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Wix.com [WIX] Conference call transcript for 2022 q4

2023-02-22 12:26:03

Fiscal: 2022 q4

Operator: Good day and thank you for standing by. Welcome to the Wix.com Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Emily Liu, Investor Relations Analyst. Emily, please go ahead.

Emily Liu: Thanks, Chris, and good morning, everyone. Welcome to Wix's fourth quarter and full year 2022 earnings call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder; Nir Zohar, our President and COO; and Lior Shemesh, our CFO. During this call, we may make forward-looking statements, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and in our Interactive Analyst on the Investor Relations website – section of our website, investors.wix.com. With that, I'll turn the call over to Avishai.

Avishai Abrahami: Thanks, Emily, and good morning, everyone. 2022 certainly was a challenging year, but I'm happy to say that we finished on a strong note and we are entering 2023, a more efficient company with a clear path to increasing profitability. Our Q4 results illustrated our ability to respond to the changing environment. We generated $52 million in free cash flow in Q4, our highest quarter ever and ahead of our guidance. Revenue in Q4 grew to $355 million, also ahead of our guidance. Our increased focus on finding efficiency closely managing cost growth allowed us to drive considerable operating leverage during the quarter. We will maintain this focus for the coming years and I believe it will enable us to emerge from this time as an even stronger company. Throughout 2022, we managed through several challenges and changes, including persistent inflation, ForEx volatility, the invasion of Ukraine and overall global uncertainty. This is all on top of consumer behavior on the internet we're setting to pre-COVID levels. Despite these headwinds, the strong fundamentals of our business, along with continued successful execution resulted in revenue growth and profitability, finishing strong. Revenue in 2022 grew 9% year-over-year to $1.4 billion. On a constant currency basis, revenue grew 11% year-over-year. Much of this growth was driven by our partners business, with partner revenues growing 29% year-over-year as we continue to successfully capture more of the professional market. Nir will share a bit more about our latest potential operational updates in a few minutes and Lior will then drive – dive into 2022 financial results as well as our outlook for the coming year. But before that, I want to provide some more details on how we are evolving our marketing strategy to create a greater amount of efficiency with these investments. As we mentioned last quarter, in September, we began to test to adjust our marketing approach to focus on higher-intent users. We accelerated this testing throughout Q4 reducing our acquisition marketing investment by nearly 50% in the quarter compared to the previous year. The results of doing this were fantastic. Despite reducing acquisition marketing by half, we have seen stable new cohort booking. We believe the driver of this success is the trend of our brand. Our investment in building a global brand over the past 15 years have made Wix synonymous with relevant general keywords on the Internet. We plan to continue this new marketing strategy and expect investment in acquisition marketing to remain at this level – reduced levels throughout 2023. We also plan to shift dollars to invest more into our brand to drive future growth. While we increased focus on operation efficiency, our strategy to build the best platform and amazing product for millions of users of all types around the world has remained unchanged. I'm extremely excited to highlight the recent launch of Wix website creation with ChatGPT, where ChatGPT is used to create text and content in the website. This product combines our leading innovation in website creation with our expertise in AI technology, which started with the market first introduction of Wix ADI in 2016. AI text creator uses open chat – open AIs ChatGPT to allow users to a specific test and create professional content on their website easily within seconds. They move in the pain point of content writing and generally improving the user experience. We are implementing AI technology in a number of other ways as well and I'm excited for the pipeline of amazing products we have in store for 2023. Before I turn it over to Nir, I want to take a moment to extend my gratitude to the entire Wix team. I'm very proud of the way the team managed for this last year. Particularly, these teammates were been and continue to be directly impacted by the war in Ukraine. Our thoughts remain with you and your families. Because of all of you, and incredible work you do, the potential of Wix in 2023 and beyond is unbounded, and I'm excited for what is yet to come. With that, Nir, over to you.

