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Wix Reports Strong Second Quarter 2017 Results Above Expectations; Expands Market Potential with Introduction of Wix Code

July 27, 2017 4:01 PM

NEW YORK--(BUSINESS WIRE)-- Wix.com Ltd. (Nasdaq: WIX), a leading cloud-based web development platform, today reported another strong quarter of financial results for the second quarter ended June 30, 2017, again exceeding the high end of guidance on all key metrics.

“Our focus on product development and innovation once again resulted in a strong quarter,” said Avishai Abrahami, Co-founder and CEO of Wix. “With the addition of Wix Code, we now have a product targeted specifically to creators, designers and developers. This is a remarkable product that significantly expands our addressable market to those who want to build complex web applications that can be tailored for any business need. With Wix ADI, the Wix Editor, our vertical applications and now Wix Code, Wix provides a product set that can be used by any user, regardless of skill set, to create anything online.”

Lior Shemesh, CFO of Wix, commented, “We generated record collections and revenue this quarter driven by year-over-year growth in new registered users and conversion to premium subscriptions. Free cash flow grew significantly as we continue to realize operating leverage over our operating expenses. We believe we will continue to drive growth and gains in operating leverage through the second half of 2017.”

Q2 2017 Financial Summary

Three months endedJune 30,

$ in thousands 2017 2016 Y/Y growth

Prior Q2 2017Outlook

Revenue $ 103,522 $ 68,730 51% $ 101,000 - 102,000
Collections $ 117,121 $ 81,453 44% $ 116,000 - 117,000
Operating Income (Loss) $ (10,563) $ (10,490) NM

Non-GAAP Operating Income (Loss)

$ 3,516 $ (2,980) NM

Net Cash Provided by Operating Activities

$ 19,651 $ 11,314 74%
Free Cash Flow $ 17,412 $ 10,185 71%

Additional Q2 2017 Results and Highlights

Recent Business Highlights

Financial Outlook

The Company is introducing its outlook for the third quarter of 2017 as follows:

Q3 2017 Outlook Y/Y growth
Revenue $109 - $110 million 44% – 45%
Collections $117 - $118 million 34% – 35%

Wix is reaffirming its outlook for the full year 2017:

FY 2017 Outlook

Y/Y growth

Revenue

$421 - $423 million

45% – 46%

Collections

$473 - $477 million

38% – 39%

Free Cash Flow

$67 – 68 million

85% - 88%

Conference Call and Webcast Information

Wix will host a conference call at 5:00 p.m. ET on Thursday, July 27, 2017 to answer questions about the financial and operational performance of the business during the second quarter 2017. 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, supplemental data sheet and supporting slides to its Investor Relations website at https://investors.wix.com/results. 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 866-393-4306 (US/Canada), 734-385-2616 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID 53229077. A telephonic replay of the call will be available through August 3, 2017 at 11:59 p.m. ET by dialing 855-859-2056 (US/Canada) or 404-537-3406 (International) and providing Conference ID 53229077.

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 a leading cloud-based development platform with over 110 million registered users worldwide. Wix 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, professionals and individuals to take their businesses, brands and workflow online. Wix ADI, the Wix Editor and a highly curated App Market enable users to build and manage a fully integrated and dynamic digital presence. Wix's headquarters are in Tel Aviv with offices in Be'er Sheva, Berlin, Dnepropetrovsk, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo and Vilnius.

Visit us: on our blog, Facebook, Twitter, Instagram, LinkedIn, Pinterest and Google+

Download: Wix App is available for free on Google Play and in the App Store

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, non-GAAP gross margin, non-GAAP operating loss, free cash flow, non-GAAP net loss and non-GAAP net loss per share (collectively the "Non-GAAP financial measures"). Collections represents 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 costs and amortization, divided by revenue. Non-GAAP operating loss represents operating loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss per share represents non-GAAP net 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.

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 of GAAP to Non-GAAP Financial Measures" table in this press release. This accompanying table has 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 has not reconciled its guidance as to free cash flow to cash flow from operations because it does not provide guidance for cash flow from operations. As items that impact cash flow from operations are out of the Company's control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to cash flow from operations is not available without unreasonable effort.

Forward-Looking Statements

This press release 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 the availability, merchantability or functionality of certain new products or features and their anticipated product demand and customer satisfaction, and may be identified by words like “anticipate,” “assume,” “believe,” “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 press release are based on management’s current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict, including the timing of product releases, 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; our ability to maintain and enhance our brand and reputation; 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; customer acceptance of new products and other challenges inherent in new product development, changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading “Risk Factors” in the Company’s 2016 annual report on Form 20-F filed with the Securities and Exchange Commission on March 28, 2017. 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.

