Understanding Wix.com’s Q3 2023 financial report

Wix.com, a leading platform that empowers businesses, communities, and individuals to create an online presence, has recently released its financial report for the third quarter of 2023. In this article, we’ll delve into the key financial metrics, growth trends, and strategic initiatives outlined in the report, while drawing comparisons to industry giant GoDaddy.

Company Overview

Wix.com reported a robust performance in Q3 2023, with a Gross Premium Volume (GPV) of $2.9 billion, representing a significant 14% year-over-year increase. The company envisions itself as the primary platform for various online presences worldwide.

Financial Overview and Update

Wix.com’s total revenue demonstrated a commendable 12% year-over-year increase. The revenue for Q3 2023 stood at $1.158 billion, marking consistent growth over the past quarters. Notably, the revenue is segmented into Business Solutions and Creative Subscriptions, with the latter showing an annualized recurring revenue (ARR) expansion of 10%.

Creative Subscriptions and Business Solutions

The Creative Subscriptions segment, a key revenue driver for Wix.com, showed positive trends in Q3 2023. The ARR growth of 10% highlights the sustained demand for premium subscriptions. On the other hand, Business Solutions, which includes revenue from agencies, freelancers, and B2B partnerships, exhibited a substantial 38% year-over-year increase.

Total Bookings and Partners Momentum

Wix.com experienced a 9% year-over-year growth in total bookings, reaching $1.202 billion in Q3 2023. Partners, including agencies, freelancers, and B2B collaborations, played a pivotal role in this success, showcasing a remarkable 33% year-over-year increase.

Transaction Revenue Growth

The transaction revenue, primarily generated through Wix Payments and other solutions, demonstrated a notable 22% year-over-year growth. This was attributed to strong GPV growth, especially from Partners, and an increased take rate as more merchants adopted Wix Payments.

Monetization of User Cohorts

Wix.com highlighted the increasing monetization of user cohorts. The Q1’23 cohort, in particular, outperformed the Q1’22 cohort in generating bookings on a smaller base, showcasing higher user intent and success on the platform.

Efficient Marketing Based on TROI

The company emphasized efficient marketing based on Time to Return On Investment (TROI). The data presented illustrated that marketing costs translate into ongoing bookings over time, showcasing a positive trend in efficient customer acquisition.

Existing Cohorts as a Growing Source of Future Bookings

Wix.com predicts substantial future bookings from existing cohorts, amounting to an estimated $15.6 billion over the next 10 years. This underscores the platform’s ability to retain and continually monetize its user base.

Geographic Reach and Net Revenue Retention

Wix.com’s geographic reach remains broad, with North America contributing 61% to total revenue. The Annual Net Revenue Retention Rate, a key metric for customer retention, was reported at 104% in 2022, reflecting positive growth trends.

Operational Efficiency and Financial Outlook

Wix.com highlighted operational efficiency, reporting increased gross profit while managing to reduce sales and marketing spend over time. The Non-GAAP gross margin demonstrated accelerated profitability improvements throughout 2023.

Free Cash Flow and Future Outlook

The company provided an optimistic outlook for free cash flow (FCF), expecting to generate FCF margin of approximately 20-21% exiting 2023. This projection considers better-than-expected top-line growth coupled with a focus on efficiency.

Conclusion

Wix.com’s financial report for Q3 2023 reveals a resilient and growing business. With a strong emphasis on user cohorts, efficient marketing, and global expansion, Wix.com is positioning itself as a formidable player in the online presence and hosting industry. As the company continues to innovate and expand its product offerings, it remains a key competitor to industry counterparts like GoDaddy, showcasing sustained growth and financial strength.