WIX · Research
Wix Borrowed to Buy Back a Third of Its Stock Just as Its Cash Engine Slowed
Wix's subscription toll is sticky, but owner cash fell to $17.3M in the first half while a tender and a bank loan left it with net debt.
- Share of stock bought back in one tender
- 29.7%
- Largest outside holder, Ameriprise
- 20.4%
- Cash left for shareholders after capex and all stock pay
- $17.3M
1. Our call: Hold off, because Wix borrowed to shrink its share count just as its cash engine slowed
Our call: Hold off. Wix sells website and app building software by subscription to small businesses, freelancers and agencies, plus payments and other add-ons [1].
In the second quarter of 2026 it booked $563.1M of revenue, up 15%, and its annual recurring revenue reached $1,963M [2].
Software is most of the business. Creative Subscriptions, the premium plans for building and hosting sites and apps, were $398.4M, or 70.8% of second quarter revenue, our calculation [2].
Business Solutions were the other $164.7M, including $71.5M of transaction revenue, mostly from Wix Payments [2].
We measure owner cash, the cash left for shareholders: operating cash flow, less capital expenditures, less capitalized software, less all stock pay. It was $334.3M in 2025, 16.8% of revenue, our calculation [9][1].
In the first half of 2026 it fell to $17.3M, from $170.4M a year earlier, our calculation [2].
The question this piece answers is whether a 2026 recapitalization makes sense for a business whose cash is slowing. In March and April Wix sold $260.0M of new stock and warrants, drew a $500M bank loan, and spent $1.6B buying back 29.7% of its shares in a tender offer
2. A subscription toll on small business sites
| Metric | Value |
|---|---|
| Software share of revenue | At least 70.8%, Creative Subscriptions alone, second quarter 2026, our calculation [2] |
| Operating margin | Minus 10.4%, a $58.8M operating loss on $563.1M, second quarter 2026, our calculation [2] |
| Stock pay share of revenue | 11.9% in 2025 ($237.4M), our calculation [9] |
| API quality | 3 of 5, our scoring: Wix offers developer tools and an app market, but most users build inside its editor [1] |
| Toll-gate score | 2 of 4 pass, 2 partial (section 2b) |
2b. Wix hosts the storefront, but prices mostly by seat
A gate is valuable when traffic must pass through it and the owner can see and price what passes. For a small business on Wix, the site, its domain, its store and its payments all run inside one account, which makes leaving slow and costly [1].
| Test | Result | Evidence |
|---|---|---|
| Owns the record | Pass | Sites, stores, bookings and customer lists built on Wix live on its platform, and premium plans are paid monthly, yearly or for several years [1]. |
| Owns the connection | Partial | Wix Payments, point of sale, shipping and a reseller channel through partners such as LegalZoom and Vistaprint run through it, but sites can still connect to outside payment and marketing tools [2][1]. |
| Prices close to outcomes | Partial | Transaction revenue of $71.5M, 12.7% of second quarter revenue, rises with merchant sales; the rest is priced by plan [2]. |
| R&D on the gate vs features | Pass | Research and development was $175.7M, 31.2% of second quarter revenue, much of it on Wix Harmony and Base44, the two platforms the company is betting on [2]. |
Two passes and two partials. The record is sticky and spending is heavy, but most revenue is a plan fee, so growth in what merchants sell reaches Wix only through payments [2].
3. Revenue growth is steady, profit is not
Operating income went from a $325.5M loss in 2021 to a $100.1M profit in 2024, then fell to $1.8M in 2025 [9]. Research and development rose 30.3% to $645.5M in 2025, our calculation, the year Wix bought Base44 [9][1].
In the first half of 2026 the operating loss was $128.5M, against an $81.7M profit a year earlier [2]. The half included $79.0M of acquisition-related expense and a $27.1M restructuring charge [2].
Partners, the agencies and freelancers who build sites for others, produced $213.8M of second quarter revenue, 38.0%, our calculation, up 17% [2]. The company cut its 2026 outlook in June, citing a sharper slowdown in Partners growth in late May and early June [3].
4. Base44 is the bet, and it eats cash
Wix bought Base44, an Israeli startup whose platform builds web and mobile apps from plain-language prompts, in June 2025 [1]. The 20-F warns that the costs of running such platforms are substantial and that market acceptance is uncertain [1].
In August the company said Base44 had entered 2026 with a near-zero gross margin, and that it expects about 60% in the second half after launching its own language model [2]. Management also said it would spend those savings on more Base44 marketing [2].
Selling and marketing rose 60.6% to $181.7M in the second quarter, from $113.2M, our calculation [2]. Research and development rose 30.4% [2].
In May and June Wix cut about 20% of staff, roughly 1,000 people, and closed some products and subsidiaries, expecting $30M to $35M of restructuring charges and about $150M of yearly savings [3]. Headcount was 4,371 at Jun 30, 2026 [2].
5. Margins depend on which business grows
Gross margin was 66% in the second quarter: 80% on Creative Subscriptions and 32% on Business Solutions [2]. Growth from payments and other add-ons lowers the blend, while growth from plans raises it [2].
Stock pay was $237.4M in 2025, 11.9% of revenue, and $110.3M in the first half of 2026 [9][2]. Before the tender, diluted weighted shares fell from 60.0M in 2024 to 57.7M in 2025 as Wix spent $575.0M on buybacks [9].
The net loss was $76.4M in the second quarter, against a $57.7M profit a year earlier, when Wix booked a $51.7M tax benefit [2].
