Wix (WIX) Q3 2026 earnings review
Wix's AI app builder grows, but its agency sales slow
Wix, the website-building company, is growing through its new AI app builder while its older agency business slows. Revenue rose 13%, above the company's own plan. Base44, the app builder, nears $250 million of yearly subscription revenue. Its first customers renewed at better rates than Wix assumed, finance chief Lior Shemesh said. Bookings, the cash and commitments customers make, climbed 11%, and Wix expects revenue growth to cool next quarter.
| Revenue | $570.2M +13% from a year ago |
|---|---|
| Bookings (cash collected plus customer commitments) | $573.0M +11% from a year ago |
| Base44 annual recurring revenue | Close to $250M about $150M in mid-May |
| Full-year free cash flow outlook | Cut to about 16% of revenue high-teens before |
⚖️ Verdict: 🔴 Bearish
The story got worse because the older business weakened sharply and Wix cut its cash target. Agency sales fell from the prior quarter. Wix now expects free cash flow of about 16% of revenue, down from the high teens. The good news: Base44's renewals and its 58% gross margin suggest the product can last.
The question now is whether Base44 adds customers faster than the agency business loses them. Either the new product lifts total growth, or it only replaces lost sales. Fourth-quarter agency revenue and bookings will tell.
🐂 Bull Case
Base44 Nears $250 Million of Recurring Revenue
Base44 is Wix's tool for building software apps by describing them in a chat, bought in June 2025. The standing doubt is whether customers who try such a tool keep paying. "Base44, our biggest bet, continues to outperform expectations," chief executive Avishai Abrahami said.
This quarter brought a first test. The earliest customers reached their one-year mark, and finance chief Lior Shemesh said monthly and annual renewal rates came in "above initial expectations". Wix published no renewal rate, so outsiders cannot size the result.
- Annual recurring revenue (ARR), the yearly value of subscriptions in force: close to $250 million, from about $150 million in mid-May
- Yearly plans: more than 20% of subscriptions bought by this September's new customers, against about 5% a year earlier
The plan mix matters because most Base44 customers pay month by month. More yearly contracts make the revenue easier to count on. One reading does not settle the doubt, but it argues against it.
What to watch: a published renewal rate, or Base44's ARR at the end of December, with fourth-quarter results. A firm number would show the growth comes from customers who stay.
Wix's Own AI Model Cut Base44's Costs
Each Base44 request runs on an AI model that costs Wix money. The website builder moved much of that work to Base 1, a model it built itself.
- Base44 gross margin, excluding one-offs: 58%, from near zero in the first quarter
- Company gross margin, excluding one-offs: 68.6%, up 2 percentage points from last quarter
- Cost of serving subscription customers: 17.9% of their revenue, down 2.5 percentage points from last quarter
Shemesh expects Base44's margin to "approach that of our core Wix business next year". The quarter backs him so far, because that subscription cost line shrank 10% while its revenue edged up.
What to watch: Base44's fourth-quarter gross margin, which Wix says will pass 60%. A reading above that mark would mean the savings hold as free users multiply.
🐻 Bear Case
Sales Through Agencies Fell From Last Quarter
Partners are the agencies and freelancers that build websites for clients, and they bring in 37% of Wix's revenue. The company said their slowdown was "in-line with expectations" and came "due to continued macro headwinds".
The numbers show more than a slowdown. Partners revenue slipped below its second-quarter level, by our math, to $212.4 million. Growth from a year ago dropped to 11%, from 24% four quarters earlier.
- New annual recurring revenue (ARR), the yearly value of subscriptions in force: $59.0 million, against $61.8 million a year ago
- Base44 alone: about $100 million of ARR added since mid-May, by our math
Abrahami's letter points to another cause. He wrote that "a platform that insists on being the only place work can happen will get left behind". Wix said Partners revenue now includes a "modest, but steadily increasing, contribution from Base44", so agency sales of the older products are weaker still.
What to watch: fourth-quarter Partners revenue, the first period after Wix launched Studio Two, its new editor for professional designers. Another decline from the prior quarter would mean agencies are leaving for AI tools.
Wix Cut Its Cash Target to Fund Marketing
Wix lowered its full-year free cash flow target to about 16% of revenue, from the high teens. The cut is "primarily due to accelerated sales and marketing investments in Base44", the company said. That measure already leaves out acquisition and restructuring costs.
- Sales and marketing, excluding one-offs: 32.5% of revenue, up 7.3 percentage points from a year ago
- Operating margin, excluding one-offs: 12.1%, against 17.8% a year ago
- Free cash flow: $74.5 million, down 41% from a year ago
Cheaper AI does not lift cash this year, because Wix expects further gross margin gains "to be reinvested into Base44 sales and marketing in the fourth quarter". Abrahami calls the spending "aggressive and necessary investments". It buys Base44's growth, but the lower target shows what that growth costs.
What to watch: fourth-quarter free cash flow before those excluded costs. By our math the new target implies about $88 million, or 15% of revenue. A lower figure would mean marketing is rising faster than the plan allows.
The Buyback Left Wix With Net Debt
In April Wix spent $1.6 billion to buy back about 30% of its shares. It borrowed $500 million to help pay. Fewer shares should lift profit per share, but that has not happened yet.
- Share count behind profit per share: down 18% from a year ago
- Profit per share, excluding one-offs: $1.42, down 15%
- Net financial income: $0.2 million, against $14.9 million a year ago
- Debt minus cash and investments: $584 million
Profit fell faster than the share count, partly because Wix no longer earns interest on the cash it spent. The loan now sits with debts due within a year.
