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  Title	Q4 2024 Weave Communications Inc Earnings Call
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  Published Date	Feb. 21, 2025, 11:36 a.m.
  Summary	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Weave Communications Inc Earnings Call Thomson Reuters StreetEvents Fri, Feb 21, 2025, 6:36 AM 36 min read I
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  Content	Unlock stock picks and a broker-level newsfeed that powers Wall Street. Upgrade Now Q4 2024 Weave Communications Inc Earnings Call Thomson Reuters StreetEvents Fri, Feb 21, 2025, 6:36 AM 36 min read In This Article: WEAV -15.57% Participants Mark Mcreynolds; Head of Investor Relations; Weave Communications Inc Brett White; Chief Executive Officer, Director; Weave Communications Inc Alan Taylor; Chief Financial Officer; Weave Communications Inc Alex Sklar; Analyst; Raymond James Brent Bracelin; Analyst; Piper Sandler Parker Lane; Analyst; Stifel Tyler Radke; Analyst; Citi Mark Schappel; Analyst; Loop Capital Markets Presentation Operator Greetings and welcome to the communications Q4 and full year 2024 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It's now my pleasure to introduce our host, Mark McReynolds, head of investor relations. Thank you, Mark. We may begin. Mark Mcreynolds Thank you, Matt. Good afternoon and welcome to Weed's 4th quarter in fiscal year. 2024. Earnings call. With me on today's Call are Brett White CEO Alan Taylor, Chief Financial Officer and Jason Christensen, VP of finance. During the course of this conference call, we will make forward-looking statements regarding. The anticipated performance of our business. These 4 different statements are based on management's current views and expectations to tell certain assumptions made out of today's date and are subject to various risks and uncertainties described in our SEC filing. We disclaimed any obligation to update or revise any for statements. Further, on today's call, we will discuss certain non-gap metrics that we believe aid the understanding of our financial results. Unless otherwise noted. All. Numbers. We talk about today will be on a non-gap basis. A reconciliation of comparable GAAP metrics can be found in today's earnings release, which is available on our website and and is exhibit to the Form 8K furnished with the SEC before this call, as well as the earnings presentation on our earnings on our investor relations website at investors.ggeme.com. And. With that, I will now turn the call over to that. Brett White Thank you, Mark, and thanks to everyone joining us today 2024 was a year of remarkable progress and transformation for weeks. I'm excited to share key financial and strategic highlights from the past year as well as our vision for 2025. We exist to create better healthcare experiences for patients and the practices that serve. Our goal is to make every interaction with the healthcare provider simple, seamless, and positive. For SMB healthcare practitioners, managing a small healthcare business while delivering quality patient care is challenging. We streamlined operations, making it easier for providers to focus on what matters most, caring for their patients. Our vision is to elevate the patient experience through a unified platform that improves business operations, enabling healthcare professionals to focus on patient care and achieve their dreams. Instead of a fragmented set of tools, we've offered an AI powered solution that integrates communication, scheduling, forms, payments, and more. Through authorized and supported integrations with leading practice management systems, we unlock deeper functionality without adding complexity. These integrations enable practices to automate and personalize patient communication while embedding fintech solutions such as tech to pay online bill pay, and payment plans directly into the communication workflows. By streamlining payment processes, we've accelerates collections, reduces write-offs, and improves practice profitability. Technology isn't just about efficiency and revenue growth for healthcare practices. It's a key factor in attracting and retaining top talent. 61% of practitioners agree that hiring high quality employees is easy when their practice leverages the latest office technology, and almost 70% say that retaining great staff is significantly improved with modern tools in place. Investing in the right technology enhances the workplace experience and reduces burnout. We platform gives practice as a competitive edge, not just in patient engagement and payments, but in building strong successful teams. By helping healthcare practices attract, engage, and retain patients, we've enabled providers to focus on what they do best, delivering excellent care while growing their business. For many, their practices is a lifelong dream and weave is here to help them achieve it by simplifying operations, reducing burdens, and empowering them to build thriving patient-centered practices. The dental, optometry, veterinary, and specialty medical verticals we serve give us access to an addressable market that we believe exceeds $7 billion in the US alone. Before Alan shares more details about