JERUSALEM (Reuters) – Israel’s Wix.com, which helps small businesses build and operate websites, swung to a loss in the second quarter as it ploughed investments into marketing to meet the demands of new customers during the COVID-19 pandemic.
The company on Thursday reported a quarterly net loss excluding one-time items of 26 cents per share, compared with a profit of 34 cents per share a year earlier. Revenue grew 27% to $236 million as customers rushed to move their operations online during the pandemic.
The result fell short of analyst estimates – according to I/B/E/S data from Refinitiv Wix was expected to earn 24 cents a share ex-items on revenue of $233 million, partly due to a doubling in marketing investments.
“We want to be aggressive and to invest and it would be stupid not to do that, and to invest in marketing in order to support this demand. So it will take some time to catch up with us,” said Chief Financial Officer Lior Shemesh.
For the third quarter Wix estimated revenue of $247-$250 million, up 26%-27% from a year earlier. Analysts are forecasting Wix will post revenue of $249.5 million in the third quarter.
Its Nasdaq-listed shares have jumped 153% so far in 2020 to $309.59.
Wix offers free basic features for setting up websites but users must pay for extra services such as shopping carts, individual web addresses and site traffic analysis.
The company said it added a record 9.3 million users and 346,000 net premium subscriptions in the second quarter, a jump of 17% from a year earlier. Wix has 182 million registered users, up 18% from last year.
Results in July point to continuing growth in demand as businesses dealing with coronavirus lockdowns and restrictions shift focus to online platforms, said Wix President Nir Zohar.
That shift, he said, was bound to happen naturally even without the global pandemic, but “necessity made it happen much much faster”.
(Reporting by Ari Rabinovitch; Editing by Tova Cohen and Emelia Sithole-Matarise)