Executive Summary / Key Takeaways

• Wix.com is undergoing a significant transformation, leveraging its early lead in AI to expand its total addressable market and enhance its core web development platform, driving accelerated growth in both its Self-Creator and Partners segments.
• The company delivered strong Q2 2025 results, with total revenue growing 12% year-over-year to $490 million and free cash flow reaching $148 million, or 30% of revenue, demonstrating robust operational efficiency and profitability.
• Strategic acquisitions like BASE44, a "vibe coding" platform, and the launch of new AI-powered products such as Wixel and Astro, are opening new avenues for application development and visual design, positioning Wix as a comprehensive digital creation ecosystem.
• Wix is targeting a "Rule of 45" in 2025, building on its achievement of "Rule of 40" a year ahead of schedule, with full-year 2025 bookings guidance of $2.04 billion to $2.075 billion and revenue of $1.975 billion to $2 billion.
• Despite macroeconomic uncertainties and intense competition, Wix's deep investment in AI, dual-engine growth strategy, and disciplined capital allocation, including a $1.15 billion convertible note offering and share repurchases, underpin a compelling long-term investment thesis.

The Digital Creation Revolution and Wix's Foundation

Wix.com Ltd. has evolved from a cloud-based web development platform into a comprehensive digital creation ecosystem, strategically positioned at the forefront of a fundamental shift in how individuals and businesses create, discover, and interact online. The increasing demand for AI-powered online creation is rapidly expanding the possibilities of digital presence, and Wix's early and sustained innovation in artificial intelligence has been a cornerstone of its strategy. The company introduced its first AI product, Artificial Design Intelligence (ADI), in 2016, followed by a full suite of image editing tools in 2017 and 2018, laying a strong foundation for its current AI-driven offerings.

A pivotal strategic shift in late 2020 saw Wix focus on attracting higher-intent users and maximizing the lifetime value of its existing customer base. This strategy culminated in the Q3 2023 launch of Wix Studio, a platform tailored for professionals, and the evolution of its AI Website Builder, now available in 20 languages. By the end of 2024, Wix had achieved its "Rule of 40" milestone a full year ahead of schedule, demonstrating robust growth and profitability. This historical trajectory underscores Wix's commitment to democratizing web creation and expanding its total addressable market by combining intuitive visual editing with flexible, AI-powered capabilities.

Technological Edge: Powering the Next Era of Web Creation

Wix's core differentiated technology lies in its intuitive, AI-powered creation tools, which simplify complex design and development processes for a broad spectrum of users. The Wix Editor provides a drag-and-drop visual development environment, while Wix Studio offers a unified platform for professional website and application development. Velo by Wix further extends these capabilities with a full-stack, no-code/low-code development environment for content-rich websites and web applications.

The company's significant investment in AI is evident across its product suite. The AI Website Builder, an evolution of its initial ADI offering, is now chosen by over 50% of new users to create their online presence. This tool has demonstrated a 13% uplift in conversion rate for the Self Creator cohort in Q3 2024, with paid subscriptions originating from AI onboarding being 50% more likely to have a business vertical attached and significantly more likely to start selling on Wix.

Wix continues to push the boundaries of AI innovation with several new offerings. Wixel, launched in May 2025, is a standalone AI-powered visual design platform that extends Wix's design expertise beyond websites, integrating advanced AI models for image generation and editing. Astro, an AI assistant embedded within the Wix dashboard since April 2025, simplifies the user journey by guiding users and surfacing relevant tools, which is expected to improve user engagement, boost package upgrades, and reduce churn. Wix also introduced a specialized AI marketing agent that analyzes website data to generate tailored marketing plans and SEO insights, leading to a notable increase in the adoption of paid marketing tools.

A significant technological differentiator is Wix's Generative Engine Optimization (GEO) offering, which includes proprietary algorithms to help users' content surface prominently in AI-generated responses from large language models (LLMs) like ChatGPT, Gemini, Perplexity, and Claude. 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. Furthermore, the Wix Model Context Protocol (MCP) Server, rolled out in Q1 2025, is a key infrastructure advancement that allows users to leverage natural language prompts to seamlessly connect Wix's business functionality with compatible AI-powered tools, enabling AI-driven app development.

These technological advancements provide tangible benefits for investors by lowering the barriers to digital creation, increasing user conversion, and improving customer care efficiency. They expand Wix's market reach, strengthen its competitive moat, and contribute to its long-term growth strategy by ensuring the platform remains at the cutting edge of online creation.

Strategic Expansion: New Frontiers and Enhanced Offerings

Wix's strategic initiatives extend beyond its core website builder, actively expanding its market reach and enhancing its value proposition. A significant move in June 2025 was the acquisition of BASE44 for $80 million in cash. BASE44 is a "vibe coding" platform that provides immediate access to a new audience, including developers, design and product teams, enterprises building internal tools, and DIY users building applications, not just websites. This acquisition is on track to generate $40 million to $50 million in Annual Recurring Revenue (ARR) by the end of 2025, demonstrating supersonic growth. While BASE44 will operate as a distinct product, it is expected to leverage Wix's robust infrastructure, including hosting, security, GDPR compliance, payments processing, and marketing automation, creating long-term synergies.

