Wix.com (WIX +21%) is experiencing a significant surge after reporting a notable EPS upside in its Q1 report. This online platform provider, which assists customers in building websites, also beat revenue expectations, albeit modestly.
- WIX described its start in 2024 as fantastic, with users increasingly choosing Wix as their go-to platform. Despite the Q1 success, Q2 revenue guidance fell slightly short of analyst expectations. However, investors are focusing on the healthy bookings outlook.
- Wix's suite of AI-powered products is performing exceptionally well. Notably, the company released its highly anticipated AI Website Builder this quarter. Leveraging over 10 years of web creation expertise and user behavior data, it offers a conversational AI chat experience. Users describe their intent and goals, and Wix's AI creates a professional website with personalized layouts, themes, text, images, and e-commerce functionalities.
- The AI-built websites are fully optimized with Wix's reliable infrastructure, including built-in marketing, SEO, CRM, and analytic tools. Wix claims there is nothing like this on the market, and feedback has been incredible. Hundreds of thousands of sites have already been created using this tool in just a few months. In April, Wix also released a suite of AI-powered image enhancement tools.
- In Q1, total bookings rose 10% year-over-year to $457.3 million, exceeding expectations and surpassing Q4's 6% growth. This strong performance led Wix to raise its bookings, revenue, and FCF outlook for the year. A significant tailwind has been better-than-expected dynamics around its Q1 price increase, with higher-than-expected retention of existing users.
- Bookings growth is expected to accelerate to 16% year-over-year in the second half of 2024, driven by growth in both its Self Creators (propelled by AI products) and Partners businesses. The improved bookings trend is expected to translate into strong revenue growth acceleration in 2025.
Overall, investors are pleased with Wix's Q1 report. While the Q1 upside is impressive, the bookings number and guidance are particularly noteworthy. Investors are focusing on the expected bookings acceleration in the second half of 2024. Wix is excited about its AI Website Builder and its potential to help customers build websites using AI chat. The raised bookings guidance reflects management's confidence in this new product.
