Wix.com Q1 2025 Earnings Report

Wix.com EPS Results

• Actual EPS: N/A
• Consensus EPS: $1.66
• Beat/Miss: N/A
• One Year Ago EPS: $1.29

Wix.com Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $471.97 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Wix.com Announcement Details

• Quarter: Q1 2025
• Date: 5/21/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 21, 2025
• Conference Call Time: 8:30AM ET

Wix.com (NASDAQ:WIX), together with its subsidiaries, operates as a cloud-based web development platform for registered users and creators worldwide. The company offers Wix Editor, a drag-and-drop visual development and website editing environment platform; and Wix ADI that enables users to have the freedom of customization that the classic editor offers. It also provides Wix Logo Maker that generates a logo, including through the use of artificial intelligence; Wix Answers to support users; and Payments by Wix, a payment platform, which helps its users receive payments from their customers through their Wix Website. In addition, the company offers various vertical-specific applications that business owners use to operate various aspects of their business online. Further, it provides a range of complementary services, including Wix App Market, a marketplace that offers its registered users various free and paid web applications for building, growing, and managing their businesses; Wix marketplace that brings users seeking help in creating and managing a website together with Web experts; and Wix owner App, a native mobile application, which enables users to manage their Websites and Wix operating systems. The company was formerly known as Wixpress Ltd. The company was incorporated in 2006 and is headquartered in Tel Aviv, Israel.

Wix.com Q1 2025 Earnings Call Transcript

Key Takeaways

• Wix launched Wixl, its standalone generative AI visual design platform with advanced image and video editing features and a Microsoft Copilot integration, aiming to democratize professional-grade design.
• In Q1 2025, total bookings reached $511 million (+12% YoY) and revenue was $474 million (+13% YoY), driving non-GAAP operating income up 44% and free cash flow of $142 million (30% of revenue).
• The Q1 2025 user cohort generated $36 million in bookings (+12% YoY) with 5.3 million new users (+7% YoY), higher ARPS, and a 4–5-month time to return on marketing investment.
• Partners revenue grew 24% to $172 million and transaction revenue rose 19% to $59 million, with core GPV up 12% despite a minor headwind, driven by strong adoption of business solutions and Wix Payments.
• Wix maintained full-year guidance (bookings up 11–13% to $2.025–2.06 billion; revenue up 12–14% to $1.97–2.00 billion; free cash flow at 30–31%), upsized its share repurchase authorization to $400 million, and built in conservatism for macro and FX uncertainties.

Presentation

[Operator]

Good day. Thank you for standing by. Welcome to Lixus First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Emily Liu, Head of Investor Relations. Please go ahead.

[Emily Liu, Head of Investor Relations at Wix.com]

Thanks, and good morning, everyone. Welcome to Wix's First Quarter twenty twenty five Earnings Call. Joining me today to discuss our results are Abhishai Abrahami, CEO and Co Founder Nir Zohar, President and Co Founder and Liora Shemesh, our CFO. During this call, we may make forward looking statements, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20 F that could cause our actual results to differ materially from these forward looking statements.

[Emily Liu, Head of Investor Relations at Wix.com]

We do not undertake any obligation to update these forward looking statements. In addition, we will comment on non GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non GAAP results in the earnings materials and in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com. With that, I'll turn the call over to Abhishai.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Thank you, Emily, and good morning, everyone. 2025 is off to a strong and exciting start. Even as the macroeconomic landscape continues to evolve, we've seen robust demand for our platform, reaffirming the essential role Wix plays for small businesses everywhere and everyone who wants or needs an online presence around the world. Our team continues to execute with excellence, delivering significant product innovation and strategic momentum aligned with our long term vision. Excitingly, we have launched the first of two milestone products slotted for the year.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Earlier this month we introduced Wixl, our new standalone visual design platform that extends Wix's vast design expertise beyond websites for the first time. Wixl marks the beginning of our next generation approach to visual design, combining Wix's intuitive creation tools and user friendly interface

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

with

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

the power of generative AI. This platform combines the best AI models on the market today tailored for specific image needs, including object, background editing and much more, with a constant pipeline of new AI enhancements. This makes Wixl unique from everything else available on the market, it handles the complexity of today's high end AI technology behind the scenes, choosing and continuously optimizing the best models for each task. This allows our users to always have access to the most advanced and up to date tools for image generation and editing. So how did we get here?

