Wix.com Ltd. (NASDAQ:WIX) Q3 2025 Earnings Call Transcript

Wix.com Ltd. (NASDAQ:WIX) Q3 2025 Earnings Call Transcript November 19, 2025

Wix.com Ltd. beats earnings expectations. Reported EPS is $1.68, expectations were $1.45.

Operator: Good day, and thank you for standing by. Welcome to Wix.com Ltd.’s Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising when your hand is raised. Please note that today’s conference is being recorded. I will now hand the conference over to your speaker host, Emily Liu, Head of Investor Relations. Please go ahead.

Emily Liu: Thanks, and good morning, everyone. Welcome to Wix.com Ltd.’s Third Quarter 2025 Earnings Call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder, Nir Zohar, President and Co-Founder, and Lior Shemesh, our CFO. During this call, we may make forward-looking statements, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and in our interactive analyst center on the Investor Relations section of our website, investors.wix.com. With that, I’ll turn the call over to Avishai.

Avishai Abrahami: Thanks, Emily. With Vibe Coding and our decades of proven expertise in democratizing emerging technologies for everyone to enjoy, we will be able to deliver products that unlock entirely new value for small businesses and people. Let me start by setting the stage. When I think about Vibe Coding, I try to simplify things by breaking the world apart into two categories. One is the developer sphere. This is Claude code, cursor, Windsurf, and all these tools which are great for engineers. These tools integrate directly on the source code of a project, enabling complex technical programming which requires significant user expertise. The second sphere is where everyone else lives. The majority of humanity who do not code or even think they can code.

Suddenly, with Vibe Coding, they can create pieces of software that improve their personal lives or help to build their businesses, all by simply using natural language. For example, a school teacher can create a custom app to track attendance and post grades. A neighborhood restaurant can build an application to handle their staff schedule, another to manage vendors, another to sort inventory, and so on and so forth. These people can now build any type of application they need or want with zero coding knowledge. Bottom line, Vibe Coding is unlocking access for regular people to build software intuitively without any technical barriers. This story sounds exactly like Wix.com Ltd.’s story back in 2006. We did not invent websites back then. They were already widely available, but only to big companies with engineering budgets.

There was an absolute barrier for the average person. We knew there was a way to enable an online presence for everyone. This was and still is the mission of Wix.com Ltd. We intend to do for software what we did for websites, enabling everybody to build applications without any need for a developer. What’s different today is that the software application market is many, many times bigger than the website creation market. Think about it. That same neighborhood restaurant needs only one website, which they likely built on Wix.com Ltd., but they may need many applications to successfully run their business. Up until now, creating the application a business owner may want has been too expensive or completely inaccessible. Without this new tech, it probably would never have been built.

We are already seeing this huge opportunity materialize as the AI-powered app building space has grown exponentially over the past year, and we are taking a bigger and bigger piece of this pie. Base 44’s share of audience traffic increased from almost nothing to more than 10% in October. Among local tools, Base 44 is quickly proving to be a leader and the best solution on the market today, with enormous white space still ahead. Base 44 is also getting better fast. We recently launched our new builder, transitioning Base 44 from a predominantly user-reliant tool to an expert developer partner for everyone. The new builder represents a fundamental architectural advancement moving to an agent decoding environment with multi-agent layers. Base 44 can now validate, debug, refactor for performance, and fix its own work, making app creation faster, smarter, and more powerful than before.

Please do not mistake my obvious enthusiasm for Base 44 and the AI-powered app building opportunity as lack of excitement about Wix.com Ltd. It is no secret that we intended to release a new flagship product as early as this summer, and as CEO, I am clearly unhappy that I still cannot share it with you today. However, seeing it in our labs gives me more and more confidence that the wait will be worthwhile. I expect it early 2026 and truly believe that it will deliver great value to our users. I want to impart one last thought about the massive importance of building products that allow humans and AI to work in tandem. People building big tech projects, creating websites, or developing applications, whether engineers or not, need to be able to control the outcome of their creation.

