Wix Reports Second Quarter 2019 Results
NEW YORK, July 24, 2019 /PRNewswire/ -- Wix.com Ltd. (Nasdaq: WIX) today reported strong financial results for the second quarter ended June 30, 2019, exceeding its prior guidance. In addition, the Company provided its initial outlook for the third quarter 2019 and raised its outlook for the full year, reflecting accelerating collections growth for the second half of the year.
"Our ongoing strong top line performance reflects success across multiple growth drivers, including vast improvements to our overall product offering and increasing adoption of complementary products. These results validate the increasing value we provide to our evolving user base. We have made tremendous progress with multiple new initiatives, and I believe these will drive growth in the second half of this year and beyond," said Avishai Abrahami, Co-founder and CEO of Wix.
Lior Shemesh, CFO of Wix, said, "We continue to grow the value of our user base through new product offerings and increasing monetization. We now expect future collections of existing user cohorts to be $5.9 billion over the next eight years, which is an increase of 28% Y/Y. Our results continue to show the strength of our financial model and our ability to drive profitable growth, which we believe will continue through this year and for many years to come."
Commenting on the recently announced initiative to expand Customer Solutions, Nir Zohar, President and COO of Wix, said, "Our expanding Customer Solutions organization is ramping quickly as we have added resources and are implementing many new processes to enable personalized support for users. Initial data is very positive, and we continue to believe this initiative will fuel additional growth."
Q2 2019 Financial Summary
Three months ended
June 30,
$ in thousands 2018 2019
Y/Y growth
Prior Q2 2019 Outlook
Revenue $146,132 $185,419 27%
$182,000 - 184,000
Collections $159,895 $199,563 25%
$197,000 - 199,000
---
Operating (Loss) $(6,507) $(14,161)
NA
Non-GAAP Operating Income $12,939 $14,195 10%
---
Net Cash Provided by $27,268 $37,180 36%
Operating Activities
Free Cash Flow $23,857 $30,754 29%
Additional Q2 2019 Results and Highlights
-- Gross margin on a GAAP basis in the second quarter of 2019 was 75%,
compared to 79% in the second quarter of 2018
-- Non-GAAP gross margin in the second quarter of 2019, calculated as
non-GAAP gross profit as a percent of revenue, was 76%, compared to 80%
in the second quarter of 2018
-- GAAP net loss in the second quarter of 2019 was $(16.7) million, or
$(0.33) per share, compared to a net loss of $(5.6) million, or $(0.12)
per share, for the second quarter of 2018
-- Non-GAAP net income in the second quarter of 2019 was $17.0 million, or
$0.34 per share, compared to non-GAAP net income of $13.8 million, or
$0.29 per share for the second quarter of 2018
-- Net cash provided by operating activities in the second quarter of 2019
was $37.2 million, while capital expenditures totaled $6.4 million,
leading to free cash flow of $30.8 million, compared to $23.9 million of
free cash flow in the second quarter of 2018, a 29% year-over-year
increase
-- Added 132,000 net premium subscriptions in the second quarter of 2019 to
reach 4.3 million as of June 30, 2019, a 17% increase over the total
number of premium subscriptions at the end of the second quarter of 2018
-- Added 5.7 million registered users in the second quarter of 2019.
Registered users as of June 30, 2019 were 154 million, representing an
18% increase compared to the end of the second quarter of 2018
Recent Business Highlights
-- Multiple new initiatives indicating strong future growth potential: The
progress of several new initiatives under development at Wix are
demonstrating the ability to contribute growth in the future. To
highlight a few:
-- When we launched Corvid by Wix, we did so to expand our addressable
market to professionals - this expansion is happening as more
professionals are coming to Wix than ever before
-- Gaining momentum with Agency Partners - tens of thousands use Wix
today
-- Significant progress in expanding Customer Support organization -
now providing 24/7 support globally and implementing procedures to
provide personalized support
-- Share of Wix Payments of total GMV rapidly increasing as total GMV
continues to climb, demonstrating strong momentum as global rollout
continues
-- Over 500,000 Wix users with premium subscriptions have used at least
one component of Ascend by Wix in the last 30 days, illustrating
this product's enormous market potential
-- Announced new operations in Japan: We announced expanded operations in
Japan with the opening of an office in Tokyo in order to drive further
growth in this market. Through the development of partnerships, targeted
marketing and dedicated customer support, these new operations will
improve our ability to serve this fast-growing market.
-- Acquired Gefen Team to form a new creative group within Wix: In May, we
completed an acquihire of the Tel Aviv-based creative agency in support
of our goal to become a top 100 brand globally. The Gefen Team, an
award-winning creative agency, joined the Wix marketing team full time,
and Founder Eran Gefen is now the Vice President of Creative at Wix.
