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Factors Setting the Tone for Wix.com's (WIX) Q4 Earnings

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Wix.com Ltd.’s (WIX - Free Report) is scheduled to release fourth-quarter 2020 results on Feb 17.

For the fourth quarter, the company expects revenues to be $266-$271 million. The Zacks Consensus Estimate for revenues is pegged at $270.3 million, suggesting growth of 32.1% from the prior-year quarter’s levels.

The Zacks Consensus Estimate for fourth-quarter bottom line is pegged at a loss of 7 cents, unchanged in the past 30 days. The company had reported earnings of 39 cents per share in fourth-quarter 2019.

Wix.com Ltd. Price and EPS Surprise

 

Wix.com Ltd. Price and EPS Surprise

Wix.com Ltd. price-eps-surprise | Wix.com Ltd. Quote

 

Factors to Note Ahead of Q4

Continued strength in adoption of innovative digital services like Editor X, Wix Editor, Ascend by Wix, Corvid by Wix, Wix ADI, Wix Logo Maker, Wix Answers, Wix Turbo and Wix Payments is expected to have aided Wix’s fourth-quarter performance.

Also, the company is undertaking measures to expand subscriber base with new product roll outs and enhancement of existing portfolio of services amid coronavirus-crisis triggered digitalization. Wix is also working on increasing monetization of existing users. These, in turn, might have contributed to the to-be-reported quarter’s performance.

In October 2020, Wix teamed up with Vodafone to augment its international footprint. With this collaboration, Wix subscription packages will be available on Vodafone Business Marketplace platform to Vodafone customers in the U.K., which will assist them in enhancing their online businesses.

For fourth-quarter 2020, the company projects Collections in the range of $295-$305 million. The Zacks Consensus Estimate for Collections is pegged at $303 million, suggesting growth of 33.5% from the year-ago quarter’s reported figure.

Meanwhile, the consensus estimates for Creative Subscriptions revenues and Business Solutions’ is currently at $214 million and $56 million for the fourth quarter of 2020, respectively.

Continued momentum in online selling activity due to the pandemic-induced e-commerce boom is also anticipated to have aided fourth-quarter performance.

Moreover, the re-imposition of shelter-in-place guidelines across several countries due to another COVID-19 wave is likely to have a number of new registered users, premium subscriptions and cohort collections across many of its geographies. This is likely to have positively contributed to the company’s in the fourth quarter.

In the last reported quarter, the company witnessed better-than-expected conversion and retention in user cohorts.

In the third quarter of 2020, Wix had added 7.8 million new registered users. Registered users as of Sep 30, 2020 were 189 million, up 19% year over year.

The company added a total of 302K net premium subscriptions in the third quarter, up 164% year over year, to reach 5.3 million as of Sep 30, 2020.

The Zacks Consensus Estimate for number of net premium subscriptions is pegged at approximately 5.55 million for the quarter under review. Meanwhile, the consensus mark for registered users for the fourth quarter is at 197.1 million.

Nonetheless, focus on small-and-medium sized (SMB) businesses, which are hit hard by the macroeconomic headwinds amid coronavirus-induced slowdown, is likely to have limited margin expansion and bottom-line performance in the quarter under review.

Also, higher investments on product development and marketing amid intensifying competition from other cloud-based software and payments platforms is likely to have put pressure on the company’s margin in the quarter to be reported.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Wix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But, that’s not the case here.

Wix has an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks worth keeping a tab on, as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.

CrowdStrike (CRWD - Free Report) has an Earnings ESP of +57.75% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday (WDAY - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2.

HP Inc. (HPQ - Free Report) has an Earnings ESP of +2.45% and a Zacks Rank #2.

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