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Wix.com Ltd (NASDAQ:WIX)
Q3 2019 Earnings Call
Nov 14, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Wix.com 2019 Third Quarter Financial Results Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today Maggie O'Donnell, Director of Investor Relations. Please go ahead.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Sarah. Good morning everyone and welcome to Wix's Third Quarter 2019 Earnings Call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder; Nir Zohar, President and COO; and Lior Shemesh, CFO. During this call, we may make forward-looking statements and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and the most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements.

In addition, we will comment on non-GAAP financial results, you can find all reconciliations between our GAAP and non-GAAP results in our press release, presentation slides, shareholder update and our Interactive Analyst Center on the Investor Relations section of our website investors.wix.com.

Now, I will hand it over to Avishai Abrahami, who is going to say a couple of words about the quarter. Avishai?

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Thanks, Maggie, and good morning everyone. Q3 was another solid quarter. We've added 114,000 net subscription in the quarter. Collections were higher than our guidance and we are raising our outlook for the full year when you adjust for changes in exchange rates. Collection from our newest user cohorts are higher than last year's cohorts, which shows the success we have had in increase in the value of our product and optimizing pricing. The future collection of our existing cohorts is now expected to be over $6 billion over the next 8 years. This result proved that we have a very strong and consistent core business that continues to grow. We are also seeing great early success in many of our new products and initiatives. The investment in marketing to professional is showing very positive trend. The perception in the market of Wix as a professional tool is increasing. And we have seen strong growth in users that build multiple website. In fact, collection from users that have 10 or more subscription grew approximately 50% in the last year. We are excited about this progress and we'll continue to develop our offering for this market.

We recently launched Wix Fitness, our newest vertical offering, that focus on one of the fastest growing categories on Wix. Use of Corvid is increasing and this product has been an important part of our ability to attract high quality and professional users. We also continue to see positive growth in payments and we are making positive advancement in expanding the customer solutions. We are ending 2019 on a strong note. We are very excited about the upcoming year. Thank you for your support through this year and for joining us today. Maggie?

Maggie O'Donnell -- Director of Investor Relations

Thank you. Operator, can we have the first question please.

Questions and Answers:

Operator

Thank you. Our first question comes from the line of Ygal Arounian with Wedbush. Your line is now open.

Ygal Arounian -- Wedbush Securities -- Analyst

Hey guys, good morning and thanks for taking the questions. So I have two, I'll start with the subs. And you had a really strong sub net adds quarter. Your guidance is to now be at the high end of the previous range, which really implies a big deceleration in the fourth quarter. I think that kind of deceleration, we haven't seen typically, so I want to dig into that a little bit to see if there is something specifically going on there. Kind of what the outlook is for subs in 4Q, as we kind of bridge toward your expectations for acceleration in 2020.

And then, I want to dig into the subscription -- the subscription packages that you're selling to the agencies, a little bit more. Maybe if you could kind of give a little bit more color around how that works, the kind of difference in duration, average, amount of subscriptions you saw per package and if you're -- if you could talk about any kind of like volume discount that you're giving to agencies on that as well and how that could be flowing through to ARPU. So I guess a lot of questions within those two. But thank you.

Lior Shemesh -- Chief Financial Officer

Hi Ygal, this is Lior. So with regard to the net sub adds are bad. I mean, yeah, we had a really strong quarter which I think that also a good demonstration of the overall changes that we've made in the last a few quarters, especially about the price optimization. It was more than what was in our guidance and that was the main reason for the fact that on an FX-neutral basis, we actually beat the quarter. And we saw a very strong demand, specifically you know coming from international, but also from partners. So obviously, this is also very exciting news for us and I believe that based on what we see right now, I think that we are in the right place to say that that next year, actually will be accelerated in term of net premiums additions, this is what we expect to happen. With regard to the -- and with regard to Q4 obviously, you know Q4 usually impacted by seasonality. So therefore, I expect that Q4 is going to be less than Q3 in terms of net subscription, but it always has been the case. With regard to the agencies, we'll go to Nir.

Nir Zohar -- President & Chief Operating Officer

Sure. Gladly, so generally in terms of how we work with partners, naturally a partner that builds many websites, buys many subscriptions throughout the year has much better KPIs, delivers more value to us has much higher retention in the subsidiaries that he creates because he give active support and hand holding to his customers. And naturally over time, we see a lot of potential there. As Avishai mentioned before and as we actually included in our package, we're actually seeing when we look at those accounts that have 10 plus subscriptions in them. We're actually seeing a rise of 50% in collections year-over-year, which we see as a great success and a big part of the new program that you're running.

