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Wix.com (WIX) Up 6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Wix.com (WIX - Free Report) . Shares have added about 6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wix.com due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Wix.com Q1 Earnings Miss Estimates, Revenues Top

Wix.com Ltd. reported non-GAAP earnings of 3 cents per share in the first quarter of 2019, missing the Zacks Consensus Estimate by 6 cents. Notably, the company reported a loss of 6 cents in the year-ago quarter.

Total revenues surged 27% year over year to $174.3 million, surpassing the Zacks Consensus Estimate of $172.97 million. The figure also came ahead of management’s guided range of $172-$173 million.

Quarter in Detail

Collections during the reported quarter came in at $200.4 million, up 26% year over year, attributable to expansion of new products and enhancement of existing products. Management had projected collections in the range of $196 million to $197 million.

The company witnessed better-than-expected conversion and retention in its user cohorts. The company added a total of 180,000 net premium subscriptions in the reported quarter, which came in at 4.2 million as of Mar 31, 2019 (up 21% year over year).

Wix added 6.6 million registered users during the reported quarter. Registered users as of Mar 31, 2019 came in at 148 million, up 19% year over year.

During the reported quarter, average revenue per subscription (ARPS) increased 9% year over year. The surge can primarily be attributed to favorable mix of higher priced subscription packages.
 
Operating Results

Non-GAAP gross profit advanced 23.7% from the year-ago quarter to $136 million. Nonetheless, non-GAAP gross margin contracted 200 bps to 78%.

Total operating expenses surged 27.7% to $162.4 million in the first quarter.

Consequently, the company reported non-GAAP operating loss of $2.2 million wider than year-ago loss reported at $0.8 million.

Balance Sheet & Cash Flow

As on Mar 31, 2019, Wix had cash and cash equivalents of $348.1 million, up from $331.1 million in the previous quarter.

Cash flow from operations came in at $35.1 million during the first quarter compared with $36.1 million reported in the previous quarter.

Free cash flow was $30 million, compared with $32.7 million reported in the prior quarter.

Guidance

For the second quarter, the company expects revenues in the range of $182-$184 million, representing year-over-year growth of 25-26%. Collections are projected to be in the range of $197-$199 million, suggesting growth in the range of 23-24% in the year-ago quarter.

The company updated fiscal 2019 guidance.

Management now anticipates revenues in the range of $758-$763 million, up from prior guided range of $755-$761million. This indicates an improvement of 26% from the year-ago reported figure.

Collections are projected to be in the range of $822-$830 million, suggesting growth of 25-26% from the prior-year quarter, compared with previous predicted range of $817-$827 million.

However, the company expects free cash in the range of $122-$126 million, indicating an improvement of 20-24% from the year-ago quarter, down from prior guided range of $135-$140 million.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -344.19% due to these changes.

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 D. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Wix.com has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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