Weave's 150% Stock Gain: Lessons in SMB SaaS Valuation, Margin Expansion, and Growth Deceleration

Weave Communications, a vertical software company serving SMBs, went public at the peak of software valuations in November 2021 but experienced a 22% IPO day drop and cratered to $145M EV by June 2022 before recovering to become the 5th best software stock performer since January 2023. The turnaround was driven by gross margin improvement (58% to 69%), healthy NRR/GRR metrics within SMB benchmarks (95%/92%), and consistent free cash flow generation despite slowing revenue growth from 55% at IPO to an expected 15% forward. The article argues that comparing SMB software to enterprise benchmarks creates dangerous blind spots, and questions whether 20% growth at breakeven cash flow can justify unicorn-level private valuations or justify the software industry's 20%+ FCF margin expectations.