Nir Zohar: Thank you, Avishai, and thank you everyone for joining us today. As Avishai mentioned, over the last year and a half, we greatly increased our focus on operating efficiency and general prudence across the business. Our efforts actually began at the end of 2021 as we were making plans for 2022 due to increasing volatility and uncertainty we began thinking more carefully about how we operate. We reduced our hiring activity and took a closer look at what was working and what was not. As we move through 2022, volatility continued with the war in Ukraine, increasing energy prices, high inflation and currency fluctuations. As we did not see improvements to the macro environment, we recognized we needed to take the next step to help us achieve our profitability targets. In August last year, we parted ways with many people and took much more caution around expenses across the company. This rigorous review of our operations did not stop after this cost reduction plan. Throughout the remainder of last year, we continue to examine our operations across the organization. This ongoing focus along with technological gains achieved in recent years led to uncovering additional cost efficiencies, and we made the difficult decision to right size the organization further to meet current demand needs. Sadly, this meant asking approximately 7% of our employees to leave last week, which primarily occurred across our Customer Care organization. While this was the right decision for our business, it was not taken lightly. I want to extend my deepest gratitude to those impacted and say thank you to everyone who has participated in our journey. This headcount reduction, in addition to the efficiency and actions implemented throughout 2022, we'll bring down our total headcount from nearly 6,100 at the end of Q1 2022 to roughly 5,200 at the end of this current process, reflecting a 15% decrease. Related to these reductions, we expect to take a one-time charge of $20 million to $30 million in Q1 due to severance and modifications of our real estate footprint as we align our office space with operating needs. In addition to reducing the size of our Care organization, we also implemented hosting efficiencies and further operational expense savings. These recent actions are expected to yield an incremental $50 million of cost savings in 2023 or $65 million of savings on an annualized basis. Combined with the cost reduction plan announced last August, we have found a total of $215 million of annualized cost savings compared to the three-year plan shared last May at our Analyst Day. These savings will allow us to achieve our path to profitability faster than we previously predicted. With that, I will now hand it over to Lior to walk through more details on our financials. Lior?

