Weave Communications Inc
NYSE:WEAV
Earnings Call Analysis
Q4-2023 Analysis
Weave Communications Inc
The company delivered a strong fourth quarter with a 21.2% year-over-year increase in revenue, reaching $45.7 million and surpassing the anticipated range by $1.7 million or 4%. They maintained their net revenue retention rate at 95% and gross retention at 92%, amongst the highest for SMB retention rates.
Operating losses showed a significant reduction by 59% to $1.7 million com pared to the previous year, with net losses improving to $800,000, or $0.01 per share. Adjusted EBITDA loss was $800,000, a $2.5 million year-over-year improvement, and they reported a substantial increase in gross margin to 69.7%.
The company ended the year with $108.8 million in cash and short-term investments and reduced its line of credit by $10 million. It achieved a positive free cash flow of $2.9 million in Q4, a remarkable rise from a $3.8 million deficit in the previous year's quarter.
The company projects Q1 2024's total revenue to be between $45.2 million and $46.2 million, with expected negative free cash flow due to annual employee bonuses. For the full year 2024, it anticipates revenue to range from $194 million to $198 million with a non-GAAP operating loss expected between $6 million and $2 million.
The company plans to deepen existing integrations and increase brand recognition, particularly in new or underserved specialty medical subverticals, to drive further success.
From its inception, Weave has focused on its people as the core driver of growth and sustains a culture that balances kindness with business rigor, contributing to its expansion and personnel addition throughout 2023.
Although previously reported, boomerang customers are not considered a crucial internal metric for business performance and will not be highlighted in future communications.
With a solid sales performance and growing demand, the company continues to uphold a conservative guidance philosophy. Initial growth projections outpaced expectations, setting a conservative precedent for guidance in the coming year.
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Greetings, and welcome to the Weave Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark McReynolds, Head of Investor Relations. Thank you, Mr. McReynolds, you may begin.
Thank you, Camilla. Good afternoon, and thank you for joining us for our fourth quarter and full year 2023 Earnings Conference Call. Joining the call today are Brett White, CEO; and Alan Taylor, CFO. Brett will open the call with an overview of Web's performance and Alan will discuss our financial results in more detail. After the prepared remarks, we'll take questions. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Please refer to the cautionary language in the earnings release and Weave's filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. We'll also discuss financial measures that do not conform with generally accepted accounting principles. For the sake of clarity, unless otherwise noted, all numbers we talk about today will be on a non-GAAP basis. Information may be calculated differently than similar non-GAAP data presented by other companies. A reconciliation between these GAAP and non-GAAP financial measures is included in our earnings press release, which can be found on our Investor Relations website at investors.getweave.com. And with that, I'll turn the call over to Brett.
Thank you, Mark, and welcome to everyone joining us this afternoon. I'd like to kick off the call by welcoming David McNeil to our leadership team as Chief Revenue Officer. David brings over 25 years of experience in scaling SaaS businesses, leading sales, customer success, revenue operations and payments team. He spent 6 years at HubSpot where he was with instrumental and leading sales teams as the company grew from $90 million to nearly $1 billion in annual recurring revenue. He also served as Chief Commercial Officer at Tebra, a leading automation platform for independently owned health care practices and in leadership positions at Salesforce and Bank of America. We're excited to leverage David's expertise as we continue to execute on the multiyear opportunities that we have in front of us. Now I'd like to provide a quick overview of Weave for the benefit of those who are new to our story. Weave provide a vertically tailored software solution to small and medium-sized health care practices, offering a seamlessly integrated customer experience and payments platform. We empower practitioners to focus their time on patient care while we streamline communications, engagement and payments. SMBs make up the vast majority of businesses in the U.S., and we have spent the past 15 years [Audio Gap] They need software solutions like Weave that are easy to set up and use. We've unified the disparate patchwork of point solutions that many of these practitioners presently use simplifying the process of attracting, engaging and retaining patients. Now I'm excited to share some of the highlights from Q4. Weave delivered another strong quarter, capping off a terrific year in which we saw continuous