According to IBIS World Research, US-based web design services industry is expected to grow 6.6% annually to $38.3 billion by the end of 2019. Israel-based Wix (Nasdaq:WIX) recently announced its first quarter results that failed to meet the market’s expectations. But the better than expected outlook helped keep the stock soaring.
For the quarter, Wix’s revenues grew 27% over the year to $174.3 million, ahead of the market’s forecast of $173 million. It reported a net loss of $0.62 per share. On an adjusted basis, it reported a profit of $0.03 per share, falling short of the Street’s forecast of $0.09 per share.
Among key metrics, collections grew 26% over the year to $200.4 million, driven by expansion of new products and enhancement of existing products.
Wix added 180,000 net premium subscriptions in the quarter to reach 4.2 million subscribers. Total registered users grew 19% or 6.6 million to 148 million. Average revenue per subscription increased 9% over the year as customers shifted to a mix of higher priced subscription packages.
For the current quarter, Wix expects revenues of $182-$184 million, falling short of the market’s forecast of $184.06 million. It expects to end the current year with revenues of $758-$763 million, revising the forecast upwards from an earlier projection of $755-$761 million. The Street was looking for revenues of $760 million for the year.
Wix’s Product Expansion
Wix is adding complementary products to its portfolio to attract more businesses. In December last year, it added Ascend-branded marketing tools focused on the small and medium businesses. Ascend helps businesses connect directly with customers on the Wix platform using new tools such as SEO, price quotes, marketing, and live chat with customers. Ascend includes a suite of 20 products focused on chat, memberships, email marketing, and search engine capabilities that help business owners grow their brand, manage customer relationships, and promote their business. Wix is selling Ascend as a separate subscription, with pricing ranging from $9 to $45 per month.
Wix recently launched Wix Turbo, a collection of product enhancements that will improve the performance for Wix websites. The proprietary technology optimizes browser rendering time so that Wix site visitors can see images and videos appear faster than ever. Wix is promoting the launch of Turbo through its tie-up with Marvel Studio’s Captain Marvel.
In April this year, Wix rebranded Wix Code as Corvid by Wix and released a technical preview of an updated version of the advanced developer platform. The upgraded platform comes with several new features, tools, and functionalities targeted at reducing issues that were raised by its users and providing more capabilities and flexibility for developers to enhance their experience and streamline their workflows.
While the recent financial performance may not have been up to the mark, the market is pleased with Wix’s continuous product expansion. It has been adding services and offerings that are gradually making it an indispensable vendor for small businesses. Addition of services like payment platform, marketing tools, and a help desk system in the recent past have helped build customer loyalty for Wix.
Wix also focuses on a platform strategy for growth. Third party developers can build apps on its platform and sell them on its marketplace. It helps the developer community build and monetize the apps. Developers can launch their apps as a freemium offering or through a subscription-based plan. The apps available on its platform provide capabilities including analytics, marketing, and social media services to name a few. Wix does not disclose the number of developers on its platform.
Its stock is trading at $145.59 with a market capitalization of $7.3 billion. It had climbed a 52-week high of $149.59 earlier this month. Like other technology stocks, Wix too had fallen to a 52-week low of $80.20 in December. Wix had listed in November 2013 by raising $127 million at a valuation of $604 million. The stock had listed at a price of $17 apiece. Prior to the listing, Wix had raised $58.5 million in funding from Bessemer Venture Partners, Mangrove Capital Partners, Benchmark, and Insight Venture Partners at an undisclosed valuation.