What happened
Shares of Wix.com (NASDAQ: WIX) plummeted 23% on Wednesday after the website-development platform's fourth-quarter results showed its once torrid growth to be slowing.
So what
Wix's revenue grew 16% year over year to $328.3 million. That represented a marked deceleration from the 26% growth Wix reported in the third quarter and the 34% growth it delivered in the second quarter. It was also below Wall Street's estimates, which had called for revenue of $331 million.
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"We are putting our best foot forward to increase our growth by expanding our market leadership with self-creators, strengthening our reach through partners, and doubling down on our commerce platform," CEO Avishai Abrahami said in a press release.
Wix's growth investments, though, are taking a heavy toll on its profitability. The company produced an adjusted net loss of $21.1 million, or $0.37 per share.
Now what
Perhaps more concerning was management's warning that it would be unable to provide investors with annual guidance for its key financial metrics. "We have experienced a much higher level of volatility in demand for online services over the last year and a half due to COVID," the company said in its earnings release. "As a result, we are not able to forecast our business with the same level of confidence as we have historically."
Wix did, however, guide for revenue to increase by 11% to 13% in the first quarter of 2022, to between $338 million and $343 million. Although that would mark a continued deceleration in its pace of expansion, Wix said investors can expect its revenue growth to reaccelerate later in the year.
Additionally, Wix noted that it will soon be able to scale back its growth investments, as its past spending begins to bear fruit. The company, in turn, projects that its adjusted free cash flow margin will rise to roughly 5% in 2022 and as high as 10% in 2023.
