Wix.com creator expects to turn a profit soon

Employees work at the offices of website design company Wix.com in Tel Aviv, Israel, July 4, 2016. REUTERS/Baz Ratner/Files

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JERUSALEM, May 16 (Reuters) – Wix.com (WIX.O), which helps small businesses build and run websites, said it would soon start turning a profit on its bottom line, after announcing a bigger than expected loss in the first quarter.

Since its inception in 2006, the Israeli company has been in the red, with company officials citing the need for significant investment to build the company for long-term growth.

“Now we’re going to see the fruits of that,” chief financial officer Lior Shemesh told Reuters. “We’re not going to be making the same investments we’ve made in the past, so you can definitely expect more profitability in the near future.”

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Shemesh declined to give a timeline at this time, noting that the company will provide details of its three-year plan at an analyst day on Thursday. However, he said Wix expects its free cash flow margin to reach 20% by 2025, from around 5% currently.

The company announced on Monday that it lost 72 cents per share excluding exceptional items in the first quarter, against a loss of 56 cents a year earlier. Despite what Shemesh called headwinds of “volatility and uncertainty” from weaker global economic growth, revenue rose 14% to $342 million.

Wix, whose shares have fallen 55% so far in 2022, forecasts revenue growth of 10-13% in 2022 as long as the macro environment does not deteriorate further. He also sees “headwinds” of $20 million in revenue due to a yearly change in exchange rates.

Revenue was $1.27 billion in 2021 and analysts expect $1.45 billion in 2022, a gain of around 14%.

Nir Zohar, president of Wix, noted that there is a slowdown in internet business after two years of strong growth, but businesses will still need to build websites and continue to do business online. “We believe this will continue to grow over the next few years,” he said.

Wix has ceased doing business in Russia and parts of Ukraine, which the company says will reduce revenue by $3 million this year.

For the second quarter, Wix estimated revenue of $342-346 million, an annual growth of 8-10% but lower than analysts’ forecast of $356 million. The forecast included a negative impact from the closure of operations in Russia and parts of Ukraine as well as currency effects.

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Reporting by Steven Scheer; edited by Jason Neely and Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

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