Wix Reports Second Quarter 2021 Results

NEW YORK, August 11, 2021 -- Wix.com Ltd. (Nasdaq: WIX) today reported financial results for the second quarter ended June 30, 2021. In addition, the Company provided its initial outlook for the third quarter. Please visit the Wix investor relations website at https://investors.wix.com/ to view the Q2’21 Shareholder Update.

“As the story of the pandemic continues to evolve, there is an uncertainty whether we are at the end of it, or if there is a massive new wave coming again. For our users, this uncertainty means that they don’t know if they should create new online or offline stores, services and events. The result of this uncertainty, for us, is a mild slowdown in the creation of new web presences, which is reflected in our financials, where we came in at the low end of our expectations,” said Avishai Abrahami, Co-founder and CEO of Wix. “As our users and the world are navigating a great deal of uncertainty, it is more essential than ever that we remain focused on our north star goal of becoming the main engine of the internet, democratizing access and providing a place for the majority of people to build their online presence.”

Lior Shemesh, CFO of Wix, added, “Our second quarter results showed stronger growth than pre-pandemic quarters, although we did face more headwinds in the back half of the quarter than we expected. User growth remained elevated compared to 2019, renewals remained strong and conversion and monetization per subscription were solid - all encouraging signs of strong underlying fundamentals.

We are adjusting our expectations for the remainder of this year to account for continued uncertainty around the pandemic as well as the timing of B2B partnership agreements. Our ambitions have not changed, and we remain well-positioned to become the primary online platform for all users and businesses.”

Regarding the recently announced technology alliance with Vistaprint, Nir Zohar, President and COO, said, “We are excited to join Vistaprint in empowering small businesses to build a complete, professional digital presence with capabilities to manage, grow and succeed. This partnership demonstrates the robustness of Wix’s products for all types of users and all types of businesses and is a testament to our many years of investing in technology, product development and our brand. Just as Amazon and Google have become the technology layer for the cloud, Wix is striving to become the technology layer for online creation, and this alliance is evidence that we are on our way to achieving this goal.”

Q2'21 Financial Results

●          Total revenue in the second quarter of 2021 was $316.4 million, up 34% y/y

 

○          Creative Subscriptions revenue in the second quarter of 2021 was $235.9 million, up 24% y/y

 

○          Business Solutions revenue in the second quarter of 2021 was $80.5 million, up 75% y/y

 

●          Creative Subscriptions ARR as of the end of the second quarter of 2021 was $967.3 million, up 22% y/y

 

●          Total collections in the second quarter of 2021 were $342.9 million, up 29% y/y

 

○          Creative Subscriptions collections in the second quarter of 2021 were $263.0 million, up 21% y/y

 

○          Business Solutions collections in the second quarter of 2021 were $79.8 million, up 66% y/y

 

●          Total gross margin on a GAAP basis in the second quarter of 2021 was 62%

 

○          Creative Subscriptions gross margin on a GAAP basis was 75%

 

○          Business Solutions gross margin on a GAAP basis was 22%

 

●          Total non-GAAP gross margin in the second quarter of 2021 was 63%

 

○          Creative Subscriptions gross margin on a non-GAAP basis was 77%

 

○          Business Solutions gross margin on a non-GAAP basis was 23%

 

●          GAAP net profit in the second quarter of 2021 was $38.0 million, or $0.66 per share

 

○          Includes $110 million from unrealized net gains in equity holdings, primarily attributable to our holdings in Monday.com

 

●          Non-GAAP net loss in the second quarter of 2021 was $(15.8) million, or $(0.28) per share

 

●          Net cash provided by operating activities for the second quarter of 2021 was $21.8 million, while capital expenditures totaled $7.1 million, leading to free cash flow of $14.7 million

 

○          Excluding the capex investment associated with our new headquarters office build out, free cash flow would have been $16.9 million

 

 

We are introducing third quarter 2021 guidance as follows:

 

We are updating our full year 2021 guidance as follows:

Given the current state of uncertainty, at this time it is challenging to predict how users will behave beyond Q3. We are adjusting our outlook for the remainder of the year and providing a range that reflects potential outcomes.

 

The top end of the guidance range for FY 2021 reflects an improvement to new user additions and conversion of users to subscriptions, above the rate we are seeing currently, as well as B2B partnerships in our pipeline in which we have a high degree of certainty in closing within the remainder of the year. The bottom end of the range reflects the possibility that we will see continued high uncertainty, resulting in further declines in new user additions, and that certain partnerships in our pipeline do not close by the end of 2021.

 

Wix will host a conference call to discuss the results at 8:30 a.m. ET on Wednesday, August 11, 2021. To participate on the live call, analysts and investors should dial +1-877-667-0467 (US/ Canada), +1-346- 354-0953 (International) or 1-809-315-362 (Israel) and reference Conference ID 2751369. A telephonic replay of the call will be available through August 18, 2021 at 11:30 a.m. ET by dialing +1-855-859-2056 and providing Conference ID 2751369.

