Weave (WEAV) and Remitly (RELY) Deliver
Weave (WEAV) reported Q4 results after the close yesterday that beat expectations on both the top and bottom lines while also giving 2024 guidance above consensus. Revenue grew 21.2% to $45.7 million (beating by $1.5 million) while EPS of -$0.01 improved by $0.05 over last year and beat consensus by $0.03.
For 2024, management guided for revenue of $194 - $198 million (consensus was $194.6 million). That implies about 15% revenue growth at the midpoint, which should prove to be conservative. The read-through is that 2024 EPS should be around -$0.04, with breakeven occurring in the back part of the year.
Turning to details from the call, management talked about how specialty medical is the fastest growing segment (more integrations, good product fit, lots of inbound calls), even outpacing veterinarian to become the third largest vertical. The company expects strong new customer/location count to continue into 2024 and ended Q4 with very strong momentum in the dental vertical.
Payments represent considerable upside and should drive greater adoption. Payments are currently less than 10% of revenue, but are growing faster than subscription revenue. Net retained revenue (NRR) continues to hover around 95% and should improve in 2024, partially due to payments adoption.
All in all it was a fairly clean quarter. First quarter of 2024 will be a little subdued since there was a new payment processing agreement with Stripe in Q1 2023 that makes for a very tough comparison. The big-picture story looks alive and well and the growth in specialty medical should keep interest in the stock trending higher. BUY
Remitly (RELY)
Shares of Remitly (RELY) are indicated to open much higher this morning after the company delivered Q4 results that were ahead of expectations on revenue ($264.8 million, +38.6%, beat by $3.4 million) and EPS ($0.04, beat by $0.07). Send volume increased by 38%, to $11.1 billion.
Active customers in the quarter surged by about 470K (around 300K was expected), meaning up 41% (+1.7 million) since Q4 a year ago to 5.9 million. That’s a huge increase and should send a fireball through any analyst notes suggesting the company’s bump in marketing spend (one of the reasons for the stock’s dismal performance after the Q3 report) was a poor decision. Management plans to keep user growth going in 2024 (guided for higher new customers than in 2023) and continues to see opportunities in India, the Philippines and Mexico (core markets).
Management also said it expects transaction costs to continue to drop as volume goes up and that new products are being tested and launched, including Remitly Circle (new app for money management).
For 2024 guidance, management gave a revenue range of $1.23 - $1.25 billion (+30% to 32%), versus consensus of $1.21 billion. With the company solidly profitable on an adjusted EPS basis we should see EPS take a healthy step forward in 2024, with $0.35 not out of the question.
Analyst estimates are going up. I think RELY will have a very good day and can make up some lost ground in the weeks ahead. I am considering moving to buy today but want to see how shares act in the first couple of hours of trading (initial thought is try to buy under 20, but the stock might be past that quickly). HOLD HALF
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