Financials
Financials — What the Numbers Say
1. Financials in One Page
Wix is a $2.0B-revenue website-building SaaS that just completed a five-year journey from chronic GAAP losses to genuine cash generation — FY2025 free cash flow of $574M (28.8% margin) on revenue that compounded at a 15% rate for the last five years. The cash conversion looks elite, but two things make the picture harder than the headline. First, GAAP operating margin went from +9.0% in Q2 2025 to -12.9% in Q1 2026 as the Base 44 AI acquisition, Harmony AI investments, and a stronger Israeli shekel landed on the cost base. Second, in April 2026 management executed a $1.6B Dutch auction tender at $92 a share — buying back 30% of shares and pushing the company from net cash into a materially net debt position just before the stock fell to $53. The single financial metric that matters now is FCF margin ex-acquisition costs in FY2026 — guidance says high-teens (post-tender capital structure), and the gap versus FY2025's 28.8% will decide whether this is a re-rated cash compounder or a re-leveraged turnaround.
Revenue FY2025 ($M)
Revenue Growth YoY
FCF Margin FY2025
Free Cash Flow ($M)
Gross Margin FY2025
Share Price (USD)
The single insight that matters: FY2025 FCF margin of 28.8% is the highest in company history, but FY2026 guidance is for high-teens FCF margin post-tender — a 800-1,000 basis-point compression because of foregone interest on liquidated cash, new debt service on a $500M credit facility, and a $64M FX headwind from the Israeli shekel. The market is no longer paying for a 30% cash-margin compounder.
2. Revenue, Margins, and Earnings Power
Wix sells subscriptions to its cloud website-building platform plus payments take-rate on Wix Stores commerce. Revenue is recognized over the subscription term, while cash is collected up front — that timing gap is why bookings consistently lead revenue and why GAAP operating earnings have lagged cash flow by years. Revenue has compounded at 15.2% over the last five years and 25.6% over the last ten, with growth re-accelerating from a Covid-pull-forward digestion trough (9.3% in FY2022) back to 13.2% in FY2025. Gross margin sits at a healthy 68.1% — typical for application software but not best-in-class — and has expanded ~600 basis points since the company built out its payments and infrastructure businesses in 2020-21.
Look at the line above and the operating-income line tells the story: ten straight years of GAAP losses, a sudden cross above zero in FY2024 (+$100M), and then a sharp reversion in FY2025 down to barely-positive $2M. That FY2025 number is dangerously fragile — Q3 swung to a $7M loss and Q4 to a $73M loss as acquisition-related expense, AI build-out, and FX hit simultaneously. The full-year operating line is no longer a credible run-rate.
Quarterly trajectory — the inflection that matters
The chart shows a clean profitability ramp through Q2 2025 followed by a violent reversal. Three things compressed margin: (a) closing the Base 44 AI website-builder acquisition and recognizing related expense, (b) ramped investment in Wix Harmony (the next-generation AI platform), and (c) the Israeli shekel strengthening versus the dollar — Wix's research and engineering payroll is almost entirely shekel-denominated, so a stronger ILS expands the cost base in dollars. Management is calling this a $64M FY2026 expense headwind net of hedging.
The cost structure under the hood
Research-and-development as a percent of revenue jumped 430 basis points in FY2025 (from 28.1% to 32.4%) as AI investment kicked in. Selling-and-general expense also reversed lower-margin discipline. This is not yet operating-leverage compounding — it is an investment cycle that needs to pay back.
3. Cash Flow and Earnings Quality
Free cash flow is cash generated from operations after capital spending. For Wix, FCF is the right metric — revenue is collected up front as subscription bookings, then recognized ratably, so deferred revenue acts as a permanent working-capital tailwind that keeps operating cash flow well above GAAP net income. The chart below makes the divergence visible.
Two things stand out. First, GAAP net income has lagged free cash flow by $400M to $500M in each of the last two years — that is not a temporary divergence; it is the structural result of large stock-based compensation (~$237M annually, ~12% of revenue) and deferred-revenue mechanics. Second, FCF stepped up from $30M in FY2021 to $574M in FY2025 — that's an 18x increase against revenue that only 1.6x'd, evidence that the model is now genuinely scaling.
FCF margin trajectory
The FCF margin trajectory tells the bull case: from negative in FY2022 to 28.8% in FY2025, a 3,000-basis-point improvement in three years. This is best-in-class for software at this scale. But management's own FY2026 guidance calls for high-teens FCF margin on a post-tender basis, or low-to-mid 20s on a pre-tender basis — so the high-water mark is already in the past.
