Website design and e-commerce platform provider Wix.com (NASDAQ:WIX) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 12.2% year on year to $419.8 million. On the other hand, the company expects next quarter's revenue to be around $433 million, slightly below analysts' estimates. It made a non-GAAP profit of $1.29 per share, improving from its loss of $0.15 per share in the same quarter last year.
Is now the time to buy Wix? Find out by accessing our full research report, it's free.
Wix (WIX) Q1 CY2024 Highlights:
- Revenue: $419.8 million vs analyst estimates of $417.8 million (small beat)
- Bookings: $457.3 million vs analyst estimates of $451.4 million (1.3% beat)
- EPS (non-GAAP): $1.29 vs analyst estimates of $1.04 (23.6% beat)
- The company raised its revenue guidance for the full year of $1.75 billion at the midpoint ("The midpoint of this updated outlook is ~$8 million higher than the midpoint of our previous outlook of $1,726 - $1,757 million as a result of better visibility in our business and higher bookings expectations")
- Gross Margin (GAAP): 67.3%, up from 65.6% in the same quarter last year
- Free Cash Flow of $105.7 million, up 31.5% from the previous quarter
- Market Capitalization: $7.59 billion
"Building on the milestones achieved in 2023, we carried that momentum into the first quarter and delivered a strong start to 2024 with results demonstrating the efficacy of our product strategy, solid execution of our growth initiatives, and steadfast commitment to balanced profitable growth. As a result, Q1 results outperformed expectations across the board," said Avishai Abrahami, Wix Co-founder and CEO.
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
E-commerce Software
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
Sales Growth
As you can see below, Wix's revenue growth has been mediocre over the last three years, growing from $300.8 million in Q1 2021 to $419.8 million this quarter.
This quarter, Wix's quarterly revenue was once again up 12.2% year on year. We can see that Wix's revenue increased by $16.01 million quarter on quarter, which is a solid improvement from the $9.93 million increase in Q4 CY2023. Shareholders should applaud the re-acceleration of growth.
Next quarter's guidance suggests that Wix is expecting revenue to grow 11% year on year to $433 million, slowing down from the 13% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 12.5% over the next 12 months before the earnings results announcement.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Wix's free cash flow came in at $105.7 million in Q1, up 322% year on year.
Wix has generated $262.9 million in free cash flow over the last 12 months, a solid 16.4% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.
Key Takeaways from Wix's Q1 Results
The company reported a small beat on revenue but a more convincing one on bookings. Wix also beat handily on the operating income line and raised full year revenue guidance, saying that it has more visibility on bookings today than it did last time it gave guidance, which is encouraging. Overall, the results were solid. The stock is up 7.4% after reporting and currently trades at $146 per share.
So should you invest in Wix right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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