Today there are literally unlimited solutions for Shopify stores to communicate with customers, target prospects, analyze data, collect reviews, and others. Yet, service businesses, such as plumbing businesses, dentistries, or hair salons are underserved. Most of them still use legacy methods such as telephone systems 📞 to communicate with customers, but a unicorn from a mini Silicon Valley was founded to change that.
Weave Communications ($WEAV) was founded in 2008 in Silicon Slopes, an emerging tech hub in Lehi, Utah. The company offers an all-in-one cloud-based platform that helps small and midsized service businesses better communicate and engage with prospects and customers. It offers a wide range of solutions for communication, customer retention, engagement and payments. The bulk of its revenue comes from recurring subscriptions that account for 90% of total revenue.
In the first six months of the year, its revenue increased 55% y/y to $53.7 million. The company is still unprofitable but its margins are moving in the right direction. In the first half of the year, the operating margin improved to -42.5% from -70% in 2019. Also, its Net Retention Rate increased to 103% in the second quarter of 2021, up from 97% in December 2019. That’s because more customers have started using Weave’s payment solution.
📫Originally posted as part of the Sunday Newsletter
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Weave has built a modern, cloud-based platform for small service businesses which have been historically underserved. As customers increasingly expect seamless purchasing and interaction experience the need for improved communication methods will only increase in demand. The company estimates that this is an $11.1 billion market in the US, and with just $80 million in revenue in 2020, there’s plenty of room for growth ahead.
WEAV has priced its IPO at the midpoint price of $26.50 per share for a market value of $1.6 billion. At this price, the company will be valued at 16.8x sales, a reasonable valuation given its fast revenue growth and promising future potential. Shares start trading on Thursday.