Wix.com Q2 2025 Earnings Report

Wix.com EPS Results

• Actual EPS: $2.28
• Consensus EPS: $1.79
• Beat/Miss: Beat by +$0.49
• One Year Ago EPS: $1.67

Wix.com Revenue Results

• Actual Revenue: $489.93 million
• Expected Revenue: $487.62 million
• Beat/Miss: Beat by +$2.31 million
• YoY Revenue Growth: +12.40%

Wix.com Announcement Details

• Quarter: Q2 2025
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 6, 2025
• Conference Call Time: 8:30AM ET

Wix.com (NASDAQ:WIX), together with its subsidiaries, operates as a cloud-based web development platform for registered users and creators worldwide. The company offers Wix Editor, a drag-and-drop visual development and website editing environment platform; and Wix ADI that enables users to have the freedom of customization that the classic editor offers. It also provides Wix Logo Maker that generates a logo, including through the use of artificial intelligence; Wix Answers to support users; and Payments by Wix, a payment platform, which helps its users receive payments from their customers through their Wix Website. In addition, the company offers various vertical-specific applications that business owners use to operate various aspects of their business online. Further, it provides a range of complementary services, including Wix App Market, a marketplace that offers its registered users various free and paid web applications for building, growing, and managing their businesses; Wix marketplace that brings users seeking help in creating and managing a website together with Web experts; and Wix owner App, a native mobile application, which enables users to manage their Websites and Wix operating systems. The company was formerly known as Wixpress Ltd. The company was incorporated in 2006 and is headquartered in Tel Aviv, Israel.

Wix.com Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong AI-driven advancements have fueled new user onboarding and cohort growth, signaling increased adoption and rapid innovation across the platform.
• Positive Sentiment: Acquisition of Base44 expands Wix into the Vibe coding market, with its ARR surging from a few million to an expected $40–50 million by year-end.
• Positive Sentiment: New user cohort bookings grew 14 percent in Q2 and accelerated to over 20 percent year-over-year exiting July, underpinning a raised full-year bookings outlook of $2.04–2.075 billion and revenue guidance of $1.975–2.0 billion.
• Positive Sentiment: Q2 performance exceeded expectations with $510 million in bookings (+11 percent), $490 million in revenue (+12 percent), a 70 percent non-GAAP gross margin, $148 million free cash flow (30 percent of revenue), and a $100 million share repurchase.
• Neutral Sentiment: Modest pricing optimizations and integration costs from Base44 and recent acquisitions will slightly elevate operating expenses to approximately 49 percent of revenue for 2025.

Presentation

[Operator]

Thank you for standing by. Hello, and welcome to Wix Second Quarter twenty twenty five Earnings Conference Call. Please note that this call is being recorded. I will now hand the call over to the Wix team. Please go ahead.

[Emily Liu, Head - IR at Wix.com]

Thanks and good morning everyone. Welcome to Wix's Second Quarter twenty twenty five Earnings Call. Joining me today to discuss our results are Abhishai Abrahami, CEO and Co Founder Nir Zohar, President and Co Founder and Lior Shemesh, our CFO. During this call, we may make forward looking statements and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20 F that could cause our actual results to differ materially from these forward looking statements.

[Emily Liu, Head - IR at Wix.com]

We do not undertake any obligation to update these forward looking statements. In addition, we will comment on non GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non GAAP results in the earnings materials and in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com. With that, I'll turn the call over to Abhishai.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Thank you, Emily, and good morning, everyone. The 2025 has been extremely exciting as creation online and the Internet continue to broadly evolve at a rapid pace. We're seeing a fundamental shift in how people create, discover and interact online. AI driven advancements are lowering the barriers to digital creation. This is allowing more people to turn their ideas into more sophisticated and higher quality projects with greater speed and ease.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Demand for AI powered online creation is growing faster than ever as AI is undoubtedly bringing more people online in new ways and rapidly expanding the world of what is possible. AI momentum combined with our early innovation has set us on a strong trajectory, clearly reflected in the strength of our new cohorts. I'll let Nir talk about cohort behavior in a few minutes, but I'm excited to report that we are seeing an improving level of new cohort growth. This new cohort momentum is the main driver of the top line growth acceleration expected in the second half of the year, which Leo will dive into later. We've seen strength in our AI onboarding funnel and increased adoption of AI across the platform, encouraging signals that new users are increasingly leveraging AI to create online.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

