Wix.com Ltd. (NASDAQ:WIX) Q2 2024 Earnings Call Transcript

Wix.com Ltd. (NASDAQ:WIX) Q2 2024 Earnings Call Transcript August 7, 2024

Operator: Good day, and thank you for standing by. Welcome to Wix Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Emily Liu of Investor Relations. Please go ahead.

Emily Liu: Thanks, Amy, and good morning, everyone. Welcome to Wix’s second quarter 2024 earnings call. Joining me today to discuss the results are Avishai Abrahami, CEO and Co-Founder; Nir Zohar, our President and COO; and Lior Shemesh, our CFO. During this call, we may make forward-looking statements, and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results and key operating metrics. You can find all reconciliations between our GAAP and non-GAAP results in the earnings materials, and in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com. With that, I’ll turn the call over to Avishai.

Avishai Abrahami: [Technical Difficulty] Emily, and good morning, everyone. I’m very pleased to share that we finished the first half of 2024 with excellent Q2 results. And by successfully executing our strategy and delivering innovative solutions to our users, we were able to drive impressive year-over-year bookings growth of 15%. This is a significant acceleration from the 10% bookings growth we saw in Q1 and underscores our leading position as the go-to platform for any user or business to create, grow and succeed online. We also generated 12% revenue growth. which again exceeded the top end of our guidance. The strong top line results reflect the encouraging reception and performance of our key product initiatives that are continuing to propel our momentum.

I’ll share some updates on Wix Studio and our AI strategy before letting Nir, dive into the incredible progress we’ve made in expanding our commerce platform. First, we continue to see outstanding results from Studio, as we steadily add new features and enhancements. This quarter, we rolled out new dynamic, no-code design expressions, business enablement capabilities and tools to help partners work better with their clients and grow their business. Most notably, we announced a highly anticipated Figma Plugin, a top partner request. Partners can now leverage Studio’s no-code animations, built-in business and AI solutions, CMS and workflow management tools to transform their Figma designs into powerful and dynamic websites seamlessly. Feedback has been very positive following this launch.

The number of Studio accounts and rate of new partners joining the Wix platform through Studio continue to outperform expectations. We also saw an acceleration in the pace of Studio subscription purchases. This, along with strong retention of existing subscriptions and the ramping of partners purchasing their second, third, and fourth Studio packages, drove quarter-over-quarter Studio bookings growth of 20%. Our platform is increasingly resonating with the professional community, as we continue to deliver best-in-class innovations and grow our partner ecosystem. Second, we continue to build up our suite of AI capabilities as a result of the numerous AI initiatives and work streams across weeks. Last quarter, we introduced our plan to embed AI assistance across our platform and products.

I’m excited to share that we have released 17 AI business assistants so far to-date. These assistants span a wide range of use cases to support users with minimal hands-on support, thus streamlining their experience. These conversational AI assistants act as a right-hand aid for users to guide them through the entire lifecycle of ideating, creating, and managing their online presence. Our offering includes an analytics assistant that can help Wix users find the data they need without having to search through dozens of reports, and an assistant that helps users create events through a conversational chat. We have already received positive feedback on this first set of AI assistants with dozens more set to launch later this year. Additionally, on the AI front, we launched AI creation capabilities for our mobile app builder in June.

This new solution enables users to create and edit iOS or Android apps through an AI chat experience. Once AI understands the user’s goals, intent, and desired aesthetic, our technology generates a branded app that can be customized and managed from the app editor. We also recently released a suite of new AI features designed to help users identify relevant topics for blogs, as well as generate outlines, content, and images for their target audience. With this new experience, users can swiftly turn ideas into near-ready articles, significantly reducing the time and effort required to create engaging content, and ultimately, changing the blog creation experience. Both Self-Creators and Partners continue to show excellent engagement with our AI tools.

As we expand the breadth of our AI technology, we expect it to continue to be a competitive advantage for us, as well as a significant driver of growth going forward. We have built up a lot of momentum in the first half of 2024 with many exciting and impactful innovations powering meaningful growth acceleration. We expect to continue this momentum into the back half of the year with many exciting things still to come. Thank you to the entire Wix team for your hard work to make Wix the web creation platform of choice. And thank you to our users for trusting us to help you achieve your goals. With that, I’ll turn it over to Nir.

