NASDAQ: WIX Price: 57.55 Change: +2.35 +4.26% Volume: 964,897 3:59 ET on Dec 13, 2017 price delayed 20 minutes

Wix Reports Strong Second Quarter 2017 Results Above Expectations; Expands Market Potential with Introduction of Wix Code

07/27/2017
  • Revenue Growth Accelerates to 51% Y/Y – Record Collections of $117.1 million, up 44% Y/Y
  • Free Cash Flow of $17.4 million grew 71% Y/Y
  • Added over 192,000 Net Premium Subscriptions for a total of 2.9 Million, up 35% Y/Y
  • Introduced Newest Product Innovation, Wix Code, a Formidable New Solution Enabling Creators, Designers and Developers to Create Powerful Web Applications

NEW YORK--(BUSINESS WIRE)-- Wix.com Ltd. (Nasdaq: WIX), a leading cloud-based web development platform, today reported another strong quarter of financial results for the second quarter ended June 30, 2017, again exceeding the high end of guidance on all key metrics.

“Our focus on product development and innovation once again resulted in a strong quarter,” said Avishai Abrahami, Co-founder and CEO of Wix. “With the addition of Wix Code, we now have a product targeted specifically to creators, designers and developers. This is a remarkable product that significantly expands our addressable market to those who want to build complex web applications that can be tailored for any business need. With Wix ADI, the Wix Editor, our vertical applications and now Wix Code, Wix provides a product set that can be used by any user, regardless of skill set, to create anything online.”

Lior Shemesh, CFO of Wix, commented, “We generated record collections and revenue this quarter driven by year-over-year growth in new registered users and conversion to premium subscriptions. Free cash flow grew significantly as we continue to realize operating leverage over our operating expenses. We believe we will continue to drive growth and gains in operating leverage through the second half of 2017.”

Q2 2017 Financial Summary

   

Three months ended
June 30,

       
$ in thousands   2017     2016 Y/Y growth

Prior Q2 2017
Outlook

Revenue $ 103,522   $ 68,730 51% $ 101,000 - 102,000
Collections $ 117,121 $ 81,453 44% $ 116,000 - 117,000
Operating Income (Loss) $ (10,563) $ (10,490) NM

Non-GAAP Operating Income (Loss)

$ 3,516 $ (2,980) NM

Net Cash Provided by Operating Activities

$ 19,651 $ 11,314 74%
Free Cash Flow $ 17,412 $ 10,185 71%

Additional Q2 2017 Results and Highlights

  • Gross margin on a GAAP basis was 83%, compared to 84% in the second quarter of last year. The decline in the second quarter was due to additional amortization of intangibles related to recent acquisitions. Non-GAAP gross margin, calculated as non-GAAP gross profit as a percent of revenue, was 84%, compared to 85% in the second quarter of last year. Non-GAAP gross margin represents GAAP gross profit adjusted for the impact of share-based compensation expense, acquisition-related costs and amortization divided by revenue.
  • GAAP net loss was $(14.3) million, or $(0.31) per share, compared to a net loss of $(11.4) million, or $(0.28) per share for the second quarter of 2016
  • Non-GAAP net loss was $(0.2) million, or $(0.00) per share, compared to a non-GAAP net loss of $(3.7) million, or $(0.09) per share for the second quarter of 2016
  • Net cash provided by operating activities for the second quarter of 2017 was $19.7 million, while capital expenditures totaled $2.2 million, leading to free cash flow of $17.4 million, compared to $10.2 million in the second quarter of last year
  • Added 192,000 net premium subscriptions in the period – our second highest net additions ever – to reach 2.9 million as of June 30, 2017, a 35% increase over the second quarter of 2016
  • Added 5.5 million registered users in the second quarter – the second highest registered user additions in our history. Registered users as of June 30, 2017 were 109 million, representing a 24% increase compared to the end of the second quarter of 2016