Further bolstering its generative AI capabilities, Wix acquired Hour One in May 2025, aiming to accelerate product innovation in AI media creation. The company also launched a new financial services suite in August 2025, featuring Wix Checking (integrated business banking powered by Unit) and Wix Capital (a Merchant Cash Advance service). This suite helps merchants manage cash flow and fund growth, complemented by an expanded partnership with PayPal (PYPL) in July 2025, which integrated PayPal directly into Wix Payments for a unified experience, including PayPal Pay Later and Venmo. These strategic moves underscore Wix's ambition to become a comprehensive operating system for online businesses, offering a full spectrum of tools beyond website creation.

Dual Engine Growth: Self-Creators and Partners

Wix's growth strategy is powered by a dual-engine approach, focusing on both its Self-Creator and Partners segments. The company's strategic shift in late 2020 towards higher-intent users has yielded significant results, particularly within the Partners segment. Wix Studio, launched in Q3 2023, has become the core product for professionals, with over two million Studio accounts, 75% of which were created by partners. This platform streamlines agencies' workflows, enabling them to create better-looking websites more efficiently.

The Partners segment has demonstrated robust financial performance, with revenue growing 24% year-over-year to $183 million in Q2 2025. This follows a 24% year-over-year growth to $172 million in Q1 2025, and a 29% year-over-year growth to $168 million in Q4 2024. Partners are also a primary driver of Gross Payment Volume (GPV), contributing nearly 55% of total GPV in Q2 2025, indicating that larger agencies and merchants are increasingly choosing Wix for their commerce needs. Management anticipates that the long-term profitability of the Partners segment will eventually surpass that of Self-Creators.

With foundational investments in the Partners business now complete, Wix is approaching its Self-Creator business with "renewed vigor," making it a central focus of its overall growth strategy. The company plans two major product launches for self-creators in 2025: one in the spring to expand design capabilities beyond websites, and another in early fall to introduce a transformative new way for self-creators to build their internet presence. While not modeled for double-digit growth in 2025, management "definitely believe[s] that we can achieve it in 2026 based on the new product that we are going to launch." The Self-Creator segment is already "super profitable in terms of free cash flow," and its profitability profile is expected to continue improving.

Financial Performance: A Trajectory of Accelerated Growth and Profitability

Wix has demonstrated a compelling financial trajectory, marked by accelerating growth and expanding profitability. In Q2 2025, total bookings reached $510 million, representing a 10% year-over-year increase, driven by increasingly stronger new user cohorts and deeper adoption of AI and Studio offerings. Total revenue for the quarter grew 12% year-over-year to $490 million, exceeding the high end of the company's guidance range. This performance builds on a strong Q1 2025, where total bookings were $511 million (up 12% year-over-year) and total revenue was $474 million (up 13% year-over-year).

Profitability metrics are also on an upward trend. Non-GAAP gross margin in Q2 2025 improved to 70%, up from 69% in Q1, reflecting productivity benefits from AI solutions in customer care and optimization of a key vendor partnership. Non-GAAP operating income in Q2 2025 was $110 million, or 22% of revenue, an increase from 21% in Q1. For the full year 2024, Wix achieved its first year of positive GAAP operating income at $100 million, or 6% of revenue.

Cash flow generation has been particularly strong. Q2 2025 free cash flow was $148 million, representing 30% of revenue. This follows a milestone Q1 2025 free cash flow of over $142 million, also 30% of revenue. In 2024, free cash flow reached $488 million, or 28% of revenue, nearly double that of 2023. The company's average bookings per subscription (ABPS) increased 13% year-over-year to over $294 in 2024, driven by a shift to higher-tiered packages and increased adoption of business solutions. Net revenue retention also improved to 100% in 2024.

Wix has also been proactive in managing its capital structure. On September 11, 2025, the company closed an offering of $1.15 billion principal amount of 0% Convertible Senior Notes due 2030, with net proceeds of approximately $1.124 billion. Approximately $71.90 million of these proceeds were used for Capped Call Transactions to reduce potential dilution, and $75 million was allocated to a concurrent repurchase of 0.49 million ordinary shares at $153.08 per share. The remaining proceeds are earmarked for general corporate purposes, including additional share repurchases and potential acquisitions. Wix also plans to repay its $575 million convertible note due in August 2025 with cash and has a $400 million share repurchase authorization, having already repurchased approximately 646,000 shares for nearly $100 million in Q2 2025.

Competitive Landscape: Differentiating in a Dynamic Market

Wix holds a prominent position in the dynamic web development market, differentiating itself through its user-friendly interface, comprehensive ecosystem, and aggressive AI innovation. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, Wix is a leader in user-friendly platforms, competing directly with companies like Shopify (SHOP), Squarespace (SQSP), GoDaddy (GDDY), and Adobe (ADBE).