Nir Zohar: Thank you, Avishai, and thank you, everyone for joining us today. I’d like to start with a quick update on our user cohorts before diving into the third leg of our growth strategy, our commerce platform. First, Q2 was another great quarter, marked by strong business fundamentals and robust user behavior. Our Q1 ’24 user cohort remains our strongest non-COVID cohort, generating more cumulative bookings in its first two quarters than our Q1 ’23 cohort, while having 9% fewer users. This is a result of our continued marketing strategy targeting high intent users. We have continued to expand our user base with Partners and Self-Creators, adding 4.7 million new high intent users in the second quarter. These new users continue to demonstrate strong conversion and increased ARPS and TROI compared to past cohorts.

We continue to benefit from the success of strategic initiatives completed over the past year. Our AI tools continue to drive user conversion, Wix Studio uptake and contribution continues to ramp and consumption of the price increase implemented earlier this year by new and existing users remain strong. All of these factors are driving bookings growth, which we believe is reflecting our unmatched value proposition and durable business model. Our commerce business was a particular highlight this quarter, with transaction revenue growing an impressive 21% year-over-year, and take rate increasing to a record 1.68%. Take rate expanded 10 basis points sequentially, the largest quarter-over-quarter improvement in recent years. Over the past few years, we have built Wix into a full end-to-end commerce platform, enabling business owners of every size across every industry and in any geography to build, manage and grow in Wix.

By introducing new features and capabilities, we have steadily expanded our platform with more merchants globally, choosing and trusting Wix for their business and livelihood. Our platform has expanded in two ways: growing GPV paired with increased monetization of our GPV. First, we are maximizing the GPV flowing through our platform in a few ways. One, we’re continually expanding into new verticals in order to facilitate any business need and diversifying our platform, which helps to insulate us from macro volatility. This quarter, we introduced Wix Donations, which provides a tailored solution for NGOs and Wix Proposals, which helps professionals across various industries create, manage and finalize proposals easily. By expanding our supported verticals, we are appealing to a wider pool of merchants and attracting additional GPV as a result.

Two, we are increasingly onboarding larger merchants with higher average transaction size onto our platform. We expect this to continue as we increasingly win share of the professional market. Three, we are enabling existing merchants to grow their businesses through a growing suite of commerce tools from online advertising and e-mail marketing to AI-based product management. The success of our existing users drives compounding growth and is key to the success of our commerce strategy. In addition to growing GPV, we are also increasing monetization of our GPV by one, adding new payment partners to our Wix Payment platform, which is what we did this quarter by expanding our base of partners, we are increasing our ownership and thus, monetization of the GPV that flows through Wix.

Two, driving higher Wix Payments adoption as new and existing merchants increasingly choose Wix Payments over other providers. The Wix Payments experience is seamless for merchants, with an integrated payments dashboard and built-in disputes tool. Meanwhile, merchants customers have an easy and smooth native checkout experience. New merchant adoption of Wix Payments has steadily ticked up over the last few years, and we expect this to continue. Three, providing additional platform solutions such as POS, credit card on file and mail and e-mail ordering capabilities. These solutions are moving more of our off-line GPV online, thus allowing us to capture and monetize better. Four, enhancing payment offerings to capture more wallet share, particularly in the international markets.

Earlier this year, we introduced new payment providers in India and entered into partnership with Global-e to power cross-border selling on Wix. We started making commerce a focus back in 2020 and our platform has grown tremendously since as a result of our initiatives. GPV in the most recent quarter was more than 2 times that of Q2 ’20 GPV. Our monetization has improved even more significantly with Q2 ’24 transaction revenue more than 5 times that of Q2 ’20 transaction revenue. As a result, our quarterly take rate has more than doubled over this period. Today, our full stack commerce solution provides Wix merchants with all of the tools they need to succeed online and drive strong user retention and higher ARPS. We believe that our commerce platform will remain a key growth driver for both Self-Creators and Partners in years to come.

With that, I will now hand it over to Lior to walk through our financials and outlook. Lior?

Lior Shemesh: Thanks, Nir. Strong execution of the key growth initiatives you just heard about as well as solid business fundamentals resulted in incredible growth momentum and additional margin expansion in the second quarter. As we continue to focus on accelerating top line growth and improving profitability margins in the back half of the year, we now expect to achieve the Rule of 40 in 2024 at the high end of our guidance ranges. I will share more about this exciting milestone, as well as our updated outlook shortly. First, let’s dive into the details of the second quarter. We experienced standout bookings performance with total bookings of $458 million, or 15% growth year-over-year. This was significant acceleration from the 10% growth in Q1 as a result of strong user absorption of the price increase implemented earlier this year, as well as contribution from the strategic initiatives you just heard about.

