Website design and e-commerce platform provider Wix.com (NASDAQ:WIX) reported results in line with analysts’ expectations in Q4 FY2023, with revenue up 13.7% year on year to $403.8 million. The company expects next quarter’s revenue to be around $417 million, in line with analysts’ estimates. It made a non-GAAP profit of $1.22 per share, improving from its profit of $0.61 per share in the same quarter last year.
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Wix (WIX) Q4 FY2023 Highlights:
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Revenue: $403.8 million vs analyst estimates of $402.6 million (small beat)
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EPS (non-GAAP): $1.22 vs analyst estimates of $0.96 (26.6% beat)
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Revenue Guidance for Q1 2024 is $417 million at the midpoint, roughly in line with what analysts were expecting
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Management’s revenue guidance for the upcoming financial year 2024 is $1.75 billion at the midpoint, in line with analyst expectations and implying 11.7% growth (vs 12.5% in FY2023)
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Free Cash Flow of $80.39 million, up 79.6% from the previous quarter
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Gross Margin (GAAP): 68.8%, up from 63.7% in the same quarter last year
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Market Capitalization: $7.16 billion
“We wrapped up an outstanding year of accelerating growth and record profitability with a strong fourth quarter underpinned by robust business fundamentals and anchored by incredible momentum in our Partners business,” said Avishai Abrahami, Wix Co-founder and CEO.
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
As you can see below, Wix’s revenue growth has been unremarkable over the last two years, growing from $333.4 million in Q4 FY2021 to $403.8 million this quarter.
This quarter, Wix’s quarterly revenue was once again up 13.7% year on year. We can see that Wix’s revenue increased by $9.93 million quarter on quarter, which is a solid improvement from the $3.86 million increase in Q3 2023. Shareholders should applaud the acceleration of growth.
Next quarter’s guidance suggests that Wix is expecting revenue to grow 11.5% year on year to $417 million, improving on the 9.5% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $1.75 billion at the midpoint, growing 11.7% year on year compared to the 12.5% increase in FY2023.
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Cash Is King
If you’ve followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills. Wix’s free cash flow came in at $80.39 million in Q4, up 108% year on year.
Wix has generated $182.2 million in free cash flow over the last 12 months, or 11.7% of revenue. This FCF margin stems from its asset-lite business model and enables it to reinvest in its business without depending on the capital markets.
Key Takeaways from Wix’s Q4 Results
We enjoyed seeing Wix’s revenue guidance for next year, indicating that growth is steady. We were also glad its gross margin and free cash flow improved. The stock is flat after reporting and currently trades at $126 per share.
So should you invest in Wix right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.