quarterly improvements in revenue growth rate, gross and operating margin, adjusted EBITDA, free cash flow and customer acquisition. Revenue for Q4 was $45.7 million, representing 21.2% year-over-year growth. This is the fourth consecutive quarter of an accelerating year-over-year growth rate. We also exceeded the top end of our revenue guidance for the eighth quarter in a row. Our continued acceleration in revenue growth was driven by the addition of new customers at higher average sales prices increase payments attach rates and higher net expansion within existing customers. Notably, we added over 450 more net new customer locations in 2023 than in the previous year. In Q4, we continued to improve the operational efficiency of our business. Gross margin reached 69.7%, 300 basis points higher than Q4 of last year, marking the eighth consecutive quarter of gross margin improvement. Our adjusted EBITDA margin improved by over 700 basis points to a negative 1.7% of revenue compared to a negative 8.8% of revenue a year ago. Finally, we generated $2.9 million in free cash flow during the quarter, a $6.9 million improvement over the same quarter last year. These outcomes underscore that while our vertically tailored software and payments platform continues to gain traction, the Weave team remains laser-focused on operational excellence. Before we dive into 2024, I want to take a look back and share some of the key accomplishments in 2023. In our earnings call last February, I shared our strategic focus areas for 2023, which were built upon a total of over 180 unique projects across the entire business. I'd like to give you a brief recap on how we delivered against them. Accelerating revenue growth was our first focus area in 2023. At the beginning of last year, we discussed the flywheel effect of growth within our business model. The team imparted significant energy to accelerate the rotation of that [indiscernible], and we saw that [ average ] pay off as our year-over-year revenue growth rates grew each quarter 18.9% in Q1, 19.3% in Q2, 20.2% in Q3 and 21.2% in Q4. We accomplished this while simultaneously reducing our annual operating loss margin by 2/3. I'm extremely proud of our team, and this is again a strategic focus area for 2024. Our second 2023 focus area was building a scalable foundation for profitable growth. We are very pleased with the results here of focusing on efficiency in all areas of our business, with gross and operating margins improving every single quarter throughout the year. Additionally, last February, we committed to exit 2023 with positive free cash flow. Due to the hard work of the team, we generated positive free cash flow every quarter in 2023, ending the year with a positive $6.5 million a significant improvement of our negative $15.9 million in 2022. Our third 2023 focus area was delivering an experience that turns our customers into Champions, which involves both product and customer service. Our platform was named the leader in G2's grid for patient relationship management ranked first in 27 different categories in G2's Winter 23 report and won 61 different badges, including patient scheduling software leader. In 2023, our customer NPS improved significantly throughout the year. We accomplished this through excellent customer service, feature improvements and increased intentions -- increased attention to new integrations which unlock the full potential of our platform from our customers and prospects. We added over 20 new integrations throughout the year, unlocking approximately 75,000 locations that we can sell our integrated platform into. We will continue to deepen and expand our integrations in 2024, both our core markets and new adjacent markets. Our product and engineering teams delivered several significant platform improvements in 2023, including enhancements to our payments platform with a deeper partnership with Stripe a new partnership with a firm and the addition of online bill pay, mobile Tap to pay and Scan to Pay functionality. We also launched innovative AI-driven features, including review response assistant, voice mill prescription and e-mail assisted. Our gross retention rate remained consistent throughout the year, and we experienced higher net expansion within existing customers. This reaffirms our belief that customers prioritize premium solutions that enhance practice productivity and patient satisfaction over cheap alternatives. Our final focus area for 2023 was fostering an effective and engaged team that lives our values. We shared in previous earnings calls that in 2021 and 2022, employee nutrition was a significant headwind to our business, a situation not unique to Weave. We listen to our employees and aligned our resources compensation and benefits to address their concerns. Our employee attrition rate decreased by nearly 50% from 2022 to 2023. Average tenure increased employee NPS improved, and I'm pleased to announce that we are named a Great Place to Work for the fifth consecutive year in the Top Workplace USA for the second consecutive year. Increased employee engagement has translated into improved