our financial performance, I want to share a few key highlights. In Q424, we delivered another outstanding quarter with strong revenue growth of nearly 19% and continued improvements of both profitability and free cash flow. Growth margins improved again through the 12th consecutive quarter, reaching 72.6%. Q4 also marked our 2nd consecutive quarter of positive operating income, resulting in full year profitability for the first time in week's history. We achieved $6.1 million in free cash flow in Q4, more than doubling year over year and representing a free cash flow margin of 11%. We produce free cash flow of 10.4 million for the year, representing nearly 60% year over year growth. Finally, we're very pleased to exceeded the high end of the revenue and profitability guidance we gave a year ago. These results underscore the strong market demand for our solutions driven by the discipline execution and a clear commitment to efficient growth. At the start of 2024, we identified several key focus areas to open up and expand new vectors of growth, including expanding into specialty medical verticals, strengthening integration partnerships, enhancing solutions for multi-location practices, elevating payments as a core component of our product, and delivering AI-powered innovations. Today, alongside our financial performance, I'm excited to share the significant progress we've made in each of these areas. In 2024 we laid the groundwork for success, and we're already seeing strong early traction. As a result, in 2025, we will be expanding these initiatives and investing to further accelerate momentum. Let me provide some additional color into each of these key growth vectors. In 2024, we identified a set of specialties within the SMB medical vertical as strategic expansion opportunities. Revenue from specialty medical practices led by primary care, med spa, plastic surgery, and physical therapy grew at twice the rate of the overall company revenue in 2024. Specialty medical remained our fastest growing market segment in Q4, with more active medical locations added than in any previous period. Our momentum in this space was fueled by the release of new authorized integration with practice management software including eClinical Works, Athena Health, Dr. Chrono, and NextGen, expanding our reach and deepening the value of our platform. The SMB medical market in the US spans 29 specialties representing an addressable opportunity that is more than twice the size of the dental, optometry, and veterinary markets combined. With less than 1% market penetration in this in this vertical, we are only beginning to unlock its vast potential. We began 2025 with the launch of authorized integrations with prompt and practice fusion, further expanding our presence in the medical vertical. At the same time, we are expanding our go to market efforts by broadening our target specialties, increasing demand generation investments, and advancing sales enablement programs. These initiatives will accelerate our growth in high potential medical specialties and solidify Weed's position as a category leader while expanding our market share. Turning to partnerships, in early 2024, we launched a dedicated partnerships team led by an experienced executive to drive new growth opportunities. This investment expanded our serviceable market by over 100,000 locations through new and enhanced integrations across all of our vertical markets. Our strategic partnership with Patterson Dental announced in June, significantly broadened our market reach through co-marketing and co-tying efforts, resulting in increased bookings and payments revenue in the latter half of 2024. Additionally, our commercial and integration partnership with prompt, which launched this month, marks a major milestone in our expansion into the physical therapy market. Since launch, we have actively driven adoption through co-marketing efforts engaging both shared customers and new prospects. To build on this momentum, we are launching a dedicated partner sales team in 2025 that will work closely with our commercial partners. By embedding within their go to market strategy, we aim to deepen collaboration, increase engagement, drive referrals, and accelerate revenue growth. Given the strong early success of our partnership strategy, we will continue to invest in 2025, strengthening both sales and marketing resources to further expand our market presence and accelerate growth. Another key focus of our strategy this year is expanding our mid-market customer base. In Q2 of 24, we launched an enterprise solution on our platform to meet the unique needs of multi-location practices. We added a proven sales leader in Q3 to accelerate our progress, and in Q4, Affordable Care, the nation's largest dental service organization for tooth replacements, chose Weave as its platform of record for patient engagement and payment. In 2025, we are expanding our mid-market sales capacity and increasing our marketing investment. These efforts will deepen engagement and expansion in existing accounts, drive pipeline growth, and position we for sustained success in this segment. In line with our other focus areas, we are seeing strong traction in our payments business. In 2024, we pointed a general manager of payments and doubled the size of our operations and an engineering teams. We integrated payments with some of the largest practice management systems in our space, including Open Dental and Patterson's Eagle Soft and Fuse, to deliver more streamlined communication and collection work flows for our customers. We enhanced our payments product suite with payment plans and payment reminders which help improve case acceptance and reduce outstanding accounts receivables for our customers. Family payments are crucial for the financial health of any practice, and weed payments is designed to make that easier. 