Q2 2021 Wix.Com Ltd Earnings Call

[music].

Yeah.

Ladies and gentlemen, thank you for standing by and welcome to the Q2.2021 earnings Conference call.

At this time, all participants are in listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone keypad. Please.

Please be advised that today's conference is being recorded.

If you require further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker today, Maggie O'donnell director of Investor Relations. Please go ahead.

Thanks, Andrew.

Good morning, everyone and welcome to ex the second quarter of 2021 earnings call. Joining me today to discuss our results are obviously, <unk> CEO and co founder Nir Zohar President.

And New York, CFO as well as Joe Parsons JP on the fees.

During this call we may make forward looking statements and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent form 20-F that could cause our actual results to differ materially from these forward looking statements.

We do not undertake any obligation to update these forward looking statements.

In addition, we will comment on non-GAAP financial results and key operating metrics you can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and our interactive Analyst Center on the Investor Relations section of our web site investors thought Wix Dot com.

With that I will now turn the call over to Joe who will be moderating the Q&A with the team.

No go ahead.

Thanks, Maggie and thanks, everyone.

Joining us today.

We're going to do something a little bit different on.

This call.

I'll start off by just moderating a bit of a Q&A between other shy near and we are.

There are several things that I think we wanted to make sure are captured on this call you can obviously read.

A lot of the materials that we already provided.

And then we will go ahead and move to some questions from from those that have dialed in on queued in.

So we'll start off at a shot just start off by giving your thoughts on the results here that we just released for Q2, well first of all on one to say that I'm very proud of the weeks team on execution this quarter.

And obviously, we ended up at the lower part of our guidance most of it I think is because we get a guidance based on assumptions that were proven to be wrong, but we assume debt it's coming out of the 2020, we assumed debt.

Wanted to cash is going to happen either COVID-19 is going to come back big time, and I'm going to have it looked on.

Or more likely to have a simple workings in the.

We're going to end up with the award moving back to normality and we actually seen the first day.

The waves of users that they're starting to build the regular offline businesses like hotels restaurants events and all of this thing to Chicago and Sally Delta has arrived and the world has moved to a place with nobody knows what's going to happen is we will look to us or this is just a phase of government going to do against Ebola.

And it's just going to governments base salaries again people jumped working there's a lot of confusion around debt and that confusion is something that we did not but inside because it's bill.

It will stay online we know what happen if people move back to normality, we know and certainly something we didn't predict what we can see four months savings that we actually had.

List people joining wix right.

And now with debt.

We'll look at a quarter that was the only negative.

And at <unk>, we had everything else is actually positive. So for me. It's a very interesting thing to see how long the decent synergy will happen and.

Yet I think debt too.

When we look at everything else and we're going to talk about it.

I mean, that's pretty much day to other things I've got a bit delayed is that we have to be good partner deals on a lot of those people were kind of like a bit delayed.

Q3, and this is mostly from what we analyzed a lot of people went to vacation, but that's not an excuse right.

So I think that.

On the nine and some day.

<unk> of the business is still doing really well.

Great.

So you talk about the uncertainty that we've experienced.

How do you know how do you feel so confident that it is.

Uncertainty here that debt.

Cause our Q2 results to come in where they are what if it competition, what if its product fatigue.

Why do we believe it's uncertainty so we look at.

Many different things for that but I'm going to point out you talked about competition. So swiftly. This published their results yesterday and we can see that on every metric who actually go on foster right.

Motor subscriptions.

And this is on an absolute number.

Percentage number on that base is much bigger so we actually ended the what's more on collections, we're going faster on revenues, we are growing faster and so I think that it's probably not competition like we've seen it with everything around the other thing we look at right is that what happened like what kind of things on uses of building and we've seen.

This really massive move to offline at the beginning of the year and then it stopped right well it didn't stop but it went down to the same.

Lower.

Usage amount of users joining wix so.

I mean, we could be and of course watching the news that we've talked on this as we talked to a lot of our users. While we had a lot of people who used to do that all the time and if you I talked to my friends in Israel tend to be just a bit ahead of the growth because we have more vaccine than any other place to people. They don't know what it should be something like Oh, My God. The closer business again showed a weighted Florida.

