Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Wix.com Ltd (NASDAQ:WIX) achieved the 'Rule of 40' milestone a year ahead of schedule, showcasing strong execution and commitment.
• Bookings growth was impressive at 18% year over year, driven by the self-creators business and strong partner momentum.
• Partners' revenue grew by 30% year over year, reflecting success in capturing the professional market.
• The AI website builder has been a significant driver of conversion and purchase behavior, with over 1 million sites created.
• The company reported its first year of positive GAAP operating income, marking a significant financial milestone.

Negative Points

• There was a modest negative FX impact in Q4 due to elevated FX volatility, affecting bookings and revenue.
• Transaction revenue was lower than expected in Q4 due to situational GPV headwinds and FX impacts.
• The company is not modeling double-digit growth for self-creators in 2025, indicating potential challenges in this segment.
• There is a significant FX headwind anticipated for 2025, impacting the financial outlook.
• Despite strong performance, the net subscriber growth has been deemphasized as a KPI, which may concern some investors.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with WIX.

Q: Can you elaborate on the components driving the 2025 guidance and acceleration over the year, especially given the challenging comps in the second half? A: Leo, CFO: The acceleration is exciting due to factors like Studio and partners growing faster. Studio is a major contributor, with new cohorts showing significant growth. AI's impact on conversion is also increasing, contributing to stronger numbers in the second half of the year.

Q: How should investors think about the growth opportunity for premium subscribers, given better conversion from new products? A: Mir Zohar, President and COO: We've de-emphasized net subscriptions as a KPI, focusing more on cohort value. The Q1 2024 cohort showed strong cumulative bookings, and the aggregate bookings value increased significantly. While net subscriptions are secondary, we expect a positive trend in 2025.

Q: Can you provide more details on the new self-creator solution that expands design beyond websites? A: Avishai Abrahami, CEO: The new product will allow users to expand design capabilities beyond websites, like creating Instagram ads or customer content. It addresses the need for broader design capabilities and leverages our core strength in simplifying complex creation processes.

Q: How is AI integration expected to impact cost structure and profitability? A: Leo, CFO: AI integration will benefit free cash flow, with most effects seen in the second half of the year. This will contribute to margin expansion and improved profitability, with savings reinvested for faster product development.

Q: What are the early user experiences with AI agents and the roadmap for 2025? A: Avishai Abrahami, CEO: Early results for AI agents like the AI-powered chat and marketing mastermind are promising, offering significant value to users. The long-term strategy involves allowing users to hire AI experts for their websites, enhancing functionality and user experience.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.