Lior Shemesh: Thanks, Nir. Let me start off by running through our numbers for Q4 and the full year before turning to some of our updated long-term profitability expectations compared to what we shared last May at our Analyst Day. I'll work it up with some thoughts around 2023 outlook. As Avishai mentioned, the fundamentals of our business remains strong, which led us to exceed the top end of our guidance range for revenue in Q4. Total revenue was $355 million this quarter, up 6% year-over-year and 8% on a constant currency basis. Total bookings were $371.8 million in Q4, also up 6% year-over-year and 10% on a constant currency basis. Transaction revenue was $38.9 million, up 8% year-over-year. This growth was driven by higher GPV of $2.6 billion, up 4% year-over-year, and a higher take rate as adoption of Wix Payments continue to increase. Partners' revenue grew to $94.6 million, up 23% year-over-year as more and more partners are building projects on Wix. Most impressively, this quarter as a result of all the actions that we have taken to increase efficiency, we finished the year with free cash flow of $52 million in Q4, above our guidance range. This made Q4 the most profitable free cash flow quarter in our history, excluding investments in our new headquarters, and we expect to continue this momentum in 2023. Moving on to the full year results. Total revenue in 2022 was $1.39 billion, an increase of 9% year-over-year or up 11% year-over-year on a constant currency basis. Total bookings were $1.47 billion, up 4% year-over-year or up 7% year-over-year on a constant currency basis. Our increased focus on efficiency led us to improve gross margins and greater operating leverage in 2022. This led to free cash flow within the range of our prediction at our Analyst Day in May 2022. We follow through with our commitment to reach our margin targets this year and we plan to exceed them next year. Due to our focus on efficiencies, we have a strong path to profitability. We now expect to achieve key financial milestones we laid out in our Analyst Day approximately two years sooner than previously anticipated. Our total non-GAAP gross margin is expected to increase to 66% in 2023 with an exit margin of 67%. And Creative Subscriptions non-GAAP gross margin is expected to reach 80% in 2023, a level we do not expect to achieve until late 2024. Non-GAAP operating expenses are expected to be down to 59% to 60% of revenue for 2023, a level previously anticipated for 2025. We now expect more than $100 million of non-GAAP operating income and positive non-GAAP net income in 2023, targets previously anticipated for late 2024. And we now expect positive GAAP operating income and GAAP net income in 2025, targets previously anticipated beyond the three-year horizon. Our expectations is that our partners business will generate positive free cash flow by mid-2024, more than a year ahead of our three-year plan shared in May 2022. The momentum matures in 2022 and continue to step toward greater efficiency going forward demonstrate our full commitment to reaching the Rule of 40 in 2025 under varying growth scenarios. Now let me review our outlook for Q1 in 2023. We expect total revenue in Q1 to be $367 million to $371 million, representing approximately 7% to 9% year-over-year growth. For the full year, we expect total revenue to be approximately $1.51 billion to $1.54 billion, representing approximately 9% to 11% year-over-year growth. I mentioned earlier improvements in both total gross margin in Creative Subscriptions gross margin in 2023, which will be driven by savings from cost efficiencies in customer care and hosting. Non-GAAP operating expenses in 2023 are expected to be down year-over-year to 59% to 60% of revenue as operational efficiencies from our cost reduction efforts materialize. We also expect sales and marketing expenses to be 27% to 28% of revenue in 2023, a decline from 72% of revenue last year. As Avishai mentioned, as we evolve our marketing strategy, we are lowering our acquisition marketing investment throughout 2023 and plan to invest more into our brand in order to drive future growth. Because we see stable new cohorts bookings, we will reduce acquisition marketing investment going forward, we plan to take a portion of these savings and invest them in brand marketing activities. We will continue to develop specific plans through the first half of 2023 and expect brand marketing investment to be higher in the second half of 2023. We currently estimate this increased brand marketing investment to be roughly 3% to 4% of revenue in the second half of 2023. We still expect lower total sales and marketing expenses in 2023 compared to 2022 as our efficiency improved from this new strategy. We expect depreciation expenses of approximately $17 million to $19 million, non-headquarters related CapEx of approximately $8 million to $9 million and headquarters-related CapEx of $50 million to $55 million for the full year of 2023. The headquarters CapEx was a bit lower in Q4 2022 and a bit higher in 2023 than we had communicated last quarter due to the timing reasons. The total cost of the projects remains the same. Free cash flow, excluding headquarters investment, is expected to be roughly $152 million to $162 million or 10% to 11% of revenue in 2023. We expect this cash flow margin to improve as we progress through the year and exit 2023 with a free cash flow margin of approximately 12% to 13%, – driven by the new efficiencies implemented in the first half of 2023. Finally, stock-based compensation is expected to decrease to 15% of revenue in 2022, down from 17% of revenue in 2022. As headcount across the organization declined, we expect stock-based compensation as a percent of revenue to continue to decline year-over-year through 2025. The accelerated profitability expected in 2023 will put us on the path to achieve the Rule of 40 in 2025. With that, we will take your questions.

Operator: Thank you. At this time we will conduct a question-and-answer session. Our next question comes from line of Matthew Pfau of William Blair. Matthew your line is open, please go ahead.

Matthew Pfau: Hey, great. Thanks for taking my questions. Wanted to ask on the partners business and specifically the B2B partnerships. How is that pipeline looking for 2023? And are you expecting to sign any significant partnerships in 2023? Thanks.

Lior Shemesh: So this is Lior. I believe that we are increasing the funnel all the time, on a quarter-over-quarter, we're actually increasing the funnel in terms of potential partners. We obviously don't expect a huge partnership to be signed every quarter, but it will be at least once a year. And we do have in the funnel a few of them. So obviously, we are working on it. But on top of it, there are many others like they are not like $50 million or $100 million, but about $10 million or a few millions of dollars that we are working with and signing every quarter.

