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No. of Recommendations: 14

Wix announced earnings after the market close today.

Revenue 40% Y/Y and collections 36% y/y

Non-GAAP operating income 16.3m up 376% y/y

FCF 23.7m 25% y/y

ARPS increase 11% y/y (customers spent more money this year than last year)
ARPS rose due to 1) increased adoption of vertical applications, 2) third party applications (TPAs), including G-Suite and 3) pricing changes ?
Premium subscription 177,000 this quarter total of 3.8m 26% y/y. Added 5.5 million subscribers 20% y/y. During the quarter, 66% of gross subscriptions were annual or longer in term while 34% were monthly. Based on the historical behavior of user cohorts, its approximate that for each 100K new premium subscriptions, Wix will generate over $165 million over eight years, at an 80% gross margin and with minimal marketing investment. Expect future collections of all existing cohorts to be $4.9 billion over the next 8 years, based on current cohort behavior. Remember ARPS is increasing so this is probably a conservative estimate.?
The Q3 2018 user cohort is on pace to achieve a time to return on investment (TROI) of 7-9 months, indicating that acquisition costs per premium subscription are not increasing. ?
Announced Wix Payments started in Brazil, 2019 in US and Europe. Should add to revenues in 2019, will reduce overall margin in future. Non-GAAP gross margin was 80% of revenue in Q3. ?
BOD authorized 100 million for share repurchase

Forcasting 36-37% y/y revenue growth for next Q (Q4) and 33-35% Collection y/y growth. Foriegn Exchange rates estimated to lessened collections and free cash flow by $2m.

Additional new product that will contribute significantly to how businesses are managed and grow online to be announced in December 11th. On the earnings call they indicated that this would be a significant announcement and should lead to greater 2019 revenues.

Ended Q3 2018 with $716.6M in cash on the balance sheet and $334.0M in long-term debt.

Management indicated that Wix Code is driving more business and expects that trend to continue in future.

My over all thought was it is a good Q, not a blow out but solid. I personally am satisfied with the business. I think the timing of the 100 million for share repurchase is interesting, as they seem to think the announcement on Dec. 11th is going to be big. Management seemed pretty certain that the company is firing on all cylinders and seem to expect strong revenue rises on back half of 2019.

I plan on holding my shares tight.
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