Website design and e-commerce platform provider Wix.com (NASDAQ:WIX) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 14% year on year to $460.5 million. On the other hand, next quarter’s revenue guidance of $471 million was less impressive, coming in 1.9% below analysts’ estimates. Its non-GAAP profit of $1.93 per share was 20% above analysts’ consensus estimates.
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Wix (WIX) Q4 CY2024 Highlights:
- Revenue: $460.5 million vs analyst estimates of $461.3 million (14% year-on-year growth, in line)
- Adjusted EPS: $1.93 vs analyst estimates of $1.61 (20% beat)
- Adjusted Operating Income: $100.5 million vs analyst estimates of $97.92 million (21.8% margin, 2.7% beat)
- Management’s revenue guidance for the upcoming financial year 2025 is $1.99 billion at the midpoint, missing analyst estimates by 1.5% and implying 12.7% growth (vs 12.7% in FY2024)
- Operating Margin: 7.8%, up from 0.4% in the same quarter last year
- Free Cash Flow Margin: 28.6%, similar to the previous quarter
- Market Capitalization: $12.92 billion
“Wix sets a high standard for innovation and creativity, and we’re constantly exceeding expectations. This past year was one of exciting innovation as we introduced revolutionary AI solutions such as the new generation AI Website Builder. We also made meaningful enhancements to the Studio platform, including the AI visual sitemap and wireframe generator and Figma integration among new advanced design capabilities,” said Avishai Abrahami, Wix Co-founder and CEO.
Company Overview
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
E-commerce Software
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Wix grew its sales at a 11.5% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our benchmark for the software sector, which enjoys a number of secular tailwinds.
This quarter, Wix’s year-on-year revenue growth was 14%, and its $460.5 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 12.2% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.3% over the next 12 months, an acceleration versus the last three years. This projection is healthy and implies its newer products and services will fuel better top-line performance.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Wix is quite efficient at acquiring new customers, and its CAC payback period checked in at 34.9 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Wix’s Q4 Results
It was good to see Wix's revenue and operating profit beat this quarter. On the other hand, its full-year revenue guidance missed and its revenue guidance for next quarter also fell short of Wall Street’s estimates. The market seems to be forgiving this mediocre outlook and focusing on the Q4 performance, and the stock traded up 3% to $234.68 immediately after reporting.
Is Wix an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
