Website developer Wix.com (WIX) has reported solid first quarter earnings results, with Q1 Non-GAAP EPS of -$0.01 beating Street expectations by $0.01. Meanwhile both GAAP EPS of -$0.76 and revenue of $216M fell in-line with consensus.
Revenue surged 23.9% year-over-year, while the company added 3.2 million new registered users, an increase of 63% year-over-year and an all-time monthly high.
“The current crisis has magnified the importance of having an online presence like never before, and we are very fortunate to offer a product that provides businesses, brands and individuals an opportunity to build and grow,” says Avishai Abrahami, CEO of Wix, noting that “demand for our platform offerings boomed at the beginning of April.”
Indeed, collections from users acquired during April 2020 were 76% higher than from users acquired in April a year ago and net premium subscription additions in the month of April were also up 207% y/y.
Looking ahead, WIX withdrew its full year guidance, but revealed that it is now anticipating second quarter revenue of $231 – 233 million (translating into 25-26% year-over-year growth), collections of $255 – 260 million and free cash flow of $41 – 43 million.
According to the company, COVID-19 has accelerated a huge shift of businesses that rely on an online presence as the anchor of their activity. “This change in behavior is creating a vast tailwind for our business. Our second quarter guidance reflects this rapid acceleration” Wix says.
Indeed, the stock shows a firm Strong Buy analyst consensus, with 12 recent buy ratings and 1 hold rating. However, with shares rallying 36% year-to-date, the average analyst price target now suggests 6% downside potential from current levels. (See WIX stock analysis on TipRanks).
“With high Gross Margins (70%+) and a sizeable TAM [total addressable market], we think there is potential for an attractive long-term model” says RBC Capital analyst Mark Mahaney.
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