Wix Delivers Q1 Top-Line Beat; Street Sees Over 70% Upside for the Stock

Israel-based Wix.com Ltd. (WIX) posted better-than-expected revenue for the first quarter. The company’s cloud-based platform enables website and application development globally.

Revenue increased 14% over the prior year to $341.6 million, outperforming consensus by $1.1 million. The net loss per share at $0.72 came in wider than estimates by $0.11. The revenue growth marks a compounded growth of 27% over the past two years for the company. Further, total bookings during the quarter jumped 12% to $393 million.

Management Weighs In

The Co-Founder and CEO of Wix, Avishai Abrahami, commented, “Wix has remained focused on executing on our long-term opportunities, our product and marketing roadmaps, and concentrating on what we can control despite the recent months of instability and volatility. Investments over the last several years have driven a significant expansion of our addressable market through the growth of our product platform, product innovation and development, and go-to-market activities.”

Moreover, the company is remaining prudent with a focus on cost management and operational efficiency. It plans to notch 20% FCF margins by 2025. It has also teamed up with LegalZoom (LZ), which underscores its capabilities.

As a further positive, Wix’s Creative Subscriptions revenue jumped 13% and Business Solutions revenue jumped 17% as compared to a year-ago period. The Creative Subscriptions ARR of the company jumped 12% over the previous year to cross the billion-dollar mark at $1.04 billion.

Financial Outlook

Despite macro challenges and global uncertainties, Wix sees revenue landing between $342 million and $346 million in the second quarter, indicating growth of between 8% and 10%. For full-year 2022, top-line growth is anticipated to be between 10% and 13%.

The guidance includes the impacts of the Russia-Ukraine conflict as well as currency gyrations. In a challenging macro backdrop, Wix is focusing on achieving growth marked by profitability and is already taking initiatives on this front.

Website Traffic Tells The Tale

Before today’s release, Wix shares were already up 12.5% on Friday. Fortunately for our users, the TipRanks website traffic tool had hinted at this performance before. The number of website visits to Wix has been on an upward trajectory for a while now.

The number of visits to Wix across devices globally had jumped from 42 million in September to 52.5 million at the end of December 2021. This number has further ballooned to 62.16 million at the end of March 2022.

Cumulatively, the number of visits has increased to 170.83 million in Q1 from 135.83 million in Q4. That’s a sequential growth of almost 26%.

Analyst’s Take

Jefferies analyst Brent Thill has reiterated a Buy rating on the stock alongside a price target of $115. Overall,  the Street has a Moderate Buy consensus rating on Wix based on 11 Buys, five Holds, and a Sell.

Despite this cautiously optimistic stance, the average Wix price target of $125.53 implies a massive ~76% potential upside for the stock. That’s after a 55.6% slide in the share price amid broader market gyrations so far in 2022.

Closing Note

Wix’s platform offers users enterprise-grade performance, security, and reliable infrastructure, as well as advanced SEO, marketing firepower, and commerce and business solutions. The company’s advantage lies in a strong brand and a host of offerings that are fuelling its growth.

Furthermore, the company’s virtual analyst and investor day on May 19 will be a key event, as management is expected to discuss its growth initiatives and three-year financial plan as well as the long-term financial framework.

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