Q4 2023 Weave Communications Inc Earnings Call
Hum.
Yes.
[music].
Greetings and welcome to the weak fourth quarter and fiscal year 2023 earnings conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
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. Mcdonald you may begin.
Thank you Camilla good afternoon, and thank you for joining us for our fourth quarter and full year 2020 earnings conference call joining the call today are Brett White, CEO and Alan Taylor CFO.
Brett will open the call with an overview of <unk> performance and Alan will discuss our financial results in more detail.
After the prepared remarks, we will take questions.
Today's discussion contains forward looking statements that represent our beliefs or expectations about future events all forward looking statements involved.
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 filings with the Securities and Exchange Commission, including our most recent form 10 or Form 10-K, and Form 10-Q for additional information concerning factors that could cause actual results to differ materially from the fourth 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 don't get we dot 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 towards 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 six years at hub spot, where he was instrumental in leading sales teams as the company grew from 90 million to nearly $1 billion.
Revenue.
He also served as chief commercial officer, Tegra, leading automation platform for independent health care practices, and then leadership positions at Salesforce of Bank of America.
We're excited to leverage David's expertise as we continue to execute on the multi year opportunities that we have in front of us.
Now I'd like to provide a quick overview of <unk> for the benefit of those who are new to our story.
<unk> provides vertically tailored software solutions to small and medium sized health care practices offering is seamlessly integrated customer experience and payments platform.
We empower practitioners to focus their time on patient care, while we streamline communications engagement in payments.
That's M P's make up the vast majority of businesses in the U S. And we have spent the past 15 years building a platform specific the unique requirements of U S that'd be health care practitioners.
Dentists optometrist, a veterinarian typically does not employ their own team of professionals. So they need software solutions like we have that are easy to set up and use.
We've unified the disparate patchwork of point solutions at 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 we've.
We've 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 re cash flow and customer acquisition.
Revenue for Q4 was $45 7 million, representing 21, 2% year over year growth. This.
This is the fourth consecutive quarter of 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 and revenue growth was driven by the addition of new customers at higher average sales prices increased 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 EBITA margin improved by over 700 basis points to a negative one 7% of revenue compared to a negative eight 8% of revenue a year ago.
Finally, we generated $2 9 million in free cash flow during the quarter, a $6 9 million dollar improvement over the same quarter last year.
These outcomes underscore that while our vertically tailored software and payments platform continues to gain traction. The we've 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 in part its significant energy to accelerate the rotation of that flywheel and we saw that effort pay off as our year over year revenue growth rates.
Through each quarter 18, 9% in Q1 19, 3% in Q2, 22% in Q3 and 21, 2% in Q4.
We accomplished this while simultaneously reducing our annual operating loss margin by two thirds I'm extremely proud of our team and it is 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 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 over a 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 G twos grid for patient relationship management.
First in 27 different categories and G Two's winter twenty-three report and 161 different badges, including patient scheduling software leader.
In 2023, our customer M. P. S improved significantly throughout the year. We accomplished this through excellent customer service feature improvements and increased intentions increased intention 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 75000 locations that we can sell our integrated platform into.
We will continue to deepen and expand our integrations in 2024 of 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 responses assistant voicemail transcription and email system.
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 attrition was a significant headwind to our business situation not unique to weak.
We listen to our employees and the Minder resources compensation and benefits to address their concerns.
Our employee attrition rate decreased by nearly 50% from 2022 to 2023.
Average tenure increased employee N P. S improve I am pleased to announce that we were named a great place to work for the fifth consecutive year, a top workplace USA for the second consecutive year.
Increased employee engagement has translated into improved customer satisfaction and overall business performance.
Okay.
As we look forward to 2024, we have aligned our strategic plan behind three focus areas for the year, which I'm very excited about.
Accelerating revenue growth as once again, our first focus area and the key initiatives in 2024 include increasing our penetration until dental optometry and veterinarian verticals and continuing to expand into adjacent specialty medical verticals, such as physical therapy medical aesthetics plastic surgery in primary care.
We will build new and innovative products that service, both single and multi location segment.