Specifically, we're currently not giving volume discounts. We are definitely trying different approaches, working with with agencies and we partners and want to find the best solutions that will deliver the most value for them. And by that also deliver the best value for our users that are using the platform through them and obviously, we will see -- we deem that to generate great impact for the company in years to come.

Ygal Arounian -- Wedbush Securities -- Analyst

Great. Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thank you, Ygal. Can we have the next question Please?

Operator

Thank you. Our next question comes from the line of Deepak Mathivanan with Barclays. Your line is now open.

Deepak Mathivanan -- Barclays -- Analyst

Thanks for taking the question, guys. Two quick ones from us. So first one, the gross margin deleverage in the quarter was a little bit higher than the second quarter levels. Can you help quantify the impact from customer support way as payments and should we expect this kind of deleverage to be normal for kind of a few quarters until the payments mix reaches a more normalized level.

And then -- and then the second question, you noted that the average collection per sub growth is likely to moderate over the next few quarters, but should we -- should we kind of expect to see the benefit from price increases that you did in May this year continue for a few more quarters and -- or is the benefit likely to be less significant from that? Thank you.

Lior Shemesh -- Chief Financial Officer

Hi, Deepak, this is Lior. So with regard to the gross margin, obviously it was well expected. I actually view it as something that it's quite positive because it means that -- everything that we've done with regard to payments has actually been successful. Obviously, this quarter we see a higher top line coming from payments. Therefore, we provided at the very beginning of the year some kind of a range with regard to the gross margin, because it was very early to say if everything that we've done about payments, all the initiatives, how's it going to work out and what will be the exact volume because basically you know it's new. So you know I'm happy to say that it was all positive according to the expectations and and even a bit better. And therefore that as longer as the payments activity is going up, it will have an impact on gross margin, but it's all incremental.

It's very important to mention that from the basic gross margin for the core business, meaning the subscription is still very high at about 84%, as it used to be two and three years ago. The mall that we are adding services to our customers like G-Suite like payments and so on. And obviously if we -- investments that we have in support has an impact on gross margin, but it's all incremental to the coal business. So, I do expect gross margin to have more impact in the future, as payments will go more and more higher. We will try to provide you know next few more quarters about it -- and try to make some more orders again of those kind of services will continue to increase. With regard to to the ACPS, So obviously you know if I'm looking at the next, let's say, a few quarters. So there are a few things that going to impact the overall ACPS, but also the ARPU and it's -- first of all about how we continue to provide more services to our customers and this is, as I mentioned, I think that payment is a good example, to the fact that we are providing more services, and therefore I expect it to increase. Q4 obviously have some seasonality into it, so I don't see that increasing, but certainly next year I can say safely that at least for the ARPU, it's going to increase and demonstrate, all the different services that we're providing to our customers. And also, you will see some benefits coming from price optimization that we've made earlier this year.

Deepak Mathivanan -- Barclays -- Analyst

Okay. Thanks, Lior.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Deepak. Can we have the next question please?

Operator

Thank you. Our next question comes from the line of Ken Wong with Guggenheim Securities. Your line is now open.

Ken Wong -- Guggenheim Securities -- Analyst

Great. Thanks for taking my question. So in the prepared remarks, you guys mentioned potentially launching a significant new product in 1Q of '20. Just wondering if you can maybe shed a little light on what that might be and how we should think about potential contributions to top line there. And then -- and then also you guys mentioned that revenue mix, I mean, yeah revenue mix had a bit of a headwind on top line. Could you maybe walk us through what that might have been, and if possible, help us quantify what that impact was. Thank you.

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Hey, this is Avishai. So we are not in a habit of disclosing product details, but I want to say this is a product that we've been working on for a very long time and very proud of, it's a very clear continuation of one of the strategies we're discussing on this call. So I think the actual product is going to be a surprise, but the direction is probably going to be something that makes a lot of sense. And as a company, we are very, very excited about it.

Lior Shemesh -- Chief Financial Officer

Yeah. With regard to the mix, I think that it was, Ken, it was really, really small. I think that when you look at the revenue about half was actually coming from FX. The other one is change of mix, nothing significant that should change your model. Basically we had more subscriptions and as we mentioned before, we had a strong quarter in term of net subscription additions. As you know, subscriptions are tend to be different in term of revenue recognition, so it has an impact, compared to other services that have been recognized immediately. But again, it's nothing significant, it was very small. A hundred thousands of dollar that shouldn't make any change to the model.

