What Happened?
Shares of website design and e-commerce platform provider Wix.com (NASDAQ: WIX) jumped 15% in the morning session after the company reported impressive third-quarter results. While revenue was in line with analysts' expectations, its EPS and adjusted operating income beat Wall Street's estimates. The top line was driven by accelerating growth in Wix's Self Creators and Partners businesses, including a 30% surge in Partners revenue due to increased adoption of its Studio platform. The company also highlighted the AI Website Builder, which boosted conversion rates. The planned monetization of new AI tools also strengthened the growth narrative. Looking ahead, Wix provided revenue guidance for the next quarter that slightly topped analysts' expectations. Zooming out, we think this was a decent quarter featuring some areas of strength.
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What The Market Is Telling Us
Wix’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. Moves this big are rare for Wix and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 21.4% on the news that the company reported a "beat and raise" quarter. Q1'24 revenue beat by a small margin but more convincingly on bookings. Wix also beat handily on the operating income line. The company called out strong traction from some of its offerings, including its AI products and Wix Studio. It added, "Notably, we saw extremely strong usage of our AI Website Builder that was launched earlier in the quarter, with hundreds of thousands of sites already created using the tool over just a few months." The contribution from Wix Studio has also been impressive, with the platform recording over a million Studio accounts since it was launched, and driving "more Studio premium subscriptions than anticipated."
Looking ahead, the company raised full-year revenue, bookings, and free cash flow guidance. Notably, management observed more visibility on bookings than it did the last time it gave guidance, which is encouraging. Overall, the results were solid.
Wix is up 78.5% since the beginning of the year, and at $210.33 per share, has set a new 52-week high. Investors who bought $1,000 worth of Wix’s shares 5 years ago would now be looking at an investment worth $1,671.
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