TEL AVIV (Reuters) - Wix.com, which helps small businesses build and operate websites, reported higher than expected profit in the second quarter and raised its revenue forecast for 2019 amid solid sales growth from a host of new products.
Its shares rose 3.2% to $150.81 in early trading on Wednesday after falling as much as 5% before the market had opened on a belief of some conservatism in its annual outlook.
“With the stock up 62% year to date, we expect Wix to continue to grind higher as it turns into a platform play for website solutions,” said Jefferies analyst Brent Thill, who raised his price target to $175 from $165.
Wix earned quarterly net profit of 34 cents a share excluding one-time items, compared with 29 cents a year earlier. Revenue grew 27% to $185.4 million. It was forecast to earn 18 cents a share excluding one-offs on revenue of $184 million, according to I/B/E/S data from Refinitiv.
The Israel-based firm offers free basic features for setting up websites. Premium users pay extra to use their own domains and the removal of advertisements as well as newly launched applications.
Wix has launched several new products including development tool Corvid, all-in-one business platform Ascend and Wix Payments, which allows firms to manage income.
“We are starting to see a good sign of monetisation of these products... that enables us to generate higher growth in the future,” Chief Financial Officer Lior Shemesh told Reuters.
This led Wix to raise its 2019 outlook and the second half is expected to be better than the first, Shemesh said.
The trio of new products “will be our main growth drivers the next couple of years,” he added.
Of Wix’s more than 150 million registered users, 4.5 million pay for subscriptions, with the number of conversions from free to paying up 29% in the last few quarters.
Wix raised its 2019 revenue forecast to $761-$765 million from a previous forecast of $758-$763 million, up 26-27% from 2018. Analysts were expecting $762 million.
For the third quarter Wix forecast revenue of $196-$198 million, up 26-27% from a year earlier.
Shemesh said Wix generated cash of $30 million in the quarter, pushing cash reserves to $850 million. He said the company was not looking for acquisitions for now.
Additional reporting by Tova Cohen; Editing by Jan Harvey and Ken Ferris