Ken Wong -- Guggenheim Securities -- Analyst

Great. Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Ken. Can we have the next question please?

Operator

Our next question comes from the line of Brent Thill with Jefferies. Your line is now open.

Brent Thill -- Jefferies -- Analyst

Thanks. Just to follow on the revenue side. There was I think a little disappointment relative to was three was at and where the revenue came in and I think you highlighted, part of this is FX in the mix change, but was the bookings more back-end loaded this quarter, did the subscriptions come in linear through the quarter. I think it was just trying to reconcile why you won't see a little bit better flow-through on the top line, based on the success of the customer adds, we understand the move to subscription but wasn't it -- wasn't it more back-end loaded than you've just historically seen?

Lior Shemesh -- Chief Financial Officer

So the answer is no, nothing was unusual about it, but we need to remember that most of the incremental subscription that we got, it was mostly on a non-monthly basis, so it's -- most of it is has been deferred. But again, it was really, really small when you look at the revenue, we're talking about a $1.5 million compared to the guidance that we provided before, about half of it was FX. So again, the change was such it was not that significant. I think that you know when you look at the bookings, so obviously you know why it was demonstrated to very aware that we actually FX-neutral with that, we actually beat. Unfortunately, not every -- every dollar out of it was was part of the revenue. But again, it was not that dramatic.

Brent Thill -- Jefferies -- Analyst

Okay. And just a quick follow-up, can you just give us a quick update on the progress of Corvid. Thank you.

Lior Shemesh -- Chief Financial Officer

Of course. So we continue to see strong growth. And I think we're currently at about 250,000, sorry, 300,000 highly engaged users. The percentage of the highly engaged users that has grown from 20% to 25%. And again, this product is what enables us I think to go so much stronger into the partners and designers and markets. So we are very happy with where it is and we believe that this is just the beginning. There are a lot of things we need to do there in order to be able to get it to the next level So we think that this was the year, where we've seen a lot of success from this product and 250,000 -- 300,000 developers that really develop into that is a tremendous number and the fact that you can actually measure the perception change and the kind of users that it brought it Wix. So this is a fantastic success from our perspective.

Brent Thill -- Jefferies -- Analyst

Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Brent. Can we have the next question please?

Operator

Our next question comes from the line of Zachary Schwartzman with RBC Capital Markets. Your line is now open.

Zachary Schwartzman -- RBC Capital Markets -- Analyst

Great. Thanks for taking my questions. Nice to see the uplift in ACPS for new fully priced US subs. But on the price optimization globally, you mentioned in the shareholders update that you continue to see these efforts benefit the lifetime cohort. Can you talk more on international specifically on targeting highly valued users and what you're seeing that gives you confidence, if this is the right strategy in those markets given the lower penetration rates, and also as growth lagged North America and Europe and Asia and LatAm this last quarter. And then a quick follow-up on Corvid, when Wix starts charging to use Corvid, could it turn off these developers who may generally prefer to work with open source alternatives and if Corvid is kept open source, will outbound agency sales or perhaps a platform marketplace be the best way Wix decides to monetize Corvid, just wondering how Wix will walk that line as it comes up with pricing. Thanks.

Lior Shemesh -- Chief Financial Officer

Maybe, I will start with Corvid. And so -- you're asking if we will start to monetize. So currently we're monetizing that in a way that you actually pay for the subscription. If you look at it, even if you use open source at some point of time, you need to host it somewhere. So if there is a project, you still need to host it, you need to buy a database or you need to use an open source database and then host that, use probably Amazon or Google or Microsoft in order to to get that in a managed service. So those kind of customers are already used to paying and I think that if we're going to have a more expensive offering for Corvid at some point in time, they are used to that.

And in addition, Corvid also offer the advantages that you can develop anything, deploy in a test mode for free, which they don't have today, because they still need to build all the environment in order to start developing something. So I believe that by if at some point we'll add additional pricing for Corvid, it'll be very aligned with what people are used to do it today and probably will be easily accepted.

