Wix.com’s (WIX) stock is on a roll, gaining a significant 32.5% year-to-date, outperforming both the S&P 500 and its sub-industry. This momentum continued after the company announced strong second-quarter 2024 results on August 7, pushing the stock up another 4.2%. While still trading slightly below its 52-week high, Wix remains an attractive option for investors.
Wix, founded in 2006 and headquartered in Tel Aviv, Israel, is a leading cloud-based web development platform. Its solutions empower businesses, organizations, professionals, and individuals to build customized websites and application platforms, enhancing their online presence. Wix has a proven track record of exceeding earnings expectations, surpassing the Zacks Consensus Estimate in each of the past four quarters with an average surprise of 29.8%.
Wix’s success can be attributed to the increasing adoption of its product portfolio, particularly its AI-powered offerings and Wix Studio. The latter is seeing growing demand, driven by the addition of new features and enhancements. Wix management notes that the number of Studio accounts and new Partners joining the Wix platform through Studio is exceeding expectations.
The company’s focus on embedding AI assistants across its platform is another key driver. Wix has already launched 17 AI business assistants, with the latest addition being advanced AI creation capabilities for its mobile app builder. This initiative simplifies the process of building professional and fully customizable apps for iOS and Android, revolutionizing the app development experience. Wix has also expanded the availability of its AI Website Builder to global users in multiple languages, including French, German, Portuguese, Spanish, Italian, Japanese, Turkish, and Korean. This expansion allows users to create websites in their preferred language, enhancing accessibility and reach.
Wix’s second-quarter financial results reflect this strong performance. Total revenues jumped 12% year-over-year to $435.7 million, surpassing the Zacks Consensus Estimate of $433.6 million. Bookings also showed impressive growth, rising 15% year-over-year to $458.4 million. Creative Subscriptions’ bookings increased 12% year-over-year to $329 million, while Business Solutions’ bookings rose 24% to $129.4 million. Partner revenues, driven by market share gains from new agencies and freelancers, soared 29% year-over-year to $148.4 million, representing 34% of total revenues.
The positive momentum in the first half of 2024 has led Wix to revise its outlook for the year, raising projections for bookings, revenues, and free cash flow. Total bookings are now expected to be between $1,802 million and $1,822 million, compared to the previous range of $1,796-$1,826 million. Total revenues are projected to be in the range of $1,747-$1,761 million, slightly higher than the previous estimate of $1,738 million to $1,761 million. Free cash flow, excluding headquarters costs, is expected between $460 million and $470 million, or 26-27% of revenues in 2024, an upgrade from the previous forecast of $445-$455 million.
Analysts are also optimistic about Wix’s future, with the Zacks Consensus Estimate for 2024 and 2025 earnings per share increasing by 7.3% and 2.4%, respectively. The estimated figures for 2024 and 2025 EPS are $5.86 and $6.93, representing year-over-year growth of 33.5% and 18.3%, respectively. Wix’s long-term earnings growth rate is projected at 22.4%. The Zacks Consensus Estimate for 2024 and 2025 revenues is pegged at $1.75 billion and $1.99 billion, respectively, indicating growth of 12.4% and 13.2% from the previous year.
Despite its strong performance, Wix faces some headwinds, including unfavorable foreign currency movements and weak global macroeconomic conditions. The company’s increasing investments in product development, infrastructure, and platform, along with stiff competition in the e-commerce marketplace, are also potential concerns. However, Wix’s impressive growth, robust financial performance, and innovative product portfolio make it a compelling investment opportunity.