-- Launched global partnership with eSports and entertainment organization
FaZe Clan: As part of our brand strategy, we have partnered with FaZe
Clan to connect with current and future customers through integrated
social and digital content. Wix will become FaZe Clan's official website
development and design partner. Wix branding will also be featured on
the official FaZe Clan team shirt, and Wix will serve as an official
supporter of FaZe Clan's Professional Fortnite team. This is our first
eSports partnership and part of our ongoing sports marketing efforts.
-- Hosting the second annual Wix Design Playground: We are hosting a
three-month design program in New York in which participants develop and
hone their web design skills. A major initiative over the course of the
program is the Social Good Project in which each designer helps a local
non-profit to build an online presence and manage the outreach to their
communities using the Wix platform.
Financial Outlook
Wix is introducing its outlook for the third quarter 2019:
Q3 2019 Outlook Y/Y growth
Revenue
$196 - $198 million 26% - 27%
Collections
$204 - $206 million 25% - 27%
Wix is also updating its outlook for the full year 2019:
Updated Y/Y growth Prior
FY 2019 Outlook FY 2019
Outlook
Revenue
$761 - $765 million 26% - 27%
$758 - $763 million
Collections
$825 - $831 million 25% - 26%
$822 - $830 million
Free Cash Flow
$123 - $126 million 21% - 24%
$122 - $126 million
Conference Call and Webcast Information
Wix will host a conference call at 8:30 a.m. ET on Wednesday, July 24, 2019 to answer questions about the financial and operational performance of the business for the second quarter ended June 30, 2019. 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 and supporting slides to its Investor Relations website at https://investors.wix.com/. 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 +1-877-270-2148 (US/ Canada), +1-412-902-6510 (International) or 1-809-212-373 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID WIX. A telephonic replay of the call will be available through July 31, 2019 at 11:59 p.m. ET by dialing +1-877-344-7529 and providing Conference ID 10133234.
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 leading the way with a cloud-based website development platform for over 150 million registered users worldwide today. The Wix website builder 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, artists, and individuals to take their businesses, brands and workflow online. The Wix Editor, Wix ADI, a highly curated App Market, Ascend by Wix and Corvid by Wix 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, Dnipro, Dublin, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo, Tokyo and Vilnius.
Visit us: on our blog, Facebook, Twitter, Instagram, LinkedIn and Pinterest
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 income (loss), non-GAAP net income (loss), non-GAAP net income (loss) per share and free cash flow (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 expenses and amortization, divided by revenue. Non-GAAP operating income (loss) represents operating income (loss) calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related expenses. Non-GAAP net income (loss) represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, amortization of debt discount and debt issuance costs and acquisition-related expenses and non-operating foreign exchange expenses (income). Non-GAAP net income (loss) per share represents non-GAAP net income (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 "Reconciliation of GAAP to Non-GAAP Financial Measures" below. The accompanying tables have 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 free cash flow guidance to net cash provided by operating activities because net cash provided by operating activities is not accessible on a forward-looking basis. Items that impact net cash provided by operating activities are out of the Company's control and/or cannot be reasonably predicted. Accordingly, a reconciliation to net cash provided by operating activities is not available without unreasonable effort.
Forward-Looking Statements
This document 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, but not limited to revenue, collections and free cash flow, 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 document, including the full year guidance, are based on management's current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict 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 create new and higher monetization opportunities from our premium subscriptions; our ability to enter into new markets and attract new customer segments; our ability to maintain and enhance our brand and reputation; our prediction of the future collections generated by our user cohorts; our share repurchases made pursuant to our share repurchase plan; 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; the success of our sales efforts; customer acceptance and satisfaction of new products and other challenges inherent in new product development; changes to technologies used in our solutions; or changes in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading "Risk Factors" in the Company's 2018 annual report on Form 20-F filed with the Securities and Exchange Commission on April 9, 2019. 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.
