A month has gone by since the last earnings report for Wix.com (NASDAQ:WIX). Shares have added about 8.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wix.com due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Wix.com Q2 Loss In Line With Estimates, Revenues Up Y/Y
Wix.com reported second-quarter 2021 non-GAAP loss of 28 cents per share, which was in line with the Zacks Consensus Estimate and wider than year-ago quarter’s 26 cents.
Total revenues increased 34% year over year to $316.4 million and beat the consensus estimate by 1.58%.
Region wise, North America, Europe, Asia and others, and Latin America contributed 58%, 25%, 12% and 5% of second-quarter revenues, respectively. Revenues from North America, Europe, Asia and others, and Latin America increased 35%, 33%, 23% and 15% year over year, respectively.
Quarter in Detail
Creative Subscriptions revenues (80.6% of revenues) increased 24% year over year to $236 million. Business Solutions revenues (19.4% of revenues) surged 75.5% to $45.9 million.
In the second quarter, Creative Subscriptions Annualized Recurring Revenues were $967.3 million, up 22% year over year.
Collections were $343 million, up 29% year over year. Creative Subscriptions increased 21% year over year to $263 million. Business Solutions surged 66% to $79.8 million.
Online commerce accounted for 35% of total collections, up 33% year over year. Business Solutions Revenue and Collections were up 75% and 66%, year over year, respectively.
Non-GAAP gross margin contracted 810 basis points (bps) to 71.1%.
Non-GAAP research and development expenses, as a percentage of revenues, grew 100 bps year over year to 32%. Non-GAAP selling and marketing expenses were 38.9% compared with year-ago quarter’s 50.6%.
Wix reported non-GAAP operating loss of $17.5 million compared with non-GAAP operating loss of $17 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2021, Wix had $927.5 million in cash compared with $1.6 billion as of Mar 31, 2021. As of Jun 30, 2021, long-term debt was reported at $834.4 million compared with $919 million as of Mar 31, 2021.
Cash flow from operations amounted to $21.8 million during the second quarter compared with $18.5 million in the previous quarter.
Free cash flow was $14.7 million compared with $14.6 million in the prior quarter.
Guidance
For third-quarter 2021, Collections are projected to be $355-$365 million, indicating an improvement of 26-30% from the year-ago quarter’s reported figure.
Revenues are expected between $311 million and $317 million, suggesting growth of 26-30% from the prior-year quarter’s reported figure.
Wix.com raised its full-year 2021 outlook. Collections are now projected in the range of $1.40-$1.44 billion, indicating an improvement of 27-30% from the prior-year quarter’s level. Earlier, the company guided Collections in the range of $1.44-$1.46 billion.
Revenues are now expected between $1.255 billion and $1.27 billion, indicating growth of 27-28% from the prior-year quarter’s reported figure. Earlier, the company guided revenues in the range of $1.280-$1.29 billion.
The company now anticipates free cash flow in the range of $60-$65 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -27.79% due to these changes.
VGM Scores
At this time, Wix.com has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Wix.com has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Wix.com Ltd. (WIX): Free Stock Analysis Report
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