Wix.com has reported a dynamic first quarter for 2026, marked by strong revenue growth and the impressive performance of its AI acquisition, Base44. This growth was coupled with a significant capital restructuring through a $1.6 billion share buyback program. Despite these positive indicators, the company's quarterly results fell short of analyst expectations, leading to a notable drop in its share price.
Quarterly Performance and Market Reaction
The company announced first-quarter revenue of $541 million, a 14% increase year-over-year, with bookings rising 15% to $585 million. These figures demonstrate solid underlying demand and a substantial subscription base, with total annual recurring revenue reaching $1.9 billion. However, these results were slightly below analysts' forecasts, contributing to immediate investor disappointment.
The earnings miss was largely attributed to increased operational costs, including a $90 million investment in marketing to promote Base44. Non-GAAP earnings per share landed at $0.68, significantly lower than the projected $1.22. Consequently, Wix's stock price slumped over 30% following the announcement, reflecting market concerns over profitability and increased spending.
Base44 Acquisition Fuels New Growth
A key driver of Wix's growth strategy is Base44, an AI-powered website and app development engine acquired in 2025. The Israeli startup's founders and employees recently received a $38 million milestone payment in Wix shares for meeting ambitious sales targets. This payment underscores the successful integration and performance of the acquired technology within the Wix ecosystem.
Base44 has demonstrated remarkable momentum, with its annual recurring revenue (ARR) reaching approximately $150 million as of May. This rapid scaling has been instrumental in boosting new user acquisition, contributing to a nearly 46% year-over-year increase in bookings from new cohorts. The platform's "Vibe Coding" approach allows users to create digital assets using natural language, representing a significant innovation.
Proprietary AI and Strategic Vision
Beyond Base44, Wix is deepening its commitment to artificial intelligence by developing its own proprietary technologies. The company's core platform, Wix Harmony, is now powered by a custom-built Large Language Model (LLM). This strategic move gives Wix greater control over product development, costs, and the overall user experience.
CEO Avishai Abrahami emphasized that the proprietary model creates a significant competitive advantage by enabling continuous improvement based on user data. This in-house approach is central to the company's long-term product roadmap and profitability strategy. It reduces reliance on third-party LLMs, positioning Wix for more efficient scaling of its AI features across its platform.
Aggressive Share Repurchase Program
In a bold financial maneuver, Wix completed a modified Dutch auction tender offer in early April, repurchasing 17.58 million shares. The company deployed approximately $1.617 billion to buy back nearly 30% of its outstanding shares. This action signals management's confidence that the stock was undervalued and is intended to generate significant long-term shareholder value.
This substantial share repurchase fundamentally resets the company's equity base, which is expected to enhance per-share metrics going forward. However, it also raises the stakes for future performance, as the market will expect growth to justify such an aggressive capital return. Management reiterated its full-year guidance, projecting continued mid-teens growth in both revenue and bookings for 2026.
Wix is at a pivotal juncture, aggressively investing in its AI-driven future while executing a major capital restructuring. The rapid success of Base44 and the development of proprietary AI models signal a clear strategic direction focused on innovation. The company must now translate these investments and its reshaped capital structure into sustained profitability to regain investor confidence.