Shares of Wix.com Ltd. (NASDAQ:WIX) were down 12.8% as of 1:30 p.m. EST Wednesday after the cloud-based web development platform announced mixed third-quarter 2017 results.
More specifically, Wix's revenue climbed 47% year over year to just over $111 million -- above the company's previous outlook for sales in the range of $109 million to $110 million. Wix also saw collections rise 38% to $120.1 million, above expectations for $117 million to $118 million. On the bottom line, however, that translated to adjusted net income of $0.4 million, or $0.01 per share, compared to a net loss of $1.6 million, or $0.04 per share in the same year-ago period.
Analysts, on average, were looking for significantly higher adjusted earnings of $0.13 per share on revenue of $109.8 million.
That's not to say Wix management was disappointed. Co-founder and CEO Avishai Abrahami stated that new products and continued improvements to existing products drove conversation to the company's highest-ever levels, helping net premium subscriptions climb 33% year over year to 3.1 million.
Wix CFO Lior Shemesh also noted that operating leverage helped the company's free cash flow more than double on a year-over-year basis (to $18.9 million), and that the company is boosting its full-year outlook as its underlying business drivers remain intact.
For the fourth quarter, Wix expects revenue of $116 million to $117 million (up 38% to 39% year over year), with collections of $126 million to $127 million (up 29% to 30%). But keeping in mind Wix could be under-promising with the intention of once again over-delivering, Wall Street was anticipating fourth-quarter revenue slightly above the high end of Wix's outlook range.
Finally, Wix now sees full-year 2017 revenue arriving in the range of $423 million to $424 million (up 46% from 2016), an increase from its previous range of $421 million to $423 million. Wix also raised its guidance for collections to climb roughly 40% to a range of $478 million to $479 million (compared to $473 million-$477 million before), and for free cash flow to increase 88% to 91% to a range of $68 million to $69 million (compared to $67 million-$68 million before).
All things considered, it's no surprise to see Wix falling today in light of its bottom-line miss and conservative fourth-quarter guidance. But it's also encouraging to see the company continuing to plow resources into R&D to sustain its innovative roots, which should in turn allow Wix to keep gaining market share and drive top-line growth. As such, I think this drop could be a perfect opportunity for long-term investors to open or add to their positions.