Will they be school of law school in September Nobody knows and this is selling debt obviously.

Users being put on a lot more sensitive than most.

Most businesses on the planet. So I mean that is a massive with it to be.

Fair right, we didn't predict it because.

This is on a proficient we don't know how to predict.

The nations and virus behavior, and if you go back to.

Two of them.

So Q1, right nobody predicted it.

However, it would probably should it be more cautious on on the on guidance and provided a guidance, which says well we have a really good idea on what we think will happen.

Corona and the vaccine, but we should probably take into account debt. This is not a proficient and we should have giving the wider guidance.

So.

So you've mentioned fundamentals are strong.

Dive into that a little bit more.

What are some of the positive trends that we saw in the quarter. So the most important right. So the most important kpis for US is always a conviction right. How many of the fuels as a company. We tried it bought actually from there and this number is higher than it has ever been so that's the first one then.

For us. It is also this is the highest ever actually decreased again, it's our highest ever.

Renewal is stable and if you think about Q2 last year.

M a C.

It must have quoted and you could imagine that the amount of renewal actually gonna go left right youre going to be higher churn, but we don't see that we're actually seeing.

Consistent.

And improvement.

And those I think are the most important free kpis, we just see other things, but e-commerce is a push.

As a percentage of our business is growing again, we see that we experiment is doing very well.

In line with.

With our targets for the year.

And partners and design on interest you joining weeks of doing it much faster than before we actually accelerated on that Kipp. Your average is a cornerstone of our future strategy. So I have to say again with the exception of demand dominions, the joining wix everything else looks really good and product development too.

We had on announcement yesterday about a new product. So there's a lot of new products coming of course bug development does not hold any way and is a big part of original I'm. So proud of the team on what happened in the last thing in the last six months.

Great.

Let's dive in a little bit more on the cohorts because as you said that that's really the key piece of this and Nir I want to I want to turn to you on cohorts. We obviously added some really large cohorts in 2020 and I think a lot of investors are going to wonder why how are those happening now we're anniversarying the first really big quarter of large cohorts.

From Q2 'twenty what.

What are we seeing now as we as we start to lap those.

Sure.

So actually I think.

This.

As you said these are the kind of the annualized.

So on the <unk>.

Suri.

<unk> Court.

2020, which is under Covid.

Q2 cohort, but also 2020, if you look on all of the courts.

They are basically.

Better than pre Covid cohorts in every key behind so they are essentially they're essentially bigger.

We have a much higher intent over the uses in those cohorts.

To build the business, we see that day by day and buying in choosing higher price packages business packages, which needs to be back on.

<unk>, obviously I mentioned.

They do the debt across the board in higher conversion again, something obviously highlights both for the current quarter, but anything going on tour flow.

For the year now.

They are adopting more business applications, such as Google workspace and spend there.

<unk> is on here.

And and I think this is basically the key thing that we've seen throughout the year and definitely now that they renew they actually had better retention.

I think that across the board these quotes on stronger.

And it's important to mention that.

<unk>.

Diluted EPS from the annual retention, which we still need to see how it goes over time, but it's the same. This is also growing the same into 2021 or from Q1 and Q2 of 2021, but basically we've seen this impact and it is continuing.

And going forward.

Great and just to focus a little bit more on commerce as part of that.

Obviously, I mentioned strength there we shared in our materials Q2 collections were 35% comprised of commerce This quarter, which was up from Q1. So we're seeing strong strength in online commerce Sharon here.

Why that's so beneficial for us.

So I think this is something that is.

And that is.

It's been going on for a while now.

<unk>.

It is becoming more and more significant than it might be if you're going to continue.

Because when you look at our Commerce Notionally, we basically had a compounding effect.

Mainly three things right first of all.

Coolness on which is not on the retail it's not only stores.

Every activity.

<unk> users can become.

To some extent on online commerce transaction, and we support that through the dookie true events through the restaurant hotels, the fitness trainers and so on and so on and so forth and so all of those.

First of all.

