Wix.com, the popular online website design engine, reported its financial results covering the first quarter of the 2023 fiscal year. By the end of March, a total of 248 million users were registered within its platform.
During the first three months of the year, Wix’s revenue grew by 10% compared to the previous year to $374 million. Meanwhile, annual recurring revenues (ARRs) for the Creative Subscriptions segment – the largest for the company – grew by 9% on a year-on-year basis to $1.14 billion.
North America continues to be the largest market for Wix.com, currently accounting for 60% of the firm’s total revenues as of this first quarter. Top-line results grew by 13% in this region compared to a year ago while growth in Europe was much slower as revenues advanced by only 5% on a year-on-year basis. This latter region accounted for a quarter of Wix’s quarterly global turnover.
CEO of Wix Discusses “The AI Opportunity” With Shareholders
In its letter addressing shareholders, Avishai Abrahami, the co-founder and Chief Executive Officer of Wix, emphasized that the company had an outstanding first quarter, exceeding growth and profit expectations.
Higher conversion rates, improved monetization of new and existing users, and robust adoption of Business Solutions drove strong revenue results. Meanwhile, Wix’s commitment to efficiency increased gross margins to targeted levels ahead of schedule.
Marketing strategy execution yielded higher bookings from the new user cohort while spending was only half of the previous year’s marketing budget. Efficiencies across costs also led to a higher-than-expected free cash flow margin of 12% for the quarter. Thanks to these solid results, Wix is raising its revenue and free cash flow guidance for 2023.
Abrahami views AI as an exciting tool to reduce user friction and create value. Wix’s goal is to simplify complex processes through AI, exemplified by Wix ADI – the AI-powered site creation platform. Over 200 AI models enhance functions like text generation and image manipulation.
While AI may one day code complex websites, Abrahami argues Wix still adds value by helping users tell their stories online. The human element of guidance remains core to Wix’s value.
Even if AI automates all software layers in the future, Abrahami believes AI will need to disrupt areas like cloud computing and databases first – and Wix is far from that now.
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The CEO commented that the company plans to introduce more AI tools over the coming months including solutions powered by large language models (LLMs) – possibly similar to ChatGPT – and algorithms that facilitate the process of creating a website for users and coming up with both suggested layouts and content.
Abrahami is confident in Wix’s AI strategy, team, and opportunities. AI will make Wix’s business “bigger, better and stronger” by simplifying software, but Wix will continue providing a human touch to guide users in sharing their stories online. Strong first-quarter results and AI tools position Wix for continued growth and efficiency gains.
Wix Generates Operational Efficiencies via Budget and Headcount Cuts
In mid-February this year, Wix.com laid off 370 employees – around 6% of its workforce – just a few months after it departed a first group of 100 employees in response to the changes that the global macroeconomic landscape and the tech industry have been experiencing lately.
As of 31 March, Wix’s headcount stood at 5,006 employees and it is down 18% compared to the same period a year ago including these recent layoffs.
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As a result of these cuts and other reductions made to its operating expenditures, Wix reported its largest non-GAAP operating profit in its history during this first quarter of the year of $48.5 million resulting in a 13% adjusted operating margin.
Abrahami emphasized that his team is seeing “signs of a modest recovery in the macro economy”. However, Wix continues to be cautious in its approach and will continue to generate cost efficiencies wherever possible.
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