6. Owner cash fell as the costs landed
| Period | Operating cash flow | Capex and capitalized software | Stock pay | Cash left for shareholders |
|---|---|---|---|---|
| 2024 | $497.4M | $20.8M | $240.7M | $235.9M, our calculation [1][9] |
| 2025 | $582.9M | $11.2M | $237.4M | $334.3M, our calculation [1][9] |
| First half 2025 | $295.8M | $5.7M | $119.7M | $170.4M, our calculation [2] |
| First half 2026 | $134.1M | $6.5M | $110.3M | $17.3M, our calculation [2] |
For 2025 we deduct the $9.9M of capital expenditure the 20-F discloses and $1.3M of capitalized software from the XBRL data [1][9]. Deferred revenue, prepaid plans not yet earned, grew $57.2M in the first half of 2026, against $70.6M a year earlier [2].
Excluding the $27.1M restructuring charge as if it were all cash, first half owner cash would still have been only about $44.4M, our calculation [2]. The company still guides to free cash flow, excluding acquisition and restructuring costs, of about $420M for 2026 [3].
That measure adds back stock pay, which we subtract [3].
7. The balance sheet swung from net cash to net debt
At Dec 31, 2025 Wix held about $1,654.8M of cash, deposits and marketable securities against $1,150M of zero-coupon convertible notes due 2030, so net cash was roughly $504.8M, our calculation [1].
At Jun 30, 2026 cash, deposits and marketable securities were $960.8M, our calculation, against the same notes plus $500M drawn from Bank Hapoalim, leaving net debt of about $689.2M, our calculation [2][1]. Part of the remaining cash is pledged: Wix must keep NIS 1B of Bank of Israel bills and a $120M deposit with the bank [1].
The bank loan requires bank debt of no more than two times free cash flow, and draws were available only through Mar 31, 2027 [1]. Book value, already negative at minus $366.0M at year end, reached minus $1.7B after the tender [2].
8. The main risks are cash, leverage and a single bet
Cash: owner cash fell 89.8% in the first half of 2026, our calculation, as restructuring, Base44 compute and marketing landed together [2].
Leverage: Wix now owes $1,650M of principal against $960.8M of cash and securities, part of it pledged [2][1].
Concentration of strategy: the company is putting new marketing money into one young product, Base44, whose gross margin was near zero at the start of the year [2].
Governance: Wix is a foreign private issuer and is not bound by U.S. proxy rules [1]. Its board is staggered and removing a director takes two thirds of the votes cast [1].
9. A mature platform buying a second act
Wix is in the mature stage. It was founded in 2006, listed in 2013, and grew revenue at 9% to 13% a year from 2022 to 2025 [1][9].
Three choices define this stage. It bought Base44 to reach app builders, it cut costs by about 20% of staff, and it used borrowed money to buy back nearly a third of its stock [1][3][4].
The test is whether owner cash returns to at least $250M a year by 2027 while revenue keeps growing above 10%. If it does, the recapitalization was cheap; if not, the debt will shape every decision [2][1].
10. Superintelligence tools are the bull case and the threat
The bull case is that tools which build a site or app from a sentence widen Wix's market from people who want a website to anyone who wants software. Base44 is that bet, and Wix says it now runs its own models to cut compute costs [2].
The bear case is that the same tools let users build outside Wix, and that Wix pays model and compute bills it once avoided [1][2]. The Partners slowdown may be an early sign that agencies need Wix less [3].
The test is gross margin. If Base44 reaches about 60% in the second half as guided and total gross margin rises, the bull case is winning [2].
11. Vote control, chief executive awards and the ties around the board
Vote control. Wix has one class of ordinary shares, and the 20-F states that no principal holder, director or officer has different or special voting rights [1].
Votes therefore equal economic stakes. Co-founder and chief executive Avishai Abrahami reported 485,571 shares held directly, 6,317 held by his spouse and 656,218 held in trust, plus options over 1,164,113 shares, in March 2026 [6].
His shares are about 2.8% of the roughly 41.6M left after the tender, our calculation [6][4]. All officers and directors held 7.2% in January 2026, before the tender [1].
Major holders. Ameriprise, through its Columbia funds, reported 20.4% on May 31, 2026, as a passive 13G filer [7].
That stake was 10.8% in January, before the tender, so it nearly doubled as other holders sold into the offer [1][7]. Senvest reported 6.7% at Mar 31, 2026 and Baillie Gifford 6.1% at Jun 30, 2026 [13]
12. The questions we would ask management, and the calls we are tracking
Question one: what owner cash, after stock pay, does the board expect in 2027, and is it enough to refinance the bank loan? [1][2]
Question two: what are Base44's revenue and marketing spend? [2]
Question three: why does the board count Allon Bloch as independent when the chairman chairs his company? [1]
Question four: what will the new chief executive package look like after Dec 31, 2026? [5]
Question five: how much of the Partners slowdown comes from agencies using building tools outside Wix? That answer sets our conviction.
Prediction one: full-year 2026 revenue grows at least 12% over 2025 (60%). [2][3]
Prediction two: owner cash, as we define it, is below $150M for 2026 (65%). [2]
Bottom line: a sticky platform carrying a new debt load
Wix's revenue grew 15% in the second quarter, and at least 70.8% of it came from subscription plans [2]. But owner cash fell to $17.3M in the first half of 2026 while Wix moved from about $504.8M of net cash to about $689.2M of net debt to buy back 29.7% of its shares [2][4].
Ameriprise holds 20.4%, co-founder and chief executive Avishai Abrahami about 2.8%, and his pay package ends on Dec 31, 2026 [7][6][5]. We would move to Buy if owner cash returns above $250M a year with revenue growth above 10%, and to Avoid if Base44 margins miss the 60% guide or the bank covenant tightens; a buyout offer would also change the call [2][1].
Our call: Hold off, conviction 3 of 5.
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