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Q4 and Full Year 2014 Earnings Summary
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Safe HarborForward-Looking StatementsThis presentation contains forward-looking statements, within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, that involve risksand uncertainties. Such forward-looking statements may include projections regarding our future performance and may be identified by words like “anticipate,” “assume,” “believe,”“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek” and similar terms or phrases. The forward-lookingstatements contained in this presentation are based on management’s current expectations, which are subject to uncertainty, risks and changes in circumstances that are difficultto predict and many of which are outside of our control. Important factors that could cause our actual results to differ materially from those indicated in the forward-lookingstatements include, among others, our ability to grow our user base and premium subscriptions; our ability to maintain and enhance our brand and reputation; our ability to managethe growth of our infrastructure effectively; changes to technologies used in our solutions or in global, national, regional or local economic, business, competitive, market, regulatoryand other factors discussed under the heading “Risk Factors" in our annual report on Form 20-F for the year ended December 31, 2013 filed with the Securities and ExchangeCommission on March 20, 2014. Any forward-looking statement made by us in this presentation speaks only as of the date hereof. Factors or events that could cause our actualresults to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements,whether as a result of new information, future developments or otherwise.
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, Wix uses the following non-GAAP financial measures:Collections, adjusted EBITDA, free cash flow, non-GAAP net loss and non-GAAP net loss per share (collectively the "non-GAAP financial measures"). Collections represents thetotal cash collected by us from our customers in a given period and is calculated by adding the change in deferred revenues for a particular period to revenues for the same period.New Adjusted EBITDA represents earnings before interest, bank charges and other financial income and expenses, net; unrealized gains or losses on certain hedging transactions;income tax; depreciation and amortization and further eliminates the effect of share-based compensation expense, changes in deferred revenue and prepaid domain registrationcosts and other unusual or non-recurring expenses. Prior Adjusted EBITDA, which is presented for comparison, is the same except that it does not adjust for changes in deferredrevenue, prepaid domain registration costs and realized gains and losses on certain hedging transactions. Free cash flow represents cash flow from operating activities minuscapital expenditures. Non-GAAP net loss represents net loss calculated in accordance with GAAP as adjusted for the impact of share-based compensation expense and other non-GAAP adjustments. Non-GAAP net loss per share represents non-GAAP net loss divided by the weighted average number of shares used in computing GAAP loss per share.
The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented inaccordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-periodcomparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and futureprospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
For more information on the non-GAAP financial measures, please see the "Reconciliation of GAAP to Non-GAAP Financial Measures" table in this press release. Thisaccompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations betweenthese financial measures. The company has not reconciled adjusted EBITDA guidance to net profit because it does not provide guidance for net profit. As items that impact netprofit are out of the company's control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net profit is notavailable without unreasonable effort.
Certain data in this presentation was obtained from various external sources, and the company has not verified such data with independent sources. Accordingly, the companymakes no representation as to the accuracy or completeness of that data or to update such data after the date hereof. Such data involves risks and uncertainties and is subject tochange based on various factors.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of theproducts or services of the company.