This is why we continue to put a huge emphasis, both at Wix.com Ltd. and at Base 44, on curating the right combination of visual editing capabilities for humans and powerful AI Vibe Coding. This combination will allow for high-quality outcomes with less iteration, while giving humans the right level of control and calibration. The future of creation will be interactive, intelligent, accelerating, and we’re just at the cusp of this transformation. With that, I’ll turn it over to Nir.

Nir Zohar: Thanks, Avishai. We are pleased to see the new user cohort behavior in our core business from the first half of the year continue through Q3 and into October. These robust cohorts have been a key driver of our top-line growth, fueling the momentum we’ve seen throughout the year. They also provide a solid foundation for continued growth as we move into Q4 and 2026. Organic traffic continued to improve as more users actively searched for Wix.com Ltd. online, underscoring Wix.com Ltd.’s continuously improving brand awareness and top position platform for web creation. Solid traffic from paid channels also drove higher traffic as we cap robust demand while operating within our TROI guardrails. New users purchased more advanced website subscriptions, adopted more business applications, and purchased longer-duration subscriptions at an accelerating clip, demonstrating the growing trust our users place in Wix.com Ltd.

With new cohort bookings following a similar shape to the second quarter cohort, cohort growth continued to trend strongly through the third quarter. We also welcomed our first full quarter of new Base 44 cohorts under the Wix.com Ltd. banner in Q3, which performed better than anticipated. As the Vibe Coding market has exploded this year, Base 44 has meaningfully outgrown most peers. We now estimate our share of audience traffic to AI-powered application builders to be more than 10%, up from low single digits in June. This growth in a matter of just months is a result of a fantastic product with organic reach supercharged by our expertise and investments, as well as the application of Wix.com Ltd.’s proven strategic playbook to Base 44. In addition to establishing a dedicated customer care team and expanding Base 44’s R&D capabilities, we focused on building up a comprehensive full-scale brand and marketing function.

Remember, Base 44 did not have any marketing motion when we acquired it in June. On day one after the deal closed, we started to apply a marketing plan that has been fine-tuned and tested over the past two decades. A key competitive differentiator for Wix.com Ltd. to Base 44. This included refining the company identity, messaging, and visual system to better reflect our market ambition. We also launched campaigns in key channels and core geographies. Compelling branding and effective marketing are crucial to growing Base 44’s reach beyond just early adopters and capturing the huge white space Avishai spoke about. Returns on our initial marketing investments meaningfully exceeded expectations as demand ramped through the quarter. As a result, we were able to confidently scale marketing efforts above our initial August plan.

Today, Base 44 serves over 2,000,000 users around the world. This is more than seven times more users than we had in June. Impressively, this translates into more than a thousand new paying subscribers joining daily. We now anticipate Base 44 to achieve at least $50,000,000 of ARR by year-end, an increase from our previous expectations. We also continue to see positive trends in our main geographic markets as we improved monetization of the growing population of users and conversion improved sequentially. Better monetization was also a result of healthier commerce activity in the third quarter. Transaction revenue accelerated, increasing by 20% year over year, driven by 13% growth in GPV and an elevated take rate. Merchants are continuing to opt for Wix.com Ltd.

payments. The opportunity remains large as we continue to strive towards capturing and addressing the full spectrum of merchant needs per our long-term commerce strategy. To wrap it up, our solid Q3 results illustrate the durability of our core business, which remains healthy against a dynamic operating environment. It also speaks to our ability to enter new markets efficiently and effectively, highlighting Wix.com Ltd.’s innovation-first mindset and the proven first-mover advantage. I remain confident in our ability to drive long-term growth by delivering essential tools that help users, both new and old, adapt, operate, and succeed in any environment. With that, I’ll hand it over to Lior.