74% of practicers believe they get paid faster by offering techs to pay, and 62% say it helps prevent overdue invoices. Affordable Care selected the Weave Enterprise solution to improve collections and reduce write-offs with integrated digital payment solutions like tax to pay. By leveraging mobile terminals, flexible payment options, and embedding payments into patient communication workflows, affordable care practices using we have seen significant revenue cycle management improvements. In 2025, payments will be a core element of our product and go to market strategy. Payments are now seamlessly integrated into our initial sale, reducing time to value for our customers. We are also investing in dedicated payments team focused on adoption and increasing usage within our customer base. We believe that these resources will result in a scalable, resilient payments business that is well positioned to drive continued growth in the coming years. Another important aspect of our strategy is AI. Last year and last year we made meaningful strides in this area. We launched our AI power platform for both single and multi-location practices. Weave AI is embedded throughout our platform to help streamline communications between the practice and its patients through review responses, email marketing creation, message tagging and prioritization, and voicemail transcriptions. In Q4, we announced our AI powered call intelligence product. This revolutionary technology transforms how healthcare practices analyze and leverage call data, enabling them to elevate patient experiences, boost operational efficiencies, and unlock new revenue streams. 88% of practices say technology is crucial to delivering a great patient experience. In 2025, we will continue advancing AI powered solutions to transform patient engagement and optimize complex practice operations. By automating workflows and enhancing communication, we've is leading the way in intelligent automated healthcare solutions, making our platform an essential tool for the modern healthcare practice. In summer, in 2024, we laid the foundation for expansion, achieving early success across multiple growth areas. In 2025, we will continue making disciplines, strategic investments where we see the greatest opportunity and a clear path to winning your business. Medical vertical markets, mid-market partnerships, payments, and AI. The traction we gained in 2024 reinforces our confidence that these investments will strengthen our market leadership and unlock new revenue streams. With a strong team, a clear vision, and proven ability to execute, weve is well positioned to accelerate growth and drive long term success. Finally, we've continued to earn recognition for our dedication to delivering exceptional customer experiences in the outstanding performance of our team and our platform. In G2's winter 2025 report, we ranked first of 23 categories and was once again named the leader in the grid for patient relationship management. He was also selected as an ink Power Partner Award winner. We are committed to fostering an exceptional workplace, and we was named a top workplaces Culture excellence winner in 2024 for innovation, employee appreciation, employee well-being, leadership, and compensation and benefits. In closing, I'm deeply proud of the Weave team's accomplishments of the past year. We achieved robust top line growth, advanced profitability, and introduced groundbreaking products that address the evolving needs of our customers. These results highlight our unwavering focus on delivering value and driving innovation. As I sit here today, I am more confident in our opportunities and outcomes than I was just 12 months ago. A heartfelt thank you to our customers, partners, team members, and shareholders for their continued trust and support. Before I turn the call over, I'd like to take a moment to address the announcement we made earlier today. Our Chief Financial Officer Alan Taylor will be retiring at the end of this quarter. As part of a planned succession, Jason Christensen, Wie's Vice President of finance, will be replacing Allen as Wi's new Chief Financial Officer and will join the executive team upon Allen's retirement. I would like to thank Alan for his significant contributions to the company. During his nine years at Weave, he built our finance function and guided Weave along the journey from startup to successful public company. I want to express my gratitude for his partnership and for his commitment to ensuring smooth transition before he embarks on his well-deserved