A month has gone by since the last earnings report for Wix.com (WIX). Shares have lost about 0.8% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Wix.com due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
WIX Q3 Earnings & Revenues Beat Estimates,
Wix reported non-GAAP earnings per share (EPS) of $1.50 for third-quarter 2024, exceeding the Zacks Consensus Estimate of $1.44. The company had reported EPS of $1.10 in the year-ago quarter.
Total revenues increased 13% year over year to $444.7 million and beat the Zacks Consensus Estimate of $443.6 million.
At the end of Sept. 30, 2024, registered users were 278 million.
Quarter in Detail
Creative Subscriptions’ revenues (71.7% of total revenues) increased 10% year over year to $318.8 million. Business Solutions’ revenues (28.3% of total revenues) rose 22% to $125.8 million.
In the third quarter, Creative Subscriptions annualized recurring revenues were $1.31 billion, up 11% year over year.
Bookings of $449.8 million improved 16% year over year. Creative Subscriptions’ bookings increased 15% year over year to $326.6 million. Business Solutions’ bookings rose 17% to $123.1 million. Solid uptake of WIX Studio, artificial intelligence (AI) product suite, healthy business pipeline and expanding commerce platform drove the strong bookings performance in the quarter under discussion.
Bookings growth for Studio subscriptions increased significantly compared to the previous quarter. This was driven by strong new purchases and many existing customers renewing their subscriptions. In the third quarter, 75% of bookings from new customers came from Studio accounts, as more agencies adopted Studio for their projects.
Partners revenues in the third quarter were $155.2 million, up 30% year over year.
Region-wise, North America, Europe, Asia and others, and Latin America contributed 60%, 25%, 11% and 4%, respectively, to third-quarter 2024 revenues, up 12%, 17%,11% and 5% year over year.
Operating Details
Non-GAAP gross margin was 69%, up from 68% in the prior-year quarter, driven by improving gross margins across Creative Subscriptions and Business Solutions segments.
Wix reported a non-GAAP operating income of $88.4 million compared with $58 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sept. 30, 2024, Wix had cash and cash equivalents of $439.4 million compared with $802.4 million as of June 30, 2024.
Cash flow from operations amounted to $129.8 million compared with $64.1 million in the year-ago quarter.
Capital expenditures totaled $2.1 million. Free cash flow was $127.8 million.
2024 Outlook Revised
Based on its strong performance in the third quarter, Wix has raised its projections for the full year. For 2024, bookings are expected to reach $1,822–$1,832 million up from the previous guidance of $1,802–$1,822 million.
Revenues are expected to be between $1,757 million and $1,764 million, suggesting 13% growth from the prior-year quarter's reported figure. Earlier, it projected revenues in the $1,747-$1,761 million band.
Free Cash Flow (excluding HQ capital expenditure) is projected in the range of $483–$488 million (27–28% of revenue), reflecting an increase from earlier guidance of $460–$470 million.
For the fourth quarter of 2024, revenue is expected to be between $457 million and $464 million, or 13-15% year-over-year growth, and the company anticipates exiting the year with bookings growth of 18%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Wix.com has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Wix.com has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Wix.com is part of the Zacks Computers - IT Services industry. Over the past month, Dynatrace (DT), a stock from the same industry, has gained 2.1%. The company reported its results for the quarter ended September 2024 more than a month ago.
Dynatrace reported revenues of $418.13 million in the last reported quarter, representing a year-over-year change of +18.9%. EPS of $0.37 for the same period compares with $0.31 a year ago.
For the current quarter, Dynatrace is expected to post earnings of $0.33 per share, indicating a change of +3.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Dynatrace. Also, the stock has a VGM Score of D.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