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

We initially started building Wixle for Wix users. We saw the incredible demand for powerful video and image editing capabilities amongst our own users who edited and saved more than 40,000,000 images to use on their Wix websites in 2024. There was also a need from the more than 100,000,000 members on DeviantArt, the largest online social network and platform for artists to promote their works. These artists seek high performance, professional grade image editing tools that enable them to create exhibition worthy work. However, visual editing is difficult today with professional grade image creation and manipulation only possible with graphic design platform for professionals, not accessible to the average person.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

My vision is for Wixle to democratize visual design the same way Wix has democratized website building. In the past, if you wanted a great looking website, you either needed to be a web designer or hire one, Wix changed that. Now with Wixle, we're doing the same for visual design assets, allowing anyone to create something stunning and professional grade in minutes. Our goal is to give total control over photo and video editing to everyone, the same way we did for website creation. Wixl is for Wix users, for entrepreneurs, freelancers, and business owners who already rely on Wix to build and grow online.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

It's for the millions of DeviantArt artists who want to add an easy to use, yet powerful editing tool to their toolkit without sacrificing the quality of their art. But Wixels' reach goes far beyond that. It's for anyone trying to create any type of digital design asset without a technical background. If you've ever felt limited by your tools or by your own skills, Wixle is for you. Excitingly, we partnered with Microsoft to integrate Wixle's capabilities into Microsoft Copilot.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

This collaboration allows Microsoft three sixty five users, small business owners, students and everyday creators to design in a smarter, more intuitive way with Wixle. Though this launch is a cornerstone of our product roadmap, we are still very early in the journey with plenty of work ahead in order to achieve our vision for Wixell. In the coming year, you can expect the platform to evolve meaningfully with breakthrough capabilities. As we continue to innovate, I'm excited to see how Wixle reshapes the digital creation space. Wixle was the headline, but it wasn't the only launch this quarter.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

We also introduced ASTRO, our new AI assistant embedded within the Wix dashboard. Astra simplifies the user journey by guiding users, surfacing relevant tools and insights, and helping them complete key tasks. We expect Astra to improve user engagement, boost package upgrades, and reduce churn over the long term. And it's only the first in a series of AI agents we plan to roll out. Additionally, we launched new AI powered tools for website automations and real time site customization, including adaptive content application, Wix functions and Wix automations.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

These features are designed to make our platform smarter and more efficient, while delivering highly personalized experiences to site visitors. Finally, we rolled out the Wix Model Context Protocol, or MCP Server, a key infrastructure advancement that allows users to leverage natural language prompts to seamlessly connect Wix's comprehensive business functionality with their preferred compatible AI powered tools. The Wix MCP Server enables AI driven app development for users to build custom experiences on top of Wix or manage their Wix based business using natural language and AI coding assistance. As a use case presented at Stripe's recent conference, our team demonstrated how to use LLMs to generate reliable code for fully functional payment solutions. They built a complete website that accepts online payments via credit cards, Apple Pay and Google Pay through Wix, Payments and Stripe.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

As we continue innovating, our focus remains the same, creating powerful tools that make it easier, faster and more inspiring for anyone to build online. Our commitment to AI innovation, user empowerment and long term growth has never been stronger. With that, Nir, over to you.

[Nir Zohar, President & COO at Wix.com]

Thanks, Avishai. We've kicked off 2025 with our strongest new user cohort of recent years as demand for building online exceeded expectations in the first quarter. This strength underscores the value of our platform against any macro backdrop and our unmatched innovation that enables Wix users to achieve their goals online more effectively than ever before. Our Q1 twenty twenty five user cohort generated $36,000,000 in bookings, reflecting a 12% increase over the bookings generated by the Q1 twenty twenty four cohort, which was also very strong, in its first quarter. This marks a meaningful improvement in demand as year over year new cohort bookings had previously grown mid single digits in the post COVID period.

[Nir Zohar, President & COO at Wix.com]

Impressively, this significant growth acceleration was driven almost entirely by better fundamentals, particularly a bigger user cohort and product innovation. From a top of funnel perspective, we saw strong traction, particularly in several key high spend geographic regions, including The US and parts of Europe. This drove the addition of nearly 5,300,000 new users in Q1, up 7% year over year. Importantly, we maintained a high proportion of high intent and commerce oriented users as our product innovation continues to attract users with more sophisticated needs. We saw healthy conversion of this higher number of new users into paid subscriptions driven by our AI onboarding funnel, which continues to widen with the large majority of new users opting to use our AI website builder to create their first Wix website.

