2Q26 Earnings First Take – Base44 Economics Improve; Partner Trends Remain the Key Debate

Research evidence excerpt

2Q26 Earnings First Take – Base44 Economics Improve; Partner Trends Remain the Key Debate

UpdateM2. FY26 Outlook Maintained; Q3 Guide Appears Measured. Wix maintained

its outlook for: (1) Low- to mid-teens FY26 revenue growth with low-teens

bookings growth. Management expects bookings to continue lagging

revenue by several points because softer Partners activity affects bookings

before the related revenue base. (2) Low-double-digit Q3 revenue growth.

Consensus' Q3 revenue of $565.8M, +12%, appears near the upper end of

the qualitative outlook but measured against 15% in Q2. (3) High-teens FCF

margin in FY26 excluding acquisition and restructuring costs. Although Base1

should support gross-margin improvement, Wix intends to reinvest much of

the savings into Base44 marketing. Therefore, better AI economics increase

Wix’s capacity to fund growth more than they create immediate earnings

upside.

3. Base1 Materially Improves the Base44 Margin Narrative. Following the

launch of Base1, Base44’s proprietary software-creation model, management

expects lower inference costs to contribute approximately two points of

consolidated gross-margin improvement versus 1H26. Consequently, Base44

non-GAAP gross margin will reach ~60% in 2H26, versus near-zero entering

the year. While still remaining below core Wix economics, it would establish

a clearer path toward attractive incremental profitability and directly

addresses concerns that Base44’s growth could remain structurally margin

dilutive. Key questions for the call are the durability of the cost savings,

continued reliance on third-party models, and whether product quality and

retention remain stable as workloads migrate to Base1.

4. Partners Remains the Principal Risk. Management indicated that some