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Wix.com (WIX) Q2 Earnings Miss Estimates, Revenues Beat
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Shares of Wix.com Ltd. (WIX - Free Report) were down 14.4% — hitting a low of $265 following mixed second-quarter 2020 results. However, the stock eventually closed the day at $307.98 on Aug 6, down 0.5%.
The company reported second-quarter 2020 non-GAAP loss of 26 cents per share, wider than the Zacks Consensus Estimate of a loss of 23 cents. Notably, the company had reported earnings of 34 cents in the year-ago quarter.
However, total revenues rose 27% year over year (up 28% at constant currency or cc) to $236.1 million and surpassed the Zacks Consensus Estimate by 1.4%.
Notably, on a year-to-date basis, the company’s stock has returned 149.2% compared with the industry’s rise of 20%.
Quarter in Detail
For increased transparency, beginning the fourth quarter, Wix reports revenues, collections and cost of revenues under two segments: Creative Subscriptions and Business Solutions.
Creative Subscriptions revenues (80.6% of revenues) improved 21% year over year to $190.2 million, driven by increase in Creative Subscriptions Annualized Recurring Revenue (ARR), which is the primary KPI for growth of its segment. As of Jun 30, 2020, Creative Subscriptions ARR was $790.9 million, up 22% year over year.
Business Solutions (19.4% of revenues) surged 62% to $45.9 million, driven by robust adoption of G-Suite and Ascend applications and Wix Payments, and momentum in GMV processed through Wix Payments.
Region wise, North America, Europe, Asia and others and Latin America accounted for 57%, 25%, 13% and 5% of second-quarter revenues, respectively. Moreover, revenues from North America, Europe, Asia and others and Latin America increased 35%, 26%, 21% and 3% year over year, respectively.
Key Metrics in Q2
Collections came in at $265.9 million, up 33% year over year. Collections in North America and Europe increased 39% and 37%, respectively, on a cc basis.
Creative Subscriptions (81.9% of collections) increased 28% year over year to $217.7 million. Business Solutions (18.1% of collections) climbed 66% to $48.2 million.
The company witnessed better-than-expected conversion and retention in user cohorts. Wix added a total of 346K net premium subscriptions in the reported quarter, up 17% year over year, to reach 5 million as of Jun 30, 2020.
Wix added 9.3 million registered users during the reported quarter. Registered users as of Jun 30, 2020 were 182 million, up 18% year over year.
Operating Results
Non-GAAP gross margin contracted 500 basis points (bps) to 71%, owing to increasing investments in Customer Care domain.
Creative Subscriptions gross margin contracted 100 bps on a year-over-year basis to 81%, due to the investment in expansion of Customer Care organization. Business Solutions gross margin contracted 800 bps to 32% in the reported quarter, owing to uptick in Wix Payments adoption, a product that carries a lower overall gross margin, and expansion of Customer Care organization.
Research and development expenses as a percentage of collections contracted 300 bps year over year to 21%. Selling and marketing expenses as a percentage of revenues expanded from 33% in the year-ago quarter to 43%.
Wix reported non-GAAP operating loss of $17 million, against operating income of $14.2 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Wix had $1 billion in cash, compared with $937 million as of Mar 31, 2020. As of Jun 30, 2020, long-term debt was reported at $371 million, compared with $365 million as of Mar 31, 2020.
Cash flow from operations came in at $50 million during the second quarter compared with $35.1 million in the previous quarter.
Free cash flow was $46.7 million compared with $40 million in the prior quarter.
Guidance
For third-quarter 2020, Collections are projected in the range of $270-$275 million, indicating an improvement of 31-34% from the year-ago reported figure.
Moreover, revenues are expected between $247 million and $250 million, indicating growth of 26-27% from the prior-year reported figure. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $248.6 million, suggesting growth of 26.4% from the year-ago reported figure.
Notably, the company anticipates free cash flow in the range of $14-$15 million, indicating a decline of 42-49% from the prior-year quarter.
However, the company has refrained from providing guidance for 2020, citing coronavirus crisis-induced uncertainty and drastic changes in consumer preferences.
Wrapping Up
Wix gained from growing user and premium subscription base in the second quarter. Moreover, it anticipates solid uptick in Wix Stores, Wix Restaurants, Wix Bookings and Ascend by Wix, in the third quarter.
Robust online selling activity amid coronavirus crisis-induced Internet demand is expected to drive collection and boost the company’s top line.
Long-term earnings growth rate of Blackbaud, Asure Software, and Analog Devices is pegged at 7.59%, 14% and 13.33%, respectively.
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Wix.com (WIX) Q2 Earnings Miss Estimates, Revenues Beat
Shares of Wix.com Ltd. (WIX - Free Report) were down 14.4% — hitting a low of $265 following mixed second-quarter 2020 results. However, the stock eventually closed the day at $307.98 on Aug 6, down 0.5%.