 

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 200 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, Editor X, a curated App Market, Ascend by Wix, Wix Payments and Velo 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 Austin, Be'er Sheva, Berlin, Cedar Rapids, Denver, Dnipro, Dublin, Krakow, Kyiv, Los Angeles, Miami, New York, Phoenix, San Francisco, São Paulo, Singapore, 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 

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,   cumulative   cohort collections,  non-GAAP  gross  margin,  non-GAAP  operating  income (loss),  non-GAAP  net   income (loss),  non-GAAP  net  income (loss)  per  share,  free  cash  flow, free cash flow, as adjusted, non-GAAP R&D expenses, non-GAAP S&M expenses, non-GAAP G&A expenses, non-GAAP operating expenses, non-GAAP cost of revenue expense, non-GAAP financial expense, non-GAAP tax expense (collectively the "Non-GAAP financial measures"). Measures presented on a constant currency or FX neutral basis have been adjusted to exclude the effect of y/y changes in foreign currency exchange rate fluctuations. Collections is a non-GAAP financial measure calculated by adding the change in deferred revenues for a particular period to revenues for the same period. Collections include cash receipts for premium subscriptions purchased by registered users as well as cash we collect for payments and additional products and services, as well as payments due to us under the terms of contractual agreements for which we may have not yet received payment. Cash receipts for premium subscriptions are deferred and recognized as revenues over the terms of the subscriptions. Cash receipts for payments and a majority of the additional products and services are recognised as revenues upon receipt. Committed payments are recognised as revenue as we fulfil our obligation under the terms of the contractual agreement.  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,  acquisition-related  expenses  and  sales tax expense  accrual and other G&A expenses (income). Non-GAAP  net  income (loss) represents  net  loss  calculated  in  accordance  with  GAAP as adjusted for the impact of share-based compensation expense, amortization, sales tax expense accrual and other G&A expenses (income), amortization of  debt  discount  and  debt  issuance  costs  and  acquisition-related  expenses  and non-operating foreign exchange expenses (income) and unrealized gain on equity investments and provisions for income tax effects related to non-GAAP adjustments. 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. Free cash flow, as adjusted, represents free cash flow further adjusted to exclude capital expenditures associated with our new headquarters. Non-GAAP cost of revenue represents cost of revenue calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP R&D expenses represent R&D expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP S&M expenses represent S&M expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP G&A expenses represent G&A expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP operating expenses represent operating expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP financial expense represents financial expense calculated in accordance with GAAP as adjusted for unrealized gains of equity investments, amortization of debt discount and debt issuance costs and non-operating foreign exchange expenses. Non-GAAP tax expense represents tax expense calculated in accordance with GAAP as adjusted for provisions for income tax effects related to non-GAAP adjustments.

 

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 tables provided 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 is unable to provide reconciliations of free cash flow, free cash flow, as adjusted, cumulative cohort collections, non-GAAP gross margin, and non-GAAP tax expense to their most directly comparable GAAP financial measures on a forward-looking basis without unreasonable effort because items that impact those GAAP financial measures are out of the Company's control and/or cannot be reasonably predicted.  Such information may have a significant, and potentially unpredictable, impact on our future financial results.

 

Wix also uses Creative Subscriptions Annualized Recurring Revenue (ARR) as a key operating metric. Creative Subscriptions ARR is calculated as Creative Subscriptions Monthly Recurring Revenue (MRR) multiplied by 12. Creative Subscriptions MRR is calculated as the total of (i) all active Creative Subscriptions in effect on the last day of the period, multiplied by the monthly revenue of such Creative Subscriptions, other than domain registrations; (ii) the average revenue per month from domain registrations; (iii) monthly revenue from partnership agreements. Finally, Wix discusses GPV. GPV includes the total value, in US dollars, of transactions facilitated by our platform.

 

 