Lior Shemesh: Thanks, Nir. We accelerated growth entering the second half of the year with third-quarter results exceeding expectations. This performance was driven by strong fundamentals in our core business and an exceptional first full quarter of Base 44 under the Wix.com Ltd. banner you just heard about from Nir. The team is executing well as we build the critical foundation for sustained momentum in 2026 and beyond. There were a few highlights in the third quarter, but I’d like to start with our financial results. Total bookings grew to $515,000,000 in Q3, up 14% year over year. The strong performance was driven by robust new user cohorts joining, the existing users finding success and adopting more business applications, as well as better-than-expected results from Base 44.

Total revenue grew to $505,000,000, also up 14% year over year and above the high end of our guidance range. Partners’ revenue grew 24% year over year to $192,000,000, driven by continued traction among professional designers and solid studio adoption. Domains, marketing applications, and Google Workspace saw particular strength within the partners’ business in the most recent quarter. Transaction revenue was $65,000,000, up a strong 20% year over year, driven by slightly improved GPV growth coupled with a sustained elevated take rate as merchants continue to attach Wix.com Ltd. payments. GPV grew 13% year over year to $3,700,000,000. Partners remained the primary driver of GPV growth, contributing approximately 55% of total GPV. Turning to the cost side, we recognized our first full quarter of costs associated with Base 44.

Before getting into the details, I’d like to start by explaining the business dynamics of Base 44, which differs from core Wix.com Ltd. As Nir discussed, we are seeing top-line growth for Base 44 trend above our initial expectations. A very large majority of these users are on monthly subscription plans, a stark contrast to the more than 80% of Wix.com Ltd.’s mix attributed to annual or longer-duration plans. This translates into a linear bookings dollar trajectory for Base 44 compared to Wix.com Ltd.’s front-loaded bookings behavior. As a result, most of Base 44’s bookings are expected to come in future quarters as these monthly cohorts build and renew. However, the cost associated with these Base 44 users is impacting our financials today.

This misalignment between bookings and operating expenses is resulting in a short-term headwind to our free cash flow. We also anticipate a short-term headwind on operating profit as we incur startup costs and initial growth investments for Base 44 while revenue ramps but remains insignificant to our top line today. The two areas we see the most impact are cost of revenue and sales and marketing. On the cost of revenue side, we are incurring AI processing and compute costs to support ramping Base 44 demand. These costs tend to be front-end heavy as new users consume more AI tokens during their initial build phase. These expenses offset continued AI-driven product productivity efficiencies across the customer care organization and improve business solutions’ gross margin.

As a result, total non-GAAP gross margin in Q3 was 69%, down slightly from 70% in Q2 as expected. On the sales and marketing side, third-quarter non-GAAP sales and marketing expenses increased 23% sequentially as we built and deployed a marketing strategy for Base 44. This is a result of accelerated branding and acquisition marketing investments above our initial August plan to capture stronger-than-expected demand, particularly in the back half of the quarter. I’m very encouraged by Base 44’s TROI, especially so early on, a signal of sustained user strength that isn’t fully reflected in the P&L due to the monthly mix dynamic. We also saw a slight increase in non-GAAP R&D expenses, which were up 7% compared to the second quarter as a result of higher overhead, AI, and other expenses as planned.

As a result, non-GAAP operating income was $90,000,000, 18% of revenue in the third quarter. This excludes $35,000,000 of acquisition-related expenses, primarily earn-out payments for the Base 44 team. We expect earn-out payments to continue to trend upwards as Base 44 AI ARR approaches the high end of its lofty previously set performance target. Q3 free cash flow was $159,000,000 or 32% of revenue. This is an increase from a free cash flow margin of 30% last quarter as we generated strong bookings and realized working capital benefits associated with the higher costs I just discussed. I expect operating and free cash flow margins to improve over time as we optimize multiple areas of our business model. Today, we’re already beginning to see AI costs decrease as LLMs improve and competition continues to ramp.

