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01/10 17:53
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A session reveal a positive outlook for Wix. Financial performance is strong with revenue and bookings exceeding guidance, and optimistic future guidance. The partnership with Microsoft and AI innovations are promising. The share repurchase program is a positive signal. Despite some concerns about organic search traffic and lack of specific launch dates, the overall sentiment, including management's confidence in growth and strategic investments, suggests a positive stock price movement in the short term.
Total Bookings $510 million in Q2, up 10% year-over-year. Driven by stronger new user cohorts and deeper adoption of AI and studio offerings.
Total Revenue $490 million, up 12% year-over-year. Above the high end of guidance range. Partners revenue grew 24% year-over-year to $183 million, driven by professional audience segment adoption and studio growth.
Transaction Revenue $64 million, up 18% year-over-year. Driven by 11% year-over-year growth in GPV to $3.6 billion and improved take rate as Wix Payments adoption grows.
Non-GAAP Gross Margin 70%, up from 69% in Q1. Reflects productivity benefits from AI solutions and vendor partnership optimization.
Non-GAAP Operating Income $110 million or 22% of revenue, up from 21% in Q1. Excludes $6.1 million of nonoperating acquisition-related expenses.
Free Cash Flow $148 million or 30% of revenue. Reflects strong operational performance.
AI-powered online creation: Wix has developed proprietary algorithms for generative engine optimization, enabling users to improve their brand visibility in AI-generated search results. This positions Wix as the first CMS to offer native AI visibility tools.
Vibe coding: Wix entered the vibe coding market with the acquisition of BASE44, which is expected to generate $40-$50 million ARR by the end of 2025 and potentially reach $100 million ARR. This acquisition expands Wix's TAM and provides synergy with its existing infrastructure.
Geographic market growth: Strong growth in key markets like the U.S., U.K., and Europe, with the U.S. showing particular strength in cohort size, conversion rates, and monetization.
Organic traffic and brand awareness: Improved organic traffic and brand awareness, with over 5 million new users onboarded in Q2, a 6% year-over-year increase.
AI-driven operational efficiencies: AI solutions improved customer care productivity and optimized vendor partnerships, contributing to a 70% non-GAAP gross margin in Q2.
Revenue and bookings growth: Total bookings grew to $510 million (10% YoY), and revenue grew to $490 million (12% YoY). Partners' revenue grew 24% YoY, driven by professional audience adoption.
AI and innovation focus: Wix is leveraging AI to enhance user success, including AI marketing tools and onboarding funnels, which have driven higher monetization and user engagement.
Long-term growth strategy: Wix is focusing on expanding its TAM through acquisitions like BASE44 and innovations in AI and vibe coding, aiming for robust growth in 2026 and beyond.
AI-driven advancements: While AI is driving growth, there is a risk of over-reliance on AI technologies, which may not meet all user needs or could face competitive pressures from other AI-driven platforms.
BASE44 acquisition: The acquisition of BASE44, while promising, involves risks such as integration challenges, potential cultural mismatches, and the need to achieve expected synergies to justify the investment.
Market competition: Wix faces intense competition in the CMS and web creation space, which could impact its ability to maintain market share and pricing power.
Economic uncertainties: Macroeconomic conditions could affect user spending behavior, particularly in key markets like the U.S., U.K., and Europe.
Regulatory compliance: Expanding into new markets and offering new services like Wix Payments and Wix Checking increases exposure to regulatory and compliance risks.
Operational costs: Increased headcount and investments in AI and acquisitions like BASE44 could strain operational budgets and impact profitability if not managed effectively.
User retention and conversion: While new user cohorts are growing, retaining these users and converting them into long-term paying customers remains a challenge.
Dependence on key markets: Growth is heavily reliant on key markets such as the U.S., U.K., and Europe, making the company vulnerable to regional economic or political disruptions.
Top Line Growth Acceleration: The company expects top line growth acceleration in the second half of 2025, driven by strong new user cohorts, increased adoption of AI across the platform, and contributions from the recent acquisition of BASE44.
Revenue Projections: Full-year revenue is projected to be between $1.975 billion and $2 billion, representing 12% to 14% year-over-year growth. Q3 2025 revenue is expected to be between $498 million and $504 million, up 12% to 13% year-over-year.
Bookings Growth: Full-year bookings are expected to range from $2.04 billion to $2.075 billion, reflecting 11% to 13% year-over-year growth. New user cohort bookings exiting July grew more than 20% compared to the previous year cohort in the same timeframe.
BASE44 Contribution: BASE44 is expected to generate $40 million to $50 million of ARR by the end of 2025, with momentum towards a $100 million ARR milestone. The acquisition is anticipated to drive long-term synergy and growth in 2026 and beyond.
AI Product Impact: AI-driven advancements, including the AI onboarding funnel and AI marketing agent, are expected to contribute to growth in the second half of 2025 and beyond. These tools are improving user success and monetization.
Market Expansion: The company is unlocking new markets, such as vibe coding, which is expected to be a major growth driver in 2026 and beyond. The acquisition of BASE44 supports this expansion.
Cost and Margin Expectations: Non-GAAP total gross margin is expected to be approximately 69% for the full year, with non-GAAP operating expenses at approximately 49% of revenue. Free cash flow is projected to be $595 million to $610 million, or 30% to 31% of revenue.
Share Repurchase Authorization: This quarter, we also began executing on our $400 million repurchase authorization. We repurchased approximately 646,000 Wix ordinary shares for nearly $100 million, proving our continued commitment to returning value to shareholders.
The earnings call reflects a positive sentiment with strong financial metrics, optimistic guidance, and strategic growth initiatives. Revenue and bookings growth projections are promising, and the BASE44 acquisition is expected to drive long-term synergy. Despite some uncertainties around churn and margin pressures, management's optimism about reducing costs and improving profitability is reassuring. The AI-driven advancements and market expansion plans further enhance the positive outlook. While some concerns were raised in the Q&A, they were addressed with confidence, supporting a positive sentiment for stock price movement.
The earnings call summary and Q&A session reveal a positive outlook for Wix. Financial performance is strong with revenue and bookings exceeding guidance, and optimistic future guidance. The partnership with Microsoft and AI innovations are promising. The share repurchase program is a positive signal. Despite some concerns about organic search traffic and lack of specific launch dates, the overall sentiment, including management's confidence in growth and strategic investments, suggests a positive stock price movement in the short term.
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