customer satisfaction and overall business performance. As we look forward to 2024, we have aligned our strategic plan behind 3 focus areas for the year, which I'm very excited about. Accelerating revenue growth is once again our first focus area, and the key initiatives in 2024 include increasing our penetration into dental, optometry and veterinarian verticals and continuing to expand into adjacent specialty medical verticals such as physical therapy, medical aesthetics, plastic surgery and primary care. We will build new and innovative products that service both single and multi-location segments. We will also continue to enhance our payment solution to better serve our customer base and improve their business operations and financial outcomes. In the last month, we added ACH debit and payment plans to our platform. With ACH debit, patients experienced enhanced transaction security and health care providers benefit from lower transaction costs. Payments plans enables health care businesses to easily set up and manage recurring payment schedules, making it convenient for both the business and their patients. Increasing customer value is our second focus area for 2024. Our platform is feature-rich and our customers are busy. Internal data shows that many of our customers are not using the most valuable features of our platform. This focus area is centered around a guided customer journey that helps customers extract the full value of our platform as quickly as possible. As mentioned earlier, integration with patient management systems strengthen our product market fit and is another key to success in this focus area. For example, in November, we released our integration with Dentrix Ascend platform. Since the release, we've seen strong demand for this integration from both new and existing customers. Powerful integrations and a seamless and personalized adoption journey will result in increased value for our customers, better customer retention and more advocacy for our brand. Our third focus area for 2024 is investing in our future. which represent a continued focus on developing Weave talent and operational excellence in our business execution. Fundamentally, this means we are investing in our people and empowering them to elevate our customer experience and deliver results that are best in class. To conclude, I'm incredibly proud of all of our team accomplished in Q4, capping off an excellent year. We accelerated revenue growth. We built a scalable foundation to improve profitability, we delivered an experience that continues to solve real problems for our customers, we have an incredible team that is engaged in firing on all cylinders. A big thank you to our customers, our team members and our shareholders for your support of Weave. We're excited for 2024 and intently focused on building on the momentum we gained in 2023. With that, I'll turn the call over to Alan to provide more detail on our financial results and review our outlook for 2024. Alan?
Thanks, Brett, and good afternoon, everyone. We had an excellent quarter, delivering fourth quarter revenue of $45.7 million, reflecting 21.2% growth year-over-year. This represents $1.7 million or a 4% beat over the midpoint of the range we provided in November. Our net revenue retention rate remained at 95% in Q4. As a reminder, the NRR calculation is a trailing 12-month calculation. On a monthly and quarterly basis, we are already seeing are improving, and we expect to see our reported metric improve in 2024. And primarily due to positive adoption of payments and software upsell. Our gross revenue retention rate remained at 92% for Q4 among the best-in-class for SMB retention and logo retention has been consistent for over 2 years. Moving on to operating results. As a reminder, I will be referring to non-GAAP results, unless stated otherwise. Our Q4 results showed significant improvement across the board. Gross margin was 69.7%. This represents a 300 basis point increase year-over-year. Our engineering and operating teams are focused on providing an exceptional customer experience and doing so while remaining efficient and expanding our margins. In Q4, operating expenses were $33.6 million a $4.2 million increase from last year compared to an $8 million increase in revenue for the same period. Our operating loss was $1.7 million, an improvement of $2.5 million or 59% compared to last year and $800,000 better than the midpoint of the guidance we gave in November. The corresponding operating loss margin of 3.8% is a significant improvement from the operating loss margin of 11.2% last year. Our net loss was $800,000 or $0.01 per share in the fourth quarter based on 69.7 million weighted average shares outstanding. This is compared to a net loss of $3.7 million or $0.06 per share last year. This represents a $2.9 million improvement due to revenue acceleration and operating efficiencies. Adjusted EBITDA loss was $800,000, a $2.5 million improvement year-over-year. Adjusted EBITDA loss margin of 1.7% is a significant improvement compared to the 8.8% loss margin reported a year ago. Turning to the balance sheet and