Wix.com‘s WIX shares have demonstrated a remarkable performance, soaring 32.5% year to date, outpacing the S&P 500 composite and sub-industry’s growth significantly.
Since announcing robust second-quarter results on Aug 7, the stock has surged by 4.2%, yet remains attractively priced, trading 8.7% below its 52-week high of $178.65.
Headquartered in Tel Aviv, Israel, and established in 2006, WIX stands as a potent player in cloud-based web development. Its solutions empower businesses, organizations, professionals, and individuals to create tailored websites and application platforms, fostering their online presence.
The company has consistently surpassed the Zacks Consensus Estimate in earnings over the last four quarters, with an average surprise of 29.8%.
Image Source: Zacks Investment Research
The Driving Force: WIX Studio & AI Strategy
WIX’s remarkable performance can be attributed to the growing adoption of its product portfolio, particularly its AI products and WIX Studio, which have been pivotal in boosting the company’s fortunes. The continuous enhancement of WIX Studio features is accelerating its adoption among users.
Furthermore, WIX has rolled out various AI-powered offerings, with 17 AI business assistants already available. The company is actively embedding AI across its platform, with a particular focus on empowering users through advanced AI creation capabilities in its mobile app builder.
Recently, WIX expanded its AI Website Builder to cover multiple languages, enabling global users to create websites in their preferred language.
During the second quarter, WIX reported a 12% year-over-year revenue increase to $435.7 million, surpassing the Zacks Consensus Estimate. Bookings hit $458.4 million, with Creative Subscriptions’ bookings rising by 12% to $329 million and Business Solutions’ bookings soaring 24% to $129.4 million.
Partners revenue totaled $148.4 million in the second quarter, constituting 34% of total revenues and reflecting a 29% year-over-year increase, driven by the addition of new agencies and freelancers.
Positive Outlook & Growth Reflection
The strong momentum in the first half of 2024 has propelled WIX to revise its outlook upward for bookings, revenues, and free cash flow for the year.
Anticipated total bookings are now expected to range from $1,802 million to $1,822 million, while total revenues are projected between $1,747 and $1,761 million. Free cash flow, excluding headquarters costs, is estimated to be between $460 million and $470 million, representing 26-27% of revenues for 2024.
Analysts’ optimism is reflected in the upward movement of estimates over the past 60 days, with a 7.3% increase in the Zacks Consensus Estimate for 2024 EPS and a 2.4% increase for 2025. The estimated EPS for 2024 and 2025 indicates substantial growth from prior-year levels.
Market estimates for WIX’s 2024 and 2025 revenues indicate strong growth, positioned at $1.75 billion and $1.99 billion, respectively, reflecting the company’s robust growth trajectory.
Challenges Amidst Growth
Despite the optimistic outlook, challenges persist in the form of unfavorable foreign currency movements and weak global macroeconomic conditions. Additionally, the company’s increased investments in product development, infrastructure, and platform intensify competition concerns in the e-commerce landscape.
Top Contenders in the Tech Space
For investors eyeing potential opportunities in the tech sphere, notable stocks to mull over include Badger Meter, Manhattan Associates, and ANSYS. Badger Meter and Manhattan Associates hold a Zacks Rank #1 (Strong Buy) each, while ANSYS boasts a Zacks Rank #2 (Buy) currently.
Badger Meter’s performance has been commendable, with its 2024 EPS estimated at $4.06, supported by consistent beats in earnings and a robust long-term earnings growth rate of 17.9%.
ANSYS is also on an upward trajectory, with an estimated 2024 earnings of $9.72, reflecting a 3.7% uptick in the past 30 days and a positive earnings history.
Manhattan Associates rounds out the list with a projected 2024 EPS of $4.26 and a solid track record of beating earnings estimates, accompanied by significant stock value appreciation.
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