than double our total growth rate.

Gross revenue retention held steady at 90% in Q3. Net revenue retention was 94%. We have discussed the resiliency of the end markets we serve, and that remains true today. Demand remains strong, and we continue to be successful in customer acquisition.

I would like to highlight a few aspects of our retention metrics. First, our net revenue retention in the second half of 2024 and the first half of 2025 was bolstered by the effects of a price increase in Q2 of 2024, which accounted for approximately 250 basis points of uplift. We have lapped the effect of that price increase and our net revenue retention rate has decreased commensurately back to within 1 percentage point of Q3 of 2023 prior to the price increase.

Second, when we enter new verticals, it is typical for us to see higher churn and lower average sales prices initially. In the early phases of a new vertical, we are selling newer integrations and often nonintegrated solutions, which have a slightly higher churn profile. That is true for specialty medical, our fastest-growing vertical, where strong new customer adoption creates pressure on overall retention metrics, similar to what we experienced in the early stages of more established verticals. Over time, we expect churn to normalize and average sales price to increase as we achieve greater product market fit and industry presence through more mature integrations and greater integration coverage.

Lastly, it's also important to note that our reported retention metrics are measured on a location basis, not a customer or logo basis on a weighted 12-month average. For example, adding another location to a multi-location customer does not improve our retention metrics as each location is viewed separately. If we were to report net revenue retention on a logo basis, it would be higher than our net revenue retention on a location basis.

Let me now turn to our operating results for the quarter. Gross profit grew to $44.8 million, an increase of nearly $7 million year-over-year. That represents a gross margin of 73%, up 50 basis points year-over-year and 70 basis points sequentially. The improvements were largely driven by leveraging cloud data center costs and hardware amortization.

Sales and marketing expenses were $24.3 million or 40% of revenue. We increased Q3 demand generation expenses to capitalize on strong momentum in specialty medical, recently announced integration partnerships and mid-market. This included demand generation for the solutions recently acquired in the TrueLark acquisition.

Research and development expenses were $9 million or 15% of revenue. Our focus includes integrating TrueLark into the Weave platform and accelerating the development of our product road map and AI strategy. General and administrative expenses were $9.9 million or 16% of revenue, which provided the most year-over-year operating leverage in our business as these expenses improved from 17.5% in Q3 of 2024.

Operating income for Q3 was $1.7 million, an improvement of $300,000 compared to Q3 of 2024 and exceeds the high end of the guidance range we provided in July by $700,000. This represents an operating margin of 2.7%.

Turning to our balance sheet and cash flow. Weave's liquidity remains strong. We ended the quarter with $80.3 million in cash and short-term investments, an increase of more than $2 million sequentially. The third quarter was another period of strong cash generation with $6.1 million of cash provided by operating activities and $5 million of free cash flow. Year-to-date, free cash flow totals $8.5 million, representing a $4.3 million improvement compared to the same period last year.

Looking ahead, we are raising the midpoint of our full year revenue guidance and updating the range to $238 million to $239 million. We are also raising our full year non-GAAP operating income guidance to be in the range of $3.3 million to $4.3 million. This outlook reflects meaningful year-over-year improvement in profitability.

For the fourth quarter of 2025, we expect total revenue in the range of $62.4 million to $63.4 million and non-GAAP operating income in the range of $1.5 million to $2.5 million. Our expected weighted average share count for the full year is approximately 76.3 million shares.

In closing, our business continues to perform well and momentum across the company remains healthy. Q3 was a strong quarter marked by accelerating revenue growth, record gross margin and solid free cash flow. As we look ahead, we're confident in our ability to balance growth and profitability as we execute on our strategy. Thank you for your continued support.

And with that, we'll now turn the call over to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Alex Sklar with Raymond James.

Brett, maybe first for you on payments and then some of the additive functionality that TrueLark bring, particularly around payments. Can you just talk about what you're seeing from that solution broadly? How are you doing in terms of new lands in specialty medical with landing with payments out of the gate?