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 ACTH debit and payment plans to our platform with atheist, David debit patients experience enhanced transaction security and health care providers benefit from lower transaction costs payment.
Payments plans enabled health care businesses to easily set up and manage recurring payment schedules, making it convenient for the both the business and their patients.
Increasing customer value is our second focus area for 2020 for our platform as 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 customer extract the full value of our platform as quickly as possible.
As mentioned earlier integration with patient management system strengthen our product market fit and there's another key to success in this focus area.
For example in November we released our integration with <unk> platform since.
Since the release, we've seen strong demand for this integration from both new and existing customers.
<unk> integrations in 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.
And a continued focus on developing we've talent operational excellence and our business execution funding.
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 at all.
All cylinders.
A big thank you to our customers our team members and our shareholders for your support of we were 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 2020 for Alan.
Yeah.
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 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 NR our calculation is a trailing 12 month calculation on a monthly and quarterly basis. We are already seeing in our are improving and we expect to see our reported metric improve in 2024, primarily due to the positive adoption of payments and software up sell.
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 two 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.
An improvement of $2.5 million or 59% compared to last year and $800000 better than the midpoint of the guidance we gave in November.
Corresponding operating loss margin of three 8% is a significant improvement from the operating loss margin of 11, 2% last year.
Our net loss was $800000 or <unk> 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 six cents per share last year.
This represents a $2 9 million dollar improvement due to revenue acceleration in operating efficiencies.
Adjusted EBITDA loss was $800000, a $2 5 million dollar improvement year over year adjusted EBITDA loss margin of one 7% is a significant improvement compared to the eight 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 no outstanding balance.
Net cash was essentially unchanged quarter over quarter, we generated $3 7 million in cash from operations, a $6 6 million dollar improvement year over year free cash flow was $2 9 million and free cash flow margin was six 4%. This compares to free cash flow of negative three.
$3 $8 million and our free cash flow margin of negative 10% in the fourth quarter of 2022.
We're pleased with our progress our initial goal was to achieve positive free cash flow by Q4 of 2023, and we already achieved 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 or any.
Will 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 $175 million and our gross margin improved to 68, 7% up from 63% last year.
Our operating margin improved to negative six 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'd like to thank all of our team members that we've 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.
To provide a little more color regarding our Q1 revenue guide leading into the 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 onto our platform. We increase these nonrecurring onboarding revenue.
By 150% last year.
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 rates 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 100.
$98 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 delivered strong results every quarter in 2022 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.
Thank you.
We'll now be conducting a question and answer session if you'd like to ask a question. Please press star one on your telephone keypad.
Your line is in the question queue.
You May press Star two if you if you would.
Like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
One moment, please pull for questions.
Thank you.
Question comes from the line of Alex Sklar with Raymond James. Please proceed with your question.
Great. Thank you.
A lot of investment into the integrations and multi office functionality that you've kind of alluded to in your prepared remarks.
Specifically as it regards to the <unk>.
75000 locations you added with the integrated platform in the past year I am curious if you can just provide some color on tangible results from adding those.
Those locations are you seeing an increasing mix of customers coming on that have that functionality.
Would the integrated functionality built in.
Sure.
We you know, we obviously track return on investment and 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 you know we're pretty deeply penetrated from an integration perspective, and dental optometry that.
Our probably our latest and most significant integration there was the <unk> platform I mentioned in my prepared remarks, we've 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, VAT and that's actually our fastest growing segment right now and it actually just.
Just past.
Veterinarian as our number three 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.
Okay. That's great context, maybe I'll kind of follow up on your answer to that last point, a specialty medical kind of passes that number three vertical what's the right way to think about the linearity of location growth that occurred in 2023, formerly 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. Thanks.
Sure so linear.
Linearity I think.
On location counts, so I mentioned in my prepared remarks that customer acquisition.
Proved each and every quarter so each quarter it was a little bit better than the other one and that came from a mix of you know what I'll call. Our four verticals now dental optometry vet, especially medical with specialty medical being the higher growth one I'm thinking that dental was still the major contributor yeah, I've got a nod from Alan.
There.
And then how we're thinking about unit growth in 'twenty 'twenty four.
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 from the revenue guidance.
Okay, great. Thank you very much.