Investor Relations:
Maggie O'Donnell
investors.wix.com
ir@wix.com
415-223-2624
Media Relations:
Vivian Hernandez
Wix.com
pr@wix.com
415-517-6539
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,
---
2018 2019 2018 2019
---
(unaudited)
(audited)
(unaudited)
Revenue $146,132 $185,419 $283,907 $359,709
Cost of revenue 30,437 46,662 59,481 86,377
---
Gross Profit 115,695 138,757 224,426 273,332
Operating expenses:
Research and development 48,492 61,486 94,994 119,669
Selling and marketing 58,855 71,329 125,866 157,047
General and administrative 14,855 20,103 28,525 38,569
---
Total operating expenses 122,202 152,918 249,385 315,285
---
Operating loss (6,507) (14,161) (24,959) (41,953)
Financial expenses, net 1,532 (580) 1,403 (2,310)
Other income (expenses) 63 8 84 32
---
Loss before taxes on income (4,912) (14,733) (23,472) (44,231)
Taxes on income 728 2,001 1,979 3,243
Net loss $(5,640) $(16,734) $(25,451) $(47,474)
Basic and diluted net loss per share $(0.12) $(0.33) $(0.54) $(0.95)
Basic and diluted weighted-average shares used to compute net loss per share 47,689,337 50,273,017 47,258,381 49,917,692
===
Wix.com Ltd.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
Period ended
December 31,
June 30,
---
2018 2019
Assets
(audited)
(unaudited)
Current Assets:
Cash and cash equivalents $331,057 $351,462
Short term deposits 349,619 293,250
Restricted cash and deposit 1,149 1,149
Marketable securities 22,992 104,863
Trade receivables 13,528 18,230
Prepaid expenses and other current assets 11,939 25,774
Total current assets 730,284 794,728
Long Term Assets:
Property and equipment, net 21,947 27,079
Marketable securities 47,225 73,858
Prepaid expenses and other long-term assets 3,065 2,623
Intangible assets and goodwill, net 42,229 41,459
Operating lease assets - 57,327
Total long-term assets 114,466 202,346
Total assets $844,750 $997,074
===
Liabilities and Shareholder's Equity
Current Liabilities:
Trade payables $45,567 $46,074
Employees and payroll accruals 32,036 45,452
Deferred revenues 227,226 262,259
Accrued expenses and other current liabilities 35,564 42,972
Operating lease liabilities - 15,259
Total current liabilities 340,393 412,016
Long term deferred revenues 12,494 17,694
Long term deferred tax liability 602 570
Convertible senior notes 337,777 348,089
Long term loan 1,219 1,219
Other long term liabilities - 2,074
Long term operating lease liabilities - 42,784
Total long term liabilities 352,092 412,430
Total liabilities 692,485 824,446
Shareholders' Equity
Ordinary shares 88 93
Additional paid-in capital 472,239 537,799
Other comprehensive loss (1,691) 581
Accumulated deficit (318,371) (365,845)
Total shareholders' equity 152,265 172,628
Total liabilities and shareholders' equity $844,750 $997,074
===
Wix.com Ltd.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(audited)
(unaudited)
OPERATING ACTIVITIES:
Net loss $(5,640) $(16,734) $(25,451) $(47,474)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 2,196 2,927 4,093 5,585
Amortization 731 738 1,319 1,470
Share based compensation expenses 17,769 27,565 33,443 52,472
Amortization of debt discount and debt issuance costs 5,194 10,311
Decrease (increase) in accrued interest and exchange rate on short term and long term deposits (545) 105 (897) 594
Amortization of premium and discount and accrued interest on marketable securities, net 45 (10) 12 41
Deferred income taxes, net (307) 402 (405) 533
Decrease (increase) in trade receivables 2,536 161 2,724 (4,532)
Increase in prepaid expenses and other current and long-term assets (8,277) (3,942) (17,549) (11,141)
Increase (decrease) in trade payables 3,826 (3,222) 3,382 1,328
Increase in employees and payroll accruals 4,978 4,223 13,431 12,235
Increase in short term and long term deferred revenues 13,763 14,144 35,643 40,233
Increase (decrease) in accrued expenses and other current liabilities (3,807) 5,629 2,302 10,599
Net cash provided by operating activities 27,268 37,180 52,047 72,254
---
INVESTING ACTIVITIES:
Proceeds from short-term deposits and restricted deposits 5,337 55,000 19,111 81,775
Investment in short-term deposits and restricted deposits (125,001) (151,780) (26,000)
Investment in marketable securities (11,576) (108,693) (14,979) (136,616)
Proceeds from marketable securities 11,496 21,601 14,436 29,056
Purchase of property and equipment (3,296) (6,235) (6,507) (11,065)
Capitalization of software development costs (115) (191) (262) (389)
Investment in other long-term assets (500) (500) -
Payment for Businesses acquired (2,800) (2,800)
Net cash used in investing activities (123,655) (41,318) (140,481) (66,039)
---
FINANCING ACTIVITIES:
Proceeds from exercise of options and ESPP shares 11,587 7,512 21,891 14,190
Proceeds from issuance of convertible senior notes 385,000 385,000 -
Payments of debt issuance costs (10,010) (10,010) -
Purchase of capped call (39,424) (39,424) -
Net cash provided by financing activities 347,153 7,512 357,457 14,190
---
INCREASE IN CASH AND CASH EQUIVALENTS 250,766 3,374 269,023 20,405
CASH AND CASH EQUIVALENTS-Beginning of period 103,487 348,088 85,230 331,057
CASH AND CASH EQUIVALENTS-End of period $354,253 $351,462 $354,253 $351,462
Wix.com Ltd.