I expect this to continue, if not accelerate. Additionally, I expect sales and marketing expense leverage as branding investments normalize once we move past initial branding investment costs. TROI targets should tick lower as Base 44 scales too. We also expect Base 44’s user and subscription mix to optimize over time. In the long term, I expect Base 44 to have similar operating free cash flow margins to Wix.com Ltd. We continue to strategically manage our balance sheet. In September, we issued $1,150,000,000 in 0% convertible senior notes due 2030. These notes follow the maturation and payback of our previous tranche of 2025 convertible notes. We expect to deploy this cash for business purposes, potential M&A opportunities, and continued share repurchases.

We repurchased approximately 1,300,000 Wix.com Ltd. ordinary shares for approximately $175,000,000, underscoring our continued commitment to returning value to shareholders. This leaves approximately $225,000,000 remaining on our current authorized program. Let’s now talk about how we expect to finish out the year. As healthy in our core offering, along with ramping Base 44 contribution, is setting the foundation for a strong fourth quarter. We are raising our full-year bookings outlook to $2,062,000,000 to $2,078,000,000 or 13% to 14% year-over-year growth, up from the 11% to 13% year-over-year growth previously expected. This increased expectation is driven by meaningful outperformance of Base 44, which we expect to continue as we accelerate marketing investments to capture the stronger-than-anticipated demand we’re seeing today.

As a result, we expect Base 44 to achieve at least $50,000,000 of ARR by year-end, an increase from our previous plan. Our guidance also assumes a stable macro, continued strength in our top of funnel, and current FX rates. For revenue, we are updating our previous full-year outlook to $1,990,000,000 to $2,000,000,000, up 13% to 14% year over year. This is a shift towards the high end of our plan, up from the 12% to 14% growth previously expected. The dynamics differ between bookings and revenue as Base 44 outperformance is offset by a continued shift in our core business mix towards longer-duration subscription packages. On the cost side, we now expect non-GAAP gross margin to be 68% to 69% of revenue and non-GAAP operating expenses to be approximately 50% of revenue for the full year.

These updated expectations reflect the front-end heavy AI and sales and marketing costs against linear revenue and bookings behavior. Due to higher anticipated bookings and working capital benefits partially offsetting these increased cost expectations, we expect free cash flow of approximately $600,000,000 in 2025 or 30% of revenue for the full year. I’m looking forward to a strong finish to 2025 as we enter 2026 on solid footing. Operator, we are now ready for questions.

Q&A Session

Operator: Thank you. And wait for your name to be announced. To withdraw your question, simply press 11 again. Please stand by while we compile the Q&A roster. Now, first question coming from the line of Ygal Arounian with Citi. Your line is now open.

Ygal Arounian: Hey, guys. Good morning. Good afternoon. So a couple on Base 44. Could we just dive into the dynamics of monthly subs versus the sort of more traditional annual subs that you got for core Wix.com Ltd. and what are you seeing there in terms of churn and those subscription dynamics? And as people sign up monthly, can you get them to sign up annually more often over time? Is that the expectation? How does that change your kind of visibility into investment as some of the margins come down here? And then I have a follow-up on the cost side.

Avishai Abrahami: Well, I’m just gonna have a shy. I think that as regards to the percentage, of course, at this stage, lean a lot more towards a monthly subscription than an annual subscription. And then we’ve also seen it in Wix.com Ltd. in the beginning. It takes time for people to trust the platform. And then they will actually feel more comfortable to pay an annual subscription. And I think we are heading in that. Vibe Coding is still so new that we are heading toward that direction. But if in Wix.com Ltd., the vast majority are annual subscriptions, then on Base 44, most of our users are still on their monthly subscription. When it comes to churn, it’s very early to say, it’s changing very quickly. So it’s very hard to say.

Obviously, churn is higher than the standard Wix.com Ltd., which almost doesn’t exist. Right? There’s almost no churn. But if you look on a cohort basis, Base 44 is better than we expected. And we know there’s so much more we can do. So we’re very optimistic, and we think that churn will probably not be our problem going forward. Right, if everything continues to advance in the same way it is now.

