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    WIX
    Earnings call· Jun 2026(Q2 FY26)

    Wix.com Q2 FY26 earnings call WIX

    Aug 4, 2026 Source

    Executive summary

    Wix Q2 FY26 — BASE44 Margin Improvement and Strategic AI Investments

    Wix delivered solid Q2 FY26 results, driven by strong BASE44 performance and accelerating self-creators revenue. The company's strategic focus on proprietary AI models, particularly Base1 for BASE44, has significantly improved gross margins, enabling aggressive reinvestment into sales and marketing to capture market share in the dynamic AI-powered app creation space. Management remains confident in its long-term growth trajectory and free cash flow generation through continued AI innovation and disciplined execution.

    Highlights

    5

    • BASE44 non-GAAP gross margin expected to improve from ~0% to ~60% in H2 FY26 due to Base1 LLM.

    • Bookings grew 12% YoY and revenue grew 15% YoY, driven by strong BASE44 performance.

    • Self-creators revenue growth accelerated sequentially to 14% YoY, underpinned by improving conversion, stable retention, and robust top of funnel.

    • Base1 LLM developed in-house provides tighter control, faster iteration, better cost structure, and superior results for BASE44 applications.

    • Company-wide non-GAAP gross margin expected to improve by 2 points in H2 FY26 vs. H1 FY26.

    Concerns

    5

    • Total non-GAAP gross margin was down 3 points YoY to 67% due to elevated investments in BASE44 and AI compute costs.

    • Non-GAAP operating income was 12% of revenue, primarily driven by continued higher sales and marketing expenses.

    • GPV grew only 3% YoY, primarily due to the wind down of InkFrog, which had low monetization.

    • Bookings growth (low teens percentage) is expected to lag revenue growth (low to mid-teens percentage) for the full year FY26.

    • R&D expenses expected to remain stable in H2 FY26 due to FX headwind from strengthening Israeli shekel offsetting savings.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year FY26 Bookings Growth
    low teens percentage
    medium materiality
    High
    Full-year FY26 Revenue Growth
    low to mid-teens percentage
    high materiality
    High
    Q3 FY26 Revenue Growth
    low double-digit percentage
    medium materiality
    High
    Full-year FY26 Free Cash Flow Margin (excluding acquisition and restructuring costs)
    high teens
    high materiality
    High
    BASE44 Non-GAAP Gross Margin
    approximately 60%
    high materiality
    High
    Consolidated Non-GAAP Gross Margin Improvement
    approximately 2 points
    medium materiality
    High
    Q3/Q4 FY26 Sales and Marketing Activities
    remain elevated
    medium materiality
    High
    H2 FY26 R&D Expenses
    remain stable
    low materiality
    High
    Consolidated Non-GAAP Operating Margin
    step up
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Self-creators
    Revenue growth accelerated sequentially, underpinned by healthy business fundamentals, including improving conversion from free to paid users, stable retention behavior and a robust top of funnel.
    		—14%accelerated sequentially—
    Partners
    Revenue growth was in line with expectations, with a step-up in BASE44 contribution as professionals increasingly leveraged AI and AI agents in their workflows.
    		—17%——

    Operational metrics

    10
    Bookings
    12%YoY
    Q2 FY26

    Bookings grew 12% year-over-year.

    Revenue
    15%YoY
    Q2 FY26

    Revenue grew 15% year-over-year.

    Non-GAAP gross margin
    67%down 3 points YoY, slight increase sequentially
    Q2 FY26

    Total non-GAAP gross margin was 67%, a slight increase sequentially and down 3 points year-over-year, driven by continued elevated investments in BASE44 and AI compute costs.

    Non-GAAP operating income
    12%
    Q2 FY26

    Total non-GAAP operating income came in at 12% of revenue, primarily driven by continued higher levels of sales and marketing expenses.

    Non-GAAP S&M expenses
    elevated
    Q2 FY26

    Non-GAAP S&M expenses remained elevated in the second quarter as expected, as we continue to accelerate marketing investments into BASE44.

    Cash and cash equivalents balance
    $960 million
    Q2 FY26 end

    Ended Q2 '26 with approximately $960 million in cash and cash equivalents.

    Total debt
    $1.63 billion
    Q2 FY26 end

    Ended Q2 '26 with $1.63 billion in short- and long-term debt.

    TROI target
    moderately longer
    null

    We are raising our TROI target moderately, underscoring our confidence that the opportunity in front of us remains competitive but massive.

    BASE44 Non-GAAP gross margin
    60%from near 0% entering 2026
    H2 FY26

    Expected to be approximately 60% in the second half of this year, a significant improvement from near 0% entering 2026 due to Base1.

    Consolidated Non-GAAP gross margin improvement
    2 points
    H2 FY26 vs H1 FY26

    Cost savings from Base1 are expected to translate into approximately 2 points of total non-GAAP gross margin improvement in the second half of the year versus the first half for the consolidated business.

    Industry KPIs

    3
    MetricValueDetails
    Customer logo metrics40% personal / 60% business%
    GMV take rate payments3%%
    Bookings tcv book to bill12%%

    Product announcements

    2
    ProductTypeDetails
    Base1launch
    Wix Harmony LLMlaunch

    Deals & partnerships

    1
    InkFrogWind down of subsidiary as part of organizational realignment to refocus efforts on high-return products.

    GPV in Q2 grew 3% year-over-year, driven primarily by the wind down of our subsidiary, InkFrog, as part of our organizational realignment in June to refocus efforts on high-return products.

