By Steven Scheer
JERUSALEM (Reuters) -Wix.com, which helps small businesses build and operate websites, said it would soon start turning a profit in its bottom line, after reporting a wider-than-expected loss in the first quarter.
Since its founding in 2006, the Israeli company has been in the red, with company officials citing the need for large investments to build the company for long-term growth.
“Now we are going to see the fruits of it,” chief financial officer Lior Shemesh told Reuters. “We are not going to do the same investments that we have done in the past so you can definitely expect more profitability in the near future.”
Shemesh declined to give a timetable at this time, noting the company will provide details of its three-year plan at an analysts’ day on Thursday. However, he said Wix expects its free cash flow margin to reach 20% by 2025, from about 5% now.
The company said on Monday it lost 72 cents per share excluding one-off items in the first quarter, compared with a loss of 56 cents a year earlier. Despite what Shemesh called headwinds from “volatility and uncertainty” from weaker global economic growth, revenue grew 14% to $342 million.
Wix, whose shares have fallen 55% so far in 2022, projected revenue growth of 10-13% in 2022 as long as the macro environment does not deteriorate further. It also sees “headwinds” of $20 million in revenue from an annual change in foreign exchange rates.
Revenue was $1.27 billion in 2021 and analysts expect $1.45 billion in 2022 for a gain of about 14%.
Nir Zohar, Wix’s president, noted there is a slowdown in Internet activity after two years of steep growth but companies will still need to create websites and continue doing business online. “We believe that is going to keep expanding over the next few years,” he said.
Wix has halted doing business in Russia and in certain areas of Ukraine, which the company said will hurt revenue this year by $3 million.
For the second quarter, Wix estimated revenue of $342-$346 million, representing annual growth of 8-10% but below analysts’ forecasts of $356 million. The forecast included a negative impact of closing operations in Russia and certain regions of Ukraine as well as foreign exchange effects.
(Reporting by Steven Scheer; editing by Jason Neely and Susan Fenton)