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 [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]