We keep a convincing the impact of moving people moving between the online and offline. We also introduced the <unk>.

In order to be able to capture some of the offline activity as well and that's something that debt will increase over time, but it's a very wide array.

Range of Commerce on.

Last one so obviously.

From the capture more and more of a day.

Yeah.

The second part debt compounded compounded growth.

Dilution of the product from the services we have.

<unk> been delivering a huge amount of value for each and every one of those on the leases.

Excellent.

Loans over the past the past few years and you Didnt most going to past years since COVID-19 hit them. They had more need to do things on line with Nacho Bye bye.

Investing heavily into our R&D team and into our technology and innovating all the time, we have also done so by by acquisitions of companies and products that complement the whole thing and we've seen that are doing more and more of debt in the past 12 months and obviously, we'll continue with that and we see obviously it'd be great to see.

Great value on it because it delivers value to the user and who then convert at a higher rate.

Generates more GP Leigh.

And staying with us form on good times and in the third leg on this compounding effect is expanding payment itself the product itself keeps on evolving expanding were men.

Volume is even better to patch more GP, we get a better take rate. So obviously, that's also another thing thats expanding the financial.

Contribution.

<unk> has been moving back to back.

Great and another I think exciting growth area. That's contributed a cohorts as well as partners Avishai can you can you give a quick update on on what we saw in partners this quarter as well and so the speed at which we sign new partners.

Full time and of course that number is also the number of active partners freelancers agencies.

Working on wages also had the highest day ever.

Editor X is doing well and is growing.

Again, 30% quarter over quarter. So we're very happy with that it is of course still small compared to the size of wix right because they're basically so small, but it's getting I think next day, we're gonna see actually debt if he is becoming significant.

Nobody could get massive the bigger contribution rate of editor X has always been debt infrastructure debt.

Agencies to US a couple of designers and we're saying that it's doing very well on it with the agencies will start with net interest and then also builds a lot of projects on the classic category. So we think that that wasn't.

That was something that we believe will happen and we think of as I mentioned before that that is important I want to point out. Another from me what is a partner deal right Vistaprint. So vistaprint.

And in many ways right kind of like NTT.

We have in Japan.

It's a mega designer right Mega design agency, why because they will build sites, where users like I'm not talking about a very large number right and there are many many hundreds of thousands that.

It doesn't mean, we'll build those site on the Wix platform and so we had to use that technology on a product to do that in pretty much every way, we define a partner like debt.

Such a partner so I think having an entity.

A few years before in Vistaprint no it's already peak confirmation that the GAAP.

GAAP in technology, so fast that even the big guys wanting us to volume and that of course of course more for them and everything and so I think debt that is another.

For me it vary.

Strong point.

Adding a partner strategy.

First let's talk about Vistaprint, Mark because obviously that was a pretty significant announcement that we made this morning as well.

So why don't you share a little bit more about why this is such an important.

Alliance for Us strategically.

Yeah.

Absolutely Joe.

I think obviously, it's a <unk>.

Big commercial deal with a big commercial impact, but I think the strategic impact.

Also extremely important message on it and I'll be shy.

Nothing on it.

Vistaprint these basically saying.

We want these rules on our business, we want to take all of these 20 years of Knowhow.

Of helping small businesses on a durable <unk>.

True true.

And.

And they are pulling demand.

We want to become basically this nasty bigger.

The biggest on the globe their ambition and their word on <unk>.

Agency Force.

Tiny as more businesses due to design their digital presence and then to market.

In order to do that we need someone with a layer of technology.

Technology like no longer.

And their choice for that to come through on partnering with us to deliver that.

Moving to the to their customers.

I think that is magic because.

If we were to achieve on beside north pattern.

Getting to.

Weeks to power, a 50% or anything new on the Internet and five to seven years from now that we need to be able to obviously.

And so the need both on every.

On the South Korea, or even the people we can do it themselves, whether it's a tiny business owner.

Can you just go on and use Abi on the classic any store or the professional designer.

Develop there with the agencies using the debt.

Full on.

Sweet debt.

Net inventory Zillow offers win and then these are the bigger companies. The biggest partners come and say, we want to have something which is true.