Recent Business Highlights

  • Introduced Wix Code, a market-expanding platform enabling users to create powerful web applications: Wix Code provides an integrated development environment for the easy creation of web applications with custom business logic and a stunning user interface. This product opens new possibilities for creators, developers and designers looking for the easiest way to build web applications of all kinds tailored to their business needs. A closed alpha of Wix Code was released in June, and the Wix Code Beta is now accepting further applications. The release of Wix Code is not expected to have an effect on our financial results in 2017.
  • Launched SEO Wiz to power search optimization on Wix sites: Wix launched SEO Wiz, enabling users to create a personalized plan and ensure their Wix sites can be found online. SEO Wiz provides easy step-by-step interactive walkthroughs, with personalized checklists of to-dos, to optimize every page of a Wix website. Wix worked directly with the Google Search Console team to create a fast, easy and powerful solution for Wix users to index their sites. To date, over 1 million users have begun building their plan in SEO Wiz, and it was the most installed app from the Wix App Market in the first half of 2017. Of users who have submitted a complete SEO Wiz plan, over 65% saw their site appear on the first Google search results page for their top keywords.
  • Launched Worldwide Ambassador Program: Wix Ambassadors around the globe partner with local technology, co-working and small business organizations in their local markets to empower millions of Wix users through workshops, events and professional tutorials and support. Already, 90 Ambassadors from 22 countries and in 10 languages have met thousands of Wix users and hosted over 100 events.
  • Wix Mobile Growth: Wix users have created 28 million mobile sites to date, making Wix one of the largest mobile site development platforms globally.
  • Global E-commerce Platform: E-commerce subscriptions reached over 388,000 during the quarter. Growth of e-commerce and other vertical application subscriptions continues to exceed overall subscriptions growth and accelerated during the quarter, highlighting Wix’s broad reach with small businesses.
  • Desktop and Mobile Business Management and Growth Solutions: Continued engagement with the Wix ecosystem is illustrated by over 600 million user contacts saved onto the Wix platform by our users. Leveraging Wix’s CRM system on the desktop and the Wix App on mobile devices, business owners can track their customer activity data, manage relationships, communicate using Wix Engage, get paid via Wix Invoices and launch marketing campaigns and newsletters via Wix ShoutOut, our email marketing solution, from a single location, anywhere.

Financial Outlook

The Company is introducing its outlook for the third quarter of 2017 as follows:

       
Q3 2017 Outlook Y/Y growth
Revenue $109 - $110 million 44% – 45%
Collections $117 - $118 million 34% – 35%
 

Wix is reaffirming its outlook for the full year 2017:

 

FY 2017 Outlook

Y/Y growth

Revenue

$421 - $423 million

45% – 46%

Collections

$473 - $477 million

38% – 39%

Free Cash Flow

$67 – 68 million

85% - 88%

Conference Call and Webcast Information

Wix will host a conference call at 5:00 p.m. ET on Thursday, July 27, 2017 to answer questions about the financial and operational performance of the business during the second quarter 2017. 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, supplemental data sheet and supporting slides to its Investor Relations website at https://investors.wix.com/results. 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 866-393-4306 (US/Canada), 734-385-2616 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID 53229077. A telephonic replay of the call will be available through August 3, 2017 at 11:59 p.m. ET by dialing 855-859-2056 (US/Canada) or 404-537-3406 (International) and providing Conference ID 53229077.

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 a leading cloud-based development platform with over 110 million registered users worldwide. Wix 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, professionals and individuals to take their businesses, brands and workflow online. Wix ADI, the Wix Editor and a highly curated App Market 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, Dnepropetrovsk, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo and Vilnius.

Visit us: on our blog, FacebookTwitterInstagramLinkedInPinterest and Google+

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, non-GAAP gross margin, non-GAAP operating loss, free cash flow, non-GAAP net loss and non-GAAP net loss per share (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 costs and amortization, divided by revenue. Non-GAAP operating loss represents operating loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss per share represents non-GAAP net 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 the "Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press release. This accompanying table has 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 guidance as to free cash flow to cash flow from operations because it does not provide guidance for cash flow from operations. As items that impact cash flow from operations are out of the Company's control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to cash flow from operations is not available without unreasonable effort.

Forward-Looking Statements

This press release 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 the availability, merchantability or functionality of certain new products or features and their anticipated product demand and customer satisfaction, and may be identified by words like “anticipate,” “assume,” “believe,” “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 press release are based on management’s current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict, including the timing of product releases, 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; our ability to maintain and enhance our brand and reputation; 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; customer acceptance of new products and other challenges inherent in new product development, changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading “Risk Factors” in the Company’s 2016 annual report on Form 20-F filed with the Securities and Exchange Commission on March 28, 2017. 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.

 
Wix.com Ltd.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
 
      Period ended
December 31,       June 30,
  2016     2017  
Assets (audited) (unaudited)
Current Assets:
Cash and cash equivalents $ 93,064 $ 124,132
Short term deposits 78,240 61,055
Restricted cash and deposit 931 1,093
Trade receivables 8,279 8,704
Prepaid expenses and other current assets   17,346     24,414  
Total current assets   197,860     219,398  
Property, equipment and software, net
Long-Term Assets:
Property and equipment, net 8,750 10,566
Prepaid expenses and other long-term assets 2,622 3,088
Intangible assets and goodwill, net   5,452     49,713  
Total long-term assets   16,824     63,367  
   