Operator: Thank you. Our next question comes from the line of Mark Mahaney of Evercore ISI. We are promoting you into Q&A right now. Mark Mahaney your line is…

Mark Mahaney: Probably the detail on the – yes, I'm here. Thanks for all the details on the change in marketing strategy or the efficiencies in marketing strategy. Long-term, do you think that you've got kind of sustainable cost learnings that mean that sales and marketing as a percentage of bookings or revenue are materially lower than what you had had before? I'm trying to get at how much of this is kind of durable cost efficiencies out of marketing, if there are any long-term targets you've thought about with sales and marketing, that would be appreciated. Thank you.

Lior Shemesh: Mark, this is Lior. Yes, definitely. I believe that in the future, we are going to see the sales and marketing dropping as a percentage of revenue. I think that this is exactly where we are today. And Avishai mentioned that at the very beginning. I think that we built a very strong brand that allows us to do that. And in parallel, we are going to increase investing in brand, but it will be only a portion of the savings that we got from lowering the investment in acquisition. So I believe that going forward, yes, definitely, we will see our sales and marketing dropping as a percentage of revenue. And this is part of the leverage that we are talking about.

Operator: Thank you. Our next question is being put into the queue. Our next question comes from Elizabeth Porter of Morgan Stanley. Elizabeth, your line is open.

Elizabeth Porter: Thank you very much. I was hoping to just get an update on the overall kind of top-of-funnel demand. I believe the letter noted reverting back to pre-pandemic trends. And back in Q3, you noted the top of the funnel was a little bit above pre-COVID. So my question is kind of what's the confidence level that the bottom on demand is behind us? And what's embedded in your 2023 guidance? If there is any pockets that you're seeing greater impacts that would be great to hear. Thank you.

Avishai Abrahami: Yes, Elizabeth, thank you for the question. This is Avishai. I think that the confidence that we have is the data that we have, right? We don't know if there is going to be another war, and we don't know what that the governments after the war would do, and how they react to things and the economy crisis where it's going to evolve to. You probably have better estimation on that than we do. And so the confidence level is that what we're seeing for a while now is that we’re in a new stable place. And that stable place, I think, is kind of obvious, right, because there is an economic crisis and we are in post-COVID. So I think what we are saying is that when we say we come in instability, it means that we don't see any information that kind of hints or give us a clue that there is a change coming. And so I think that this is where our confidence comes from. All the information that we have is showing that this is pretty much the level of demand in an economic crisis of the type that we have now.

Operator: Thank you. I’m promoting our next questions. This question comes from Brad Erickson of RBC Capital Markets. Brad please go ahead.

Bradley Erickson : Thanks. So you gave the net subscriber number, like you normally do at the end of the year, which I guess was up, call it, modestly year-over-year, reflected a lot of that churn you've talked about in the last few quarters. Talk about the top-of-funnel you're seeing right now for subscribers, new subscribers and sort of what it's going to take to get back to the quarterly net add cadence that you used to do before COVID. Just curious if we can get back to those types of levels here this year or next?

