Wix.com Ltd "Q1 2026 Earnings Recap" (Neutral) Zhang

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Wix.com Ltd "Q1 2026 Earnings Recap" (Neutral) Zhang

steadily increasing, supporting stable TROI even as marketing scaled.

On margins, while total Wix gross margin pressure in Q1 was driven by Base44’s

elevated AI compute costs amid stronger than expected demand, management

reiterated these AI costs are front loaded (i.e., highest during a user’s initial build

phase) and noted Base44 gross margins are already positive on an overall basis,

with management expecting QoQ gross margin improvement and a big change

from Q1 to Q4 as optimization work continues (e.g., ongoing model and usage

optimization) and as post-build AI consumption normalizes. Management added

that ~35% of Base44 COGS come from free users currently, which the company

expects to continue for Q2 and for the full year).

Longer term, Wix is also leaning into structural AI cost control (including its newly

deployed proprietary LLM for Harmony, with management noting marginal

inference cost vs. frontier models), and while management did not provide a

timeline for deploying a similar approach in Base44, they emphasized it is a

focused priority with senior technical leadership closely involved. Strategically, Wix

is increasingly calling out synergies including Base44 expanding Wix’s top-of-

funnel resulting in early signs of partner adoption, with potential to help Partners

both build core customer sites and deliver incremental value via custom

applications that can also be relevant to Wix’s SMB customer base over time.

Q2 & FY 2026 outlook and modeling considerations

Wix expects Q2 revenue for the consolidated business to grow at ~mid-teens% YoY,

broadly in line with Q1 performance. For FY 2026, Wix's outlook calls for: 1) Both