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Wix.com (WIX) to Report Q1 Earnings: Is a Beat in the Cards?

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Wix.com Ltd.’s (WIX - Free Report) is set to report first-quarter 2020 results on May 14.

Despite COVID-19 related headwinds, the company reaffirmed its guidance for the first-quarter in a letter to investors released on Apr 13.

Notably, for the first quarter, the company expects revenues in the range of $215-$217 million. The Zacks Consensus Estimate for revenues is pegged at $215.8 million, which suggests growth of 23.8% from the prior-year quarter’s figure.

The Zacks Consensus Estimate for first-quarter earnings is pegged at a loss of 2 cents, unchanged over the last 30 days. The company delivered earnings of 3 cents per share in the prior-year quarter.

Notably, the company beat the Zacks Consensus Estimate in three of the last four quarters and missed the mark in one. It has a trailing four-quarter positive earnings surprise of 31.05%, on average.

Let’s see how things have shaped up prior to this announcement.

Wixcom Ltd Price and EPS Surprise

 

 

Favorable ESP

Our proven model conclusively predicts 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.

Wix has an Earnings ESP of +100.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors to Watch

Wix is undertaking measures to expand subscriber base with product roll outs and enhancements of existing portfolio of services. These user-friendly applications are likely to have witnessed robust adoption due to their easy-to-use and creative features. This, in turn, is expected to have boosted the top line in the to-be-reported quarter.

Further, the company has noted that the growth in stay-at-home trends due to COVID-19 induced lockdowns has increased the number of new registered users, premium subscriptions and cohort collections across many of its geographies. Ascend by Wix also witnessed robust traction due to the rise in communication and marketing activities.

Notably, the company projected Collections in the band of $247-$249 million. The Zacks Consensus Estimate for Collections is at $248 million, which suggests growth of 23.7% from the year-ago quarter’s reported figure.

The company’s rebranded Corvid solution as well as Editor X (launched on Feb 5) has been witnessing solid traction. This is anticipated to have aided the company’s performance in the quarter under review.

Moreover, incremental adoption of innovative digital services including Wix ADI and Wix Payments, among others is expected to have bolstered the top line in the first quarter.

Increasing popularity of the company's products instills optimism in the stock. Notably, shares of Wix have returned 35.5% in the year-to-date period against the industry’s decline of 4.3%.

In the last reported quarter, the company witnessed better-than-expected conversion and retention in user cohorts. The company added a total of 89,000 net premium subscriptions in the reported quarter, which came in at 4.5 million as of Dec 31, 2019 (up 13% year over year). This trend continued in the first quarter, sustained by the aforementioned increase in traffic due to COVID-19.

The Zacks Consensus Estimate for number of net premium subscriptions is pegged at approximately 4.68 million for the quarter under review.

Notably, in the quarter under review, Wix announced opening of a new office in New York. The office is aimed at strengthening the company’s footprint in the city. Although it favors growth prospects in the longer haul, increasing investments on product development, infrastructure and platform as well as sales & marketing are likely to have exerted pressure on the company’s bottom line in the first quarter.

Moreover, Wix witnessed a slight increase in subscription cancellations in the last few weeks of the first quarter, which is expected to have dampened revenue growth.

Other Stocks to Consider

Here are some other stocks you may consider as our proven model shows that these too have the right mix of elements to beat estimates.

BJs Wholesale Club Holdings Inc (BJ - Free Report) has an Earnings ESP of +6.42% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank #2.

Cisco Systems Inc (CSCO - Free Report) has an Earning ESP of +6.29% and a Zacks Rank #3.

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