Is a Beat in the Cards for Wix.com's (WIX) Q2 Earnings?
Wix.com Ltd.’s WIX is scheduled to report second-quarter 2020 results on Aug 6.
For the second quarter, the company expects revenues in the range of $231-$233 million. The Zacks Consensus Estimate for revenues is pegged at $232.9 million, suggesting growth of 25.6% from the prior-year quarter.
The Zacks Consensus Estimate for second-quarter earnings stands at 23 cents, unchanged over the last seven days. The figure indicates a decline of 32.4% from the year-ago quarter.
Wix.com Ltd. Price and EPS Surprise
Notably, the company beat estimates in the trailing four quarters, the average surprise being 60.22%.
Factors to Note
Robust online selling activity courtesy of coronavirus crisis-induced e-commerce boom is expected to have driven collection. Consequently, this might get reflected in the company’s second-quarter results.
For second-quarter 2020, Collections are projected in the range of $255-$260 million. The Zacks Consensus Estimate for Collections is pegged at $260 million, suggesting growth of 30% from the year-ago reported figure.
Moreover, incremental adoption of innovative digital services including Editor X, Wix ADI, Wix Logo Maker, Wix Answers, Ascend by Wix, Wix Turbo and Wix Payments is expected to have driven the to-be-reported quarter’s performance.
Particularly, the company anticipates solid uptick in Wix by Ascend in the second quarter. Notably, new purchases of Ascend by Wix increased 136% year over year in April 2020. Further, management is banking on strong growth in selling activity of businesses with gross merchandise value (GMV) transacted on Wix — across all payment methods in April — surging 110% year over year.
Increasing popularity of the company's products instills optimism in the stock. Notably, shares of Wix have skyrocketed 137.4% in the year-to-date period outperforming the industry’s rally of 19.3%.
Wix has been undertaking measures to expand subscriber base with product roll outs and enhancements of existing portfolio of services. These user-friendly applications are likely to have witnessed robust adoption due to their easy-to-use and creative features. This, in turn, may have contributed to the to-be-reported quarter’s performance.
Notably, in the quarter under review, Wix rolled out extended eCommerce solution to aid merchants in boosting business with customizable storefronts and carts, and enable them to offer products across multiple channel with easy dropshipping and integrated payment processing capabilities.
Further, growth in stay-at-home trends due to COVID-19 induced shelter-in-place guidelines is expected to have increased the number of new registered users, premium subscriptions and cohort collections across many of its geographies.
In the last reported quarter, the company witnessed better-than-expected conversion and retention in user cohorts. The company added a total of 162K net premium subscriptions in the last reported quarter, which came in at 4.7 million as of Mar 31, 2020 (up 12% year over year). This trend is likely to have continued in the second quarter, sustained by the aforementioned increase in traffic due to COVID-19.
The Zacks Consensus Estimate for number of net premium subscriptions is pegged at approximately 5.05 million for the quarter under review.
Meanwhile, consensus for registered users is pegged at 180.7 million. In the first quarter, Wix had added 6.9 million new registered users. Registered users as of Mar 31, 2020 were 172 million, up 16% year over year.
During the second quarter, Wix announced partnership with Turkey-based telecommunication and technology service provider, Türk Telekom, with an aim to expand its presence in the country. Wix is now offered as part of Türk Telekom's bundled premium package for SMBs – boasting of 48 million subscribers, out of which over 1.5 million are active SMBs.
Although increasing investments on business expansion and strategic deals including product roll outs and partnerships favor growth prospects in the longer haul, these might have put pressure on the company’s bottom line in the second quarter.
Our proven model conclusively predicts an earnings beat for Wix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Wix has an Earnings ESP of +6.64% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks that Warrant a Look
Here are some other companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
Cogent Communications Holdings CCOI has an Earnings ESP of +11.66% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Synaptics SYNA has an Earnings ESP of +10.6 % and a Zacks Rank of 2.
Benefitfocus BNFT has an Earnings ESP of +6.25% and a Zacks Rank of 2, currently.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.