While the full picture of this new era is still unfolding, I'm confident that Wix is well positioned to thrive and help shape what comes next. We are heading down this path fast with major AI players building the rails to bring in this new era of web and Wix is ready. Recently, we developed proprietary algorithms that help our users content surface prominently in AI generated responses with our generative engine optimization offering. This empowers users to understand, monitor, and actively improve how their brand appears in LLM based search engines. Wix is the first CMS to offer this kind of AI visibility natively, setting a new benchmark for AI search optimization tools within website platforms and demonstrating our first mover advantage.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

As we transform our core website building offering to align with the next era of Internet, we are also unlocking completely new markets such as Vibe coding. Growing RTOM is a core pillar of our long term growth strategy and we are making big leaps with our June acquisition of Base44. Base44 gives us immediate access to a completely new audience. This includes developers, design and product teams, enterprises building internal tools and DIY users building applications, not just websites. This isn't just about entering an attractive market.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

It's about recognizing early enough that Vibe coding represents the future of how applications will be built. Vibe coding, whether through base 44 or native capabilities yet to come, is going to be a major growth driver in 2026 and beyond. We're already seeing the fruits of this investment today. With just a few million of ARR at the time of our acquisition, Base44 is now on track to generate $40,000,000 to $50,000,000 of ARR by the end of this year. This is a supersonic level of growth in just a matter of weeks and we don't expect this momentum to slow as we accelerate towards the 100,000,000 ARR milestone.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

More importantly, there is opportunity to generate long term synergy between Wix and Base44. Wix can provide the robust infrastructure that Vibe coding platforms need to scale. This includes hosting capability, security framework, GDPR compliance, payments processing, marketing automation and more. Base 44 brings the application layer to empower rapid development of ideas, while Wix can supply the business and online platform. These are all capabilities that Wix has invested into and built over nearly twenty years, resulting in a fulsome ecosystem.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

In fact, these are the same problems faced by custom coded websites today, which continues to push users to migrate to SaaS CMS platforms like Wix. While we've seen this trend for years, migration has especially accelerated in the last few quarters. Long term, I strongly believe Vibe coding is a natural complement to our existing core offering. My belief is that the future of building online is in the combination of intuitive visual editing with flexible Vibe coding, Wix is well ahead on the path to offering the full spectrum, visual first creation for simplicity and speed, and AI powered coding capabilities for flexibility and depth. This is how we'll continue to lead in this next era, giving every user, from beginner to pro the tools to build smarter, faster and at a scale previously not possible. With that, I'll turn it over to Nir.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Thanks, Avishai. We were excited to continue to see the incredibly strong new user cohort behavior from Q1 actually accelerate through Q2 and July. We expect the strong cohorts we recently onboarded and continue to onboard to drive top line growth acceleration later this year. These cohorts improve the foundation for growth in 2026 and beyond as they increasingly layer on. This is the power of our business model.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

This strength underscores growing demand for our platform as users online needs change and the Internet evolves at breakneck speed. Bookings from our Q2 twenty twenty five user cohort grew 14% over the bookings generated by the Q2 twenty twenty four cohort in its first quarter. Impressively, new cohort bookings growth accelerated to a higher clip in late Q2 and through early Q3. I'll speak more about this shortly. Q2 cohort strength was driven by our main geographic markets such as The U.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

S, UK and Europe. Notably growth in The U. S, our biggest market experienced particular strength with year over year improvement across all key metrics including cohort size, conversion rate to paying subscriptions and monetization. New cohort strength was also driven by a strong top of funnel. Notably, we saw improvement in our organic traffic as more users actively searched for Wix online, which is an indication of our increased brand awareness being the top platform for web creation.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