Nir Zohar: Brad, it's Nir. So, I want to kind of reiterate our thinking around the net subs and actually give some more color. First of all and foremost, you have to remember, we're always aiming to optimize and drive higher cohort value. This has led also to our decisions around focusing on higher intent users. It's part of what we've done in terms of how we made our pricing decisions, in terms of being willing to take less subs but at a higher price with a higher value. Now when you think about what you see in 2022, you have to remember that the cohorts of 2022 and 2021, which are relatively still young compared to 2022 were very, very big cohorts. They grow a lot of subs into the system. And they have converted in elevated numbers, they are retained at similar numbers as previous cohorts. But because their sheer size is bigger, because the heightened demand of COVID, when some of them gets canceled in terms of the subs that obviously creates an impact on the net subs throughout 2022. And that specific behavior will probably last a little bit longer as these cohorts mature and stabilize. The other thing that we've seen is that the macro impact affects also existing cohorts, which makes a lot of sense because these are made also out of small businesses that are trying to retain and build the business in a much more challenging environment. And lastly, another thing that impacted 2022 was the need or the decision to eliminate our business in Russia after it invaded Ukraine. So I think all of those have – had that kind of impact on our net sales in 2022. But I want to say something which is – illustrate something which, I think. is more important here. And this is about the ARPS. When you look at our ARPS, it has increased by 29% from 2019. And when you think about that metric, ARPS used to be, in the past, a very uniform metric for us because the variance between the different subscriptions was relatively very small. And therefore, it increased over time because we optimized prices, because we added more functionality and helped people drive them towards a little bit of the higher subscription, but it was still very uniform, in general. In the last few years, we are seeing a change, a very significant change where we are getting much more complex websites being built on our platform, for which the price point can go to the thousands and even to the hundreds of thousands of dollars, which means that ARPS is not uniform anymore, which also explains why we're de-focusing our thinking about net adds and focusing so much more about the absolute value in the cohort itself. So I hope that answers your question.

Operator: Thank you. We’ll move on to the next question. This question comes from Ygal Arounian of Citi. Ygal your line is open.

Ygal Arounian: Hi, good morning guys. I wanted to ask about ChatGPT integration. And I know you guys have always talked about when you rolled out ADI that was a big kind of driver of conversion. And I know it's really early just thinking through that if there's any parallels and if you expect that this might drive a pump in conversions as we go through the year. And then just going back to the marketing efficiency. Just on that 50%, is there a little bit more you could share as to kind of the learnings from that? Is that you're just targeting higher-intent customers or users that are going to convert at a higher rate or spend more? Does that mean that you're focused less on maybe the DIY creators, the self-creators, as you guys call them, or is that not the right basis to make on that? Thanks.

Avishai Abrahami: So I'll start with the first one. Yes, we've been – I think when we started ADI, which is Artificial Design Intelligence, right, it's was the first, I think, AI product to the mass market and maybe with the exception of some things that do voice speech. So, we've been ahead of the curve on that for a while, which today we have a lot of different things. For example, we have a way for you to edit images with AI. So for a lot of you upload the product, we'll clear the background and make the photo better. That's one example that we released a few years ago, ADI. And now we introduced ChatGPT. So this is really open AI ChatGPT. It's not some hybrid we build. And we know that one of the hardest things for many people is to write the content on the website. So by adding ChatGPT, we make it, well, a lot simpler, right, and a bit more creative in many cases. So I think it's a tremendous value for our users. And in the next year, you are going to see some additional, very cool things that we're doing with AI now, again, to simplify our users are – our users are interacting and creating a website, which is kind of a complex thing, right? It's a very complex thing because think about it, it has many different assays, right? You write many different pieces, all have to look together, the graphic has to come all together. So, we have a lot of things we can do there to make Wix simpler and better use for self-creators. When it comes to acquisition, so you were touching the right point there, which is, yes, this is – if you look at the brand, Wix is a very strong brand for self-creators. I think we did a very good job emphasizing that. What we've seen in the last, pre-COVID, we've already seen that the brand was separating itself from the rest of the clutter and during COVID, a lot of new people have arrived that were not thinking about building OS but now they had to. So it was a mass opportunity to educate a big portion of the population about Wix. And last year, we started to notice that the brand has become so strong that it's more than the generic way that people actually look for Wix. So that is all for self-creators. And of course, we've proven that now by the fact that we can actually eliminate a lot of that direct acquisition and the brand equity hold. The next thing that we're doing, of course, is building – starting to work on a similar strategy for where we are less strong. And that's why we will continue to invest in branding and, of course, with acquisition. But as we – even if we go after partners, right, we're very complex website, the brand value that we have from Wix and the investment that we did carries into that, that which is enabling us to do that with a smaller acquisition costs.

Operator: Thank you. This question comes from Andrew Boone of JMP Securities. Your line is open.

