Wix.com (WIX 1.14%), the renowned web development company, released its third-quarter results for 2024 on November 20.
The highlight was its non-GAAP EPS of $1.50, beating analyst expectations of $1.44. Revenue grew to $444.7 million, marginally exceeding the projected $444 million. This performance marks a significant 13% year-over-year growth from $393.8 million in Q3 2023. Both financial metrics reflected consistent execution, aligning with management's guidance range of $440 - $445 million for the quarter.
Overall, the quarter was marked by robust financial results, driven by innovation in AI and product diversification.
| Metric | Q3 2024 Result | Analyst Estimate | Q3 2023 Result | % Change YoY |
|---|---|---|---|---|
| Non-GAAP EPS | $1.50 | $1.44 | $1.10 | 36% |
| Total Revenue | $444.7 million | $444 million | $393.8 million | 13% |
| Free Cash Flow | $127.8 million | N/A | $44.8 million | 185% |
| Bookings | $449.8 million | N/A | $389.1 million | 16% |
Source: SEC filings. Analyst estimates provided by FactSet.
Understanding Wix.com
Wix.com is a prominent platform where users can create websites without prior coding experience. Through its diverse toolkit, it caters to individuals and businesses seeking easy-to-build websites. The company stands out in the market due to its broad range of offerings, enabling users to design, market, and manage their websites effectively.
The recent focus for Wix.com has been on growing its user base and enhancing user conversion rates. A key facet of this strategy is utilizing AI to improve onboarding experiences and developing tools like Wix Studio for advanced user needs. Success in these areas is critical for its long-term growth and financial outcomes.
Quarterly Highlights and Developments
During the quarter, Wix displayed notable achievements in multiple areas. Financially, it succeeded with a 13% rise in revenue to $444.7 million, in line with a steady performance trajectory. Free cash flow surged dramatically to $127.8 million from $44.8 million in Q3 of 2023, showcasing improved cash management and operational efficiency. This sequential increase of 170 basis points extended the free cash flow margin to 29%.
In product developments, Wix Studio was a standout, securing 75% of new Partner bookings, which indicates strong user adoption and leverage of the platform's capabilities. Wix Studio supports advanced website development tasks, which broaden Wix's potential customer base and attract more professional designers and developers.
AI innovation also played a crucial role. Wix introduced AI business assistants aimed at enhancing on-platform efficiency and user satisfaction. Initial results were promising, with a 13% increase in conversion rates credited to the AI-enhanced onboarding process. This underlines Wix's strategy to integrate cutting-edge technology to drive user satisfaction and retention.
Despite these accomplishments, the company faced challenges like a competitive industry landscape and the need for user conversion. With 222 million registered users but only 6 million premium subscribers, the free-to-premium conversion rate is an area that needs improvement. Addressing this issue is vital to Wix's revenue model.
A potential concern stems from macroeconomic factors and foreign exchange volatility, which could impact financial performance. Management maintains a cautious outlook to mitigate these risks by adjusting cost structures and staying agile in innovation.
Looking Ahead
As 2024 progresses, Wix anticipates sustaining its positive momentum. Management has updated its full-year bookings guidance to between $1,822 million and $1,832 million, reflecting stronger confidence in its growth strategies. Revenue guidance was slightly increased, with expectations for free cash flow uplifted to $483 - $488 million, a significant upward revision from the previous range.
Investors should watch for continued advancements in AI-powered tools and product diversification strategies, which are key components of Wix's future plans. Additionally, any shifts in the competitive landscape and evolving economic conditions are critical factors that could influence Wix's performance in the coming quarters.
