Israeli Internet company Wix.com Ltd. (Nasdaq: WIX) today published its financials for the first quarter of 2019. Wix outperformed the analysts' revenue forecasts for the company, but failed to meet their profit forecasts. At the same time, the company also raised its revenue guidance for 2019 as a whole, but lowered its free cash flow guidance because of an expansion of its investment in its customer service. Wix's share plunged 6% at the beginning today's trading.
Wix enables users to establish and manage websites, appealing primarily to small and medium-sized businesses. The Tel Aviv-based company's share is cruising at a record $142, giving it a $7.1 billion market cap.
Wix's revenue totaled $174 million in the first quarter, 26.5% more than in the corresponding quarter last year. Collections, which include deferred revenue, grew 25.5% to $200 million. Increased operating expenses swelled Wix's GAAP-based operating loss by 50.6% to $27.8 million, while its GAAP net loss grew from $19.8 million in the first quarter of 2018 to $30.7 million in the first quarter of this year.
On a non-GAAP basis, which excludes stock-based compensation for employees, depreciation of intangible assets, and other accounting items, Wix posted a $2.2 million operating loss, compared with $762,000 in the corresponding quarter last year. At the same time, the company recorded a $1.5 million non-GAAP net profit in the first quarter, compared with a $2.7 million loss in the first quarter of last year. Wix's profit per share was $0.03, $0.02 less than the analysts' forecasts.
Wix generated $35.1 million in cash flow from current activity in the first quarter. After raising $440 million in an issue of convertible bonds at 0% interest last year, the company had $789 million in cash at the end of the first quarter. Wix plans to file a court request to update its authorization for a buyback of shares of up to $100 million that it did not carry out.
Wix recruited 6.6 million registered users during the first quarter, giving it 148 million users at the end of the quarter. The company also recruited 180,000 premium users in the quarter, giving it a total of 4.2 million.
According to Wix's revised guidance, the company will have $182-184 million revenue and $197-199 million in collections in the second quarter and $758-763 million revenue in 2019 as a whole, 26% more than in 2018 and more than its previous $755-761 million guidance.
Wix also projects $122-126 million in free cash flow for 2019, 20-24% more than in 2018, but less than its previous guidance of $135-140 million, due to expansion of its customer service requiring an immediate $15 million investment in 2019. Wix believes that this investment will generate a 5% increase in collections in 2020. The company's previous guidance included a $15-20 investment for supporting new growth engines.
"The results this quarter indicate a strong start to the year. It is clear that there continues to be substantial demand for creating an online presence as evidenced by the more than six and a half million new users that registered with Wix in the quarter," said Wix cofounder and CEO Avishai Abrahami. "We are also excited to create another growth opportunity by investing in the next phase of Customer Solutions. We believe this evolution will drive top line growth through conversion improvements and the sale of new products while increasing our overall level of support. I am very happy with our results this quarter and maintain my resounding excitement for the year ahead."
Wix CFO Lior Shemesh added, "Our strong top line growth highlights the early success of our strategy to increase collections per subscription, as the trend that we began to see last quarter is continuing as expected. We are raising our outlook for revenue and collections to reflect these early successes we have experienced to start the year."
Published by Globes, Israel business news - en.globes.co.il - on May 16, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019