[ad_1]
Text size
According to Wix, customers aren’t sure whether to create new online stores or expand with outlets, services, and events in the brick-and-mortar world.
Dream time
Wix.
com stocks suffer after the website building software provider has cut its financial guidance for the full year and some customers stopped developing new websites.
In the second quarter, Wix (ticker: WIX) posted revenue of $ 316 million, up 34% year over year and slightly above the consensus forecast of $ 312 million on Wall Street. The company posted an adjusted loss of 20 cents per share, lower than what analysts were expecting 37 cents. Under generally accepted accounting principles, earnings were 66 cents per share, reflecting $ 110 million in unrealized gains on equity investments, mostly from
Montag.com,
which went public in June.
“As the story of the pandemic continues to develop, there is an uncertainty as to whether we are finished or whether another massive new wave is coming. For our users, this uncertainty means that they don’t know whether to create new online or offline stores, services and events, â€said Avishai Abrahami, Co-Founder and CEO, in a press release. “The result of this uncertainty is a slight slowdown in the creation of new websites for us, which is reflected in our financial data, where we are at the lower end of our expectations.”
Wix stock fell 19% to $ 209.50 around noon.
For the third quarter, the company expects revenues of $ 311 million to $ 317 million, which is below the consensus demand of $ 325 million. Wix reduced its full-year revenue forecast to $ 1.255 billion to $ 1.27 billion, from $ 1.28 billion to $ 1.29 billion previously. For the full year, free cash flow is expected to be $ 35 million to $ 40 million, down from $ 62 million in previous guidance to $ 72 million.
The company said the upper end of the forecast range for the full year reflects a potential improvement in the rates at which it attracts users and transforms users into subscribers, while the lower end reflects the possibility that conditions will remain uncertain, “leading to further declines the new user will be added and that certain partnerships in our pipeline will not be concluded until the end of 2021. “
CFO Lior Shemesh said in a statement that the company experienced more headwinds in the latter half of the quarter than we expected. He added that Wix had adjusted its guidance for the remainder of the year “to reflect ongoing uncertainty surrounding the pandemic as well as the timing of B2B partnership agreements.”
Wedbush analyst Ygal Arounian said in a research note that Wix says businesses are “freezing” online or in-store and are therefore “taking a break”.
He said the situation reflected short-term uncertainty and “companies taking a little break” rather than a long-term shift in fundamentals. “In the short term, it is clear that trends are slowing, at least temporarily, and that is definitely a challenge,” he wrote.
Arounian maintained an outperform rating on the stock with a price target of $ 340.
Write to Eric J. Savitz at [email protected]
[ad_2]
