Bear's Mar18Q Wix Review

To get a better idea that I can summarize here, read the “shareholder update” slides, which you can find here:…

You can look at the usual things like Revenue and FCF:

Mar17: 93M, up 50%
Jun17: 104M, up 51%
Sep17: 111M, up 47%
Dec17: 119M, up 41%
Mar18: 138M, up 49%
Jun18 guidance: 145M, up 40% (which of course they will beat)

Mar17: 14.8M
Jun17: 17.4M
Sep17: 18.9M
Dec17: 19.6M
Mar18: 21.4M

But what stands out to me is how little they have to convert of their user base to keep growing their revenue. On page 9 of the Shareholder Update, they point out that in Q1 2015 they added 4.6 million new registered users, and in Q1 2018 they added 5.9 million. That’s 30% growth, so it’s not super impressive. But they went from adding 103,000 premium subscribers (from the Q1 2015 cohort) to adding 213,000 this (Q1 2018) quarter! That’s up 107%…much more impressive.

In fact they said: Our Q1 2018 user cohort generated over 213,000 net premium subscriptions in its first quarter, the highest ever for a user cohort.

They actually added 231,000 premium subscribers total this quarter, so 18,000 were registered users before 2018 that just decided to go premium. If that trend holds, then we can expect that some more of the 5.9M users from this quarter’s cohort might convert later! And of course Wix have another several million new users in Q2…can’t wait to see how many of them go for premium! I really like this freemium model.

But what strikes me the most is that 213,000 is 3.6% of 5.9M. That’s all the new users that they needed to convert to premium to grow fantastically: 3.6%. The numbers are pretty obvious:

Registered Users
Mar17: 103M
Jun17: 109M
Sep17: 114M
Dec17: 119M
Mar18: 125M

Premium Subscriptions
Mar17: 2.7M
Jun17: 2.9M
Sep17: 3.1M
Dec17: 3.2M
Mar18: 3.5M

They have several cool value-add products (like Wix Code, and Wix Answers) that I believe are driving some of the growth, but the more simple way to look at it is that they are a huge, huge provider of websites in a world where there are more and more websites all the time. E-commerce is part of it, but their offerings are so affordable that they don’t price themselves into competition with, say, Shopify. Wix’s project is completely different – their products don’t appeal to the same customers as Shopify’s.

This is just an easy company to follow and appreciate. With 471M in TTM revenue growing at 40%+, and a market cap of only about $4 billion, they are at a PS of 8.5. I’ll take that price all day. Wix has become one of my top 3 conviction companies, along with Shopify and Square. Perfect quarter.



Thank you. Split my last cash between more WIX and some ILMN.
Did with a nurses needle in my arm giving me my Pneumonia vaccine.


What a co-incidence. Have some Parkinson problems and to cut a long story short, yesterday just as I’m about to be put out for a procedure I have agreed to, I ask the young lady to wait whilst I put in an order with Ameritrade for PVTL at 19.01. She thought I was fairly insane…what else is news!


Attached is an investor presentation from last week.…


I’m thinking of adding Wix. (I had Wix before, but sold around 90). The only concern I have is the new registered users per quarter isn’t growing. Basically flat from 1Q17 to 1Q18 with sales and marketing spend increasing. They are converting many more to subscriptions (up 20% from 1Q17 to 1Q18).

So does flatening new registered users with increasing conversions mean they are spending ad dollars to target a better customer that has more potential to subscribe, or does it mean they are running out of possible new customers?

They are still getting a ROI of 7-9 months on their marketing.

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The only concern I have is the new registered users per quarter isn’t growing.

I think it’s anybody’s guess as to whether they’ll be able to keep adding 200k premium subscribers each quarter. If they can, wow…even though it might mean the growth rate would slow down from 50% to 40% and then 30%, I’ll take 200k subscribers per quarter all day long. When they go from 3.5M to 4.5M and then 5.5M, multiplying by $14/ea per month (or more) makes things look pretty solid.

However, even though I’m perfectly fine with that, I will note that new subs ticked up to 231,000 in Q1 (from 170,000 the quarter before). And I think this could tick up further – which I see as alpha opportunity. Wix Code and other value-add offerings seem to be attracting subscribers. I’m not counting on this but I believe it’s quite possible, and would be nice.

Lastly, one point I left out on my Q1 summary: They do a big superbowl add every year in Q1. Last year the S&M spend was over 54m in Q1 and down to 48m in Q2. This year it was 67m in Q1. If that comes down substantially, as is the pattern, EPS could be a record high in Q2. I suspect wall street would like that, though you never know.