KEY PERFORMANCE METRICS
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Revenues $146,132 $185,419 $283,907 $359,709
Collections $159,895 $199,563 $319,550 $399,942
Free Cash Flow $23,857 $30,754 $45,278 $60,800
Number of registered users at period end (*) 131,027 154,039 131,027 154,039
Number of premium subscriptions at period end (*) 3,659 4,295 3,659 4,295
(*) Excludes users and subscriptions of DeviantArt
Wix.com Ltd.
RECONCILIATION OF REVENUES TO COLLECTIONS
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Revenues $146,132 $185,419 $283,907 $359,709
Change in deferred revenues 13,763 14,144 35,643 40,233
Collections $159,895 $199,563 $319,550 $399,942
Wix.com Ltd.
TOTAL ADJUSTMENTS GAAP TO NON-GAAP
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(1) Share based compensation expenses:
(unaudited)
(unaudited)
Cost of revenues $1,087 $1,436 $2,166 $2,747
Research and development 9,470 14,119 17,955 26,375
Selling and marketing 2,352 4,506 4,394 9,254
General and administrative 4,860 7,504 8,928 14,096
Total share based compensation expenses 17,769 27,565 33,443 52,472
---
(2) Amortization 731 738 1,319 1,470
(3) Acquisition related expenses 946 53 2,374 53
(4) Amortization of debt discount and debt issuance costs 5,194 10,311
(5) Non-operating foreign exchange expenses (income) 140 1,592
Total adjustments of GAAP to Non GAAP $19,446 $33,690 $37,136 $65,898
Wix.com Ltd.
RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Gross Profit $115,695 $138,757 $224,426 $273,332
Share based compensation expenses 1,087 1,436 2,166 2,747
Amortization 142 141 284 283
Non GAAP Gross Profit 116,924 140,334 226,876 276,362
---
Non GAAP Gross margin 80% 76% 80% 77%
Wix.com Ltd.
RECONCILIATION OF OPERATING LOSS TO NON-GAAP OPERATING INCOME
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Operating loss $(6,507) $(14,161) $(24,959) $(41,953)
Adjustments:
Share based compensation expenses 17,769 27,565 33,443 52,472
Amortization 731 738 1,319 1,470
Acquisition related expenses 946 53 2,374 53
Total adjustments $19,446 $28,356 $37,136 $53,995
Non GAAP operating income $12,939 $14,195 $12,177 $12,042
Wix.com Ltd.
RECONCILIATION OF NET LOSS TO NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER SHARE
(In thousands, except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Net loss $(5,640) $(16,734) $(25,451) $(47,474)
Share based compensation expense and other Non GAAP adjustments 19,446 33,690 37,136 65,898
Non-GAAP net income $13,806 $16,956 $11,685 $18,424
Basic Non GAAP net income per share $0.29 $0.34 $0.25 $0.37
Weighted average shares used in computing basic Non GAAP net income\ per share 47,689,337 50,273,017 47,258,381 49,917,692
===
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,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Net cash provided by operating activities $27,268 $37,180 $52,047 $72,254
Capital expenditures, net (3,411) (6,426) (6,769) (11,454)
Free Cash Flow $23,857 $30,754 $45,278 $60,800
Wix.com Ltd.
RECONCILIATION OF BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING AND THE DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Three Months Ended
Six Months Ended
June 30,
June 30,
---
2018 2019 2018 2019
---
(unaudited)
(unaudited)
Basic and diluted weighted average number of shares outstanding 47,689,337 50,273,017 47,258,381 49,917,692
===
The following items have been excluded from the diluted weighted average number of shares
outstanding because they are anti-dilutive:
Stock options 8,040,188 7,744,708 8,040,188 7,744,708
Restricted share units 2,117,774 2,289,069 2,117,774 2,289,069
57,847,299 60,306,794 57,416,343 59,951,469
===
Wix.com Ltd.
RECONCILIATION OF PROJECTED REVENUES TO PROJECTED COLLECTIONS
(In thousands)
Three Months Ended
YearEnding
September 30, 2019
December 31, 2019
Low
High
Low
High
---
Projected revenues 196,000 198,000 761,000 765,000
Projected change in deferred revenues 8,000 8,000 64,000 66,000
Projected collections $204,000 $206,000 $825,000 $831,000
===
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SOURCE Wix.com Ltd.