The company reported second-quarter 2020 non-GAAP loss of 26 cents per share, wider than the Zacks Consensus Estimate of a loss of 23 cents. Notably, the company had reported earnings of 34 cents in the year-ago quarter.
However, total revenues rose 27% year over year (up 28% at constant currency or cc) to $236.1 million and surpassed the Zacks Consensus Estimate by 1.4%.
Notably, on a year-to-date basis, the company’s stock has returned 149.2% compared with the industry’s rise of 20%.
Quarter in Detail
For increased transparency, beginning the fourth quarter, Wix reports revenues, collections and cost of revenues under two segments: Creative Subscriptions and Business Solutions.
Creative Subscriptions revenues (80.6% of revenues) improved 21% year over year to $190.2 million, driven by increase in Creative Subscriptions Annualized Recurring Revenue (ARR), which is the primary KPI for growth of its segment. As of Jun 30, 2020, Creative Subscriptions ARR was $790.9 million, up 22% year over year.
Business Solutions (19.4% of revenues) surged 62% to $45.9 million, driven by robust adoption of G-Suite and Ascend applications and Wix Payments, and momentum in GMV processed through Wix Payments.
Region wise, North America, Europe, Asia and others and Latin America accounted for 57%, 25%, 13% and 5% of second-quarter revenues, respectively. Moreover, revenues from North America, Europe, Asia and others and Latin America increased 35%, 26%, 21% and 3% year over year, respectively.
Key Metrics in Q2
Collections came in at $265.9 million, up 33% year over year. Collections in North America and Europe increased 39% and 37%, respectively, on a cc basis.
Creative Subscriptions (81.9% of collections) increased 28% year over year to $217.7 million. Business Solutions (18.1% of collections) climbed 66% to $48.2 million.
The company witnessed better-than-expected conversion and retention in user cohorts. Wix added a total of 346K net premium subscriptions in the reported quarter, up 17% year over year, to reach 5 million as of Jun 30, 2020.
Wix added 9.3 million registered users during the reported quarter. Registered users as of Jun 30, 2020 were 182 million, up 18% year over year.
Operating Results
Non-GAAP gross margin contracted 500 basis points (bps) to 71%, owing to increasing investments in Customer Care domain.
Creative Subscriptions gross margin contracted 100 bps on a year-over-year basis to 81%, due to the investment in expansion of Customer Care organization. Business Solutions gross margin contracted 800 bps to 32% in the reported quarter, owing to uptick in Wix Payments adoption, a product that carries a lower overall gross margin, and expansion of Customer Care organization.
Research and development expenses as a percentage of collections contracted 300 bps year over year to 21%. Selling and marketing expenses as a percentage of revenues expanded from 33% in the year-ago quarter to 43%.
Wix reported non-GAAP operating loss of $17 million, against operating income of $14.2 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2020, Wix had $1 billion in cash, compared with $937 million as of Mar 31, 2020. As of Jun 30, 2020, long-term debt was reported at $371 million, compared with $365 million as of Mar 31, 2020.
Cash flow from operations came in at $50 million during the second quarter compared with $35.1 million in the previous quarter.
Wix.com Ltd. Price, Consensus and EPS Surprise
Wix.com Ltd. price-consensus-eps-surprise-chart | Wix.com Ltd. Quote
Free cash flow was $46.7 million compared with $40 million in the prior quarter.
Guidance
For third-quarter 2020, Collections are projected in the range of $270-$275 million, indicating an improvement of 31-34% from the year-ago reported figure.
Moreover, revenues are expected between $247 million and $250 million, indicating growth of 26-27% from the prior-year reported figure. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $248.6 million, suggesting growth of 26.4% from the year-ago reported figure.
Notably, the company anticipates free cash flow in the range of $14-$15 million, indicating a decline of 42-49% from the prior-year quarter.
However, the company has refrained from providing guidance for 2020, citing coronavirus crisis-induced uncertainty and drastic changes in consumer preferences.
Wrapping Up
Wix gained from growing user and premium subscription base in the second quarter. Moreover, it anticipates solid uptick in Wix Stores, Wix Restaurants, Wix Bookings and Ascend by Wix, in the third quarter.
Robust online selling activity amid coronavirus crisis-induced Internet demand is expected to drive collection and boost the company’s top line.
Zacks Rank & Stocks to Consider
Currently, Wix carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Blackbaud, Inc. (BLKB - Free Report) , Asure Software, Inc. (ASUR - Free Report) and Analog Devices (ADI - Free Report) . While Blackbaud sports a Zacks Rank #1 (Strong Buy), both Analog Devices and Asure Software carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate of Blackbaud, Asure Software, and Analog Devices is pegged at 7.59%, 14% and 13.33%, respectively.
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