Business context and reporting period
Wix.com Ltd. filed this Form 20-F for the fiscal year ended December 31, 2021, reporting under U.S. GAAP. Although the request identifies 2020 Q4, the supplied filing is a 2021 annual report and does not provide clear standalone fourth-quarter 2020 results. Wix operates a global freemium SaaS platform for website creation and business management. At year-end 2021, it reported 221.8 million registered users and approximately 6.0 million premium subscriptions.
Key financial metrics
Amounts below are in U.S. dollars; annual financial-statement figures are in millions unless otherwise noted.
| Metric | 2021 | 2020 | Change or context |
|---|---|---|---|
| Revenue | $1,269.7 | $984.4 | Up 29% |
| Creative Subscriptions revenue | $950.3 | $783.5 | Up 21%; 75% of 2021 revenue |
| Business Solutions revenue | $319.4 | $200.9 | Up 59%; 25% of 2021 revenue |
| Gross profit / margin | $781.1 / 61.5% | $671.3 / 68.2% | Margin declined 6.7 percentage points |
| Operating loss / margin | $(325.5) / (25.6%) | $(199.1) / (20.2%) | Operating loss widened |
| Net loss / margin | $(117.2) / (9.2%) | $(166.9) / (17.0%) | Net loss narrowed, aided by financial income |
| Operating cash flow | $65.7 | $148.0 | Down $82.4 |
| Capital expenditures | $37.7 | $18.9 | Free cash flow was $28.0 versus $129.2 |
| Bookings, non-GAAP | $1,418.8 | $1,102.0 | Up approximately 29% |
| Creative Subscriptions ARR, non-GAAP | $1,010 | $878 | Up 15% |
Financial income was $271.9 million in 2021, including a large fair-value gain related to an equity investment that became publicly traded. Management attributed $265.0 million of financial income to appreciation in the valuation of a holding in a public company. Taxes on income were $64.2 million. The company remained loss-making, with an accumulated deficit of $648.1 million at year-end.
Liquidity, debt and capital allocation
At December 31, 2021, Wix reported $451.4 million in cash and cash equivalents, $411.7 million in short-term deposits, and $843.9 million in marketable securities, totaling approximately $1.71 billion in liquid assets. Working capital was $615.5 million. Management stated that available liquid assets and operating cash flow should fund operations for at least 12 months and the foreseeable future.
Convertible notes had $937.7 million of principal outstanding at year-end: $362.7 million due 2023 and $575.0 million due 2025. The balance sheet recorded $923.0 million of convertible notes, net. Both note issues carry a 0% coupon; the company may need cash to settle conversions or repay principal at maturity. Wix repurchased 895,136 shares for $200 million in 2021. A further $500 million repurchase program was authorized by the board in March 2022 but remained subject to Israeli court approval in the filing.
Material changes versus the prior comparable period
- Revenue rose 29%, with Business Solutions growing considerably faster than Creative Subscriptions; its share of revenue increased from 20% to 25%.
- Gross margin fell as cost of revenue grew 56%, faster than revenue. Business Solutions cost of revenue rose 76%, reflecting product, payment-processing and support costs.
- Operating expenses increased 27% to $1.11 billion. Research and development rose 33%, selling and marketing 17%, and general and administrative 52%; headcount grew approximately 28% to 5,929 employees and contractors.
- Operating cash flow fell to $65.7 million from $148.0 million, and free cash flow declined to $28.0 million from $129.2 million.
- Net loss narrowed, but the comparison was significantly affected by non-operating investment gains; operating loss widened.
- Premium subscriptions increased 9% to about 5.97 million; registered users increased 13% to 221.8 million. Yearly and multi-year subscriptions represented 85% of active subscriptions.
Outlook, commentary, risks and unusual items
- Wix said it expected to keep investing in research and development, expand its product offering and user experience, and increase marketing in the U.S. and internationally. It expected 2022 capital expenditures of approximately $100–$110 million, including $80–$85 million for its new headquarters. The filing does not provide a clear quantified revenue or earnings forecast.
- Management expected cost of revenue, selling and marketing, and general and administrative expenses to rise in absolute terms; it expected R&D expense to decline as a percentage of revenue.
- Significant risks include sustaining subscription growth and renewals, converting users to paid products, rising competition and acquisition costs, payment-processing and cybersecurity exposure, privacy regulation, foreign-exchange movements, and the company’s history of operating losses.
- Wix had 871 contractors and 11 employees in Ukraine at year-end 2021. After Russia’s invasion began in February 2022, some team members relocated and Ukrainian sites were non-operational. Wix said it suspended commercial activities in Russia; the duration and financial effects were uncertain.
- Wix corrected Google Workspace revenue-recognition errors. It deemed the errors immaterial to prior years but said their impact on 2021 was material; revised 2020 and 2019 figures are presented. The filing also describes early adoption of convertible-debt accounting guidance in 2021, which changed the balance-sheet presentation and reduced future interest expense.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The auditor identified revenue recognition as a critical audit matter because of high transaction volumes and reliance on multiple applications and data sources.
Important facts for investors to verify
- Confirm the intended reporting period: this is a fiscal 2021 annual report, not a standalone 2020 Q4 filing.
- Assess recurring operating performance separately from the $265.0 million investment-valuation gain and related tax effects.
- Track gross-margin pressure, rising operating expenses, and the sharp year-over-year decline in operating and free cash flow.
- Review the maturity, conversion and potential cash-settlement terms of the 2023 and 2025 notes, alongside the proposed repurchase program’s court-approval status.
- Monitor Ukraine-related workforce and operating disruption, Russia-related restrictions, and the effects of foreign exchange and privacy/payment regulation.