A new layer of technology attached to our onofre that degree something which is bigger than what we've had before.

This stigma.

Debt disciplined is choosing to do this without having all of their massive traffic.

Toward towards <unk>, I think that that's a huge.

Huge testament to all of the innovation and work and then putting a product and technology in the last few years income.

As long as our brand and the strength of it.

So I think this is.

Obviously, something very very exciting for us.

And just because we know investors want to know beyond strategy commercially.

What does it mean for us.

Well on actually are not going on I cannot go over the commercial detail.

The amendment, but if.

You just think about what has been announced okay vistaprint.

On the move their entire.

Inside the business hundreds of thousands of websites entirely.

To walk on mix there going on.

Transition all of their new.

We're on Skype being built.

Going forward on.

On their platform in the years to come to move two weeks, that's under the tongue and it's more so the only that is massive but if you think about it we're.

We're not going to be.

They're transitioning from offering tied to build their experience, which is one thing is now to having the full blown weeks.

Operating system for the business offering.

Is it going to be about additional applications on the vertical who's going to be about.

The branded asset weighted.

Alex yesterday is going to be about a much deeper e-commerce.

Integration.

About about the about the standard CRM is going to be about the ability to capture GPC and to deliver delivery volume to end customers at the on the side of those users.

Essentially I think the the potential here going forward.

Matthew over the next few years.

Great.

So, let's let's move on our financials, a little bit more than we are.

We wanted to dig into Q2, a little bit on the results.

Sure.

Could a little bit more about the.

The results for creative subscriptions versus business solutions in Q2.

Sure so.

With regard to the creative subscription collections. This is actually work came in I saw low end.

Because of all the reasons that I wish I had mentioned before.

About you know about the number of users coming in two weeks.

On the other day video solution actually came a bit better than what we've expected we have a really good growth coming from the wix payments, even though even better than the first quarter.

While Google Workspace factually came lower than the first quarter and interest pretty much expected.

We also spoke about it last quarter about the seasonality effect COVID-19.

Great and gross margin a little bit more on on.

On what we saw on gross margin by segment as well, yes. So we actually started to see.

As expected the improvement in gross margin in both places.

The first one is in creative subscription we saw some improvements over there while we actually started to gain.

The leverage from the investments we've made in customer support.

Cost structure.

I do believe that this is something that is going to continue especially towards the second half of next year and gross margin will continue to increase.

Business solutions on our gross margin actually was better than what I expected.

And it's mainly because payments Scala white famous scale up the margin on getting better over there obviously.

Mostly to the leverage that we've seen in this business.

Great and then the final thing in Q2 that debt.

It is worth mentioning is around marketing and what we did with marketing investment in the quarter. Yeah. So as you can as you can notice marketing was that was the big down then.

And then our expectations.

But it's mainly due to the envoy the model that we're using which is based on the IRI and how much we invest and how much we've seen a return.

And as we sold the new users has slowed down so by default our marketing investments are going down I think that is a great example of how fast we are actually reacting to the changes in market. If you remember.

Last year when the demand was huge.

Actually increase our marketing investments.

And it was really fast.

This time is actually a geography, but the reaction is really fast and we always invest when we see the return we do not do that when we don't see the return.

And I think the returns that we're seeing and you walked through the cohorts and we're still seeing the benefits from those cohorts that we increased our investment on last year and that's an example of why we manage marketing the way we do absolutely on.

Okay. So let's go onto guidance.

Just talk about how we put together Q3 guidance.

So.

Obviously, you know we spoke a lot about the uncertainty about the confusion on loan growth customers.

And how we are going to guide.

It is the case so the trend is actually started made continued through July.

Even early August.

So this is also part of our Q3 guidance.

That said I feel very good about the Q3 guidance, we obviously about about almost half.

Already into Q3.

Quarter.

Actually most of the uncertainty is.

Interest in the fourth quarter and this is the main reason why we are expanding the range of our guidance okay.

Just getting back to Q3 before we move on our Q4. It. So we mentioned there were some partnerships booked in Q3 already to talk more about that on how that affects the guidance.

