Hello and welcome to Wix' Second Quarter 2025 Earnings Conference Call. Please note that this call is being recorded. I will now hand the call over to the Wix team. Please go ahead.
Thanks, and good morning, everyone. Welcome to Wix' Second 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. The first half of 2025 has been extremely exciting as creation online and the Internet continued to broadly evolve at a rapid pace. We're seeing a fundamental shift in how people create, discover and interact online. AI-driven advancements are lowering the barriers to digital creation. This is allowing more people to turn their ideas into more sophisticated and higher quality projects with greater speed and ease. Demand for AI-powered online creation is growing faster than ever, as AI is undoubtedly bringing more people online in new ways and rapidly expanding the world of what is possible. AI momentum, combined with our early innovation, has set us on a strong trajectory, clearly reflected in the strength of our new cohorts. I'll let Nir talk about cohort behavior in a few minutes, but I'm excited to report that we are seeing an improving level of new cohort growth.
This new cohort momentum is the main driver of the top line growth acceleration expected in the second half of the year, which Lior will dive into later. We've seen strength in our AI onboarding funnel and increased adoption of AI across the platform, encouraging signals that new users are increasingly leveraging AI to create online. While the full picture of this new era is still unfolding, I'm confident that Wix is well-positioned to thrive and help shape what comes next. We are heading down this path fast with major AI players building the rails to bring in this new era of web, and Wix is ready. Recently, we developed proprietary algorithms that help our users' content surface prominently in AI-generated responses with our generative engine optimization offering. This empowers users to understand, monitor and actively improve how their brand appears in LLM-based search engines. Wix is the first CMS to offer this kind of AI visibility natively, setting a new benchmark for AI search optimization tools within website platforms and demonstrating our first-mover advantage, as we transform our core website-building offering to align with the next area of Internet.
We are also unlocking completely new markets such as vibe coding. Growing our TAM is the core pillar of our long-term growth strategy, and we are making big leaps with our June acquisition of BASE44. BASE44 gives us immediate access to a completely new audience. This includes developers, design and product teams, enterprises building internal tools, and DIY users building applications, not just websites. This isn't just about entering an attractive market; it's about recognizing early enough that vibe coding represents the future of how applications will be built. Vibe coding, whether through BASE44 or native capabilities yet to come, is going to be a major growth driver in 2026 and beyond. We're already seeing the fruits of this investment today. With just a few million of ARR at the time of our acquisition, BASE44 is now on track to generate $40 million to $50 million of ARR by the end of this year.
This is a supersonic level of growth in just a matter of weeks, and we don't expect this momentum to slow as we accelerate towards the $100 million ARR milestone. More importantly, there is an opportunity to generate long-term synergy between Wix and BASE44. Wix can provide the robust infrastructure that vibe coding platforms need to scale. This includes hosting capabilities, security framework, GDPR compliance, payments processing, marketing automation, and more. BASE44 brings the application layer to empower rapid development of ideas while Wix can supply the business and online platform. These are all capabilities that Wix has invested into and built over nearly 20 years, resulting in a fulsome ecosystem. In fact, these are the same problems faced by custom-coded websites today, which continues to push users to migrate to SaaS CMS platforms like Wix. While we've seen this trend for years, migration has especially accelerated in the last few quarters.
Long-term, I strongly believe vibe coding is a natural complement to our existing core offering. My belief is that the future of building online is in the combination of intuitive visual editing with flexible vibe coding. Wix is well ahead on the path to offering the full spectrum, visual-first creation for simplicity and speed and AI-powered coding capabilities for flexibility and depth. This is how we'll continue to lead in this next era, giving every user from beginner to pro the tools to build smarter, faster, and at a scale previously not possible. With that, I'll turn it over to Nir.
Thanks, Avishai. We were excited to continue to see the incredibly strong new-user cohort behavior from Q1 actually accelerate through Q2 and July. We expect the strong cohorts we recently onboarded and continue to onboard to drive top-line growth acceleration later this year. These cohorts improve the foundation for growth in 2026 and beyond, as they increasingly layer on. This is the power of our business model. This strength underscores growing demand for our platform as users' online needs change and the Internet evolves at breakneck speed. Bookings from our Q2 2025 user cohort grew 14% over the bookings generated by the Q2 2024 cohort in its first quarter. Impressively, new cohort bookings growth accelerated to a higher clip in late Q2 and through early Q3. I'll speak more about this shortly. Q2 cohort strength was driven by our main geographic markets such as the U.S., U.K., and Europe.
