Wix.com WIX stock is continuing its upward trajectory with a gain of 55.5% in the past year compared with 44.3% and 26.5% growth of the sub-industry and S&P Composite, respectively.
Headquartered in Tel Aviv, Israel, and founded in 2006, WIX is a cloud-based web development platform. It offers solutions that enable businesses, organizations, professionals and individuals to develop customized websites and application platforms, and grow their online presence.
The increase in stock price can be attributed to robust financial performance. The company recently reported better-than-expected fourth-quarter 2023 results. Wix reported non-GAAP earnings per share (EPS) of $1.22 compared with 61 cents in the year-ago quarter.
Total revenues increased 14% year over year to $403.8 million. Momentum in the Creative Subscriptions and Business Solutions segments is driving the top-line performance. Creative Subscriptions’ revenues (73.3% of total revenues) increased 12% year over year to $296.2 million. Business Solutions’ revenues (26.7%) rose 20% to $107.6 million.
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Bookings of $395 million improved 6% year over year. At the end of Dec 31, 2023, registered users were 263 million. In the last reported quarter, non-GAAP gross margin expanded 500 basis points to 70%, driven by improving gross margins across the Creative Subscriptions and Business Solutions segments.
Total revenues for 2023 was $1.56 billion, which rose 13% year over year. Bookings for the full year were $1.60 billion, up 9% year over year.
Frequent launch of new products, growth in the number of registered users and premium subscriptions are key revenue drivers.
The company plans to tap the growing demand for Artificial Intelligence (AI) through the launch of innovative products like AI Site Generator, AI Chat Experience for businesses and AI Code Assistant.
Healthy adoption of Wix Studio is likely to drive overall monetization of partner cohorts. The average revenue per subscription is being driven by the shift to higher-tier packages, higher pricing, and increased adoption and usage of business solution products.
However, unfavorable foreign currency movement, stiff competition and rising accumulated deficit are headwinds.
Robust Outlook
Going ahead, WIX expects 2024 bookings and revenues to benefit from a stable and positively trending macro environment coupled with solid business momentum.
The company anticipates 2024 revenues to grow 11-13% and in the range of $1.73-$1.76 billion.
Non-GAAP operating expenses are forecast to be between 51% and 52% of revenues for 2024.
Wix estimates free cash flow (excluding HQ capital expenditure) in the range of $370-$400 million, representing 21-23% of revenues.
For first-quarter 2024, revenues are expected to be between $415 million and $419 million, suggesting 11-12% growth from the prior-year quarter's reported figure.
Zacks Rank & Estimates
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, WIX has a Growth Score of A. Per Zacks proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a VGM Score of A or B offer solid investment opportunities.
The Zacks Consensus Estimate for WIX’s 2024 and 2025 EPS is pegged at $4.81 and $6.44, suggesting an increase of 9.6% and 34%, respectively, from a year ago.
Revenues for 2024 and 2025 are projected to rise 14.2% and 10.9% to $1.78 billion and $1.98 billion, respectively.
WIX outpaced estimates in each of the trailing four quarters, delivering an earnings surprise of 124.1%, on average.
Other Stocks to Consider
Other top-ranked stocks worth consideration in the broader technology space are Manhattan Associates MANH, Watts Water Technologies WTS and Microsoft MSFT. While Manhattan Associates sports a Zacks Rank #1, Watts Water and Microsoft carry a Zacks Rank of 2 each, at present. You can the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MANH’s 2024 EPS has increased 3.6% in the past 60 days to $3.76. Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 72.6% in the past year.
The Zacks Consensus Estimate for Watts Water’s 2024 EPS has improved 12 cents to $8.56 in the past seven days. The long-term earnings growth rate is pegged at 7.8%. Shares of WTS have jumped 15.6% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 EPS is pegged at $11.63, indicating growth of 18.6% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term earnings growth rate is pegged at 16.2%. MSFT has gained 64.7% in the past year.
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