Andrew Boone: Thanks so much for taking my question. Can you help us understand the impact of the price and changes for 4Q? And then how does that relate to 2023 guidance? Thanks so much.

Lior Shemesh: So we still see the effect of the price increase that we did last year and this one is going to continue, I believe, until May, where we complete everything. And this is part of the guidance that we have provided, meaning that it's already embedded there. I think that's very important to mention that we see also increase in ARPU, obviously, not just a result of the price increase, but also for the change in mix in our customers. And I think that also Nir spoke about it and provide some explanation about it, but we see a major change in mix, which also drives the ARPU – continue to drive the ARPU up. And I believe that this is something that will continue also later even after the effect of the price increase that we've made.

Operator: Thank you. Bringing forth the next question. This question comes from John Byun of Jefferies. Your line is open.

John Byun: Hi. Thank you. This is John Byun on behalf of Brent Thill at Jefferies. Two questions. One on the 2023 guidance, I'm wondering what you're assuming on the macro. I mean, in the comments you mentioned that the assumption for Q1 is the macro does not deteriorate. So I just want to see what it will be if we do enter into a tough U.S. recession? And then a quick second one, just what you're seeing so far quarter-to-date, we're already two months in? And any change in trends since the Q4? Thank you.

Lior Shemesh: So with regard to the macro, I think that Avishai mentioned that before, we assume that macro as it is right now, meaning that we didn't even try to focus what will be the effect, what will be the changes in the macro. Obviously, if we see that macro is improving, that will be an upside, especially around the GPV in the Wix payments. With regard to the overall guidance that we have provided, what we did assume is that, obviously, fundamentals are still very strong. We didn't assume any change in our KPIs. We didn't see any change in those fundamentals, and they are very stable also throughout the first quarter, at least so far. We continue to see strong growth in partners. And this is something that is really important to mention. We keep talking about the growth, but the partners, we are still taking market share. And this is kind of a more of a hyper growth. And I believe that this is something that will continue also in 2023 and also beyond that.

Nir Zohar: Hey John. In terms of what we're seeing in January, February and kind of relates to what Avishai commented earlier. So to this point, I'm sure that you would – we would have loved to be the first management team to talk about the recovery, but sadly, that's not the case. We don't see any decline, but also no major improvements at this point. So it's basically kind of stability at where we are now.

Operator: Thank you. Promoting our next question. This question comes from Ken Wong of Oppenheimer & Company. Your line is open.

Ken Wong: Thanks a lot. I just wanted to dig into NRR, that took a bit of a step down. I'm just wondering if you could maybe kind of give us a little context in terms of some of the moving pieces and how you think that number should settle in once the kind of demand environment stabilizes?

Nir Zohar: Sure. It's Nir here. So in terms of the NRR, you have to remember, first of all that when you think about the kind of the step down as you put it, it is compared to 2021, which still had a big component of COVID that benefited it in terms of the size of it. Obviously, we still have a positive NRR, so we are happy with the result. When you look at kind of what made the impact, so I would say that – generally speaking, we've seen and I mentioned this before, the macro slowness also affects a little bit the existing cohorts, again, because these are small tiny businesses that are trying to keep on working and maintaining the business in a harsher environment, and obviously that has an effect on them. And take even a bit kind of a more deeper dive in what is – where is most of the slowdown, I would say it is around commerce. And by that, obviously also the affected GPV that comes with it. But we think these are the main things, and we expect it to remain pretty much at the same level.

Operator: Thank you. Moving up our next question. This question comes from Trevor Young of Barclays. Your line is open.

Trevor Young: Great. Thanks. Can you just help us understand what's informing the revenue acceleration throughout the year in 2023? Is it FX headwinds abating? Because it would seem to me, based on your prior comments that the lift from pricing starts lapping out in May, but then you are kind of contemplating a little bit of an acceleration through year-end. Is that maybe coming from the partner side, some of the Vistaprint finally kicking in? Just any color there would be appreciated.