Contribution from Studio and our growing suite of AI capabilities continued to ramp and are expected to be the main drivers of growth in the coming years. Notably, growth accelerated across both Self-Creators and Partners demonstrating the underlying strength of our entire Wix Platform. Q2 revenue was also very strong and finished above the high end of our guidance. Total revenue grew to $436 million, up 12% year-over-year with growth driven by the same factors that benefited bookings. This quarter, our commerce business performed extremely well with transaction revenue growing 21% to $54 million as a result of healthy GPV growth, along with improving monetization. GPV growth was a product of larger merchants joining Wix and compounding GPV from existing businesses.

Our bookings and events products were the best performing vertical this quarter with GPV growth of approximately 20% and 25%, respectively. This GPV growth was paired with increased monetization driven by the addition of a new payment partners to Wix Payments platform. As a result, take rate in the second quarter reached a record high of 1.68%. This is an increase of 10 basis points sequentially. We expect GPV and take rate to continue to steadily improve over the long term as we grow our commerce platform. Our Partners business was another major driver of overall top line growth this quarter. Partners revenue grew 29% year-over-year as we onboarded new agencies, empowered existing Partners to build more projects on Wix and improved monetization of our professional user base.

Notably, Studio contribution continued to ramp as usage and adoption increased. The accelerating phase of Studio package purchases, strong retention of partners and significant increase in the number of partners building the second, third and fourth website on platform, give us confidence that Studio will be a meaningful driver of partners’ growth in the coming years. Moving on to the cost side of things. Total non-GAAP gross margin in Q2 was 68%, which was in line with our expectation of 68% to 69% gross margin for the full year. Impressively, this quarter, we saw a significant improvement in operating margin. Both GAAP and non-GAAP operating margin increased more than 400 basis points sequentially as a result of lower operating expenses. Q2 operating expenses decreased quarter-on-quarter as a result of payroll efficiencies, lower overhead costs from lower property taxes on our headquarters, and additional subleasing of our office footprint as well as seasonally lower advertising expenses.

We expect to sustain this lower base of payroll and overall costs through the rest of the year, while Studio related sales and marketing costs increased through second half as planned. As a result, non-GAAP operating margin totaled 21% of revenue, while GAAP operating margin was 7% of revenue. Q2 free cash flow excluding headquarter build-out costs totaled almost $118 million or 27% of revenue due to continued strong top line growth and more efficient operating cost base. This quarter marked the completion of our headquarter construction with no additional build-out related CapEx anticipated going forward. This now leads me to our expectations for the back half of 2024. We expect total revenue in Q3 of $440 million to $445 million, representing approximately 12% to 13% year-over-year growth.

For the full year 2024, we are updating our outlook as we expect to sustain the momentum built up in the first half of the year. We now expect total booking of $1,802 million to $1,822 million, or 13% to 14% year-over-year growth. We began to see FX volatility materialize in late Q2, which has continued into early Q3, due to this and a bit more macro unpredictability broadly mostly related to payments, we are building more conservatism into our outlook. I want to highlight that this updated guidance still reflects an acceleration in total bookings 0% to 16% at the high end of our expectations. This has not changed from what we shared in May as we continue to see broad-based trends across our platform. We continue to expect to see Self-Creators and Partners growth continue to accelerate in the second half at the high-end of our expectations as our AI products and Studio platforms performed ahead of plan.

Additionally, we now expect total revenue of $1,747 million to $1,761 million or 12% to 13% year-over-year growth. On the cost side, we continue to expect non-GAAP total gross margin of 68% to 69% for the full year. As we sustain the lower operating expense base achieved in the most recent quarter, non-GAAP operating expenses are now expected to be approximately 50% of revenue for the full year. This is slightly lower than our previous expectation of 50% to 51% of revenue. As a result, we expect to generate free cash flow, excluding headquarter costs of $460 million to $470 million or approximately 26% to 27% of revenue in 2024. This is an increase from the $445 million to $455 million or 26% of revenue previously expected. We now expect to achieve the Rule of 40 milestone this year, assuming the high end of our revenue and free cash flow guidance ranges.