We've also seen growth coming from paid channels, which also drove higher traffic to the platform while we maintained our TROI guardrails. As a result, more than 5,000,000 new users onboarded in Q2, up 6% year over year. We continue to see an improving mix of high intent and commerce oriented users in our new cohorts as we expand our product suite and innovate upmarket. Constant innovation, particularly across our AI offering is enabling improved user success. As a result, we have seen healthy conversion of new users into paid subscriptions.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Partners in particular continue to convert well driven by studio momentum. This continued mix shift to higher intent users also fueled higher monetization in the recent cohort as they purchase more advanced subscriptions and adopt more business solutions. Turning now to our existing cohort users, which continued to perform well in the second quarter. This was driven by stable ongoing conversion, strong retention and users committing to Wix for longer subscription periods. Both existing and new users are now opting for more of our longest term subscriptions than ever before, demonstrating improved confidence in their businesses and our platform.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Growing bookings from existing users was also driven by better monetization across both self creators and partners as adoption of our AI products improved. This quarter, we saw strong results from a couple of the AI offerings launched earlier this year. Our AI marketing agent brought a notable increase in adoption of our paid marketing tools, while ASTRO engagement accelerated. Improved engagement then resulted in more users continuing through more than 300 suggested flows and taking direct action afterwards. It's incredibly rewarding to see our AI innovation tangibly enable more success for users.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Better monetization was also a result of solid commerce activity in the second quarter. Transaction revenue increased by 18% year over year, driven by 11% year over year growth in GPV and continued improvement in take rate. More merchants are opting for Wix Payments as we improve our capabilities, demonstrated by the recent expanded partnership with PayPal. New offerings like Wix Capital and Wix Checking are opening up new avenues for monetization. We remain focused on capturing and addressing the full spectrum of merchant needs as part of our long term commerce strategy.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Finally, I would like to briefly talk about what we've seen in early Q3. The incredibly positive demand trends we've seen in the 2025 have actually continued to accelerate. Impressively, new user cohort bookings grew more than 20% exiting July over what the previous year cohort grew in the same timeframe. We have not seen organic cohort growth at this elevated level since peak COVID. This 20% plus growth excludes impact from base 44.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Including base 44 cohorts, new cohort growth would have accelerated much more significantly in early Q3. Bookings from the Q1 and Q2 twenty twenty five new user cohorts also continue to perform very well. These trends give me confidence that top line growth will accelerate in the back half of the year, which Lior will speak about shortly. To wrap it up, our solid Q2 results illustrate the durability of our business across a dynamic macro as Wix remains the leading platform to create, manage and grow digital presence. I remain confident in our ability to drive long term growth by delivering essential tools that help users adapt, operate and succeed in any environment. With that, I'll hand it over to Lior.

[Lior Shemesh, CFO at Wix.com]

Thanks, Nir. We delivered another great quarter that exceeded expectations across multiple metrics driven by the robust business fundamentals you just heard about and continued successful execution of key initiatives. The momentum built up year to date is expected to drive growth acceleration in the second half, which I'll talk through in a few minutes. More importantly, the cohort strength we're generating today as well as products we are innovating and new terms we are entering are laying the foundation for robust growth in 2026 and beyond. First let's dive into the details of the second quarter.

[Lior Shemesh, CFO at Wix.com]

Total bookings grew to $510,000,000 in Q2, up 11% year over year. This solid performance was driven primarily by increasingly stronger new user cohorts joining the platform as well as deeper adoption of our AI and studio offerings. Total revenue grew to $490,000,000 up 12% year over year and above the high end of our guidance range. Partners revenue grew 24% year over year to $183,000,000 driven by continued adoption in the professional audience segment of our platform and studio. We continue to see studio bookings grow with an increasing number of partners building multiple projects on the platform.

[Lior Shemesh, CFO at Wix.com]

Transaction revenue was $64,000,000 up 18% year over year driven by continued GPV growth coupled with improvement in our take rate as Wix Payments adoption among new merchants continues to grow. GPV grew 11% year over year to $3,600,000,000 Partners remained the primary driver of GPV growth contributing nearly 55% of total GPV as larger agencies and merchants continue to choose Wix for their commerce needs. Total non GAAP gross margin in Q2 was 70% up from 69% in Q1. This reflects productivity benefits from AI solutions implemented across our customer care organization as well as optimization of a key vendor partnership. Non GAAP R and D and sales and marketing expenses increased in the second quarter as we increased headcount according to our annual plan and integrated the team from our recent Base-forty four and Hour One acquisitions.

[Lior Shemesh, CFO at Wix.com]

We continue to drive operating leverage. Non GAAP operating income was $110,000,000 or 22% of revenue, up from 21% in Q1. This excludes $6,100,000 of non operating acquisition related expenses, primarily accrued bonus and earn out payments for the respective acquisition agreements. Q2 free cash flow was $148,000,000 or 30% of revenue. This quarter we also began executing on our $400,000,000 repurchase authorization.

[Lior Shemesh, CFO at Wix.com]

We repurchased approximately 646,000 Wix ordinary shares for nearly $100,000,000 proving our continued commitment to returning value to shareholders. Let's now turn to the rest of 2025. Healthy first half performance provides confidence in our expectation for growth acceleration through the rest of the year, particularly as we see increasingly stronger new cohorts layering onto the platform. We are raising our full year bookings outlook to 2,040,000,000.00 to $2,075,000,000 or 11% to 13% year over year growth. This increased outlook assumes a continued upwards trend in new cohort behavior, contribution from base 44 and current FX rates.

