Website building platform Wix (NASDAQ: WIX) announced better-than-expected revenue in Q2 CY2026, with sales up 14.9% year on year to $563.1 million. Its non-GAAP profit of $1.39 per share was 15.3% above analysts’ consensus estimates.

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StockStory’s Take

Wix delivered results that exceeded Wall Street’s expectations in Q2, with stronger-than-expected revenue and non-GAAP profit. Management credited this outcome to continued momentum in its BASE44 AI-powered app creation platform and a successful launch of Base1, Wix’s proprietary large language model. CEO Avishai Abrahami highlighted that tighter control over their AI technology stack was a major factor in driving both user satisfaction and significant margin improvements in BASE44. These advancements allowed the company to capitalize on increasing demand from both self-creators and professional partners across diverse use cases.

Looking forward, Wix’s guidance is shaped by plans to accelerate investment in BASE44 and AI-driven product development. Management expects to reinvest gross margin gains from Base1 and other proprietary models back into sales and marketing to capture additional market share. CFO Lior Shemesh emphasized that improved margins in BASE44 create flexibility to pursue further growth, while President Nir Zohar underscored the company’s confidence in BASE44’s market opportunity, stating, “We are raising our TROI target moderately, underscoring our confidence that the opportunity in front of us remains competitive but massive.”

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to rapid adoption of AI-powered solutions, successful cost reduction in AI operations, and a strategic focus on expanding their technology stack.

• BASE44 margin transformation: The introduction of Base1, Wix’s in-house large language model (LLM), significantly lowered AI inference costs and improved BASE44 gross margins from near zero to approximately 60%. This shift marks a transition from early-stage economics to a more sustainable margin profile for the segment.
• Platform diversification: Wix pursued two parallel AI development tracks: Harmony for visual, drag-and-drop website creation and BASE44 for natural language and code-based app creation. Operating both platforms enables Wix to meet evolving market preferences across user types.
• Product-led growth in partners: The professional partner segment saw rising adoption of AI agents and BASE44 workflows, with more agencies using these tools for both website and app development. Management cited growing interest in new AI-powered solutions among advanced beta testers, indicating future product expansion opportunities.
• Monetization mix shift: The wind-down of low-monetization subsidiary InkFrog and focus on higher-value offerings improved Wix’s payment volume mix, resulting in a stronger take rate and better monetized gross payment volume (GPV).
• Reinvestment strategy: All gross margin gains from AI cost savings are being funneled back into sales and marketing, particularly for BASE44, as Wix aims to capture more top-of-funnel demand and accelerate user growth in the rapidly expanding AI app creation market.

Drivers of Future Performance

Wix’s outlook for the remainder of the year is anchored in further AI product enhancements, targeted reinvestment into marketing, and managing evolving partner and user behaviors.

• Aggressive BASE44 investment: Management plans to reinvest margin improvements into sales and marketing for BASE44, extending the time to return on investment (TROI) to accelerate market share gains, especially as demand remains elevated for AI-powered app creation.
• Margin and cost discipline: The company expects consolidated non-GAAP gross margin to improve by two points in the second half of the year, primarily from AI cost reductions, but will balance this with reduced marketing spend in the core Wix business and stable R&D expenses, despite currency headwinds.
• Partner and cohort dynamics: Wix is monitoring partner migration from legacy offerings to BASE44 and tracking the durability of BASE44’s annual recurring revenue (ARR) as early annual cohorts approach renewal. Management noted that high user satisfaction and an increasing share of annual subscriptions underpin their confidence in ARR durability, though trends are still developing.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will closely watch (1) the pace of adoption and renewal for BASE44 annual subscriptions, (2) the impact of AI-driven margin improvements on consolidated profitability as Wix reinvests in growth, and (3) evolving partner and agency engagement with BASE44 versus legacy Wix platforms. Continued product launches and the competitive landscape in AI-powered business creation will also be critical indicators.

Wix currently trades at $59.75, up from $56.84 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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