Wix Reports Fourth Quarter and Full Year 2019 Results

NEW YORK, Feb. 20, 2020 /PRNewswire/ -- Wix.com Ltd. (Nasdaq: WIX) today reported strong financial results for the fourth quarter and full year ended December 31, 2019. In addition, the Company provided its initial outlook for the first quarter and full year 2020.

"The fourth quarter was the culmination of a phenomenal year at Wix. We continue to evolve from a  website builder to a comprehensive web creation and business solutions platform," said Avishai Abrahami, Co-founder and CEO of Wix. "The unveiling of Editor X was a major milestone for Wix and has laid the groundwork for expanding our reach in the professional market in 2020. We believe that we have never been better positioned for the future."

Lior Shemesh, CFO of Wix, said, "Our results in the fourth quarter closed out a record year of revenue, collections and free cash flow generation for Wix. The guidance we are providing reflects that momentum continuing into 2020 and our confidence in our ability to continue to deliver strong growth for years to come."

New Financial Disclosures
For increased transparency, beginning this quarter we will present revenue, collections and cost of revenue in two segments: Creative Subscriptions and Business Solutions.

In addition, for the first time we are providing Annualized Recurring Revenue (ARR)¹ as the primary KPI for the growth of our Creative Subscriptions segment. We believe this new financial reporting provides improved clarity regarding our top line growth and gross margins and is a better metric for modeling our business.

ARR for Creative Subscriptions Revenue as of December 31, 2019 was $707.2 million, up 21% Y/Y

FY 2019 Financial Summary

Q4 2019 Financial Summary

Additional FY 2019 Results and Highlights

• Currency was a headwind to top line growth throughout the year. Had FX rates remained constant year over year, revenue would have been ~$8 million higher, or $768.9 million, up 27% y/y and collections would have been ~$12 million higher, or $844.5 million, up 28% y/y
• Total gross margin on a GAAP basis for the full year 2019 was 74%, compared to 79% in 2018
• Creative Subscriptions gross margin on a GAAP basis for the full year 2019 was 81%, compared to 84% in 2018
• Business Solutions gross margin on a GAAP basis for the full year 2019 was 35%, compared to 46% in 2018
• Total gross margin on a non-GAAP basis for the full year 2019 was 75%, compared to 80% in 2018
• Creative Subscriptions gross margin on a non-GAAP basis for the full year 2019 was 82%, compared to 85% in 2018
• Business Solutions gross margin on a non-GAAP basis for the full year 2019 was 37%, compared to 48% in 2018
• GAAP net loss for the full year 2019 was $(86.4) million, or $(1.71) per share, compared to a net loss of $(37.1) million, or $(0.77), per share in 2018
• Non-GAAP net income for the full year 2019 was $59.1 million, or $1.17 per share, compared to a non GAAP net income of $51.3 million, or $1.07 per share in 2018
• Net cash provided by operating activities for the full year 2019 was $149.6 million, while capital expenditures totaled $22.1 million, leading to free cash flow of $127.5 million, compared to $101.6 million of free cash flow in 2018, a 25% year-over-year increase

Additional Q4 2019 Results and Highlights

• Total gross margin on a GAAP basis in the fourth quarter of 2019 was 72%, compared to 79% in the fourth quarter of 2018
• Creative Subscriptions gross margin on a GAAP basis was 80%, compared to 84% in the fourth quarter of 2018
• Business Solutions gross margin on a GAAP basis was 28%, compared to 46% in the fourth quarter of 2018
• Total non-GAAP gross margin in the fourth quarter of 2019, calculated as non-GAAP gross profit as a percent of revenue, was 74%, compared to 80% in the fourth quarter of 2018
• Creative Subscriptions gross margin on a non-GAAP basis was 81%, compared to 84% in the fourth quarter of 2018
• Business Solutions gross margin on a non-GAAP basis was 34%, compared to 47% in the fourth quarter of 2018
• GAAP net loss in the fourth quarter of 2019 was $(21.6) million, or $(0.42) per share, compared to a net loss of $(5.8) million, or $(0.12) per share, for the fourth quarter of 2018
• Non-GAAP net income in the fourth quarter of 2019 was $19.9 million, or $0.39 per share, compared to non-GAAP net income of $20.8 million, or $0.42 per share for the fourth quarter of 2018
• Net cash provided by operating activities in the fourth quarter of 2019 was $41.2 million, while capital expenditures totaled $3.8 million, leading to free cash flow of $37.5 million, compared to $32.7 million of free cash flow in the fourth quarter of 2018, a 15% year-over-year increase
• Added 89,000 net premium subscriptions in the fourth quarter of 2019 to reach 4.5 million as of December 31, 2019, a 13% increase over the total number of premium subscriptions at the end of the fourth quarter of 2018
• Added 5.8 million registered users in the fourth quarter of 2019. Registered users as of December 31, 2019 were 165 million, representing a 16% increase compared to the end of the fourth quarter of 2018

Recent Business Highlights

• Unveiled website creation platform, Editor X: In February, Wix introduced Editor X, a new website creation platform that offers advanced design and layouting capabilities specifically targeted to designers and web agencies. The wide, flexible new canvas allows the use of modern CSS technologies, including Flexbox and Grid, all with precise drag and drop, so designers and web creators can control the exact position and styling of elements at every viewport.
• Opened a new expanded office space in New York City: The new location will house sales team members and agency relations for the Wix Partner Program, product and marketing teams, as well as HR and operations staff. Additionally, the Wix Playground Academy will hold its annual design academy at this address as well as hosting classes, workshops, lectures and partner events.

