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Wix.com (WIX) is under pressure today after reporting its Q3 results this morning. The company beat EPS expectations, while revenue increased 13.6% yr/yr to $505.2 mln, which was in line with expectations. Wix also raised the bottom end of its FY25 revenue outlook to $1.99-2.00 bln (from $1.975-2.00 bln) and lifted its FY25 bookings guidance to $2.06-2.078 bln (from $2.04-2.075 bln), reflecting strong outperformance from its recent acquisition, Base44.

• Total bookings increased 14% yr/yr to $515 mln, driven by robust new user cohorts, healthy renewal activity from existing users, and better-than-expected contribution from Base44.
• Core business fundamentals were solid: Creative Subscriptions revenue grew 12% yr/yr to $356.2 mln, Business Solutions revenue rose 18% yr/yr to $149 mln, and Partners revenue jumped 24% yr/yr to $192.1 mln.
• User behavior remained strong, with higher conversion into advanced subscriptions, greater adoption of business apps, and more users opting for longer-duration plans. Organic traffic also improved.
• Base44 scaled rapidly to 2+ mln users, is adding 1,000+ new paying subscribers daily, and now holds 10%+ share in AI app-building, with ARR expected to reach $50 mln+ by year-end.
• That said, weighing on shares is the near-term impact of Base44, with costs hitting now while bookings build over time. Management noted this mismatch creates a headwind to free cash flow and operating profit, with gross margin dipping to 69% on higher AI compute costs and sales & marketing up 23% sequentially from accelerated Base44 spend.

Briefing.com Analyst Insight

Despite the EPS beat and raised outlook, the stock is under heavy pressure today. The quarter was fundamentally solid, with broad-based growth across Wix's core categories. Base44 was the clear highlight, and management remains highly enthusiastic about its long-term potential and early traction. However, the flip side is that Base44 is creating near-term headwinds, as elevated marketing, onboarding, and AI compute costs are hitting the P&L immediately, while revenue from mostly monthly subscribers builds more gradually. This is weighing on margins and free cash flow in the short run. Additionally, while non-GAAP EPS beat, GAAP EPS swung to a loss of $(0.01) versus $0.46 in the year-ago period, adding to investor caution. That said, strong fundamentals across the core Wix platform and a bullish outlook for Base44 point to a favorable long-term setup, but near-term cost pressures are hard to ignore.