What to watch: cash and the loan balance at year-end. Net debt declined $83 million this quarter, and a reversal would mean operations no longer cover the spending.
Risks this quarter didn't answer
These standing concerns got no settling number in the results. Each has a figure that would move it, and Wix could publish any of them next quarter.
- Growth without Base44: no quarter-end Base44 figure, so the older business's pace stays hidden.
- Rival AI tools: no customer-loss data; Abrahami wrote that "several major AI players have announced their own version of SMB agents".
- Paying subscribers: down two years running through 2025; no new count.
- Base44 earnout, the deal payments owed to its team: $32.0 million booked outside headline profit; total owed undisclosed.
- Payments volume: about 1% below a year ago after Wix closed its inkFrog unit.
- Shekel and war costs: no update on the $64 million currency cost flagged for 2026.
👓 Other Themes
Wix Names Nir Zohar Co-Chief Executive
Wix appointed president and co-founder Nir Zohar as co-chief executive alongside Abrahami, effective immediately. Zohar will lead business strategy, sales and operations, while Abrahami keeps product and AI. "Nir runs the business; I run product and AI," Abrahami wrote. Zohar has served as president since 2013, so the title formalises how the two already work.
Wix Launches Studio Two and Symphony
Two products arrived. Studio Two, an editor for professional designers, lets them "export projects as standard code to Claude, Codex, Cursor, or other IDEs". Symphony, a set of AI agents that run tasks for small businesses, launched in August and is "already generating millions of dollars of ARR", or yearly subscription revenue, Abrahami wrote. Neither added meaningful revenue this quarter.
Europe Grew 18% While Latin America Shrank
Wix blames a weak economy for slower agency sales, but its regional numbers do not show weakness everywhere. With currency moves stripped out, revenue rose 18% in Europe and 11% in North America, its largest market. Latin America slipped 1%. Currency swings barely touched the total this quarter.
💲 Other KPIs
Deferred revenue, cash customers have paid for service not yet delivered, stopped growing. It slipped $0.3 million from June. Growth from a year ago has cooled for three quarters and is now 8.6%, by our math. That matters because today's prepayments become revenue in later quarters.
Revenue from handling customers' payments rose 12% from a year ago, the same pace as last quarter. At the start of the year it grew 19%. Wix kept 2.02% of each dollar it processed, a bigger cut than before, as more merchants adopted its own payment service.
Wix spent 2% less on research and development than a year ago, while revenue grew. The line now takes 18% of revenue, from 21%. Lower payroll explains the decline, the company said. The website builder ended September with 4,121 employees, 250 fewer than in June.
The operating loss under standard accounting narrowed to $16.4 million, from $58.8 million last quarter. Stock awards and the Base44 earnout account for most of the gap to headline profit. Wix booked no new restructuring charge, though it paid $25.2 million in cash for June's reorganisation.
🔮 Guidance
Unchanged. Nine months of results plus the fourth-quarter outlook put the year at about 13% growth, by our math. That sits in the lower half of the range Wix describes. The company lowered this outlook once, in June, from mid-teens.
Unchanged. Bookings are cash collected plus amounts customers have committed to pay. They rose 12.5% over nine months. We read low-teens as 11% to 13%. By our math the plan then leaves about 11% for the fourth quarter, close to this quarter's pace.
Consistent with the earlier plan. Wix expects revenue growth to cool to a low-double-digit rate, from 12.9% this quarter. At 11%, the middle of our reading of that phrase, revenue would be about $582 million. Most Base44 customers pay monthly, so their spending reaches revenue quickly and keeps it ahead of bookings.
Unchanged. Wix expects bookings to keep trailing revenue because slower agency sales hit bookings first, the company said. This quarter the gap was 1.5 percentage points. The release gives no fourth-quarter number for bookings on their own.
Cut. By our math the new target means roughly $45 million less cash this year than the middle of the old range. It leaves about 15% of revenue for the fourth quarter, against 17% this quarter. Wix started the year aiming for the low-to-mid 20s, then moved to high teens after the buyback, so this is the second step down.
Unchanged. Base44 reached 58% in the third quarter, so the plan needs the fourth quarter above 60%, which is what Wix says it expects. New this quarter: Shemesh said the margin should approach the older business's level next year. Wix also now sees AI costs below 30% of Base44's bookings in the second half.
New. Wix will prepay for the specialised chips that run its AI models "for the next couple of years". That takes about $10 million out of fourth-quarter cash flow. The release does not say whether the 16% full-year cash target already includes this payment.
❓ Key Questions
What was Base44's recurring revenue at quarter-end?
Wix gave a figure for early November, not for September 30. Without a quarter-end number, nobody can work out how fast the rest of the business is growing, or whether it is growing at all.
What share of Base44's first customers actually renewed?
Shemesh said renewals beat the company's early expectations but gave no rate and no expectation. A percentage, split between monthly and yearly plans, would show whether Base44's revenue lasts.
How many agencies are moving their work to AI tools?
Wix blames the economy and its own lower spending for slower Partners sales. Yet Partners revenue now includes Base44 sales, and Studio Two answers rival tools. Partners growth without Base44 would separate the causes.
How much of the Base44 earnout is still owed?
By our math Wix has booked about $236 million of acquisition-related costs over five quarters, all outside headline profit. The remaining amount and its payment dates decide how much cash leaves later.
How will Wix repay its $500 million loan?
The loan that helped fund April's buyback now counts as short-term debt. Wix holds more debt than cash and has just lowered its cash target, so the repayment plan matters.