Wix (WIX: US) 1Q Results

ISRAELI TECH WIX.com Ltd. (NASDAQ:WIX) May 10, 2016 WIX (WIX: US) 1Q16 earnings: Strong start to the year and increased guidance across all metrics; Reiterating outperform, PT raised to $30 Results summary: WIX reported strong 1Q results that exceeded management’s pervious guidance and market consensus. The company reported revenue of $61.6 million and collections of $75.7 million, above street expectation for revenue of $60.7 million, an increase of 38% and 35% compared to 1Q15. Excluding the impact of foreign currency exchange rates, revenue and collections growth was 41% and 39%, respectively. Non-GAAP net loss per share was $(0.30), similar to the non-GAAP net loss in 1Q15, and slightly better than street expectation for ($0.31). Adjusted Ebitda for 1Q16 was $2.7 million, above street consensus of $1.7 million. On the back of the strong start of the year management increased its FY guidance across all metrics - revenues in FY16 are now expected to be in the range of $274-$277 million (up from $270-$274 million, street -$269 million), and adjusted Ebitda in the range of $30-$32 million (up from $27-$30, street - $29.5 million). Collections for 2016 full year are expected to come at $320-$324 million up from $314- $320 million. For 2Q management guided revenues in the range of $66-$67 million slightly above the street estimate of $65.6, and collections in the range of $77-$78 ($79-$80 with FX neutral to 1Q15). Adjusted Ebitda is expected to be in the range of $6.5-$7.5 million, above street expectation of $4.06 million. The company updated on the call that it is on schedule with both new products that it has mentioned in the beginning of the year, and that it plans to make an announcement about one of them in the up-coming Investor and Analyst Day that will be held on June 8. First quarter highlights: Record registered users and premium subscriptions adds - Wix added in the first quarter record number of 170k premium subscribers, up from 124K in 4Q15 and 138K in 1Q15, driven by the adoption of the New Editor & vertical launches. We note that 1Q is typically the strongest quarter of subscriptions adds. 1Q adds reflects a 23% increase yoy and brings the total number of premium subscribers to 1.94 million (up from 1.37 million in 1Q15, 41% increase yoy). This quarter 40% of new subscriptions were from users registered in the current quarter (vs 37% in 4Q15), while 60% came from prior quarter user cohorts (63% in 3Q15), in line with previous cohort behavior. Average collections per subscription increased 7% over 4Q15 driven by launch of new verticals. Registered users also grew by record ~5.3 million users (15% increase yoy) to 82 million total at the end of the quarter (32% increase yoy). High marketing expenses – In the first quarter S&M expense was $39.4 million, 52% of collections compared to 56% in 1Q15 and vs. 53% in 4Q15. This expense includes the Kung Fu Panda Super Bowl commercial and related marketing campaign. Management still expects Sales and marketing spending to fall to a range of 43% to 45% of collections for the full year 2016, down from 48% in 2015. R&D in the Company Description quarter was 26% of collections vs. 28 % in 1Q15. Shift toward annual subscribers continues - Annual subscriptions accounted for 77% of new Wix is a global web development subscriptions during 1Q16 compared to 79% in 4Q15 and 74% in 1Q15. Of the total subscription base, platform that provides a do-it- 84% are annual compared to 83% in the end of 4Q15. yourself website builder for individuals and small-businesses, Valuation – We maintain outperform rating and raise PT to $30 (up from $27) as we factor higher enables them to take their collections (high range of management’s updated guidance) and a slightly higher multiple for 2016 to businesses, brands and work flow reflect the strength of the business and the positive outlook. Our new price target is based on 4.5x online. The company operates in EV/Non GAAP revenue 2016E (collections) vs. our prior PT which was based on 4.0x EV/collections, 190 countries and offers its implying approx. 20% upside from current levels. Our multiple is based on a comparable analysis that platform in 13 different languages. includes SaaS, SMB online presence and services companies. We maintain our Outperform rating as we believe in Wix strong fundamentals and competitive position that will drive future growth and CF. Main risks – Slowdown in subscriptions adds, increased S&M spending in order to add registered users and convert them to subscriptions (such as heavy promotional discounts), increased competition and currency fluctuations. Makor Securities Makor Capital Makor Capital Markets Makor Securities London Ltd Rogovin Tower Makor Securities London Ltd Makor Securities London Ltd 7/8 Savile Row 2nd Floor Menachem Begin 11 (Geneva Rep Office) (Paris Rep. Office) London W1S 3PE, ENGLAND 52689 Ramat Gan, ISRAEL 27 rue de la Croix-d’Or 51 rue Francois Premier +44 207 290 5777 +972 3 545 3777 1204 Geneve, SWITERLAND 75008 Paris, FRANCE +41 223 106 916 +33 1 42 99 69 41 1

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Makor Securities Makor Capital Makor Capital Markets Makor Securities London Ltd Rogovin Tower Makor Securities London Ltd Makor Securities London Ltd 7/8 Savile Row 2nd Floor Menachem Begin 11 (Geneva Rep Office) (Paris Rep. Office) London W1S 3PE, ENGLAND 52689 Ramat Gan, ISRAEL 27 rue de la Croix-d’Or 51 rue Francois Premier +44 207 290 5777 +972 3 545 3777 1204 Geneve, SWITERLAND 75008 Paris, FRANCE +41 223 106 916 +33 1 42 99 69 41 3