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Yeah. With regard to the global price optimization. The reason why we call it a price optimization because in some cases, we actually reduced prices in some of the countries, meaning that we actually run and did those tests in literally in every country to try to see what is the best optimization that we can do in term of the pricing to get a better value for cohorts. So obviously where we've made the changes, we see a better value of our cohort, also outside of the US. I think that you know in the last few quarters, we got a better and growing faster in the US then in other places in the world. One of the reasons is obviously the strength of the dollar compared to other currencies, we need to remember that when we do the TOI, it's based on dollar. So if we are getting, for example, in the UK, we are getting the same amount of British pound in dollar, it's a smaller. So the model is actually adjusting that automatically to be based on the TOI. So we are growing faster in the US, but I believe that still the International has a huge opportunity for us and especially with all the price optimization that we've made, I see that the value from the cohort is actually going up.

Zachary Schwartzman -- RBC Capital Markets -- Analyst

Great. Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks Zach. Can we have the next question please?

Operator

Our next question comes from the line of Ron Josey with JMP Securities. Your line is now open.

Ron Josey -- JMP Securities -- Analyst

Great. Thanks for taking the question. Lior, you talked about at least in the letter, we had three reasons for confidence in growth next year on the subscriber base products, partners, customer solutions. Can you just talk more about the partner side and with the partner program live, how built out is the program, are you expecting more partners like to Town Page partner or is it smaller agencies. Any insight on maybe that second leg of the of the three stool -- three legs that are driving growth next year. And yeah, I'll just stop there. And I guess maybe a quick one Avishai, you talked about excitement in the 2020. Obviously, we have new products, payments gaining traction, subscribers. Anything else that you want to highlight there. Thank you.

Lior Shemesh -- Chief Financial Officer

Yeah, sure. So I think that in terms of -- I think that in terms of subscription growth, there is going to first of all, we keep on building, improving the current products that we have and also building new products and we always expect and we have a great track record I think of showing how those new products improve conversion and by improving conversion obviously driving growth. The second part in terms of partners, then absolutely yes, I think the initiatives will cover any kind and any size and many forms different Partners and agencies, the entity deal is definitely that kind, is one kind or one kind of an example of a partner and we will keep on going down that path of supporting anytime and any size of those partners, as this is exactly what you set up to do. We wanted to evolve and expand our business to the people who are building the website for other people. Regarding the second question, can you repeat the second question quickly?

Ron Josey -- JMP Securities -- Analyst

Well, I guess just on -- it's more bringing everything together in 2020 and back to partners, just -- can you just talk about how built out is the program, but then on 2020, more than I've seen in the past just comments around why 2020 is sort of exciting in your minds, new products subscription, acceleration, payments getting stronger et cetera. So, just Avishai, you mentioned the excitement in 2020 just more thoughts around that. Thanks.

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Yes, absolutely. I think that companies that for the life go from stages. And I think that one of the interesting thing the companies can experience is the ability to attract new kinds of customers, right, new type of customers. And the nature of our business by the subscription things take time to accumulate to be significant. But what we see now, with our ability to attract professionals to Wix, for me is really exciting. It will take time to accumulate, as you've seen with AI, things take time but we are seeing already that the number, the perception, the growth and we're going to have some interesting stuff coming into Q1. As a result of that, I'm very positive that we'll be able to not just do what is our traditional market, but actually expand to new markets and I think that is something that does not happen a lot in life of companies, we are at the point where we are seeing something like this happened, so for me it is super exciting.

In addition to that, I think that if you look at the total view of our market, as a company, then let me add to website built, I think that our dominance today is higher than it's ever been, and we can see that the lot of the -- and we can see that in many different aspects. So, I think that is the other side, which is something that we are very happy about. I think that we spent a lot of effort evolving our technology and product to a level that it enabled such a thing to happen.

Ron Josey -- JMP Securities -- Analyst

Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks for your question Ron. Can we have the next question please?

Operator

Our next question comes from the line of Naved Khan with SunTrust. Your line is now open.

Naved Khan -- SunTrust -- Analyst

Yeah. Thanks a lot. Couple of questions. On the subscriber additions for the next year, again you guys called out three components, improved conversions from product improvement, partner program, and the customer support. So if I have to -- in my mind, if I had to rank order them, how should I be thinking about the impact on the subscriber additions for next year. And then, I had a question on the state tax, looks like it's going to be getting layered in on the coming months. Is there a potential impact on conversion rate meaning as people see a higher amount that they have to pay you might see an impact on conversions? How should we be thinking?

