管理層發言
Good day. Thank you for standing by. Welcome to Wix' First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Emily Liu, Head of Investor Relations. Please go ahead.
Thanks, and good morning, everyone. Welcome to Wix' first quarter 2025 earnings call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder; Nir Zohar, President and Co-Founder; and Lior Shemesh, our CFO. During this call, we may make forward-looking statements, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com. With that, I'll turn the call over to Avishai.
Thank you, Emily, and good morning, everyone. 2025 is off to a strong and exciting start. Even as the macroeconomic landscape continues to evolve, we've seen robust demand for our platform, reaffirming the essential role Wix plays for small businesses everywhere and everyone who wants or needs an online presence around the world. Our team continues to execute with excellence, delivering significant product innovation and strategic momentum aligned with our long-term vision. Excitingly, we’ve launched the first of two milestone products slotted for the year. Earlier this month, we introduced Wixel, our new stand-alone visual design platform that extends Wix' vast design expertise beyond websites for the first time. Wixel marks the beginning of our next-generation approach to visual design, combining Wix' intuitive creation tools and user-friendly interface with the power of Generative AI.
This platform combines the best AI models on the market today, tailored for specific image needs, including object and background editing among much more, with a constant pipeline of new AI enhancements. This makes Wixel unique from everything else available on the market. It handles the complexity of today's high-end AI technology behind the scenes, choosing and continuously optimizing the best models for each task. This allows our users to always have access to the most advanced and up-to-date tools for image generation and editing. So how did we get here? We initially started building Wixel for Wix users. We saw the incredible demand for powerful video and image editing capabilities amongst our own users who edited and saved more than 40 million images to use on their Wix websites in 2024. There was also a need from the more than 100 million members on DeviantArt, the largest online social network and platform for artists to promote their works.
These artists sought high-performance, professional-grade image editing tools that enable them to create exhibition-worthy work. However, visual editing is difficult today with professional grade image creation and manipulation only possible with graphic design platforms for professionals, which are not accessible to the average person. My vision is for Wixel to democratize visual design, the same way Wix has democratized website building. In the past, if you wanted a great-looking website, you either needed to be a web designer or hire one; Wix changed that. Now with Wixel, we're doing the same for visual design assets, allowing anyone to create something stunning and professional-grade in minutes. Our goal is to give total control over photo and video editing to everyone, the same way we did for website creation. Wixel is for Wix users, for entrepreneurs, freelancers, and business owners who already rely on Wix to build and grow online.
It's for the millions of DeviantArt artists who want to add an easy-to-use, powerful editing tool to their toolkit, without sacrificing the quality of their art. But Wixel's reach goes far beyond that; it's for anyone trying to create any type of digital design asset without a technical background. If you've ever felt limited by your tools or by your own skills, Wixel is for you. Excitingly, we partnered with Microsoft to integrate Wixel's capabilities into Microsoft Copilot. This collaboration allows Microsoft 365 users, small business owners, students, and everyday creators to design in a smarter, more intuitive way with Wixel. Though this launch is a cornerstone of our product roadmap, we are still very early in the journey with plenty of work ahead in order to achieve our vision for Wixel. In the coming year, you can expect the platform to evolve meaningfully with breakthrough capabilities.
As we continue to innovate, I'm excited to see how Wixel reshapes the digital creation space. Wixel was the headline, but it wasn't the only launch this quarter. We also introduced Astro, our new AI assistant embedded within the Wix dashboard. Astro simplifies the user journey by guiding users, surfacing relevant tools and insights, and helping them complete key tasks. We expect Astro to improve user engagement, boost package upgrades, and reduce churn over the long-term. And it's only the first in a series of AI agents we plan to roll out. Additionally, we launched new AI-powered tools for website automation and real-time site customization, including adaptive content application, Wix functions, and Wix automations. These features are designed to make our platform smarter and more efficient while delivering highly personalized experiences to site visitors. Finally, we rolled out the Wix Model Context Protocol (MCP) server, a key infrastructure advancement that allows users to leverage natural language prompts to seamlessly connect Wix' comprehensive business functionality with their preferred compatible AI-powered tools.
