WIX Q3 Earnings Surpass Estimates with Revenue Growth Driven by Key Segments

Wix.com Ltd WIX delivered an impressive third-quarter performance in 2023, with non-GAAP diluted earnings per share (EPS) of $1.10, outpacing the Zacks Consensus Estimate of 77 cents and showing significant growth from the 6 cents reported in the same quarter of the previous year. This notable rise highlights WIX's profitability enhancements and operational efficiency.

Revenue Expansion

WIX observed a substantial year-over-year revenue increase of 14% to $393.8 million, again exceeding the estimated $389.5 million by Zacks Consensus. This growth is attributed to the strong momentum in the company's Creative Subscriptions and Business Solutions segments, with registered users reaching 258 million as of September 30, 2023.

Segment Performance

The Creative Subscriptions sector, accounting for nearly three-quarters of total revenues, saw an 11% increase to $290.6 million. In comparison, the Business Solutions segment rose by 22% to $103.2 million. The robust performance of these segments reflects WIX's capability to adapt and serve diverse customer needs effectively.

The company's focus on annualized recurring revenues paid off with a 10% increase to $1.18 billion in the third quarter within the Creative Subscriptions. Bookings also saw an uptick of 10% to $389.1 million, with Creative Subscriptions contributing a 5% increase and Business Solutions bookings climbing a significant 27%.

WIX's global presence was evident as revenues from North America, Europe, Asia, and others, as well as Latin America, demonstrated year-over-year improvements of 16%, 11%, 11%, and 9% respectively, showcasing international market penetration and appeal.

Operating Efficiency and Prospects

The non-GAAP gross margin expansion by 300 basis points to 68% is particularly noteworthy, reflecting efficiencies across the key segments. From an operational perspective, WIX converted a non-GAAP operating loss to a non-GAAP operating income of $57.9 million, juxtaposed with a $3.1 million loss in the prior year.

WIX's balance sheet remains robust with ample liquidity of $504.7 million in cash and cash equivalents. Meanwhile, operating cash flow saw a significant jump to $64.1 million from a mere $0.3 million in the previous year, indicating strong cash generation capabilities.

Forward-Looking Statements

Looking ahead, WIX forecasts fourth-quarter 2023 revenues between $400 million and $405 million, aligning with a 13-14% growth rate from the year prior. The full-year 2023 outlook is also optimistic, with expected revenue growth of 12-13%, translating to $1,558-$1,563 million.

This financial trajectory is complemented by projections of reduced non-GAAP operating expenses, making up 53%-54% of revenues, and an elevated free cash flow estimate in the range of $235-$240 million.

Investment Opportunity

For investors, WIX holds a Zacks Rank #3 (Hold), proposing a stable investment option. However, for those seeking higher-ranked stocks in the technology space, Asure Software ASUR and Badger Meter BMI—both with a Zacks Rank #1 (Strong Buy)—emerge as compelling alternatives. With significant earnings beats and positive long-term growth prospects, ASUR and BMI present attractive choices for technology-segment investors.

earnings, revenue, growth