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Yes, so I should, I will start with -- the first question about the subs reacceleration. There is by the way a fourth reason, which is the lapping price optimization impact, which we had it on 2019, it was kind of a one-time when we did the price optimization, I don't expect it to happen at least not at that magnitude in 2020. So we had this impact in 2020, you basically start with -- from a different place and therefore, the effect of the price optimization actually is going to end at 2020, when you look at it on a year-over-year basis. Again, that sale, as you mentioned, you have new products and obviously impact conversion, the partners in support investment, I believe that obviously partners is a big chunk out of it, but I cannot rank it to you 1,2,3,4 , but obviously partner is a big -- one of the most important items for reaccelerating.

With regard to the sales tax, the answer is, I don't know, I think that you know everything about the sales tax is something that's happening -- it's a new things in the US, at least for most of the countries and we need to see the impact of it. I think that -- it's not just about Wix, I think that people used to pay sales tax and think that it will be -- have any big impact. We saw that by the way, in the past in Europe when the VAT started, which is essentially, it's really, really the same. We haven't seen really impact on the conversion because of that, when people started to pay VAT in Europe. So I believe that it's really, really the same, but again it's hard to tell, we will have to test, we will have to understand and then obviously we will inform.

Naved Khan -- SunTrust -- Analyst

Thanks, that's super helpful. And then -- so just on the clarification on the tax issue. Is this -- is this something that is layered into you -- so you reiterated guide 450,000 to 500,000 for the year. But do you think you're come in toward the high end, are you baking in some appropriate amount of conservatism because of the tax issue?

Avishai Abrahami -- Co-Founder & Chief Executive Officer

No. No, because remember that we are talking about this number for this year. In 2019, we haven't really started to collect taxes, the sales tax from the customers, because we need to get ready for that, every country has different rules. And therefore, it is part of our provisions, meaning that next year, we won't see that as a provision because we are going to charge customers and pay back, to the different authorities. Therefore, there is no change in terms of the pricing of sales tax in 2019.

Naved Khan -- SunTrust -- Analyst

Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks for your questions, Naved. Can we have the next question please?

Operator

Our next question comes from the line of Jason Helfstein with Oppenheimer. Your line is now open.

Jason Helfstein -- Oppenheimer -- Analyst

Thanks. Two questions. So with respect to next year, you're basically telling us you're confident in sub acceleration, better ARPU, you're obviously not giving us revenue at this point. But if I do the math and just correct me if I'm wrong, the guidance basically assumes 27% collections growth, there is a currency headwind, I think if you back out the headwind it's about 36 and so are you basically telling kind of an aggregate, adjusting for currency collections basically should accelerate next year. And then just can you clarify again on the pricing increases, again that when you expect to be complete as far as announced, but then they roll through at the annual increase when that ends. Thank you.

Lior Shemesh -- Chief Financial Officer

So with regard to the first question, Jason, obviously we are not in a position to provide numbers right now for 2020. So, unfortunately, I cannot comment on that. I think that the only comment was about the reacceleration of next few net sub, again not to a specific number, but we cannot comment on the exact collection and revenue for next year. With regard to the pricing increase impact, so obviously, we started it the mid of 2019. So I guess that the impact lapping in mid of 2020 in most of the cases, so I hope that was the question.

Jason Helfstein -- Oppenheimer -- Analyst

And then just clarify the currency impact that you implied it's about what is it about 9 points in the fourth quarter, is that right, headwind?

Lior Shemesh -- Chief Financial Officer

The question is compared to what, if you compare the...

Jason Helfstein -- Oppenheimer -- Analyst

For collections -- collections growth headwind in the fourth quarter with the implied guidance.

Lior Shemesh -- Chief Financial Officer

When you compare it to the last guidance that we provided a few months ago...

Jason Helfstein -- Oppenheimer -- Analyst

No. Year-over-year -- year-over-year growth rate collections in the fourth quarter.

Lior Shemesh -- Chief Financial Officer

For the overall year, the impact was about $12 million. So I believe that for Q2, it's a few millions, I don't think that we provided the number, I can check it and get back to you. But it was a few millions of dollars.

Jason Helfstein -- Oppenheimer -- Analyst

Okay. I was talking about the fourth quarter though.

Lior Shemesh -- Chief Financial Officer

The fourth quarter?

Jason Helfstein -- Oppenheimer -- Analyst

Right, what's implied in the guidance? That it's about a 9-point headwind on collections?

Lior Shemesh -- Chief Financial Officer

It was more like $2 million to $3 million.

Jason Helfstein -- Oppenheimer -- Analyst

In the fourth quarter?

