Key Takeaways
- Wix plans to eliminate approximately 1,000 positions — representing roughly 20% of total staff — marking the company’s biggest workforce reduction to date.
- Shares collapsed following disappointing Q1 results, losing one-third of their value overnight; the stock has declined approximately 50% since January.
- First-quarter financials revealed a $57.5 million deficit even as revenues increased 14% to $541 million, while operational costs skyrocketed by 50%.
- The Base44 AI platform, purchased for $80 million, has rapidly scaled to $150 million in annual recurring revenue by May — but at significant financial expense.
- A $1.6 billion stock repurchase program has done little to restore investor confidence in the struggling company.
The website building platform posted a first-quarter deficit of $57.5 million, marking a dramatic shift after multiple consecutive profitable periods. While top-line revenues grew 14% year-over-year to reach $541 million, operational expenditures ballooned by 50% to $423 million. Meanwhile, cash flow generation declined 21% to $112 million.
Shares have plummeted nearly 50% from their January levels. Following last week’s first-quarter earnings release, the stock experienced a brutal single-day selloff that erased another third of its market value.
The company is now implementing dramatic workforce reductions. Wix is preparing to eliminate approximately 1,000 positions — around 20% of its 5,277-person workforce. Over 60% of employees are located in Israel.
Management cited artificial intelligence as a key factor behind the restructuring decision. As AI tools increasingly handle development and design tasks, numerous positions have become obsolete.
Earlier in the year, leadership mandated a full return-to-office policy, sparking considerable internal pushback. During Q1, headcount decreased by just 63 employees. The planned layoffs represent a far more aggressive approach.
Base44 Delivers Rapid Expansion But Drains Resources
A significant portion of Wix’s recent expansion narrative centers on Base44, the vibe-coding technology platform acquired for $80 million. Created by Maor Shlomo, the platform enables users to develop software through natural-language instructions.
Base44’s annual recurring revenue surged to $150 million by May, exceeding internal projections. However, this expansion has proven costly. Aggressive marketing campaigns, escalating computing infrastructure expenses, and ongoing acquisition-related compensation to Shlomo are all pressuring profitability.
The company paid Shlomo $38 million during Q1 alone, with additional payments scheduled throughout the year. Wix ran two separate Super Bowl advertisements — one promoting Wix, another spotlighting Base44 — further inflating marketing expenditures.
Wix is simultaneously developing a proprietary AI model to fuel Harmony, its AI-powered website creation tool. CEO Avishai Abrahami indicates it will eventually enhance precision and reduce inference expenses, though currently it represents another substantial cost center.
Stock Repurchase Program Fails to Restore Confidence
In March, Wix initiated a $1.6 billion share repurchase program — effectively depleting its cash position, which dropped to $900 million. The strategy aimed to demonstrate management’s conviction to shareholders.
The approach has backfired. Shares continue declining, pressured by broader concerns that its core website creation business faces obsolescence as AI democratizes site building, enabling anyone to launch websites for minimal monthly fees.
Investor unease surrounding software companies has intensified. While Wix doesn’t function as a conventional SaaS provider, it’s been swept up in the same negative market sentiment.
Operating expenses as a percentage of revenue surged from 21% in Q1 2025 to 35% in Q1 2026 — a trajectory that has alarmed Wall Street. Wix’s market capitalization currently hovers around $2 billion.
Base44’s ARR climbed to $150 million by May 2026, according to company disclosures.
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