Website Builder Platform Wix.com To Cut Costs & Lay-off Staff
Wix.com said that it’s going to cut costs by $150 million per year to compensate for a global economic crisis and stronger dollar. They are also going to layoff their staff.
Wix.com, which assists small businesses in creating and managing websites, stated that it plans to lower costs by $150 million annually to make up for a slowdown in the global economy and a higher currency, which have hurt sales.
Wix stated that as part of a three-year plan, it would implement extensive cost-cutting actions, including some job cutbacks, with the goal of increasing free cash flow and quickening margin expansion.
According to the report, 2022 is when around 20% of the annual savings should be realized.
The remaining 75% of cost savings will primarily come from operating expenses, with a quarter of the savings coming from sales and resulting in a 200 basis point increase in gross margin in 2023.
“In terms of GDP, we can observe what is taking place in the US. It has shrunk throughout the past three quarters, and it is currently shrinking.
People are therefore making less purchases, both offline and online, which affects us “After releasing quarterly earnings, chief financial officer Lior Shemesh made a statement.
This is the reason we started this efficiency plan to ensure that, regardless of the top line for the upcoming year, we will still achieve our goal of profitability.
In comparison to a loss of 28 cents per share per year earlier, the Israeli company reported a loss of 14 cents per share, excluding one-time factors. To $345.2 million, revenue increased by 9%.
As per Refinitiv I/B/E/S data, Wix was expected to lose 34 cents on revenue of $344 million, excluding one-time items.
Free cash flow was expected to be between 2 and 3 % of revenue in 2022 by the corporation, whose shares had fallen 56% so far in 2022. By 2025, it aims to reach a free cash flow margin of 20%.
Wix predicted revenue of between $341 million and $345 million for the 3rd quarter, which would reflect yearly growth of between 7 percent and 8 percent. That is less than the $354 million analysts had predicted.
In contrast to a previous prediction from May of 10 to 13 percent, it anticipates revenue growth of 8 to 10 percent in 2022.
Wix highlighted that the forecasts took into account the implications of ending operations in Russia, the assumption that the market would remain difficult for the rest of the year, and changes in foreign exchange rates as a result of a higher dollar.