So as we mentioned before a significant beat to be partnership already booked in the into third quarter and in spite of our Q3 guidance as well.

Actually we mentioned in the shareholder updates our debt.

About $17 million.

B to B partnerships is part of our second second half.

Guidance.

And most of it is already booked in the first quarter. So in a way to create the largest sequential decline in the fourth quarter because of that.

Very important for me to mention and we've actually saw debt. So in the second quarter. The beat to be partnerships is something that is part of our strategic.

You know strategic initiatives.

We believe the long term.

I used to be obviously solids and generates a very steady.

On a cash flow for us.

But at the very beginning it is lumpy and this is something that we've seen in the second quarter and again.

We just booked a mega deal in the first quarter, which makes it even more lumpy.

But but obviously.

Chip.

We believe that it will be much more slowly.

But I think that is also another good example of how we drive growth organic drove a true on new initiatives and it's already contributing in the third quarter.

So will contribute in the fourth quarter and I expect it.

To continue growing also on next year.

Great and.

Finally on Q3.

We get we give overall guidance.

But can you give a little color on on segment in Q3 interest guidance by segment.

Yes, so what I can say debt business solution is actually flat.

Between Q2 in Q2.

We feel some impact from Q2 going into Q3, mainly on applications.

We see strong growth.

We predict strong growth in payments in the fourth quarter due to seasonality.

<unk>.

Very important to mentioned payments in general feel on truck and it's doing very well.

Great and then and then Q4.

You mentioned, that's where most of the uncertainty is.

But we still provided guidance. So how did we how did we come up with and think about how do we think about the guidance for Q4 full year here. So obviously uncertainty make it harder to predict.

We defend proficient we usually are.

Well to do.

So basically the way that we're looking at taking a two two scenarios.

The first one is captured the low end if on.

Certainly continues to drive zone.

The second is the high end if things actually improve from here. So I have no idea what you know what makes more sense on what is going to happen. But this is why we provided a wider range to capture both of those options. So this is a true range.

Of about comps for the remainder of the year that were provided it is a true range and most likely it will be we tend to range.

And then finally, we updated free cash flow.

How is all of this changing our investment plans for the year.

So actually none of them so nothing growth the things Thats happened actually impact on Arps.

Because we you know we view that as something that is a temporary effect. We don't know how much time interest on the left but you know at some point of time I'm going to stop and we are building a company for the long term.

So it's not going to have any impact on our decision to continue on growth and investment.

Except of marketing, which is.

By default is doing based on on the traffic based on the number of users that joined the weeks.

And it's based on DIY, but besides of that we're not doing any other changes to our plan and by the way. This is why you'll see that most of the effect of the decrease in our guidance reflected as part of our free cash flow.

Okay, Great I think those are all helpful items.

Maggie I'll turn it back over to you and I think we can take some questions from from others on the phone.

Great Operator, I think we are ready for questions.

Certainly if they would like to ask an audio question. Please press star one on your telephone keypad again on star one to ask an audio question.

Your first question comes from the line of Brian Josey with JMP Securities.

Great. Thanks for taking the question and I. Appreciate this new this new format I wanted to talk a little bit more of just the top of funnel slowdown and good to hear all the commentary around that but can you speak to just how the slowdown is affected more presence versus commerce differently.

The question is it seems like online activity for Commerce continues to do well from from your comments around wix payments, but talk to us more just about presence and how that was put on hold in and on a follow up there out of Shire near in the letter you talk just about demand was pulled forward due to higher conversions in 2020, though I think our view is it.

The highest ever in the 'twenty 'twenty cohorts showing better retention. So just talk a little more about what do you mean by pull forward or focusing on upselling or buying more products because they are starting out at a higher level or just any insights on that so pull forward and then presence versus commerce. Thank you.

Of course, so this is avishai and so I'll start with commerce right I think that day.

What we've seen has got in.

Well, if you think about presence so fragrance will be things like events or people doing selling force door or floor.

Clinical for many other things that are not only based on online right and when people don't know took on a.