Notably, growth in the U.S., our biggest market, experienced particular strength with year-over-year improvement across all key metrics, including cohort size, conversion rate to paying subscriptions, and monetization. New cohort strength was also driven by a strong top of funnel. Notably, we saw improvement in our organic traffic as more users actively searched for Wix online, which is an indication of our increased brand awareness being the top platform for web creation. We've also seen growth coming from paid channels, which also drove higher traffic to the platform while we maintained our TROI guardrails. As a result, more than 5 million new users onboarded in Q2, up 6% year-over-year. We continue to see an improving mix of high intent and commerce-oriented users in our new cohorts as we expand our product suite and innovate upmarket. Constant innovation, particularly across our AI offering, is enabling improved user success.
As a result, we have seen healthy conversion of new users into paid subscriptions. Partners, in particular, continue to convert well, driven by studio momentum. This continued mix shift to higher intent users also fueled higher monetization in the recent cohort, as they purchase more advanced subscriptions and adopt more business solutions. Turning now to our existing cohort users, which continued to perform well in the second quarter. This was driven by stable ongoing conversion, strong retention, and users committing to Wix for longer subscription periods. Both existing and new users are now opting for more of our longest-term subscriptions than ever before, demonstrating improved confidence in their businesses and our platform. Growing bookings from existing users were also driven by better monetization across both self-creators and partners as adoption of our AI products improved. This quarter, we saw strong results from a couple of the AI offerings launched earlier this year.
Our AI marketing agent brought a notable increase in the adoption of our paid marketing tools, while Astro engagement accelerated. Improved engagement then resulted in more users continuing through more than 300 suggested flows and taking direct action afterward. It's incredibly rewarding to see our AI innovation tangibly enable more success for users. Better monetization was also a result of solid commerce activity in the second quarter. Transaction revenue increased by 18% year-over-year, driven by 11% year-over-year growth in GPV and continued improvement in take rate. More merchants are opting for Wix Payments as we improve our capabilities, demonstrated by the recent expanded partnership with PayPal. New offerings like Wix Capital and Wix Checking are opening up new avenues for monetization. We remain focused on capturing and addressing the full spectrum of merchant needs as part of our long-term commerce strategy.
Finally, I would like to briefly talk about what we've seen in early Q3. The incredibly positive demand trends we've seen in the first half of 2025 have actually continued to accelerate. Impressively, new user cohort bookings grew more than 20% exiting July over what the previous year cohort grew in the same timeframe. We have not seen organic cohort growth at this elevated level since peak COVID. This 20%-plus growth excludes impact from BASE44. Including BASE44 cohorts, new cohort growth would have accelerated much more significantly in early Q3. Bookings from the Q1 and Q2 2025 new user cohorts also continued to perform very well. These trends give me confidence that top line growth will accelerate in the back half of the year, which Lior will speak about shortly. To wrap it up, our solid Q2 results illustrate the durability of our business across a dynamic macro as Wix remains the leading platform to create, manage, and grow 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.
Thanks, Nir. We delivered another great quarter that exceeded expectations across multiple metrics, driven by the robust business fundamentals you just heard about and continued successful execution of key initiatives. The momentum built up year-to-date is expected to drive growth acceleration in the second half, which I'll talk through in a few minutes. More importantly, the cohort strength we're generating today, as well as products we are innovating and new TAMs we are entering are laying the foundation for robust growth in 2026 and beyond. First, let's dive into the details of the second quarter. Total bookings grew to $510 million in Q2, up 10% year-over-year. This solid performance was driven primarily by increasingly stronger new user cohorts joining the platform, as well as deeper adoption of our AI and studio offerings. Total revenue grew to $490 million, up 12% year-over-year and above the high end of our guidance range.
Partners revenue grew 24% year-over-year to $183 million, driven by continued adoption in the professional audience segment of our platform and studio. We continue to see studio bookings grow with an increasing number of partners building multiple projects on the platform. Transaction revenue was $64 million, up 18% year-over-year, driven by continued GPV growth coupled with improvement in our take rate as Wix Payments' adoption among new merchants continues to grow. GPV grew 11% year-over-year to $3.6 billion. Partners remain the primary driver of GPV growth, contributing nearly 55% of total GPV, as larger agencies and merchants continue to choose Wix for their commerce needs. Total non-GAAP gross margin in Q2 was 70%, up from 69% in Q1. This reflects productivity benefits from AI solutions implemented across our customer care organization as well as optimization of a key vendor partnership.
