Wix.com Ltd. (WIX) Q2 2025 Earnings Call Transcript

Wix.com reported strong Q2 2025 results, with total revenue up 12% to $490 million and bookings up 10% to $510 million, exceeding guidance driven by robust new user cohort performance. New cohort bookings growth accelerated to over 20% exiting July, a level not seen since peak COVID, prompting an upward revision of full-year 2025 bookings guidance to $2.04-$2.075 billion and revenue to $1.975-$2 billion. The company is strategically leveraging AI for enhanced user engagement and new offerings like Generative Engine Optimization, while the recent acquisition of BASE44 is significantly expanding Wix's total addressable market into 'vibe coding' for application building, projected to reach $40-$50 million ARR by year-end. This strategic expansion and strong operational execution position Wix for accelerated growth in 2026 and beyond, alongside continued strong free cash flow generation and active share repurchases.

Analysis

Wix.com delivered a strong second quarter, with revenue growing 12% year-over-year to $490 million and bookings rising 10% to $510 million, both exceeding prior guidance. The primary catalyst for this outperformance and the subsequent upward revision of full-year guidance is a significant acceleration in new user cohort acquisition. Bookings from the Q2 2025 cohort grew 14% over the prior year's cohort, and this momentum intensified to over 20% year-over-year growth for new cohorts exiting July—a rate management notes has not been seen since the peak of the COVID-19 pandemic. This organic acceleration is the main driver for the raised full-year outlook for bookings to $2.04-$2.075 billion and revenue to $1.975-$2 billion. Strategically, Wix is expanding its total addressable market through the acquisition of BASE44, a "vibe coding" platform targeting application developers. BASE44 is projected to achieve a hyper-growth trajectory from a few million in ARR at acquisition to $40-$50 million by year-end, positioning it as a major growth driver for 2026. The company is also embedding AI as a competitive moat, launching proprietary tools like "Generative Engine Optimization" to enhance user visibility in LLM-based search. Despite increased investments in acquisitions, Wix maintains robust financial discipline, generating $148 million in free cash flow (30% of revenue) in Q2 and reaffirming its full-year FCF margin target of 30-31% while executing a $100 million share repurchase.

Key Decisions for Investors

• Investors should closely monitor the sustainability of the new user cohort bookings growth, which exceeded 20% in July, as this is the primary indicator supporting the company's thesis for accelerating top-line growth in the second half of 2025 and into 2026.
• The BASE44 acquisition represents a significant expansion of the total addressable market into application development; its rapid ARR scaling towards a $40-$50 million year-end target should be tracked as a material new growth vector.
• Evaluate the market adoption and monetization of Wix's AI-native tools, such as its Generative Engine Optimization, as they are central to the company's strategy of creating a durable competitive advantage and enhancing customer retention.
• Note the company's disciplined capital management, which combines aggressive growth investments with a firm commitment to a 30-31% free cash flow margin and active share repurchases, providing a strong foundation for shareholder value creation.