We will go back to look Donaldson slow down there. We also seen a bit of a slowdown in commerce, but not as strong so the GAAP. So basically we can see about it.

10% to 20% improvement in the percentage of commerce in weeks. This is coming from tourism. The one that we just describe on debt.

The other is that we continue to invest in Congress a lot of the products are getting better. So we have more customers with commerce.

I still yoda regards to your second question, while we're still at beta in the first and last year as debt.

Cohort that we had and the best right.

We're converting faster than.

Then before and a lot of it was that because of the pandemic made it more of an <unk>.

Urgent thing for people to finish it.

Online presence and to start working with that so that if they fit that we've seen and then.

We've seen that slow down now, we along with a new user registration.

But I was just wondering.

That day and.

Both cohorts conversion is still higher than 2019, so it's not as high as 2020, but we should also see.

<unk> department, there compared to the past.

Thank you Avishai very helpful.

Your next question comes from the line of Elliot.

With Morgan Stanley.

Hi, Thank you so much.

Just a quick question on debt the progress on the 10 billion GMB and take rate I know you guys mentioned, it's trending to your goal, but kind of any sign from.

US incrementally more confident on hitting those goals.

On an expansion to the new G L and adoption of Wix payments as the default option would be helpful. And then kind of any color on is the fact that about 40% of GP DS services oriented did that have.

Incrementally.

The net of Covid.

Yes.

Thanks.

Oh that was a lot of questions, but I think as we are in line with the targets that we placed we do see that the.

G P V.

It being where it was for service oriented so it's still in this area.

Yeah.

Where are seeing the compounded benefit from two 'twenty, obviously right into that because people that had there and because retention stay pretty much the same as it used to be and we had a lot of commerce happening into 2020, but we have even more commission percentage coming this year. So.

In terms of globally, we don't have we experiment yet in all the countries that we sell and this is something that we're working very hard to close so we can offer it in more countries, but in the countries that we do offer it we're seeing that adoption is better than before and so higher than before.

That answers all of your question on did I Miss.

One.

That was something that was helpful. Thank you.

And then just a follow up on the Vistaprint announcement.

Can you walk us through how how customers start adopting from wix platform and kind of any expectations on when users from day to day partnership.

Thank you Ms. Alber is there any sort of kind of delayed timing we should ex.

Beth.

And just higher level kind of go to market strategy on finding new partners and how you think you can accelerate adding more partnerships to the model. Thank you.

Okay.

Sure.

Yeah I'll take this one so in terms of you asked about excuse me on how do how many customers that we used to feed customers start adopting a week.

Well the growth is too.

Two haven't been in a place where when the I'm just going to be growing to vistaprint.

Finally, and after after the initial on boarding of the Vistaprint product.

We will find the best way places too often in the week, we saw free according to who they are obviously, we'll play with that we will segment that but the gross loans that funnel and ultimately put me on screen and the best possible in their hands and bring the best possible way.

And on this thing Thats going to happen there is.

Mr <unk>.

Acquired a $19 million designs.

On a while ago and also part of the offering will be an offering which is very much agency like do it for me in which for which the wix platform would be.

The technology and product platform that will empower.

In terms of timing then we're talking.

It's going to be soon we're talking about.

On <unk>.

On the next year.

Okay. Thank you.

Yeah.

Your next question comes from the line of Brad Erickson from RBC capital.

Hi, Thanks, guys I.

I guess first just a little more clarity on the guidance on the uncertainty you're talking about I.

I think we can all understand and I guess I appreciate what would happen if the.

The business of Covid totally flared up again and everyone kept their businesses online but to.

To the degree that things would have or do fully reopen can you just clarify what would the acute effects of that on your business and then I have a follow up thanks.

Yeah, So I think that day.

Okay.

I think that was a big part of why we gave the guidance. The way. We did we assume that this is what's going to happen and.

I'm familiar with our business right, we have a lot of things like restaurants hotels events.

On a lot of it.

Places like studios flow yoga, fitness and beauty salons, but in a lot of those things that will really hurt during the pandemic and we expected that once COVID-19.

And Ob.

Well at least the last.

Much better place.