cash flow. We ended the year with $108.8 million in cash and short-term investments. In Q4, we paid down $10 million on our line of credit, which remains open, but with no outstanding balance. Net cash was essentially unchanged quarter-over-quarter. We generated $3.7 million in cash from operations, a $6.6 million improvement year-over-year. Free cash flow was $2.9 million and free cash flow margin was 6.4%. This compares to free cash flow of negative $3.8 million and a free cash flow margin of negative 10% in the fourth quarter of 2022. We are pleased with our progress. Our initial goal was to achieve positive free cash flow by Q4 of 2023, and we overachieved and produced positive free cash flow each quarter and for the full year 2023. We expect free cash flow to be positive again for the full year 2024. But as we are paying out our annual 2023 employee bonuses in Q1 we expect that free cash flow will be negative in Q1 of 2024. Before reviewing our guidance, I'll provide a brief recap of the full year results. In 2023, total revenue grew by 19.9% to $170.5 million, and our gross margin improved to 68.7%, up from 63% last year. Our operating margin improved to negative 6.8%, a significant improvement over the negative 21.8% in 2022. We made substantial progress on free cash flow, ending the year having generated $6.5 million, up from negative $15.9 million last year. We're pleased with this progress and we would like to thank all of our team members at Weave our customers and partners for their contributions through the year. Turning now to our outlook for the first quarter and full year 2024. For the first quarter of 2024, we expect total revenue in the range of $45.2 million to $46.2 million and non-GAAP operating loss in the range of $2.5 million to $1.5 million. I would like to provide a little more color regarding our Q1 revenue guide. Leading into last year and throughout 2023, we implemented a more disciplined approach to collecting onboarding revenues for new customers. These are the implementation fees we collect from customers as we bring them on to our platform. We increased these nonrecurring onboarding revenues by 150% last year. In Q1 of last year, we also signed a multiyear agreement to extend and deepen our partnership with Stripe for payment processing. That agreement increased our take rate on payments volume and increased our payments revenue. Both the improvement in nonrecurring onboarding revenue and the improvement in our take rate for payments remain in place this year, but we do not expect to see the same growth rate in these components of our revenue as last year, and we will lap the impact of both improvements in Q1 of 2024. As such, we expect to see a modest decrease in our year-over-year growth rate in Q1 versus our Q4 year-over-year growth due to lapping the initial impact that each of these initiatives had last year. Our growth rate in payments is still significantly higher than our total revenue growth rate, and we continue to see strong demand for our subscription products, which had improving growth rates throughout 2023. For the full year 2024, we expect total revenue to be in the range of $194 million to $198 million. We expect the range for our full year 2024 non-GAAP operating loss to be from $6 million to $2 million. We expect to have a weighted average share count of approximately 71.7 million shares for the full year. To summarize, we've delivered strong results every quarter in 2023. Our performance demonstrates strong demand for our platform. We remain excited about the opportunity ahead and we will continue to drive our business to maximize long-term value. And with that, we'll take your questions.
[Operator Instructions]. First question comes from the line of Alex Sklar with Raymond James.
Brett, a lot of investment into the integrations and multi-office functionality that you kind of alluded to in your prepared remarks, specifically, as regards to the 75,000 locations you added to the integrated platform in the past year, I'm curious if you can just provide some color on tangible results from adding those locations? Are you seeing an increasing mix of customers coming on that have that functionality with the integrated functionality built in?
Sure. So we obviously track return on investment in all of our integration activities on the dev side and throughout the business. And what we've seen is Specialty Medical, which is where we are pretty deeply penetrated from an integration perspective in dental optometry bet are probably our latest and most significant integration there was the Dentrix Ascend platform I mentioned in my prepared remarks, we picked up pretty strong demand, both existing customers and new customers since we've released that integration. So that's one proof point. But we've been focusing a lot on specialty medical outside of dental optometry bet, and that's actually our fastest-growing segment right now, and it actually just past veterinarian as our #3 vertical. So we're definitely seeing tangible results in our additional integration work that we're doing, both in dental and vet and in specialty medical.