[Lior Shemesh, CFO at Wix.com]

For revenue we are updating our previous full year outlook to 1,975,000,000.000 to $2,000,000,000 up 12% to 14% year over year. We expect total revenue in Q3 twenty twenty five to be $498,000,000 to $5.00 $4,000,000 up 12% to 13% year over year. Remember that robust new cohorts and acquisitions made in the middle of the year have minimal impact on second half revenue. I want to also provide more color on the growth acceleration in the second half. Specifically, we anticipate one, increasingly stronger new cohorts layering onto the platform.

[Lior Shemesh, CFO at Wix.com]

New user cohort bookings exited July growing more than 20% compared to what the previous year cohort grew in the same timeframe. As demand continues to increase, conversion continues to improve in key markets and more sophisticated users onboard, we expect new cohort bookings growth to trend upwards through the rest of the year. These stronger new cohorts as well as increasing contribution from the recent Q1 and Q2 cohorts also layering in are expected to drive the majority of the second half top line acceleration. Two, contribution from base 44. Three, modest benefit from targeted pricing optimizations.

[Lior Shemesh, CFO at Wix.com]

This was planned at the beginning of the year to remediate pricing disparity across certain subscription types in select geographies. Four, continued ramping contribution from Studio as new partners join and earlier users mature and build multiple projects with us. And five, growing impact from our AI products such as our AI onboarding funnel and AI marketing agent. On the cost side, we now expect non GAAP total gross margin approximately 69 percent and non GAAP operating expenses to be approximately 49% of revenue for the full year. These slightly higher cost expectations reflect incremental ongoing AI, marketing and headcount investments we plan to make to operate, integrate and grow Base forty four.

[Lior Shemesh, CFO at Wix.com]

With higher bookings expectations offsetting these increased costs we are able to keep our free cash flow expectations unchanged. We continue to expect to generate free cash flow of $595,000,000 to $610,000,000 in 2025 or 30% to 31% of revenue accelerating new cohort momentum combined with AI tailwinds as the Internet continues to evolve and Base44's tremendous growth trajectory gives me confidence that we can achieve even more and maintain robust growth in 2026 and beyond. Operator, we are now ready for questions.

[Operator]

Thank And our first question comes from the line of Ygal Arounian from Citi. Your line is open.

[Ygal Arounian, Director - Internet Equity Research at Citigroup]

Hey, good morning guys. Okay. So I want to dig into Gen AI, Vibe coding and BASE 44 a little bit more. So Abhijit, the way you talk about it, the vibe coding is complimentary to your core Wix kind of drag and drop editor. So, I wanted to expand on that as vibe coding grows the way it's growing.

[Ygal Arounian, Director - Internet Equity Research at Citigroup]

Do you think this model of building replaces the drag and drop editor? Does it remain complementary over time? And I guess if you look at the share performance, the investors would seem to view that Vibe coating replaces Wix, not creates a new market and complementary. You know, for example, our agencies using this with Wix Studio, it replaced Wix Studio? Just want to understand how you envision the ecosystem evolving? Then I have a quick follow-up.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, I think it's complementary, right? I think that if you look at the history, we've done the first version of something that is very similar to vibe coding, where you type what you want, and we actually built a website around it. And we started in 2016, of course we continued to improve it, and we'll continue to improve it. And I think for websites, it's very hard just with a text interface to move things around and design them the way you want them. But, and we can actually see already the tools that they do, just vibe coding already started to add very weak, but existing visual editing elements.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

So obviously the solution in the future will be a combination. I think VIVE coding has tremendous potential when it comes to building applications. So that way I think it's very interesting, because a lot of the business logic is extremely hard, and that's where vibe coding shines. I want to point out again that if you build a website with the standard vibe coding tools today, you actually end up with a website that is very poor in terms of a lot of the quality that is needed or required by law. For example, you don't have support for GDPR, don't have support for accessibility, you don't have support for cookie banners, you don't have support for tons of other things that you want to have.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

So I think the combination should be that vibe coding allow you to start very quickly, and then switch between design very quickly for websites, and of course for applications, allow you to build the logic of the applications with a text interface. For website, it's a bit different. It's very hard to write the text of a full blown e commerce package. The prompt.

