Wix increases profit, upgrades forecast for 2024
Wix increases profit, upgrades forecast for 2024
Wix's revenues in the first quarter amounted to $419.8 million, while GAAP net income reached $24 million
After presenting a profitable bottom line in the previous quarter for the first time in its history, Wix maintained profitability in the first quarter of 2024 as well, alongside revenues slightly higher than market forecasts. In light of the strong performance, Wix provided an optimistic outlook for the current quarter and upgraded its forecast for the rest of the year.
Wix's revenues in the first quarter amounted to $419.8 million, representing a 12% growth compared to the corresponding quarter. This was slightly above Wix's forecast of $415-419 million. The fastest-growing part of Wix's business continued to be the partners revenue, which rose 33% to $138.4 million.
Wix launched its studio platform to work with partners in October 2023, a week after the Hamas attack on Israel. Working with partners helps Wix retain customers and generate higher income, as these customers, such as professional web designers, tend to use the solutions regularly and pay for advanced capabilities, something casual customers typically do not do. Additionally, partners often set up websites for businesses, including those with payment processing solutions.
Wix has established itself as a profitable company (following the positive result of the previous quarter). The company recorded GAAP net income of $24 million in the first quarter, or $0.43 per basic share and $0.41 per diluted share, compared to a profit of $3 million in the previous quarter. This is also a dramatic improvement compared to the corresponding period last year, when the first quarter of 2023 ended with a loss of $10.4 million. Non-GAAP net income was $77.3 million, or $1.38 per basic share and $1.29 per diluted share.
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Although Wix also benefits from financing income on high cash balances, it recorded an operating profit of $9.7 million, compared to an operating loss of $33.3 million in the first quarter of 2023. Cash flow from operations amounted to $113.8 million.
The company continues to emphasize operational efficiency: the number of employees decreased slightly in the past quarter, bringing the total to 5,235 employees. Wix points out that the company continues to hire employees at a relatively slow pace due to efficiency initiatives implemented in recent years. These included lateral cuts and closing customer support centers in favor of digital solutions. As a result, it expects an overall annual decrease in the rate of operating expenses to 50%-51% of revenues.
Wix estimates that double-digit growth will continue in the current quarter (second quarter of 2024), with expected revenue of $431-435 million. This amount will reflect an improvement of 11%-12% compared to the corresponding period last year.
The company also slightly raised the annual revenue forecast to a range of $1.73-1.76 billion, an increase of $8 million compared to the previous forecast, representing annual growth of 11%-13%. It is expected to present both an operating and net profit in the annual summary.
Cash flow from operations is expected to reach $435-455 million, which is 26% of the expected revenues by the end of the year—a higher rate than Wix's own goal of a 25% flow rate by 2025.
"We kicked off 2024 with a strong start to the year with top-line growth and profitability exceeding expectations in Q1, positioning us within close reach of the Rule of 40," added Lior Shemesh, CFO at Wix. "Of note, bookings growth accelerated to 10% y/y and revenue growth of 12% y/y exceeded expectations, driven by higher conversion and improved monetization across our user base, as well as the robust product traction. Strong top-line growth coupled with a stable cost base resulted in record FCF margin of 26% in the quarter, well ahead of our three-year plan.”
Referring to the complex geopolitical environment, Wix President Nir Zohar said: "The environment is certainly complex for us as an international company, and it is not trivial to operate in it. However, we have not had any special incidents recently and hope to continue being good ambassadors of Israel along with other high-tech companies. We certainly don't hide our Israeliness, and any customer or employee can easily see it."
