Website maker sees strong second-quarter as businesses rush online

TEL AVIV (Reuters) - WIX.O, which helps small businesses build and operate websites, expects a strong second quarter as companies rush online amid lockdowns to tackle the coronavirus pandemic, it said on Thursday.

After posting a small net loss in the first quarter due to higher marketing expenses, Israel-based Wix said it enjoyed a strong April.

With growth in the United States and Europe robust, it recruited a net 3.2 million new users last month, up 63% from April 2019 and a record monthly high, while the number of premium subscriptions jumped 207% from a year earlier.

“As soon as people understood we were going into lockdown, there was a massive uplift,” said Nir Zohar, Wix’s president.

He said demand for an online presence soared from businesses ranging from restaurants to fitness trainers, while people who lost their jobs sought to make websites.

“Everyone is trying to position themselves online,” Zohar told Reuters.

Wix, whose Nasdaq-listed shares are up 36% this year, offers free basic features for setting up websites, but users must pay for extra services such as shopping carts, individual web addresses and site traffic analysis.

It estimated second-quarter revenue of $231-$233 million for an annual gain of 25-26%, which it said was higher than its previous assumptions. But it withdrew its 2020 outlook due to uncertainty about the second half of the year.

Free cash flow is expected to rise as much as 40% in the second quarter to $41-$43 million.

“We believe that the year as a whole is going to be stronger than we originally expected, but trying to quantify it now is impossible,” Zohar said.

In the first quarter, Wix posted a loss of 1 cent per share excluding one-time items, compared with earnings of 3 cents a year earlier. Revenue grew 24% to $216 million.

It added 6.9 million registered users to reach 172 million, while premium subscriptions were up 12% to 4.7 million.

“We are investing more in marketing because of the huge demand, to make sure we are taking more market share,” Chief Financial Officer Lior Shemesh said.

Reporting by Steven Scheer; Editing by Mark Potter