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Key Metrics: Q4 2014
$49.3 Million
Revenue Registered Users
PremiumSubscribers
Collections
57.9 Million 1.2 Million$41.6 Million
$50.5 Million Collections on a Constant Currency basis
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Q4 2014 HighlightsFinancial Highlights:
Collections of $49.3 million, 61% Y/Y growth, 66% Y/Y growth on a constantcurrency basis
Revenue of $41.6 million, 67% Y/Y growth
Strong premium subscription growth – 108,000 net adds, 56% Y/Y growth
New Adjusted EBITDA of $(1.3) million, improvement from Q3 2014
Business Highlights:
Announced partnership with Shutterstock providing Wix users seamless access through the WixEditor to Bigstock’s marketplace of over 21 million photos, videos, vectors and illustrations
Announced a partnership with Microsoft in which subscribers to Office 365 will have the ability toselect Wix.com to create and launch their online presence
ShoutOut App: launched a Wix native mobile application. The Wix ShoutOut app allows users tocreate and send beautiful newsletters, notes or announcements from their mobile device
Super Bowl campaign: launched the #ItsThatEasy campaign in early January 2015, which includedthe company’s first ever Super Bowl commercial; nearly 300 million engagements to date
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1,233
1,125
1,019
908
790
707
627
549
470414
378338
298266
223192
Users and Subscriptions
58
54
50
46
42
39
36
32
28
2522
2017
14
118
2011 2012 2013 2014
Registered Users(Millions, at End of Period)
Premium Subscriptions(Thousands, at End of Period)
56% Y/Y
38% Y/Y
2011 2012 2013 2014
Q4Q4
6
$10
$25
$44
$80
$142
$25
$42
2010 2011 2012 2013 2014 Q4 '13 Q4 '14
$14
$30
$53
$99
$171
$31
$49
2010 2011 2012 2013 2014 Q4 '13 Q4 '14
Collections and Revenues
Collections($ Millions)
Revenues($ Millions)
116%
77%
88%
61%
150%
78%
84%
67%
74% 76%
Constant Currency:$51mm, 66% Y/Y
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28,83537,440
87,484
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
136,364
Consistent BehaviorActive Premium Subscriptions from Q1 User Cohorts
Number of Quarters Passed
New Registered Users
Q1’10919,221
Q1’111,833,897
Q1’122,651,656
Q1’133,714,472
Q1’144,089,253
18,513
29,612
62,071
33,747
Note: Data as of December 31, 2014
19,329
92,019
• Improved conversion in 2013 and 2014 cohorts
• Retention strengthening in pre-2014 cohorts
• Driven by product improvements, shift to annual plans and payment infrastructure
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Marketing EfficiencyOne Time Marketing, Ongoing Monthly Collections
Note: Data as of December 31, 2014
Q1’13 Cohort
Q1’12 Cohort
Q1’11 Cohort
Q1’10 Cohort
Marketing Cost ($mm)
… After 8 Quarters
3.2x
… After 12 Quarters
3.6x
… After 16 Quarters
5.5x
… After 20 Quarters
11.9x
Cohort Net Collections ($mm)
$8
$26To Date
$17To Date
$5
$16To Date
$3
$12To Date
$1
… After 4 Quarters
1.2x
$18 $21To Date
Q1’14 Cohort
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Increasing Geographic PenetrationRevenue by Geography (% of total revenue)
71%
51%
17%
27%
3%10%
9% 12%
2010 2014
North America Europe Latin America Asia and others
Growth Rate vs. 2013
96% Y/Y
64% Y/Y
63% Y/Y
96% Y/Y
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In Q4, approximately 72% of Collections were paid in US Dollars, ~20%in Euro and GBP and ~8% in other currencies; approximately 40% ofour expenses are paid in Israeli Shekels (NIS)
We hedge the Euro and GBP for our Collections and NIS for expenses
• Currently, we have favorable NIS, Euro and GBP hedges in place through December 2015
Gains and losses from hedges that are recorded using hedgeaccounting – which include substantially all of our hedges related toexpenses – are reported as a component of Other ComprehensiveIncome or Loss and reclassified into earnings in the same period orperiods during which the hedged transaction affects earnings
Overview of FX Impact
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Gains and losses on those hedges which are not recorded using hedgeaccounting – which include all of our hedges related to Collections – arerecorded in “Financial income and (expenses), net”
• In Q4 2014, realized gains on hedges totaled $556K and in FY 2014 was$232K
• Given realized gains and losses on hedges impact cash flow,we will report this as part of our Adjusted EBITDA
Excluding gains related to our FX hedging program and assuming FXrates remained constant from Q3 2014 through Q4 2014,our Q4 2014 collections would have been $1.2 million higher