[Nir Zohar, President & COO at Wix.com]

Partners also continue to convert well, driven by studio momentum as we roll out platform enhancements and deepen our reach within the professional community. In addition to a robust top of funnel, monetization of the most recent cohort improved compared to previous user cohorts. Higher ARPS was fueled by new users buying more higher tier packages and strong attachment rates for business solutions, particularly Google Workspace. We captured strong top of funnel demand through the first quarter, while continuing to prudently manage acquisition marketing investments against our guardrails. Strong execution of our acquisition strategy has us on track to achieve a time to return on our investment or TROI of four to five months on our Q1 twenty twenty five user cohort, which is at the lower end of our targeted return guardrails.

[Nir Zohar, President & COO at Wix.com]

These returns are similar to the returns on the first quarter cohorts of prior years, despite the much larger recent new user bookings base. This is particularly impressive and demonstrates the improved quality of our top of funnel today. Turning to our existing user cohorts, behavior remained healthy. Bookings from prior cohorts continued to grow steadily in the first quarter, supported by stable conversion, strong retention and increasing ARPS. In our partners business, these effects are magnified as professionals built more sites, attached more business solutions and drove GPV growth through more complex projects.

[Nir Zohar, President & COO at Wix.com]

I'd like to finish with some thoughts on what we're seeing on the macro front. Year to date, we've seen really positive demand trends with new cohort strength actually continuing through April and early May. This is a clear reflection of the critical and growing role Wix plays in helping small businesses and anyone building their brand online succeed and thrive. In fact, our business historically has tended to outperform during times when shifting online increasingly became non negotiable. We expect Q2, Q3 and Q4 new cohorts to remain strong, driving top line growth acceleration in 2H as these additional cohorts layer on and contribution ramps throughout the year.

[Nir Zohar, President & COO at Wix.com]

Though we are encouraged by this strong demand and our results so far, it is difficult to predict how the macro environment could trend through the rest of the year. So while we like what we're seeing today, we are building conservatism into our expectations, particularly around our Business Solutions segment. Business Solutions, particularly Commerce and GPV, is naturally a bit more responsive to changes in consumer behavior and macro volatility. Overall engagement and adoption of our suite of business applications currently remain healthy and we continue to onboard larger merchants to the platform. Our solid Q1 results illustrate the durability of our business across varying macroeconomic environments as Wix remains the leading platform to create, manage and grow a digital presence.

[Nir Zohar, President & COO at Wix.com]

I remain confident in our ability to drive long term growth by delivering essential tools that help users adapt, operate and succeed in any environment. With that, I'll hand it over to Lior, who will provide more details on our financial results and our outlook.

[Lior Shemesh, Chief Financial Officer at Wix.com]

Thanks, Nir. We began 2025 on strong footing with very healthy top line growth, driven by continued benefits from our key strategic and product initiatives, particularly Studio and our growing suite of AI offerings, as well as robust year to date top of funnel activity you just heard about from NEAR. This underscores the critical importance of Wix to small businesses and anyone maintaining an online presence globally. Starting with our first quarter results before we move on to expectations for the rest of the year. Total bookings were $511,000,000 in Q1, up 12% year over year.

[Lior Shemesh, Chief Financial Officer at Wix.com]

Total revenue was $474,000,000 up 13% year over year and above the high end of our guidance. Partners revenue grew 24% year over year to $172,000,000 in the first quarter, driven by more subscription purchases, particularly higher priced ones, as well as improved adoption of business applications and increasing GPV. Importantly, studio adoption remained strong as bookings from new studio subscriptions accelerated compared to previous quarters. This was a factor of new partners building their first studio website more quickly than previous cohorts and existing studio partners building additional projects on the platform. Transaction revenue in Q1 was $59,000,000 up 19% year over year, driven by increasing GPV and continued improvement in our take rate as more merchants adapted Wix Payments.

[Lior Shemesh, Chief Financial Officer at Wix.com]

Transaction revenue growth also continued to benefit from the previous year's addition of a new Wix Payments partner. As we lap this benefit in Q2, we expect transaction revenue to grow at a similar pace as GPV going forward. Digging into GPV, we continue to face headwind from the same small subsidiary discussed last quarter. Accelerated GPV drawdown in this subsidiary resulted in a two point headwind to total GPV in Q1. We expect this headwind to GPV to persist through the rest of the year though with minimal top line impact as GPV from subsidiaries experienced significantly lower monetization rates.

[Lior Shemesh, Chief Financial Officer at Wix.com]

As a result, core excluding the impact of this subsidiary grew 12% year over year in constant currency. Total non GAAP gross margin in Q1 was 69%, in line with our expectation. Non GAAP operating income increased 44% year over year and totaled 21% of revenue as we continue to benefit from a stable operating cost base as our business scales. This quarter, non GAAP R and D expenses increased quarter over quarter to $96,000,000 as we added developer headcount in line with our hiring plans for 2025. Non GAAP sales and marketing expenses grew quarter over quarter to $102,000,000 as we increased acquisition marketing spend to capture the strong demand we saw through the first quarter.