The Wix MCP server enables AI-driven app development for users to build custom experiences on top of Wix or manage their Wix-based business using natural language and AI coding assistance. As demonstrated at Stripe's recent conference, our team illustrated how to use LLMs to generate reliable code for fully functional payment solutions. They built a complete website that accepts online payments via credit cards, Apple Pay, and Google Pay through Wix payments and Stripe. As we continue innovating, our focus remains the same, creating powerful tools that make it easier, faster, and more inspiring for anyone to build online. Our commitment to AI innovation, user empowerment, and long-term growth has never been stronger. With that, Nir, over to you.
Thanks, Avishai. We've kicked off 2025 with our strongest new user cohort of recent years as demand for building online exceeded expectations in the first quarter. This strength underscores the value of our platform against any macro backdrop and our unmatched innovation that enables Wix users to achieve their goals online more effectively than ever before. Our Q1 2025 user cohort generated $36 million in bookings, reflecting a 12% increase over the bookings generated by the Q1 2024 cohort, which was also very strong in its first quarter. This marks a meaningful improvement in demand as year-over-year new cohort bookings had previously grown mid-single digits in the post-COVID period. Impressively, this significant growth acceleration was driven almost entirely by better fundamentals, particularly a bigger user cohort and product innovation. From a top-of-funnel perspective, we saw strong traction particularly in several key high-spend geographic regions, including the U.S. and parts of Europe.
This drove the addition of nearly 5.3 million new users in Q1, up 7% year-over-year. Importantly, we maintained a high proportion of high intent and commerce-oriented users as our product innovation continues to attract users with more sophisticated needs. We saw healthy conversion of this higher number of new users into paid subscriptions driven by our AI onboarding funnel, which continues to widen with the large majority of new users opting to use our AI website builder to create their first Wix website. Partners also continue to convert well, driven by studio momentum as we roll out platform enhancements and deepen our reach within the professional community. In addition to a robust top of funnel, monetization of the most recent cohort improved compared to previous user cohorts. Higher Average Revenue Per Subscriber (ARPS) was fueled by new users buying more higher-tier packages and strong attachment rates for business solutions, particularly Google Workspace.
We captured strong top-of-funnel demand through the first quarter while continuing to prudently manage acquisition and marketing investments against our guardrails. Strong execution of our acquisition strategy has us on track to achieve a time to return on our investment, or TROI of 4 to 5 months on our Q1 2025 user cohort, which is at the lower end of our targeted return guardrails. These returns are similar to the returns on the first quarter cohorts of prior years despite the much larger recent new user bookings base. This is particularly impressive and demonstrates the improved quality of our top of funnel today. Turning to our existing user cohorts, behavior remained healthy. Bookings from prior cohorts continued to grow steadily in the first quarter, supported by stable conversion, strong retention, and increasing ARPS. In our Partners business, these effects are magnified as professionals build more sites attached to more business solutions and drive gross payment volume (GPV) growth through more complex projects.
I'd like to finish with some thoughts on what we're seeing on the macro front. Year-to-date, we've seen really positive demand trends with new cohort strengths actually continuing through April and early May. This is a clear reflection of the critical and growing role Wix plays in helping small businesses and anyone building their brand online succeed and thrive. In fact, our business historically has tended to outperform during times when shifting online increasingly became non-negotiable. We expect Q2, Q3, and Q4 new cohorts to remain strong, driving top-line growth acceleration in the second half as these additional cohorts layer on and contribution ramps throughout the year. Though we are encouraged by the strong demand and our results so far, it is difficult to predict how the macro environment could trend through the rest of the year. So while we like what we're seeing today, we are building conservatism into our expectations, particularly around our Business Solutions segment.
Business Solutions, particularly e-commerce and GPV, is naturally a bit more responsive to changes in consumer behavior and macro volatility. Overall engagement and adoption of our suite of business applications currently remain healthy, and we continue to onboard larger merchants to the platform. Our solid Q1 results illustrate the durability of our business across varying macroeconomic environments as Wix remains the leading platform to create, manage, and grow our digital presence. I remain confident in our ability to drive long-term growth by delivering essential tools that help users adapt, operate, and succeed in any environment. With that, I'll hand it over to Lior, who will provide more details on our financial results and our outlook.
