UPDATE 1-Israel's Wix.com Q2 revenue jumps, raises 2014 outlook

Wed Aug 6, 2014 11:23am EDT

* Q2 revenue up 82 pct to $33.9 mln vs $31.8 mln forecast

* Q2 loss/shr ex-items $0.27 vs $0.31 loss/shr forecast

* Raises 2014 revenue estimate to $136-$138 mln

* Sees Q3 revenue of $35-$36 mln

* Shares rise 3.5 pct to $17.97 on Nasdaq (Adds share reaction)

By Steven Scheer

JERUSALEM, Aug 6 (Reuters) - Wix.com, which helps small businesses build and operate websites, reported a smaller loss than expected in the second quarter and raised its 2014 outlook as more firms convert to paid services from free ones.

Israel-based Wix, which raised more than $122 million in an initial public offering on the Nasdaq last November, said its quarterly loss excluding one-off items narrowed to 27 cents per share from 72 cents a share in the same period last year, as revenue surged 82 percent to $33.9 million.

Analysts were expecting Wix to lose 31 cents per share on revenue of $31.8 million, according to Thomson Reuters I/B/E/S.

"We anticipate growth will continue to accelerate," Chief Financial Officer Lior Shemesh told Reuters on Wednesday.

Wix had 50.3 million registered users as of June 30 and added 110,000 premium subscriptions in the second quarter to reach 1.019 million - up 62 percent over the past year.

The company works on a so-called freemium model where basic features for setting up websites are free but users need to pay for extra services such as shopping carts, individual web addresses or site traffic analysis.

Company officials believe small businesses will pay for more tools and Wix has responded by adding more premium products.

On Wednesday, it launched WixHotels, a booking engine aimed at hotel and bed and breakfast owners.

PROFITS TO FOLLOW

Wix raised its full-year revenue forecast to $136-$138 million from $130-$133 million, which would give a 69-71 percent increase over 2013. It was the second straight quarter the company has raised its forecast. For the third quarter, Wix estimates revenue will be $35-$36 million.

Wix plans to expand its global footprint further into Latin America and in Russia, Eastern Europe and Asia-Pacific in 2015.

"The most important thing is to take more market share and to increase the number of customers," Shemesh said. "Growth is the most important thing. Profitability will follow later, big time."

"We will enter 2015 with a very solid financial status," Shemesh said, adding that the company would provide 2015 estimates when it releases fourth-quarter results.

Wix's Nasdaq-listed shares rose 3.5 percent to $17.97 on Wednesday but they are down more than 30 percent so far in 2014.

Nir Zohar, Wix's president, said there was plenty of room to grow since the company still had less than 1 percent of the market, but most players have small shares. As a result, Wix is not active in the mergers and acquisition market.

"We are not looking to be bought," Zohar said. "We took the company public to build a great business ... At this stage, the aim is to grow."

He said that rather than spend on an acquisition, it was more cost effective to market the company online. Still, he said Wix was looking at new technologies and complimentary products. (Reporting by Steven Scheer; editing by David Clarke and Louise Heavens)