[Lior Shemesh, Chief Financial Officer at Wix.com]

Despite the larger base of cohort bookings onboarded, TROI remained stable, underscoring the strength of the Wix brand, improving quality of our funnel and continued execution of our marketing strategy. Q1 free cash flow was over $142,000,000 or a milestone 30% of revenue. Let's turn now to outlook for Q2 and the rest of 2025. We expect total revenue in Q2 to be $485,000,000 to $489,000,000 representing approximately 11% to 12% year over year growth. Even with new cohort trends remaining strong, we are maintaining our bookings expectations for the full year.

[Lior Shemesh, Chief Financial Officer at Wix.com]

We continue to expect bookings of $2,025,000,000 dollars to $60,002,000 or 11 percent to 13% growth year over year. For revenue, we are also maintaining our previous guidance of $1,970,000,000 to 2,000 million dollars or 12% to 14% growth year over year. Our expectations now incorporate a higher degree of conservatism given the macro uncertainty Nir spoke about. This potential volatility is offset by the easing FX headwinds we're seeing today. So while our fundamentals remain very healthy today, we are also aware that the macro pendulum can swing quite meaningfully very quickly.

[Lior Shemesh, Chief Financial Officer at Wix.com]

As a result, we are also leaving our free cash flow expectations unchanged. We continue to expect to generate $590,000,000 to $610,000,000 of free cash flow or 30% to 31% of revenue in 2025. We remain on track to achieve Rule of 45 this year assuming the high end of our outlook. Finally, I am pleased to announce the upsizing of our share repurchase program. The Board has authorized an additional $200,000,000 of repurchases, which now puts the total authorization under the current program at $400,000,000 This increase reflects continued confidence in our ability to drive strong cash flow generation as well as our ongoing commitment to increasing shareholder value.

[Lior Shemesh, Chief Financial Officer at Wix.com]

Operator, we are now ready for questions.

[Operator]

Thank you. First question coming from the line of Gal Aronian from Citigroup. Your line is now open.

[Ygal Arounian, Director - Internet Equity Research at Citi]

Hey, good morning guys or good afternoon for you. Maybe just to start with Wixil, Abhishek, given the focus from your comments. Can you maybe just give us a little bit more color on the expectations on the rollout, kind of the product roadmap and monetization expectations? Is this something that over time you think can have can be as big as Wix is today, maybe kind of end market users a little bit more just to understand how this might flow through the financials and the company metrics over the next couple of years? Thanks.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Of course. I think that the technical we just offline Quixel, right? So this is a very early version of the product that we just released. And we believe that this allows us to expand on a market in a few ways. First of all, it's a new funnel.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

It allows us to bring users that don't need a website to Wix, because they need the ability to do really sophisticated image editing, which is today only possible with AI. So that's the first thing. The second thing is that it's also something that we intend to release to Wix users, so allowing them to edit their content better, their images and videos better, which also we hope to expand the capabilities of our users. WigCell is a separate subscription. It's priced on its own pricing, which we are just now starting to test, so it's going to take a while until it's stabilized.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

But its own price, its own subscription, and its own user base. We did see that already when we started this product, immediately started with a few interesting partnership, Microsoft, OpenAI. So, do believe there is a big need in the market for an AI image editing and video editing.

[Ygal Arounian, Director - Internet Equity Research at Citi]

Okay. Thank you. And maybe I'll I'll just stay with you, Abhishai, and and the the AI team. And and if we can just get kind of your updated thoughts on the AI landscape within, the web builder world or kind of, I guess, web web design more more broadly now. You know, there there's you guys continue to roll out a lot of products.

[Ygal Arounian, Director - Internet Equity Research at Citi]

It feels like the cadence around AI has has picked up or AI releases. You in in the letter, talked about or mentioned vibe coding, and I guess there there's just been a a lot of change over the past few years since JetAI popped up in in your world and you started to implement it into your product. How do you see the the world evolving from here? You know, particularly on that kind of vibe coding, concept of it becomes easier to to code with just kind of natural language processing, and how that changes your product evolution, how it might change the market and the way websites are built? Just a bigger picture question.

