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Israel Wix.com in the fourth quarter, with profit, see 25 growth of sales in 2019

TEL AVIV (Reuters) – Wix.com that helps small businesses build and operate websites, posted higher-than-expected fourth-quarter earnings and forecast a 25 percent increase in revenue in 2019.

The logo of the website designer company Wix.com is to see on a high-tech park in Beersheba, southern Israel, August 28, 2017. REUTERS/Amir Cohen

It reported Wednesday a net profit of 42 cents per share, excluding non-recurring items, an increase of 16 cents a year earlier. The sales grew by 39 percent to $164 million.

Analysts had forecast adjusted earnings of 33 cents per share on revenue of $162 million, I/B/E/S data from Refinitiv showed.

Israel-based Wix offers free basic features for setting up websites, but users have to pay for extra services, such as shopping carts, individual web addresses of the site and traffic analysis.

The company has 142 million registered users. During the quarter, added 147,000 paid users, to reach 4 million premium customers, an increase of 24 percent compared to the end of 2017.

Wix projects 2019 sales of $755-$761 million, an increase of 25 and 26 percent by 2018. Analysts predicted a revenue of $ 761 million.

Chief Financial Officer Lior Shemesh said, Wix is expected to generate free cash flow of approximately $155 million, which it will use $15-$20 million for new growth initiatives.

“If there is upside of that investment, it is not part of our guidance. There may be an upside,” he told Reuters, pointing 2018 was a record year for product launches.

The company has seen strong demand to be paid in set of tools to Ascend, that was launched in December and allows businesses to connect to and manage customers.

President Nir Zohar said Wix, the main competitor is Squarespace, a private New York-based company. There is a number of recent M&A activity in the sector, with the $2 billion acquisition of Web.com by Siris Capital and Square Inc for $365 million purchase of Weebly.

For the first quarter, Wix, whose shares have jumped almost 70 percent in the past year, estimates the revenues of $172-$173 million, an increase of 25 and 26 percent compared to a year earlier.

Reporting by Tova Cohen; editing by Steven Scheer and Jason Neely

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