Wix.com Just Got Hit With a Downgrade and the AI Threat Is Getting Real - 24/7 Wall St. S&P 5006,390.90 -1.67% Dow Jones45,279.20 -1.79% Nasdaq 10023,204.00 -1.92% Russell 20002,452.56 -2.11% Wix.com Just Got Hit With a Downgrade and the AI Threat Is Getting Real By Joel SouthPublished Mar 27, 2:21PM EDT Quick Read Wix (WIX) saw Creative Subscriptions growth slow to 12% year over year in Q4 2025, the slowest segment in its portfolio, while GAAP operating loss widened to -$72.59 million and shareholders' ...

Core Insights - Wix.com Ltd. (NASDAQ:WIX) is identified as one of the 10 most undervalued stocks to buy and hold for a decade, with an Overweight rating and a price target of $130 set by Cantor Fitzgerald following the company's fourth-quarter results [1][2] Financial Performance - In the fourth quarter, Wix reported revenues and bookings that were in line with consensus estimates, achieving an EPS of $1.81, which exceeded Wall Street's consensus estimate of $1.42 [1] Growth Strategy - Wix's growth strategy is significantly influenced by its two AI-led initiatives, Base44 and Wix Harmony, which are expected to reshape the company's long-term growth trajectory [2] - Base44 is projected to generate $100 million in annual recurring revenue, presenting a generational opportunity for Wix in the AI-native application building sector [2] - Base44 is already gross-margin positive and is expected to surpass the previous 2026 revenue estimate of $108 million due to rapid product development and effective marketing strategies, including high-profile initiatives like the Super Bowl [2] Company Overview - Wix.com Ltd. operates a web development platform for creators, offering a range of services through a Software-as-a-Service model, including website templates, builders, designs, an app market, web hosting, domain names, and an AI website builder [3]

Core Insights - The article discusses the 10 most undervalued stocks to buy and hold for a decade, highlighting the potential for significant returns as market conditions improve [5]. Market Context - Geopolitical events are influencing global markets, prompting investors to seek signs of market bottoms to buy equities at lower prices before a recovery [2]. - Tom Lee from Fundstrat Global Advisors suggests that while certainty about market bottoms is elusive, current trends indicate a potential bottom formation [2][3]. - The markets have shown resilience against global concerns, suggesting opportunities may arise post-market downturn [3]. Indicators of Market Bottom - Lee identifies the VIX index, particularly spikes over 40, as a key indicator of market bottoms, noting it reached 80 points last year but is not expected to do so again soon [4]. - Another indicator is the behavior of gold prices; if gold sells off while stocks rise after negative headlines, it may signal a market bottom [4]. Stock Selection Methodology - Stocks were identified based on expected earnings growth of at least 30% over the next five years and a forward price-to-earnings ratio between 6x and 18x [7]. - The selection focused on companies with recent noteworthy developments likely to impact investor sentiment and those favored by analysts and hedge funds [7][8]. Wix.com Ltd. (NASDAQ:WIX) - Wix.com is highlighted as one of the undervalued stocks, with Cantor Fitzgerald maintaining an Overweight rating and a price target of $130 following its fourth-quarter results [10]. - The company reported an EPS of $1.81, exceeding Wall Street's estimate of $1.42, with revenues and bookings aligning with consensus [10]. - Wix's AI-driven growth initiatives, Base44 and Wix Harmony, are expected to significantly contribute to long-term growth, with Base44 projected to generate $100 million in annual recurring revenue [11]. Primo Brands Corp. (NYSE:PRMB) - Primo Brands is also listed among the undervalued stocks, with Jefferies raising its price target to $24 from $20 after its fourth-quarter report [13]. - The company reported a 2.5% decline in net sales to $1.554 billion but saw an increase in premium brand sales and adjusted EBITDA due to strategic focus and operational improvements [13]. - Challenges are anticipated in the first half of 2026, but growth is expected to return in the second half with new capacity coming online [14].