[Ygal Arounian, Director - Internet Equity Research at Citi]

Thanks.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Well, I think viral coding is a super exciting concept. It's still very early, and so things tend to break after a while, they're not stable, they're not good at SEO, so search engine optimizations. There's a lot of things that need to get there to be mature in order for it to be a viable product for our customers. Just the simplest one is if you edit something, it takes four minutes for any small change to happen. In the best case scenario, it's four minutes.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Moving a button will take you a few minutes. So there's a lot of super exciting potential in vibe coating, but I think it's a bit too early for it to be really a mass product, so reaching for the mass market. But I love it. It's really exciting. I think that for us as a company, we always when it came to AI, we've always been a bit ahead of the curve.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

We released our first AI product in 2016, and then full suite of image editing in 'seventeen and 'eighteen. And I think that vibe coding is pretty much the same. We need to be ahead of the curve there, we need to know what is happening and to feel very strong about how to try and combine that into Wix. We're going to start with, of course, a few things, including the ability to code components into the Wix editor, which is one of the obvious things that we're going to be doing. I do think that this will allow us and companies like us to expand our market reach, because things that you could not have done traditionally on website building platforms, now you'll be able to do, because you're able to write this custom code without coding.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

So I'm very optimistic. I think it's going present to us a lot of really interesting opportunities. But I want to emphasize again, it's really a young technology. It's still not stable. It is still very slow, but we definitely have to be to understand it and then to position ourselves correctly to capitalize on that.

[Ygal Arounian, Director - Internet Equity Research at Citi]

Great. Thanks so much.

[Operator]

Thank you. And our next question coming from the line of Ken Wong with Oppenheimer. Your line is now open.

[Ken Wong, Managing Director at Oppenheimer & Co. Inc.]

Great. Thanks for taking my question. This one's for you, Lior. As we think about free cash flow margins, usually Q1 is the low watermark. How should we think about the progression of free cash flow margins through the year given the current guidance?

[Lior Shemesh, Chief Financial Officer at Wix.com]

So, yeah, I mean, I think that what we are going to see are very similar to last year, meaning that we will see a modest increase in free cash flow margin, because we are continuing with the leverage that we are getting in terms of operating expenses out of revenue. So as long as we continue with our plan and mentioned before that we are going to see a slight acceleration in the second half of the year of revenue and bookings, so obviously it's going to have also a positive impact on free cash flow. Therefore, I believe that there will be a modest increase in free cash flow throughout the year.

[Ken Wong, Managing Director at Oppenheimer & Co. Inc.]

Okay, perfect. And then, I mean, one could be for you or maybe Nir, but I mean, you guys have talked about really strong momentum in April, May. At the same time, you guys are talking about heightened conservatism in the guidance. How should we think about kind of what's built in, in terms of that conservatism? Is this kind of peak April panic?

[Ken Wong, Managing Director at Oppenheimer & Co. Inc.]

Or like what level of downticking are you guys are you guys have you guys factored in now?

[Lior Shemesh, Chief Financial Officer at Wix.com]

So, I think that, you know, as always, I mean, you know, we mentioned that many, many times in the past. There are stuff that we can control and things that we cannot control. Obviously, we see a very good result in terms of the Q1 cohort. By the way, it is also improving into April and May. So we feel very comfortable about it.

[Lior Shemesh, Chief Financial Officer at Wix.com]

We released new products, we AB tested everything. Everything was already mentioned during Q1 when people ask about the acceleration in the second half of the year, and we did mention about new product and innovation that we already tested. So we actually can see that in Q1 quote results, meaning that it's happening. On the other end, there are stuff that we cannot control. I mean, look what happened to the for example, to the FX in the last few months and to the overall macro in terms of trade and so on.

[Lior Shemesh, Chief Financial Officer at Wix.com]

So we want to make sure that we're conservative around it, because I really don't know what kind of development or new development is going to happen in the future. So I prefer to be conservative about the guidance and actually maintaining them.

[Ken Wong, Managing Director at Oppenheimer & Co. Inc.]

Okay, perfect. Thank you very much, guys.

[Operator]

Thank you. And our next question coming from the line of Thill with Jefferies. Your line is now open.

[John Byun, Senior VP at Jefferies Financial Group]

Hi, thank you. This is John Bian for Brent Thill. Two questions. One, the partners revenue obviously continued to outperform the rest of the segment, but it is a bit of a decel in Q1 to 24% in from 29% last quarter. Wondering how we should think about what some of the factors might be?

[John Byun, Senior VP at Jefferies Financial Group]

And then second, on the new Wixelt product, obviously, as you mentioned, new user base, you know, really opening up a new design front. But wondering how you're thinking about for, you know, distribution, marketing since, you know, it is a different type of cohort, as you mentioned, besides the partnership you mentioned? Thank you.

