Wix Reports Fourth Quarter and Full Year 2017 Results

February 14, 2018

NEW YORK, Feb. 14, 2018 -- Wix.com Ltd. (Nasdaq: WIX), a leading cloud-based web development platform, today reported financial results for the fourth quarter and full year ended December 31, 2017. In addition, the Company provided its initial outlook for the first quarter and full year 2018.

"Continued improvements to our product offering and successful execution of marketing campaigns drove robust financial results this quarter, closing out a strong year," said Avishai Abrahami, Co-founder and CEO of Wix. "Most notably, Wix ADI improved considerably throughout the year, driving conversion improvements and increases in collections per subscription. These successes, combined with upcoming new products and enhancements, underscore our position of strength for the year ahead."

Lior Shemesh, CFO of Wix, added, "The growth in collections and free cash flow in Q4 closes a year of ongoing strengthening to our business fundamentals and exceeded our initial expectations since the beginning of the year. For the third consecutive year, we grew collections over 41%, and this year we did it along with nearly doubling our free cash flow. This outstanding momentum is reflected in our initial 2018 outlook and provides us with confidence in our ability to continue to generate growth and increase free cash flow moving forward."

Q4 2017 and Full Year 2017 Financial Summary


Three months ended

December 31,


$ in thousands

2016

2017


Y/Y growth


Prior Q4 2017 Outlook

Revenue

$84,176

$118,545


41%


$116,000 - 117,000

Collections

$97,652

$132,203


35%


$126,000 - 127,000

Operating (Loss)

$(4,742)

$(7,523)


NM



Non-GAAP Operating Income

$3,879

$9,703


150%



Net Cash Provided by Operating Activities

$19,714

$24,941


27%



Free Cash Flow

$18,683

$19,555


5%











Twelve months ended

December 31,


$ in thousands

2016

2017


Y/Y growth


Prior FY 2017 Outlook

Revenue

$290,103

$425,636


47%


$423,000 - 424,000

Collections

$342,069

$483,989


41%


$478,000 - 479,000

Operating (Loss)

$(44,032)

$(50,011)


NM



Non-GAAP Operating
Income (Loss)

$(12,529)

$9,099


NM



Net Cash Provided by
Operating Activities

$40,573

$83,052


105%



Free Cash Flow

$36,158

$70,683


95%


$68,000 - 69,000

Additional Q4 2017 Results and Highlights

  • Gross margin on a GAAP basis in the fourth quarter of 2017 was 85%, the same as the fourth quarter of 2016
  • Non-GAAP gross margin in the fourth quarter of 2017, calculated as non-GAAP gross profit as a percent of revenue, was also 85%, the same as in the fourth quarter of 2016
  • GAAP net loss in the fourth quarter of 2017 was $(6.6) million, or $(0.14) per share, compared to a net loss of $(5.9) million, or $(0.13) per share, for the fourth quarter of 2016
  • Non-GAAP net income in the fourth quarter of 2017 was $7.2 million, or $0.16 per share, compared to a non-GAAP net income of $3.0 million, or $0.07 per share for the fourth quarter of 2016
  • Net cash provided by operating activities in the fourth quarter of 2017 was $24.9 million, while capital expenditures totaled $5.4 million, leading to free cash flow of $19.6 million, compared to $18.7 million of free cash flow in the fourth quarter of 2016, a 5% year over year increase
  • Added 170,000 net premium subscriptions in the fourth quarter of 2017 to reach 3.2 million as of December 31, 2017, a 31% increase over the total number of subscriptions at the end of 2016
  • Added 5.3 million registered users in the fourth quarter of 2017. Registered users as of December 31, 2017 were 119 million, representing a 22% increase compared to the end of the fourth quarter of 2016

Additional Full Year 2017 Results and Highlights

  • Gross margin on a GAAP basis for the full year 2017 was 84%, the same as in 2016
  • Non-GAAP gross margin in the full year 2017 was 85%, the same as in 2016
  • GAAP net loss for the full year 2017 was $(56.3) million, or $(1.24) per share, compared to a net loss of $(46.9) million, or $(1.12), per share in 2016
  • Non-GAAP net loss for the full year 2017 was $(0.5) million, or $(0.01) per share, compared to a non-GAAP net loss of $(14.6) million, or $(0.35) per share, in 2016
  • Net cash provided by operating activities for the full year 2017 was $83.1 million, while capital expenditures totaled $12.4 million, leading to free cash flow of $70.7 million, compared to $36.2 million of free cash flow in 2016, a 95% year-over-year increase