The earnings-quality gotchas
The single biggest earnings-quality flag: Stock-based compensation of $237M is 4.4x GAAP net income of $54M. If you mark-to-market SBC instead of accepting it as non-cash, FY2025 economic earnings are closer to negative $180M than the headline positive $54M. SBC-adjusted FCF (FCF less SBC) is only $337M, an 16.9% margin — still healthy, but a long way from the 28.8% headline.
4. Balance Sheet and Financial Resilience
Wix's balance sheet just went through a violent transformation. At the end of FY2025 the company carried $1.18B of cash against $1.13B of debt — barely net debt of $406M. After the April 2026 modified Dutch auction tender, $1.6B of cash was returned to shareholders at $92 per share, funded by a combination of liquidating the cash pile, drawing a new $500M credit facility, and issuing $1.15B of convertible notes in 2025. The company moved from a comfortably-funded position to a materially-leveraged one in one transaction.
The chart hides the post-tender state: as of May 2026, cash is materially below $1.2B and debt is above $1.6B + $500M facility drawn. Wix is now operating with roughly $1.0B+ of net debt versus negative net debt twelve months earlier.
Negative book equity isn't a red flag here
Shareholders' equity is negative $366M at year-end FY2025 and will be substantially more negative after the April 2026 tender (total assets $2.61B, total liabilities $2.98B, accumulated deficit $851M). This is not an insolvency signal — it reflects the cumulative effect of (a) $1.6B+ of buybacks at prices well above book value and (b) the historic accumulated deficit from a decade-plus of GAAP losses. Negative book equity is a common feature of cash-generative software companies that aggressively repurchase stock (GoDaddy carries similarly negative equity for the same reason).
The real resilience question is interest coverage and refinancing risk:
Net debt to EBITDA looks ugly at 12x but is misleading. The right denominator for an asset-light subscription business is FCF, not GAAP EBITDA — and net debt to TTM FCF is only 0.7x. That said, the convertible note structure means refinancing risk is real on a five-year horizon, and a $500M credit facility carries floating interest expense at a moment when free cash flow margin is compressing.
5. Returns, Reinvestment, and Capital Allocation
This is where the story gets bolder — and more controversial. Wix has chosen, definitively, to be a capital-return story rather than a reinvestment-and-grow story. Over the last five years management has spent $1.6B+ on buybacks while keeping capex below 5% of revenue and making only opportunistic acquisitions.
The shift is unmistakable: capex peaked at $69M in 2022 (HQ buildout) and is now at $9M, while buybacks have grown from $200M to $575M in four years. Then in April 2026 the company executed an additional $1.6B tender at $92/share, reducing share count from ~55M to 41.85M as of May 11, 2026 — a 24% reduction. This is one of the most aggressive capital-return programs in mid-cap software.
Share count — the per-share story
After a decade of share-count creep from SBC dilution (49M → 57M from 2018-2022), the company began net-shrinking the share count in 2024. The 2026 step-down to 41.8M is dramatic — and was executed at $92/share, well above the current $53 price. Management bought back stock 73% higher than it now trades.
Returns on capital
GAAP ROA went positive for the first time in FY2023, peaked at 7.2% in FY2024, and slipped back to 2.1% in FY2025 as Q3/Q4 losses dragged the full-year number down. The honest economic-return measure — free cash flow to total assets — tells a stronger story: it stepped from 1.5% in FY2021 to 25.1% in FY2024 and held at 22.0% in FY2025. Wix only began earning back its cost of capital in FY2024 — one year before management aggressively levered the balance sheet to buy back stock. That timing is either decisive (management bought back below intrinsic value when nobody else would) or premature (returns were not yet durable enough to support that leverage).
Capital allocation judgment: The buybacks at $92 look ill-timed against today's $53 price, but the right metric is forward FCF per share. At FY2026 FCF of $400M on 42M shares, that's ~$9.50 FCF/share — vs ~$10.45 FCF/share if all 55M shares had been kept and FCF stayed at $574M. The tender adds value only if FY2026 FCF holds above ~$400M (FCF margin above ~17%). Management's own high-teens guidance puts this near the break-even.
6. Segment and Unit Economics
Wix does not break out segment-level operating income in its public filings; revenue is reported by Creative Subscriptions (the legacy website-builder business) and Business Solutions (commerce take-rate, payments, third-party apps). Detailed segment economics have to be reconstructed from disclosures.