Non-GAAP R&D and sales and marketing expenses increased in the second quarter, as we increased headcount according to our annual plan and integrated the teams from our recent BASE44 and Hour One acquisitions. We continue to drive operating leverage. Non-GAAP operating income was $110 million or 22% of revenue, up from 21% in Q1. This excludes $6.1 million of non-operating acquisition-related expenses, primarily accrued bonus and earnout payments per the respective acquisition agreements. Q2 free cash flow was $148 million or 30% of revenue. This quarter, we also began executing on our $400 million repurchase authorization. We repurchased approximately 646,000 Wix ordinary shares for nearly $100 million, proving our continued commitment to returning value to shareholders. Let's now turn to the rest of 2025. Healthy first-half performance provides confidence in our expectation of growth acceleration through the rest of the year, particularly as we see increasingly stronger new cohorts layering onto the platform.
We are raising our full-year bookings outlook to $2.04 billion to $2.075 billion or 11% to 13% year-over-year growth. This increased outlook assumes a continued upward trend in new cohort behavior, contribution from BASE44 and current FX rates. For revenue, we are updating our previous full-year outlook to $1.975 billion to $2 billion, up 12% to 14% year-over-year. We expect total revenue in Q3 2025 to be $498 million to $504 million, up 12% to 13% year-over-year. Remember that robust new cohorts and acquisitions made in the middle of the year have minimal impact on second-half revenue. I want to also provide more color on the growth acceleration in the second half. Specifically, we anticipate, one, increasingly stronger new cohorts layering onto the platform. New user cohort bookings, exiting July, growing more than 20% compared to what the previous year cohort grew in the same timeframe.
As demand continues to increase, conversion continues to improve in key markets and more sophisticated users onboard. We expect new cohort bookings growth to trend upwards through the rest of the year. Two, contribution from BASE44. Three, modest benefit from targeted pricing optimizations. This was planned at the beginning of the year to remediate pricing disparity across certain subscription types in select geographies. Four, continued ramping contribution from Studio's new partners joining and earlier users mature and build multiple projects with us. And five, growing impact from our AI products such as our AI onboarding funnel and AI marketing agent. On the cost side, we now expect non-GAAP total gross margin of approximately 69% and non-GAAP operating expenses to be approximately 49% of revenue for the full year. These slightly higher cost expectations reflect incremental ongoing AI marketing and headcount investments we plan to make to operate, integrate, and grow BASE44.
With higher bookings expectations offsetting these increased costs, we are able to keep our free cash flow expectations unchanged. We continue to expect to generate free cash flow of $595 million to $610 million in 2025 or 30% to 31% of revenue. Accelerating new cohort momentum combined with AI tailwinds, as the Internet continues to evolve, and BASE44's tremendous growth trajectory gives me confidence that we can achieve even more and maintain robust growth in 2026 and beyond. Operator, we are now ready for questions.
And our question comes from the line of Ygal Arounian from Citi.
Okay. So I want to dig into GenAI, vibe coding, and BASE44 a little bit more. So obviously, the way you talk about it, vibe coding is complementary to your core Wix kind of drag-and-drop editor. So I want to expand on that. As vibe coding grows the way it's growing, do you think this model of building replaces the drag-and-drop editor? Does it remain complementary over time? And I guess, if you look at the share performance, the investors would seem to view that vibe coding replaces Wix, not create a new market and complementary. And for example, are agencies using this with Wix Studios or replacing Wix Studio? I just want to understand how you envision the ecosystem evolving. And then I have a quick follow-up.
I believe it's complementary. If you examine the history, we developed an initial version similar to vibe coding, where you specify what you want and we construct the website accordingly. We began this in 2016 and have been continually improving it, and we will keep doing so. Designing websites using just a text interface is quite challenging. We've noticed that the tools related to vibe coding are beginning to incorporate some basic visual editing features. Therefore, the future solution will likely involve a combination of both. Vibe coding has significant potential for application development since many aspects of business logic are quite complex, which is where vibe coding excels. However, I must emphasize that a website created with the current vibe coding tools often lacks important quality elements required by law. For instance, there is no support for GDPR, accessibility, cookie banners, or many other necessary features. I envision that vibe coding will allow users to start quickly and easily switch between designs for websites, while also facilitating application logic development through a text interface. However, for websites, creating a comprehensive e-commerce package purely through text is quite difficult.