Core Viewpoint - Wix.com Ltd has initiated a significant share repurchase program through a modified Dutch auction tender offer, aiming to buy back up to $1.75 billion of its shares, reflecting confidence in its long-term growth prospects and addressing the current depressed stock levels [2][3]. Group 1: Share Repurchase Details - The tender offer is set to buy back shares at a price range of $80 to $92 per share, compared to a prior closing price of $83.78 [2]. - The offer is scheduled to expire on April 1, unless extended or terminated, and is not subject to a minimum tender condition or financing contingency [2]. Group 2: Financial Performance - Wix reported a 14% year-over-year revenue growth in the fourth quarter, reaching $524.27 million, with adjusted earnings of $1.81 per share, surpassing analyst expectations [4]. - The company is also pursuing a broader $2 billion repurchase plan through 2026 and has announced a private placement of up to $250 million for general corporate purposes and investments in AI-driven products [4]. Group 3: Stock Performance and Analyst Consensus - Over the past year, Wix's stock has seen a significant decline from a high of $197.53 to a low of $62.80, indicating a bearish trend confirmed by trading below its moving averages [5]. - Despite the bearish trend, the stock maintains a Buy rating from analysts, with an average price target of $168.67, although some analysts have lowered their targets [6].

Core Insights - Base44 is being utilized for diverse projects, including CRM, project management, ERP systems, and financial reporting, with organic adoption noted as there is no sales team involved [1] - Base44 has achieved approximately $100 million in Annual Recurring Revenue (ARR) within a year of its founding and nine months post-acquisition by Wix, marking it as one of the fastest-growing software platforms [2] - The market opportunity for Wix has expanded significantly due to the capabilities of Base44, allowing users to create tailored software applications and websites [3] Product Development and Performance - Wix Harmony integrates visual editing with "vibe coding" through a unified AI layer, with early performance showing positive trends in conversion and monetization [4] - The company is transitioning from a DIY website builder to a comprehensive online creation platform for various user types, emphasizing the real-world value of AI [5] Financial Performance - In Q4 2025, total bookings reached $535 million, a 15% year-over-year increase, while revenue was $524 million, up 14% [7] - For the full year, bookings totaled $2.07 billion and revenue was $1.993 billion, both reflecting a 13% year-over-year growth [7] - Base44 contributed significantly to growth, finishing 2025 with approximately $59 million of ARR above initial expectations [8] User Cohorts and Retention - New user cohorts showed strong momentum, with double-digit growth in bookings for the core Wix business in Q4, driven by improved conversion rates and monetization [15] - Wix's net revenue retention was 105% in 2025, indicating resilient retention metrics despite external pressures [16] Future Outlook - The company anticipates mid-teens year-over-year growth in consolidated bookings and revenue for 2026, with a focus on optimizing Base44's growth trajectory [17] - Wix expects a low- to mid-20% free cash flow margin for 2026, with potential pressures from investments in Base44 [18] Capital Strategy - Wix plans to complete a $2 billion stock repurchase program aggressively during 2026, reflecting confidence in its business value [20] - A $250 million equity investment led by Durable Capital Partners is seen as an endorsement of Wix's long-term vision [21]