[Lior Shemesh, Chief Financial Officer at Wix.com]

So I will start with the partners revenue. So, you know, we feel very good about the overall partners and the growth. I believe that partners will continue to be a hyper growth revenue driver for us in the future. We see also the success of Studio. So it obviously continue.

[Lior Shemesh, Chief Financial Officer at Wix.com]

I want to mention about the specific questions that you asked compared to the previous quarter. So obviously, we had two points of effect in terms of the FX that has a direct impact on partners. The other one is about the growth in GPV was a bit less than anticipated. Remember that partners make up for about 35% of revenue, but contribute over 50% of GPV, because also of the nature of the customers and the difference between the mix of sales theatres and partners. We still feel very strong about partners and the

[Lior Shemesh, Chief Financial Officer at Wix.com]

fact that it will continue to

[Lior Shemesh, Chief Financial Officer at Wix.com]

be a growth driver, a meaningful growth driver for us in the future.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

As for Wixell, I think that it's a new funnel, the distribution, it's a new funnel, which opens a lot of interesting opportunities. So the first one, of course, is actually using our existing user base and to allow them to access the product. The second one, which we've just demonstrated, is going be, I think, we think there's a lot of appetite for partnership with this product, so we do intend to continue doing that as well. But I think more interesting is that it allows us to do a lot of really cool things with marketing, and we have a lot of really cool ideas on what to do there. So it's going to be very interesting.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

I think as a company, we demonstrated many times in the past that we know how to do online marketing very well, and have the discipline to do it on a metric profitable basis. And I think we're going take the same strategy and to do it with Wixell. I just want to emphasize again that this is a young product, and even that we're seeing great results already, it's going to take time until for that to be substantial with our revenues.

[Emily Liu, Head of Investor Relations at Wix.com]

Thank you.

[Operator]

Thank you. Our next question coming from the line of Elizabeth Porter with Morgan Stanley. Your line is now open.

[Elizabeth Porter, Executive Director at Morgan Stanley]

Great. Thank you so much. I wanted to ask again on Wixle. I think the design and visual editing space has certainly seen some increasing competition. We've also seen some of the traditional design software companies move into websites, which creates just a really interesting intersection.

[Elizabeth Porter, Executive Director at Morgan Stanley]

So it'd be great to get a better understanding for really the core differentiator for Wix in the design software. What enables the right to win against some of the larger brands in the market? And then maybe just at a higher level, some thoughts on pricing, how you landed at $79 a year, and how you're trying to strike the balance between monetization and adoption? Thank you.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Well, I think that those are great questions. I think the first question is about the fact that we do see some of the traditional design tools moving into more of a website building area. I think less into our universe, but more into the Webflow kind of a universe, we do see some. I think that building really great websites is a lot harder than it seems, and that actually has tremendous value for users. But beyond that, when it comes to Wixell, we don't try to build another drag and drop editing environment, which I think all the tools that you're referring to are a drag and drop editing environment.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

What we're trying to do is really how would if you would think in five years from today how you could edit images or content with AI, how would that look like? And we're trying to build that into Wixelt. So I think the way that the tool itself behaves is very different than the traditional editing environment. Now I'm not saying that they cannot do that. I'm sure they can.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

There are lot of smart people there. I'm just saying that if you try to rebuild your tools into this thinking about how will the universe look in five years, or how would AI look in five years, you'll find that you have change a lot of the user interface, a lot of the experience, lot of the underlying technologies in those existing tools, which I believe is a bit of a challenge when you have a bigger we have a lot of users. So we hope that by being able to be more agile and focusing on that long term vision, we can create a better experience for the people that are interested in editing content with AI.

[Elizabeth Porter, Executive Director at Morgan Stanley]

Great. Thank you so much. And just as a follow-up, I wanted to ask on the top of funnel strength. The net new user cohort kind of flipping to growth after declines in Q1 for the last two years has certainly been impressive. So I wanted to better understand, are you seeing new drivers emerge further improving that top of funnel demand?

[Elizabeth Porter, Executive Director at Morgan Stanley]

Is it more partners versus self careers? Any notable changes in the free to pay conversion in terms of actions you took specifically in the quarter? And then how just overall this impacts your view on the premium subscription growth in 2025? Thank you.

[Nir Zohar, President & COO at Wix.com]

Hey, it's Mir. I think, you know, it's Lior also mentioned These are the key things that impact the top of funnel are eventually the product innovation we've done throughout 2024, towards the end of it, throughout Q1. And this is an ongoing effort because you've seen us for a long time. We keep on innovating, we keep on introducing new capabilities, new functions.

