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Wix.com (WIX) Q1 Earnings Miss Estimates, Revenues Beat (revised)

Zacks Equity Research

Wix.com Ltd. WIX delivered non-GAAP earnings of 3 cents per share in the first quarter of 2019, missing the Zacks Consensus Estimate by 6 cents. Notably, the company reported a loss of 6 cents in the year-ago quarter.

Total revenues surged 27% year over year to $174.3 million, surpassing the Zacks Consensus Estimate of $172.97 million. The figure also came ahead of management’s guided range of $172-$173 million.

Quarter in Detail

Collections during the reported quarter came in at $200.4 million, up 26% year over year, attributable to expansion of new products and enhancement of existing products. Management had projected collections in the range of $196 million to $197 million.

The company witnessed better-than-expected conversion and retention in its user cohorts. The company added a total of 180,000 net premium subscriptions in the reported quarter, which came in at 4.2 million as of Mar 31, 2019 (up 21% year over year).

Wix added 6.6 million registered users during the reported quarter. Registered users as of Mar 31, 2019 came in at 148 million, up 19% year over year.

During the reported quarter, average revenue per subscription (ARPS) increased 9% year over year. The surge can primarily be attributed to favorable mix of higher priced subscription packages.
 

Wix.com Ltd. Revenue (Quarterly)

Wix.com Ltd. Revenue (Quarterly)

Wix.com Ltd. revenue-quarterly | Wix.com Ltd. Quote

Latest Developments Hold Promise

In the reported quarter, Wix joined forces with Marvel Studios' Captain Marvel for the launch of Wix Turbo, a platform that enhances speeds across all Wix websites.

Further, the company enhanced Wix Code with new functionalities and rebranded it as Corvid by Wix. The renewed product is designed to aid developers manage their workflow in a streamlined manner.

We believe that these product innovations and partnership deals bode well for Wix.

The company also announced that it intends to develop a new campus and headquarters at Tel Aviv, Israel.

Operating Results

Non-GAAP gross profit advanced 23.7% from the year-ago quarter to $136 million. Nonetheless, non-GAAP gross margin contracted 200 bps to 78%.

Total operating expenses surged 27.7% to $162.4 million in the first quarter.

The company reported non-GAAP operating loss of $2.2 million wider than year-ago loss reported at $0.8 million.

Wix.com Ltd. Price, Consensus and EPS Surprise
 

Wix.com Ltd. Price, Consensus and EPS Surprise

Wix.com Ltd. price-consensus-eps-surprise-chart | Wix.com Ltd. Quote

Balance Sheet & Cash Flow

As on Mar 31, 2019, Wix had cash and cash equivalents of $348.1 million, up from $331.1 million in the previous quarter.

Cash flow from operations came in at $35.1 million during the first quarter compared with $36.1 million reported in the previous quarter. Free cash flow was $30 million, compared with $32.7 million reported in the prior quarter.

Guidance

For the second quarter, the company expects revenues in the range of $182-$184 million, representing year-over-year growth of 25-26%. The Zacks Consensus Estimate for revenues is currently pegged at $184.06 million. Collections are projected to be in the range of $197-$199 million, suggesting growth in the range of 23-24% in the year-ago quarter.

The company updated fiscal 2019 guidance. Management now anticipates revenues in the range of $758-$763 million, up from prior guided range of $755-$761million. This indicates an improvement of 26% from the year-ago reported figure. The Zacks Consensus Estimate for revenues is currently pegged at $759.8 million.

Collections are projected to be in the range of $822-$830 million, suggesting growth of 25-26% from the prior-year quarter, compared with previous predicted range of $817-$827 million.

However, the company expects free cash in the range of $122-$126 million, indicating an improvement of  20-24% from the year-ago quarter, down from prior guided range of $135-$140 million.

Zacks Rank and Other Key Picks

Wix carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks worth considering in the broader sector, include Cadence Design Systems CDNS, Verint Systems Inc. VRNT and j2 Global, Inc. JCOM, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Cadence, Verint and j2 Global is pegged at 12%, 11% and 8%, respectively.

 

(NOTE: We are re-issuing this article to correct a mistake, The original version, published yesterday, May 16, 2019, should no longer be relied on.)

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