And when do you think you're going to be in a position where you can integrate some of that TrueLark functionality on the revenue cycle management opportunity and automating some of the collections processes?

Alex, sure. So first, we'll talk about payments. So we had very strong volume growth this quarter. So we continue to improve there. As we mentioned, we had revenue growth in aggregate was greater than -- more than double the total growth rate. So continue to add customers, continue to add volume. Average volume per customer continues to be strong.

As far as when do we think we can add TrueLark capabilities, that's absolutely on the road map. Our road map is really to release the stand-alone product, which is not yet integrated with payments, but it's on the road map. We're going to be upselling -- we just started upselling it to our existing customers. We're going to introduce the sales to our new single locations this month. And then we're going to be building an integrated solution that we're calling internally called infusion, where we integrate the TrueLark technology into the Weave inbox. So you have one combined inbox. And then shortly after that, we'll follow with what we're calling intelligent actions, which one of those will be working payments and RCM type activities into the automated workflows. So follow-ups on past due payments, active outbound invoicing, intelligent insurance verification and insurance eligibility. So over time, probably next couple of quarters, be building that functionality into a lot of the intelligent actions that the system is going to deliver to our customers.

Okay. Great color there. And I don't know if this one is for you, Brett, or Jason, but really strong commentary on specialty medical again this quarter. You had a nice group win. Can you just kind of update us on how some of these group integration or implementations have gone? We're about 12 months past, I think, the ACI one. Where does that one stand? How is the overall pipeline for middle market kind of larger practice opportunities stand within the overall growth algorithm?

Great question. So we continue to make great progress in the mid-market. Sales are very strong. On ACI specifically, we continue to make progress. We continue to see adoption and rollout. We have seen great growth in that business. If you'll remember, they also selected Weave because of the payment workflows and solutions that we're able to integrate with the overall Weave offering. And that's been a nice contributor and a benefit to us.

And one of the things that they're really excited about and looking forward to is this integrated inbox that Brett shared. he's had -- he could speak to this better, but he's had several conversations with a number of these large group practices. And as they understand what we're developing as we acquired TrueLark and what we're now building together, they really get excited about what that can mean for their business, the ROI can deliver, the centralized reporting and analytics. And so we continue to remain quite optimistic about the opportunity ahead of us in the mid-market front, where it still feels like we're very early in that life cycle.

Yes. I'll add a little bit there. We just recently had dinner with our management team, and the rollout is on track. So that's great news. And then we shared with them kind of our plans for the automated front desk, and they were very, very interested in the value that, that can bring to their practices. So the relationship is very strong, and I'm very optimistic about our future there.

Your next question comes from the line of Hannah Rudoff of Piper Sandler.

Nice to see that subscription growth reaccelerate this quarter. Just wanted to follow-up on Alex's first question around payments. It's nice to hear about that strong growth in payments, but it seems like the base is still relatively small there. I guess what is it going to take for payments adoption to really accelerate? And how much will it benefit from this TrueLark integration you're talking about? How much will it benefit from the surcharging and bulk payments functionality added in? Is there other functionality you need to build in to really get a step function change in payments adoption?

Sure. Thanks, Hannah. So I think we've been saying all along, the real unlock for our payments business is the workflows, really nailing the workflows and then also nailing the integration with practice management software. I listed 2 of the top features that customers were looking for, especially multi-location customers. In my prepared remarks that they really wanted, and we've delivered on those. We've actually -- on surcharging, we've actually seen in the short period that's been live, very positive results there. So again, it's nailing the workflows and then nailing the integrations. We've just ticked off 2 of the major items on the list.

And then the integrations, we continue to make really good progress there. Our strategy of only going through authorized front door integrations, only using authorized APIs is paying off. So I think we just keep delivering the features and functionalities that we need.

And then I think the automation technologies that are coming from TrueLark, but also being developed organically with the 2 combined teams should also be a pretty significant unlock, and we'll see how that rolls out over the next few quarters.