Lior Shemesh -- Chief Financial Officer

Yes, for the fourth quarter on a year-over-year basis. Correct.

Jason Helfstein -- Oppenheimer -- Analyst

Okay. Thank you.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Jason. Can we have the next question please?

Operator

Our next question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is now open.

Lloyd Walmsley -- Deutsche Bank -- Analyst

Thanks. Can you remind us do some of the lower margin products that Q3 and payments flow through the disclosure on cohort collections and kind of when you look at cohorts on a gross margin basis adjusting for some of the lower margin products. Can you talk about how that the recent cohorts look compared to earlier cohorts?

And then a second one if I can, just on the collections from partners with 10 or more subscriptions being up 50%. How big is that in your base from last year, just prior to the agency push, the sales force push, I would think it would be growing even quicker than that unless it's just a bigger portion of the base than we realized. So if you can give us a sense of the magnitude of that in the mix, that would be really helpful.

Lior Shemesh -- Chief Financial Officer

So with regard to the first question about the cohort. So basically, the cohort includes collection in term of dollars not margins, to your question, it's include the G-Suite inclusive of everything that we are selling, because we need to compare it to our -- to the overall DIY model that we have and we measure collection and obviously the other associated cost is part of the overall budget and profitability that we keep on optimizing. But you are right, the cohort include all the different aspects of the collections With regard to the increase mention of partner, so we didn't actually provide the number, but it was a very quite a significant increase compared to where we were last year.

Avishai Abrahami -- Co-Founder & Chief Executive Officer

And it's starting from a very, its a wide base.

Lior Shemesh -- Chief Financial Officer

It's a wide base, correct. It's a wide base. Remember that we already had partners when we started and overall it's make us to be very, very excited about next year.

Lloyd Walmsley -- Deutsche Bank -- Analyst

Okay. So on the cohort stuff, given that it does include some of the lower margin products, I mean if you look at it on a gross margin basis by cohort, is that showing healthy growth as well?

Lior Shemesh -- Chief Financial Officer

Correct, because still for example, when you take the payments, although we had a millions of dollars for example this quarter from payments, it is still not that significant when you look at the cohort basis. Remember that usually when you start the cohort, usually you don't use the payments immediately, it takes time until you open the store and start to have business on top of it and so on. So usually it's incremental, but it might have an impact in the later stage. I believe that it will be all incremental because the basic more fundamental business that we have have not changed in term of the gross margin. So I believe that it will certainly going to have an impact in the future. Right now, it's not so significant, but it will be interesting to see.

Maggie O'Donnell -- Director of Investor Relations

Great. Thanks. Can we have the next question please.

Operator

Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Your line is now open.

Sterling Auty -- JPMorgan -- Analyst

Yeah. Thanks. Hi guys. One question, one follow-up. First, on Corvid, you mentioned in the prepared remarks, the 6.5x, I think traffic improvement for sites that are actually using it, can you give us a sense of what is the revenue per subscription for those that are using Corvid and in terms of how that compares to the average kind of revenue per subscription?

Lior Shemesh -- Chief Financial Officer

I can say that overall people that are using Corvid tend to take the more expensive packages and currently, all pricing for Corvid is within the normal business model that we have. The one thing that we do notice that is very significant is that the retention of those users is dramatically higher, so they tend to stay much longer, build much more complex websites

Avishai Abrahami -- Co-Founder & Chief Executive Officer

So does this answer your question?

Sterling Auty -- JPMorgan -- Analyst

It does. Thanks Avishai. I really appreciate that. And then one follow-up on payments. Can you give us a sense of what is the type of customer that's taking Wix Payments and maybe, Lior given the number of questions kind of earlier in the queue around payments, can you just remind people what the accounting is for payments?

Nir Zohar -- President & Chief Operating Officer

Hey Sterling, it's Nir. So I'll take the first part in terms of the type and hand it over for the accounting to Lior. But in terms of the kind of user, it's pretty much -- it's is a very varied and diverse profile. You have to remember, we have so many different kind of businesses running on our platform, and many of them would like to close transactions online. So it will be an online store naturally, but it will also be -- it will also be someone who is -- who is using our bookings engine and trying to close a class or an appointment, it can be a restaurant, it can be someone who is selling ticket to an event. When we look -- you look at kind of e-commerce kind of transactions on Wix, it's a very, you have very high variety and all of them need that ability to do payment easily.

