Wix Reports Third Quarter 2020 Results

NEW YORK, Nov. 12, 2020 /PRNewswire/ -- Wix.com Ltd. (Nasdaq: WIX) today reported strong financial results for the third quarter ended September 30, 2020, exceeding the high end of its guidance ranges for revenue, collections and free cash flow. In addition, the Company provided its outlook for the fourth quarter of 2020.

"Demand for an online presence continues to remain at high levels," said Avishai Abrahami, Co-founder and CEO of Wix. "Businesses are using Wix more than ever before, and we are seeing them utilize our platform to not only help them create a website, but also to support them as they manage their business and grow their brands. Our web creation products and business solutions have enabled millions of our users to achieve success despite the ongoing difficulties that they are facing."

Lior Shemesh, CFO of Wix, added, "Our strong results in Q3 were driven by continued high levels of demand from new users for our website creation products and business solutions as well as the ongoing monetization of users who joined Wix over the most recent quarters. Users that joined Wix during Q3 purchased subscriptions at higher rates that we have seen in several years and at higher prices. This significant growth in new users, as well as our continued execution in product development and marketing, position us well to drive growth in 2021 and beyond."

Nir Zohar, President and COO, said, "Throughout Q3, even as parts of the world began re-opening economies, we experienced strong growth, which demonstrates the new state of mind for people and businesses about the need for an online presence. Our teams across the globe continue to execute at their highest levels throughout this tumultuous time, providing world class solutions for those in need of an online presence. We remain focused on meeting the needs of users who come to Wix to create, manage and grow their businesses and brands online."

Q3 2020 Financial Results

• Total revenue in the third quarter of 2020 was $254.2 million, compared to $196.8 million in the third quarter of 2019, an increase of 29% y/y
• Creative Subscriptions revenue in the third quarter of 2020 was $203.0 million, compared to $164.8 million in the third quarter of 2019, an increase of 23% y/y
• Business Solutions revenue in the third quarter of 2020 was $51.2 million, compared to $32.0 million in the third quarter of 2019, an increase of 60% y/y
• Creative Subscriptions ARR was $840.5 million in the third quarter of 2020, compared to $680.4 million in the third quarter of 2019, an increase of 24% y/y
• Total collections in the third quarter of 2020 were $280.9 million, compared to $205.9 million in the third quarter of 2019, an increase of 36% y/y
• Creative Subscriptions collections in the third quarter of 2020 were $228.3 million, compared to $173.6 million in the third quarter of 2019, an increase of 32% y/y
• Business Solutions collections in the third quarter of 2020 were $52.6 million, compared to $32.3 million in the third quarter of 2019, an increase of 63% y/y
• Total gross margin on a GAAP basis in the third quarter of 2020 was 69%, compared to 73% in the third quarter of 2019. The y/y decline was related to incremental investments in Customer Care, hosting and the faster revenue growth of the Business Solutions segment
• Creative Subscriptions gross margin on a GAAP basis was 79%, compared to 81% in the third quarter of 2019. The y/y decline was related to the investment in expanding our Customer Care organization and higher hosting costs to serve the increased number of users
• Business Solutions gross margin on a GAAP basis was 29% compared to 32% in the third quarter of 2019. The y/y decline was related primarily to the growth of Wix Payments, the expansion of Customer Care and higher hosting costs to meet the increased number of users
• Total non-GAAP gross margin in the third quarter of 2020, calculated as non-GAAP gross profit as a percent of revenue, was 70%, compared to 74% in the third quarter of 2019. The y/y decline was related to incremental investments in Customer Care, hosting and the faster revenue growth of the Business Solutions segment
• Creative Subscriptions gross margin on a non-GAAP basis was 80%, compared to 82% in the third quarter of 2019. The y/y decline was related to the investment in expanding our Customer Care organization and higher hosting costs to serve the increased number of users
• Business Solutions gross margin on a non-GAAP basis was 31%, compared to 33% in the third quarter of 2019. The y/y decline was related primarily to the growth of Wix Payments, the expansion of Customer Care and higher hosting costs to meet the increased number of users
• GAAP net loss in the third quarter of 2020 was $(56.8) million, or $(1.03) per share, compared to a net loss of $(17.4) million, or $(0.34) per share, for the third quarter of 2019
• Non-GAAP net loss in the third quarter of 2020 was $(8.0) million, or $(0.14) per share, compared to non-GAAP net income of $20.8 million, or $0.41 per share, for the third quarter of 2019
• Net cash provided by operating activities in the third quarter of 2020 was $24.5 million, while capital expenditures totaled $5.1 million, leading to free cash flow of $19.4 million, compared to $29.2 million of free cash flow in the third quarter of 2019, a (34)% y/y decrease
• Excluding the capex investment associated with our new headquarters office build out, free cash flow would have been $20.2 million, a decrease of (31)% y/y
• Added 302,000 net premium subscriptions in the third quarter of 2020, a 164% increase y/y, to reach 5.3 million as of September 30, 2020, a 20% increase over the total number of premium subscriptions at the end of the third quarter of 2019
• Added 7.8 million registered users in the third quarter of 2020, a 42% increase y/y. Registered users as of September 30, 2020 were 189 million, representing a 19% increase compared to the end of the third quarter of 2019