Good to hear. And then how do you think about balancing the rollout of new integrations on the specialty medical side and different subverticals you're expanding into versus growing the ASPs and customers in existing specialty medical subverticals that you're in?

Well, it's interesting. So we take a very programmatic approach to rolling out new integrations. We kind of start with where the largest presence are when it comes to practice management software, work with them, develop those integrations. And unlocking those integrations actually drives quite a bit of ASP growth. So a non-integrated Weave is generally -- let me say it differently, integrated Weave is more valuable to our customers. So it has a higher ASP, and it has a higher retention rate. And so one kind of begets the other. We get the integration done, we roll them out and then we can either upsell existing customers who are on a nonintegrated version or we can go to market with the integrated version, which [Audio Gap]

It seems we have Lost the main speaker line. Please hold.

Okay. Are we back?

You are back. Loud and clear.

Awesome. Are there any additional questions?

Yes. Your next question comes from the line of Matthew Kikkert of Stifel.

Specialty Medical continues to outpace the overall growth. Can you break down the driver of that success? Is a lot of the success coming from deeper penetration within existing subverticals like med spas or is it expansion into new subverticals? And then maybe more importantly, how can you replicate that success across other verticals?

Yes. Thank you for the question, Matthew. We continue to remain focused on the primary verticals that we've been talking about around med spa, plastics and aesthetics, physical, opto, physical, occupational therapy. And so there's a significant opportunity there just within the 4 specialties that we're targeting, the size of the opportunity is roughly the size of dental, optometry and vet combined. And we're still less than 1% penetrated.

So our approach to opening up the verticals we look at, one, the integration opportunity and our ability to go get those integration unlocks with the EMRs in the healthcare space. And then two, the economics and the demand from the customer base. And so there's a lot of opportunity where we're at. We remain focused there. Integrations lead our expansion. And so while we're growing there, it's -- we have a business development group who continues to evaluate other opportunities. And that's something that we'll continue to assess is where we expand. It is something that we can replicate. But for now, right now, we're just -- we're targeted on capturing the opportunity ahead of us there.

Okay. And then secondly, I'm curious, as you embed payments more deeply. Could you give a deep dive into how you're differentiating Weave payments from both legacy payment processors and then modern vertical SaaS players who are also bundling their own payments? And then are you able to share roughly what percentage of the customer base is now using Weave for payments?

Yes. We haven't broken out payments separately. You know it makes up about -- it makes up less than 10% of our revenue because we don't break it out. It continues to increase as a percent or a mix of our overall revenue. The real differentiators for us is when you think about the industries that we serve, increasingly, the point of collection where payment happens is outside of the walls of the practice. And so offices are stuck trying to collect either on the front end or the back end when the patient is not right in front of them. And so you could say payment happens at the point of interaction. Weave owns all of those interactions. We manage the trusted business phone numbers when you think about the text-to-pay capabilities and the ability to deliver online bill pay links through e-mail or through text. Weave sits right at that intersection of the day-to-day operations and workflows that the front desk staff who's trying to collect those dollars is already managing.

And so the points of differentiation for Weave is the ability to integrate and bring the payment or collection process into the existing interactions and communications that the front desk is already having with the patients. And that's just going to improve over time as we execute on the vision Brett laid out with bringing those collection workflows in through the AI receptionist as well.

We're going to check back with Hannah Rudoff of Piper Sandler for a follow-up.

I think, Brett, you dropped a little during the answer. You were talking about the programmatic approach you're taking in integrated versus nonintegrated solutions and integrated driving higher ASPs. I was just wondering if there's anything else you wanted to add to that.

I think that's -- those are the key points that integrations drive higher ASPs, higher retention. And we focus our integration activities, think of large to small. So go for the largest players in the space first and then just kind of have a rolling thunder of integrations from there. And then also an important concept is we get a fair bit of upsells when we introduce an integration. So we'll put up -- we'll go to a trade show and we'll say, put up sciences. We are now integrating with XYZ EMR practice management software, and we'll get a lot of interest from existing customers saying, yes, I want to upgrade to the integrated version. And it's just a better performing product for them, and it's just kind of a win-win.

