VTSI upgraded to strong buy

May 24th, 2024

Analyst Color

Citigroup’s Ronald Josey raised their price target on Wixcom (NASDAQ: WIX) by 15.4% from $175 to $202 on 2024/05/21. The analyst maintained their Strong Buy rating on the stock.

Josey’s update was in response to Wixcom’s Q1 2024 earnings, reported on 2024/05/20.

(1) Accelerated 2H bookings, (2) projected FY 2025 revenue growth, and (3) a 17% increase in FY 2024 free cash flow guidance all follow from the company’s product-driven success, which was boosted by its Studio and generative AI solutions, the analyst told investors.

Josey thinks Wixcom’s stock is cheap and expects an increase in multiples and estimates.

Earnings Report

For Q1 2024, Wixcom reported:

  • EPS of $1.29, which beat the Zacks Consensus Estimate of $1.03 and, by 41.8%, Q1 2023’s $0.91.
  • Revenue of $419.78M, which beat the Zacks Consensus Estimate by 0.50% and, by 12%, Q1 2023’s $374.08M.
  • Gross margin of 68%.
  • Bookings of $457.3M, up 10% Y/Y.
  • Creative subscription revenue of $304.3M, up 9% Y/Y.
  • Free cash flow of $1115M.

Management guided:

For Q2 2024:

  • Revenue of $431M to $435M.

For 2H 2024:

  • Bookings growth of 16%.
  • Double-digit creative subscription bookings growth.

For FY 2024:

  • Revenue of $1.74B to $1.76B.
  • Gross margin of 68% to 69%.
  • Bookings of $1.796B to $1.826B.
  • Free cash flow of $445M to $455M.

Co-founder & CEO Avishai Abrahami commented: “Building on the milestones achieved in 2023, we carried that momentum into Q1 and delivered a strong start to 2024 with results demonstrating the efficacy of our product strategy, solid execution of our growth initiatives, and steadfast commitment to balanced, profitable growth. 

“As a result, Q1 results outperformed expectations across the board.

“This outperformance was underpinned by robust business fundamentals as well as strong product traction, particularly for our expansive AI product offering and Wix Studio. 

“Notably, we saw extremely strong usage of our AI Website Builder that was launched earlier in the quarter with hundreds of thousands of sites already created using the tool over just a few months. 

“Wix Studio also continues to perform ahead of plan, with over 1M Studio accounts created since our August launch. 

“Importantly, these accounts have resulted in more Studio premium subscriptions than anticipated as Studio users have converted at a high rate. 

“This high conversion of Studio users is a testament to the powerful design, creation, and workflow management capabilities that professionals cannot get anywhere else. 

“We continue to expect AI and Studio to be increasingly more meaningful drivers of growth in 2024 and the years to come.”


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