Lior Shemesh: So actually, it's very simple. I think that Q1, when you compare Q1 on a year-over-year basis, you compare it to Q1 of 2022, which was very strong. So the comps are different. Remember that the overall slowdown more or less started during the spring. So obviously, the next three quarters with totally different comps. So that's obviously, explains the differences. Nothing beyond that.

Operator: Thank you. Promoting our next question. This question comes from Deepak Mathivanan of Wolfe Research. Your line is open.

Deepak Mathivanan: Hey guys. Thanks for taking the question. So first, I wanted to ask about the product focus areas in 2023. I know you rolled out ChatGPT integration; but what are the main priorities from a product standpoint for this year? And when do you kind of expect to see meaningful progress and then also potentially incremental contribution to top line growth? And then Avishai, with the cost reduction you've done so far, I wanted to ask your views on the efficiency levels. Do you feel like the staffing levels and then the ag productivity is at a healthy level kind of right now after these actions as we head into 2023? Thank you so much.

Avishai Abrahami: Of course. So I think the product focus is – well, the core bit is pretty much the same, meaning that we think that we have two heads going forward. One is of course, self creators business. Where we have some very cool things coming and you're going to see some additional announcements. A lot of them are in the area of AI, but not only that. So, you're going to see, I think, some very exciting things coming this year. On the other hand, we spent a lot on the partners and we have a lot of things that we need to do there. So that is very exciting because it's the creation or there is a big gap in what we should be doing and where we're, so we're going to close a lot of that gap this year. I mean, which is going to have, by far, the best offering for partners as we head into the latter part of the year. And so, that's where most of our product focus is. I want to mention for a minute. We just released new packages for enhancing your utilization of Velo, okay? We've released a product called CodeX. All of those are products aimed only at partners, right, for people that actually build professional websites that are very deep to new functionality, and I think we're going to continue to do that. You're going to see some additional very exciting things that we do for marketing, allowing our customers to do better marketing. So we have some nice project in there, and I think that we see really good traction. And with that, Nir, do you want to take the next part?

Nir Zohar: Yes, absolutely. So in terms of the organizational productivity, I think it's actually at a high level and increasing. I think the changes we've done throughout the second half of 2022, we received extremely well within the company and have helped us become even better in what we do. You also have to remember that late October, we moved – we started moving into our new headquarters in Tel Aviv. That on its own had a fantastic impact on morale and on productivity because people can be work closer at a much, much better environment. And it also allowed us to call back the employees to the office which we believe is a better way for us to operate and a better way for us to manage. Before we did the move to the new headquarters, we just did not have enough office space. So obviously, now that is a change and is also a great contributor. So when we are heading into 2023, especially from that kind of a standpoint of the productivity and the connection within the organization of the company, we're actually feeling very, very confident that we are kind of shedding some of the, I would say, the bad behaviors that we adopted during COVID because we had to, but still did. And going back to where we are excelling in executing.

Operator: Thank you. Promoting our next question. This question comes from Chris Zhang of Credit Suisse. Your line is open.

Chris Zhang: Hi. Thanks for taking my question. I had a question on your partnership with Amazon multichannel fulfillment. So maybe it's still early days in its adoption as it was rolled out in the first quarter of 2022 when e-com started facing more headwind. But in light of the recent availability of Buy with Prime, I just wanted to hear your thoughts about potential deepening your partnership with Amazon on that offering? Or are you happy with the multichannel booking right now?

Nir Zohar: So we are very happy with the progress there. I think it's a combination of being happy on that specifically and also developing what we think can be a very interesting future relationship with Amazon around commerce for our business and other things that we may be doing together in the future. Obviously, I cannot go into the details, but we are definitely happy with it.

Operator: Thank you. That completes our Q&A session. I'd now like to hand the conference back over to the company for any further comments.

Emily Liu: Thanks, everyone. Thanks, Chris, for hosting that. Thanks, everyone, for joining today, and we'll talk to you next time. Have a good day.