retirement. I've had the privilege of working closely with Jason throughout his four-year tenure at W. His extensive experience in our business, understanding of our strategy, and deep insights into our customers make him the ideal successor. Having personally been served as a CFO for over 20 years, I'm confident in Jason's abilities to continue to scale weed and drive continued growth and performance for many years to come. With that, I'll turn the call over to Adam. Story Continues Alan Taylor Thanks Bret and good afternoon, everyone. It's been a great privilege to serve with the CFO that we for the last 9 years and to work with such an incredible team. I'm looking forward to the next stage in my life, and I have enormous confidence in JC as he takes the reins of CFO. Jason's extensive finance experience and leadership will integrate to our IPO in the last few years business transformation and growth. In addition to leading financial planning and analysis, Jason has played a central role in driving strategic corporate initiatives, including business technology and business intelligence and developing our payments business strategy in advance of. Jason's deep understanding of we, his alignment with our mission and his embodiment of our core values make him well suited for this role. Jason will join us for Q&A after my remarks. Starting with Q4, we had an excellent quarter and continued to execute well across the board. In Q4, we delivered revenue of $54.2 million reflecting nearly 19% growth year over year, exceeding the midpoint of our guidance by $1.1 million or 2% fee. Revenue growth was driven by new customer acquisitions, payments, up sales, and ongoing momentum in our specialty medical vers, which continues to grow rapidly. Notable successes were achieved among the primary care, med spa, plastic surgery, and physical therapy verticals. Our net revenue retention rate is 90% in Q4, up from 95% last year. This reflects the positive contributions from its customers and price adjustments for additional functionality made to select customer codes and products throughout 2024. Growth revenue retention or GR remains strong and round to 91% in Q4, which is a minor decrease of 20 basis points from Q3 2024 and 30 basis points from a year ago. Our GRR consistently ranged between 91% and 94% over the past 4 years, positioning as one of the top performers in S&P. Turning to operating results, I'll be referring to non-gap figures unless otherwise stated. In Q4, gross margin improved to 72.6%, representing a 290 basis point increase year over year and our 12th quarter of sequential improvement. Our total operating expenses of the percent of revenue improved to 69% this quarter, down from 73% in Q4 2023, reflecting discipline, cost management and operational efficiencies. We saw the biggest improvement in general administrative expenses, which were $9.3 million or 17% revenue. Down from 19% of revenue last year, sales and marketing expenses came in at $20 million or 37% of revenue, a slight decrease from 38% in the same period last year. Research and development expenses for the quarter totaled $8.3 million representing 15% of revenue, down from 16% of revenue that you remove. These improvements highlight the focus on efficiency and productivity. In 24, we achieved a second consecutive quarter of non-gap operating with $1.8 million of profit, a $3.5 million dollar improvement last year and $800,000 higher than the top. The corresponding corresponding operating income margin of 3.3% is a significant improvement in the operating loss margin of 3.8% last year. Our net income was $2.4 million or $0.03 per share in quarter based on $72.9 million weighted average shares outstanding, reflecting a $3.2 million dollar improvement year over year. Adjusted even do for Q4 was $2.6 million improving by $3.4 million year over year due to revenue growth and operating efficiency. Turning to the balance sheet, the cash flow ended the year with $99.1 million in cash and short-term investment, up from $98.2 million last quarter. Cash flow generated from operations in Q4 was $6.7 million a $2.9 million dollar improvement year over year. Free cash flow was $6.1 million in the fourth quarter, representing year over year growth of 109%. We're particularly pleased with the profitability and pre-cash flow progress that we made in 2024. We anticipate offering income and free cash flow will remain positive for the full year 2025, though Q1 will likely show negative pre-cash flow due to the timing of the payout of annual employee bonuses and certain one-time. Before reviewing our guidance, I'll provide a brief recap of all your results. In 2024, total revenue grew 20% to $204.3 million. The sur entertainment revenue grew 21%, up from 19% last year. Our gross margin improved to 71.9%, up from 68.7% last year. Our operating margin improved to a positive 0.4% as we delivered the 1st year of operating income. In company this a significant improvement over the 6.8% margin in 20. We made substantial progress on pre-cash flow, ending the year having generated $10.4 million up from $6.5 million last year. We ended the year with nearly 35,000 customer locations on our platform, landing at 3,497. Up 