Recent Business Highlights

  • Expands Strategic Partnership with Google Cloud: Building on its already strong alliance with Google Cloud, Wix announced that it has chosen G Suite as the exclusive provider of business productivity and collaboration applications on its platform. This increased alliance is a testament to the growth and scale benefits both Wix and Google have realized over many years of partnering. Wix grew its collaboration with Google throughout the last year by expanding the breadth of products it utilizes including G Suite, Google Cloud Platform, Google Maps API, YouTube and AdWords.
  • Official Launch of Wix Code: In December 2017, Wix officially launched Wix Code to all users. Wix Code is a powerful development platform that allows users to significantly extend the functionality of their online presence. Wix Code greatly expands Wix's addressable market by bringing a platform for creators, designers and developers to take advantage of a serverless development environment that features an array of advanced functions to create content-rich, custom websites and web applications. Since its launch, over 140,000 users have put Wix Code to use, marking a fantastic start to this innovative product set.
  • New Wix Tools Help Users with Site Accessibility: Wix has added Site Accessibility into the Wix Editor, now available for all sites on Wix. With these tools, a user can make their websites work better with assistive technologies or navigable with just a keyboard. Now any user can easily make any site accessible, for free.

Financial Outlook

Wix is introducing its outlook for the first quarter and full year 2018. This guidance is presented as follows:

  • The guidance for 2018 is based on the new revenue recognition standard ASC 606. Please reference our Investor Relations website for a reconciliation of 2017 financial information to ASC 606 for comparative purposes.
  • The outlook also incorporates the growth Wix is expected to realize from the revised terms in its agreement with Google. This revised agreement necessitates changing from net (agent) to gross (principal) accounting of collections and revenue, which is also incorporated in this guidance

For the first quarter of 2018, Wix expects the following:


Q1 2018 Outlook


Y/Y growth

Revenue1

$135 - $136 million


46% – 47%

Collections1        

$157 - $158 million


37% – 38%

For the full year 2018, Wix expects the following:


FY 2018 Outlook


Y/Y growth

Revenue2

$591 - 595 million


39% – 40%

Collections2

$645 - 653 million


33% – 35%

Free Cash Flow

$98 - $100 million


39% – 41%

Conference Call and Webcast Information

Wix will host a conference call at 8:30 a.m. ET on Wednesday, February 14, 2018 to answer questions about the financial and operational performance of the business during the fourth quarter and full year 2017. The conference call will include a brief statement by management and will focus on answering questions about our results during the quarter and full year. To enhance the Q&A portion of this call, the Company has posted a shareholder update and supporting slides to its Investor Relations website at https://investors.wix.com/results. These materials provide shareholders and analysts with additional detail for analyzing results in advance of the quarterly conference call.

To participate on the live call, analysts and investors should dial 866-393-4306 (US/Canada), 734-385-2616 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call and reference Conference ID 4482927. A telephonic replay of the call will be available through February 21, 2018 at 11:59 p.m. ET by dialing 855-859-2056 (US/Canada) or 404-537-3406 (International) and providing Conference ID 4482927.

Wix will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company's website at https://investors.wix.com/.

About Wix.com Ltd.

Wix is leading the way with a cloud-based development platform for over 122 million registered users worldwide. Wix was founded on the belief that the Internet should be accessible to everyone to develop, create and contribute. Through free and premium subscriptions, Wix empowers millions of businesses, organizations, artists, and individuals to take their businesses, brands and workflow online. The Wix Editor, Wix ADI, a highly curated App Market, and Wix Code enable users to build and manage a fully integrated and dynamic digital presence. Wix's headquarters are in Tel Aviv with offices in Be'er Sheva, Berlin, Dnipro, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo and Vilnius.

Visit us: on our blog, FacebookTwitterInstagramLinkedInPinterest and Google+

Download: Wix App is available for free on Google Play and in the App Store

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, Wix uses the following non-GAAP financial measures: collections, non-GAAP gross margin, non-GAAP operating income (loss), free cash flow, non-GAAP net income (loss) and non-GAAP net income (loss) per share (collectively the "Non-GAAP financial measures"). Collections represents the total cash collected by us from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period. Non-GAAP gross margin represents gross profit calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, acquisition-related costs and amortization, divided by revenue. Non-GAAP operating income (loss) represents operating income (loss) calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net income (loss) represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net income (loss) per share represents non-GAAP net income (loss) divided by the weighted average number of shares used in computing GAAP loss per share. Free cash flow represents net cash provided by (used in) operating activities less capital expenditures.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

For more information on the non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press release. This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. The Company has not reconciled its guidance as to free cash flow to cash flow from operations because it does not provide guidance for cash flow from operations. As items that impact cash flow from operations are out of the Company's control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to cash flow from operations is not available without unreasonable effort.