Okay. Understood. And I guess a follow-up then. As you see BASE44 gain adoption among your partners, are they using Studio and BASE44? Or is it a complete kind of different set of users that you're seeing right now? And I guess part of the view from investors is you're seeing a number of smaller new entrants like BASE44 that are growing really quickly and at least seemingly taking share of the overall market? Just your thoughts on that.
Well, I think it's a very different intent. Sometimes, it's the same user, but it's a different intent. And you can already see some of the signs of that on Wix itself, right? We accelerated, not decelerated. So in theory, if there was a huge amount of competition out there, it would have decelerated and not accelerated. However, I do think that if you look at the three different needs that you have mostly for website builders and application builders, it will either be website building, application building, and prototype building, okay? So I think for prototype building and application building, you see tremendous use of vibe coding now, and I expect that to continue to go. And I'm sure that we can enjoy a lot of the new capabilities of AI in order to enhance our offering, which is something that we've always been doing.
And our next question comes from the line of Ken Wong from Oppenheimer.
Fantastic. Lior, I was wondering just in terms of the bookings acceleration in the back half and the increase in the bookings, any rough sense of what the BASE44 contribution is? I know you guys mentioned $44 million of ARR. I wanted to understand how much of that $50 million raise was driven by BASE44.
Sure. So first of all, I think that it's important to mention that even without BASE44, we would have raised the guidance. It's mostly coming from the fact that it's driven by the overachievement of our new cohorts. I think that we mentioned that it's a level of strength that since peak COVID, we haven't seen something even similar to that. And this is why it allowed us to accelerate the second-half growth even more than what we initially expected. BASE44 has some contribution, but it's not the majority over the raise. But in any case, we're not going to break it down into the different elements.
Okay. Understood. Super, super helpful. And then obviously, also on BASE44, just wondering, as you guys work it into the Wix platform, is this a business that you guys intend to run separately? Is it just going to be part of the core Wix' ADI studio platform? Just love some thoughts on how you plan to integrate the businesses.
Well, we're going to keep it separately, at least for the current future that we can foresee. I believe, again, that those are very different needs. People don't do the same thing on BASE44 that they do on Wix. And I think that vibe coding is a great way to build prototypes and applications and not necessarily the best solution for a website. And I think the intent is what drives the success of the product, so I believe that we're going to maintain them separately.
Our next question comes from the line of Brent Thill from Jefferies.
This is John Byun for Brent Thill. So great to see the acceleration in user cohort, and you talked about that's going to help the guidance. But I don't know if you can dig into why you're confident that strength can continue? I don't know if there's anything specific drivers or things underneath that you see that makes you confident that all of this is sustainable for the next 6-plus months or so.
Our confidence stems from the fact that we've already completed one month of the six you mentioned, and we're observing very positive trends. Additionally, we recognize that a significant reason for this is the strength of our brand and the rising demand. We're quite assured since this momentum didn't just begin recently but can be traced back to Q2 and has already extended into a substantial part of Q3. This gives us strong confidence that these trends will persist.
Great. If I could quickly follow up on the targeted price increases, I'm curious about their scope. We did observe one in a specific SKU in the U.S., but will this have a significant impact in 2025 or possibly even in 2026?
It's not a significant issue. It's more of a continuation from our previous actions and some adjustments we made for certain subscriptions and specific regions. The impact is minimal and was already included in our initial guidance as part of our regional strategy.
Our next question comes from the line of Andrew Boone from Citizens.
I'd love to talk a big picture question for Avishai. As I think about the expansion of the Wix product portfolio, including Wixel previously and now kind of financial services. Is AI unlocking just a wider product set for Wix? What's kind of in the strike zone or out of the strike zone as you guys want to be able to approach? Can you just speak to kind of the expansion of the product roadmap and kind of how you guys were thinking about offering a broader set of services for customers?
Well, I think that you talked about a few different things. But I think you probably want to know more about the core Wix offering. And we're one of the first companies, if not the first, on the planet to release an AI product to the mass markets. And the reason for that is that we believe that AI provided and will continue to provide tremendous opportunities for us, to expand our market reach, to expand the value that we bring to our customers, and of course, to offer new and exciting things. Vibe coding is a point in that, but there's so much more that I believe will happen and should happen. And we do intend to continue to develop that and continue to offer new ideas and new technologies to our customers. So yes, I do believe that we are tremendously benefiting from AI, and we will continue to do that and to enjoy the benefits of the global AI innovation.