This will be a major milestone that we have steadfastly worked towards for the past three years, even more impressively, we will be achieving this goal one year ahead of plan. This is a testament to the successful execution of our strategic initiatives and focused commitment to profitable growth. But this is certainly not the finish line for us. The bookings acceleration expected this year sets us up for revenue growth acceleration in 2025. We also expect continued incremental free cash flow margin improvement as we maintain our stable cost structure, while our business scales, as a result we are positioned to surpass the Rule of 40 in 2025 more meaningfully than previously expected. Finally, I would like to finish with highlighting another aspect of our three year plan that we are tracking ahead of our share repurchase commitment.

In the second quarter, we repurchased $225 million of shares, making the completion of the board authorized plan approved last August. This marks more than $1 billion of share repurchases executed since 2021. We remain committed to returning value to shareholders and consider share repurchases, a key tool in our capital allocation strategy. As such, our Board authorized a new $200 million program to repurchase our securities. The progress made over the past couple of years demonstrates our track record of not just executing, but outperforming our service. I took — I look forward to building on our momentum in the second half of the year and the milestones still to come. Operator, we’re now ready for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from the line of Ygal Arounian of Citi Group. Your line is open.

Ygal Arounian: Hi. Good morning. Good afternoon, guys. Great quarter, and maybe I want to focus first on the commerce packages and there’s one — into a little bit more detail there. It seems to be more of a driver now with the Partner side. Can you share a little bit more about the new types of customers that are coming on board, what type of merchants they are? This kind of move to larger merchants, what that opportunity is for you guys? Just a little bit more newer, I guess.

Nir Zohar: Hey, Ygal. It’s Nir. So I think naturally, as we gain more and more traction on — with Wix Studio and with Partners and the professional crowd, we’re also attracting higher — bigger merchants of all kinds. So it can be on the bookings and scheduling platform. It can be on the stores and commerce platform, it can be bigger events. It really is across the board. And I think it’s a testament to two things. First of all, it’s the ongoing increased maturity of our commerce offering in all of these different verticals, as well as the increased penetration and market share we’re taking into the professional market.

Ygal Arounian: Got it. Okay. And then just a follow-up on Self-Creator side, particularly on the AI products. And I know Self-Creators are supposed to be part of what drives the acceleration in the 2H bookings. What are you seeing there so far on the AI uptake? I know you’ve got a lot of products more in the pipeline. And are there any KPIs that are giving you confidence that we’re going to continue to see that improvement, better conversions, higher ARPU, those types of things?

Avishai Abrahami: Well, I think that — yes, we do have KPIs and we more than that, we have a long trend that we see that can be continuously improved and I’ll explain. Release ADI, the first AI product Gen AI product actually created website right in the end of 2016. And since then, we’ve seen that by exposing users to AI functionality as part of the natural progression in the product life cycle, we get very high adoption, obviously, using those kind of tools and results that can improve. And for ADI, we show that we improved the conversion dramatically. The new version that came earlier this year, did it again. And we are seeing that a lot of the agents that we have now, AI agents when they start to pick up more user interactions and more user conversations, again, create measurable effect.

So I’m very optimistic, I think that our experience in releasing AI technology, right, which is almost, what, eight years now, seven years now, is helping us understand how to integrate them into the product in a way that actually mixed user interact with them and that they feel natural and don’t feel like you’re stepping out of what you’re doing to do something else and then coming back. And I think that creates a big difference. So yes, I’m very optimistic on the potential that we’re going to see a continuation of the improvement. Thank you.

Operator: Thank you. And our next question comes from the line of Andrew Boone of JMP Securities. Your line is open.

Andrew Boone: Thanks so much for taking my questions. I wanted to ask on Studios momentum. Do you guys are starting to lap tougher comps here. Can you just speak to the sustainability of Studios? And then a bigger picture question on Studios and again, relating this back to AI. How does AI change the Studios and Partners opportunity? Is there any worry there that is to improve the Self-Creator product that there may be a shift back in the Self-Creators? Do you guys care? How do we think about that balance? Thanks so much.

Avishai Abrahami: All right. So that’s like, three different question, I’ll start with the first one. We’re very happy, of course, with Studios growth, [indiscernible] product. It was released less than a year ago, about a year ago, and we can see already significant results from it. One of the biggest signals that we have is that we’re seeing new kind of agencies that join Wix that would not normally join. And in addition, we’re seeing that many of those agencies will buy an ad website, right, to buy more subscription as time progresses. So they’re by two, three, four, five, six, seven and more subscription when they create new websites. And for us, it’s a signal, not just that they used Studios once or twice that they actually adopting the product and going to continue to use it in the longer term.