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements may include projections regarding our future performance, including, but not limited to revenue, collections and free cash flow, the availability, merchantability or functionality of certain new products or features and their anticipated product demand and customer satisfaction, and may be identified by words like "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "outlook," "future," "will," "seek" and similar terms or phrases. The forward-looking statements contained in this press release, including the full year guidance, are based on management's current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, our ability to grow our user base and premium subscriptions; our ability to maintain and enhance our brand and reputation; our ability to manage the growth of our infrastructure effectively; our ability to effectively execute our initiatives to scale and improve our user support function; customer acceptance of new products and other challenges inherent in new product development, changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading "Risk Factors" in the Company's 2016 annual report on Form 20-F filed with the Securities and Exchange Commission on March 28, 2017. Any forward-looking statement made by us in this press release speaks only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Investor Relations:
Maggie O'Donnell
[email protected] 
415-223-2624

Media Relations:
Vivian Hernandez
Wix.com
[email protected] 
415-517-6539

Wix.com Ltd.

CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP

(In thousands, except loss per share data)


















Three Months Ended


Year Ended


December 31,


December 31,


2016


2017


2016


2017


(unaudited)


(audited)


(unaudited)









Revenue

$                  84,176


$              118,545


$       290,103


$       425,636

Cost of revenue

12,738


17,676


45,287


69,391

Gross Profit

71,438


100,869


244,816


356,245









Operating expenses:








Research and development

28,877


43,965


105,368


153,635

Selling and marketing

40,022


50,906


156,512


204,435

General and administrative

7,281


13,521


26,968


48,186

Total operating expenses

76,180


108,392


288,848


406,256

Operating loss

(4,742)


(7,523)


(44,032)


(50,011)

Financial income (expenses), net

(450)


(1,142)


247


(5,015)

Other income (expenses)

(5)


79


(4)


76

Loss before taxes on income

(5,197)


(8,586)


(43,789)


(54,950)

Taxes on income

724


(1,981)


3,107


1,323

Net loss

$                  (5,921)


$                (6,605)


$       (46,896)


$       (56,273)









Basic and diluted net loss per share 

$                    (0.13)


$                   (0.14)


$            (1.12)


$            (1.24)

Basic and diluted weighted-average shares used to compute net loss per share 

43,907,388


46,267,701


42,032,818


45,552,199

Wix.com Ltd.

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)






Period ended


December 31,


December 31,


2016


2017

Assets

(audited)


(unaudited)

Current Assets:




   Cash and cash equivalents

$            93,064


$            85,230

   Short term deposits

78,240


148,112

   Restricted cash and deposit

931


949

   Trade receivables 

8,279


11,400

   Prepaid expenses and other current assets

17,346


19,246

 Total current assets

197,860


264,937

Property, equipment and software, net




Long-Term Assets:




Property and equipment, net

8,750


16,201

Prepaid expenses and other long-term assets 

2,622


5,753

Intangible assets and goodwill, net

5,452


45,052

 Total long-term assets

16,824


67,006





 Total assets

$         214,684


$         331,943





Liabilities and Shareholder's Deficiency




Current Liabilities:




   Trade payables

$            20,709


$            34,240

   Employees and payroll accruals

20,230


28,067

   Deferred revenues

146,987


202,482

   Accrued expenses and other current liabilities

18,847


37,592

Total current liabilities

206,773


302,381





Long term deferred revenues

9,746


14,329

Long term deferred tax liability

634


2,694

Long-term loan

-


1,219

Total long-term liabilities

10,380


18,242





 Total liabilities

217,153


320,623





Shareholders'  Equity (Deficiency)




   Ordinary shares

74


74

   Additional paid-in capital

241,154


311,113

   Other comprehensive loss

(389)


(286)

   Accumulated deficit

(243,308)


(299,581)

Total shareholders' equity (deficiency)

(2,469)


11,320





Total liabilities and shareholders' equity (deficiency) 

$         214,684


$         331,943

Wix.com Ltd.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


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