Wix's core competitive advantage lies in its accessibility and speed of creation, particularly through its AI Website Builder and drag-and-drop editor. This contrasts with more specialized platforms like Adobe, which targets professional designers with a steeper learning curve, or Squarespace, which emphasizes aesthetic templates but may offer less customization. Wix's all-in-one platform, integrating features like Wix Payments, the App Market, and marketing tools, provides a comprehensive solution that can be more efficient for users than assembling disparate services.

The company's first-mover advantage and continuous innovation in AI, exemplified by its 2016 ADI launch and recent developments like Generative Engine Optimization (GEO) and the Wix Model Context Protocol (MCP) Server, provide a significant edge. Wix is the first CMS to offer native AI visibility for LLM-based search engines, positioning it ahead in the evolving landscape of online discovery. This technological leadership is crucial as the complexity of building a successful website, especially one that interacts with AI agents and LLMs, is increasing, making a robust platform like Wix more essential.

However, Wix faces vulnerabilities in highly specialized niches. For instance, while its commerce offerings are growing, it may lack the depth of e-commerce-specific features found in platforms like Shopify, which dominates that segment. The emerging field of "vibe coding," while a significant opportunity with the BASE44 acquisition, is still in its early stages and presents challenges related to stability, SEO, and compliance (e.g., GDPR, accessibility) for full-blown websites. Wix's strategy to keep BASE44 separate acknowledges these different user intents. The company also observes a small but present decline in organic search traffic due to the rise of LLMs, a trend it is actively addressing with GEO.

Wix's strategic response to these competitive forces involves expanding its total addressable market through acquisitions like BASE44, which targets application development, and continuously enhancing its core offerings with AI to make its platform indispensable. The company's focus on both Self-Creators and Partners, with tailored product roadmaps and a commitment to innovation, aims to capture market share across the spectrum of digital creation needs.

Outlook and Guidance: Sustaining Momentum Towards Rule of 45

Wix's outlook for 2025 reflects a confident trajectory of sustained growth and profitability, building on the strong momentum from the first half of the year. The company is targeting a "Rule of 45" in 2025, a new milestone that underscores its commitment to balancing robust revenue growth with expanding free cash flow margins.

For the full year 2025, Wix has raised its total bookings outlook to $2.04 billion to $2.075 billion, representing 11% to 13% year-over-year growth. The total revenue outlook has been updated to $1.975 billion to $2 billion, an increase of 12% to 14% year-over-year. For Q3 2025, total revenue is expected to be between $498 million and $504 million, reflecting 12% to 13% year-over-year growth.

These projections are underpinned by several key drivers. Management anticipates increasingly stronger new user cohorts layering onto the platform, with new user cohort bookings growing over 20% exiting July compared to the prior year, excluding the impact of BASE44. The BASE44 acquisition is expected to contribute significantly, with an ARR of $40 million to $50 million by the end of 2025. Modest benefits from targeted pricing optimizations and continued ramping contribution from Wix Studio are also expected. Furthermore, the growing impact of AI products, such as the AI onboarding funnel and AI marketing agent, is a crucial factor in the anticipated second-half growth acceleration.

On the profitability front, Wix expects a non-GAAP total gross margin of approximately 69% for the full year 2025, with non-GAAP operating expenses projected to be around 49% of revenue. Despite incremental investments in AI marketing and headcount related to BASE44, free cash flow expectations remain unchanged at $595 million to $610 million, or 30% to 31% of revenue, due to higher bookings offsetting increased costs.

While the outlook is positive, management acknowledges macroeconomic uncertainties, particularly regarding the Business Solutions segment, which is more sensitive to consumer behavior and macro volatility. However, the strong performance of new cohorts provides confidence in the company's ability to navigate these challenges.

Conclusion

Wix.com is executing a profound transformation, evolving from a leading website builder into a dynamic digital creation and business management platform. Its early and sustained leadership in AI innovation, exemplified by products like the AI Website Builder, Wixel, Astro, and Generative Engine Optimization, is not merely enhancing existing offerings but fundamentally expanding its market reach and competitive moat. This technological prowess, coupled with a dual-engine growth strategy focused on both highly profitable Self-Creators and rapidly expanding Partners through Wix Studio, positions the company for sustained top-line acceleration.

The robust financial performance, marked by accelerating revenue and bookings growth, expanding margins, and strong free cash flow generation, underscores the effectiveness of Wix's strategic initiatives. The company's disciplined capital allocation, including a significant convertible note offering and ongoing share repurchases, provides financial flexibility while demonstrating a commitment to shareholder value. With a clear path towards achieving its "Rule of 45" target and a strategic vision that embraces the future of AI-powered online creation, Wix presents a compelling investment thesis for those seeking exposure to a technologically differentiated leader in the evolving digital landscape. The integration of vibe coding through BASE44 and the expansion into financial services further solidify its role as a comprehensive operating system for online businesses, promising incremental layers of growth and profitability in the years to come.