Ygal Arounian: Okay. You talked about, Avishai, in the past that these platforms are good for prototyping. But, eventually, when you have a finished product, that sort of has to live somewhere else, right, because a lot of the back-end stuff isn’t developed. Is that part of the factor for churn? Then on the cost side, just on the gross margins and the AI compute, is there anything that you can do within your control outside of LLM costs coming down to keep costs down, for example, your own internal data to help build versus relying on third-party LLMs as much? Thanks.

Avishai Abrahami: Well, I’m not gonna go into all the details here, but yes, there’s a lot we can do in cost. Okay? It’s not a priority at this stage, right? It’s something that we’re also investigating. I think the priority now is to build a better product and capture more market share. But I think that long term, and long is not multiple years, we can dramatically improve the cost of AI for Base 44. There is so much we can do from training our own models to do part of it, from partnerships with the different vendors, from the fact that simple reality that cost is always declining. And so I think there’s gonna be a tremendous amount of opportunities for us to reduce the cost of the AI for Base 44. And sorry? And so the first part, so I’m sorry I missed that.

So we do see, you’re right, when you say, a lot of it is just used for prototyping. Right? And that’s great. For people to actually build an application that is just for demo, for a few people, and then the prototype is the application. Right? It doesn’t need scale. It’s okay if it kind of like it has tiny bugs or but we are getting to a place that today with Base 44, you can really build more full applications. There’s still quite a way to go on what we can do there, and how to make it even better. But we are getting to a place, and of course, we have some users that already built really large applications that have been deployed and we can see that. So if a year ago, you couldn’t do Vibe Coding for anything real, and a few months ago, you could do Vibe Coding for multi prototypes.

For applications, I think today we are starting to see more applications that are real and have been used on the commercial level. For websites, it’s still different. I think for websites, there’s still a gap that needs to be closed with Vibe Coding to build real websites that are Google-friendly, that are LLM-friendly, that are of all the privacy rules that are required by law. And a bunch of other things. And there’s still quite a distance to go. But we hope to close that early next year.

Lior Shemesh: You guys, this is Lior. Just a couple of small points about the cost. I think that what is interesting here is that new users coming to Base 44, they are obviously consuming more AI tokens. Right? More bandwidth as they build their apps. But what we see is a big difference between, obviously, the cost of newcomers to the one that actually continues, because they might modify, do some changes, but it’s really not the same. But it means that, for example, if you take this year compared to next year, next year you’re going to have much more of the recurring revenue. It means that the profit obviously will be totally different. So it’s not just about the fact that, as Avishai mentioned, that we already started to see the cost of AI goes down, but it’s also about the model itself that is so different between newcomers to the one that actually already built their app and just maintaining it.

Ygal Arounian: Okay, guys. Very helpful. Thank you.

Operator: Thank you. Our next question coming from the line of Deepak Mathivanan with Cantor Fitzgerald. Your line is now open.

Deepak Mathivanan: Great. Thanks for taking the questions. Avishai, I just wanted to ask a big picture question for you. Wix.com Ltd. is pretty well positioned to kind of reengineer the web for the AI era by making a lot of small business websites kind of agent-ready. Right? Like so they can be discovered by Gemini, IGBT, and others more effectively versus the current web architecture, which includes a lot of total consumption for them. Can you talk about the vision you have for Wix.com Ltd. for this era and how you’re planning to capitalize on this big secular theme for the next three to four years? What are you doing, perhaps the new product or from others in the future, to make the websites of both your current and future customers kind of agent-friendly so they can get the traffic, transactions, everything from agents?

Avishai Abrahami: So, yes, you are right. I think that you’re touching a very important point. We’re gonna see in the next couple of years. We’re already starting to see that, but it’s probably going to accelerate a transition and change in many ways that you consume content website, or discover website with the content. And or just discover the content without even the website. Right? So there’s a lot of things that are changing now. The first thing that we’re doing in Wix.com Ltd. in order to support and enable all our customers to enjoy that new mode is that every Wix.com Ltd. website is now indexable by LLMs. Right? So we make the data available to any LLM, and there’s a few formats for that. And so we ensure that CHARGEPT can actually read your content and discover your website.