15%. We're pleased with our project this year, and we would like to thank all of our team members and we, our customers and partners for their contributions throughout the year. I'd like to TRY some coloring outlook for 2025. As we outlined in 2024, we continuously refine our price strategies to align with market dynamics and business objectives. Well, we will continue to make adjustments as necessary, we do not anticipate the same magnitude of price changes in 2025 as we implemented in 2020. The most significant pricing updates occur in Q2 of 202. Making 22 or type will be your comparison. Of 2025 as we lack the effects of that cohort. However, excluding the impact of these suggestions, we anticate growth in our core business in 2025 to exceed 2020. As Brett mentioned, we are investing in payments and AI to deliver innovative workflow work flow-based solutions which we believe will unlock greater lifetime value and expand wallet share in the next few years. Additionally, in 2024, we launched a new platform, secured some transformative partnerships, and made great strides in our mid market business. We will, we are still in the early stages of these opportunities. And we're encouraged by the green shoots we see, but we're not assuming significant contributions in the first half of 2025 from these new vectors of growth. On the expense side, 2025 will be the 1st year that we will be required to comply with Section 44B of the Star Bank Act, and as a result, we are expecting an increase in compliance and compared to 2024. Daal color on expenses and seasonal factors that result in a sequential increase in expenses in Q1, including the reset of payroll tax payments, benefits renewals taking effect, and the timing of the annual quantities which are weighted more heavily in Q1. For the first quarter of 2025, we expect total revenue in the range of $54 million to $55 million and non-gap operating income in the range of negative.7 million dollars positive $0.3 million. For the full year 2025, we expect total revenue to be in the range of $232 million to $237 million. We expect the range for a full year 2025 non-gap operating income to be from $2 million to $6 million. We expect that a weighted average share of approximately 75.9 million shares for the full year. As we wrap things up in this final earnings call for me, and I express how incredibly fortunate I am to have been a part of the team. This last chapter of my business career started with an opportunity to work with the founders of Brandon Robb, Jarod Rodney, and Clint Barry. They are remarkable people and capable leaders, and the success that we presently enjoy scientists group in their vision and determination to build something extraordinary. Brandon is one of the most serious and optimistic people I've ever met, and I'm tremendously grateful for the opportunity he gave me to work with me. Finance team is best in class, committed, and a delight to work with, and I will miss. The investors and board members are sharp and cited as well as being great friends and mentors. What we do is weed is a vital part of how health care practitioners and their staff take care of people. Our people and our platform help them deliver a better experience to their patients. That's an important goal, and it's been hugely rewarding to watch what with this great we team hast to realize. We've been able to tap into a market with great potential, the greatest portion of which is still ahead. That for me reo means I can look forward to spending more time with my sweetheart Paula, who like every family member or loved one of those who work we, make their own special contributions to our success through their love, sacrifice, patience, and support. I'm grateful to Paula and to the extended we family who are such an important part of making it all happen. Paul and I look forward to spending more time together with our 16 grandchildren, so I'm fairly confident I'll have plenty to keep you busy. Brett and this great management team that is in place will not bee if they're joined by Jason, who has already won their respect because they had witnessed his capacity and performance for 4 years. Looking ahead, I'm very confident that we will continue to capitalize on new opportunities because the entire organization is passionate about the mission and will be disciplined and executed. We use exceptionally well position to grow and succeed in years to come. With that a certain call could be operated for QA. Question and Answer Session Operator (Operator Instructions) Alex Sklar from Raymond James. Alex Sklar Great, thank you, Alan, congratulations on the retirement and Jason on the new role. First question for me is just on the 2025 guide, it implies kind of a step back in the rule of framework. I know we saw something similar with how you approached the 2024 outlook, but it could just provide some more color on what you're factoring from an incremental investment perspective and and when we could expect those to contribute to growth. Alan Taylor Alec, thanks. Hey, it all starts. So we made it clear last year, this year and going forward that our bias is going to be towards growth. And so the investment profile with all of the things that