WIX Q2 results and sell off???

I looked at the WIX results. Their growth on various metrics has been steady. They have been adding users and premium users (the paying ones) at a steady clip. Their revenue has been growing consistently. Their FCF and CFFO has been growing rapidly. Their guidance for Q3 looks to continue things steadily. Their full year guidance looks unchanged or even slightly higher on revenue. Their share based comp ticked up a bit this last quarter but it’s not absurdly high. I really don’t see anything in the results or the guidance that would change future expectations for the company. I haven’t listened to the conference call so maybe something was said that spooked investors.

Chris


	Revenue in $M					
	Q1	Q2	Q3	Q4	Total	Rev Growth
2012					43.7	
2013					80.5	84.2%
2014					141.8	76.1%
2015	44.5	48.6	53.6	56.8	203.5	43.5%
2016	61.6	68.7	75.6	84.2	290.1	42.6%
2017	92.5	103.5	109.5(F)	422(F)	45.5%(F)

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I really don’t see anything in the results or the guidance that would change future expectations for the company.

As exciting as revenue growth seems to be for a number of investors, rest assured that a great many investors care as much about EARNINGS.

WIX disappointed on the earnings front coming in with Q2EPS at $0. The expectation was that WIX would finally show a modest ($0.09) profit. If WIX can’t substantially improve on its -14% operating margin and its -14.9 percent profit margin, then ever increasing revenue streams will simply lead to more losses.

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As exciting as revenue growth seems to be for a number of investors, rest assured that a great many investors care as much about EARNINGS.

WIX disappointed on the earnings front coming in with Q2EPS at $0. The expectation was that WIX would finally show a modest ($0.09) profit. If WIX can’t substantially improve on its -14% operating margin and its -14.9 percent profit margin, then ever increasing revenue streams will simply lead to more losses.

I agree that earnings are important. But look at CFFO and FCF and the growth of those.

CFFO was $19.7M an increase of 74.3%. Full year growth of CFFO on a 12 month trailing basis was 149%.

FCF (which is CFFO less the cap ex investment required to grow the business) was $17.4M an increase of 70.6% over the prior year. The full year growth of FCF was 175%.

The results were inline with their guidance and their future guidance don’t raise any red flags. The one thing to watch is their SBC going forward.

Chris

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