Of course, for us, as a company, it means that we are compounding right growth because every one agency that does it is as a compounding effect. So this is, again, a very good signal, that was the first right question. The second question was about how does the Studio use utilize AI. Well, there are massive — there is a big difference between what an agency and Self-Creators need from AI. So for me, if I want to design a website, and I’m not a designer, I want AI to help me designed because English is not my first language. And I’m not writing so well in Hebrew as well, right? So I would love AI to also rate and help me write great text and generate images. When you’re an agency, you probably know how to design and you have your system of design and how things should look like.

So you don’t need that. You probably need a little bit to help with the text, but other things like the image editing, right, and the content re-composition create tremendous value. And then the other things that, in addition to that, for example, a great designer not necessarily know how to configure things to work in a responsive way on different screen resolutions, and we have an AI to do that. So we are utilizing those kind of technologies to streamline the agency’s experience and work and efficiency in a way that is significant to them. And I think we have some ideas on how to make it even more significance going forward. As for the question — last part of the question, which is, do we have concern between how agencies and Self-Creators will end up in the future, meaning — well, in theory, if you can just, one, they talk to a computer and get the full website functioning that knows exactly what should be there and that easy to update that maybe some of the agencies business will disappear, but there is a long way until we get to something similar to that.

And I think the majority of businesses in the case that they need a website, they want somebody to be responsible for it, somebody that know how to activate the tools and use them and utilize them. And that’s why they go to agencies because they have a professional that understand how to take care of all of their business needs. And there’s a lot of those, right from SCO to how do you write things correctly in order to get the right shipping rules and there’s a ton of things. So I think that where there’s a long way for AI to go before it can successfully replace good agencies. And unless, of course, you are Self-Creators by nature, which is a lot of most of our customers, and you want to create your website, you can control it and you can do those things and you can change it.

So I think the difference is in the user type and user intent and not necessarily in technology, which I believe means that both will continue to grow agencies and Self-Creators.

Andrew Boone: Thank you.

Operator: Thank you. And our next question comes from the line of Elizabeth Porter of Morgan Stanley. Your line is open.

Elizabeth Porter: Great. Thank you very much. I wanted to follow up on the strong adoption of AI solutions thus far. Are you seeing different initial adoption rates or behavior from new versus existing customers and how do you see the opportunity evolving? What is that kind of opportunity around going back to the existing customer base and driving more spend with that existing cohort? Thank you.

Avishai Abrahami: Hello, Elizabeth. Thank you for the question. And yes, we do see a different adoption rate between new users and of course, all the users. And one of the qualification that you needed to have in order to be able to use Wix in the past was to know how to design to some level, to know how to write text to some level and to trust yourself that you’re good enough to do it, right? So most of our users feel that they know how to do those things. And naturally, they will use less AI because they think they can just do it. And I think we are now opening to users that don’t feel that, right? They don’t expect themselves to know how to do those things and expect us to have the tools to — AI tools to automate it for them. So we are already seeing some of this gap, and I believe that this will continue to grow. And essentially, we are opening Wix to be more useful to more new types of customers.

Elizabeth Porter: Great. And then just as a follow-up. Really impressive to see the, hitting the Rule of 40 early. As we’re looking out, I’m just hoping you could provide any context around the view for exceeding Rule 40 in 2025. If we look at just the free cash flow margin, we’ve seen some really good expansion this year. So how should we think about kind of magnitude for next year? And any factors or actions that you’re driving that would support free cash flow margin materially ahead of operating margin expansion?

Lior Shemesh: Hey, Elizabeth. This is Lior. So I assume that next year is a combination of both growth, but also margin expansion. Tech, for example, like, for example, overall payroll expenses. So yes, I mean, we are going to increase payroll expenses in dollars. But in terms of growth as a percentage of revenue on a year-over-year basis, it will not be the same as revenue, meaning that the revenue growth will be much faster than that. So it means that we are going to see more leverage coming from all kinds of different expenses, although, we are going to increase investment, for example, in marketing, but still as a percentage of revenue, we are going to see some leverage over there as well. So I believe that the combination of what we have seen right now is a very strong execution of our bookings growth on a year-over-year basis, which obviously will be reflected into a higher acceleration of revenue next year.

