Wix (WIX) Investment Memo
Meera Equities 09.29.2020
What company or industry do you want us to cover?
We want to create a community of investors, make sure to subscribe and share!
Investment Thesis
We are extremely bullish on the following trends; the internet economy, digital assets & value creation, and no code. We believe Wix has created an innovative platform with quality re-occurring cash flow and potential that embodies all three.
Company Description
Wix.com Ltd is a cloud-based development platform provider for millions of registered users worldwide. It offers web templates, web editor, web builder, search engine optimization tools, logo maker, web hosting, and electronic mail marketing services.
Qualitative
Overview
Sector: Technology
Industry: IT Services & Consulting
Competitors: BLIN, WRSN, SYNC, TCX
Strategy: Drive growth through product development.
Maintain leadership in DIY website creation
Expand upmarket to professional creators, agencies, and global teams
Provide solutions for business to grow online
Business Model: Enable individuals and organizations to take their businesses, brands, and workflow online.
~3M new registered users per month
5M+ total premium subscriptions
Over 50% of new premium subscriptions com from FREE traffic sources
Market: Businesses, organizations, professionals, and individuals, including entrepreneurs and freelancers
The main focus has been users who are considering starting a business & medium-sized business
Now focusing on growing new user segment including mid-size and large enterprise-level companies by offering products targeting technically skilled users and web developers
Website building, a fraction of the Wix suite, has a $300B+ TAM
Moat: Product Excellence
“We believe that we do not compete with traditional web development firms as we focus not only on web development but also on creativity, technology, design, and complementary business solutions.”
One-stop shop
Grew into…
X-Factor: Editor X
Curated product for professional web designers, agencies, and global teams.
Launched in February of 2020 and includes; breakpoint precision, CSS grid, flexbox technology, custom code, integrated business applications, and other premium services.
The professional market expands TAM significantly.
Cash Cow: Creative Subscriptions
Creative subscriptions account for over 80% of overall revenue.
Yearly and multi-year subscription packages constituted approximately 84% of all net active premium subscriptions.
Efficient marketing spend has led to larger cohort growth and higher rates of user conversion increasing ARR.
$7.9B expected future collections over the next 8 years from existing cohorts – up 35% YoY.
Growth Opportunities:
Global Expansion: 43% of revenue comes from outside of North America
Expanded eCommerce: Product launched in June of 2020 and delivers “must-have” capabilities including; custom storefronts, payment solutions, integrated CRM, unified back office, and more.
Professional market: ~360M existing active domains and every time Wix’s capability improves, the DIY website builder opportunity also expands.
Quantitative
Risks
Wix is based in Israel and will have to carefully manage its exchange rate exposure. Additionally, macro geopolitical events could have an adverse effect on operating performance.
Wix conducts business worldwide and would be subject to any government regulations regarding the internet.
Wix is not yet profitable.
Learn Something
Company Materials: 20-F | Investor Presentation | Investor Relations
The Investor’s Field Guide: John Collison – Growing the Internet Economy
Brookings Institute: The Economy and the Internet: What Lies Ahead? *WARNING* This article was written in 2001, we would like to challenge our readers to imagine how the same article was written today, looks and reads in 2040.
20-F: SEC Form 20-F is a form issued by the Securities and Exchange Commission (SEC) that must be submitted by all "foreign private issuers" with listed equity shares on exchanges in the U.S.