[Ygal Arounian, Director - Internet Equity Research at Citigroup]

Okay, understood. And I guess a follow-up then. As you see Base44 gain adoption among your partners, is it are they using Studio and Base44? Or is it a completely kind of different set of users that you're seeing right now? And I guess part of the view from investors is you're seeing a number of smaller new entrants like Base forty four that are growing really quickly and seemingly taking share of the overall market, and just your thoughts on that? Thank you.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, think it's a very different intent. Sometimes it's the same user, but it's a different intent. And you can already see some of the sign of that on Wix itself, right? We accelerated, not de accelerated. So in theory, there was a huge amount of competition out there who would have de accelerated and not accelerated.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

However, I do think that if you look at the three different needs that you have mostly for website builder and application builders, might there be website building, application building, or prototype building, okay? So I think for prototype building and application building, you see tremendous use of vibe coding now, and I expect that to continue to go, and I'm sure that we can enjoy at least a lot of the new capabilities of AI in order to enhance our offering, which is something that we've always been doing.

[Operator]

Thank you. Our next question comes from the line of Ken Wong from Oppenheimer. Your line is open.

[Ken Wong, MD & Senior Analyst at Oppenheimer & Co. Inc.]

Fantastic. Lior, I was wondering just in terms of the bookings acceleration in the back half and the increase in the bookings, any rough sense what the base forty four contribution is? I know you guys mentioned $44,000,000 of ARR. Just wanted to understand how much of that $50,000,000 raise was driven by base forty four?

[Lior Shemesh, CFO at Wix.com]

Sure. So first of all, I think that it's important to mention that even without BACE-forty four, we would have raised the guidance. It's mostly coming from the fact that it's driven by the overachievement of our new cohort. I think that we mentioned that it's a level of strength that since pre COVID, we haven't seen something even similar to that. And this is why it allows us to accelerate the second half growth even more than what we initially expected.

[Lior Shemesh, CFO at Wix.com]

Base forty four has some contribution, but it's not the majority, of the raise. But in any case, we're not going to break it down to the different elements.

[Ken Wong, MD & Senior Analyst at Oppenheimer & Co. Inc.]

Okay, understood. Super, super helpful. And then, Abhishai, also on base 44, just wondering as you guys work it into the Wix platform, is this a business that you guys intend to kind of run separately? Is it just gonna be part of the core Wix ADI studio platform? Just love some thoughts on on on how you plan to to integrate the businesses.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, we're gonna keep it separately, at least for the for the current future that we can foresee. I believe, again, that those are very different needs. People don't do the same things on Base 44 that they do in Wix. And I think that vibe coding is a great way to build prototypes and applications, and not necessarily the best solution for website. And I think the intent Mhmm.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Is what drives the success of product, so I believe that we're gonna maintain them separately.

[Ken Wong, MD & Senior Analyst at Oppenheimer & Co. Inc.]

Got it. Thank you very much.

[Operator]

Thank you. Our next question comes from the line of Brent Thill from Jefferies. Your line is open.

[John Byun, SVP at Jefferies]

Thank you. This is John Jen for Brent Thill. So great to see the acceleration in new user cohort and you talked about that's going to help the guidance. But I don't if you can dig into why you're confident that strength continue. I don't know if there's anything specific drivers or things underneath that you see that makes you confident that all of this is sustainable for the next six plus months or so.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Brent, it's Nir. So first of all, I think our confidence comes from the sense that we've, you know, we've already covered one month out of the six that you just referred to. And we are seeing very favorable trends from that standpoint. And also because we understand that a large part of why we're seeing this is comes from the strength of our brand and increased demand. So we feel very comfortable since this is not something that started just a few weeks ago, but actually started in Q2 and spilled already into a significant part of Q3, it gives us a good confidence that this should continue.

[John Byun, SVP at Jefferies]

Thank you, Fred. A quick follow-up on you mentioned the targeted price increases. I'm wondering how broad those are, and we did see one one of the SKUs in The U. S. But is that a material impact for '25 and or maybe even '26? That's it. Thank you.

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Okay. So actually it's not a material one. It's more of a kind of a tail the tail end of the previous move that we've done and some wrap ups that we did in specific for specific subscriptions and specific geographies. So the impact is not very significant and was actually part of our original plan and was already baked into our original guidance.

[John Byun, SVP at Jefferies]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Andrew Boone from Citizens. Your line is open.