Got it. And it sounded like that 600-plus location deal in specialty medical was due to an EMR integration. Is that correct?

That's correct. And this one is interesting because it was actually -- the deal was struck in concert with the EMR.

Your next question comes from the line of Kylie Towbin of Citi.

You've got Kyle on for Tyler Radke. It was good to see the beat and raise on profitability, especially the step down in G&A spend as a percent of revenue. Where are you expecting to find leverage from here? Is that sustainable moving beyond Q4? And was this through synergies or curious, any details on profitability?

Yes. Thanks, Kylie. We've talked about 2025 as a year where we are making some targeted focused investments, especially on the go-to-market side and the engineering side to enable these integrations and whatnot. The leverage in the model, we believe the investments that we're making are things that will ultimately provide additional leverage within our model. As we look at 2026, we're in the middle of our planning cycles right now. We'll provide a lot more color on what 2026 will look like in our next call. But we continue to be committed to striking that balance between growth and managing incremental profitability. We have a bias towards growth, but it's something that we remain very focused on making sure that we can strike the right cord on both sides.

Got it. And then just on the AI receptionist adoption. Can you talk about the competitive landscape for this product? Does it replace the need for a practice to hire a receptionist outright or more alleviating the lower-value tasks?

Yes. It's definitely the latter. What practice owners want to do is get their front desk staff much more engaged in patient care, increasing their acceptance rates on proposed treatment plans, basically engaging in much higher value activities and leave a lot of the kind of paperwork, administrative follow-up tasks to automation. And we're seeing a lot of interest there, a lot of traction. It works great. And over the next couple of quarters, we're going to be delivering an increasing level of functionality to really up-level the roles and then provide a much higher level of patient service and then just capture more revenue for the practice.

Your next question comes from the line of Mark Schappel.

Brett, in terms of the success you're seeing in your payments business this year, how much of that success would you attribute to, I guess, you could say the new go-to-market focus that you put on that solution over the past year or so versus, say, the new product capabilities that have been added to the product over, say, the last 18 months?

I think they all go hand-in-hand. The #1 driver is really creating a stand-alone business unit that encompasses all aspects of the payments business. So understanding at a very, very detailed level how a practice actually operates, designing the product, figuring out what are the key workflows, building those, standing up the appropriate go-to-market engine, whether it be sales reps, marketing, comp plans, having the right kind of onboarding, having the right kind of customer support. So it all works together synergistically. And so it's -- obviously, having the product is paramount and knocking a number of these top requested items off the list is great progress. And then also advancing our partnerships with practice management software platforms is also great progress.

Great. And then as a follow-up, this year, you've seen accelerated investments, particularly in go-to-market, integrating TrueLark and just the deeper integration with the practice management systems. I realize it's still a little bit early, but I was wondering if you could just maybe comment on how you see next year shaping up, whether it's going to be as big of an investment year.

Yes. Thanks, Mark. As I said with Kylie, we're right in the middle of our planning for 2026. As we look at the next year and how we're going to frame that. A lot of it comes down to the opportunities that are ahead of us. And a couple of things as we look at the go-to-market investments, these are generally small, targeted investments in a handful of sales reps in like the mid-market side.

And the thing I'd highlight is even with those, we've really been able to leverage some of the scale within like our G&A line to help facilitate that so that here in 2025, we're delivering more profitability than we did in 2024 while also growing nicely. And so that's a balance that we're going to continue to strike. We're going to look at where our opportunities lie. We still have a bias for growth, but very conscientious about profitability and our ability to deliver incremental profitability. And so more to come on that in our next call, but hopefully, that helps you understand how we're thinking about it.

There are no further questions at this time. I will now turn the call back to CEO, Brett White, for closing remarks.

Thank you all for joining the call, and thank you again [Audio Gap]

This concludes today's call. Thank you for attending. You may now disconnect.