Lior Shemesh -- Chief Financial Officer

With regard to the overall margin of payments, Sterling to your question, when you look at the payments by itself as a business has a much lower margins than the overall our margins that we have. I think that it's -- usually it's around 70%, but we need to remember that the way that I look at it is in a much different way, because what I -- I think that the more interesting way to look at it is about all the services that you provide to merchants. And it's not necessarily just payments, I think the payments, its one of them. In some of the cases, you know you can provide a bundled solution that include all kind of stuff, like for example, drop ship and so on. It's nothing new in this market. And then I think that it's much more interesting to look at the overall margin of those merchants solutions to our customers because at the end of the day, each and every one of them has its own value, but together they provide much more values to the customer. So, if you ask me about you know the target of where I can see that in the future, I certainly hope that it will be somewhere between 30% to 40%, when talking about the overall services that we provide to our merchants and our customers in general. So, I hope that next year, we'll be able to provide much more colors around it. I do believe that as long as it's growing, we need to provide some more information about it.

Sterling Auty -- JPMorgan -- Analyst

Understood. Thank you so much.

Maggie O'Donnell -- Director of Investor Relations

Thanks, Sterling. Can we have the next question please?

Operator

Our next question comes from the line of Josh Beck with KeyBanc. Your line is now open.

Josh Beck -- KeyBanc Capital Markets -- Analyst

Thanks for taking the question. I'm not sure if you'll be able to address this, but I'm really just trying to think a little bit more granular about the shape of net add acceleration for next year, when I look at the implied Q4 guidance, it just -- it seems like the way that the 2020 is going to start off as it could still be down and then maybe the back half could feature a lot of acceleration and that's what gets you to a better number for the year, is there any -- I know that's pretty detailed, but is there any commentary you can share just on the shape of net adds for 2020?

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Sure. I think that -- I think to answer your question, I will start with some general comments about it, you can see that in previous years, when you look historically at Wix, it was all based on products, meaning that the way that we increase net subs was all due to when we actually launched new products.

In some cases, you saw a better a strong H2 than H1 in some of the case, a stronger H1 than H2. So except of seasonality, where usually the first quarter is really, really strong, there is another impact of -- when you're product become mature, and people actually more engage with your product and using that. Specifically, to your question, I do believe that the second half of next year is going to be stronger than the first half of the year, simply because of the fact that you know the effect of partners, I do believe will be stronger in the second half than in the first half as the product is more mature and we have the opportunity to increase the usage of that.

Second, you know, there is also obviously the effect of the price optimization that we've made. So if you look at it on a year-over-year basis, the price increase lapping is at around, I think that It's around May of 2020. So obviously when you look at it on the year-over-year basis, again, there is also and it's mathematics, there is also an impact to that.

Maggie O'Donnell -- Director of Investor Relations

Okay. Thanks, Josh. Can we have the next question please?

Operator

Our next question comes from the line of Aaron Kessler with Raymond James. Your line is now open.

Aaron Kessler -- Raymond James -- Analyst

Great. Thanks guys. Couple of questions, maybe first on the customer solutions initiatives, you reaffirmed how the the 5-point growth reacceleration in 2020, can you just maybe update us on maybe traction or what you're seeing so far in terms of conversion rates et cetera from customer solutions investment and second just maybe quickly back to the gross margin drivers on a sequential basis, if I could maybe the rough 200 basis points decline was, should we infer most of that payments are kind of, can you help us how much of the sequential changes payments versus customer service in G-Suite. Thank you.

Nir Zohar -- President & Chief Operating Officer

Yeah. I'll take the first question about customer service. So I have to say, we've kind of dived into this whole initiative based on years of data and work we've been doing in our customer service. And understanding in many ways that this is -- it's a big opportunity that was just there for us to go -- to go after. Throughout this year, we've -- we hired and increased the size of our call centers, mostly based on a third party, but we are talking about hundreds of agents. We already just by doing that and training them on the basically but we already managed to definitely improve significantly our SLA and just give better customer service in general.

Now what we're doing in the last -- in the last few months is basically going into much deeper training level and basically working into a much more personalized level of customer service and experience, in a way that will actually help us consult our users to just become better and more successful online, whether it's taking them through the building of the website process and helping them convert and getting to the endpoint and actually have a live effective site online and even if they're already have converted -- and we can help them out, get more value by using more products, whether they are free products or paid products, Ascend for example, then we would love to do that. As long as we help them become more successful. So that has been -- that has been the big focus in the last few months. Also kind of resulting a lot the training programs, understanding the quality control for them, bringing in more new Talent, people with experience that can manage and run such an operation. And I would say that I'm very excited about it, it's not only because of the potential growth we see toward 2020, I think that for us to be able to be in a position where we work with our customers more closely, we consult them, we help them be more successful, just puts us in a much better position for growth in years to come not only, as I look forward into the next year.