We'd see that acceleration into doors businesses that first of all natural and natural part of our business, but also was lacking in 2020, and we're probably going to be some catch up wildly on.

On an up saying is that it started to be done and then of course when it became obvious that we did not yet finished with the pandemic. It's actually went back to slow down.

Yeah.

If this answering your question.

Yeah, that's kind of what you're getting at and.

And then I guess just to follow up on the on the <unk> partnerships you mentioned that I think another one pushed to the second half I think this came up maybe last quarter as well. So I guess question is sort of what's your confidence level on everything closing in second half that you've contemplated in the guidance for the second half of the year.

Okay.

So as we mentioned we have about.

I think that it will be the only time that we actually providing gross numbers I think that's a day.

Intention is to be like very true on spirit in terms of what we're having to be a second half of the year.

For our guidance and also to explain.

The lumpy.

No.

Nature of this business at least at the very beginning.

Can tell you is that on the second half of the year, we have about $70 million.

Out of our guidance, we're all on most of its already been signed and booked.

We do anticipate to close more deals in the second half of the year.

But again as I mentioned before most of it already done.

Got it thanks.

Your next question comes from the line of Yoga Iranian Whats split question.

Charities.

Yeah.

Hey, good morning, guys. So I think one of the themes.

Noticed that.

As we've gone through earnings is that some of the.

Larger more established customers.

Or not necessarily hitting pause or.

Not that they're not concerned just not hitting pause the way that it feels like the small ones or are you seeing that also like in your you said you said that the agency and partner business is stronger than it's ever been.

At the top of the funnel theyre seeing the same kind of impact or are your agency partners.

At least doing a little bit better than you.

You know maybe about the rest of the top of the funnel.

And then the second question just going back to the comments on on the pull forward.

To be clear it sounds like Youre, saying that the pull forward was in conversion.

Not in in new users.

Is that the case.

Why are you why we'll be confident that debt.

It wasn't a pull forward it from users.

So.

Let me try on us if that's all for the first question right. So we do see a bit of a slowdown also from new projects coming to partners.

And so.

So they are expense similar to us although not on the same scale on a smaller scale.

Which kind of makes sense right.

The.

Pull forward why do we call pull forward is that they say that we are of course from 2017 right. So most of the users will convert in the first few months and then we have this amount of users that joined for free and I'm, playing with wix, but will convert over time.

And if you look at really old cohorts, we still see that users debt join with five or seven years ago as free users and play with a product with suddenly convert so this is having debt that's been true.

For all of July from the company right that fourth cohort.

Cohorts are still converting.

And what we're seeing in 2020, the day rate of that conversion went up.

So while it made it a debt we felt as if we have.

And we made it the debt conversion going from there.

Covid in a few months or in a few years to faster conversion and this.

This is at least how we perceive that to be although we saw on it.

Okay.

So just to so.

If we look at.

2020, it was a higher rate, but if we look at the.

And how they behave.

It is behaving now compare to 1918 or the early part of 'twenty right. Then the that effect is actually better. So we are somewhere in between what you used to be in the past 12 awards from 2020.

So it is still better than most of our history, but not as good of course excellent growth and adjust the pandemic exploded.

Okay. Thanks, and just one more quick follow up on the <unk> stuff. You know we spent a lot of time on it last quarter.

But like the way you guys talked about it was that it wasn't.

As important apart.

Yes, the big picture or the plan for the business and it feels like.

Well, you're talking about it now.

And it's a bit it's a much bigger part of the overall strategy is that right read are you stepping into that.

Sure.

On a bigger part of your growth going forward than it's been in.

In the past thanks, guys.

Yeah, I think that's a you know it really depends on first of all on on the nature of the profit I think that you know of a shy on you mentioned before that's how it's all connected to the overall strategy of obviously serving more people in a way also.

Think of a huge agency for us.

Every customer is strategic for us obviously and.

And I believe that you know in the fast track a few quarter ago.

It was not that big we just started the business I believe that you know of our standard progressive we actually have seen that there is a really huge demand to the weeks Brent from those partners. So we do believe that regardless of what we've already signed are for example on with restructuring to another.

