Wix.com (WIX) Up 3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Wix.com (WIX). Shares have added about 3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wix.com due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
WIX Q4 Earnings & Revenues Beat Estimates
Wix.com non-GAAP diluted earnings per share (EPS) of $1.22 for fourth-quarter 2023, exceeding the Zacks Consensus Estimate of 98 cents. The company had reported EPS of 61 cents in the year-ago quarter.
Total revenues increased 14% year over year to $403.8 million and beat the Zacks Consensus Estimate of $402.6 million.
At the end of Dec 31, 2023, registered users were 263 million.
Quarter in Detail
Creative Subscriptions’ revenues (73.3% of total revenues) increased 12% year over year to $296.2 million. Business Solutions’ revenues (26.7% of total revenues) rose 20% to $107.6 million.
In fourth-quarter 2023, Creative Subscriptions annualized recurring revenues were $1.19 billion, up 10% year over year.
Bookings of $395 million improved 6% year over year. Creative Subscriptions’ bookings increased 1% year over year to $283.5 million. Business Solutions’ bookings rose 24% to $111.5 million.
Region-wise, North America, Europe, Asia and others, and Latin America contributed 60%, 25%, 11% and 4% to fourth-quarter 2023 revenues, up 13%, 14%,9% and 21% year over year, respectively.
Operating Details
Non-GAAP gross margin expanded 500 basis points to 70%, driven by improving gross margins across Creative Subscriptions and Business Solutions segments.
Wix reported a non-GAAP operating income of $64.7 million compared with $30.7 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2023, Wix had cash and cash equivalents of $609.6 million. Long-term debt was $569.7 million compared with $568.9 million as of Sep 30.
Cash flow provided from operations amounted to $90.4 million compared with $53.2 million in the year-ago quarter.
Capital expenditures totaled $10 million. Free cash flow was $80.4 million.
Outlook
For first-quarter 2024, revenues are expected to be between $415 million and $419 million, suggesting 11-12% growth from the prior-year quarter's reported figure.
The company anticipates 2024 revenues to grow 11-13% and in the range of $1.73-$1.76 billion.
Non-GAAP operating expenses are expected to be 51 of revenues for 2024.
Wix estimates free cash flow (excluding HQ capital expenditure) in the range of $370-$400 million, representing 21% of revenues.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 64.82% due to these changes.
VGM Scores
At this time, Wix.com has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Wix.com has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Wix.com is part of the Zacks Computers - IT Services industry. Over the past month, CDW (CDW), a stock from the same industry, has gained 2.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
CDW reported revenues of $5.02 billion in the last reported quarter, representing a year-over-year change of -7.7%. EPS of $2.57 for the same period compares with $2.50 a year ago.
CDW is expected to post earnings of $2.15 per share for the current quarter, representing a year-over-year change of +5.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.5%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for CDW. Also, the stock has a VGM Score of A.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Wix.com Ltd. (WIX) : Free Stock Analysis Report
CDW Corporation (CDW) : Free Stock Analysis Report