That's great context. Maybe I'll kind of follow up on your answer to that last point. As specialty medical kind of passes in that #3 vertical, what's the right way to think about the linearity of location growth that occurred in 2023. As you formally stood up specialty medical did you see your location count on a gross basis kind of increase as the year progressed? And then with that, as we think about the 2024 outlook, what was the right way to think about what you're embedding into the outlook from a location standpoint?
Sure. So linearity, I think, on location count, so I mentioned in my prepared remarks that customer acquisition improved each and every quarter. So each quarter was a little bit better than the other one. And that came from a mix of what I'll call our 4 verticals now, dental optometry vet and specialty medical with specialty medical being the higher growth one. I'm thinking that dental was still the major contributor, I got a nod from Alan there. And then how we're thinking about unit growth in 2024. I think we just continue to plan to add both on an increasing basis, gross and net new customers throughout the year. And I think you can probably just maybe back into it from the revenue guide.
Our next question comes from the line of Brent Bracelin with Piper Sandler.
Brett, I wanted to double-click into the new hire. Obviously, David brings a lot of scaling expertise, what do you have him focused on? And what are his priorities as you think about the opportunity in 2024?
Yes. Thanks, Brent. It's a great question. So when I was interviewing CRO candidates, pretty much every single one of them asked me, what's broken, what do I need to fix? And the answer is, is nothing. Sales function is executing really well. It's very well managed. So that gives us the opportunity to leverage David's talent and really helping us get our business from where we are now, $170 million to $500 million. He's seen growth and scale. HubSpot from $90 million to $1 billion. He's had senior roles at Salesforce. And so his role really is focusing on scale. Some of the scale opportunities we have right now are -- we're on a multiyear journey with the multi-location business segment. We have a payments business that I think we can do a better job at, and we frankly haven't had a dedicated leader in payments. So that's one of the top priorities. And then also being the revenue partner on strategic partnerships. We're just starting to scratch the surface on growing the partner side of our business. I think through maybe the mid last year, we were definitely an inside sales organization. And I think partnerships are going to be important part of our future over the next several years. So David, partnering with our Chief Strategy Officer and our Strategic Partners Group, is hopefully where he'll spend his time. But really just being been there done that person helping us scale.
Absolutely helpful color there. And then one quick follow-up on Specialty Medical, a little surprised that actually is growing fast enough to overtake veterinarian. What's driving the momentum there? Is it just a much larger TAM and it's now just started to overtake that. Is it some partnerships that have sparked some interest. Just curious what's driving the outsized success here in specialty medical here this quarter?
Sure. I'd say it's a few things. So TAM, for sure. Our inbound has always been pretty meaningful for specialty medical and that inbound demand has been growing. So when we layer on integrations into specialty medical, we can actually now offer the full functionality of Weave into some of these adjacent verticals where we've been seeing inbound demand, but haven't really been able to satisfy that demand with a fully integrated product. So it's a combination of TAM, growing number of integrations and product market fit around that and then just the increasing inbound demand that we're seeing from that segment.
Our next question comes from the line of Mike Funk with Bank of America.
This is Matt on for Mike Funk. Appreciate the question. So it sounds like you're going to be facing some tougher comps on the payment side starting in 1Q. But can you help us understand the shape of expected revenue growth in '24. And then can you break down a little further the components driving the fiscal '24 guidance between locations, ASP growth, retention expansion, et cetera, and where you see the highest potential for upside?
Sure.
