Wix’s third quarter saw higher-than-expected costs alongside strong revenue growth. Management attributed the results to robust user adoption in both the core website business and the newly acquired Base 44 AI-powered app builder. CEO Avishai Abrahami highlighted that “Base 44 is quickly proving to be a leader and the best solution on the market today,” while acknowledging that initial costs from rapid growth and marketing outlays for Base 44 weighed on margins. Cost pressures were driven by increased AI compute expenses and the predominance of monthly, rather than annual, subscriptions in Base 44’s user base, leading to a short-term misalignment between costs and revenue.
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Wix (WIX) Q3 CY2025 Highlights:
- Revenue: $505.2 million vs analyst estimates of $502.3 million (13.6% year-on-year growth, 0.6% beat)
- Adjusted EPS: $1.68 vs analyst estimates of $1.49 (12.6% beat)
- Adjusted Operating Income: $89.93 million vs analyst estimates of $95.97 million (17.8% margin, 6.3% miss)
- Revenue Guidance for Q4 CY2025 is $526 million at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: -1.5%, down from 5.8% in the same quarter last year
- Billings: $514.5 million at quarter end, up 14.4% year on year
- Market Capitalization: $5.17 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Wix’s Q3 Earnings Call
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Ygal Arounian (Citi): questioned the predominance of monthly subscriptions in Base 44 and the path to annual plans. CEO Avishai Abrahami explained it “takes time for people to trust the platform,” expecting annual adoption to grow over time as seen in Wix’s core business.
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Deepak Mathivanan (Cantor Fitzgerald): asked how Wix is preparing for the AI era and making websites more agent-friendly. Abrahami said every Wix website is now indexable by large language models (LLMs) and that new AI-driven standards are being integrated to ensure discoverability.
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Andrew Boone (Citizens Bank): inquired about the pathway for Base 44 to achieve margin parity with the core Wix platform. CFO Lior Shemesh said margins are currently pressured by upfront costs but should improve as recurring revenue rises and AI costs decline.
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Josh Beck (Raymond James): pressed on the duration of margin pressures from Base 44 hypergrowth. Shemesh replied that margin recovery depends on the balance between ongoing growth and cost efficiencies, with improvement expected as the user base matures.
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Trevor Young (Barclays): sought clarity on delays to the new Self Creator product. Abrahami cited the need to resolve technical challenges and stabilize new AI features, with launch now targeted for early 2026.
Catalysts in Upcoming Quarters
In the coming quarters, our team will closely monitor (1) the conversion of Base 44 users from monthly to annual subscriptions, (2) the pace of AI cost reductions and associated margin recovery, and (3) the rollout and adoption of new AI-driven features across both the core platform and Base 44. Execution on these fronts will be key in determining whether Wix can sustain growth while improving profitability.
Wix currently trades at $94.73, down from $126.92 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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