Wix.com Ltd. (Nasdaq: WIX) today reported strong financial results for the first quarter ended March 31, 2019, exceeding its prior guidance. In addition, the Company provided its initial outlook for the second quarter 2019 and increased its outlook for revenue and collections for the full year 2019.

"The results this quarter indicate a strong start to the year. It is clear that there continues to be substantial demand for creating an online presence as evidenced by the more than six and a half million new users that registered with Wix in the quarter," said Avishai Abrahami, Co-founder and CEO of Wix. "We are also excited to create another growth opportunity by investing in the next phase of Customer Solutions. We believe this evolution will drive top line growth through conversion improvements and the sale of new products while increasing our overall level of support. I am very happy with our results this quarter and maintain my resounding excitement for the year ahead."

Lior Shemesh, CFO of Wix, added, "Our strong top line growth highlights the early success of our strategy to increase collections per subscription, as the trend that we began to see last quarter is continuing as expected. We are raising our outlook for revenue and collections to reflect these early successes we have experienced to start the year."

Additional Q1 2019 Results and Highlights

• Gross margin on a GAAP basis in the first quarter of 2019 was 77%, compared to 79% in the first quarter of 2018
• Non-GAAP gross margin in the first quarter of 2019, calculated as non-GAAP gross profit as a percent of revenue, was 78%, compared to 80% in the first quarter of 2018
• GAAP net loss in the first quarter of 2019 was $(30.7) million, or $(0.62) per share, compared to a net loss of $(19.8) million, or $(0.42) per share, for the first quarter of 2018
• Non-GAAP net income in the first quarter of 2019 was $1.5 million, or $0.03 per share, compared to a non-GAAP net loss of $(2.7) million, or $(0.06) per share for the first quarter of 2018
• Net cash provided by operating activities in the first quarter of 2019 was $35.1 million, while capital expenditures totaled $5.0 million, leading to free cash flow of $30.0 million, compared to $21.4 million of free cash flow in the first quarter of 2018, a 40% year-over-year increase
• Added 180,000 net premium subscriptions in the first quarter of 2019 to reach 4.2 million as of March 31, 2019 a 21% increase over the total number of premium subscriptions at the end of the first quarter of 2018
• Added 6.6 million registered users in the first quarter of 2019. Registered users as of March 31, 2019 were 148 million1, representing a 19% increase compared to the end of the first quarter of 2018

Recent Business Highlights

• Building Agency Relationships and Gaining Adoption by Professionals: As highlighted last quarter, we are creating internal teams to build relationships with agencies, designers and developers. These efforts are off to a strong start as tens of thousands of agencies and professionals around the globe use Wix today.
• New Growth Opportunity with Next Phase of Customer Solutions: Following an initial investment in our Customer Solutions, we gathered data to compare problem-solving support to a more personalized approach. The analyses showed that conversion of users who engaged with the personalized support was multiple times higher than regular conversion on Wix. As a result, we will invest in building the infrastructure to increase our Customer Solutions globally. We believe this investment will provide multiple benefits:
  • Growth of revenue and collections: We expect this expansion to drive additional revenue and collections growth through increases in conversion due to a greater level of personalized support. Agents will be able to spend more time with users not only answering questions but also providing advice on what is needed to finalize and publish a site. Agents will also be able to offer and sell some of the many complementary products we have developed in the last several years including vertical applications, Ascend by Wix, Wix Payments and Wix Logo Maker.
  • Stellar support for our users worldwide: Prior to this expansion, Wix provided support to users primarily in North America during U.S. business hours. We will now be able to provide live phone support to all users around the world, regardless of location, 24 hours a day, 7 days a week.

We expect that this investment will drive incremental collections growth of approximately 5% in 2020, or approximately 3x the investment.

• Introduced Corvid by Wix: In April, Wix rebranded Wix Code as Corvid by Wix and released a technical preview of an updated version of the advanced developer platform, with new features, tools and functionalities. The new features are designed to solve many of the issues that our community had raised, providing more capabilities and flexibility for developers to enhance their experience and streamline their workflows.
• Unveiled Plans for New Headquarters in Tel Aviv: In April, Wix announced that it plans to build a new headquarters and campus for employees based in Tel Aviv. The new space will allow Wix to scale our operations in a single location and accommodate growth for years to come. Wix expects to occupy the space in two phases -- phase one in the second half of 2022 and phase two in the second half of 2023.
• Updated Share Repurchase Authorization: Wix plans to file in the coming days a motion seeking court approval in Israel to reauthorize the Company to repurchase up to $100 million of its ordinary shares from time to time. In accordance with Israeli law, the Company must receive approval from the District Court prior to the implementation of any shareholder distribution program. The current court authorization expires June 30, 2019, and Wix expects it to be re-approved before the expiration. Wix did not repurchase any shares in the quarter ended March 31, 2019.

Financial Outlook

Wix is introducing its outlook for the second quarter 2019. This guidance reflects recent changes in FX rates. Had FX rates stayed constant from when we provided full year guidance in February, we would have further raised Q2 collections guidance by approximately $1 million to $198-200 million.

About Wix.com Ltd.

Wix is leading the way with a cloud-based website development platform for over 150 million registered users worldwide today. The Wix website builder 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, Ascend by Wix and Corvid by Wix 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, Dublin, Kiev, Los Angeles, Miami, New York, San Francisco, São Paulo, Vilnius and Tokyo.

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