Sure. Thanks, Matt. First of all, with respect to the shape of the revenue growth, I think you're going to see some consistency with what you've seen in 2023. In terms of that revenue growth, there's the partner team and their efforts on both the integration front as well as other avenues of partnerships that we're looking into is probably the biggest source of upside for the year. And so we're looking at that. I think that the -- you mentioned payments, but the bigger actually piece of the difficult compare in Q1 has to do with the onboarding revenues that we recognize. If you look at the information in the disaggregated revenues, you'll see that, that was 150% growth year-over-year in those onboarding revenues. We're now at a healthy spot. And while we'll see growth consistent with kind of the growth in onboarded customers, it's just not that it's going to be at the same rate as the rest of them. So again, shape fairly consistent, upside is going to be around partnerships and the comps are just normal course of business where we'll continue to see those benefits. They just won't be as big in Q1 as they were last year.
Our next question comes from the line of Parker Lane with Stifel.
Lots of new payments capabilities being launched in the second half of the last year. Curious if you could give us an idea of the impact that you expect that to have on adoption and attach rates of payments and just the overall expectation around payments growth when you look out over the next few years?
Sure. So I'll start with that answer. So I think I continue to believe that we have a really significant opportunity in payments. And it's really -- the key to that is getting Weaves payments functionality integrated into the workflow of the office. And the way we do that is we add more of these terrific features, functionality, just make it a much more compelling offering. And then -- and then training the offices on the functionality and helping them make the move. And it's really -- they don't really care which platform they process on. They just want it to work really well. So as we develop more of this functionality and then integrate it better into their office workflow is where we'll see continued adoption. So we're currently less than 10% of revenue is payments because if we were more, you would see it in our financials. But it's growing as a percentage of revenue. It's growing faster than subscription revenue, even though subscription revenue has accelerated, and we expect it to continue to do that. The other thing we're working on, as I mentioned, one of the activities that David McNeil is going to overtake is payments is going to report directly to him and one of his top priorities is recruiting a dedicated general manager of payments for us who just walks the floor every day, figuring out how do we get more integrated into the workflow, get greater adoption, greater usage. And then I think that those are kind of a couple of key pieces necessary for our success, and I really think we can grow payments, both in total but also as a percentage of our revenue pretty meaningfully over the next several years.
Got it. Very helpful. And then you also called out a pretty material improvement in employee attrition rates from '22 to '23, I wonder if you can go into a little bit more detail on what measures you undertook to actually achieve that outcome and how that's translating into productivity gains across different areas of business.
Sure. So I'll give my opinion, and Alan, you can give your opinion because you've been here a lot longer than I have. A few years ago, when I joined, it was I think we lacked real clarity on what it is we were trying to accomplish as a business. What were our priorities? What were we going to work on, what we are not going to work on. And then also really pushing down ownership of business operations. So over -- starting last year, we brought the whole company together in a kickoff. We were very explicit in what our top priorities are. We announced our 4 focus areas for last year. And then we built projects across those focus areas that every single employee who is part of that project work new, what they're working on, why they're working on it and what the expected outcome was and how it how it impacted the company. And then we also started increasing accountability and ownership by a number of different tools. One of them we call vital signs. It's every Tuesday morning the leadership of the company gets together and spends 30 to 45 minutes going through all of the results of the business for the previous week, and it really created synergistic understanding and behaviors where all the functions were working together to kind of generate the desired outcomes and it was measured every single week. So people could see success where functions were having challenges, teammates jumped in to help them, and it's really -- it's actually, frankly, been magical to watch. So I'll pass it up to Alan.
Yes. All of those things that Brett mentioned are absolutely key to what we've been doing. Since its inception, the founders of Weave said, "Hey, people are the real heart of why we can grow and make this a great business." When Brett came in, his mantra as he introduced himself was "Be kind to people and be tough on the business." And that serves us very well. We want to be aggressive, but we love being around people. We love working together. We want the collaborative environment. And so we've done that. And then obviously, just a macroeconomic environment, Weave have been growing in 2023, adding personnel as we've gone through the year. And that's been somewhat unique not only nationwide but here along the Wasatch front, where we're located. And that always is a benefit with respect to the employee environment that you can create. So those are the -- that's what I would add to that question.
Our next question comes from the line of Jacob Staffel with Goldman Sachs.
