Weave Communications Inc.’s stock sputtered in its public debut as the maker of cloud-based tools for small-business communications received a chilly reception on Wall Street.
Shares of Weave WEAV, -21.71% opened at $ 21.80, before heading lower and closing the day at $ 18.79, down 21.7% from their offering price. The initial public offering priced at $ 24 a share late Wednesday, below the company’s expected range of $ 25 to $ 28 a share. The company raised $ 120 million in its offering and is valued at $ 1.18 billion based on its closing price.
The company runs a cloud-software platform that aims to give smaller businesses the same sorts of tools for their customer communications that enterprise businesses have. The platform includes the ability for small- and medium-size businesses to ask for customer reviews, schedule appointments, and send marketing emails, among other things.
“What QuickBooks is to small-business accounting, we will be to small-business customer communication,” Chief Executive Roy Banks told MarketWatch.
Smaller businesses often rely on “numerous standalone products” with each one targeting “one specific element of the broader problem” without providing a “comprehensive solution,” Weave said in its prospectus. The company believes its interconnected platform better serves the needs of its customer base.
The company sees particular appeal in service-based markets where companies have recurring customer relationships, Banks told MarketWatch. A Weave client might use the platform to text customers about an upcoming appointment, send intake forms in advance, and handle payments.
“If you buy all these different solutions from all these different vendors, they don’t talk to each other and don’t share data,” he said. That’s “inefficient and, at the end of the day, more expensive,” Banks added, but Weave offers more “affordability” by packaging the services together.
Weave recorded $ 53.7 million in revenue during the first six months of 2021, up from $ 34.7 million in the same period of 2020. The company also posted a net loss of $ 23.4 million during the first six months of 2021, compared with a loss of $ 20.6 million during the first six months of 2020.
The company has over 130,000 monthly active users. As of the June 30, more than 21,000 locations were “under subscription” with Weave.
“We require each physical location of a customer to enter into a subscription to gain full access to our platform, which results in customers with multiple offices having multiple subscriptions with us,” the company noted in its prospectus.
About 40% of Weave’s deals are “multi-location”, Banks said, and the company has a feature that aims to create unification between different offices of the same company so that workers can route calls to the other branches and “make customers feel like they’re dealing with one location.”
A Veterans Day IPO holds significance for Banks, who served in the U.S. Navy. “The day was certainly something that was desirable but not completely the reason we IPO’ed,” he said, noting that the company believes it can “accelerate the momentum of growth” with the capital it raised through the offering.
Weave’s IPO comes as the Renaissance IPO ETF IPO, +0.71% has increased about 3% on the year, and as the S&P 500 SPX, +0.06% has gained 24% over the same period.