Wix.com Q2 Earnings Call Highlights

Key Points

• Wix delivered solid Q2 growth, with bookings up 12% year over year and revenue up 15%, driven by its core business and strong demand for Base44, its AI-powered app-creation platform.
• Base1, Base44’s internally developed AI model, is expected to materially improve margins. Management projects Base44’s non-GAAP gross margin to reach about 60% in the second half of 2026, adding roughly two percentage points to Wix’s consolidated gross margin.
• Wix maintained its full-year outlook for low-teens bookings growth, low-to-mid-teens revenue growth and a high-teens free-cash-flow margin. The company plans to reinvest Base44’s efficiency gains into sales and marketing while expecting operating margins to improve in the second half.

Wix.com NASDAQ: WIX reported second-quarter 2026 bookings growth of 12% year over year and revenue growth of 15%, driven by continued growth in its core business and strong demand for Base44, its AI-powered application creation platform.

Chief Executive Officer and Co-Founder Avishai Abrahami said the company is pursuing two parallel AI product paths. Wix Harmony is focused on combining AI with the company’s visual drag-and-drop website-building tools for self-creators, while Base44 targets users creating apps and software through natural-language prompts.

“Running both in parallel means we capture demand wherever the market evolves,” Abrahami said.

Base1 Model Drives Margin Improvement

A key product development during the quarter was the June launch of Base1, Base44’s proprietary large language model. Abrahami said Wix chose to develop the model internally to gain greater control over product quality, speed up iteration and improve its longer-term cost structure.

According to Abrahami, the model learns from user interactions and is trained to distinguish stronger application-generation results from weaker ones. He said Base1 is already producing better results for Base44-specific tasks than models from frontier providers, though he noted that it is not intended to outperform those models across every use case.

The in-house model is also expected to substantially improve Base44’s economics. CFO Lior Shemesh said Wix expects Base44’s non-GAAP gross margin to reach approximately 60% in the second half of 2026, up from near zero at the beginning of the year.

Shemesh said the Base44 improvement is expected to add roughly two percentage points to consolidated non-GAAP gross margin in the second half compared with the first half. Wix intends to reinvest those savings into sales and marketing for Base44 as it seeks to capture demand in the growing AI-powered app-creation market.

“We already see it,” Shemesh said in response to a question about whether the margin improvement had begun to materialize. He said the improvement emerged gradually over recent weeks rather than immediately after launch.

Core Business and Partner Trends

President and Co-Founder Nir Zohar said Self-Creators revenue growth accelerated sequentially to 14% year over year in the second quarter. He attributed the performance to improved conversion from free to paid users, stable retention and a robust top of funnel.

Partners revenue rose 17% year over year, in line with the company’s expectations provided in early June. Zohar said Base44 made a larger contribution to the partner segment as professionals increasingly used AI and AI agents in their workflows and expanded into software creation.

Gross payments volume grew 3% year over year. Zohar said the result was primarily affected by the wind-down of Inkfrog, a Wix subsidiary with moderate GPV contribution but low monetization, as part of a June organizational realignment. He said the decision improves Wix’s mix toward more highly monetized payment volume and a better take rate.

Management said the partner business remains an investment priority despite changes to its outlook in June. Wix is testing new products with agency partners and expects those offerings to better align its platform with the evolution of agencies’ AI-related workflows.

Abrahami said some partners have reduced activity on Wix while increasing activity on Base44, though he cautioned that it is too early to determine how broadly that migration will develop. Some partners are using both products for different use cases, management said. Abrahami added that partners may be able to charge more for software applications than for traditional website projects, but said the economics remain anecdotal and require more time to evaluate.

Demand, Users and Marketing Investment

Base44 demand remained elevated in the second quarter, with the newest user cohort outperforming the prior cohort, Zohar said. Renewal activity was also a contributor to overall growth, and the company is seeing more users choose annual plans as trust in the product increases.

Wix did not provide Base44 annual recurring revenue or a detailed split between monthly and annual subscribers. Zohar said the company is nearing the first annual renewal cycle for Base44 customers but is not yet prepared to discuss renewal results. Monthly retention is not yet at the level of the established Wix business, he said, though behavior has been improving nearly every month.

Abrahami said approximately 40% of Base44 users are building personal projects, while roughly 60% are building business-oriented applications. He said the platform has more large-business users than Wix’s traditional platform and described its customer base as varied across use cases.

Management identified user satisfaction and word-of-mouth sharing as important demand drivers for Base44, alongside paid marketing. Abrahami said users who successfully build applications often share them with friends and colleagues.

Wix plans to moderately extend its time-to-return-on-investment target for Base44 marketing. Zohar said the company does not expect to increase that target further in the near term, but could adjust it based on factors such as further gross-margin gains or greater adoption of annual plans.

Margins, Cash Position and Outlook

Total second-quarter non-GAAP gross margin was 67%, up slightly sequentially but down three percentage points from a year earlier. Shemesh attributed the year-over-year decline to elevated Base44 growth investments and AI compute costs, while noting that gross margins in the core Wix business were stable compared with the prior-year period.

Non-GAAP operating income was 12% of revenue, reflecting higher sales and marketing spending. Wix increased marketing investment in Base44 to address demand and said costs related to free Base44 users’ AI inference and compute usage also rose sequentially.

Wix ended the quarter with approximately $960 million of cash and cash equivalents and $1.63 billion of short- and long-term debt.

The company maintained its full-year outlook, expecting bookings to grow at a low-teens percentage rate and trail revenue growth by several percentage points. Wix continues to expect full-year revenue growth in the low-to-mid-teens percentage range, third-quarter revenue growth at a low-double-digit rate, and a high-teens free-cash-flow margin excluding acquisition and restructuring costs.

Shemesh said Wix expects non-GAAP operating margin to improve in the second half as lower AI costs and seasonally lower core Wix marketing costs help offset elevated Base44 sales and marketing spending. Research and development expenses are expected to remain stable versus the first half, as foreign-exchange pressure from a stronger Israeli shekel offsets savings from the company’s organizational realignment.

About Wix.com (NASDAQ:WIX)

Wix.com Ltd. operates a cloud-based platform that enables individuals and businesses to create, manage and develop professional web presences through an intuitive drag-and-drop interface. The company's software-as-a-service model provides hosting, customizable templates and a range of design tools, eliminating the need for coding expertise. Users can choose from a variety of premium plans to access custom domains, enhanced storage, and advanced performance features tailored to personal projects, small businesses and online storefronts.

Beyond its core website builder, Wix offers a suite of complementary services designed to support digital growth and marketing.

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