Total assets $ 214,684   $ 282,765  
 
Liabilities and Shareholder's Deficiency
Current Liabilities:
Trade payables $ 20,709 $ 28,933
Employees and payroll accruals 20,230 25,938
Deferred revenues 146,987 182,220
Accrued expenses and other current liabilities   18,847     26,650  
Total current liabilities   206,773     263,741  
 
Long term deferred revenues 9,746 13,126
Long term deferred tax liability 634 3,908
Long-term loan   -     1,219  
Total long-term liabilities   10,380     18,253  
   
Total liabilities   217,153     281,994  
 
Shareholders' Equity (Deficiency)
Ordinary shares 74 74
Additional paid-in capital 241,154 275,414
Other comprehensive income (loss) (389 ) 3,740
Accumulated deficit   (243,308 )   (278,457 )
Total shareholders' equity (deficiency)   (2,469 )   771  
   
Total liabilities and shareholders' equity (deficiency) $ 214,684   $ 282,765  
 
 
Wix.com Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(In thousands, except loss per share data)
                   
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
 
Revenue $ 68,730 $ 103,522 $ 130,316 $ 196,060
Cost of revenue   11,018     18,025     21,525     32,888  

Gross Profit

57,712 85,497 108,791 163,172
 
Operating expenses:
Research and development 25,483 36,749 49,955 69,418
Selling and marketing 36,026 48,016 76,480 102,345
General and administrative   6,693     11,295     12,614     22,443  
Total operating expenses   68,202     96,060     139,049     194,206  
Operating loss (10,490 ) (10,563 ) (30,258 ) (31,034 )
Financial income, net (105 ) (2,043 ) 400 (1,895 )
Other income (expenses)   1     1     1     1  
Loss before taxes on income (10,594 ) (12,605 ) (29,857 ) (32,928 )
Taxes on income   826     1,659     1,475     2,221  
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
 
Basic and diluted net loss per share $ (0.28 ) $ (0.31 ) $ (0.77 ) $ (0.78 )
Basic and diluted weighted-average shares used to compute net loss per share   41,166,589     45,390,479     40,772,744     45,043,215  
 
 
Wix.com Ltd.
ADJUSTMENTS FOR RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS AND NET LOSS
(In thousands)
                   
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016   2017   2016   2017
(1) Share based compensation expenses: (unaudited) (unaudited)
Cost of revenues $ 475 $ 695 $ 903 $ 1,201
Research and development 3,558 6,586 6,669 11,312
Selling and marketing 1,122 1,778 2,103 3,197
General and administrative   1,772   2,920   3,389   5,251
Total share based compensation expenses   6,927   11,979   13,064   20,961
(2) Amortization 186 1,240 373 1,426
(3) Acquisition related expenses 397 860 1,580 4,625
(4) Taxes on income   197   -   372   -
Total adjustments of GAAP to Non GAAP $ 7,707 $ 14,079 $ 15,389 $ 27,012
 
 
Wix.com Ltd.
RECONCILIATION OF OPERATING LOSS TO NON-GAAP OPERATING INCOME (LOSS)
(In thousands)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
Operating loss $ (10,490 ) $ (10,563 ) $ (30,258 ) $ (31,034 )
Adjustments:
Share based compensation expenses 6,927 11,979 13,064 20,961
Amortization 186 1,240 373 1,426
Acquisition related expenses   397     860     1,580     4,625  
Total adjustments $ 7,510   $ 14,079   $ 15,017   $ 27,012  
       
Non GAAP operating income (loss) $ (2,980 ) $ 3,516   $ (15,241 ) $ (4,022 )
 
 
Wix.com Ltd.
ADJUSTMENTS FOR RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT
(In thousands)
                   
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
Gross Profit $ 57,712 $ 85,497 $ 108,791 $ 163,172
Share based compensation expenses 475 695 903 1,201
Amortization - 1,040 - 1,040
Acquisition related expenses   -     -     -     28  
Non GAAP Gross Profit   58,187     87,232     109,694     165,441  
 
Non GAAP Gross margin 85 % 84 % 84 % 84 %
 
 
Wix.com Ltd.
RECONCILIATION OF NET LOSS TO NON-GAAP NET LOSS AND NON-GAAP NET LOSS PER SHARE
(In thousands, except loss per share data)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
Share based compensation expense and other Non GAAP adjustments   7,707     14,079     15,389     27,012  
Non-GAAP net loss $ (3,713 ) $ (185 ) $ (15,943 ) $ (8,137 )
 
Basic Non GAAP net loss per share $ (0.09 ) $ (0.00 ) $ (0.39 ) $ (0.18 )
Weighted average shares used in computing basic Non GAAP net loss per share   41,166,589     45,390,479     40,772,744     45,043,215  
 
