Wix: Towards a change in Strategy?
- Yoel Frischoff
- Feb 23, 2022
- 3 min read
Updated: Mar 26
Published: 02/23/2022
Updated: 02/24/2025
Does investors' shock verdict mean #Wix is to shift its #strategy from #growth to #profitability?
Will the company pull the levers it needs to increase such profitability?
A Wake-Up Call
Investors’ response to Wix’s financial outlook, citing 5% free cash flow in ’22 and 10% in ’23, suggests a shift in focus towards profitability. This shift may involve extracting more value from the current user base, increasing revenue retention, and exploring new value-added services.
With recent signals money supply might dwindle as central banks gird to fight inflation, increasingly cautious investor mindset means growth companies may now shift their focus towards proven profitability.
The growth king may not be dead yet, but long lives #operationalexcellence. Management at the company certainly has a lot to think about, after the chilly response to its somewhat sparse yearly revenue and profit forecast.
Strategy Shift Looming
While part of Investors scramble to the exit is certainly due to #covid related uncertainty; I humbly suspect that the financial outlook in the company guidance, citing 5% free cash flow in '22 and 10% in '23, may not be enough.
Capital supply may become short in the next few years - as might investors' patience for loss making companies. The challenge ahead is then, how to extract more #value from the current user base:
How many would eventually move up the #freemium ladder?
How revenue retention can be increased? How to cross-sell to paying customers new value added services, and
How can the platform sustain the full digital lifecycle of modern day small businesses?
Finally, an intriguing one: Can, and should, Wix create value propositions for larger - and better paying - customers, or will Wordpress ecosystem continue to rule this space?
These are some questions that will determine #wix future success and a renewed #investor #confidence. Wix's change of strategy is coming!
Following Up
I made it a habit to revisit old posts in this blog, to see if and how my observations and forecasts have materialized. March 2025 now. Three years have transpired.
Let's first review the financial perspective:
The share price shows steady growth, as the company's fortune mature - both in terms of sustained profitability, and healthy growth.
Following the wake-up call in early 2022, Wix shifted from “growth at all costs” to building a leaner, more focused product strategy. It shut down non-core tools like Wix Answers, stopped internal experiments that didn’t drive revenue, and doubled down on its core website and commerce platform.
The result? The stock that more than doubled from its early 2022 low. Not surprisingly so, as the per share results shot from loss of $(0.37) per share, to $2.36.
A product Perspective
As my scope is more on product strategy, and as a long time user, It is worth while to dwell on the product aspects of the platform (where you are now reading this).
The Good
Wix.com has indeed leaned up its offering, and currently offers a stronger product lineup.
Interestingly, the launch of Wix Studio marks a clear pivot toward serving high-value professional users and agencies.
According to Wix, the partner program, whose revenue is defined as revenue generated through agencies and freelancers that build sites or applications for other users as well as revenue generated through B2B partnerships, has achieved a compound annual growth rate (CAGR) of approximately 50% since 2019, positioning it as a key driver of the company's overall business expansion. In 2019, revenue from the Partners segment was $93 million, which increased to $469 million by 2023.
By streamlining features and targeting higher-tier customers, Wix turned its platform into a more premium, margin-friendly product.
The Bad
The pressure to extract more is showing.
Site owners are targeted with multiple up-sell offerings.
Here's my own dashboard. I've marked the areas wher upsells are pushed directly, or one click away.
Wix is an important player in the local high tech arena here in Tel Aviv, and despite my (monute) grievances, I wish them the best...
Spring Cleaning
I took the liberty to streamline the owner dashboard so it fits my needs as a product consultancy. Feel free to browse the mockup:
At TheRoad, we specialize in #businessmodel creation; #productstrategy ; #growthstrategy.
We help managements evaluate their options, craft their strategy, and create measurable workplans.
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