Key Takeaways
- Wix plans to eliminate approximately 1,000 positions — representing roughly 20% of its total employee base — marking the company’s most significant workforce reduction to date.
- The announcement comes after disappointing Q1 results that erased one-third of the company’s market value overnight; shares have declined approximately 50% since the beginning of the year.
- First-quarter financials revealed a $57.5 million deficit even as revenues increased 14% to reach $541 million, while operational costs surged 50%.
- The Base44 AI platform, purchased for $80 million, has achieved rapid expansion — reaching $150 million in annual recurring revenue by May — but carries substantial operational expenses.
- Despite deploying $1.6 billion toward share repurchases, the company has been unable to restore investor confidence.
Wix’s first-quarter financial results showed a $57.5 million deficit, marking a dramatic shift following multiple periods of profitability. While revenues grew 14% year-over-year to reach $541 million, operational expenditures ballooned 50% to $423 million. Cash generation fell 21% to $112 million.
Shares have plummeted nearly 50% since the start of January. When first-quarter earnings were released last week, the stock experienced an additional one-third decline in just one trading session.
The workforce reductions are now imminent. Wix is preparing to cut approximately 1,000 staff members — about 20% of its 5,277-person workforce. Over 60% of employees work from the company’s Israeli operations.
Management has attributed the restructuring to artificial intelligence. As AI tools increasingly handle development and design tasks, numerous positions have become obsolete.
Earlier in the year, executives mandated a return to in-person work arrangements, triggering significant employee pushback. During Q1, headcount decreased by just 63 individuals. The planned reductions represent a far more dramatic transformation.
Base44: Rapid Expansion at Steep Operational Costs
A significant portion of Wix’s expansion narrative centers on Base44, the vibe-coding platform acquired for $80 million. Created by Maor Shlomo, the platform enables users to create software applications through natural language instructions.
Base44’s annual recurring revenue reached $150 million by May, exceeding internal projections. However, this rapid growth carries significant financial implications. Aggressive marketing campaigns, escalating computational infrastructure costs, and ongoing acquisition-related compensation to Shlomo are pressuring profitability.
Wix paid Shlomo $38 million during Q1 alone, with additional payments scheduled for later this year. The company invested in two Super Bowl advertising spots — one promoting Wix, another highlighting Base44 — further increasing marketing expenditures.
Wix is simultaneously developing a proprietary AI model to support Harmony, its AI-powered website creation tool. CEO Avishai Abrahami indicates it will eventually enhance precision and reduce inference expenses, though currently it represents another substantial investment.
Share Repurchase Program Fails to Restore Confidence
In March, Wix initiated a $1.6 billion stock buyback program — depleting nearly all cash reserves, which dropped to $900 million. The initiative was designed to demonstrate management’s confidence to shareholders.
The strategy has proven ineffective. The stock continues its downward trajectory, burdened by widespread concerns that the core website creation business faces existential threats as AI enables consumers to build sites independently for minimal monthly costs.
Investor sentiment surrounding software companies has deteriorated significantly. While Wix doesn’t function as a conventional SaaS provider, it has been swept up in the broader negative momentum affecting the sector.
Operating expenses as a percentage of revenue jumped from 21% in Q1 2025 to 35% in Q1 2026 — a dramatic shift that has alarmed market participants. Wix’s market capitalization currently hovers around $2 billion.
Base44’s ARR climbed to $150 million by May 2026, according to company disclosures.
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