Wix.com’s Q4 profit up

Wix.com, which helps small businesses build and operate websites, posted higher-than-expected fourth-quarter profit and forecast a 25% rise in revenue in 2019.

It reported on Wednesday a net profit of 42 cents per share excluding one-time items, up from 16 cents a year earlier. Revenue grew 39% to $164 million.

Analysts had forecast adjusted profit of 33 cents a share on revenue of $162m., I/B/E/S data from Refinitiv showed.

Israel-based 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 has 142 million registered users. During the quarter it added 147,000 paid users to reach 4 million premium customers, up 24% from the end of 2017.

Wix projects 2019 revenue of $755-$761 million, up 25-26% from 2018. Analysts were forecasting revenue of $761m.

Chief Financial Officer Lior Shemesh said Wix expects to generate free cash flow of about $155m., from which it will use $15-$20m. for new growth initiatives.

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“If there will be upside from those investments it’s not part of our guidance. Potentially there’s an upside,” he told Reuters, noting 2018 was a record year for product launches.

The company has seen strong demand for its paid set of tools Ascend, which was launched in December and allows businesses to connect with and manage customers.

President Nir Zohar said Wix’s main competitor is Squarespace, a private New York-based firm. There has been some recent M&A activity in the sector, with the $2 billion acquisition of Web.com by Siris Capital and Square Inc.’s $365m. purchase of Weebly.

For the first quarter Wix, whose shares have jumped nearly 70% in the past year, estimates revenue of $172-$173m., up 25-26% from a year earlier.

(Reuters)