Wix getting crushed this morning after earnings because they missed on EPS.
Rev. of $111M (+47%)
EPS non gaap of -0.01
FCF of $19M (+101%)
CFFO of $22M (+111%)
Raised 4q guidance to 116-117 M and FY17 G to 423-424.
Overall I liked the quarter, no slow down in revenue growth. They appear to be investing in their business which is hurting EPS. CFFO and FCF improving nicely.
Jimbo
Overall I liked the quarter, no slow down in revenue growth. They appear to be investing in their business which is hurting EPS. CFFO and FCF improving nicely.
Jimbo,
Thanks for the quick take. I wanted to do the same, but I was too busy with work this morning, as well as buying Wix.
I agree with your assessment and it’s even a bit better than you said. See, Wix doesn’t give EPS guidance, so as far as I’m concerned they didn’t “miss.” They came in at EPS of 0.01, and for some crazy reason analysts expected 13 cents or something. Why? Good question!
Sep16: -0.04
Dec16: 0.06
Mar17: -0.18
Jun17: 0.00
So they improved from -0.04 to +0.01 YoY. Not sure where the analysts came up with 13 cents, but that would have been a little crazy.
As you said, it was a near perfect quarter. Revenue grew 47% (woulda liked to see 50%+ but obviously 47% is incredible) and Wix generated 20M of FCF. More collections than ever. Even Average Collections per New Annual Subscription ticked up sequentially from $156 to $158 (it had been flat in Mar and Jun). They killed it.
I now own 21% more shares than I did yesterday, and am prepared to add more. Wish I’d just done it all this morning, but you obviously never know how Mr Market will react / panic. I bought just under $57 and was thrilled, but $60 is still an incredible price. PS is sitting at 7.0!
Bear
EPS non gaap of -0.01
Actually, it was +0.01
Beware Bear.
You’ve got a CEO saying: We also continued to gain operating leverage in our model, driving
meaningfully increased free cash flow on a year over year basis.
The only gain in operating leverage in their model comes from giving out more IOUs to their people.
As for the so-called increase in “free cash flow”…that came from three sources, none of which are
sustainable:
An increase in payables and accrued expenses.
An increase in deferred revenue.
The aforementioned increase in stock compensation.
Here’s a suggestion. Figure out how much cash from those three sources could be pulled from the
business on a continuing basis if Wix decided to stop “investing for growth”.
Note: If you’re a chain letter type investor, just ignore this post.
Ears
Note: If you’re a chain letter type investor, just ignore this post.
Funny, that sounds like something you would see in a chain letter.
I think you mean well, Ears, but I feel like you’re missing the point with this board. We invest for growth. Wix, like so many others, now spends more money than they make, but they are building a network of subscription customers who pay them every month for years. At some point when their growth runway is closer to being exhausted, or when they have a sales & support staff that can handle most any volume, they can actually reduce expenses. And if you don’t believe companies do that look at Arista or Alarm.com. Both spent less on OpEx this quarter than last.
Bear
Bear,
Of course you invest for growth. (Not that there’s anything wrong with that).
Arista and Alarm…both showed evidence very early on of operating leverage over and above
giving away more IOUs.
Wix hasn’t shown that. In fact, just the opposite.
Plus you have a CEO using mind tricks to bedazzle his audience.
Be careful. Look for evidence of operating leverage going forward that isn’t saddled with IOUs.
Even this early in the game.
Ears
P.S., salesforce.com (CRM) is the poster child for chain letter investing. The founder (and many
investors) have become filthy rich convincing people for over a decade that profits free
from IOUs are just around the corner and that cash flow based on IOUs is really discretionary cash
flow. So what do I know?