The combination of that with the expansion of margins would lead me to believe that we are going to significantly surpass the Rule of 40 next year.

Elizabeth Porter: Thank you for the context.

Operator: Thank you. And our next question comes from the line of Jian Li of Evercore ISI. Your line is open.

Jian Li: Great. Thanks for taking the question. So first, Lior, I want to kind of circle back to your comment about back half conservatism in the guide due to macro. Just to clarify, is it general conservatism or are you seeing any potential volatility into Q3 to date? If you can kind of talk about the macro impact in top of funnel for both your partners, which assuming are more resilient and Self-Creators, that would be great? Thank you.

Lior Shemesh: So no, definitely, it’s something that is general. It’s not something that is specific for the third or the fourth quarter. It’s really hard for me to know. But being conservative around macro and FX, it’s something that we always take into configuration, when we provide the guidance, I think that it’s really important. I mean we’ve seen that the execution of bookings for the second quarter was really in line with our expectations, was 15%, but it puts us in a place that it will be — it’s very easy to understand how we get to the 16% now. As we mentioned last quarter, that we will be at. So no, there’s nothing really specific about the sales, not about the fourth quarter. But that said, I really don’t know.

Jian Li: Got it. That’s helpful. And also another one on Payment. I appreciate the color around vertical expansion and taking our new partners and expanding the adoption. Is there any lever that you can think of in terms of improving the Wix Payment take rate by itself? Like, what I mean is any value-added service around the payment service that you can kind of helped to improve the gross margin profile of Wix Payment, if that makes sense?

Nir Zohar: So I don’t know about necessarily the gross — I mean, the general gross margin is by the adoption and increasing the take rate, right? So in essence, if I manage to get everyone to the maximum, I’ll get to stack rate of almost 3%. Naturally, that’s not the case. It’s not the case with anyone in our industry. And I think if you look at the best-in-class in our industry, they get to about 2 points — 2.25% that’s definitely something we aspire to. But I think the drivers are the things we spoke about, which is kind of more partners, making driving more of our customers to adopt Wix Payments rather than other providers. But it’s also the introduction of new capabilities and new products, new verticals adding the POS that allows us to attach and touch some of the off-line transactions that make them move them online, things like the Donations, Verticals, the Proposals, all of this innovation is another great way to tap and expand our GPV.

And I do think that we still have — we have a lot of room to grow there in the next few years.

Jian Li: Thank you.

Operator: Thank you. And our next question comes from the line of Brent Thill of Jefferies. Your line is open.

John Byun: Hi. Thank you. This is John Byun on behalf of Brent Thill. I don’t know if you answered this a little bit earlier, but in terms of — when you mentioned a bit more macro and predictability, wondering if you could give a little bit more color what you’re seeing, especially around SMB Health among your cohorts? And anything on the geographic side, I mean, it looks like the trends were fairly consistent. But once if you’ve seen any anything notable to geography-wise? Thank you.

Nir Zohar: Hey. So I think, again, I don’t think we can point out anything specific with a major shift, neither here nor there in terms of SMB Health or in any geography and in general. We spoke about this in the past. I think few quarters that everything is kind of mid-last year, we’ve seen a stabilization in the behavior with a slight increase, but very moderate. So the euro grew slightly more this quarter, but it’s not significant enough in order to call anything specific. Vertical, in terms of the Verticals, as Lior mentioned, we’ve seen our scheduling and bookings and events of Verticals grow a little bit faster than other verticals. But these are, I would say, again, I don’t think any of those can be — any concrete signals that you can read into macro economy, I think we’re still seeing pretty much stability.

Lior Shemesh: By the way, this is why we are providing range. I think that some of it has got to do with us. I mean we don’t always know exactly the behavior in every country and this is why we provide range in order to reflect that.

John Byun: Thank you.

Operator: Thank you. And our next question comes from the line of Josh Beck of Raymond James. Your line is open.

Josh Beck: Yes. Thanks so much for taking the question. I was pretty impressed with this metric that you all gave about 17 AI assistance. And I believe you said there’s dozens more to come. That’s a big number, probably certainly larger than what we’ve seen elsewhere. So maybe if you just kind of help unpack within that, maybe how many are external customer-facing? How many are internal efficiency driven and maybe what are kind of rising to the top as some of the most promising use cases there?