we have in terms of the partnerships, the new markets we're going into, especially medical markets, our investments in AI, that's those are the areas where we will continue to invest so that we can lay the groundwork for just continuing growth. And so that's, I think, fairly consistent with what we've been saying all along in terms of the way that we'll plan on going forward. Brett White Yeah, Alex, maybe I'll add to that. So I know the word investment can be a scary word sometimes when giving guidance. So let me just give a little color. In each of these vectors of growth where we're really starting to see the green shoots growing in order to really capture the opportunity to accelebrate them, each of them needs a team. And so instead of having the existing team turn out, work on partnerships or work on payments, we're actually setting up dedicated teams. They're small teams to get us started and to grow. So we're not. We're not going crazy. We're just making very targeted small team investments in each one of these growth sectors to really get the kind of traction that we think we can. But these are really important multi-year growth opportunities and so we're seeding those down with some teams to really get them going and. We mentioned, we're going to be more over more profit next year than we did this year. We're going to see growth accelerate in the second half. So don't be scared by the investment or it's just a few teams, but we're levering those up, this quarter, to really to hit the end of the year to hit the second half of the year at at at stride. Alex Sklar Okay, thank you both for that color. Just one maybe follow up then on one of those growth factors payments. So you've had a new head of payments in place now. It's top priority. You're talking about seeing more of the team there. Can you just kind of update us on where that solution stands in terms of how creative it's been to growth and just given some of the learnings from Patterson, how do you view the payments opportunity for 2025 versus 24? Brett White Yeah, so we're the key for us for payments is getting the work flow payments integrated into the office work flow and so much of this year was, hiring ahead of payments actually Jason was our acting head of payments for the first half of the year. And then we hire have the payments and they've really been assembling the team put together the risk team. We've doubled the size of the engineering, we've built in some new integration flows. We're working with ACI to bring their payments over to our platform. So I think we've got all the the the pieces in place and now the reps. Of the work really is building out the work flows and then the other major change we've made this year is we've changed the sales compensation model. So starting January, all of our sales account executives now have a payment number. They all get paid on closing payments. And they also get paid on payment residuals. So we've changed the go to market model, we've changed the sales model. We've got many of the integrations done. There's still work to be done. I think you know we'll be working on the workflow for, quite a while, but we make incremental improvements there. We're getting traction with new ads, we're getting traction with partners, so I would say everything is is proceeding nicely and it will definitely continue to have. An accretive effect in 25 for both our growth and our margins. Alex Sklar All right, great. Thank you both. Operator Brent Bracelin from Piper Sandler. Brent Bracelin Good afternoon, Alan. It's been a pleasure working with you. Best of luck in retirement. 16 grandchildren. Sounds like you're going to remain pretty active. Jason, congrats on the new role, much deserved. Maybe Alan will double click into the guide. If I go back, your initial guide for 23 was 11%, actual was 19.9%, 2024 initial guide was 15%. Actual growth 19.9%. Are you trying to flag the 15% growth as some near term challenges you see to growing in 2025, or should we think about the guide as kind of a typical conservative amount of of of of conservatism in the guide this year just trying to parse that out if there's something specific you're trying to flag to us or if this is kind of the normal cadence of guidance you give thanks. Alan Taylor So Brent, first of all, thank you very much. It's been a pleasure to work with you as well. The only thing that I would point out is what we mentioned in the in the prepared remarks, which is that we do have a typical comp in Q2, but other than that, this is the same philosophy that we've been using and so I appreciate that setup. It is, it's very germane to this conversation in terms of the way that we look to grow. The only other thing I would add is the green shifts that we've been talking about. These are pretty exciting things. I need to see them, but I'm very convinced that we've got some opportunity for things that that we will have a conviction about as the year progresses, but I would read it as status quo with respect to the ploy behind the guy with one quarter compared to you. Brent Bracelin Got it very clear, so the Q2 compare is the only kind of thing kind of factoring in to the guide that's super helpful color. Brett, for