Thank you.
Our next question comes from the line of Brent <unk> with Piper Sandler. Please proceed with your question.
Thank you good afternoon, great incentive quarter hero solid execution Bret.
I wanted to double click into the new hire honestly, 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.
Yeah. Thanks Brent.
It's a great question so when we.
When I was interviewing CFO candidates pretty.
Pretty much every single one of them asked me, what's broken why 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 talent and really helping us get our business from where we are now 170 million to 500 million. He he has seen growth and scale our hub spot from nine.
<unk> two 1 billion.
He's had senior roles and say at sales force 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 with multi with a multilocation business segment, we have a payments business that I think we can do a better job at and we frankly havent 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 it would be mid last year, we were definitely.
David partnering with our Chief strategy Officer, and our strategic partners group.
That's hopefully where where they'll he'll spend his time, but really just being I've been there done that person, helping us scale.
Absolutely helpful color, there and then one quick follow up on specialty medical a little surprised.
It actually is growing fast enough to overtake veterinarian.
What what's driving the momentum there is it just a much larger Tam and it's now just starting to overtake that is it some.
Some partnerships that have sparked some interest just curious what's driving the the outsize success here and specialty medical here. This quarter. Thanks sure I'd say, it's a few things so tam for sure.
Our inbound has always been pretty meaningful.
Demand has been growing so when we layer on integrations into specialty medical we can actually now offer the full functionality of weaved into some.
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.
So it's a combination of Tam.
Growing number of integrations and product product market fit around that and then just the the increasing inbound demand that we're seeing from that segment.
Helpful color. Thank you.
Thank you.
Thank you. Our next question comes from the line of Mike Funk with Bank of America. Please proceed with your question.
Hi, This is Matt on for Mike.
I appreciate the question so it sounds like you're going to be facing some tougher comps on the payment side starting in <unk>, but can you help us understand the shape of expected revenue growth and 24, and then can you break down a little further the components driving the fiscal 'twenty four guidance between locations ASP growth retention expansion et cetera, and where you see it.
Our highest potential for upside.
Sure sure Thanks, Matt.
First of all with respect to the shape of the revenue growth I think youre going to see some consistency with what you've seen in 2023.
In terms of that revenue growth is the partner team and their efforts on the on both the integration front as well as other.
Avenues of Av.
Partnerships that we're looking into is probably the biggest source of upside for the year and so we're looking at that looking at that I think that the.
You mentioned payments, but they're the bigger actually piece of the differ.
A difficult compare in Q1 has to do with the Onboarding revenues that we recognize.
If you look at the.
Information and 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 <unk>.
<unk> on boarded customers, it's just not it there'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 as.
<unk>.
Big in Q1 as they were last year.
Super helpful. Thank you.
You bet Thanks, Matt.
Our next question comes from the line of Parker Lein with Stifel. Please proceed with your question.
Hey, guys. Thanks for taking the question congrats on the quarter and the continued acceleration here lots of new payment capability is being launched in the second half of last year curious if you could give us an idea of the impact that you expect that to have on adoption and attach rates and payments and just overall.
Our expectation around payments growth when you look out over the next few years.
Sure So I'll start with an answer so.
Yes.
I think I continue to believe that we have a really significant opportunity in payments and it's really the key to that is is getting weaves payments functionality integrated into the workflow of the office and the way we do that as we add more of these.
Terrific features functionality, just just make it a much more compelling offering and then the and then training the.
The offices on the functionality and helping them make the move and you know, it's it's really they don't really care, which platform. They process them. They just wanted to work really well so as we did.
Develop more of this functionality and then integrate it better into their office workflow is where we will see continued adoption. So.
You know, where we're currently less than 10% of revenue as 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 its going to overtake it.
<unk> payments is going to report directly to him in one of his top priorities is recruiting a dedicated general manager of payments, where us who just walk the floor everyday 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.
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.
Christian rates from 'twenty, two to 'twenty three I Wonder if you can go into a little bit more detail on what measures you undertook to actually achieve that outcome and how thats translating into productivity gains across different areas of the business.
Sure.
So I'll give my opinion and Alan you can give your opinion because <unk> been here a lot longer than I have.
