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Wix.Com Ltd (NASDAQ:WIX) Drops Another Solid Q

Wix.Com Ltd (NASDAQ:WIX) reported upside Q3 results and provided in-line guidance. The company, based in Israel, offers a web development software platform enabling small business owners, free-lancers, and entrepreneurs to develop online outposts for their businesses. WIX offers some free products (available for registered users) with the hope that satisfied users will eventually upgrade to paid subscriptions in order to benefit from the platform’s fuller offering of features, such as increased storage and bandwidth or free domains. Wix currently has over 137 mln registered users worldwide.

The company’s core product is the Wix Editor, a drag-and-drop website editing platform that provides a range of templates, graphics, image galleries, and fonts to employ in website construction. Via this product, users create websites that can be viewed across all major browsers and mobile devices. WIX has created page templates designed to support several verticals (retail/online stores, hotel and property management, musician and artist pages, restaurants, etc.) that can be set up with ease and without the need to write code.

Wix.Com Ltd (NASDAQ:WIX) frames itself as a company that develops and markets an Internet service that allows users to create Web content in Latin America, Europe, North America, Asia, and internationally.

It offers Web development, design, and management solutions and apps through an online platform that enables its user base of businesses, organizations, professionals, and individuals to create a digital presence.

The company’s principal product is the Wix Editor, a drag-and-drop visual development and Website editing environment platform. Its applications and value-added solutions comprise Wix App Market, an online platform that offers its users a range of software apps, which could be integrated as add-ons into its users’ Websites.

In addition, the company provides Wix ShoutOut, which enables users to create and send customized email campaigns, such as newsletters, updates, and promotions directly from their Wix accounts.

Further, it offers Wix Stores that allows its users to create, design, and manage an online store through which they may sell their products online and process payments using an integrated shopping cart app; Wix Bookings, an online appointment booking solution; Wix Hotels, a Website for hotels, B&Bs, and vacation rentals; Wix Music, an advanced music player solution; and Wix Restaurants that provides various solutions for restauranteurs, including Wix Restaurants menus, orders, and reservations.

Additionally, the company provides Wix Photography, a solution for photographers looking to create their portfolio and manage their business online; Wix Video that allows its customers to showcase, promote, and sell videos on their Wix Website; and customer support and services. As of December 31, 2017, it had approximately 119.3 million registered users and 2,465,160 premium subscriptions. The company was formerly known as Wixpress Ltd. Ltd. was founded in 2006 and is headquartered in Tel Aviv, Israel.


Home Sweet Home

As noted above, WIX just put out Q3 results, reporting non-GAAP EPS that jumped to $0.39 from just $0.01 last year, which was much better than market expectations. Revenue rose 40.2% year/year to $155.6 mln, above prior guidance of $152-153 mln.

For Q4, WIX expects revenue of $161-162 mln, which is roughly in-line with expectations. The company also announced a $100 mln share repurchase plan.

What stands out to us about these operating metrics is that registered users grew 20% year/year to 137 mln. That’s a lot of growth off of such a large base. It’s easy to post huge growth numbers when a platform is small, but 20% growth is quite robust for a 100+ mln registered user pool. Also, Wix says that accelerating monetization drove results as average revenue per subscription increased 11% year/year and conversion increased.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action WIX shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -6% on above-average trading volume.

All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. WIX shares have been relatively flat over the past month of action, with very little net movement during that period.

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