Wix.com (WIX +9.34%), a leading cloud-based platform for building websites, saw more strong top-line growth in its first quarter of 2019. In addition, free cash flow jumped sharply.
Here's a close look at these trends, as well as the quarter's overall performance, which was driven primarily by a big increase in premium subscriptions and improved monetization.
Image source: Wix.com.
Wix's third-quarter results: The raw numbers
|
Metric |
Q1 2019 |
Q1 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$174.3 million |
$137.8 million |
27% |
|
Free cash flow |
$35.1 million |
$24.8 million |
40% |
|
Non-GAAP earnings per share |
$0.03 |
($0.06) |
N/A |
Data source: Wix.com first-quarter earnings release.
What happened with Wix this quarter?
Wix's revenue increased 27% year over year to $174.3 million. Though this figure was higher than management's guidance for between $172 million and $173 million, it represented a much lower growth rate than the 39% Wix posted in Q4. Free cash flow went up 40% year over year to $35.1 million.
Results were bolstered by a 9% year-over-year increase in average revenue per subscription and 180,000 net new premium subscriptions.
What management had to say
The quarter was "a strong start to the year," said Wix CEO Avishai Abrahami in the company's first-quarter earnings release.
He continued:
It is clear that there continues to be substantial demand for creating an online presence as evidenced by the more than six and a half million new users that registered with Wix in the quarter.
Wix CFO Lior Shemesh noted that the company's top-line growth was aided by "the early success of our strategy to increase collections per subscription, as the trend that we began to see last quarter is continuing as expected."
Improved monetization per user was the result of new products and pricing, management said.
Looking forward
Wix lifted its outlook for full-year revenue, guiding for $758 million to $763 million, or 26% year over year growth. Previously, management was expecting 2019 revenue between $755 million and $761 million.
But management lowered its outlook for free cash flow, forecasting full-year free cash flow between $122 million and $126 million. This is down from a previous forecast for $135 million to $140 million. The lowered outlook for free cash flow reflects a planned $15 million investment in customer solutions, which management decided to double down on. "Excluding this investment, our free cash flow guidance for 2019 would be $137-$141 million," management said.
"We are also excited to create another growth opportunity by investing in the next phase of Customer Solutions," explained Abrahami. "We believe this evolution will drive top line growth through conversion improvements and the sale of new products while increasing our overall level of support."
Even with this investment, management's free cash flow guidance implies 20% to 24% growth in the important metric.