And then I wanted to ask a question that's maybe too early to answer, but I want to try to address it. Do the barriers to change websites change as we think about more text website capabilities? How do we think about the kind of the component of churn within websites as new capabilities kind of lower the barrier to creation?
Changing a website has always been relatively straightforward. Users have always owned their content and can switch between different platforms. The reason many people continue to use Wix is that we provide a superior platform that meets their needs. I believe that as advanced AI capabilities develop, it will become more challenging to change websites rather than easier. There will likely be fewer platforms that can offer all those capabilities, which means the number of platforms to switch between will actually decrease. We’ve already observed this trend. The time it took for other companies to catch up after the introduction of ADI was significant. Looking at our recent developments, many innovations do not yet exist on other platforms. Moving forward, the speed at which we innovate, along with our growing expertise in adding and integrating features, will continue to enhance our competitive advantage. I believe AI currently serves as a significant barrier that allows us to capitalize on innovation.
Our next question comes from the line of Brad Erickson from RBC Capital Markets.
Guys, I have two. The first, I guess, just two trends with AI that seem kind of salient to your business. One is organic search traffic is declining to individual websites. And then two, maybe some more signs of AI driving some layoffs. How do these two trends kind of potentially interplay and impact your business, if at all? And then I have a follow-up.
We are noticing a slight decline in organic search traffic, although it is minimal. However, there is a new challenge emerging regarding how to maintain visibility on large language models (LLMs). This is as intricate as getting found on Google. Therefore, it's essential that we equip our customers with the best tools and technologies to enhance their presence on LLMs. I don't anticipate that LLMs will handle transaction processing in the near future. For instance, if a yoga studio wants to offer a class video for an LLM to order, the LLM must have information about the seminar's availability, pricing, tax rules, reimbursement policies, refund procedures, coupon compatibility, and whether a membership card is needed. This involves a complex back-end system with a detailed database and numerous regulations. Currently, it seems unlikely that LLM providers will create these back-end structures; instead, they will likely connect to existing websites.
As a result, many website functionalities and visual elements will remain intact. The situation is further complicated by the need for the LLMs to interact not only with users but also with various agents who handle specific tasks with the information we provide. Additionally, being discovered on LLMs presents a significant challenge. Over time, we will observe that creating and maintaining a successful website has become increasingly intricate, which suggests that a more robust platform will be necessary to manage all of this. Successfully appearing on LLMs is quite difficult, and developing technology for agents to communicate and present information effectively adds another layer of complexity. Ultimately, consumers typically want to see and interact with products or services—whether it's a shirt, car, restaurant, or hotel—before making a decision.
Yes, that's great. That's helpful. And then second, just on Studio, I think you shipped a number of enhancements kind of in the March or maybe April timeframe, which I think have been pretty well received and kind of perceived as adding more value. How do you guys think about your ability and maybe timing of potentially capturing some of that value on the improvements you've made on Studio this year?
I believe we have an exciting roadmap for Studio, and I am personally very enthusiastic about it. Currently, we are pursuing two different directions with Studio. One involves enhancing its capabilities in the traditional way, while the other focuses on preparing Studio to equip our partners with powerful tools to support the future of the Internet for their customers. The combination of these two approaches this year, and even more so next year, will give us a significant competitive advantage over existing platforms.
Our next question comes from the line of Elizabeth Porter from Morgan Stanley.
I wanted to ask again about BASE44. It's a really exciting new market to go after with a new audience of users. And when we think about the historical expansion that you've had into markets like partners, there was certainly incremental investment to build the brand with the new audience. So how should we think about BASE44? What are some of the factors that could make the impact on TROI look either similar or different than the prior periods when we were investing for partners?
Well, I think that BASE44 is a great example of a fantastic product that makes it easier, right, to push and to do marketing and to create brand recognition because it is, at least in my opinion, the best of its class. And you guys are more than welcome to try and compare it to other tools, and you see immediately the difference. So I believe that it's always the same, right? You keep building a great product, you keep doing great marketing, you keep building a great community, working very hard with your users to solve their needs, and I think that we really are starting at a great point to be at.