you, you're clearly excited by these, 4 or 5 new initiatives, especially medical partner of payments. When do you think those can start to actually drive an acceleration and growth? I ask because we've had Good stabilization and growth the last two years. When do you think the green shoots could be material enough to drive action and acceleration and top line? Brett White Yeah, thank you, Brent. So in some areas it's already happening, but you kind of can't see it yet. I think one of the points I wanted to make sure that came through is, as Alan mentioned, we're lapping our our price adjustments from last year, which will happen the final quarter in Q2, and we're not claiming the same level of price adjustments in our 25 guides. So absent the price increase. We believe our core business will grow faster in 25 than in 24, so I think they're already the number, it's already showing up in the numbers in the business that we really look at and then I think the second half is when we'll see market acceleration. Relative to these initiatives, definitely on the partnership front, definitely on the multi-location front, definitely on the specialty medical front. So I think, if we're able to screen through the pricing adjustments, I think you'd be seeing more of it now, but net of all that, I think you'll see it mostly in the second half. Brent Bracelin Thank you absolutely thank. Mark Mcreynolds You thank you. Next question is from. Operator Parker Lane from Stifel. Mark Mcreynolds Please go ahead. Parker Lane Hey guys, thanks for taking the question, and Alan, I'll echo my congrats on the successful career environment here. Maybe the questions for Brett here, when you look at the multi-location and enterprise motion, how much of that is aimed at largely the dental vertical where you have the biggest exposure and the the history there versus the broader swath of the go to market motion? Brett White I would say currently if you look at our primary pipeline and our focus areas it's primarily dental and it's just because we've got the brand, we've got the product. We've got the partnerships with the big practice management software vendors and frankly that's where we get the most inbound. So, we've totally changed the go to market motion, we've totally changed the team, we're going to be changing the events we go to, so it's a major. Rebuild of that function and it's off to a great start. So, kind of like the rest of our SMB business, we'll start in dental, get our traction there, and then move into probably other areas of, doubt dental optometry and that and then specialty medical. Parker Lane Understood. And then Alan, I know you referenced the the the pricing increase last year impacting 2. When you look at some of the AI functionality you're bringing things like call recording, etc. Why isn't there an opportunity to take more price on on those feature sets that you're bringing to the market here in 2025, or is that something you think about in longer terms or simply just customer success and differentiating the platform? Alan Taylor Yeah, Parker, I think it will be the AI functionality that we're doing, we're already seeing good capability, intelligence, for instance, is doing well. We're seeing that uplifted, but when when we're talking about price, specifically just increasing the price on existing products or existing customers, I think we're kind of separating that out a little bit. And so we will take advantage of just some price increase this year, but that does not limit what we can do on the AI products and the other not sell products that are presently being sold and will be introduced. Can I add something to that. We, we. Brett White Also don't want. To do price.Increases that inhibit our ability to move.Customers onto the.New platform, but we are seeing greater adoption from a higher NPS and better customer response from that platform. And we know that's something that we want to move customers towards and so. We're trying to be very careful and cautious in how we balance those two in 2025. Parker Lane Understood, thanks for the feedback, guys. Operator Tyler Radke from Citi. Tyler Radke Hi, this is Kylie on for Tyler. Congratulations echoing the congrats for Allen on your retirement and thanks again for the question. NRR upticked nicely through the year. I'd just love to hear any directional comments for expectations on NRR transfers FY25. Alan Taylor So NRR will continue to be fed by improvements in payments. We obviously got some improvement through pricing last year. Payment payments is probably our strongest lever right now, but the sales are doing well and so we got a few. Vectors and help us to improve the NRR. I think it's important for all everybody on the call to make sure they understand, we price our offering on a location basis and so some of the NRR and we land very heavy in the processes that we go into and so some of the NRR we take up front as just the full features that these offices want. And yet we still have the opportunity to continue to improve as we add penetration within our customer base, and we continue to improve the opportunities for them to take advantage of these products like call intelligence and insurance certification