You know a few years ago.
When I joined it was.
I think we lacked real clarity on what it is we're trying to accomplish as a business what were our priorities. What we were going to work on what we're 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 four 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 knew what they were working on why they were 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 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 spend 30% to 45 minutes going through all of the results of the business for the previous week and it really.
Really created synergistic.
Understanding and behaviors, where all the functions, we're working together to to kind of generate the desired outcomes and it was measured every single week, so people could see success.
We're functions, we're having challenges teammates jumped in to help them.
And it's a it's really it's actually frankly been magical to watch so I'll pass it up Alan.
All of those things that Brad mentioned are absolutely key to what we've been doing.
Since its inception, the founders of we've said Hey people are the real heart of why we can grow in.
And make this a great business when Bret came in his his mantra as he.
Introduced himself was behind people and be tough on the business and that that serves us very well, we want to be aggressive, but we love being around people, we love working together, we'd want to collaborative environment and so we've done that and then obviously.
Just the macro economic environment, we have has 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 that always has 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.
Understood. Thanks, guys Congrats again.
Our next question comes from the line of Jacob Stifel with Goldman Sachs. Please proceed with your question.
Hey, guys. Thanks for thanks for the question and good to see another strong quarter.
A lot of good questions I had to Miss So just want to wrap up maybe a couple more admin things here, but and and for Q1 Q2 Q3 Q.
You all noted.
Marine customers and unless I missed it on the call I don't think it was noted.
So first question would just be around you know, how many boomerang customers that youll see this quarter.
Or any color you can give around that would be would be great.
Sure I'll take 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, we said well, let's let's actually dive in there and understand what's happening. So we introduced the comment the concept and we we talked about it I think youre right for four quarters in a row and.
This quarter was basically the similar similar results that we've seen all year, maybe a little bit more.
But we we really kind of said well, let's just stopped 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 it was good to watch we do keep an eye on it but we're just not a key metrics. So we're just not going to report it anymore.
Because it's just a continuing pretty consistent trend.
Got you, Okay that makes perfect sense.
And then the other question I had was around the assumptions that were baked in.
And the guidance if I look at.
The progression of.
Growth.
In 2023 initial guidance was for 11% and.
Growing <unk>.
23, 20% so.
Can you just talk about the guidance assumptions that you're making.
Our initial guidance and whether there might be upside or continued pressure that we should be aware of as we progress throughout fiscal 'twenty four.
Sure. So let me start by just talking a lot therapy.
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 that 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.
Like year over year, almost average volume per customer that grew in 'twenty three 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 'twenty two it worked for us in 'twenty three.
We kind of beat it eight quarters in a row. So we're sticking with that guidance philosophy in 'twenty, four and I can let allen filling any details would be like.
Jacob I think Brett nailed it no change in that philosophy.
We are going to continue to have high conviction about what we present to the street and continue on the March forward.
Perfect. Thank you so much guys I really appreciate it.
Our next question comes on the line of Tyler Radke with Citi. Please proceed with your question.
Yeah. Thanks for taking the question so.
On the specialty medical vertical can.
Can you just talk about some of the integrations that you're working on kind of other product specific case.
Capabilities that you think could be an unlock for that vertical.
And then I.
I guess is there any further.
Yes, I think you have motions around things like plastic surgery medical spas fit.
Physical therapy or is there any kind of other further segmentation.
Youre planning within specialty medical thank you.
Sure. So I'll start the I think there's maybe 20 sub verticals in specialty medical yeah, and so I called out four of them physical therapy medical aesthetics.
Med Spa general practice.
And.
Those are the ones that I'd say, we're primarily focused on building product market fit around those as.
As far as the work that was done Oh and also plastics sorry.
The.
The work that's done is really on two fronts.
Well really three friends.
Building the integrations, so integrating to their practice management or EMR software and integrating them to eat that's number one number two deepening existing integrations. So.
There are different levels of integration that you can write in and the more integrated you get the more valuable the product is so deepening existing integrations.
The three the third piece is really developing very crisp go to market.
And brand recognition you know a lot of these newer are especially medical sub verticals that are new to us. We don't have great brand recognition and so building that brand recognition and a very focused way.
