Wix.com Ltd.: Big, Bold Bets in a Brutal Backdrop

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Wix.com Ltd.: Big, Bold Bets in a Brutal Backdrop

Barclays | Wix.com Ltd.

marketing layer back in. Building out internal LLMs (based on open source models) is probably

not a major financial burden and may help significantly reduce AI token consumption costs, but

at the same time shifts resources from building the application layers on top of the models,

which is where we see greater opportunity for differentiation - another bold bet that may or

may not pay off given a rapidly evolving backdrop for frontier models. While we're hopeful this

is final cut, we admittedly don't have high conviction right now; the interest income/expense

dynamic is likely to persist, some working capital benefits might not, and we can't help but

wonder if marketing spend keeps grinding higher to keep B44 on a good growth trajectory while

the core gets some more marketing lift at some point to get partners back on track.

Estimates & Valuation: We're lowering our FY26 revenue by ~70bps, and more than 1pt in

2027/2028 to contemplate a lower growth profile for the core business, most notably in

partners, which appears to be going through a bit of a product/marketing reset. We further trim

our GM as greater inference spend layers in (in part from greater mix shift towards Base44). We

lower our FY26 FCF ex. acquisition costs -22% to ~$400m (17.5% margin) with a similar shift

down through the forecast period. We now value WIX at 2x revenue and 10x FCF (vs. 3x and 14x

previously) on our 2027 estimates as we see greater risk to the more durable core business, and

greater mix shift towards lower-margin/more speculative Base44. We lower our PT from $155 to

$100. Of note, we are now starting to see GAAP EPS val support when looking out to 2028,