and bulk texting and so on. Brett White And just one point I would add, just clarification, we measure NRR on a location basis, so we don't measure it on a logo basis. So for example, as ACI add locations over time. That does not positively affect the ACI logo NR per se. So I think that's a really important one to understand. So an ACI location is the same as any any other, and they're measured year over year on the individual location basis, not as a number of locations added by a. Logo. Tyler Radke Makes total sense, thanks. And then if I could slip in one more, I'd love to hear any comments on demand trends in the quarter and then keeping in mind that comment that you're more confident than 12 months ago, but just noticing that software revenue did have a slight de sell off of 3Q, what drove the revenue upside and the incremental confidence? Thank you. Brett White Yeah, so at the beginning of the year, at the beginning of 24, we laid out our plan, and all of our focus areas and throughout the year, we just kept adding really good leadership and they were tapping into these veins of opportunity and producing results. And so, lots of green shoes, lots of green lights are coming out of our kind of strategic plan for 204. So, as I was preparing for our kickoff, our employee kickoff, I kind of looked at on the same stage 12 months later, how's the view from the stage, and it was just a lot better because we have a lot more vectors to pursue. And so really the question is how aggressively do we want to pursue them on an investment basis. So we're being measured in our investment, but we're putting, full teams behind each one of these opportunities and demand was terrific in Q4, and so, from my seat things things look pretty darn good. Operator Mark Schappel from Loop Capital Markets. Mark Schappel Hi, thank you for taking my question. Brett, and first of all, Alan, congrats on your retirement here. Question for you, Brett I was wondering, I appreciate your comments regarding your investment priorities in the coming year with respect to the sales enablement initiatives to expand your presence and especially especially medical. Is that strategy to go deeper in the current, say handful of sub segments that you currently play in, or is the plan to maybe expand into other subsegments? Brett White So, kind of the way the model works is we look at demand. We look at product market fit and then we design our integration. Timing or integration roll out based on those factors and so really where we really start getting traction in the verticals is when we build the integration. So we build our integration roadmap, we start rolling out integrations, and then the go to market falls right behind that and the concept of sales enablement. Let's not TRY to make our old scripts and the old verticals work in the new verticals, let's actually make them very tailored, very pointed, so our sales teams get more efficient, more quickly, the previous question was, why the optimism? A year ago. We had we were looking for integrations to write. We were in, we were trying to get partners to sign up with us so we can write the integration. Now we're exactly flipped. Now we have more partners who want to partner with us, more integration agreements signed than we have actually have the capacity to deliver. So we're actively hiring more on the engineering side so we can meet the demand. So it's identify the verticals that are the closest product market fit, build the integrations, tailor the go to market motions to that integration or to that vertical, and then unleash the teams. Mark Schappel Great, thank you. And then with respect to your AI products, specifically assistant and call intelligence, I was wondering if you could just provide some additional color on how you plan to to actually monetize those products. Brett White So they're currently, you can, so currently they are included in the top bundle and then also we can sell them on upsell. So call intelligence is an upsell or it's an additional cost in the higher bundle, and I think the results we've seen recently is where our new sales are more biased towards the higher end. We kind of have the standard good better best bundling and ASPs are coming up because our sales are more biased towards the higher bundle. So, call intelligence is not a freebie. Some of the other embedded AI technologies come with. The new we've experienced platform, but that's, one of the ways that we're able to deliver value and therefore get price on both the SMB segment but really importantly on the multi-market segment or multi-location segment. Alan Taylor Great thank you. Operator This concludes the question and answer session. I'd like to turn 4 back to Brett White for any closing comments. Brett White Well, another big thank you to Alan for all his years of commitment and just being a great partner, and thanks to all of you for joining the call and thanks again to the entire team. Operator This concludes today's teleconference. You may disconnect your eyes at this time. Thank you again for your participation. View Comments Terms and Privacy Policy Your Privacy Choices More Info Recommended Stories
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