Did you mean to say that - once the annual subscription is over, WIX needs to spend more money to get that business -I.e. Get the same subscriber to renew the service for one more year?
Or you meant that additional / new subscriber cost them more than cost of acquiring previous subscriber? - nilvest
Hello nilvest!
I’m really not the correct person to answer your question. I am not invested in WIX and I tried to explain why in my brief analysis. Saul and Bear both like the company and I’m sure they can best explain why.
I’ll offer a few comments based on my review of the Annual Report. Wix’s “freemium” model must consider the following:
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In order to increase revenues and grow, Wix needs ever more subscribers and must make the service sticky enough such that subscribers continue renewing their subscriptions.
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Wix offers free hosting as an inducement to try the service and then opt for “premium” features. To grow their subscriber base, Wix spends ever greater sums to advertise its presence and availability. The free site users represent the candidate pool for paid subscriptions. Given that Wix wants to grow that pool, it must continue spending money to attract a growing number of new users.
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Subscribers fall away over time. As Wix’s own data indicate, there is a noticeable renewal drop-off after one year of service. In order to induce subscribers to remain subscribers, Wix offers an expanding array of services. This costs money. It’s a challenging balancing act.
As mentioned, the company doesn’t interest me as an investment. Time to pass the baton to Bear and Saul.