Wix Drops 23% on Q4 Revenue Miss and Weak Guidance

Shares of Wix.com Ltd. (WIX) marked an all-time low of $81.60, after reporting a fourth-quarter revenue miss and weak FY22 guidance. Shares dropped 23.1%, closing at $89.06 on February 16.

Wix.com is an Israel-based software company offering cloud-based web development services to customers to enhance their online presence. Its shares have lost over 63% over the past year.

Notably, the Software-as-a-Service (SaaS) provider’s Creative Subscriptions surpassed Annualized Recurring Revenue (ARR) of $1 billion, and total bookings increased 15% to $351.6 million.

Weaker-Than-Expected Results

Wix reported Q4 revenue of $328.34 million, growing 16% year-over-year but missing the analyst estimates of $331.16 million. In Q4, Creative Subscriptions revenue grew 15% year-over-year to $246.7 million, and Business Solutions revenue generated $81.7 million, growing 19% compared to the same period last year.  

However, Q4 adjusted quarterly loss came in one cent better than the analyst estimate at $0.37 per share.

For FY21, Wix reported total revenue of $1.27 billion, growing 29% annually, while full-year adjusted loss stood at $1.39 per share.  

Co-Founder and CEO Comments

Happy with Wix’s performance in Q4, Avishai Abrahami, Co-founder and CEO of the company, said, “We exited 2021 with fundamentals of our business at much higher levels than when we entered the pandemic, positioning us for success in the coming years, and we are clear on what needs to be done to maintain this momentum.”

“We are putting our best foot forward to increase our growth by expanding our market leadership with self-creators, strengthening our reach through partners, and doubling down on our commerce platform,” Abrahami added.

Initiating Q1FY22 Outlook

Based on the huge volatility in demand for its services, Wix is initiating guidance for Q1FY22. The company forecasts revenue to be between $338 million and $343 million, while the consensus is pegged much higher at $355 million.

Wall Streets’ View

Responding to Wix’s financial performance, Oppenheimer analyst Jason Helfstein reiterated a Buy rating on the stock and a $110 (23.5% upside potential) price target.

Helfstein noted that Wix’s fundamentals deteriorated during Q4, putting a challenging end to fiscal 2021. The analyst was also discouraged by the absence of full-year 2022 guidance.

Helfstein said, “4Q results and minimal guidance give little comfort to investors looking for stabilization in the financial results as a pre-cursor for initiating and/or increasing WIX positions. Wix’s valuation looks washed out and, in our view, offers an interesting proposition ahead of a ramp in FCF over the next two years, but will also take time to recover given inconsistent execution.”

Overall, the Wix stock has a Moderate Buy consensus rating based on 7 Buys and 4 Holds. The average Wix.com price target of $170.80 implies 91.78% upside potential to current levels.

Hedge Funds

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in WIX is currently Very Positive, as 3 hedge funds increased their cumulative holdings of the stock by 298,500 shares in the last quarter, at the time of writing.

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