Why Israeli Software Company Wix.com's Shares Are Rising Today

Wix.com Ltd WIX shares are trading higher by 7% after it reported Q3 FY23 results.

Revenue grew 14% Y/Y to $393.8 million, beating the consensus of $389.7 million. 

Revenue growth was led by the third consecutive quarter of Partners revenue growth (+38% Y/Y), strong GPV growth, and improved performance in the new cohorts of users. 

Non-GAAP EPS of $1.10 beat the consensus of $0.67.

Segments: Creative Subscription revenue increased 11% Y/Y to $290.6 million. The Creative Subscriptions bookings climbed 5% Y/Y to $283.9 million. Creative Subscriptions ARR was $1.18 billion, up 10% Y/Y.

Business Solutions' revenue rose 22% Y/Y to $103.2 million, and the bookings jumped 27% Y/Y to $105.2 million.

The non-GAAP gross margin expanded to 68% from 65% a year ago.

Wix.com generated $64.1 million in operating cash flow and held $920 million in cash and cash equivalents.

Avishai Abrahami, Wix Co-founder and CEO, said, "The strength in our Partners business is especially noteworthy with our team firing on all cylinders and revenue growth continuing to accelerate. We expect an extended growth period ahead for this business as we increase our penetration of the professionals market with higher monetization, particularly as Wix Studio continues to gain traction." 

"Finally, we continue to make tremendous progress leveraging AI to create a frictionless experience for users with the recent launch of Conversational AI Chat Experience for Business, the first step in completely automating business management with AI to get businesses online more quickly and efficiently. This is just the first milestone launch in a string of very exciting AI product releases we have on the horizon."

Also Read: Wix Now Offers 'Tap to Pay' For Android Customers, Should You Buy The Stock?

Outlook: Wix.com sees Q4 revenue of $400 million - $405 million (consensus $399.28 million), up 13%-14% Y/Y.

The company raised its FY23 revenue outlook to $1.558 billion-$1.563 billion from $1.543 billion - $1.558 billion vs. the consensus of $1.56 billion.

Wix also raised FY23 FCF outlook, excluding HQ and cash restructuring costs, to $235 million - $240 million, or approximately 15% of revenue, and expects to exit the year with an FCF margin of 20%-21% in Q4, placing it near the minimum 25% FCF margin anticipated in FY25.

Related: Wix.com Targets 13% Revenue Growth by 2025: What Analysts Are Saying About Its Upside Potential?

Price Action: WIX shares are up 7.97% at $97.00 premarket on the last check Thursday.