Website design and e-commerce platform provider Wix.com (NASDAQ:WIX) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 12.9% year on year to $444.7 million. The company expects next quarter’s revenue to be around $460.5 million, coming in 0.7% above analysts’ estimates. Its non-GAAP profit of $1.50 per share was 5% above analysts’ consensus estimates.
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Wix (WIX) Q3 CY2024 Highlights:
- Revenue: $444.7 million vs analyst estimates of $444 million (12.9% year-on-year growth, in line)
- Adjusted EPS: $1.50 vs analyst estimates of $1.43 (5% beat)
- Adjusted Operating Income: $88.42 million vs analyst estimates of $86.44 million (19.9% margin, 2.3% beat)
- Revenue Guidance for Q4 CY2024 is $460.5 million at the midpoint (0.7% beat)
- Operating Margin: 5.8%, up from -1.5% in the same quarter last year
- Free Cash Flow Margin: 28.7%, up from 27% in the previous quarter
- Market Capitalization: $10.3 billion
“The continued momentum and accomplishments achieved this year are a testament to our intense focus on best-in-class innovation,” said Avishai Abrahami, Wix Co-founder and CEO.
Company Overview
Founded in 2006 in Tel Aviv, Wix.com (NASDAQ:WIX) offers a free and easy to operate website building platform.
E-commerce Software
While e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Wix grew its sales at a 11.8% compounded annual growth rate. Although this growth is solid on an absolute basis, it fell short of our benchmark for the software sector.
This quarter, Wix’s year-on-year revenue growth was 12.9%, and its $444.7 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 14% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.8% over the next 12 months, an acceleration versus the last three years. This projection is admirable and suggests its newer products and services will spur faster growth.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Wix is efficient at acquiring new customers, and its CAC payback period checked in at 38.4 months this quarter. The company’s performance gives it the freedom to invest its resources into new product initiatives rather than excessive sales and marketing.
Key Takeaways from Wix’s Q3 Results
It was good to see Wix provide revenue guidance for next quarter that slightly topped analysts’ expectations. We were also glad its EPS and adjusted operating income beat Wall Street's estimates. Zooming out, we think this was a decent quarter featuring some areas of strength. The stock traded up 12.1% to $206.01 immediately following the results.
Big picture, is Wix a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
