Wix.com Ltd. (WIX) is focused on expanding its website-building offerings to gain more market share among professional site designers. The company has reported impressive bottom-line results, including a significant Q2 beat. Wix’s AI efforts and other new features have also attracted attention from Wall Street and developers.
Wix’s earnings outlook continues to improve in an industry that remains in demand. In fact, Wix achieved its first-ever quarter of positive GAAP operating income in Q2.
Wix’s stock is currently trading above key technical levels and is still 70% below its previous highs.
Expanding Beyond DIY
Since its inception in 2006, Wix has been assisting small businesses and individuals in designing and maintaining websites. The company offers intuitive and user-friendly tools for DIY website building. However, in recent years, Wix has introduced more features to attract professional website builders. It launched Editor X, a platform designed specifically for designers and agencies, and has rolled out an AI Text Creator and other features. Wix also has partnerships with industry leaders such as Meta and Google.
Wix plans to launch its new AI Site Generator, accompanied by a suite of AI-powered capabilities. It also announced the introduction of Wix Studio, which includes a newly-designed development and creation editor with code capabilities, multi-site management workspaces, and access to new monetization opportunities.
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All of these efforts are part of Wix’s strategy to expand beyond DIY and tap into new growth areas to reignite sales.
Growth, Improving Profitability, and Outlook
Wix experienced average revenue growth of 50% from 2014 to 2018. The company’s top-line expansion slowed as it faced increased competition and market saturation. However, Wix achieved 28% average sales growth between 2019 and 2021. Despite a 9% revenue expansion in 2022, Wix’s profitability efforts and focus on the bottom line have resulted in positive GAAP operating income.
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Looking ahead, analysts estimate Wix to achieve profitability and sales growth, with projected adjusted earnings per share of $3.35 in 2023 and a 12% increase in sales. The company’s adjusted earnings outlook has already seen positive revisions, resulting in a Zacks Rank #1 (Strong Buy).
Price, Valuation, and More
After a significant climb since its market debut, Wix’s stock is currently down 14% in the last five years and is trading around its lows during the COVID-19 selloff. However, the stock has shown a 30% increase over the past 12 months.
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Wix is currently trading above its moving averages, indicating positive momentum. The stock’s valuation is favorable with a 3.2X forward 12-month sales multiple and a 27.9X forward 12-month earnings multiple.
Bottom Line
Wix is taking steps to position itself as a profitable and growth-oriented business. Its recent platform updates offer both short-term and long-term upside potential. Analysts have a positive outlook on Wix, with the majority of brokerage recommendations being either “Strong Buy” or “Buy.”
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