Wix.com (NASDAQ:WIX) has experienced substantial growth this year, with its shares surging by 25.2% year-to-date, outpacing the S&P 500 composite’s 19.7% increase.
Wix operates as a cloud-based web development platform, offering tailored solutions for businesses, organizations, professionals, and individuals seeking to create customized websites and application platforms.
Driving Factors Behind the Stock’s Ascent
The company’s performance is buoyed by robust momentum in its Creative Subscriptions and Business Solutions segments. Additionally, the continuous growth in annualized recurring revenues from Creative subscriptions, which reached $1.18 billion in the last reported quarter (a 10% YoY increase), is a significant positive factor.
Wix benefits from increasing partner revenues, successful B2B partnerships, and positive trends in user conversion to paid subscriptions. Strong customer retention, coupled with a rise in average revenue per subscription, further contribute to the company’s favorable outlook. As of the end of the third quarter, Wix boasted 258 million registered users.
In response to the growing demand for artificial intelligence (AI), Wix has introduced innovative products such as Conversational AI Chat for businesses and AI Meta Tags Creator. These tools aid users in enhancing their online business profiles and website capabilities. Other offerings, like AI Site Generator and AI Assistant for businesses, leverage AI to automate various aspects of website creation.
Looking ahead, Wix anticipates increased revenues and improved free cash flow margins in 2023, fueled by ongoing business momentum. The company now forecasts a 12-13% growth in 2023 revenues, reaching the range of $1,558-$1,563 million, up from the previous estimate of 11-12% growth and $1,543-$1,558 million.
In the third quarter of 2023, Wix reported non-GAAP diluted earnings per share of $1.10, surpassing the Zacks Consensus Estimate of 77 cents. Total revenues also exceeded expectations, reaching $393.8 million, a 14% YoY increase.
Potential Challenges on the Horizon
Despite these positive developments, Wix faces challenges in the form of a volatile macroeconomic environment, adverse foreign currency fluctuations, stiff competition, and increasing accumulated deficits.
Analyst Projections and Estimates
Wix’s earnings per share estimate for 2023 stands at $4.09, representing a notable improvement from the 2022 loss of 17 cents per share. Analyst optimism is evident in the Zacks Consensus Estimate for 2024, which pegs the EPS at $4.43.
Over the past 60 days, analysts have revised the Zacks Consensus Estimate for Wix’s 2023 EPS from $3.33 to $4.09, reflecting their positive outlook. The 2024 EPS estimate has also seen an improvement, rising from $3.53 to $4.43 over the same period.
Looking at revenue projections, Wix is expected to experience a 12.4% increase in 2023, reaching $1.56 billion. The outlook for 2024 is equally optimistic, with the metric anticipated to climb 11.9% to $1.75 billion.
Wix has consistently surpassed estimates in the last four quarters, delivering an impressive average earnings surprise of 283.6%.
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