Core Insights - Wix.com Ltd (WIX) reported non-GAAP earnings per share (EPS) of $1.81 for Q4 2025, surpassing the Zacks Consensus Estimate of $1.36, although down from $1.93 in the same quarter last year [1][9] - Quarterly revenues increased by 14% year over year to $524.3 million, but fell short of the Zacks Consensus Estimate of $528 million. For the full year 2025, revenues reached $1.99 billion, reflecting a 13% increase [2][9] Revenue Breakdown - Creative Subscriptions, accounting for 70.6% of total revenues, saw a 12% year-over-year increase to $370.4 million. Business Solutions, making up 29.4% of total revenues, rose 18% to $153.8 million [5] - Total annualized recurring revenues (ARR) for the quarter were $1.84 billion, up 14% year over year, with bookings improving by 15% to $534.5 million [5] Strategic Developments - Wix's strategic investments in AI through Wix Harmony and Base44 are noteworthy, with Base44 achieving $100 million in ARR within one year of its founding, significantly expanding Wix's Total Addressable Market [3] - The company announced a $250 million private placement led by Durable Capital Partners, aimed at reinforcing market confidence and funding AI innovation [4] Operating Performance - Non-GAAP gross margin was reported at 68%, down from 70% a year ago, with Creative Subscriptions achieving a gross margin of 83% and Business Solutions at 34% [7] - Non-GAAP operating income for the quarter was $81.2 million, compared to $100.5 million in the previous year [7] Financial Position - As of December 31, 2025, Wix had cash and cash equivalents of $311.4 million, a decrease from $889.6 million as of September 30, 2025 [8] - Cash flow from operations amounted to $158.3 million, up from $133.7 million year over year, with free cash flow reported at $155.6 million [10] Shareholder Returns - During the quarter, Wix repurchased approximately 750,000 shares for $100 million and plans to aggressively execute its $2 billion share buyback program [11] Future Outlook - For 2026, Wix anticipates mid-teens revenue growth and similar growth in bookings, indicating strong demand momentum. Free cash flow margins are projected in the low-to-mid-20% range, with potential fluctuations based on investments in Base44 [12]

Core Insights - Wix.com Ltd. is a leading cloud-based web development platform known for its user-friendly interface and innovative products, competing with platforms like Squarespace and WordPress [1] Financial Performance - For Q4 2026, Wix reported earnings per share (EPS) of $1.81, exceeding expectations of $1.36, while revenue was $524.3 million, slightly below the forecast of $546.2 million [2][6] - The company achieved a 15% year-over-year increase in fourth-quarter bookings, reaching $535 million, driven by new cohort momentum and the success of Base44, which has an annual recurring revenue of $100 million [3] Growth Outlook - Wix anticipates mid-teens top-line growth in 2026, supported by product innovations such as Base44 and Wix Harmony, which are already showing strong early conversion and monetization [4][6] - The company expects its free cash flow margin to be in the low- to mid-20% range, indicating strategic investments in product development [4] Strategic Initiatives - Wix plans to complete most of its $2 billion share repurchase program in 2026, reflecting confidence in its long-term strategy [5] - A $250 million equity investment led by Durable Capital Partners underscores market confidence in Wix's future [5] Valuation Metrics - Wix has a P/E ratio of 29.79 and a price-to-sales ratio of 2.15, indicating positive market valuation of its earnings and sales [5] - The company's current ratio of 1.62 suggests strong liquidity, while a negative debt-to-equity ratio of -5.64 indicates more liabilities than equity [5]

