Key Takeaways
- Wix shares plunged to a 52-week low of $55.88, declining approximately 30% following earnings release
- Q1 earnings per share registered at $0.68, significantly missing the $1.21 analyst consensus
- Quarterly revenue increased 14% year-over-year to $541.2 million but fell short of $543.8 million projections
- Company unveiled “Wix Harmony,” a proprietary AI model powered by an in-house developed large language model
- Wix completed a $1.6 billion Dutch Auction tender offer, buying back 17.5 million shares at $92 per share
Shares of Wix.com (WIX) plummeted nearly 30% on Tuesday following the release of Q1 2026 earnings that disappointed investors on multiple fronts. The website-building platform’s stock hit a 52-week low of $55.88 during trading before recovering slightly to around $58.75 by midday.
The company’s Q1 non-GAAP earnings per share registered at $0.68, dramatically undershooting the Wall Street consensus of $1.21. This represents a significant decline from the $1.55 EPS the company delivered in the corresponding period last year.
Quarterly revenue totaled $541.2 million, reflecting a 14% increase from the prior year. While the growth rate appears healthy for a mature company, it still came up short against analyst expectations of $543.8 million.
Company executives attributed some of the quarter’s challenges to geopolitical tensions related to the continuing conflict in Israel. Disruptions to productivity in the Partners division were highlighted as a particular concern.
Despite these headwinds, the Partners segment managed to deliver 19% revenue growth, reaching $203.4 million. However, management conceded that this business unit experienced a slower start to the quarter than anticipated.
Proprietary AI Model Debuts
The most significant strategic development from the quarter was the introduction of “Wix Harmony,” which operates on a proprietary large language model developed entirely by Wix’s internal team. This represents a deliberate move away from dependence on external AI tools.
Executives positioned Harmony as the inaugural offering in what will become a comprehensive portfolio of Wix-developed AI technologies. The strategic objective is to create AI functionality that cannot be easily duplicated by competitors.
Creative Subscriptions revenue, representing 70.6% of total revenue, expanded 13% year-over-year to $382 million. Business Solutions revenue climbed 17% to $159 million.
Annual recurring revenue reached $1.9 billion, marking a 15% year-over-year increase. Total bookings for the quarter came to $585 million, also growing 15%.
A particularly bright spot: bookings from the Q1 new user cohort surged nearly 50% compared to the previous year. Management attributed “Base44” as a significant driver of this impressive growth.
Substantial Share Repurchase Program Finalized
In April, Wix concluded a modified Dutch Auction tender offer, buying back approximately 17.5 million shares at $92 per share. The aggregate cost of this repurchase totaled roughly $1.6 billion.
This transaction reduced total outstanding shares to approximately 41.8 million as of May 11, 2026 — representing a nearly 30% decrease.
Non-GAAP gross margin registered at 66%, compared to 69% in the same quarter last year. Non-GAAP operating income fell to $27.8 million from $99.8 million year-over-year. Operating margin contracted to 5% from 21%.
Cash and cash equivalents on the balance sheet totaled $1.34 billion as of March 31, 2026, up from $311.4 million at the end of 2025 — partially reflecting the timing of financing related to the tender offer.
Quarterly free cash flow amounted to $75 million. When excluding acquisition-related expenses, adjusted free cash flow would have reached $112.3 million, or 21% of revenue.
Wix reaffirmed its full-year guidance for mid-teens percentage revenue growth and mid-teens percentage bookings growth. Free cash flow margins are projected to finish in the high-teens range due to reduced interest income following cash deployment, interest expenses on a $500 million credit facility, and foreign exchange headwinds from a strengthening Israeli shekel.
Some product launches targeting professional users were reportedly postponed, which could impact near-term growth prospects.
Wix currently carries a Zacks Rank of #3 (Hold).
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