Lior Shemesh -- Chief Financial Officer

Yeah. With regard to the gross margin decline this quarter compared to to Q2. Since the investments in customer support was already done in Q2, and obviously in Q3, it was a bit higher, but most of the impact is coming from payments.

Maggie O'Donnell -- Director of Investor Relations

Okay. Great. I think we have time for just one more question. Can we have the last question please?

Operator

Our last question comes from the line of Jonathan Kees with Summit Insight Group. Your line is now open.

Jonathan Kees -- Summit Insights Group -- Analyst

Great. Thanks for squeezing me in and taking my questions here. I wanted to ask regarding one of your opportunities, specifically international. I've heard you in terms of you're seeing international is a huge opportunity, but if I look at the growth rate for the regions, for the quarter, it was only Asia-Pacific that was at corporate average, the other regions were below corporate average for the year-over-year growth. So I guess -- and I also saw the announcement with NTT Page, is there going to be like -- I'm just trying to tie that in, are you looking to change your strategy by chance, are you looking to lead international more with Corvid and are you also looking now just focus countries versus more the regions or are you going to still stay with the DIY market services. Thanks.

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Wow. I think that you asked a lot of questions. Maybe, I'll start with that, so obviously, right we've continued to go with our do-it-yourself strategy. But as we said, we are also working on attracting partners, partners being companies or individuals who are building websites for others. NTT is an extreme example of that, of course, it's not that common case, which is a huge company that is now using Wix as the technology and product to build websites for their customers. And that is in line with our partner strategy. We hope to have a lot of those in the future and some of them as big as NTT the majority of them, of course, will be smaller. So we will continue our do-it-yourself business, as it is very, very effective. We do intend to continue and invest in the products as we mentioned today, we see a lot of growth in that, the amount of users with 10 or more subscription is growing rapidly, 50% and on revenues there. And so we are very excited about both opportunities. We don't see them as conflicting with each other. Most of the people that will take a partner to build a website will not do so on themselves either because they're too busy or because they don't have the computer skills or they want to professional to do the websites for them. So we believe that those two do not conflict with each other and actually contribute to the creation of Wix is the dominant -- is the stronger brand in that -- in this category.

Lior Shemesh -- Chief Financial Officer

With regard to the first part of your question about Europe, for example. I think that -- the best way to explain it in a simple way is about the TOI. Think about it this way, what's happened in Europe and the strength of the dollar compared to the euro and the British pound obviously has an impact, because when you do the calculation of the TOI essentially, it's dollar in and dollar out, obviously dollar in is less when you convert what we are getting in euro and British pound and therefore we allocate at some of the investment through the US, where we saw the much, much better growth. But most of the impact was because of what's happened to the FX. When you have the FX remain the same as last year, you would've seen more investment in Europe because of that.

Jonathan Kees -- Summit Insights Group -- Analyst

Okay. Great. Thanks for your time, Avishai.

Maggie O'Donnell -- Director of Investor Relations

Thanks for your question, Jonathan. And thanks everybody for joining.

Operator

[Operator Closing Remarks]

Duration: 53 minutes

Call participants:

Maggie O'Donnell -- Director of Investor Relations

Avishai Abrahami -- Co-Founder & Chief Executive Officer

Lior Shemesh -- Chief Financial Officer

Nir Zohar -- President & Chief Operating Officer

Ygal Arounian -- Wedbush Securities -- Analyst

Deepak Mathivanan -- Barclays -- Analyst

Ken Wong -- Guggenheim Securities -- Analyst

Brent Thill -- Jefferies -- Analyst

Zachary Schwartzman -- RBC Capital Markets -- Analyst

Ron Josey -- JMP Securities -- Analyst

Naved Khan -- SunTrust -- Analyst

Jason Helfstein -- Oppenheimer -- Analyst

Lloyd Walmsley -- Deutsche Bank -- Analyst

Sterling Auty -- JPMorgan -- Analyst

Josh Beck -- KeyBanc Capital Markets -- Analyst

Aaron Kessler -- Raymond James -- Analyst

Jonathan Kees -- Summit Insights Group -- Analyst

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