Financial Data and Key Metrics Changes - Total bookings in Q4 2025 reached $535 million, up 15% year-over-year, while total revenue was $524 million, up 14% year-over-year [19] - For the full year 2025, total bookings grew to $2.07 billion, up 13% year-over-year, and total revenue was $1.993 billion, also an increase of 13% year-over-year [24] - Non-GAAP gross margin for Q4 was 68%, slightly down year-over-year, while non-GAAP operating income was 15% of revenue [22] - Free cash flow for Q4 was $156 million, representing 30% of revenue, and for the full year 2025, free cash flow was $605 million, also 30% of revenue [24][25] Business Line Data and Key Metrics Changes - New user cohorts in the core Wix business maintained double-digit growth in Q4, driven by higher conversion rates from free to paid subscriptions and increased monetization per user [11] - Base44 finished the year with approximately $59 million of ARR, exceeding expectations, and recently reached approximately $100 million of ARR, marking it as one of the fastest-growing software platforms [19][9] - Paid subscription volume in key markets, particularly the U.S., increased year-over-year in 2025, with business subscriptions making up a larger share of the total subscription mix [14] Market Data and Key Metrics Changes - Gross Payment Volume (GPV) grew 11% year-over-year to $3.7 billion in Q4 and 11% year-over-year to $14.3 billion for the full year [20] - Partners revenue grew 21% year-over-year to $203 million in Q4, driven by strong adoption of Google Workspace and marketing solutions [21] Company Strategy and Development Direction - The company aims to reshape online creation through AI, with Wix Harmony and Base44 as cornerstone offerings [4][8] - Wix Harmony is designed to simplify website creation and is expected to drive long-term impacts on conversion, engagement, retention, and monetization [7] - Base44 is expanding the company's reach into software creation, with a rapidly growing user base and significant adoption from businesses and enterprises [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and execution capabilities, anticipating that 2026 will be a pivotal year for growth driven by innovations in AI [10][18] - The company expects bookings and revenue growth to accelerate in 2026, with a guidance of mid-teens percentage growth year-over-year [26] - Management noted that the current stock performance undervalues the opportunities and fundamental strength of the business [16] Other Important Information - The company plans to complete a $2 billion stock repurchase program this year, reflecting confidence in its strategic plan [16] - The partnership with Durable Capital Partners, which led a $250 million equity investment, is seen as a strong endorsement of the company's long-term vision [16] Q&A Session Summary Question: Can you rank the contributors to organic growth in the full year bookings guide? - Management indicated no significant changes in pricing assumptions and that guidance reflects growth within the core business and Base44 [31] Question: What types of businesses are using Base44? - Management noted a wide variety of applications being built, from personal projects to enterprise solutions, indicating a diverse user base [33] Question: How far upmarket do you expect Base44 to go? - Management acknowledged the potential for Base44 to serve both personal and enterprise needs, with ongoing efforts to segment the market effectively [40] Question: Can you provide insights on the growth of Base44? - Management highlighted that the growth is driven by brand awareness and effective marketing, with a significant increase in user base and product improvements [78] Question: How do you estimate the LTV and payback period for Base44? - Management stated that they are currently seeing less than one year of ROI and plan to invest in growth, expecting acquisition costs to increase in 2026 [52]

Financial Data and Key Metrics Changes - Total bookings in Q4 2025 reached $535 million, up 15% year-over-year, while total revenue was $524 million, up 14% year-over-year [19] - For the full year 2025, total bookings grew to $2.07 billion, an increase of 13% year-over-year, and total revenue was $1.993 billion, also up 13% year-over-year [24] - Non-GAAP gross margin for Q4 was 68%, slightly down year-over-year, while non-GAAP operating income was 15% of revenue [22] - Free cash flow for Q4 was $156 million, representing 30% of revenue, and for the full year 2025, free cash flow was $605 million, also 30% of revenue [25] Business Line Data and Key Metrics Changes - New user cohorts in the core Wix business maintained double-digit growth in Q4, driven by higher conversion rates from free to paid subscriptions and increased monetization per user [11] - Base44 finished the year with approximately $59 million of ARR, exceeding expectations, and recently reached approximately $100 million of ARR, marking it as one of the fastest-growing software platforms [19][9] - Paid subscription volume in key markets, particularly the U.S., increased year-over-year in 2025, with business subscriptions making up a larger share of the total subscription mix [14] Market Data and Key Metrics Changes - Gross Payment Volume (GPV) grew 11% year-over-year to $3.7 billion in Q4 and 11% year-over-year to $14.3 billion for the full year [20] - Partners revenue grew 21% year-over-year to $203 million in Q4, driven by strong adoption of Google Workspace and marketing solutions [21] Company Strategy and Development Direction - The company aims to reshape online creation through AI, with Wix Harmony and Base44 as cornerstone offerings [7][8] - Wix Harmony is positioned as a unified AI layer for website creation, expected to drive long-term impacts on conversion, engagement, and monetization [8] - Base44 is expanding the company's reach into software creation, with a rapidly growing user base and significant adoption from various industries [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic plan and the potential for growth as the internet shifts towards AI [10] - The company anticipates bookings and revenue growth to accelerate in 2026, driven by new cohort momentum and the continued outperformance of Base44 [26] - Management noted that the current stock performance undervalues the company's opportunities and fundamental strength [16] Other Important Information - The company plans to complete a $2 billion stock repurchase program this year, demonstrating confidence in its strategic plan [16] - The partnership with Durable Capital Partners, which led a $250 million equity investment, is seen as a strong endorsement of the company's long-term vision [16] Q&A Session Summary Question: Can you rank the contributors to organic growth in the full year bookings guide? - Management indicated no significant changes in pricing or GPV payments, reflecting growth within the Wix core business and Base44 [32] Question: What types of businesses are using Base44? - Management noted a wide variety of applications being built, from personal projects to enterprise solutions, indicating a diverse user base [34] Question: How far upmarket do you expect Base44 to go? - Management acknowledged the potential for Base44 to serve both personal and enterprise needs, with ongoing efforts to segment the market [40] Question: What accelerated Base44's growth? - Management attributed the growth to increased brand awareness, effective marketing, and continuous product improvements [78] Question: How do you estimate the LTV or payback period for Base44? - Management stated that they are currently seeing less than one year of ROI and plan to increase acquisition costs in 2026 to capture market share [53]