That’s the first part. The second part is that we continuously add new standards for how to do e-commerce, the one that OpenAPI OpenAI released a few months ago, MCP, and a bunch of others in order to enable all the functionality to be available within LLMs or be discovered by LLMs. And then run on your website. In addition to that, there’s a few more things that we think that how the user interface will change next couple of weeks. I’m not gonna go into details, but I think that that’s another super interesting opportunity for our customers. And we intend, of course, to provide fantastic solutions for that. So if you look at it, long term, I mean, the fact that, and not just Wix.com Ltd., right? There are other platforms out there. But if you are an owner of a business and you try to build a website in the old way, you’re gonna find that you’re not supporting all these new standards that are coming every few months.

Right? There’s a new standard that you need to support to be part of the new world of AI. Then I think the platform we have to work for you really pretty hard in order to make sure that all those standards that will ensure your business visibility in this new world are part of what we supply.

Deepak Mathivanan: Got it. Then maybe one quick one for Nir. Can you talk about the cohort retention trends of Base 44 and how it compares versus Wix.com Ltd. on monthly customer plans, perhaps on month one retention or monthly retention given that you have had Base 44 now for a few months?

Nir Zohar: Hey. Sure, Deepak. So, you know, naturally, it’s still very early. Just as you said, it’s just a few months. When we look at it, we’re seeing kind of similar behavior to what we know from the monthlies on Wix.com Ltd. And I would actually dare to say that it seems it’s better than what you used to see at Wix.com Ltd. in the early days. So I think, you know, we are, Avishai referred to this in the beginning when he was talking about the monthlies’ behavior. Our belief is that we’re gonna work on a few different things in tandem that we are gonna eventually improve the dynamics. One, as we garner more brand visibility and brand recognition, it would be easier for people to transition to the annual plans and then obviously will give us more visibility and better TROI.

Faster TROI, so to speak. And secondly, there’s a lot more improvements we can do in creating more motivation for people to retain and strengthen their connection with the platform. And our belief is that we should see better results as time progresses. Again, it’s very, very early.

Deepak Mathivanan: No. Makes sense. Thank you so much.

Operator: Thank you. Next question coming from the line of Andrew Boone with Citizens Bank. Your line is now open.

Andrew Boone: Thanks so much for taking the questions. I’d like to touch on WixVibe and just the learnings of Vibe Coding as it relates to website creation. Do we get self-creator to that double-digit kind of target that we’ve talked about in the past? And then going back to Base 44, you guys just help us understand the pathway to getting margins up to core Wix.com Ltd. levels? What does that have to look like? And kind of what are the assumptions that need to take place around retention? Thanks so much.

Nir Zohar: Andrew, I’ll take the first one about WixVibe. So, you know, WixVibe is, you know, it’s a beta of something we’re trying out. And it’s part of our general strategy in terms of product and understanding. Avishai spoke about this today and in the past about the higher complexity there is between Vibe Coding and building websites. All that, you know, Google-friendly as you put it, Google-friendly, LLM-friendly, matching means security, etcetera, etcetera, etcetera. And obviously, we think there needs to be a better solution there, and we’re working towards this.

Lior Shemesh: Andrew, with regard to the second question, I think that we need to relate to the two different components in terms of the investments that we are making. And the first one, we spoke about it before, is about the AI. And I think that, you know, I would like to take the opportunity and spend a couple of minutes in order to explain it better. By the way, for both cases, also for the sales and marketing and also for the cost of goods sold. We have a really proven track record, you know, how we can actually, over time, we can drive growth and be in a place where we believe that we can drive even more profitability. And I will try to explain. So with regard to the AI cost, you know, I kind of spoke about it before. We see a very strong user demand.

