Wix Reports Fourth Quarter and Full Year 2018 Results

NEW YORK, Feb. 20, 2019 /PRNewswire/ -- Wix.com Ltd. (Nasdaq: WIX) today reported financial results for the fourth quarter and full year ended December 31, 2018. In addition, the Company provided its initial outlook for the first quarter and full year 2019.

"Wix's ability to develop a best-in-class product experience drove strong results in 2018," said Avishai Abrahami, Co-founder and CEO of Wix. "In 2018 we rolled out more products than ever before, and in 2019 we are looking forward to delivering these products to users and expanding our reach into new and exciting markets. We believe that these new products and markets will drive growth in the coming years. I'm thrilled with the progress we have made in giving our users even more tools to create without limits and look forward to an exciting 2019."

Lior Shemesh, CFO of Wix, added, "2018 marked our fifth consecutive year of greater than 40% revenue growth since our IPO in combination with record margin expansion, driving free cash flow of over $100 million. This combination of growth and profitability highlights our ability to generate positive returns on investments in our business. Our 2019 outlook reflects continued growth from existing and new products as we plan to make additional investments this year to bring these new products to market and expand into new markets. Additionally, the strategic change we initiated last year of a greater focus on generating higher value from our user cohorts is producing early signs of success. We believe this new initiative along with new products and the expansion of our addressable market will continue to deliver strong growth for years to come."

Q4 2018 and Full Year 2018 Financial Summary

Additional Q4 2018 Results and Highlights

• Gross margin on a GAAP basis in the fourth quarter of 2018 was 79%, compared to 85% in the fourth quarter of 2017; non-GAAP gross margin in the fourth quarter of 2018, calculated as non-GAAP gross profit as a percent of revenue, was 80%, compared to 85% in the fourth quarter of 2017
• Under ASC 605, fourth quarter 2018 GAAP gross margin as a percent of revenue would have also been 79%
• Results in the fourth quarter include the impact of the change from net (agent) to gross (principal) accounting related to the amended terms of our partnership agreement with Google announced early last year. As previously stated, the initial impact is an approximately $30 million benefit to FY 2018 revenue and collections. This impact also has resulted in a year-over-year decrease in our GAAP and non-GAAP gross margins
• GAAP net loss in the fourth quarter of 2018 was $(5.8) million, or $(0.12) per share, compared to a net loss of $(6.6) million, or $(0.14) per share, for the fourth quarter of 2017
• Non-GAAP net income in the fourth quarter of 2018 was $20.8 million, or $0.42 per share, compared to a non-GAAP net income of $7.2 million, or $0.16 per share for the fourth quarter of 2017
• Net cash provided by operating activities in the fourth quarter of 2018 was $36.1 million, while capital expenditures totaled $3.4 million, leading to free cash flow of $32.7 million, compared to $19.6 million of free cash flow in the fourth quarter of 2017, a 67% year over year increase
• Added 147,000 net premium subscriptions in the fourth quarter of 2018 to reach 4.0 million as of December 31, 2018, a 24% increase over the total number of subscriptions at the end of 2017
• Added 5.9 million registered users in the fourth quarter of 2018. Registered users as of December 31, 2018 were 142 million, representing a 19% increase compared to the end of the fourth quarter of 2017

Additional Full Year 2018 Results and Highlights

• Revenue for the full year 2018 was $603.7 million, or 42% y/y growth. Collections for the full year 2018 was $658.4 million, or 36% y/y growth
• Had foreign exchange rates remained constant from when we provided our initial full year 2018 guidance in February, collections would have been approximately $10.2 million higher, or $668.6 million, 38% higher than the prior year
• Gross margin on a GAAP basis for the full year 2018 was 79%, compared to 84% in 2017; non-GAAP gross margin in the full year 2018 was 80%, compared to 85% in 2017
• Under ASC 605, full year 2018 GAAP gross margin as a percent of revenue would have also been 79%
• Results in 2018 include the impact of the change from net (agent) to gross (principal) accounting related to the amended terms of our partnership agreement with Google announced early last year as described above
• GAAP net loss for the full year 2018 was $(37.1) million, or $(0.77) per share, compared to a net loss of $(56.3) million, or $(1.24), per share in 2017
• Non-GAAP net income for the full year 2018 was $51.3 million, or $1.07 per share, compared to a non-GAAP net loss of $(0.5) million, or $(0.01) per share, in 2017
• Net cash provided by operating activities for the full year 2018 was $115.7 million, while capital expenditures totaled $14.1 million, leading to free cash flow of $101.6 million, compared to $70.7 million of free cash flow in 2017, a 44% year-over-year increase

Recent Business Highlights

• Launched Ascend by Wix: In December, we launched Ascend by Wix, a suite of 20 products that allows businesses to easily connect with and manage their customer base, as well as promote and grow their brand and business online. Ascend is now open to users in all languages. 
• Introduce Wix Turbo: We plan to announce Wix Turbo, a platform-wide performance boost that improves speeds across all Wix websites. With Wix Turbo, the Wix platform has been supercharged to ensure Wix sites are faster than ever.
• Began Roll Out of Wix Payments: We recently introduced Wix Payments to users in the U.S. Wix Payments users benefit from being able to manage their entire business, from orders to payments, on one platform, including reviewing transaction and payout details in the Wix Payments Dashboard. We plan to launch Wix Payments in the U.K. in Q1 and other countries in Europe and in Asia throughout the year.
• Wix Answers Closes Agreement with MyHeritage: We recently signed an agreement with MyHeritage, which will be utilizing the Wix Answers Knowledge Base, ticketing system, and call center tools. This is one of the first enterprise class clients to use the full Wix Answers product. We are in the process of hiring a team to expand the reach of this product.
• Wix Partners with Universities: Our Academic Partnerships team has been working with schools and universities all over the U.S. to make Wix a part of their curriculum. These partnerships are aimed at helping students establish an online presence and learn why it's such a critical part of any career path. For example, Wix partnered with the University of South Carolina and is now integrated into several different courses that form part of the school's Internet Retailing program. We also have launched a Wix for Students program where we offer discounted premium plans to verified current students and various schools.

Financial Outlook

Wix is introducing its outlook for the first quarter 2019:

Wix is also introducing its outlook for the full year 2019. This full year guidance reflects incremental investment of approximately $15-20 million to support new growth initiatives. The positive impact to collections and revenue growth that we believe will result from this investment is not fully incorporated into our 2019 collections and revenue guidance. Excluding this incremental investment, our FCF guidance would be $150 ? $155 million, or 18-19% of the midpoint of 2019 collections guidance.

Conference Call and Webcast Information

Wix will host a conference call at 8:30 a.m. ET on Wednesday, February 20, 2019 to answer questions about the financial and operational performance of the business for the fourth quarter and full year ended December 31, 2018. 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 February 27, 2019 at 11:59 p.m. ET by dialing +1-877-344-7529 and providing Conference ID 10128095.

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 147 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 Wix Code 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 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 , non-GAAP research and development, non-GAAP selling and marketing, non-GAAP general and administrative 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. 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. Non-GAAP research and development represents research and development expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP selling and marketing represents selling and marketing expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related expenses and amortization. Non-GAAP general and administrative represents general and administrative expenses calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense and acquisition-related expenses. 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 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 2017 annual report on Form 20-F filed with the Securities and Exchange Commission on March 29, 2018. 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
Wix.com
[email protected] 
415-223-2624

Media Relations:
Vivian Hernandez
Wix.com
[email protected] 
415-517-6539

SOURCE Wix.com Ltd.