    Risks & headwinds

    3
    Elevated investments in BASE44 and AI compute costsQ2 FY26

    Total non-GAAP gross margin was down 3 points YoY to 67% due to continued elevated investments in BASE44 to support its rapid growth and elevated AI compute costs.

    Mitigation: Base1 LLM is expected to improve BASE44 gross margins to ~60% in H2 FY26, leading to a 2-point consolidated gross margin improvement.

    Elevated sales and marketing expensesQ2 FY26, Q3 FY26, Q4 FY26

    Non-GAAP S&M expenses remained elevated in Q2 FY26 and are anticipated to remain elevated in Q3 and Q4 FY26.

    Mitigation: Gross margin savings are being reinvested into BASE44 sales and marketing to capture increased demand and market share, with a moderately longer TROI target.

    FX headwind from strengthening Israeli shekelH2 FY26

    The FX headwind from a strengthening Israeli shekel offset savings from organizational realignment.

    Mitigation: Organizational realignment savings partially mitigated the FX impact, leading to R&D expenses remaining stable in H2 FY26 compared to H1 FY26.

    What to watch in Q3 FY26

    5

    BASE44 annual renewals behavior

    Next quarter (Q3 FY26)
    CurrentNearing first annual renewals, monthly behavior improving.
    TargetClearer trends on annual renewal rates, comparison to monthly cohorts.

    Why it matters

    Indicates the long-term durability and predictability of BASE44's ARR and user commitment.

    Elizabeth, so yes, you're correct. We are nearing kind of the first round of the annual renewals for BASE44. And naturally, we're not there yet. So we are not ready to comment or speak about it.

    Q&A highlights

    6

    Asked for more detail on Base1's build, potential quality trade-offs, and future cost/compute improvements.

    Avishai explained Base1 is trained in-house, continuously improving based on user interactions and results. It's better for BASE44-specific applications than frontier models, leading to significant cost reduction.

    “It's not better for everything. I want to be very clear about it. It's better for BASE44, right? But we do see a significant improvement. And of course, the cherry on the top is the fact that it also costs dramatically less.”

    asked by Ygal Arounian · answered by Avishai Abrahami

    2 min read7 chapters

    Detailed Narrative

    01

    AI Strategy and Proprietary LLMs

    Wix is pursuing a dual AI strategy with Wix Harmony for self-creators and BASE44 for natural language app creation. A key milestone was the introduction of Base1, a proprietary LLM for BASE44, built in-house for better quality control, faster iteration, and improved cost structure. This approach allows Wix to capture demand across evolving AI market segments and leverages 20 years of expertise in making complex technology accessible.

    02

    Base1's Impact on BASE44 Economics

    The in-house development of Base1 has dramatically improved BASE44's gross margin, projected to reach approximately 60% in H2 FY26 from near 0% at the start of the year. This cost optimization, combined with the successful deployment of the Wix Harmony LLM earlier, demonstrates Wix's ability to leverage its AI expertise for tangible financial benefits and move towards a more sustainable margin-healthy model.

    03

    Growth Trends Across Segments

    Q2 FY26 saw bookings grow 12% YoY and revenue 15% YoY. Self-creators revenue accelerated to 14% YoY, driven by improved conversion from free to paid users, stable retention, and robust top of funnel. Partners revenue grew 17% YoY, with increasing BASE44 contribution as professionals leveraged AI agents. BASE44 itself continued strong growth, with elevated top-of-funnel demand and outperforming new cohorts, leading to increased user trust and annual plan adoption.

    04

    Investment Strategy and TROI

    Given the strong demand and improved margin profile of BASE44, Wix plans to invest further into the platform, moderately raising its TROI target. This aggressive market share capture strategy involves reinvesting gross margin savings into sales and marketing for BASE44, aiming for sustained long-term growth and market leadership in the dynamic AI-powered app creation space.

    05

    Financial Performance and Outlook

    Total non-GAAP gross margin was 67% in Q2, down 3 points YoY due to BASE44 investments. Non-GAAP operating income was 12% of revenue, impacted by elevated S&M. The company maintains full-year guidance for low teens bookings growth, low to mid-teens revenue growth, and high teens free cash flow margin, expecting non-GAAP operating margin to step up in H2 due to lower AI costs and decreased core Wix marketing.

    06

    Partner Ecosystem Evolution

    The partner ecosystem is showing increased appetite for AI solutions, with some partners shifting activity to BASE44 for application building, enabling them to charge higher fees for more complex projects ($15,000-$30,000 vs. $1,000 for a website). While early, this trend suggests an evolution in how agencies leverage AI, with Wix aiming to provide value across its product portfolio, including new solutions being tested.

    07

    Competitive Landscape and Moat

    Avishai Abrahami discussed the competitive landscape for AI models, noting that while current frontier models use similar algorithms, the moat for Base1 comes from its continuous training based on user interactions and its ability to solve specific application-building problems better than generic models. He emphasized that Wix and Lovable are inventing a new market together rather than directly competing for existing share, with Wix estimating it is ahead in the important U.S. market.

    AI-generated summary of the company’s earnings call. Not investment advice.