Very important to mention that both of the investments, also sales and marketing, and also the AI cost, which is a part of the cost of goods sold, are both driven because of a very, very strong demand. As we know, you know, from an accounting point of view, we first recognize the cost, only later recognize the revenue. So by definition, when you have such a hyper-growth business, you recognize more cost at the very beginning and then you recognize the revenue over time. So by definition, we are going to see a higher profitability in a later stage. But at least at the very beginning, you know, this is the situation. Also, in terms of the AI cost, I, you know, kind of spoke about it before. New users consuming more AI tokens. So it means that the more that we have more customers, and that are maintaining their application and stay with us in terms of the application, so obviously, we are going to see that their margin profile is much better than the new one.

But right now, all of the customers, most of the customers, because it’s such a new platform, are new. So we all understand this situation. The other thing is about the cost of AI. We’ve already started to see, we’re going to see more players in this market, which eventually is going to lower the cost. So I believe that we are going to see that dramatic change in terms of the overall cost, which obviously is going to have a positive impact. Very much that you saw, we saw at the very beginning when we started the business at Wix.com Ltd. The hosting was totally different in terms of its cost. Right? And today is much, much, much more profitable than it used to be in the past. With regard to the marketing, it is really the same methodology as we use at Wix.com Ltd., meaning that we invest in marketing based on TROI.

So it means that when you have such a hyper-growth business, you invest more right now in order to capture the demand under the TROI methodology. Meaning that we are not investing money in marketing and we don’t see short-term returns. And this is something that is really important to mention because when you have such a growth, you invest right now more, you’re recognizing the cost immediately and only after you recognize the revenue. In order to summarize everything, I think that already next year, we are going to see improving margin as a result of that. But yes, I mean, we are going to see some pressure on margin in the short term. Definitely because of all the reasons that I mentioned before. We are going to see that the TROI targets are optimized, we are going to see that AI cost decrease, we are going to see Base 44 mix of customer change.

All of that is going to drive the profitability to be very similar to the one that we see in Wix.com Ltd., and we strongly believe because we’ve been there.

Andrew Boone: Thank you.

Operator: Thank you. Our next question coming from the line of Josh Beck with Raymond James. Your line is now open.

Josh Beck: Yes. Thank you so much for taking the question. Maybe, you know, following up on Lior’s comments there. You know, when we look at kind of the Q4 gross margin guidance implied, I think it’s something on the order of 66% or so. And, you know, assuming that, you know, creative core subscriptions are kind of in the mid-eighties, it would indicate, you know, a pretty big difference for Base 44, which, as you mentioned, I think it has to do with this hypergrowth dynamics. You have effectively these new cohorts being the vast, you know, majority. So should we kind of assume that as long as this is in a hypergrowth phase going from $50,000,000 to $100,000,000, yeah, there should be kind of this drag and not until we get beyond that phase, it goes away just kind of any other guidepost to kind of help us think about the duration of this drag would be great.

Lior Shemesh: It’s a great question. You know, it’s I think that it’s kind of interesting because this kind of drag is a drag that we really like. Right? Because it’s coming from very high growth, and I believe that also profitable growth in the future. I think that it’s too early for me to say because, yes, you’re right. The more that we have very high growth, it means that we have more new customers that are building the application, and it’s more expensive, as I mentioned before, from recurring customers. But we also see quite a big decrease in the AI cost. But also in terms of our ability, for example, to do changes in our model in order to take the margins up. So it’s really hard for me to answer the question. It really depends on what is stronger, meaning the growth effect or the ability to actually reduce the cost.

But I do believe for sure, looking at the trends right now, that I believe that the margins will continue to improve as we already started to see that from Q3 to Q4.

Josh Beck: Okay. Very helpful. And then maybe just a follow-up. On the pricing construct. Obviously, we can all see the Base 44 pricing and, you know, the freemium and some permutation of good, better, best. You know, is that at a point where you’re still experimenting? Or, you know, do you feel like if you were to take one of these plans and kind of run out that customer’s life cycle that it already does have, you know, quite attractive profitability built in, or are you still tweaking the pricing? How are you thinking about that?