Wix.com Ltd.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
Period ended
December 31, June 30,
2016 2017
Assets (audited) (unaudited)
Current Assets:
Cash and cash equivalents $ 93,064 $ 124,132
Short term deposits 78,240 61,055
Restricted cash and deposit 931 1,093
Trade receivables 8,279 8,704
Prepaid expenses and other current assets 17,346 24,414
Total current assets 197,860 219,398
Property, equipment and software, net
Long-Term Assets:
Property and equipment, net 8,750 10,566
Prepaid expenses and other long-term assets 2,622 3,088
Intangible assets and goodwill, net 5,452 49,713
Total long-term assets 16,824 63,367
Total assets $ 214,684 $ 282,765
Liabilities and Shareholder's Deficiency
Current Liabilities:
Trade payables $ 20,709 $ 28,933
Employees and payroll accruals 20,230 25,938
Deferred revenues 146,987 182,220
Accrued expenses and other current liabilities 18,847 26,650
Total current liabilities 206,773 263,741
Long term deferred revenues 9,746 13,126
Long term deferred tax liability 634 3,908
Long-term loan - 1,219
Total long-term liabilities 10,380 18,253
Total liabilities 217,153 281,994
Shareholders' Equity (Deficiency)
Ordinary shares 74 74
Additional paid-in capital 241,154 275,414
Other comprehensive income (loss) (389 ) 3,740
Accumulated deficit (243,308 ) (278,457 )
Total shareholders' equity (deficiency) (2,469 ) 771
Total liabilities and shareholders' equity (deficiency) $ 214,684 $ 282,765
Wix.com Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP
(In thousands, except loss per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Revenue $ 68,730 $ 103,522 $ 130,316 $ 196,060
Cost of revenue 11,018 18,025 21,525 32,888