Lot of good questions ahead of me. So I just want to wrap up maybe a couple of more admin things here. But in 4Q, 1Q, 2Q and 3Q, you all noted Boomerang customers. And unless I missed it on the call, I don't think it was noted. So first question would just be around how many boomerang customers that you'll see this quarter? Or any color you can give around that would be great.
Sure. I'll pick a crack at that. So the reason we introduced the concept of boomerang customer was really in response to a competitive question. We've got a competitive question [indiscernible] let's actually dive in there and understand what's happening. So we introduced the concept, and we talked about it, I think you're right, for 4 quarters in a row. And this quarter was basically the similar results that we've seen all year, maybe a little bit more. But we really kind of said, well, let's just stop talking about it because we've proven our point. The trend is the same, and it's really not a key metric that we focus on internally in the business. It was good to watch. We do keep it on it, but we just -- it's not a key metric. So we're just not going to report it anymore, mostly because it's just a continuing preconsistent trend.
Got you. Okay. That makes perfect sense. And then the other question I had was around the assumptions that were baked in into guidance. If I look at the progression of growth in 2023, initial guidance was for 11%, and you ended growing 20%. So can you just talk about the guidance assumptions that you're making for initial guidance and where there might be upside or continued pressure that we should be aware of as we progress throughout fiscal '24.
Sure. So let me start by just talking philosophy. The business is doing well. You saw in Q4, the business continued to do well. Demand continues to grow. We continue to execute well. So that's, I'd say, probably the most important point to take away. The sales team is performing very well. We saw good customer volume growth. So if you look at like year-over-year, almost average volume per customer that grew in '23. So the customers' businesses are doing well. But we are very focused on providing guidance that we have high confidence that we can deliver on. And our philosophy has not changed. It worked for us in '22, it worked for us in '23. We kind of beat it 8 quarters in a row. So we're sticking with that guidance philosophy in '24, and I can let Alan fill in any details if you'd like.
Jacob, I think Brett nailed it. No change in the philosophy. We are going to continue to just have high conviction about what we present to the Street and continue on the march forward.
Our next question comes from the line of Tyler Radke with Citi.
So on the specialty medical vertical, can you just talk about some of the integrations that you're working on kind of other product-specific capabilities that you think could be an unlock for that vertical? And then I guess, is there any further -- I think you have motions around things like plastic surgery, medical spas, physical therapy? Or is there any kind of other further segmentation that you're planning within Specialty Medical?
Sure. So I'll start. The -- I think there's maybe 20 sub verticals in specialty medical. And so I called out 4 of them: physical therapy, medical aesthetics, medspa, general practice and those are the ones that I'd say we're primarily focused on building product market fit around those. As far as the work that was done -- and also plastic sorry. The work that's done is really on 2 fronts, well, really 3 fronts. Building the integrations, so integrating to their practice management or EMR software and integrating them to lead. Number one. Number two, deepening existing integrations. So there are different levels of integration that you can write and the more integrated, you get the more valuable the product is. So deepening existing integrations. The 3 -- the third piece is really developing very crisp go-to-market and brand recognition. A lot of these newer or specialty medical subverticals that are new to us, we don't have great brand recognition. And so building that brand recognition in a very focused way is important to us and I think driving a lot of success. So that's why we kind of take the 20-plus, break it down to 3 or 4 that we're really going to focus on now and then just go through and knock them off.
So I'll just add one -- a couple of things to that. Number one, we are developing these relationships with these [indiscernible] partners and the [ Rack ] management, EHR, [ beyond ] providers. going in the front door. We're developing those relationships. We got -- we want to have deep and we're not doing the back door stuff like some of the competitors do. The second thing that I would add is just with the leadership of the group that's heading that up under our Chief Strategy Officer, we now have a much more disciplined approach to the way that we're going after this. We've got a road map. We've got objectives. We've got -- we know the targets. We can't speak publicly about all of those, but as we continue to delve in there. I see great things ahead with respect to the opportunities to both deepen and create those new interactions and integrations that will open up to [indiscernible].