Thanks, Nir. We began 2025 on strong footing with very healthy top-line growth driven by continued benefits from our key strategic and product initiatives, particularly studio and our growing suite of AI offerings as well as robust year-to-date top of funnel activity you just heard about from Nir. This underscores the critical importance of Wix to small businesses and anyone maintaining an online presence globally. Starting with our first quarter results before we move on to expectations for the rest of the year, total bookings were $511 million in Q1, up 12% year-over-year. Total revenue was $474 million, up 13% year-over-year and above the high-end of our guidance. Partners revenue grew 24% year-over-year to $172 million in the first quarter, driven by more subscription purchases, particularly higher price ones, as well as improved adoption of business applications and increasing GPV. Importantly, studio adoption remains strong as bookings from new studio subscriptions accelerated compared to previous quarters.
This was a factor of new Partners building their first studio website more quickly than previous cohorts and existing studio Partners building additional projects on the platform. Transaction revenue in Q1 was $59 million, up 19% year-over-year, driven by increasing GPV and continued improvement in our take rate as more merchants adopted Wix Payments. Transaction revenue growth also continued to benefit from the previous year's addition of a new Wix Payments partner. As we lap this benefit in Q2, we expect transaction revenue to grow at a similar pace as GPV going forward. Digging into GPV, we continue to face headwinds from the same small subsidiary discussed last quarter. Accelerated GPV drawdown in this subsidiary resulted in a 2-point headwind to total GPV in Q1. We expect this headwind to GPV to persist through the rest of the year, though with minimal top-line impact as GPV from subsidiaries experienced significantly lower monetization rates.
As a result, core GPV, excluding the impact of this subsidiary, grew 12% year-over-year in constant currency. Total non-GAAP gross margin in Q1 was 69%, in line with our expectation. Non-GAAP operating income increased 44% year-over-year and totaled 21% of revenue as we continue to benefit from a stable operating cost base as our business scales. This quarter, non-GAAP R&D expenses increased quarter-over-quarter to $96 million as we added developer headcount in line with our hiring plan for 2025. Non-GAAP sales and marketing expenses grew quarter-over-quarter to $102 million as we increased acquisition marketing spend to capture the strong demand we saw through the first quarter. Despite the larger base of cohort bookings on-boarded, TROI remained stable, underscoring the strength of the Wix brand, improving quality of our funnel and continued execution of our marketing strategy. Q1 free cash flow was over $142 million or a milestone 30% of revenue.
Let's turn now to outlook for Q2 and the rest of 2025. We expect total revenue in Q2 to be $485 million to $489 million, representing approximately 11% to 12% year-over-year growth. Even with new cohort trends remaining strong, we are maintaining our bookings expectations for the full year. We continue to expect bookings of $2,025 million to $2,060 million or 11% to 13% growth year-over-year. For revenue, we are also maintaining our previous guidance of $1,970 million to $2,000 million or 12% to 14% growth year-over-year. Our expectations now incorporate a higher degree of conservatism given the macro uncertainty Nir spoke about. This potential volatility is offset by the easing FX headwinds we're seeing today, so while our fundamentals remain very healthy today, we are also aware that the macro pendulum can swing quite meaningfully, very quickly. As a result, we are also leaving our free cash flow expectations unchanged.
We continue to expect to generate $590 million to $610 million of free cash flow or 30% to 31% of revenue in 2025. We remain on track to achieve a Rule of 45 this year, assuming high end of our outlook. Finally, I'm pleased to announce the upsizing of our share repurchase program. The board has authorized an additional $200 million of repurchases, which now puts the total authorization under the current program at $400 million. This increase reflects continued confidence in our ability to drive strong cash flow generation as well as our ongoing commitment to increasing shareholder value.
分析師問答
We are now ready for questions.
Maybe just to start with Wixel, Avishai, given the focus on your comments. Can you maybe just give us a little bit more color on the expectations on the rollout, kind of the product roadmap monetization expectations? Is this something that, over time, you think can be as big as Wix is today, maybe kind of end market users a little bit more, just to understand how this might flow through the financials and the company metrics over the next couple of years?
