Key Takeaways
- Wix plans to eliminate approximately 1,000 positions — representing roughly 20% of total employees — marking its most significant workforce reduction to date.
- The decision comes after disappointing Q1 results erased one-third of the company’s market value overnight; shares are down approximately 50% this year.
- First-quarter results revealed a $57.5 million deficit even as revenue increased 14% to $541 million, with operational costs soaring 50%.
- The Base44 AI platform, purchased for $80 million, is expanding rapidly — reaching $150 million in annual recurring revenue by May — but driving significant expenditures.
- A $1.6 billion stock repurchase program has done little to restore investor confidence.
The web development company posted a first-quarter deficit of $57.5 million, marking a dramatic shift following multiple quarters of profitability. While revenue grew 14% to reach $541 million, operational expenditures jumped 50% to $423 million. Cash generation fell 21% to $112 million.
Shares have declined nearly 50% since the start of January. Following last week’s quarterly report release, the stock plunged an additional third in just one trading day.
The workforce reductions are now imminent. The company is preparing to cut approximately 1,000 employees — about 20% of its 5,277-person workforce. Over 60% of staff members work from Israel.
Management has cited artificial intelligence as a catalyst for the organizational changes. With AI tools increasingly handling development and design functions, numerous positions have become obsolete.
Earlier in 2025, executives mandated a full return to in-person office work, which sparked considerable internal pushback. During Q1, headcount only decreased by 63 employees. The planned reductions represent a far more aggressive approach.
Base44: Rapid Expansion With Substantial Costs
A significant portion of Wix’s current expansion narrative centers on Base44, the vibe-coding technology it purchased for $80 million. Created by Maor Shlomo, the platform enables users to create software through natural language commands.
Base44’s annual recurring revenue reached $150 million by May, exceeding projections. However, this expansion carries substantial financial implications. Aggressive marketing investments, increasing computational expenses, and ongoing acquisition-related compensation to Shlomo are all pressuring profitability.
The company paid Shlomo $38 million during Q1 alone, with additional disbursements scheduled for later this year. Two Super Bowl advertisements — one promoting Wix and another for Base44 — further inflated marketing expenditures.
The company is simultaneously developing a proprietary AI model to support Harmony, its AI-powered website creation tool. CEO Avishai Abrahami indicates it will eventually enhance precision and reduce inference expenses, though currently it represents another major cost center.
Stock Repurchase Program Fails to Restore Confidence
This past March, the company initiated a $1.6 billion share buyback program — effectively depleting most cash holdings, which dropped to $900 million. The strategy was designed to demonstrate management’s conviction to shareholders.
The approach hasn’t succeeded. Share prices continue declining, pressured by widespread concerns that the core website-building business faces obsolescence as artificial intelligence enables anyone to launch sites for minimal monthly fees.
Investor concern surrounding software companies has intensified broadly. While the company doesn’t function as a conventional SaaS enterprise, it has been swept up in the same negative market momentum.
Operational costs as a percentage of revenue surged from 21% in Q1 2025 to 35% in Q1 2026 — a shift that has alarmed market participants. The company’s market capitalization currently sits at approximately $2 billion.
Base44’s annual recurring revenue hit $150 million in May 2026, according to company disclosures.
