Israel's Wix.com sees 2020 revenue reaching almost $1 billion

[February 20, 2020]  By Steven Scheer

TEL AVIV (Reuters) - Wix.com, which helps small businesses build and operate websites, reported a smaller-than-expected decline in fourth-quarter net profit and forecast a revenue rise of about 25% this year to nearly $1 billion as it expands into the professional web creator market.

Israel-based Wix reported on Thursday a quarterly net profit of 39 cents a share excluding one-time items (adjusted EPS), compared with 42 cents a year earlier. Revenue grew 19% to $204.6 million.

Analysts were forecasting adjusted EPS of 31 cents on revenue of $205.6 million, according I/B/E/S data from Refinitiv.

Wix offers free basic features for setting up websites but users must pay for extra services such as shopping carts, individual web addresses and site traffic analysis.

The company added a net 89,000 premium subscribers in the October-December period to reach 4.5 million paying customers, up 13% over a year earlier. Wix has 165 million registered users, up 16% from 2018.

Chief Financial Officer Lior Shemesh said the conversion rate to paying customers has increased each year since Wix became a full operating system to run small businesses' websites and not just a website builder.

Earlier this month, Wix launched its Editor X product as it targets professional web designers and agencies, which the firm thinks will help drive growth this year. It plans to launch a number of new products and technologies in 2020.

The offices website-designer firm Wix.com are shown in Tel Aviv, Israel July 4, 2016. Picture taken July 4, 2016. REUTERS/Baz Ratner/File Photo

"The majority of web development is being done by professionals," Wix President Nir Zohar told Reuters. "We understand that in order to expand we need to go deeper in actually customising this suite of products that fits their exact needs."

For 2020 Wix, which has seen its shares rise 27% so far this year after a 35% jump in 2019, expects revenue of $946 million to $956 million, up 24% to 26% from 2019.

For the first quarter it estimates revenue of $215 million to $217 million, up 23% to 25% from a year earlier.

Analysts expect revenue of $954 million this year, according I/B/E/S data from Refinitiv.

Shemesh said revenue should surpass $1 billion next year, while collections -- which are sales that get recognised over a number of quarters -- are expected to top $1 billion in 2020.

Free cash flow, which rose 25% in 2019 to $127.5 million, is expected to reach $155 million to $162 million in 2020.

(Additional reporting by Tova Cohen; Editing by Helen Popper)

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