Gross Profit

57,712 85,497 108,791 163,172
Operating expenses:
Research and development 25,483 36,749 49,955 69,418
Selling and marketing 36,026 48,016 76,480 102,345
General and administrative 6,693 11,295 12,614 22,443
Total operating expenses 68,202 96,060 139,049 194,206
Operating loss (10,490 ) (10,563 ) (30,258 ) (31,034 )
Financial income, net (105 ) (2,043 ) 400 (1,895 )
Other income (expenses) 1 1 1 1
Loss before taxes on income (10,594 ) (12,605 ) (29,857 ) (32,928 )
Taxes on income 826 1,659 1,475 2,221
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
Basic and diluted net loss per share $ (0.28 ) $ (0.31 ) $ (0.77 ) $ (0.78 )
Basic and diluted weighted-average shares used to compute net loss per share 41,166,589 45,390,479 40,772,744 45,043,215
Wix.com Ltd.
ADJUSTMENTS FOR RECONCILIATION OF GAAP TO NON-GAAP OPERATING LOSS AND NET LOSS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(1) Share based compensation expenses: (unaudited) (unaudited)
Cost of revenues $ 475 $ 695 $ 903 $ 1,201
Research and development 3,558 6,586 6,669 11,312
Selling and marketing 1,122 1,778 2,103 3,197
General and administrative 1,772 2,920 3,389 5,251
Total share based compensation expenses 6,927 11,979 13,064 20,961
(2) Amortization 186 1,240 373 1,426
(3) Acquisition related expenses 397 860 1,580 4,625
(4) Taxes on income 197 - 372 -
Total adjustments of GAAP to Non GAAP $ 7,707 $ 14,079 $ 15,389 $ 27,012
Wix.com Ltd.
RECONCILIATION OF OPERATING LOSS TO NON-GAAP OPERATING INCOME (LOSS)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Operating loss $ (10,490 ) $ (10,563 ) $ (30,258 ) $ (31,034 )
Adjustments:
Share based compensation expenses 6,927 11,979 13,064 20,961
Amortization 186 1,240 373 1,426
Acquisition related expenses 397 860 1,580 4,625
Total adjustments $ 7,510 $ 14,079 $ 15,017 $ 27,012
Non GAAP operating income (loss) $ (2,980 ) $ 3,516 $ (15,241 ) $ (4,022 )
Wix.com Ltd.
ADJUSTMENTS FOR RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Gross Profit $ 57,712 $ 85,497 $ 108,791 $ 163,172
Share based compensation expenses 475 695 903 1,201
Amortization - 1,040 - 1,040
Acquisition related expenses - - - 28
Non GAAP Gross Profit 58,187 87,232 109,694 165,441
Non GAAP Gross margin 85 % 84 % 84 % 84 %
Wix.com Ltd.
RECONCILIATION OF NET LOSS TO NON-GAAP NET LOSS AND NON-GAAP NET LOSS PER SHARE
(In thousands, except loss per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
Share based compensation expense and other Non GAAP adjustments 7,707 14,079 15,389 27,012
Non-GAAP net loss $ (3,713 ) $ (185 ) $ (15,943 ) $ (8,137 )
Basic Non GAAP net loss per share $ (0.09 ) $ (0.00 ) $ (0.39 ) $ (0.18 )
Weighted average shares used in computing basic Non GAAP net loss per share 41,166,589 45,390,479 40,772,744 45,043,215
Wix.com Ltd.
KEY PERFORMANCE METRICS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Revenues $ 68,730 $ 103,522 $ 130,316 $ 196,060
Collections $ 81,453 $ 117,121 $ 157,147 $ 231,667
Free Cash Flow $ 10,185 $ 17,412 $ 8,051 $ 32,193
Number of registered users at period end (*) 87,405 108,739 87,405 108,739
Number of premium subscriptions at period end (*) 2,121 2,865 2,121 2,865
(*) the numbers without DeviantArt
Wix.com Ltd.
RECONCILIATION OF REVENUES TO COLLECTIONS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Revenues $ 68,730 $ 103,522 $ 130,316 $ 196,060
Change in deferred revenues 12,723 13,599 26,831 35,607
Collections $ 81,453 $ 117,121 $ 157,147 $ 231,667
Wix.com Ltd.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Net cash provided by operating activities $ 11,314 $ 19,651 $ 10,389 $ 36,048
Capital expenditures, net (1,129 ) (2,239 ) (2,338 ) (3,855 )
Free Cash Flow $ 10,185 $ 17,412 $ 8,051 $ 32,193
Wix.com Ltd.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW EXCLUDING DEVIANTART ACQUISITION COSTS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
Net cash provided by operating activities $ 11,314 $ 19,651 $ 10,389 $ 36,048
Capital expenditures, net (1,129 ) (2,239 ) (2,338 ) (3,855 )
DeviantArt acquisition costs - - - 2,738
Free Cash Flow excluding DeviantArt acquisition costs $ 10,185 $ 17,412 $ 8,051 $ 34,931
Wix.com Ltd.
RECONCILIATION OF PROJECTED REVENUES TO PROJECTED COLLECTIONS
(In thousands)
Three Months Ended Year Ending
September 30, 2017 December 31, 2017
Low High Low High
Projected revenues $ 109,000 $ 110,000 $ 421,000 $ 423,000
Projected change in deferred revenues $ 8,000 $ 8,000 52,000 54,000
Projected collections $ 117,000 $ 118,000 $ 473,000 $ 477,000
Wix.com Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
(unaudited) (unaudited)
OPERATING ACTIVITIES:
Net loss $ (11,420 ) $ (14,264 ) $ (31,332 ) $ (35,149 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 1,206 1,346 2,450 2,643
Amortization 186 1,142 373 1,462
Share based compensation expenses 6,927 11,980 13,064 20,962
Tax benefit related to exercise of share options 197 - 372 -
Increase in accrued interest and exchange rate on short term and long term deposits (163 ) (53 ) (393 ) (167 )
Deferred income taxes, net (21 ) (184 ) (47 ) (397 )
Decrease (increase) in trade receivables (1,510 ) 1,124 (532 ) 760
Decrease (increase) in prepaid expenses and other current and long-term assets (2,121 ) 743 (3,710 ) (3,170 )
Increase (decrease) in trade payables (590 ) 2,151 4,034 6,659
Increase (decrease) in employees and payroll accruals 3,089 (5,160 ) 3,311 (205 )
Increase in short term and long term deferred revenues 12,723 13,599 26,831 35,607
Increase (decrease) in accrued expenses and other current liabilities 2,811 7,227 (4,032 ) 7,043
Net cash provided by operating activities 11,314 19,651 10,389 36,048
INVESTING ACTIVITIES:
Proceeds from short-term deposits and restricted deposits 18,422 16,664 23,188 33,050
Investment in short-term deposits and restricted deposits (18,257 ) (5,000 ) (25,257 ) (15,650 )
Purchase of property and equipment (1,129 ) (2,239 ) (2,338 ) (3,855 )
Payment for Businesses acquired - (3,257 ) - (33,091 )
Net cash provided by (used in) investing activities (964 ) 6,168 (4,407 ) (19,546 )
FINANCING ACTIVITIES:
Proceeds from exercise of options and ESPP shares 4,250 7,416 7,571 14,736
Credit line repayment - - - (170 )
Net cash provided by financing activities 4,250 7,416 7,571 14,566
INCREASE IN CASH AND CASH EQUIVALENTS 14,600 33,235 13,553 31,068
CASH AND CASH EQUIVALENTS—Beginning of period 38,179 90,897 39,226 93,064
CASH AND CASH EQUIVALENTS—End of period $ 52,779 $ 124,132 $ 52,779 $ 124,132

Wix.com

Investor Relations:

415-449-4716

[email protected]

or

Media Relations:

Vivian Hernandez, 415-517-6539

[email protected]

Source: Wix.com Ltd.

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