Wix(WIX) - 2025 Q4 - Earnings Call Transcript

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]