Financial Outlook

Conference Call and Webcast Information

Wix will host a conference call at 8:30 a.m. ET on Thursday, February 20, 2020 to answer questions about the financial and operational performance of the business for the fourth quarter ended December 31, 2019. The conference call will include a brief statement by management and will focus on answering questions about our results during the quarter. To enhance the Q&A portion of this call, the Company has posted a shareholder update and supporting slides to its Investor Relations website at https://investors.wix.com/. These materials provide shareholders and analysts with additional detail for analyzing results in advance of the quarterly conference call.

To participate on the live call, analysts and investors should dial +1-877-667-0467 (US/ Canada), +1-346-354-0953 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID 3793195. A telephonic replay of the call will be available through February 27, 2020 at 11:30 a.m. ET by dialing +1-855-859-2056 and providing Conference ID 3793195.

Wix will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company's website at https://investors.wix.com/.

About Wix.com Ltd.

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Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S.  GAAP,  Wix  uses  the  following  non-GAAP  financial   measures:   collections,   cumulative   cohort collections, collections  on  a  constant  currency  basis,  revenue  on  a  constant  currency  basis,  non-GAAP  gross  margin,  non-GAAP  operating  income  ,  non-GAAP  net   income   ,  non-GAAP  net  income  per  share  and  free  cash  flow (collectively the "Non-GAAP financial measures"). Collections represent  the  total  cash  collected  by  us  from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period.  Non-GAAP  gross  margin  represents gross profit calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization, divided  by  revenue.  Non-GAAP operating income represents operating income (loss) calculated in accordance with GAAP as adjusted for the impact of  share-based  compensation  expense,  amortization,  acquisition-related  expenses  and  sales tax expense  accrual. Non-GAAP  net  income  represents  net  loss  calculated  in  accordance  with  GAAP as adjusted for the impact of share-based compensation expense, amortization, sales tax expense accrual, amortization of  debt  discount  and  debt  issuance  costs  and  acquisition-related  expenses  and non-operating foreign exchange expenses (income). Non-GAAP net income per share represents non-GAAP net income divided by the weighted average number of shares used in computing GAAP loss per share. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures.

The presentation of this financial  information  is  not  intended  to  be considered in isolation or as a substitute for, or superior to, the financial information  prepared  and  presented  in  accordance  with  GAAP.  The  Company uses these non-GAAP financial measures for financial and operational decision  making  and  as  a means to  evaluate  period-to-period  comparisons.  The  Company  believes  that  these  measures  provide  useful information about operating results, enhance  the overall understanding of past financial performance  and  future  prospects,  and  allow  for  greater  transparency with respect to key metrics used by management in its financial and operational decision making.

For more information on the  non-GAAP  financial  measures,  please  see  the reconciliation tables provided below. The accompanying tables have more details on the GAAP financial measures  that  are  most  directly  comparable  to  non-GAAP  financial  measures  and  the  related reconciliations between these financial measures. The Company  has  not  reconciled  its  free  cash  flow  guidance to net cash provided  by  operating  activities  because  net  cash  provided  by  operating  activities  is not accessible on a forward-looking  basis.  Items  that  impact  net  cash  provided  by  operating  activities  are out of the Company's control and/or cannot  be  reasonably  predicted.  Accordingly,  a  reconciliation  to  net cash provided by operating activities  is  not  available  without  unreasonable  effort.  The  Company  has  also  not reconciled future collections over the next eight years  from  existing  user  cohorts.  Items  that  impact  future revenue and deferred revenue  over  an  eight  year  period  cannot  be  reasonably  predicted.  Accordingly, a reconciliation to revenue is not available without unreasonable effort.

Forward-Looking Statements

This document contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements may include projections regarding our future performance, including, but not limited to revenue, collections and free cash flow, and may be identified by words like "anticipate," "assume," "believe," "aim," "forecast," "indication," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "outlook," "future," "will," "seek" and similar terms or phrases. The forward-looking statements contained in this document, including the full year guidance, are based on management's current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, our ability to grow our user base and premium subscriptions including through the launch of our Wix Partner Program; our ability to create new and higher monetization opportunities from our premium subscriptions; our ability to enter into new markets, and attract new customer segments, and our ability to successfully enter into partnership agreements; our ability to maintain and enhance our brand and reputation; our prediction of the future collections generated by our user cohorts; our share repurchases made pursuant to our share repurchase plan; our ability to manage the growth of our infrastructure effectively; our ability to effectively execute our initiatives to scale and improve our user support function, including through the recent expansion of our Customer Solutions organization by engaging additional agents around the world to provide 24/7 support in nine different languages; the success of our sales efforts; customer acceptance and satisfaction of new products and other challenges inherent in new product development; changes to technologies used in our solutions; or changes in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading "Risk Factors" in the Company's 2018 annual report on Form 20-F filed with the Securities and Exchange Commission on April 9, 2019. Any forward-looking statement made by us in this press release speaks only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Investor Relations:
Maggie O'Donnell
investors.wix.com 
ir@wix.com 
914-267-7390

Media Relations:
Rona Davis
Wix Press Room 
ronadt@wix.com

SOURCE Wix.com Ltd.