[Andrew Boone, Managing Director at Citizens JMP]

Thanks so much for taking the question. I'd love to talk a big picture question for Abhishai. As I think about the expansion of the Wix product portfolio, including WEX sold previously and now kind of financial services, is AI unlocking just a wider product set for Wix? What's kind of in the strike zone or out of the strike zone that you guys want to be able to approach? Can you just speak to kind of the expansion of the product roadmap and kind of how you guys are thinking about offering a broader set of services for customers?

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, think that you talked about a few different things, but I think you probably want to know more about the Core Wix offering. And you know, we're one of the first companies, if not the first company in the planet to release an AI product to the mass markets. And the reason for that is that we believe that AI provided and will continue to provide tremendous opportunities for us to expand our market reach, to expand the value that we bring to our customers, and of course, to offer new and exciting things. Vibe coding is a point in that, but there's so much more that I believe will happen and should happen, and we do intend to continue to develop that and to continue to offer new ideas and new technologies to our customers. So yes, I do believe that we are tremendously benefiting from AI, and we will continue to do that and to enjoy the benefits of global AI innovation.

[Andrew Boone, Managing Director at Citizens JMP]

And then I wanted to ask a question that may be too early to answer, but I want to try to address it. Do the barriers to change websites change as we think about more text website capabilities. How do we think about the component of churn within websites as new capabilities kind of lower the barrier to creation?

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, it's always been easy to change a website, right? I think that the content is always been owned by the user, and you can always move between different platforms. I think that the reason that we see so many people staying with Wix is because we offer them a better platform for many of the things that they need. I do believe that the more AI capabilities, advanced AI capabilities exist, it's actually going be harder to change a website, not easier. I think that there's to be less platforms that offer all those capabilities.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

As a result, the amount of platform you can change between would actually grow down, and we can already see that. If you look at how much time it took to people to catch up, to other companies to catch up after ADI, who was quite a few years, and I think that if you look at the thing we've been doing the last couple of years, you see that most of them don't exist yet, in other platforms. And I think so going forward, I think that the speed of innovation and the fact that we have so much expertise in how to add, integrate and offer to our customers in our products will actually continue to give us a benefit in terms of our competitive landscape. So, I believe that actually AI is currently mostly provided as a great barrier, or a great way for us to enjoy innovation.

[Andrew Boone, Managing Director at Citizens JMP]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Brad Erickson from RBC Capital Markets. Your line is open.

[Brad Erickson, Equity Analyst - Internet at RBC Capital Markets]

Yeah. Hey, guys. I have two. The first, I guess, just two trends with AI that seem kind of salient to your business. One is organic search traffic is declining to individual websites.

[Brad Erickson, Equity Analyst - Internet at RBC Capital Markets]

And then two, maybe some more signs of AI driving some layoffs. How do these two trends kind of potentially interplay and impact your business, if at all? And then I have a follow-up.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, think that when it comes to organic search traffic, we do see a decline. It's still very small, but we do see a decline. However, there is a new universe now that people have to think about and work very hard to do that, and this is how to appear and be visible on the LLMs themselves, right? And that is actually at least as complicated as being found on Google. As a result, again, I think we need to supply our customers with the best tool and the best technologies to be visible and to be found on LLMs.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

And I don't see any time in the near future where the back end of the transactions will be done on the LLMs themselves. Let me explain. For example, let's say that you have a yoga studio and somebody wants to go to an LLM and actually order a class with you or to join a seminar. For that, the LLM has to know the seminar exists, how many seats are there, what is the price of a ticket, what are the tax rules, what are the reimbursement rules, what are the refund rules, what kind of coupons go together, how does it all combine to the membership card that you have, do you need a membership card, you don't need a membership card? All of those things require very complicated back end, which is a very complicated database, and a lot of rules on top of that.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

I don't see, and currently all the signs point to the other direction, that NLM's providers will not develop those, but actually interface with the existing website. As a result from that, you still have all of the logic of the website and a lot of the visual elements as part of it, right? And now it's even more complicated because it has to know how to talk, not just with users, but also with different agents that know how do different things with the knowledge that you have, and you need to be able to expose that knowledge to the LLMs, in addition, you need to be found on the LLMs. So I think that if you look at the next couple of years, at least, we're going to see that actually building a successful website, it just becomes way more complicated, which also means that you probably need a stronger platform to support all of that. Just being fun on LLM is extremely hard, not to mention building technology for agents to talk to other agents and take part of the visual and present stuff on a different target, right?

