Shares of website-building platform Wix.com (WIX +10.83%) jumped on Wednesday after it reported a strong first quarter and provided a view into impressive performance during April. The company's robust growth and the way customers flocked to the platform during this pandemic captures the appeal of the tech company's product and how well Wix.com is positioned amid strong secular tailwinds.
Here's a look at Wix.com's first-quarter results, as well as some commentary from chief operating officer Nir Zohar on how the company is capturing this strong upside and capitalizing on opportunities.
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A good first quarter and torrid momentum in April
In Wix's first quarter, revenue jumped 24% year over year to $216 million, driven by a 17% increase in creative-subscriptions revenue (revenue from subscriptions to its website-building solutions) and a 72% spike in business-solutions revenue (other sales of products and services to its registered users, such as payments capabilities, third-party apps, and customer relationship-management solutions).
But the most impressive takeaways from Wix.com's earnings release came from its update on business in April, as businesses started responding en masse to the impact of lockdowns.
In April, the year-over-year growth rates for Wix.com's offerings skyrocketed:
- Total net premium subscription additions: up 207%
- Wix Stores subscriptions: up 580%
- Wix Restaurants subscriptions: up 167%
- Purchases of Ascend by Wix (customer relationship management solutions): up 136%
Small and medium-sized businesses are innovating
As shown in its April performance, Wix is well-positioned to be a one-stop-shop for many businesses (especially small and medium-sized businesses) that have been forced to adapt quickly during these unprecedented times.
In an interview with The Motley Fool, Wix chief operating officer Nir Zohar pointed out the company's breadth of offerings for a wide variety of business needs, as companies are adapting and innovating in order to improve their online presence and solutions during lockdowns. "Wherever you are, whatever thing you are trying to do, whatever business you're trying to bring online, we can suit your needs," he said. From scheduling, e-commerce, payments, customer relationship management, and more, Wix has it -- and it's all available at prices small businesses can easily afford.
Further, Zohar noted its solutions have suddenly gone from being a great supplemental option for businesses to "mission-critical." Wix, therefore, was strategically positioned during this pandemic to deliver the value small businesses needed -- all from one place.
When asked whether the recent surge in demand for its products as COVID-19 impacted the global economy reinforced Wix's commitment to go after and support small and medium-sized businesses, Zohar confirmed that this is the case. "The actual unit that you should look at is not the small business but the person behind the small business," he said.
Those entrepreneurs are not going away, Zohar explained. In fact, they're adapting and innovating because their livelihood is on the line. "Even if a small business goes out of business, they'll try something else," the COO noted. "And this is exactly what we're seeing on our platform.
With so much momentum in Wix's business, it wasn't surprising to see management guide for an acceleration in its top-line growth during Q2. Wix said it expects revenue during the period to grow 25% to 26% year over year, with free cash flow during the period soaring 33% to 40%
