Wix embarks on a cost-cutting quest.
Popular website builder Wix has begun implementing cost reduction measures in a bid to achieve $150 million in annualized savings.
With effects of high inflation materializing and a potential recession on the horizon, Wix says in its Q2 financial report that these savings are not one-time in nature and will continue to be realized on a run-rate basis.
The ultimate goal for the Israeli website builder is to achieve the free cash flow targets that were set by the company back in May 2022.
Approximately 20% of Wix’s annualized savings are expected to be realized already in 2022, without any reduction to the company’s user acquisition marketing investments.
A large portion of these savings will stem from efforts to right-size the workforce and future hiring targets across multiple functions, while the rest will come from changes to operating expenses.
TechRadar Pro reached out to Wix for clarification on whether the right-sizing of its workforce could mean potential redundancies, but the company is yet to reply. Wix currently has around 5,000 employees across twelve countries.
Lior Shemesh, CFO at Wix, explained that the cost-saving exercise would continue even if market conditions were to improve next year.
Overall, Wix’s total revenue in the second quarter of 2022 was $345.2 million, up 9% year over year.
“We are pleased with our fundamental business improvement this quarter as Wix continues to be the go-to platform for any type of user and any type of business globally,” said Avishai Abrahami, Wix Co-founder and CEO.
"The strong results of our growth initiatives continue. Despite the current macroeconomic environment, we are focused on what is under our control — driving operational efficiencies to accelerate our path to profitability while continuing to execute on growth initiatives, such as launching the new Wix Editor this quarter. We remain committed to executing on our three-year financial plan, enhancing our differentiated business model and delivering innovative capabilities for our users to drive shareholder value."
My Take: The way the economy is right now, who knows what direction Wix will move in next? This could end up being a huge, strategic mistake.
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