Financial Data and Key Metrics Changes - Total bookings in Q4 2025 reached $535 million, up 15% year-over-year, while total revenue was $524 million, up 14% year-over-year [18] - For the full year 2025, total bookings grew to $2.07 billion, up 13% year-over-year, and total revenue was $1.993 billion, also an increase of 13% year-over-year [23] - Non-GAAP gross margin for Q4 was 68%, slightly down year-over-year, while non-GAAP operating income was 15% of revenue [20] - Free cash flow for Q4 was $156 million, representing 30% of revenue, and for the full year 2025, free cash flow was $605 million, also 30% of revenue [24] Business Line Data and Key Metrics Changes - New user cohorts in the core Wix business maintained double-digit growth in Q4, driven by higher conversion rates from free to paid subscriptions and increased monetization per user [10] - Base44 finished the year with approximately $59 million of ARR, exceeding expectations, and reached approximately $100 million of ARR shortly after acquisition [18][8] - Paid subscription volume in key markets, particularly the U.S., increased year-over-year in 2025, with business subscriptions making up a larger share of total subscriptions [12] Market Data and Key Metrics Changes - Gross Payment Volume (GPV) grew 11% year-over-year to $3.7 billion in Q4 and 11% year-over-year to $14.3 billion for the full year [19] - Partners revenue grew 21% year-over-year to $203 million in Q4, driven by strong adoption of Google Workspace and marketing solutions [19] Company Strategy and Development Direction - The company is focused on reshaping online creation through innovations like Wix Harmony and Base44, aiming to expand its total addressable market significantly [4][6] - Wix Harmony is positioned as a unified AI layer to enhance user experience and is expected to become the default experience for new and existing users [5][6] - The company plans to aggressively execute a $2 billion stock repurchase program, reflecting confidence in its strategic plan and business strength [15] Management's Comments on Operating Environment and Future Outlook - Management anticipates 2026 to be a pivotal year with accelerating growth driven by innovations and the expansion of AI capabilities [17] - The company expects bookings and revenue growth to accelerate in 2026, with guidance for mid-teens percentage growth year-over-year [25] - Management noted that the current stock performance undervalues the company's opportunities and fundamental strength [14] Other Important Information - The company is experiencing organic growth in Base44, with a significant portion of new users coming from enterprise-sized organizations [8] - Management highlighted the importance of maintaining a balance between user acquisition costs and growth investments, particularly in the context of Base44 [52] Q&A Session Summary Question: Can you rank the contributors to organic growth in bookings? - Management indicated no significant changes in pricing assumptions and that guidance reflects growth within the Wix core business and Base44 [30] Question: What types of businesses are using Base44? - A variety of applications are being built, from personal projects to enterprise solutions, indicating a broad user base [32] Question: How far upmarket do you expect Base44 to go? - Management noted that Base44 is seeing diverse usage, including personal and enterprise applications, and they aim to capture both segments [36][38] Question: What accelerated Base44's growth? - Growth is attributed to increased brand awareness, effective marketing, and continuous product improvements [78] Question: How do you estimate the LTV and payback period for Base44? - Management stated that they are currently seeing less than one year of ROI and expect acquisition costs to increase in 2026 due to market demand [52]