Wix.com Ltd. (WIX) - Get Wix.com Ltd. Report sank 12.32% to $110.26 in afternoon trading Wednesday after the website design firm beat Wall Street's fourth quarter earnings and revenue expectations, but provided weak revenue guidance for the first quarter and 2019.
The Tel Aviv, Israel-based company reported net earnings of $20.8 million, or 42 cents a share, up from $7.2 million, or 16 cents a share a year ago, and beating analysts' expectations of 32 cents a share. Revenue totaled $164.2 million, up from the year ago total of $118.5 million, and besting Wall Street's forecast of $162 million.
The company has 142 million registered users. During the quarter it added 147,000 paid users to reach 4 million premium customers, up 24% from a year ago.
For the March quarter, Wix forecast revenue of $172 million to $173 million, while analysts are looking for $176.4 million in sales. Wix projected 2019 revenue in the range of $755 million $761 million, up 25-26% from a year ago. Wall Street is looking for revenue of $761 million.
Rosenblatt Securities analyst Mark Zgutowicz downgraded Wix to Sell from Neutral and cut his price target on Wix.com shares to $73 from $75. In a note to investors, Zgutowicz said that the company's Q4 results and guidance "highlighted a continued downward conversion trajectory" and referred to the company's Wix Code development platform as "a niche product with no meaningful benefit to conversion."
"2018 marked our fifth consecutive year of greater than 40% revenue growth since our IPO in combination with record margin expansion, driving free cash flow of over $100 million," Lior Shemesh, chief financial officer, said in a statement. "This combination of growth and profitability highlights our ability to generate positive returns on investments in our business. Our 2019 outlook reflects continued growth from existing and new products as we plan to make additional investments this year to bring these new products to market and expand into new markets. Additionally, the strategic change we initiated last year of a greater focus on generating higher value from our user cohorts is producing early signs of success."