Nir Zohar: Hey, Josh, it’s me. Again, I think, you know, it’s very, very early. So naturally, you know, we’re just gonna be testing different things and different ideas. And see what lands the most balanced and smart optimization between the margins and the financial results. And our top priority, which is grabbing market share.

Josh Beck: Very helpful. Thank you.

Operator: Thank you. Our next question coming from the line of Ken Wong with Oppenheimer. Fantastic. Thanks for taking my question. Maybe first, just as we think about that bookings guide, last quarter, you guys had mentioned that the majority of the raise was coming from the core. Any color on how we should be thinking about the contributing factors to the 4Q bookings? And then second, just on the profitability. I think we get it. You’re a lot of upfront costs. You guys had already started messaging that perhaps less margins going forward. As we try to rattle through the higher OpEx and the gross margins, I mean, is it fair to assume that we might still see some margin expansion? Any early thoughts there, Lior?

Lior Shemesh: Sure. So I will start with the guidance. I think that it’s fair to say that most of the increase in guidance is coming from the strength that we see with the Base 44 business. I think that it’s very much kind of different from what we’ve seen only last earnings. I remember it has been like five months from the minute that we’ve bought this business. The first earning that we had like a few months ago, we’ve seen the demand, but in the last few months, it’s even much, much bigger than what we anticipated at the very beginning. This is why we’ve decided to invest more. And I do believe that Base 44 will turn out to be a significant growth driver for Wix.com Ltd. With regard to the margin headwind, yes, I believe that it will continue and let me even say differently, I hope that it will continue because it means that we are going to see a much higher demand.

I think that in this case, it’s really the same as what we’ve seen, you know, in the past from Wix.com Ltd. You know, every time that we’ve launched a new product, it was actually the case the very beginning with the ADI, even when we started the partners business. We saw such a huge demand and obviously we are investing in to capture it. So, yes, I mean, in the short term, we are going to see some more pressure on margin. I’m not sure where the margin expansion will start again. It is going to be 2026 or late 2026. It really depends on the demands that we are going to see for this business.

Ken Wong: Fantastic. Thank you.

Operator: Thank you. And our next question coming from the line of Trevor Young with Barclays. Your line is now open.

Trevor Young: Great. Thanks for the questions. First one, Avishai. On the new Self Creator tool that was expected first this summer and then pushed to the fall, now getting pushed out again to sometime in ’26. Can you expand on what the delays are there? Is there some sort of reimagination going on with the tool? Just trying to figure out what’s going on in terms of, you know, the product launch and timing.

Avishai Abrahami: Actually, most of the reason for the delay is about just fine-tuning technology. So, you know, it’s solving a lot of technical challenges and bugs and making it really stable and working faster. And, yeah. So I suppose the most project was doing software, which you know, anyways, tend to be delayed, but this one to be fair to the team, right, is using a lot of new technologies that didn’t exist before. And so a lot of AI stuff that never existed before. So it was a bit harder to estimate some of the effort that will go into finalizing them. I think we are beyond this point. In fact, it’s kind of entering already the first stage of a closed beta within here inside of Wix.com Ltd. So I feel very confident we’re gonna see it very early in 2026. And we’re actually gonna have, I think, a much better product.

Trevor Young: Great. Thanks for that. And as a follow-up question, on the 3Q cohort commentary trending similar to 1H, if I recall correctly, 1Q cohort collections grew 12%, 2Q was 14%. So should we assume 3Q is kind of low teens growth territory? So did something change in August and September to cause a step down relative to the 20% growth that you had flagged back in the July timeframe?

Nir Zohar: Hey, Trevor. It’s Nir. Not so much, actually. No. I think we’ve, you know, we’ve seen some expected seasonality. And generally, we’ve seen the cohorts behave as we expected. We’re seeing ongoing strength going into, you know, the rest of Q3 and into Q4.

Trevor Young: Great. Thanks, guys.

Operator: Thank you. And that’s the end of our Q&A session. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. And you may now disconnect.

Nir Zohar: Thank you, everyone.