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No. of Recommendations: 14
https://docs.wixstatic.com/ugd/cdc165_dfe96c4dfba6421b840230...

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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No. of Recommendations: 0
Looks like a great quarter to me. Beat on earnings by a mile (by GAAP and non-GAAP) and solidly beat on revenues.

Guidance seems good.

But it's trading down a few dollars at $87 after hours. Seems to be the trend recently - even a great quarter is met with selling.

Maybe there's more than meets the eye. Hopefully, Bear will give us his perspective.

Dave
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No. of Recommendations: 3
https://seekingalpha.com/article/4221943-wix-com-ltd-wix-ceo...

Well here's the earnings call transcript. Seems pretty short - highlights then straight to Q&A.

A couple of things that stuck out to me both of interest and potentially explaining the drop:-

1) The new Wix payment solution being tested and rolled out - was good and bad. Upside revenue growth but lower margin

2) There are a bunch of new solutions from Wix Code, Cloud, Payments and something major being announced in December (11th)

3) There's were questions and/or concerns expressed about churn and conversion as well as the counting of premium members

4) International expansion seems on an English speaking / high margin track. Once they are done with US and UK and presumably Australia and Singapore, I'm not sure where they go from there.

I have held and was tempted to sell out at an earlier high. These results are ok and the valuation isn't bad but I'm not as high in conviction of Wix as others.

Ant
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4) International expansion seems on an English speaking / high margin track. Once they are done with US and UK and presumably Australia and Singapore, I'm not sure where they go from there.

I just built a proof of concept with WIX using Portuguese as the language. I believe they many languages to choose from.
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I just built a proof of concept with WIX using Portuguese as the language. I believe they many languages to choose from.

It maybe capable of it, (especially Portuguese - hence trialing Wix Payments in Brazil), however the company said their focus for their expansion is English speaking countries.

A
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No. of Recommendations: 15
Hopefully everyone knows this, but please be aware the top-line growth number is artificially high due to two factors:

1) Google accounting is now gross in FY18 rather than net in FY17 and previous; Wix is not breaking this out by quarter but has been transparent in saying this is a +$30M impact on FY18 topline. However, they tend to focus on the fact that it has diluted margins Y/Y and not that growth would be lower without this change (fair for them to do so, but make sure you don't miss this). This puts the Google impact per quarter at roughly +$7.5M which would be 7pts of Wix's 40% Y/Y growth.

2) NRS accounting in FY19 without restated baseline; they call this out as +$2M impact in Q3'18 which equates to +2pts of growth Y/Y.

So, without the Google uplift and the NRS changes growth would be 31% Y/Y. Nothing wrong with that per se, just be sure you consider this in your valuation. Come Q1'19 I expect guidance will be at ~30% growth; I think Wix is doing the right things and will be able to maintain ~30% growth for several years while becoming more profitable, but 40% growth will be a thing of the past once the accounting isn't uplifting comparables. Don't let that surprise you.

Erik
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