Excluding gains related to our FX hedging program and assuming FXrates remained constant from Q4 2013 through Q4 2014,our Q4 2014 collections would have been $1.4 million higher
Overview of FX Impact
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Overview of FX Impact
(in thousands) Q4 ’13 Q4 ‘14 Y/Y%
Collections $30,592 $49,279
F/X impact on Q4/14 using Q4/13 rates - 1,355
Collections excluding FX impact $30,592 $50,634 66%
(in thousands) Q3 ’14 Q4 ‘14 Q/Q%
Collections $44,586 $49,279
F/X impact on Q4/14 using Q3/14 rates - 1,191
Collections excluding FX impact $44,586 $50,470 13%
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Q4 & 2014Non GAAP Financial Results(in thousands) Q4 ’13 Q4 ‘14 Y/Y% 2013 2014 Y/Y%Collections $30,592 $49,279 61% $98,673 $171,255 74%
Revenues $24,943 $41,559 67% $80,473 $141,841 76%
Gross Margin % 82% 82% 82% 82%
R&D expenses $8,789 $14,428 64% $26,511 $51,120 93%
% of revenues 35% 35% 33% 36%
S&M expenses $15,914 $26,341 65% $52,591 $95,173 81%
% of revenues 64% 63% 65% 67%
% of collections 52% 53% 53% 56%
G&A expenses $1,937 $3,329 72% $6,077 $11,569 90%
% of revenues 8% 8% 8% 8%
New Adjusted EBITDA
($713) ($1,309) N/M ($1,897) ($11,260) N/M
% of revenues 3% 3% 2% 8%
Net Loss ($6,958) ($9,604) N/M ($20,953) ($40,247) N/M
% of revenues 28% 23% 26% 28%
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Non-GAAP Financial Summary
(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
Revenues $43,676 $80,473 $141,841 $24,943 $41,559
Gross Profit $34,548 $65,706 $116,738 $20,501 $34,246
Gross Margin 79% 82% 82% 82% 82%
Net Loss ($13,718) ($20,953) ($40,247) ($6,958) ($9,604)
New Adjusted EBITDA
($5,354) ($1,897) ($11,260) ($713) ($1,309)
Prior AdjustedEBITDA
($13,070) ($18,244) ($38,462) ($5,765) ($8,973)
Free Cash Flow ($4,555) $1,173 ($6,422) $1,009 $126
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APPENDIX
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Reconciliation of GAAP to Non-GAAP
(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
Revenues $43,676 $80,473 $141,841 $24,943 $41,559
Change in Deferred Revenues
8,803 18,200 29,414 5,649 7,720
Collections $52,479 $98,673 $171,255 $30,592 $49,279
(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
Net Cash (used)/from Operating Activities
($3,608) $4,243 ($803) $2,434 $1,064
Capital Expenditures (947) (3,070) (5,619) (1,425) (938)
Free Cash Flow ($4,555) $1,173 ($6,422) $1,009 $126
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Reconciliation of GAAP to Non-GAAP
(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
GAAP Net Loss ($14,972) ($28,720) ($56,566) ($10,918) ($15,076)
Adjustments:
Financial expenses(income), net
(487) 603 (2,144) 502 (538)
Other expenses (income) 2 18 14 (2) 9
Taxes on income 496 1,572 3,052 580 1,751
Depreciation 871 1,229 2,662 374 879
Amortization - - 153 - 119
Withdrawn secondary offering expenses
- - 365 - -
Acquisition related expenses
- - 65 - -
Stock-based compensation
1,020 7,054 13,937 3,699 3,883
Total adjustments $1,902 $10,476 $18,104 $5,153 $6,103Prior Adjusted EBITDA ($13,070) ($18,244) ($38,462) ($5,765) ($8,973)
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Reconciliation of GAAP to Non-GAAP(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
GAAP Net Loss ($14,972) ($28,720) ($56,566) ($10,918) ($15,076)
Adjustments:
Interest, bank charges & other financial expenses (income), net
(487) (18) 262 204 245
Unrealized losses (gains) on hedging transactions
- 469 (2,124) 187 (227)
Other expenses (income) 2 18 14 (2) 9
Taxes on income 496 1,572 3,052 580 1,751Depreciation 871 1,229 2,662 374 879Amortization - - 153 - 119Withdrawn secondary offering expenses
- - 365 - -
Acquisition related expenses - - 65 - -
Stock-based compensation 1,020 7,054 13,937 3,699 3,883Change in deferred revenue 8,803 18,200 29,414 5,649 7,720Change in prepaid domain registration costs (1,087) (1,701) (2,494) (486) (612)
New Adjusted EBITDA ($5,354) ($1,897) ($11,260) ($713) ($1,309)
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Reconciliation of GAAP to Non-GAAP
(in thousands) 2012 2013 2014 Q4 ’13 Q4 ‘14
GAAP Gross Profit $34,443 $65,216 $115,733 $20,297 $33,999
Stock-based Compensation 105 490 1,005 204 247
Non-GAAP Gross Profit $34,548 $65,706 $116,738 $20,501 $34,246
GAAP Net Loss ($14,972) ($28,720) ($56,566) ($10,918) ($15,076)
Stock-based Compensation and other Non GAAP Adjustments
1,254 7,767 16,319 3,960 5,472
Non-GAAP Net Loss ($13,718) ($20,953) ($40,247) ($6,958) ($9,604)