Wix.com Announces Record Setting Second Quarter 2016 Results

• Exceeded High End of Guidance Across All Key Performance Metrics
  
• Delivered Record Quarterly Free Cash Flow
• Added 183,000 Net Subscriptions, Exceeding Last Quarter’s Record
• Second Straight Quarter Adding Over 5 Million New Registered Users
• Introduced Wix ADI – the First AI Solution for Design
• Raised Full Year 2016 Outlook Reflecting Continued Momentum into the Second Half of the Year

TEL AVIV, Israel, July 27, 2016 (GLOBE NEWSWIRE) -- Wix.com Ltd. (Nasdaq:WIX), a leading global software platform for small businesses operating online, today reported stronger than expected financial results for the second quarter ended June 30, 2016.  In addition, the Company provided its initial outlook for the third quarter 2016 and once again raised its financial outlook for the full year 2016.  

Q2 2016 Financial Summary

“The incredible momentum in our business continued during the second quarter as we generated record growth in net premium subscriptions,” said Avishai Abrahami, Co-founder and CEO of Wix. “We continue to generate an exceptional blend of higher conversion of registered users to premium subscriptions, improved retention of subscriptions, and increased collections per new subscription.  We also raised the bar for website design with the introduction of Wix Artificial Design Intelligence, or Wix ADI. The initial response to this ground breaking product has been overwhelmingly positive, and executing on the first AI solution for design widens our technology leadership moat.”

Lior Shemesh, CFO of Wix, commented, “Our outperformance this quarter was our strongest as a public company and continues a consistent trend of delivering higher than expected financial results. We re-accelerated our top line growth rate and generated record free cash flow.  Our existing user cohorts continue to generate significant value, stemming from the ongoing conversion of existing registered users and the negative churn we highlighted at our analyst day in June. Our performance in the first half of 2016 was well ahead of our expectations going into the year, and with new product introductions and improvements on the horizon, we are excited about the second half of the year. As a result, we are once again increasing our full year outlook for all of our key financial metrics.”

Q2 2016 Results and Highlights

• Revenue increased 41% to $68.7 million compared to $48.6 million for the second quarter last year 
• Collections on a constant currency basis, which excludes the impact of approximately $1 million related to year-over-year changes in foreign exchange rates, would have been $82.5 million, an increase of 44% versus the prior year
  • Reported collections increased 42% to $81.5 million compared to $57.4 million for the second quarter last year
• Gross margin on a GAAP basis was 84% compared to 83% in the second quarter of last year. Non-GAAP gross profit was 86% of collections compared to 85% in the second quarter of last year
• GAAP operating loss was $10.5 million compared to $10.8 million in the second quarter a year ago. On a non-GAAP basis, operating losses were $3.0 million compared to $6.8 million in the second quarter last year
• GAAP net loss was $11.4 million, or $(0.28) per share, compared to a net loss of $12.3 million, or $(0.31) per share for the second quarter of 2015
• Non-GAAP net loss was $3.7 million, or $(0.09) per share, compared to a non-GAAP net loss of $8.2 million, or $(0.21) per share for the second quarter of 2015
• Adjusted EBITDA was $10.7 million compared to $3.5 million for the second quarter of 2015
• Free cash flow improved to $10.2 million compared to $3.4 million for the second quarter of 2015
• Added a record 183,000 net premium subscriptions in the period to reach 2.12 million as of June 30, 2016, a 41% increase over the second quarter of 2015
• Added 5.1 million registered users in the second quarter. Registered users as of June 30, 2016 were 87 million, representing a 29% increase compared to the second quarter of 2015

Recent Business Highlights

• Launched Wix ADI:  Wix unveiled the first-ever AI solution for design and creation for desktop and mobile websites worldwide. Wix ADI was designed to eliminate the most significant challenges of building websites – time, design and content creation. Wix ADI instantly produces tailored websites by learning about the user through a few simple questions and curates content to create a unique design. From billions of high-quality combinations and possibilities, Wix ADI selects the perfect combination for each users' need.
   
• Wix Mobile Growth:  Our users have created over 17.9 million mobile sites using our platform to date, making Wix one of the largest mobile site development platforms globally.
   
• Global E-commerce Platform: E-commerce subscriptions surpassed 290,000 during the quarter.
   
• Increasing Platform Engagement:  Continued engagement with the Wix ecosystem illustrated by over 355 million contacts saved onto the Wix platform.  Leveraging Wix’s MyAccount CRM system, business owners track customer activity data, manage relationships and communicate using WixShoutOut, Wix’s email marketing solution.