Is it 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 three or four 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 integration partners in the practice management EHR providers.
Providers.
Going into the front door.
Developing those relationships, we got you want to have deep and 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, it'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 roadmap we've got objectives, we've got no debt targets.
We can't speak publicly about all of those but that as we.
To delve in there I see great great things ahead with respect to the opportunities to both deepen and create those new interactions and integrations that will open up the Tam for us.
Just let me add one more comment here.
Just the difference between the front door back integration in our back door integration is pretty important front door integration is where we have an agreement with the software provider. The practice management software provider and our integration is supported they approve of it we would only do things that we're supposed to do and are allowed to do and then they actually saw.
And that integration they support their customers our back door, it's kind of an unauthorized integration where vendor would go in and and attempt to connect to the software without agreement with the company.
It's sometimes referred as a hospital integration and our focus is on front door.
That's helpful. Thanks for all the comments. So just the last question I had a couple of follow ups as we think about the outlook. So you know.
On the new customer front encouraging to hear and see the pickup in new ads of locations.
This year.
You do you think that that further accelerates next year now that you're you're really leaning into these.
These cans that just frankly have a lot higher locations and then secondly, Alan.
I appreciate the detail on NR are.
Would it be fair to say that you're expecting higher NRI.
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.
<unk> is currently on.
Sure.
The the the.
The new customers is I think the new customers who follows the same pattern that we've seen with the exception that I do think that the partnership opportunities are going to accelerate.
Thank you.
Thank you.
Our next question comes from the line of Mark Chapell with loop capital markets. Please proceed with your question.
Hi, Thank you for taking my call and or my question excuse me and nice job on a quarter here.
But starting with you on prior earnings calls you noted that the product development group is working on building your Nexgen platform and I was just wondering if you could just give us a sense of when that will be released this year and just maybe some of the benefits financially.
We expect to derive from it in the coming year.
Sure you bet.
So really.
There's two desired outcomes from our Nexgen platform.
If you are 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 is 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 in with them around and thats easier for the customer and it's easier for us because we can move more functionality into the app are 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 as you kind of occurs over time, where the majority of the way there where we're fully done on some functionality and where the majority of the weigh down on some of the remaining functionality. So definitely should happen this year hopefully around mid year. So that's.
The first outcome and then the second outcome is adding multi functionality. So functionality that is makes the product much more usable and useful to multilocation offices. So for example, being able to manage multiple E mail inboxes at once doing multiple texting activities. So basically you can.
Pick a pick list and either pick from one office are all 10 offices or three of the seven offices whatever you want to do so it's really around those two outcomes that we're working on.
We currently opened it up to early access late last year I think we've got over 1000 customers on it using it testing it playing with it and.
So I would say we're in we're in a very good place there.
The responses in the feedback that we've gotten has been quite good.
Not selling it quite yet, but we are showing it too.
Select multi location customers.
And I think this will continue to improve.
Improve embed the legacy functionality into the new platform over throughout 2024.
Thank you 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 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.
We opened planet will that we will continue to add sales capacity.
Throughout 2024, and then I think we've got some additional hiring plan in product and.
Engineering.
Anything else you want I don't know I think those are the those are the key elements, we will grow across the board and obviously, we will gauge that growth.
<unk> execution, and making sure that the metrics supported.
Great. Thank you.
Thank you 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 we've team for delivering another terrific quarter and we will 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.
[music].
Yes.
Okay.
Okay.
Sure.
[music].
Okay.
Hum.
Yes.
Okay.
Yes.
Okay.
Okay.
Okay.
Yeah.
Yes.
Okay.
Okay.
Thank you.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
Hum.
Okay.
Okay.
Okay.
Good morning.
Yeah.
Yes.
Okay.
Okay.
Okay.
Uh huh.
[music].
Okay.
Yes.
Thank you.
Thank you.
Good.
Okay.
Hum.
Okay.
Okay.
Sure.
Yes.
Thank you.
Okay.
[music].
[music].
Okay.
Yes.
[music].
Operator.
Sure.
[music].
Hum.
Okay.
Yes.
Okay.