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

I mean, nobody want to buy a shirt or a car or go to a restaurant or hotel without seeing them and being able to actually interact with them.

[Brad Erickson, Equity Analyst - Internet at RBC Capital Markets]

Yeah, that's great. That's helpful. And then second, just on Studio, I think you shipped a number of enhancements kind of in the March or maybe April timeframe, which I think have been pretty well received and kind of perceived as adding more value. How do you guys think about your ability and maybe timing of potentially capturing some of that value on the improvements you've made on Studio this year? Thanks.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, think that we have a very exciting roadmap for Studio, and that I'm personally very excited about. I think that in Studio, we have two different directions that we currently are working on. One is enhancing the capabilities of Studio in traditional way we did, and the other one is preparing Studio to provide tremendous tools for partners to be able to support the future of the Internet for their customers. And I think both of them combined together this year and more even more next year will provide a big competitive edge as opposed to a different other platform that exists today.

[Brad Erickson, Equity Analyst - Internet at RBC Capital Markets]

Got it, thanks.

[Operator]

Thank you. Our next question comes from the line of Elizabeth Porter from Morgan Stanley. Your line is open.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

Great. Thank you so much. I wanted to ask again about Base forty four. It's a really exciting new market to go after with a new audience of users. And when we think about the historical expansion that you've had into markets like partners, there was certainly incremental investment to build the brand with the new audience.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

So how should we think about Base forty four? What are some of the factors that could make the impact on TROI look either similar or different than the prior periods when we were investing for partners?

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, think that BASE forty four is a great example for a fantastic product that makes it easier, right, to push and to do marketing and to create a brand recognition, because it is, at least in my opinion, the best of its class. And you guys are more than welcome try and compare it to other tools and you see immediately the difference. So I believe that, you know, it's always the same, right? You keep building a great product, keep doing great marketing, you keep building great community, working very hard with your users to solve their needs, and I think that we really are starting at a great point to be it.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

Great. And then, go ahead.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

No, no, of course, I think that same thing that happened in weeks, can already see a lot of it happening non base, which is very strong organic growth.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

Got it, great.

[Lior Shemesh, CFO at Wix.com]

Elizabeth, I just want to add that it's different than studio, because then we build the product. So I think that we kind of and over here we bought a company. Of course, there is a lot of investment to do with the product, but the ROI is much faster. So I don't think that it will have a big burden on our P and L or any future plans with regard to the KPIs that we mentioned in the past.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

Great. And then just as a follow-up, earlier this year we've been talking about a new self creator product. So I just wanted to get an update on kind of where And then given the improvement that we've seen in conversion thus far, would a new Self Creator product potentially be additive to further accelerating conversion improvements?

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Hey, Olivia, it's Nir. So obviously, not going to state the date, but we're looking still looking at kind of a launch at a full launch, sorry. And in terms of the potential to an uplift in conversion, obviously, that's always attached to any kind of improvement that we do, and we definitely hope so. But it will take time to roll out something new and test it over time to see what kind of impact it has.

[Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley]

Got it. Thank you.

[Operator]

Thank you. Our next question comes from the line of Trevor Young from Barclays. Your line is open. Great,

[Trevor Young, Director & Internet Research Analyst at Barclays Capital]

thank you. First one, Abhishai, bigger picture, are we now at the point where you've harvested a lot And from here, we should assume much less margin lift and more incremental investments to further accelerate growth such that as you go from your current rule of 42 to something north of that, the incremental lift comes from accelerating revenue growth?

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

I'm not sure I understand the question.

[Trevor Young, Director & Internet Research Analyst at Barclays Capital]

Are you going to invest more to try to accelerate growth?

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Trevor, generally, and I'm going to hand it over to Lior, of course, but generally the answer is yes. I think we can invest further into growth of our business while maintaining similar margin?

[Lior Shemesh, CFO at Wix.com]

Correct. I think that we need to look at right now the expansion of the margin. So we've expanded significantly over the last couple of years. We actually even with that investment that we have this year, we haven't changed really the free cash flow margin. I believe that Base is a super profitable business.

[Lior Shemesh, CFO at Wix.com]

From one end, it's going to increase the growth. On the other end, it's going to generate more free cash flow for us in the future. So I don't see a major deviation from the KPIs that we provided in the past. Actually, I think that there is an option in the future actually to even to improve further the margins, because I believe that the AI cost will drop significantly over the next couple of years.

