Wix revenue jumps 49%

Wix Photo: Baz Ratner Reuters

The company exceeded its guidance from last quarter in both revenue and collection.

Israeli web development company Wix.com Ltd. (Nasdaq: WIX) outperformed the analysts' forecasts in its first quarter financial statements published today, reporting more revenue and a smaller loss than expected. At the same time, the company raised its guidance for 2018 as a whole. Wix provides a platform for easy construction of websites for small and medium-sized businesses and private individuals. Wix's share price hit a new record today, reflecting a market cap of over $4 billion.

Wix recorded $138 million in revenue in the first quarter, 49% more than in the first quarter of 2017 and 16.3% more than in the preceding quarter. Collection, which includes the change in deferred revenue, totaled $160 million, enabling the company to beat its guidance it provided last quarter for both revenue and collection.

According to GAAP accounting rules, Wix's operating loss was $18.5 million, 10% less than in the corresponding quarter last year, and its net loss was $19.8 million, a 5.1% decrease. Wix's non-GAAP net first quarter loss, excluding accounting expenses pertaining to remuneration for employees, was $2.1 million, compared with a $8 million loss in the corresponding quarter last year and a $7.2 million profit in the preceding quarter. Net loss per share was $0.05, while the analysts predicted $0.10.

Wix generated $24.8 million in cash flow from current activity in the first quarter, and its free cash flow reached a record $21.4 million. The company had $266 million in cash at the end of the first quarter. Wix recently announced that it would petition a court for permission to spend $80 million on buying back its own shares, but CFO Lior Shemesh said that this was a purely procedural process in the event that the company decides to do this in the future and was not considering the measure right now.

What Wix is planning to do with its cash

Shemesh said, "Companies with a value similar to ours are usually traded with their cash ranging from 5% to 15% of their market cap. I think that $270-300 million is a suitable amount of money for the company's current market cap. We're not planning acquisitions at this stage, but this is the amount of money we want to have for a rainy day."

Commenting on his company's first quarter financials, Shemesh said, "The first quarter performance was really good in both the numbers and business activity. We're still making progress in the percentage of users switching from free to paying, which resulted in our outdoing our guidance for all measures."

"Highest recruitment turnover ever"

Wix added 5.9 million users in the first quarter, bringing the number of its users to 125 million, with the number of paying users rising 231,000 to 3.5 million. Wix is publishing a figure today - its "recruitment turnover" of users in the first quarter was the highest ever and is projected to generate over $370 million in collection in the next eight years.

Shemesh adds that the Wix code and ADI products continue to contribute to the company's results, with the addition of a new product - Wix answers for managing online customer support. This product was originally developed for the company's internal needs, but it was decided to also market it outside the company.

Looking at the future, Wix is slightly raising it guidance for 2018 as a whole "in order to reflect confidence in the ability to continue reporting strong growth," and now projects $594-597 in revenue for 2018, 40% more than in 2017, with $651-657 million in collection, 36% more than in 2017. The midpoint of Wix's revenue guidance range is now $2.5 million higher, meaning that the higher guidance is attributable to the company's exceeding its guidance for the first quarter. Wix is projecting $144-145 million in revenue in the second quarter, the same as the analysts' forecasts, and $158-159 million in collection.

Published by Globes [online], Israel business news - www.globes-online.com - on May 9, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Wix Photo: Baz Ratner Reuters
Wix Photo: Baz Ratner Reuters
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