Elizabeth, I want to emphasize that this situation is different from Studio because we built the product there. Here, we acquired a company, which involves significant investment in the product, but the return on investment is much quicker. Therefore, I don't expect this to significantly impact our profit and loss statements or any of our future plans regarding the key performance indicators we've discussed previously.
Great. Please continue.
No, no. I think the same thing is happening with Wix, and we can already see a lot of it occurring now in Base, which is experiencing very strong organic growth.
Yes.
Elizabeth, it's Nir. I'm not going to specify the date, but we are still working towards a complete launch. Regarding the potential for an increase in conversion rates, that is always linked to any improvements we make, and we certainly hope for that. However, it will take time to introduce something new and to test it thoroughly to determine its impact.
Our next question comes from the line of Trevor Young from Barclays.
First one, Avishai, bigger picture, are we now at the point where you've harvested a lot of the margin opportunity, and from here, we should assume much less margin lift and more incremental investments to further accelerate growth such that as you go from your current Rule of 42 to something north of that, the incremental lift comes from accelerating revenue growth?
I'm not sure I understand the question.
So, Trevor, generally, and I'm going to hand it over to Lior, of course, but generally, the answer is yes. I think we can invest further into the growth of our business while maintaining similar margin.
Correct. I think that we need to look at right now the expansion of the margin. So we've expanded it dramatically significantly over the last couple of years. We actually, even with that investment that we have this year, we haven't changed really the free cash flow margin. I believe that BASE is a super profitable business. From one end, it's going to increase the growth. On the other end, it's going to generate more free cash flow for us in the future. So I don't see a major deviation from the KPIs that we provided in the past. Actually, I think that there are some options in the future actually to even improve further the margins because I believe that the AI cost will drop significantly over the next couple of years.
Great. And as a follow-up, Lior, on capital allocation, is the plan still to repay the convert from cash on hand? I think that comes due fairly soon. And if so, why not opt to refi or use another form of debt? The high recurring nature of the business would suggest more leverage would still be palatable and that would give you a lot more cash on hand to accelerate current prices.
Yes, we definitely plan to repay the converts with cash. With regard to debt and plans for the future, we'll leave it to the future. But right now, we are going to pay the converts with cash, definitely. If we feel that we need a requirement or need for cash in the future, so I agree with you, there are a lot of means in order to do that in the capital markets.
Our next question comes from the line of Josh Beck from Raymond James.
I was really trying to put BASE44 in the right swim lane, so maybe more for Avishai, but it seems like there's kind of two ends of the spectrum. You have very prototype building types of platforms. Obviously, there's been some buzzy IPOs right there. The other side, you have very in-depth app building platforms. Obviously, a lot of headlines with vibe coding kind of getting integrated into IDEs. Where is BASE44 in this kind of market map? And are you really going after kind of the entrepreneurial developer? Is it the enterprise developer? Just would love to hear how it fits into the market.
Well, it's important to note that all of those tools are primarily based on Anthropic. There are various ways to utilize them for code generation, with each experience differing according to the user. For example, platforms like Windsurf or Cursor are designed for developers, which creates a distinct experience compared to BASE44. BASE44 is geared towards individuals who may not be developers or developers who prefer a quick solution without extensive coding, allowing them to innovate more easily. This is where BASE44 diverges from Cursor and Windsurf. I believe there is significant long-term potential and a substantial market for creating applications and prototypes, which is fundamentally what BASE44 addresses.
That's very helpful. I have a question for Lior or Nir about what you're observing regarding customer retention compared to your expectations this year, and how that influences your strategic pricing actions, which seems to involve some adjustments to legacy plans. How does this impact your thoughts on pricing strategy for the upcoming year and beyond?
Well, generally, I can say that this year, we're seeing kind of a little bit of a stronger-than-expected dynamics around retention. Again, as I said before, what you've seen in terms of the current changes in pricing was very limited, so it had no significant impact. And generally, we're seeing stronger-than-expected dynamics. I have nothing to comment on any future price changes because, obviously, we're not going to announce them ahead of time. But I will say that actually, I think from our standpoint, we obviously see this improved retention is just a very strong and positive signal overall, both in terms of the value that we give our customers as well as some more strength in the macro environment.
That concludes the question-and-answer session for today. That also concludes the call for today. Thank you all for joining. You may now disconnect.
Thank you, everyone.
Thank you, everyone.