Wix Reports Third Quarter 2019 Results

NEW YORK, Nov. 14, 2019 /PRNewswire/ -- Wix.com Ltd. WIX today reported strong financial results for the third quarter ended September 30, 2019. In addition, the Company provided its outlook for the fourth quarter 2019 and updated its outlook for the full year.

"The investment in marketing to professionals we announced earlier this year is already showing positive returns as agencies continue to increase their engagement with Wix," said Avishai Abrahami, Co-founder and CEO of Wix. "We continue to build out the Wix platform to provide the ability to create any website or application online, and I am excited about our momentum as we head into 2020."

Nir Zohar, President and COO of Wix, said, "Our results this quarter reflect strong growth in the lifetime value of our user cohorts. This growth has been driven by a combination of increasing subscriptions and monetization per subscription, which demonstrates the high value of our products and success with our recent pricing optimization efforts."

Lior Shemesh, CFO of Wix, said, "Our worldwide reach provides us with a global user base; however, it also subjects us to changes in foreign exchange rates. We have experienced strong growth this year, but our growth would be even stronger excluding changes in FX rates. Using constant currency rates on a year over year basis, we expect our revenue for the full year 2019 would be approximately $10 million higher and collections would be roughly $12 million higher, which would equate to 28% year over year growth. Despite this headwind, we are ending 2019 on a strong note and are excited about 2020."

Q3 2019 Financial Summary

 

Additional Q3 2019 Results and Highlights

• Revenue in the third quarter was impacted by changes in foreign exchange (FX) rates since Q3 guidance was provided in July, as well as a change in revenue mix in the quarter
• Collections in the third quarter were impacted by changes in FX rates since Q3 guidance was provided in July. Assuming constant FX rates since Q3 guidance was issued in July, Q3 collections were $207.0M, up 27% y/y
• Gross margin on a GAAP basis in the third quarter of 2019 was 73%, compared to 79% in the third quarter of 2018
• Non-GAAP gross margin in the third quarter of 2019, calculated as non-GAAP gross profit as a percent of revenue, was 74%, compared to 80% in the third quarter of 2018
• The decline in non-GAAP gross margin is attributed to the growth of Wix Payments since its launch in Q4 2018, as well as the investment in expanding our Customer Solutions globally to provide a more personalized support experience for our users. We believe this investment and Wix Payments will drive incremental collections and revenue growth in 2020 and beyond
• GAAP operating loss in the third quarter of 2019 was $(20.6) million, compared to GAAP operating loss of $(3.5) million in the third quarter of 2018
• The y/y growth in GAAP operating loss is due to the decline in gross margin as a result of the growth in Wix Payments, the investment we made in Customer Solutions, the increase in stock based compensation expenses as a result of increases in our share price and the accrual of approximately $3.2 million in sales tax expense in GAAP G&A expenses in Q3 2019
• Non-GAAP operating income in the third quarter of 2019 was $12.3 million compared to non-GAAP operating income of $16.3 million in the third quarter of 2018.
• The y/y decline in non-GAAP operating income is attributed to the decline in gross margin as a result of the growth in Wix Payments, as well as the investment we made in Customer Solutions
• GAAP net loss in the third quarter of 2019 was $(17.4) million, or $(0.34) per share, compared to a net loss of $(5.9) million, or $(0.12) per share, for the third quarter of 2018
• Non-GAAP net income in the third quarter of 2019 was $20.8 million, or $0.41 per share, compared to non-GAAP net income of $18.8 million, or $0.39 per share for the third quarter of 2018
• Net cash provided by operating activities in the third quarter of 2019 was $36.1 million, while capital expenditures totaled $6.8 million, leading to free cash flow of $29.2 million, compared to $23.7 million of free cash flow in the third quarter of 2018, a 23% year-over-year increase
• Added 114,000 net premium subscriptions in the third quarter of 2019 to reach 4.4 million as of September 30, 2019, a 15% increase over the total number of premium subscriptions at the end of the third quarter of 2018
• Added 5.5 million registered users in the third quarter of 2019. Registered users as of September 30, 2019 were 160 million, representing a 17% increase compared to the end of the third quarter of 2018

Recent Business Highlights

• Introduced Wix Partner Program: This quarter, we began the roll out of the Wix Partner Program, which offers agencies professional resources to achieve their business goals and deliver custom solutions to their clients. The initial phase of this program includes extended support, access to the tailored dashboard, forum, and product betas, as well as migration support and a complimentary business website. Future products and offerings for this program are planned for early 2020
• Announced a strategic partnership with NTT Town Page: In September, we announced a partnership with NTT Town Page, which provides a leading Japanese business directory, offering "NTT Town Page Digital Lead Powered by Wix" to NTT Town Page small business customers across Japan. The service will include a complete suite of products including website creation, site management, e-commerce and SEO capabilities to power online marketing and promotion for small and medium-sized businesses. As a result of this venture, Wix will serve as the exclusive website platform provider to NTT Town Page, positioning Wix to become the leading digital marketing solution for millions of businesses in Japan
• Introduced enhanced payment options in Japan: In August, we announced a partnership with GMO Epsilon to provide a local payment option for Wix merchants in Japan. Wix businesses in Japan are now able to offer GMO-EP's payment solutions to customers through their online businesses, enabling credit card payments with lower processing fees, direct bank transfers, and additional features to make growing a business on Wix even more convenient
• Renewing of the share repurchase authorization: As previously disclosed, Wix is authorized by the Israeli District Court to repurchase up to $100 million of its ordinary shares from time to time, until December 31, 2019, when the current court authorization expires. Wix plans to file in the coming days a motion seeking a renewed court approval in Israel to re-authorize the Company to repurchase up to $100 million of its ordinary shares from time to time until December 31, 2020, or a shorter period as approved by the court. Wix expects the motion to be re-approved before the expiration of the current authorization. Wix did not repurchase any shares in the quarter ended September 30, 2019

Financial Outlook

Wix is introducing its outlook for the fourth quarter 2019:

Wix is also updating its outlook for the full year 2019. The updated full year guidance is inclusive of changes in FX rates since we last provided full year guidance in July. Had FX rates stayed constant since that time, we would have raised FY 2019 collections guidance from the prior range of $825-$831 million by approximately $3.5 million at the midpoint of the range to $830-$833 million, and FY 2019 free cash flow guidance from the prior range of $123-$126 million by approximately $2.5 million at the midpoint of the range to $126-$128 million.