Avishai Abrahami: Of course, so maybe I’ll start with the easiest part of the question, how many of the 17 are customer facing and the answer is, all of them. The concept is that we are currently — we build a platform in which it is easier for us to build an AI assistant. And that enable us to develop two kinds of different assistance. The first one would be a question and answer in AI assistant, so if you have a product like booking, how do I add a staff member to my yoga studio, right? And so you can actually talk to the AI and ask questions, get answered and ask questions, get answer as you would do with the normal human being. And then, we see a great result in that in terms of how customers quickly find the answers. Hallucinations are very small, the percentage probably similar to what a human would do or not even better.

And of course, in terms of customer experience, it’s incredible because they get the answers now. They don’t have the contact support. They don’t have to start searching Google and so this is very exciting. The other thing that we are doing is that you can ask questions and you can have the AI do things for you, so this is the second kind. And for example, if you go to our analytics, you see that you can actually start asking questions and get the reports done for you automatically by the AI. So this is an AI that activates other agents in order to give you answers, the two actions for you. How do I make an event that is a wedding event, what can and then we do RSVP. But if you want to create an event which is selling tickets for a concert, it will define that we can work with you on that.

So those kind of things and streamline and reduce a lot of friction from the customer. We intend to integrate them, of course, to one current experience. And we’re going to add those kind of assistance in pretty much everywhere that we can on Wix. And I think the overall change in — from a customer perspective is tremendous. You get quick answers, high quality answers to your questions and you get an AI that will help you set up things or change things or ask questions, like, get analytics. So it’s really a big difference from a customer perspective.

Josh Beck: Understood. Very helpful. And maybe just a follow-up on Studio and really trying to think about the monetization curve. It’s been in the market for a year. So from the point at which somebody is creating an account to their ramp and learning curve with the new editor to really starting to produce a meaningful number of websites. I don’t — I’m not looking for anything specific, but maybe if you look at some of the early cohorts, kind of what you’ve learned and in terms of model impact, I mean, is this something that we should be thinking about ’25 is more impactful to revenue or maybe it’s a bit beyond that? Just would love any color there.

Avishai Abrahami: Of course, I think that modeling Lior will answer. I’m going to say about the behavior. What we’re seeing is that people will come to Studio and usually play with it, right? So agencies will come and play with the product. And it’s in point in time, they’ll take a project that they just got. So it’s mostly a new project. So we have to wait until they have a new project, and then they’ll implement that first project on Wix Studio. And this is the most critical time, of course, if they are happy with it and the customer is happy with it, there is a very high chance to come again when — again, to get the next project to do it again on Studio. Direct of projects is not depending so much on Studio, right, because it’s more on the quarter that Wix Studio, it’s mostly depending on how many customers they have, right?

And this can be a big agency that only do a few websites every year or it can be a freelance that will do a few websites every year or it can be the agency that has doing a dozen websites every week. So we have a variety of them. And I think the exciting thing about Studio is that we’re seeing all of them using Studio. And if we look at the statistics, it seems that all of them will more likely come back to Studio to build a second project than only one. So we are very excited about that. It’s a very strong signal that the customers — that the agencies like this product. And if you have the chance to see the community chart about it, I think it’s also obvious there.

Lior Shemesh: In terms of modeling it, I think that there’s like a very too interesting phenomena’s that we see. So the first thing is obviously around the existing partners. Keep on building and using Wix for more and more of their projects. Now the question is, how much it’s going to grow and how many projects each and every one of them are using, and this is something that we are keep learning, but it’s quite big. Avishai mentioned before that they are building the second, the third, the fourth, the fifth, the tenth website on Wix, and this is really amazing. I can tell you that it is much more than what I anticipated in my model at the very, very beginning when we started. Second, obviously, is about the newcomers and what kind of agencies, what kind of business solution they are using.

So we have like the first results that we see right now, for example, in the second quarter, one of the reasons why you see the acceleration of 10% to 15% of bookings in the second quarter is because of that. It’s still moderate. It’s not huge, but we are not talking about hundred thousands of dollars, obviously, it’s millions of dollars. Yes, I do believe that in 2025, the growth of revenue with regard to Studio will be much more significant.

Josh Beck: Very helpful. Thanks, team.

Operator: And this concludes today’s question-and-answer session. I would like to turn the call back to the company for closing comments.

Emily Liu: Thanks, everyone, for joining us today. We’ll see you on the next one. Bye.

Avishai Abrahami: Thank you.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.