Of course, I think that we just launched Wixel. So this is the very early version of the product that we just released. We believe that this allows us to expand on a market in a few ways. First of all, it's a new funnel. It allowed us to bring users that don't need a website and Wix because they need the ability to do really sophisticated image editing, which is today only possible with AI. So that's the first thing. The second thing is that it's also something that we intend to release to existing Wix users, allowing them to enhance their images and videos better, which we hope will expand the capabilities of our users. Wixel is a separate subscription. It's priced on some pricing, which we are just now starting to establish. So it's going to take a while until it stabilizes, but it has its own price, its own subscription, and its own user base. We did see that already when we started this product; it immediately started with a few interesting partnerships, Microsoft, OpenAI. So we do believe there is a big need in the market for AI image editing and video editing.
Can you share your updated thoughts on the AI landscape within the web builder space or web design more broadly? It seems like you are continually rolling out new products, and the pace of AI releases has increased. In your letter, you mentioned vibe coding, which reflects a significant change since generative AI emerged and began integrating into your offerings. How do you envision the evolution of this space, especially regarding vibe coding and the potential for using natural language processing to simplify coding? How might this impact your product development, the market, and the overall process of building websites?
I think vibe coding is an exciting concept, but it's still in its early stages. It tends to face stability issues and struggles with search engine optimization. There are many aspects that need to improve for it to become a viable product for our customers. For instance, even minor edits can take up to four minutes to process. While vibe coding has great potential, it’s currently not ready for mass market adoption. Historically, we've been pioneers in AI; we launched our first AI product in 2016 and a full suite of image editing in 2017 and 2018. I believe we need to continue this forward-thinking approach with vibe coding. We will begin by incorporating features like the ability to code components in the Wix Editor. This advancement will help us and similar companies expand our market reach, enabling capabilities that traditional website building platforms lack, allowing for custom coding without conventional coding. I’m optimistic about the opportunities vibe coding will create, but I want to stress that it’s a nascent technology that is still unstable and slow. We need to understand it well and position ourselves to take advantage of its potential.
This one is for you, Lior. As we think about free cash flow margins, usually, Q1 is the low watermark. How should we think about the progression of free cash flow margins through the year, given the current guidance?
So yes, I mean I think that what we are going to see is very similar to last year, meaning that we will see a modest increase in free cash flow margin because we are continuing with the leverage that we are getting in terms of operating expenses out of revenue. So as long as we continue with our plan and we mentioned before that we are going to see a slight acceleration in the second half of the year of revenue and bookings. So obviously, that's going to have a positive impact on free cash flow. Therefore, I believe that there will be a modest increase in free cash flow throughout the year.
Okay. Perfect. And then, I mean, this one could be for you or maybe Nir, but you guys have talked about really strong momentum in April and May. At the same time, you guys are talking about heightened conservatism in the guidance. How should we think about kind of what's built in, in terms of that conservatism? Is this kind of a peak April panic or what level of down ticking are you guys anticipating?
So yes, I think that as always, we mentioned that many, many times in the past, there are things that we can control and things that we cannot control. Obviously, we see a very good result in terms of the Q1 cohort, and by the way, it is also improving into April and May, so we feel very comfortable about it. We released new products, and everything was already mentioned during Q1 when people asked about the acceleration in the second half of the year. We did mention new products and innovations that we already tested. So we actually can see that in Q1, our core results mean that it's happening. On the other hand, there are things that we cannot control. Look what happened to the FX in the last few months and to the overall macro in terms of trade and so on. So we want to be conservative around it because I really don't know what kind of development or new developments are going to happen in the future. So I prefer to be conservative about the guidance and actually maintaining them.
This is John Byun for Brent Thill. Two questions. One, the Partners revenue obviously continued to outperform the rest of the segment, but it is a bit of a deceleration in Q1 to 24% from 29% last quarter. Wondering how we should think about that, what some of the factors might be? And then second, on the new Wixel product, obviously, as you mentioned, new user base really opening up a new design front, but wondering how you're thinking about distribution, marketing since it is a different type of cohort, as you mentioned, besides the partnership you talked about.
