Wix.com WIX stock has been on a meteoric rise, soaring by 55.5% in the past year, outpacing the growth of the sub-industry and the S&P Composite by significant margins.
Headquartered in Tel Aviv, Israel, Wix, founded in 2006, stands as a cloud-based web development platform, offering tailored solutions for businesses, organizations, professionals, and individuals to craft personalized websites and application platforms to bolster their online presence.
Financial Performance
This upward surge in the stock price can be attributed to Wix’s robust financial performance, highlighted by its recent exceptional fourth-quarter 2023 results. Notably, Wix reported a staggering non-GAAP earnings per share (EPS) of $1.22, marking a substantial improvement from 61 cents in the year-ago quarter.
The company witnessed a 14% year-over-year increase in total revenues, amounting to $403.8 million, with the Creative Subscriptions and Business Solutions segments driving the top-line performance. Creative Subscriptions revenues surged by 12% year over year to $296.2 million, while Business Solutions revenues rose by 20% to $107.6 million.
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The company also reported an improvement in the non-GAAP gross margin, expanding by 500 basis points to 70%, driven by strengthening gross margins across the Creative Subscriptions and Business Solutions segments.
In 2023, Wix amassed total revenues of $1.56 billion, a 13% year-over-year growth, with bookings for the full year amounting to $1.60 billion, marking a 9% increase year over year.
Future Prospects
Looking ahead, Wix remains optimistic, with expectations for strong performance in 2024. The company foresees a revenue growth of 11-13%, projected to reach $1.73-$1.76 billion, buoyed by a stable macro environment and a robust business momentum.
Furthermore, Wix estimates non-GAAP operating expenses to range between 51% and 52% of revenues in 2024, with free cash flow expected to be in the range of $370-$400 million, representing 21-23% of revenues.
For the first quarter of 2024, revenues are expected to range between $415 million and $419 million, indicating an 11-12% growth compared to the prior year’s reported figure.
Analyst Insights
With a Zacks Rank #2 (Buy), Wix presents a compelling investment opportunity backed by healthy fundamentals and promising growth prospects. Additionally, the company boasts a Growth Score of A, reinforcing its strong potential as an investment option.
Analysts project Wix’s earnings per share to increase by 9.6% and 34% for 2024 and 2025, respectively, while revenues are expected to rise by 14.2% and 10.9% to $1.78 billion and $1.98 billion for the same periods.
Notably, Wix has consistently outperformed estimates in the past four quarters, showcasing an earnings surprise of 124.1%, on average.
Comparative Analysis
In comparison, other notable stocks in the technology sector worth considering include Manhattan Associates (MANH), Watts Water Technologies (WTS), and Microsoft (MSFT), each boasting favorable Zacks Ranks and growth potential.
Manhattan Associates has witnessed a substantial surge of 72.6% in stock price over the past year, while Watts Water Technologies has observed a 15.6% gain. Microsoft, on the other hand, has seen a remarkable growth of 64.7% in the same period.