Just let me add one more comment here. Just the difference between a front door back integration and the backdoor integration is pretty important. The front door integration is where we have an agreement with the software provider, the [indiscernible] software provider, and our integration is supported. They approve of it. We only do things that we're supposed to do and are allowed to do, and then they actually support us and that integration and they support their customers. A back door is kind of an unauthorized integration where a vendor would go in and attempt to connect to the software without agreement with the company, sometimes referred as a hospital integration and our focus is on front door.
That's helpful. So just the last question I had, a couple of follow-ups as we think about the outlook. So on the new customer front, encouraging to hear and see the pickup in new adds of locations. This year, do you think that, that further accelerates next year now that you're really leading into these TAMs that just frankly have a lot higher locations? And then secondly, Alan, I appreciate the detail on NRR. Would it be fair to say that you're expecting higher NRR in 2024 versus 2023?
So Tyler, yes, on the second question, as we get into the second half, given what we're already seeing, we can say with confidence that we're going to see that in the second half of the year. just given that 12-month trailing metric that the NR is currently on. And the new customers is -- I think the new customers will follow the same pattern that we've seen with the exception that we -- I do think that the partnership opportunities are going to accelerate.
Our next question comes from the line of Mark Schappel with Loop Capital Markets.
Brett, starting with you on prior earnings calls, you noted that the product development group was working on building your next-gen platform. And I was just wondering if you could just give us a sense of when that one will be released this year and just maybe some of the benefits financially you may expect to drive from it in the coming year.
Sure. You bet. So really, there's 2 desired outcomes from our next Gen platform. If you're familiar with our product, current product, it's basically -- it's an app that sits on the desktop. It kind of looks like an iPhone and right now, we put all of our functionality into that app. So the first outcome that's desired by the next-generation platform is to move the current functionality from the legacy app into a more dynamic app. So an app where you can grab the corners and make them larger or smaller and move them around. And that's easier for the customer, and it's easier for us because we can move more functionality into the app. We're no longer constrained by real estate. And also the other piece of that is to move that functionality to the web. So you can either work in the app kind of like a slack or you can pull up the web version of it and getting the functionality the same from the legacy app to the new app to the web, just kind of occurs over time. We're the majority of the way there. We're fully done on some functionality, and we're the majority of the way down on some of the remaining functionality. So definitely, it should happen this year, hopefully, around midyear. So that's the first outcome. And then the second outcome is adding multifunctionality. So functionality that is -- makes the product much more usable and useful to multi-location offices. So for example, being able to manage multiple e-mail inboxes at once, doing multiple testing activities. So basically, you can take a pick list and either pick from 1 office or all 10 offices or 3 of the 7 offices, whatever you want to do. So it's really around those 2 outcomes that they're working on. We opened it up to early access late last year. I think we've got over 1,000 customers on it, using it, testing it, playing with it. And so I would say we're in a very good place there. The responses and the feedback that we've gotten has been quite good. We're not selling it quite yet, but we are showing it to select multi-location customers. And I think this will continue to improve, embed the legacy functionality into the new platform over -- throughout 2024.
And then building on an earlier question, I was wondering if you could just give us maybe a little bit of an update on your hiring plans for the year, particularly on the go-to-market side.
Right. So we added sales capacity in 2023. We clicked it up a few notches in Q3 and Q4, so we could make sure that we've got the sales capacity we need kind of every quarter, but certainly throughout 2024. I expect that everything goes the way we hope and plan it will, that we'll continue to add sales capacity throughout 2024. And then I think we've got some additional hiring planned in product and engineering. Anything else you want to add on.
No. I think those are the key elements we will grow across the board. And obviously, we will gauge that growth on continued execution and making sure that the metrics support it.
There are no further questions at this time. I would like to turn the floor back over to CEO, Brett White for closing comments.
Okay. Well, thank you again for your continued support, and thank you to the entire Weave team for delivering another terrific quarter, and we'll talk to you in our next call.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.