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Wix (WIX) Q3 Loss Narrower Than Expected, Revenues Rise Y/Y

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Wix.com Ltd. (WIX - Free Report) reported a third-quarter 2021 non-GAAP loss of 21 cents per share, narrower than the Zacks Consensus Estimate for a loss of 43 cents per share. However, the figure was wider than the year-ago quarter's loss of 14 cents per share.

Total revenues increased 26% year over year to $320.8 million and beat the consensus estimate of $314.8 million.

Region-wise, North America, Europe, Asia and others, and Latin America contributed 58%, 25%, 13% and 4% to third-quarter revenues, respectively. Revenues from North America, Europe, Asia and others, and Latin America increased 27%, 28%, 19% and 9% year over year, respectively.

Quarter in Detail

Creative Subscriptions revenues (75.2% of revenues) increased 19% year over year to $241.3 million. Business Solutions revenues (24.8% of revenues) jumped 55% to $79.5 million.

In the third quarter, Creative Subscriptions Annualized Recurring Revenues were $992.3 million, up 18% year over year.

Collections were $373.3 million, up 33% year over year. Creative Subscriptions increased 28% year over year to $292.7 million. Business Solutions rose 53% to $80.6 million.

Business Solutions Revenues and Collections were up 55% and 53%, year over year, respectively.

Operating Details

Non-GAAP gross margin contracted 700 basis points (bps) to 63%.

Non-GAAP research and development expenses, as a percentage of revenues, expanded 40 bps year over year to 25.2%. Non-GAAP selling and marketing expenses were 33.9%, contracting 790 bps year over year.

Wix reported a non-GAAP operating loss of $10.9 million compared with a non-GAAP operating loss of $8.5 million in the year-ago quarter.

Wix.com Ltd. Price, Consensus and EPS Surprise

 

Wix.com Ltd. Price, Consensus and EPS Surprise

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

Balance Sheet & Cash Flow

As of Sep 30, 2021, Wix's cash and short-term deposits were $828.5 million compared with $927.5 million as of Jun 30, 2021.

As of Sep 30, 2021, long-term debt was reported at $922 million compared with $920 million as of Jun 30, 2021.

Cash flow from operations amounted to $4.3 million in the third quarter compared with $21.8 million in the previous quarter.

Capital expenditure totaled $13 million in the reported quarter. Free cash flow was ($8.7 million).

Guidance

For fourth-quarter 2021, Collections are projected to be $348-$372 million, indicating an improvement of 14-21% from the year-ago quarter's reported figure.

Revenues are expected between $324 million and $333 million, suggesting 15-18% growth from the prior-year quarter's reported figure. The Zacks Consensus Estimate for the same is pegged at $328.43 million.

Wix raised its 2021 outlook. Collections are now projected to be $1.415-$1.439 billion, indicating an improvement of 28-31% from the prior-year quarter's level. Earlier, the company guided Collections of $1.400-$1.435 billion.

Revenues are now expected between $1.265 billion and $1.274 billion, indicating growth of 28-29% from the prior-year quarter's reported figure. Earlier, the company guided revenues of $1.255-$1.27 billion.

The Zacks Consensus Estimate for 2021 revenues is projected at $1.26 billion.

The company now anticipates a free cash flow of $22-$27 million.

Zacks Rank & Stocks to Consider

Currently, Wix carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are ON Semiconductor (ON - Free Report) , Advanced Micro Devices (AMD - Free Report) and NVIDIA (NVDA - Free Report) . While On Semiconductor currently sports a Zacks Rank #1 (Strong Buy), Advanced Micro Devices and NVIDIA carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Long-term earnings growth rates of ON Semiconductor, Advanced Micro Devices and NVIDIA are pegged at 53.93%, 46.2% and 19.54%, respectively.

ON Semiconductor, Advanced Micro Devices and NVIDIA have gained 77.8%, 59.2% and 132.8%, respectively, on a year-to-date basis.