The two segments behave very differently. Creative Subscriptions is the core, gross-margin-rich (83% GAAP gross margin) website-platform business growing 11% in FY2025 — durable but not exciting. Business Solutions (payments, take-rate on Wix Stores, third-party app marketplace) is now the economic engine: growing 18% YoY and structurally lower-margin (32% GAAP gross margin), but with embedded take-rate optionality as commerce GMV scales. The mix shift toward Business Solutions explains why blended gross margin has flattened — not deteriorating quality, but a deliberate shift toward the larger TAM.
Self-Creators vs Partners: Wix also discloses revenue by buyer type. Partners (agencies, designers using Wix Studio) and Self-Creators with Studio products together now contribute the majority of new bookings — the "professional / B2B" cohort grows ~30%+ and is the strategic priority. Wix's new disclosure of cohort bookings (Q1'26 new user cohort bookings +50% YoY) is meant to highlight this dynamic — but it's a non-GAAP metric without a long history.
7. Valuation and Market Expectations
The market just priced Wix as a broken story. The stock fell from a recent high near $230 in early 2025 to $53.70 as of May 26, 2026 — a peak-to-current decline of 77%. RBC Capital cut to Sector Perform with a $60 price target (down from $90) after the Q1 2026 miss; the stock had already dropped 38% YTD before the cut.
Share Price (USD)
Market Cap ($M)
Enterprise Value ($M)
TTM Revenue ($M)
WIX now trades at 8.3x trailing non-GAAP P/E — a 68% discount to the sector median of 26x and a 68% discount to its own 5-year average. EV/Sales of ~1.6x is in line with low-growth SaaS like BigCommerce, not high-quality 13%-grower territory. By any historical standard the stock is screening cheap.
Historical multiple
The compression from 18x in 2020 to 1.6x today is mostly justified by (a) the slowdown from 30%+ growth to 13%, and (b) the post-tender leverage. But the stock has now compressed below crash-era 2022 levels despite materially better cash flow.
Bear / base / bull frame
The range is asymmetric. Bear scenario -35%, bull scenario +105%, base +30%. The width reflects how much depends on whether the Q3/Q4 2025 margin reversal is investment lag or structural.
8. Peer Financial Comparison
WIX screens with the lowest EV/Revenue (1.6x) and the lowest P/E (8.3x non-GAAP) in the peer set despite the highest FCF margin (28.8%) and one of the higher gross margins (68%). The catch is that revenue growth (13.2%) sits below SHOP and TOST and only modestly above GDDY. The peer that screens closest in profile is GoDaddy: similar SMB website-builder model, similar low-teens growth, similar high FCF margin (22%) — and GoDaddy trades at 2.4x WIX's EV/Revenue and 2.3x WIX's P/E. That gap is the heart of the bull case. Either GDDY is overvalued, or WIX is being penalized for a transient Q3/Q4 margin shock that will normalize.
The peer gap that matters: WIX trades at a 60% discount to GoDaddy on EV/Revenue and a 56% discount on P/E despite comparable growth, gross margin, and FCF profile. Half-closure of the gap is consistent with ~50%+ upside scenario; widening on continued operating margin deterioration is consistent with another ~30% downside.
9. What to Watch in the Financials
The financial verdict
What the financials confirm: Wix has built a genuine cash-generation machine. Free cash flow rose from $30M to $574M in four years — and a 28.8% FCF margin in FY2025 puts it among the most efficient SMB SaaS companies at any scale. The model has subscription economics that drive deferred revenue tailwinds, an asset-light cost base, and a paths-to-leverage cost structure.
What they contradict: GAAP operating income that swung negative again in H2 FY2025 and Q1 FY2026, and FY2026 guidance for high-teens FCF margin post-tender (down from 28.8%), point to a quality reset, not just a capital-structure reset. Stock-based comp at 12% of revenue means the cash flow understates the real cost of running the business. Negative shareholder equity is structurally fine but signals how far the company has chosen to lever its balance sheet for buybacks executed at much higher prices than today.
The first financial metric to watch is FY2026 FCF margin ex-acquisition costs. Management has guided to high-teens. If the Q2 2026 report (early August 2026) confirms that trajectory — and Q3/Q4 2025's GAAP operating losses prove to be a one-off — the post-tender capital structure works at the current 8x P/E. If FCF margin drifts toward the low-teens or worse, the tender at $92 ages badly and the balance sheet becomes the constraint.