[Nir Zohar, President & COO at Wix.com]

We're improving the funnel itself our users come to the software and to the editors. We improved the ability of the user interface and the ability to get to the end result. We unblock a lot of business functionality people need for specific business needs. And to be honest, we do it on both ends. So it goes to self creators and it goes to partners.

[Nir Zohar, President & COO at Wix.com]

I would say that what we've been experiencing throughout these first few months of the year, Q1 as well as going into the beginning of Q2, is the benefits from those kind of improvements. Naturally, that's also what you're seeing plays out into the increased value of our cohorts in Q1. And it gives us confidence that we can go down this path for the rest of the year. I also think it keeps us still positive on our ability to regrow net subs this year.

[Elizabeth Porter, Executive Director at Morgan Stanley]

Great. Thank you.

[Operator]

Thank you. And our next question coming from the line of Brad Erickson with RBC Capital Markets. Your line is now open.

[Brad Erickson, Equity Analyst at RBC Capital Markets]

Hi. Thank you. First, can you just kind of talk about you've sort of been around the edges of this, but can you talk about product development considerations as we kind of think about agents and, you know, this ability to sort of canvas lots of different sites and more complex tasks and everything? Maybe just, I guess, like, help us expand our minds, so to speak, on whether websites somehow kinda need to be, like, structurally different in the AI era from particularly from, like, a utility and discoverability perspective. Kinda how do you position for that?

[Brad Erickson, Equity Analyst at RBC Capital Markets]

Let me just clarify, you're asking about for ChargePT to be able to read the website well, or do you talk about how we build the website?

[Brad Erickson, Equity Analyst at RBC Capital Markets]

Yeah, I'm talking about, like, how agents will sort of maybe change how people access the internet broadly and websites specifically.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Well, do believe that there is a big change coming. I know that for myself, I'm using Chateapiti more than Google when I search for things now. So I would love to have content and Chateappity digests a lot of content from the Internet and tries to give you this limited version. And it has advantages and disadvantages, right? Because you get this average content from everything, and then a lot of the time you know what you're looking for and you know what is the right place to look at that information with.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

And that can be a product that you want to buy, it could be a service that you want to get, or it could be just general information, right, about pretty much anything. And the way that LLMs work today, by just scrolling the Internet, of course, is not good enough. It's not going to provide you any knowledge about will my hairdresser have an appointment in two days, right? And we're starting to see the first layer of protocols. Microsoft has announced one, Entropic announced MCP, which is a way for LLM to query complicated services in a way that the agent know how to learn how to ask an API.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

We just announced that we supported and released everything that Wix has now is available for MCP. And I think we're going to have to be very agile there as the value to our user, I believe, will grow. I want to say year by year, but probably month over month, right? So we need to be there in the front and make sure that we provide the right things. I do also believe that in many ways that will play and help platforms like Wix because the complexity of building a website that know how to offer its services for APIs and MCP to LLM and how to do the equivalent of SEO for LLM are just going to make building a website 10 times harder.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

So if you today can take somebody who knows how to write HTML and CSS, and in theory build a decent website, then in a year that will be impossible. I think the complexity that will be created by those tools and the speed of innovation. MCP was announced a month and a half ago. We already released to Elicit, I think, about a month and a half ago. And so the complexity and the need to support and to accelerate, I think that is something that will actually help all the website and content building platform, because it's going to be much harder to do it with your own internal team.

[Brad Erickson, Equity Analyst at RBC Capital Markets]

Got it. And then, you know, I guess just as we think about the utility of Wix changing to all the all the good developments you've talked about, do we kind of see any changes to the mix shift we're seeing from partners versus creators, or does it kind of augment both at the same rate and so the mix shift we're seeing kind of continues? Which of those would you say? Thank you.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

Well, in theory, right, we in theory, if we look at the far future, then why would you need an agency? Because in theory, you can just tell the AI, hey, build this website so many change those things, now make it successful. Practically, we're not there yet. I think there's a big distance that we have to have for those AI agents to evolve in order to be able to help you actually achieve all of those goals. Even when we are at Wix trying to build these exact agents to do each one of those, there's still a lot of human interactions.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

And I think a lot of expertise that the human can bring to help it. So I think there is a lot of room for agencies even in the years to come. Currently, when we look at the ad data, would say that agencies probably pick up technologies faster than consumers and then small businesses. So we'd actually kind of give them a bit of a shift in terms of what they can do. Studio is a great example of what you can do there if you play with it.

[Avishai Abrahami, Chief Executive Officer and Co-Founder at Wix.com]

But I think the shopping habits, the people that decide I want to do it myself, or the people who say I'm going to go for an agency are pretty much constant. I mean, we didn't change the humans, right? We only changed the technology. So I think when it comes to that, that's why we're seeing that the buying behavior and the split is pretty much constant.