[Trevor Young, Director & Internet Research Analyst at Barclays Capital]

Great. Thanks for that.

[Trevor Young, Director & Internet Research Analyst at Barclays Capital]

And as a follow-up, Lior, on capital allocation, is the plan still to repay the convert from cash on hand? I think that comes due fairly soon. And if so, why not opt to refi or use another form of debt? The high recurring nature of the business would suggest more leverage, but it would still be palatable and that would give you a lot more cash on hand to accelerate

[Lior Shemesh, CFO at Wix.com]

Yeah, we definitely plan to repay the converts with cash with regard to debt and plan for the future. We'll leave it to the future, but right now we are going to pay the converts with cash, definitely, if we feel that we need requirement or need for cash in the future. So I agree, there's a lot of means in order to do that in the capital markets.

[Trevor Young, Director & Internet Research Analyst at Barclays Capital]

Great, thank you.

[Operator]

Thank you. Our next question comes from the line of Josh Beck from Raymond James. Yes, thank

[Josh Beck, Managing Director at Raymond James]

you for taking the question. I was really trying to put BASE forty four in the right swim lane, so maybe more for Abhishai. But it seems like there's kind of two ends of the spectrum. You have very prototype building types of platforms. Obviously, there's been some buzzy IPOs right there.

[Josh Beck, Managing Director at Raymond James]

The other side you have, you know, very in-depth, app building platforms. Obviously, lot of headlines with vibe coding kind of getting integrated into IVEs. Where is the base 44 in this kind of market map? And are you really going after kind of the entrepreneurial developer? Is it the enterprise developer?

[Josh Beck, Managing Director at Raymond James]

Just would would love to hear how it fits into the market.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

Well, basically, I mean, first of all, maybe it's important to say, all of these tools are based mostly on entropic, clothed by entropic, right, and there are many different ways of using that to generate code. Each one of them is mostly the experience and what they do is different according to the user. Meaning that, when you look at something like WinServe or Cursor, they are aimed at developers. So the whole experience is very different than the experience that you have in BASE 44. BASE 44 is aimed for mostly people that are not a developer, or that are developers and do not want to develop, and to do something very quick, and then continue to innovate on top of it, again, coding.

[Avishai Abrahami, Co-Founder, CEO & Director at Wix.com]

So I think this is where they start to deviate from things like Cursor and Windsurf. I believe that long term there is a huge opportunity and a huge market for building applications and prototypes for different applications. And I think this is the core of the market of BASE-forty four.

[Josh Beck, Managing Director at Raymond James]

Okay, that's super helpful. And then maybe a question more so for Lee or Nir on what you're seeing with respect to maybe customer retention versus your expectations this year and maybe how that's informing. Obviously, you kind of mentioned you have this strategic pricing action. It sounds like it's a little bit of a cleanup of some legacy plans. But how does that inform kind of your go forward thoughts around maybe pricing strategy into next year and beyond?

[Nir Zohar, President & Chief Operating Officer at Wix.com]

Well, generally, I can say that this year we're seeing kind of a little bit of a stronger than expected dynamics around retention. Again, as I said before, what you've seen in terms of kind of the current changes in pricing was very limited, so it had no significant impact. And generally, we're seeing stronger than expected dynamics. I have nothing to comment on any future price changes because obviously, we're not going to announce them ahead of time. But I will say that actually, I think from our standpoint, we obviously see this improved retention as just a very strong and positive signal overall, both in terms of the value that we give our customers as well as some more strength in the microenvironment.

[Josh Beck, Managing Director at Raymond James]

Thank you.

[Operator]

Thank you. That concludes the question and answer session for today. That also concludes the call for today. Thank you all for joining. You may now disconnect. Thank you, everyone.

Participants

Executives

• Emily Liu, Head - IR
• Avishai Abrahami, Co-Founder, CEO & Director
• Nir Zohar, President & Chief Operating Officer
• Lior Shemesh, CFO

Analysts

• Ygal Arounian, Director - Internet Equity Research at Citigroup
• Ken Wong, MD & Senior Analyst at Oppenheimer & Co. Inc.
• John Byun, SVP at Jefferies
• Andrew Boone, Managing Director at Citizens JMP
• Brad Erickson, Equity Analyst - Internet at RBC Capital Markets
• Elizabeth Porter, Executive Director - Equity Research at Morgan Stanley
• Trevor Young, Director & Internet Research Analyst at Barclays Capital
• Josh Beck, Managing Director at Raymond James