So I will start with the Partners revenue. So we feel very good about the overall Partners and the growth. I believe that Partners will continue to be a hyper-growth revenue driver for us in the future. We also see the success of studio. So it's obviously continuing. I want to mention that the specific question you asked compared to the previous quarter, we had two points of effect in terms of FX that had a direct impact on Partners. The other one is that the growth in GPV was a bit less than anticipated. Remember that Partners will make up about 35% of revenue but contribute over 50% of GPV, because of the nature of the customers and the difference between the mix of sales theatres and Partners. We still feel very strong about Partners and the fact that it will continue to be a growth driver, a meaningful growth driver for us in the future.
Regarding Wixel, it's a new distribution funnel that presents numerous exciting opportunities. Firstly, we will utilize our existing user base to give them access to the product. Additionally, we believe there is significant potential for partnerships with this product, and we plan to pursue that as well. More importantly, Wixel will enable us to explore various creative marketing strategies, and we have many innovative ideas for that. Our company has consistently shown that we excel in online marketing and can execute it profitably based on metrics. We intend to apply the same approach with Wixel. However, I want to reiterate that Wixel is still a young product. Although we are already seeing positive results, it will take time for it to significantly impact our revenues.
I wanted to ask again on Wixel. I think the design and visual editing space has certainly seen some increasing competition. We've also seen some of the traditional design software companies move into websites, which creates just a really interesting intersection. So it'd be great to get a better understanding for really the core differentiator for Wix in the designing software, what enables the right to win against some of the larger brands in the market. And then maybe just at a higher level, some thoughts on pricing, how you landed at $79 a year, and how you're trying to strike the balance between monetization and adoption?
Well, I think that this is a great question. The first question is about the fact that we do see some of the traditional design tools moving into more of a website building area. I think less into our universe but more into the web flow kind of universe. We do see some. I think that building really great websites is a lot harder than it seems, and that actually has tremendous value for users. But beyond that, when it comes to Wixel, we don't try to build your traditional drag-and-drop editing environment, which I think all the tools that you're referring to are. What we're trying to do is really envision, if you think in five years from today, how you could edit images and content with AI. How would that look like? We are trying to build that into Wixel. So I think the way that the tool itself behaves is very different than the traditional editing environment. Now I'm not saying that they cannot do that; there are a lot of smart people there.
I'm just saying that if you try to rebuild your tools with the mindset of how will the universe look in five years or how it will work with AI, you'll find that you have to change a lot of the user interface, the experience, and the underlying technologies in those existing tools, which I believe is a bit of a challenge when you have a large user base. So we hope that by being able to be more agile and focus on that long-term vision, we can create a better experience for the people that are interested in editing content with AI.
Elizabeth, it's Nir. So I think Lior also mentioned that before. The key things that impact the top of funnel are eventually the product innovation we've done throughout 2024 toward the end of it, and throughout Q1, and this is an ongoing effort because you've seen us for a long time; we keep on innovating. We are introducing new capabilities and functions. We're improving the funnel itself throughout which our users come to the software and to the editors, and we improved the ability of the user interface and the ability to get to the end result. We unlock a lot of business functionality people need for specific business needs. And to be honest, we do it on both ends. So it goes to self-creator and it goes to Partners. What we've been experiencing throughout these first few months of the year, Q1, as well as going into the beginning of Q2, is the benefits from those kinds of improvements. That’s also what you're seeing plays out into the increased value of our cohorts in Q1, and it gives us confidence that we can go down and discuss for the rest of the year. I also think it keeps us still positive on our ability to regrow net subscriptions this year.
Can you discuss product development considerations regarding agents and their ability to handle various websites and more complex tasks? Specifically, do you think websites need to be structurally different in the AI era, especially in terms of utility and discoverability? How are you positioning for that?
And then just to clarify, you're asking about for ChatGPT to be able to read the website well, or are you talking about how we build a website?
Yes, I'm talking about how agents will sort of change how people access the internet broadly and websites specifically.