[Brad Erickson, Equity Analyst at RBC Capital Markets]

Very helpful. Thank you.

[Operator]

Thank you. And our next question coming from the line of Josh Beck with Raymond James. Your line is now open.

[Josh Beck, Managing Director at Raymond James]

Yeah. Thanks so much, you know, for taking the question. Maybe just focusing on, on self creator, obviously, there's been quite nice momentum. I think it accelerated above, 7% this quarter. In terms of bridging the gap between where the business stands today in a double digit type of clip, what would be some of the primary drivers?

[Josh Beck, Managing Director at Raymond James]

I assume conversion is important. I'm not sure if Wixle is a contributor. But just how should we think about that bridge?

[Nir Zohar, President & COO at Wix.com]

Hey, Josh. So first of all, you're assuming right, obviously. As Abhish I mentioned, is very early stages. It's not a contributor, at least not at this stage. In the future, definitely an option.

[Nir Zohar, President & COO at Wix.com]

But that's not the 2025 thing. Generally speaking, I think that, you know, over the course of the years, what we've seen driving the growth of self creators, know, there's a big, obviously there's always some play here in terms of what does the macro and how does that affect, and that can play a role. But this is obviously not something we are counting on, because it's completely out of our control. The key thing is improving our editing environment, simplifying lots of the functionality that people need in order to incorporate them into their website. So essentially making the journey from the point where you come to us and you state your need, to the point where you actually have something that you're happy about and you're proud of the creation, making that journey as smooth as possible, but also as accurate as possible.

[Nir Zohar, President & COO at Wix.com]

People are very, very accurate in their needs and in their wants, meaning that they really want to get to something that really encompasses and delivers the exact vision they have to their creation. And lastly, would also point out, and we've seen this over the years, is

[Nir Zohar, President & COO at Wix.com]

that

[Nir Zohar, President & COO at Wix.com]

websites, over the past, more than a decade, became something much, much, much more sophisticated in terms of the value they give people. The nature of them being transactional, not only for commerce, but also for communicating with your own customers, with giving service, with giving information. And from that standpoint, whenever we remove a blocker and

[Nir Zohar, President & COO at Wix.com]

something that stops

[Nir Zohar, President & COO at Wix.com]

the user from

[Nir Zohar, President & COO at Wix.com]

achieving their goal, obviously that also ends up with a heightened conversion and better results. So I think all of those together are things that we believe can continue driving self greater growth in the future.

[Josh Beck, Managing Director at Raymond James]

Super helpful. And maybe a follow-up for Lior. I know there was a comment in there that you expect transaction growth to be similar to GPV growth moving forward. So it seems like somewhat stable take rates, is the way to think about that. Is that really a comment for this year as you maybe lap the addition of some payment partners?

[Josh Beck, Managing Director at Raymond James]

But as we take a multiyear view, there's still opportunity for the take rate to go higher. Any comments on that front?

[Lior Shemesh, Chief Financial Officer at Wix.com]

So, on a multiyear basis, definitely, yes. I think that, you know, there are many things that we can do, for example, moving people from offline to online. We have, you know, our POS solution, full omni channel solution that actually helping that and we actually do that partnering with channels and customers to use our POS. And this is one of the ways to move people from offline to online in terms of the transactions. Except of that, many new features, many new products that, you know, do the same thing.

[Lior Shemesh, Chief Financial Officer at Wix.com]

So I believe that definitely yes, think that there are more countries that we need to implement WIX payments and we're definitely going to do that. Yes, we are going to see increase in take rate. I'm not sure if it's going to be significant as last year, for example, when we partnered with Square or PayPal. But definitely, they have had much more big customers, big channels like that or big partnerships like that. But definitely, yes, I believe that it will continue to grow and increase, even this year, but not as significant as last year.

[Operator]

Thank you. And there are no further questions. This concludes today's conference call. Thank you all for your participation, and you may all disconnect.

Participants

Executives

• Emily Liu, Head of Investor Relations
• Avishai Abrahami, Chief Executive Officer and Co-Founder
• Nir Zohar, President & COO
• Lior Shemesh, Chief Financial Officer

Analysts

• Ygal Arounian, Director - Internet Equity Research at Citi
• Ken Wong, Managing Director at Oppenheimer & Co. Inc.
• John Byun, Senior VP at Jefferies Financial Group
• Elizabeth Porter, Executive Director at Morgan Stanley
• Brad Erickson, Equity Analyst at RBC Capital Markets
• Josh Beck, Managing Director at Raymond James