I believe that we are going to have more but yeah. I mean look everything is strategically right everything is reported and remember what we said before in the end of the day.

What is important for us is to obviously youre not to serve everyone on it'll be a big part of the Internet and we are doing the right.

Step two beta and restructuring and those are partnerships very important milestone.

Our way.

Hey, Thank you.

We have time for one last question.

My apologies. Our next question comes from <unk> Khan with choice.

Yeah, Thanks, Hey, Thanks, a lot.

A couple of questions from me.

One day on the Mr parent partnership on.

How are you guys expect it to start letting in next year.

With the migration of these existing customers over to Rex is there a step up that we might see in mixers.

Paying subscriber base.

Once that happens and then on.

In terms of the pull forward I wanted to just double click on on the historical mix that you guys used to disclose it seems like more than half of the net adds were from from from previous cohorts previously.

You haven't obviously broken that out.

More recently, but how does that ratio look like the new ideas new adds coming from.

New customer choices.

Over the course.

Okay.

Yes.

Yeah. So the first question was about the migration.

From those partners.

Once it gets going to stout, yeah, we are going to see.

You know many of our customers and many new premium subscription.

Joining wix and obviously, it's going to increase.

The number of creative subscriptions that we have.

No.

It is I think that it's too early for me to tell you that it's going to be massive in one quarter or two quarter, but it is significant I mean, you mentioned that we're talking about hundreds of thousands of subscriptions to be migrated two weeks. So you know it's a good question. If it is going to happen in one you on six months I think that it's too early.

Early to say.

Yeah.

So with regard to the reaches out to the second quarter.

Our calls are typically about 60%.

Of the gross adds in the quarter and only 48% coming from new on nothing change.

In this dynamic.

In the second quarter is very similar.

Got it thank you.

Your final question comes from the line of day pack massive Damian.

Wolfe research.

Hey, guys. Thanks for taking the questions just a couple of ones first can you give some color on how we should think about the creative subscriptions growth on the collection side on the second half guidance for total collections kind of on.

Twice a day selling too you know Mara.

On 20% range in <unk> I know that you already provided some context on business solutions, but anything you can share on the grid and subscriptions will be great and then the second question just to follow up on the <unk> side.

How should we think about this going forward in 'twenty, two and 'twenty three and so on I mean, there's 70 million.

It's about like a price six points of incremental growth. This year, but do you expect this business to incrementally get bigger and bigger over the next few years. Thank you.

Yes, so I'll start with the second question would actually be clothing.

Impacts from <unk>.

<unk> relates also to the first one.

Look we just started the business. So for example.

We mentioned about the $17 million in the second half, which is mostly talking about new premiums.

Think about it this way those new premiums are going to be renewed.

Most likely we expect those partnerships to be successful. So it's even can be more on top of debt.

So we just faster than every day every big partnership has.

Bigger impacts on on our collection resort in a single quarter.

To answer your question, Yes, I do believe that it is going to be.

A much higher.

In terms of the dollar value in the next few years, because we see the demand in the market to our brand.

<unk> invested in our growth technology for many many years.

And this is you know this is Pat.

This is part of the reason why the demand so loud. So I do I do believe that we are going to see more and more partnerships like that and yes. This business I expect that it will continue to grow but as I mentioned before.

At the very beginning it is lumpy so we need to take it into consideration with regard to the first question that you asked about the creative subscriptions.

Business, Yes, I mean as <unk>.

<unk> solution is more.

Stable due to payments.

Most of the decrease.

We have been now forecast actually is because of the creative subscriptions.

And this is due to the average that I mentioned before about the uncertainty.

Uncertainty, mostly affect the creative subscriptions as payments continue to grow because it's a compounding effect.

So this is this is how we view things obviously, if we are going to see any improvement first is going to be on creative prescriptions.

Got it okay. That's very helpful. Thank you so much.

Thanks, Deepak thanks.

Thanks, everybody for joining us today for all the time, we have a day.

Good day.

This concludes today's conference call you May now disconnect. Your lines at this time and have a wonderful day.

Thank you so much Andy.

Yeah.