       
Financial Outlook

The Company is introducing its outlook for the third quarter of 2016 and increasing its prior outlook for full year 2016 as follows: 

• For the third quarter of 2016:

• For the full year 2016:

Changes in Financial Metric Reporting 
We are aware of recent changes to the SEC’s reporting guidelines concerning non-GAAP financial metrics.  As a result, we will implement a change to our reporting of non-GAAP metrics.  Beginning with our earnings release in Q1 2017, we will no longer report adjusted EBITDA as a non-GAAP financial metric.  Instead, we have commenced this quarter reporting non-GAAP operating income and free cash flow as key non-GAAP financial measures of our business.  We believe this change will improve the transparency of our business and increase the comparability of our results with peers.

Conference Call and Webcast Information

Wix.com will host a conference call at 8:30 a.m. ET on Wednesday, July 27, 2016 to answer questions about the financial and operational performance of the business during the second quarter 2016. The conference call will include a brief statement by management and will focus on answering questions about our results during the quarter. To enhance the Q&A portion of this call, the company has posted a shareholder update, supplemental data sheet and supporting slides to its Investor Relations website at https://investors.wix.com/results.cfm. These materials provide shareholders and analysts with additional detail for analyzing results in advance of the quarterly conference call.

To participate on the live call, analysts and investors should dial 866-393-4306 (US/Canada), 734-385-2616 (International) or 1-809-315-362 (Israel) at least ten minutes prior to the start time of the call.  A telephonic replay of the call will be available through August 3, 2016 at 11:59 p.m. ET by dialing 855-859-2056 (US/Canada) or 404-537-3406 (International) and providing Conference ID: 40464581.

Wix will also offer a live and archived webcast of the conference call, accessible from the “Investor Relations” section of the Company’s website at https://investors.wix.com/.

About Wix.com Ltd.

Wix.com (NASDAQ:WIX) is a leading global software platform for small businesses operating online with over 88 million registered users worldwide. Wix was founded on the belief that the Internet should be accessible to everyone to develop, create and contribute.  Through free and premium subscriptions, Wix empowers millions of businesses, organizations, professionals and individuals to take their businesses, brands and workflow online. The Wix Editor and highly curated App Market enable users to build and manage a fully integrated and dynamic digital presence. Wix's headquarters are in Tel Aviv with offices in San Francisco, New York, Miami, Vilnius and Dnepropetrovsk.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, Wix uses the following non-GAAP financial measures: collections, collections and revenue on a constant currency basis, adjusted EBITDA, non-GAAP operating loss, free cash flow, non-GAAP net loss and non-GAAP net loss per share (collectively the "Non-GAAP financial measures"). Collections represents the total cash collected by us from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period. We adjust collections and revenue to measure them on a constant currency basis by assuming the same exchange rates as the prior period applied to the reported figures in the current period. Non-GAAP operating loss represents operating loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense, amortization, and acquisition-related costs. Non-GAAP net loss per share represents non-GAAP net loss divided by the weighted average number of shares used in computing GAAP loss per share. Adjusted EBITDA is defined as cash flow from operations before changes in working capital, prepaid domain registration costs, interest, bank charges and other financial expenses (income), net unrealized losses (gains) on hedging transactions, other income (expenses), taxes on income, and other unusual or non-recurring expenses. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures. 

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that it provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making.

For more information on the non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press release. This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. The Company has not reconciled its guidance as to adjusted EBITDA to cash flow from operations because it does not provide guidance for cash flow from operations. As items that impact cash flow from operations are out of the Company's control and/or cannot be reasonably predicted, the Company is unable to provide such guidance. Accordingly, a reconciliation to cash flow from operations is not available without unreasonable effort.

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements may include projections regarding our future performance and may be identified by words like “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “outlook,” “future,” “will,” “seek” and similar terms or phrases. The forward-looking statements contained in this press release are based on management’s current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-looking statements include, among others, our ability to grow our user base and premium subscriptions; our ability to maintain and enhance our brand and reputation; our ability to manage the growth of our infrastructure effectively; changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatory and other factors discussed under the heading “Risk Factors” in the Company’s 2015 annual report on Form 20-F filed with the Securities and Exchange Commission on April 13, 2016. Any forward-looking statement made by us in this press release speaks only as of the date hereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.