To get a better idea that I can summarize here, read the “shareholder update” slides, which you can find here: https://investors.wix.com/investor-relations/events-and-pres…
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)
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:
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.