 

Conference Call and Webcast Information

Wix will host a conference call at 8:30 a.m. ET on Thursday, November 14, 2019 to answer questions about the financial and operational performance of the business for the third quarter ended September 30, 2019. The conference call will include a brief statement by management and will focus on answering questions about our results during the quarter. To enhance the Q&A portion of this call, the Company has posted a shareholder update and supporting slides to its Investor Relations website at https://investors.wix.com/. These materials provide shareholders and analysts with additional detail for analyzing results in advance of the quarterly conference call.

To participate on the live call, analysts and investors should dial +1-877-667-0467 (US/ Canada), +1-346-354-0953 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID 6392716. A telephonic replay of the call will be available through November 21, 2019 at 11:30 a.m. ET by dialing +1-855-859-2056 and providing Conference ID 6392716.

Wix will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company's website at https://investors.wix.com/.

About Wix.com Ltd.

Wix is leading the way with a cloud-based website development platform for over 160 million registered users worldwide today. The Wix website builder was founded on the belief that the Internet should be accessible to everyone to develop, create and contribute. Through free and premium subscriptions, Wix empowers millions of businesses, organizations, artists, and individuals to take their businesses, brands and workflow online. The Wix Editor, Wix ADI, a highly curated App Market, Ascend by Wix and Corvid by Wix enable users to build and manage a fully integrated and dynamic digital presence. Wix's headquarters are in Tel Aviv with offices in Be'er Sheva, Berlin, Dnipro, Dublin, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo, Tokyo and Vilnius.

Visit us: on our blog, Facebook, Twitter, Instagram, LinkedIn and Pinterest 

Download: Wix App is available for free on Google Play and in the App Store

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, Wix uses the following non-GAAP financial measures: collections, cumulative cohort collections, collections on a constant currency basis, revenue on a constant currency basis, non-GAAP gross margin, non-GAAP operating income (loss), non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow (collectively the "Non-GAAP financial measures"). Collections represents the total cash collected by us from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period. Non-GAAP gross margin represents gross profit calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization, divided by revenue. Non-GAAP operating income (loss) represents operating income (loss) calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, acquisition-related expenses and sales tax expense accrual. Non-GAAP net income (loss) represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, sales tax expense accrual, amortization of debt discount and debt issuance costs and acquisition-related expenses and non-operating foreign exchange expenses (income). Non-GAAP net income (loss) per share represents non-GAAP net income (loss) divided by the weighted average number of shares used in computing GAAP loss per share. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

For more information on the non-GAAP financial measures, please see "Reconciliation of GAAP to Non-GAAP Financial Measures" below. The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. The Company has not reconciled its free cash flow guidance to net cash provided by operating activities because net cash provided by operating activities is not accessible on a forward-looking basis. Items that impact net cash provided by operating activities are out of the Company's control and/or cannot be reasonably predicted. Accordingly, a reconciliation to net cash provided by operating activities is not available without unreasonable effort. The Company has also not reconciled future collections over the next eight years from existing user cohorts. Items that impact future revenue and deferred revenue over an eight year period cannot be reasonably predicted. Accordingly, a reconciliation to revenue is not available without unreasonable effort.  

Forward-Looking Statements

This document contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements may include projections regarding our future performance, including, but not limited to revenue, collections and free cash flow, and may be identified by words like "anticipate," "assume," "believe," "aim," "forecast," "indication," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "outlook," "future," "will," "seek" and similar terms or phrases. The forward-looking statements contained in this document, including the full year guidance, are based on management's current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, our ability to grow our user base and premium subscriptions including through the launch of our Wix Partner Program; our ability to create new and higher monetization opportunities from our premium subscriptions; our ability to enter into new markets, and attract new customer segments, for example through our recent strategic partnership with NTT Town Page and our partnership with a Japanese payment provider, intended to expand our reach to customers in Japan; our ability to maintain and enhance our brand and reputation; our prediction of the future collections generated by our user cohorts; our share repurchases made pursuant to our share repurchase plan; our ability to manage the growth of our infrastructure effectively; our ability to effectively execute our initiatives to scale and improve our user support function, including through the recent expansion of our Customer Solutions organization by engaging additional agents around the world to provide 24/7 support in nine different languages; the success of our sales efforts; customer acceptance and satisfaction of new products and other challenges inherent in new product development; changes to technologies used in our solutions; or changes in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading "Risk Factors" in the Company's 2018 annual report on Form 20-F filed with the Securities and Exchange Commission on April 9, 2019. Any forward-looking statement made by us in this press release speaks only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Investor Relations:

Maggie O'Donnell

investors.wix.com 

ir@wix.com 

914-267-7390

Media Relations:

Vivian Hernandez

Wix Press Room 

pr@wix.com 

415-517-6539

 

 

 

 

 

 

 

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SOURCE Wix.com Ltd.