Key Highlights
- Wix shares plummeted to a 52-week low of $55.88, shedding approximately 30% following earnings release
- First quarter EPS of $0.68 significantly underperformed against the $1.21 Wall Street consensus
- Top-line results showed 14% year-over-year growth to $541.2 million, slightly missing the $543.8 million forecast
- Company unveiled “Wix Harmony,” a proprietary AI platform powered by an in-house developed large language model
- Wix completed a substantial share buyback through a Dutch Auction tender offer, repurchasing 17.5 million shares at $92 per share for $1.6 billion
Shares of Wix.com (WIX) experienced a dramatic selloff on Tuesday, plunging nearly 30% following the release of disappointing first quarter 2026 financial results that underperformed expectations across key metrics. The stock bottomed at $55.88, marking a new 52-week low, before recovering modestly to trade near $58.75 by afternoon trading.
The company’s adjusted earnings per share for the first quarter registered at $0.68, representing a significant shortfall compared to analyst expectations of $1.21. This figure also marks a substantial decline from the $1.55 per share reported during the comparable period last year.
On the revenue front, Wix generated $541.2 million during the quarter, reflecting a 14% increase from the prior year period. While demonstrating healthy growth momentum for a company of Wix’s size, the figure nonetheless fell slightly short of Wall Street’s $543.8 million projection.
Executive leadership attributed some of the quarter’s challenges to geopolitical tensions stemming from the continuing conflict in Israel. The company specifically highlighted productivity disruptions affecting its Partners business segment.
Despite these obstacles, the Partners division delivered 19% revenue expansion to $203.4 million. However, company officials acknowledged that this business unit experienced a slower launch to the quarter than initially anticipated.
Introduction of Wix Harmony AI Platform
The most significant strategic development emerging from the quarter was the introduction of “Wix Harmony,” which operates on a proprietary large language model developed entirely within the company. This represents a deliberate pivot away from dependency on external AI tools.
Executives characterized Harmony as the inaugural offering in what will become a comprehensive portfolio of proprietary AI systems developed by Wix. The strategic objective centers on creating AI functionality that rivals cannot easily duplicate.
The Creative Subscriptions division, representing 70.6% of overall revenue, expanded 13% year-over-year to reach $382 million. Meanwhile, Business Solutions revenue demonstrated stronger momentum with 17% growth to $159 million.
Annual recurring revenue reached $1.9 billion, marking a 15% year-over-year increase. Total bookings registered at $585 million, similarly advancing 15%.
A particularly encouraging data point emerged from cohort analysis: bookings generated from the Q1 new user cohort surged nearly 50% compared to the same period last year. Company leadership attributed “Base44” as playing a significant role in driving this growth.
Substantial Capital Return Through Share Repurchase
During April, Wix finalized a modified Dutch Auction tender offer, acquiring approximately 17.5 million shares at a price of $92 per share. The total transaction value amounted to roughly $1.6 billion.
This transaction reduced total outstanding shares to approximately 41.8 million as of May 11, 2026 — representing nearly a 30% decrease in the share count.
Adjusted gross margin registered at 66%, declining from 69% in the year-ago period. Non-GAAP operating income contracted sharply to $27.8 million from $99.8 million twelve months earlier. Operating margin compressed to 5% from 21%.
Cash and cash equivalents on the balance sheet totaled $1.34 billion as of March 31, 2026, increasing from $311.4 million at the close of 2025 — partially reflecting the timing and financing structure of the tender offer transaction.
Free cash flow during the quarter amounted to $75 million. When excluding acquisition-related expenses, the normalized figure would have reached $112.3 million, equivalent to 21% of quarterly revenue.
Wix reaffirmed its full-year guidance calling for mid-teens percentage growth in both revenue and bookings. Free cash flow margins are projected to settle in the high-teens range due to reduced interest income following the substantial cash deployment, interest expenses associated with a $500 million credit facility, and foreign exchange headwinds from the strengthening Israeli shekel.
Certain product launches targeting professional users reportedly experienced delays, which could potentially impact near-term growth trajectories.
Wix currently carries a Zacks Rank of #3 (Hold).