Well, I do believe that there is a big change coming. I know that for myself, I'm using ChatGPT more than Google when I check for things now. I would love to have a content and traffic digest a lot of content from the Internet and try to give you this limited vision, with its advantages and disadvantages as you get average content from everything. A lot of the time, you know what you're looking for and you know what is the right place to look at that information, be it a product that you want to buy, a service that you want to get, or just general information. The way that LLMs work today by just growing the Internet is, of course, not good enough. It's not going to provide you any knowledge about will my headrest, your revenue appointment in two days. We are starting to see the first layer of protocols; Microsoft just announced one and Tropic announced MCP, which is a way for LLMs to query complicated services in a manner that enables the agent to learn how to ask an API.
We just announced that we supported and released everything that we say now, and I think we're going to have to be very agile there as the value for our user will grow. I believe that will be month over month, and so we need to be at the forefront and ensure that we provide the right tools. I also believe that in many ways, this will help platforms like Wix because the complexity of building a website that offers the services for APIs and MCP to LLM, as well as how to do the equivalent of SEO for LLM, is just going to make building a website ten times harder. If you could take someone who knows how to write HTML and CSS and theoretically build a decent website today, then in a year, that will be impossible. I think the complexity that will be created by those tools and the speed of innovation are key aspects. So if we look at the future, why would you need an agency? Because theoretically, you can just tell the AI to build this website for me, change those things, and now make it successful.
But particularly, we're not there yet. There’s a big distance that we have to travel before AI agents can actually help you achieve those goals. Even when we are trying to build these exact agents to perform those tasks, they still require human interaction. There is a lot of expertise that a human can bring to help them. So I think there is a lot of room for agencies even in the years to come. Currently, when we look at the data, I would say this is probably PCAP technology is faster than consumers. This gives them a shift regarding what they can do, and Studio is a great example of this capability. The shopping habits for those who decide I want to do it myself or I am going for an agency are pretty much constant. We are only engaging the humans, and we only changed the technology. I think that’s why we are seeing that the buying behavior will remain consistent.
Yes. Maybe just focusing on self-creator. Obviously, there's been quite nice momentum. I think it accelerated above 7% this quarter. In terms of bridging the gap between where the business stands today and a double-digit type of clip. What would be some of the primary drivers? Some conversion is important. I'm not sure if Wixel is a contributor, but just how should we think about that bridge?
Josh, first of all, you're correct; obviously, Wixel, as Avishai mentioned, is in very early stages. It’s not a contributor, at least not at this stage. In the future, definitely an option, but that's not in the books for 2025. Generally speaking, I think that over the course of the year, what we've seen driving the growth of self-creators is a big play here in terms of what the macro influences, but that’s not something we are counting on because it's completely out of our control. The key factor is improving our editing environment and simplifying many functionalities that people need to incorporate them into their website. Essentially, we want to make the journey from the point where you come to us with a need to the point where you have something that you are proud of in your creation as smooth and accurate as possible. People have very specific needs and wants, meaning they want to get something that fulfills their vision in their creation. Lastly, we've seen that over the past years where websites have become far more sophisticated, not only for commerce but also for engaging with customers, providing services, and delivering information. Therefore, whenever we remove a blocker that prevents the user from achieving their goal, we will see heightened conversion and better results. I think all these factors can continue driving self-creator growth in the future.
Super helpful. And maybe a follow-up for Lior. I know there was a comment in there that you expect transaction growth to be similar to GPV growth moving forward. So it seems like stable take rates is the way to think about that? Is that really a comment for this year? As you may be lap the addition of some payment partners, but as we take a multiyear view, is there still an opportunity for the take rate to go higher? Any comments on that front?
So on a multiyear basis, definitely, yes. I think that there are many things we can do; for example, moving people from offline to online. We have our POS solution, which is a full omni-channel solution that helps with that. We are partnering with channels and customers to utilize our POS. This is one of the ways to transition people from offline to online transactions. Beyond that, there are many new features and products that will contribute to this as well. So definitely, yes, I believe that there is potential for higher take rates going forward, but not as significantly as last year when we partnered with Square or People. There’s definitely potential when we have bigger customers and bigger partnerships.
Thank you. And there are no further questions. This concludes today’s conference call. Thank you all for your participation, and you may all disconnect.