Recent Business Highlights

• In August, Wix issued $575 million of 0% convertible senior notes due 2025. The size of the offering was upsized from the initial base offering and includes the over-allotment option that the initial purchasers exercised in full. In connection with this offering, Wix entered into negotiated capped call transactions that are expected generally to reduce the potential dilution to the ordinary shares of Wix upon any conversion of Notes and/or to offset any cash payments Wix is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. Proceeds from the offering were partially used to pay for the capped call transactions with the remaining net proceeds to be used for potential acquisitions or general corporate purposes
• Announced Wix Capital, an internal venture arm that invests in technology innovators that are focused on the future of the web and that look to accelerate how businesses operate in today's evolving digital landscape
• Partnered with Vodafone to bring Wix to the Vodafone Business Marketplace platform, enabling its customers to build an online presence. The Vodafone partnership was a key milestone for the Wix Channels initiative, which expands Wix's global growth by enabling international service providers to sell Wix website subscriptions and business solutions directly to their customers
• Announced the expansion of the Wix Playground Academy, an intensive web design program, into Europe in January 2021. The Academy bridges the gap between design school and the professional world and helps designers elevate their multidisciplinary design experience
• Enabled merchants to offer their buyers installment payment plans for purchases. Wix now offers Afterpay in the US, Australia and New Zealand and Clearpay in the UK as well as Laybuy in the UK, Australia and New Zealand

Financial Outlook

Despite the continued uncertainty surrounding the pandemic, we remain focused on being a destination for creators and businesses to move and grow online. Our Q4 guidance reflects the new state of mind of creators and businesses about the importance of an online presence and the continuation of demand for our offering.

Our outlook is also underscored by continued gains from investments in our business, including improving and growing our Customer Care organization, bolstering our hosting infrastructure and increasing marketing activities. We believe these investments will continue to drive positive returns.

We are introducing Q4 guidance as follows:

Conference Call and Webcast Information

Wix will host a conference call at 8:30 a.m. ET on Thursday, November 12, 2020 to answer questions about the financial and operational performance of the business for the third quarter ended September 30, 2020. 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 4409229. A telephonic replay of the call will be available through November 19, 2020 at 11:30 a.m. ET by dialing +1-855-859-2056 and providing Conference ID 4409229.

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.

Wix is leading the way with a cloud-based website development platform for over 189 million registered users worldwide today. The Wix website builder was founded on the belief that the Internet should be accessible to everyone to develop, create and contribute. Through free and premium subscriptions, Wix empowers millions of businesses, organizations, artists, and individuals to take their businesses, brands and workflow online. The Wix Editor, Wix ADI, Editor X, a highly curated App Market, Ascend by Wix and Corvid by Wix enable users to build and manage a fully integrated and dynamic digital presence. Wix's headquarters are in Tel Aviv with offices in Austin, Be'er Sheva, Berlin, Cedar Rapids, Denver, Dnipro, Dublin, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo, Tokyo and Vilnius. 

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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 (loss),  non-GAAP  net   income (loss),  non-GAAP  net  income (loss)  per  share,  free  cash  flow, free cash flow, as adjusted, free cash flow margins, non-GAAP R&D expenses, non-GAAP S&M expenses, non-GAAP G&A expenses, non-GAAP operating expenses, non-GAAP cost of revenue expense, non-GAAP tax expense (collectively the "Non-GAAP financial measures"). Measures presented on a constant currency or FX neutral basis have been adjusted to exclude the effect of y/y changes in foreign currency exchange rate fluctuations. 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 (loss) 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 (loss) 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 (loss) per share represents non-GAAP net income (loss) 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. Free cash flow, as adjusted, represents free cash flow further adjusted to exclude capital expenditures associated with our new headquarters. Free cash flow margins represent free cash flow divided by revenue. Non-GAAP cost of revenue represents cost of revenue calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP R&D expenses represent R&D expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP S&M expenses represent S&M expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP G&A expenses represent G&A expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP operating expenses represent operating expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization.

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 is unable to provide reconciliations of free cash flow, free cash flow, as adjusted, cumulative cohort collections, non-GAAP gross margin, and non-GAAP tax expense to their most directly comparable GAAP financial measures on a forward-looking basis without unreasonable effort because items that impact those GAAP financial measures are out of the Company's control and/or cannot be reasonably predicted.  Such information may have a significant, and potentially unpredictable, impact on our future financial results.

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 fourth quarter 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 our Wix Partner Program; uncertainty surrounding the duration and severity of COVID-19 and its effects on our business, including changes in consumer dynamics shifting to online and increased GMV on our platform; 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 2019 annual report on Form 20-F filed with the Securities and Exchange Commission on April 2, 2020. 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
ir@wix.com 
914-267-7390

Media Relations:
pr@wix.com

SOURCE Wix.com Ltd.