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,” “aim,” “forecast,” “indication,” “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 annual and quarterly 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 attract and retain registered users and generate new premium subscriptions; our ability to increase the revenue we derive from the sale of premium subscriptions and business solutions through our partners; our expectation that new products and developments, including third-party products offered within our platform, will receive customer acceptance and satisfaction, including the growth in market adoption of our online commerce solutions; our assumption that long-term agreements with partners will become a more significant part of our business in the future and that the expected accounts receivable from such long term partners agreement will ultimately be received; our assumption that historical user behavior can be extrapolated to predict future user behavior; our prediction of the future revenues generated by our user cohorts and our ability to maintain and increase such revenue growth; our ability to maintain and enhance our brand and reputation; our ability to attract and retain qualified employees and key personnel; our ability to enter into new markets and attract new customer demographics, including new partners; our expectation that our products created for markets outside of North America will continue to generate growth in those markets; the impact of fluctuations in foreign currency exchange rates on our business; our ability to effectively execute our initiatives to scale and improve our user support function through our Customer Care team, and thereby increase user retention, user engagement and sales; the integration and performance of acquisitions; risks relating to the repurchase of our ordinary shares and/or Convertible Notes pursuant to our repurchase plan; our ability to successfully localize our products, including by making our product, support and communication channels available in additional languages and to expand our payment infrastructure to transact in additional local currencies and accept additional payment methods; our ability to effectively manage the growth of our infrastructure; the impact on our business and operations of the COVID-19 pandemic, including uncertainty relating to expected consumer dynamics after the COVID-19 pandemic subsides and the anticipated GPV on our platform, the effectiveness of government policies, vaccine administration rates and other factors; changes to technologies used in our solutions; any regulatory investigations or litigation; our expectations regarding changes in our cost of revenues and our operating expenses on an absolute basis and as a percentage of our revenues; changes in the global, national, regional or local economic, business, competitive, market, and regulatory landscape, including as a result of COVID-19; our planned level of capital expenditures and our belief that our existing cash and cash from operations will be sufficient to fund our operations for at least the next 12 months and other factors discussed under the heading “Risk Factors” in the Company’s 2020 annual report on Form 20-F filed with the Securities and Exchange Commission on March 25, 2021. 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

Media Relations:

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
		(unaudited)								(unaudited)
OPERATING ACTIVITIES:
Net loss		$	(57,736	)		$	37,957			$	(96,889	)		$	(22,857	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			3,537				3,378				7,109				6,810
Amortization			566				846				1,132				1,445
Share based compensation expenses			34,967				50,396				65,685				97,027
Amortization of debt discount and debt issuance costs			5,516				1,296				10,949				2,703
Decrease in accrued interest and exchange rate on short term and long term deposits			15				(63	)			62				(48	)
Amortization of premium and discount and accrued interest on marketable securities, net			438				2,082				717				4,405
Gain on equity securities			-				(73,186	)			-				(73,186	)
Deferred income taxes, net			(55	)			32,752				(1,721	)			40,103
Changes in operating lease right-of-use assets			5,158				8,379				9,446				13,060
Changes in operating lease liabilities			(4,588	)			(7,578	)			(9,817	)			(13,613	)
Decrease (increase) in trade receivables			(1,765	)			875				(1,617	)			(5,301	)
Increase in prepaid expenses and other current and long-term assets			(6,931	)			(30,304	)			(21,605	)			(100,845	)
Increase (decrease) in trade payables			26,172				2,234				34,974				(1,028	)
Increase (decrease) in employees and payroll accruals			11,585				(27,407	)			23,694				13,147
Increase in short term and long term deferred revenues			29,792				21,810				62,663				65,432
Increase (decrease) in accrued expenses and other current liabilities			3,287				(1,634	)			10,203				13,067
Net cash provided by operating activities			49,958				21,833				94,985				40,321
INVESTING ACTIVITIES:
Proceeds from short-term deposits and restricted deposits			9,225				40,000				26,225				178,015
Investment in short-term deposits and restricted deposits			(49,000	)			(171,529	)			(138,000	)			(172,131	)
Investment in marketable securities			(100,867	)			-				(230,168	)			-
Proceeds from marketable securities			65,656				90,562				154,911				180,659
Purchase of property and equipment			(3,264	)			(6,657	)			(8,207	)			(10,377	)
Capitalization of software development costs			0				(462	)			(132	)			(591	)
Investment in other long-term assets			(643	)			-				(5,643	)			-
Payment for Businesses acquired, net of acquired cash			-				(37,217	)			(6,626	)			(42,803	)
Purchases of investments in privately held companies			(685	)			(1,500	)			(785	)			(1,500	)
Net cash used in investing activities			(79,578	)			(86,803	)			(208,425	)			131,272
FINANCING ACTIVITIES:
Proceeds from exercise of options and ESPP shares			12,312				11,380				19,287				21,802
Net cash provided by financing activities			12,312				11,380				19,287				21,802
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(17,308	)			(53,590	)			(94,153	)			193,395
CASH AND CASH EQUIVALENTS—Beginning of period			191,258				415,843				268,103				168,858
CASH AND CASH EQUIVALENTS—End of period		$	173,950			$	362,253			$	173,950			$	362,253

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2020				2021				2020				2021
		(unaudited)								(unaudited)
Creative Subscriptions			190,169				235,891				366,715				462,327
Business Solutions			45,890				80,515				85,331				158,191
Total Revenue		$	236,059			$	316,406			$	452,046			$	620,518
Creative Subscriptions			217,696				263,045				426,493				531,104
Business Solutions			48,155				79,816				88,216				162,866
Total Collections		$	265,851			$	342,861			$	514,709			$	693,970
Free Cash Flow		$	46,694			$	14,714			$	86,646			$	29,353
Free Cash Flow, excluding capex related to future Wix HQ office build-out		$	47,102			$	16,911			$	87,537			$	32,385
Creative Subscriptions ARR		$	790,916			$	967,281				790,916				967,281