 
Wix.com Ltd.
KEY PERFORMANCE METRICS
(In thousands)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016   2017   2016   2017
(unaudited) (unaudited)
Revenues $ 68,730 $ 103,522 $ 130,316 $ 196,060
Collections $ 81,453 $ 117,121 $ 157,147 $ 231,667
Free Cash Flow $ 10,185 $ 17,412 $ 8,051 $ 32,193
Number of registered users at period end (*) 87,405 108,739 87,405 108,739
Number of premium subscriptions at period end (*) 2,121 2,865 2,121 2,865
 
(*) the numbers without DeviantArt
 
 
Wix.com Ltd.
RECONCILIATION OF REVENUES TO COLLECTIONS
(In thousands)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016   2017   2016   2017
(unaudited) (unaudited)
Revenues $ 68,730 $ 103,522 $ 130,316 $ 196,060
Change in deferred revenues   12,723   13,599   26,831   35,607
Collections $ 81,453 $ 117,121 $ 157,147 $ 231,667
 
 
Wix.com Ltd.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
Net cash provided by operating activities $ 11,314 $ 19,651 $ 10,389 $ 36,048
Capital expenditures, net   (1,129 )   (2,239 )   (2,338 )   (3,855 )
Free Cash Flow $ 10,185   $ 17,412   $ 8,051   $ 32,193  
 
 
Wix.com Ltd.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW EXCLUDING DEVIANTART ACQUISITION COSTS
(In thousands)
                   
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
Net cash provided by operating activities $ 11,314 $ 19,651 $ 10,389 $ 36,048
Capital expenditures, net (1,129 ) (2,239 ) (2,338 ) (3,855 )
DeviantArt acquisition costs   -     -     -     2,738  
Free Cash Flow excluding DeviantArt acquisition costs $ 10,185   $ 17,412   $ 8,051   $ 34,931  
 
 
Wix.com Ltd.
RECONCILIATION OF PROJECTED REVENUES TO PROJECTED COLLECTIONS
(In thousands)
                   
Three Months Ended Year Ending
September 30, 2017 December 31, 2017
Low High Low High
 
Projected revenues $ 109,000 $ 110,000 $ 421,000 $ 423,000
Projected change in deferred revenues $ 8,000 $ 8,000   52,000   54,000
Projected collections $ 117,000 $ 118,000 $ 473,000 $ 477,000
 
 
Wix.com Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                   
 
Three Months Ended Six Months Ended
June 30, June 30,
  2016     2017     2016     2017  
(unaudited) (unaudited)
OPERATING ACTIVITIES:
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,206 1,346 2,450 2,643
Amortization 186 1,142 373 1,462
Share based compensation expenses 6,927 11,980 13,064 20,962
Tax benefit related to exercise of share options 197 - 372 -
Increase in accrued interest and exchange rate on short term and long term deposits (163 ) (53 ) (393 ) (167 )
Deferred income taxes, net (21 ) (184 ) (47 ) (397 )
Decrease (increase) in trade receivables (1,510 ) 1,124 (532 ) 760
Decrease (increase) in prepaid expenses and other current and long-term assets (2,121 ) 743 (3,710 ) (3,170 )
Increase (decrease) in trade payables (590 ) 2,151 4,034 6,659
Increase (decrease) in employees and payroll accruals 3,089 (5,160 ) 3,311 (205 )
Increase in short term and long term deferred revenues 12,723 13,599 26,831 35,607
Increase (decrease) in accrued expenses and other current liabilities   2,811     7,227     (4,032 )   7,043  
Net cash provided by operating activities   11,314     19,651     10,389     36,048  
INVESTING ACTIVITIES:
Proceeds from short-term deposits and restricted deposits 18,422 16,664 23,188 33,050
Investment in short-term deposits and restricted deposits (18,257 ) (5,000 ) (25,257 ) (15,650 )
Purchase of property and equipment (1,129 ) (2,239 ) (2,338 ) (3,855 )
Payment for Businesses acquired   -     (3,257 )   -     (33,091 )
Net cash provided by (used in) investing activities   (964 )   6,168     (4,407 )   (19,546 )
FINANCING ACTIVITIES:
Proceeds from exercise of options and ESPP shares 4,250 7,416 7,571 14,736
Credit line repayment   -     -     -     (170 )
Net cash provided by financing activities   4,250     7,416     7,571     14,566  
INCREASE IN CASH AND CASH EQUIVALENTS 14,600 33,235 13,553 31,068
CASH AND CASH EQUIVALENTS—Beginning of period   38,179     90,897     39,226     93,064  
CASH AND CASH EQUIVALENTS—End of period $ 52,779   $ 124,132   $ 52,779   $ 124,132  

Source: Wix.com Ltd.

Wix.com

Investor Relations:

415-449-4716

ir@wix.com

or

Media Relations:

Vivian Hernandez, 415-517-6539

pr@wix.com