Wix.com Q3 2026 Earnings Call Transcript

Wix.com (NASDAQ:WIX) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.

Access the full call at https://edge.media-server.com/mmc/p/neunk9o4/

Summary

Wix.com reported strong performance in Q3 2026, with Base 44 nearing $250 million in ARR and Symphony showing early top-line revenue in the millions.

The company launched new products, including Symphony by Wix and Wix Studio 2, with a focus on AI-native infrastructure, driving efficiency and growth.

Wix.com announced a co-CEO structure, with Avishai Abrahami focusing on product development and Nir Zohar handling business operations.

The company achieved a non-GAAP gross margin of 69%, with Base 44 reaching a 58% margin, and expects further improvement in Q4.

Future guidance includes maintaining top-line growth in low to mid-teens percentages for 2026, with an emphasis on continued investment in Base 44 marketing.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the Wix.com Q3 2026 earnings conference call. At this time all participants are in the listen-only mode. After the speaker’s presentation there will be a question-and-answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to your first speaker today, Emily Lu, Investor Relations. Please go ahead.

Emily Lu (Investor Relations)

Thanks and good morning, everyone. Welcome to Wix.com’s third quarter 2026 earnings call. Joining me today to discuss the results are Avishai Abrahami and Nir Zohar, our co-CEOs and co-founders, and Lior Shemesh, our CFO. During this call we may make forward-looking statements and these statements are based on current expectations and assumptions. Please consider the risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update those forward-looking statements except as required by law. In addition, we will comment on non-GAAP financial results and key operating metrics.

You can find all reconciliations between our GAAP and non-GAAP results in the earnings materials and in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com. With that, I’ll turn the call over to Avishai.

Avishai Abrahami (Chief Executive Officer)

Thanks, Emily. This quarter we expanded our addressable market, and we did it with products that are already in the hands of users and generating revenue. Base 44 is closing in on a quarter billion dollars of ARR. Symphony by Wix has gone from launch to encouraging early top-line results in under three months, and Studio 2 is now live with partners and opens a path into a Wix.com enterprise offering for the first time. All of it runs on AI-native infrastructure that we control, delivered by an organization that is materially leaner than the one we had four years ago.

Growth, speed, and efficiency have been the three things I’ve asked the company to deliver this year, and this quarter speaks to progress on each of them. Starting with Base 44. Demand in the second half of the year has run ahead of what we modeled. The flywheel here is working, where paid marketing and brand investment build recognition, and recognition drives organic sign-ups. Given the strength of what we are seeing, we have chosen to accelerate marketing investment to capture as much of this demand as we can, while the category is still forming, with the emphasis on maintaining a leadership position in the most lucrative geographic markets such as the United States.

Importantly, we’ve paired this exceptional growth with significant gross margin improvement, reaching almost 60% in the third quarter. Turning to Symphony, which we launched in August as a standalone multi-agent system that takes on the operational work of running SMBs, including marketing campaigns, incoming calls, and preparing the owner for the week ahead. Symphony ARR is already in the millions of dollars today — still small, but a strong early signal that we are positioned well. Within a month of our launch, several of the largest AI companies announced agent products of their own.

I view this as validation of the opportunity rather than a threat. We also bring a distinct advantage: 20 years of small business data, workflows, and payment relationships sitting underneath our agents — a foundation that is difficult to replicate. Additionally, most of these competing AI agents on the market today are geared towards personal tasks, while Symphony focuses on addressing the business needs of SMBs, an attractive carve-out of this very large market.

Last week we launched Wix Studio 2, which I consider the best editor we have ever built and a strategically important product for our partner channel. Studio 2 is a completely open system connected to every modern AI tool. We rebuilt the foundation so that AI generation, visual design on the canvas, and standard React code operate as one continuous workflow on the same project. A partner can now build and edit their website with ChatGPT, Claude, Cursor, or any other AI tool on top of Studio 2 without ever having to leave their preferred AI platform.

Then, by leveraging Wix’s design system and infrastructure, every change is reflected back in Studio 2. This was a deliberate choice, and we believe it is what makes Studio 2 the most advanced professional editor on the market — built for how professionals actually work with AI today and ready for how they will build going forward. Importantly, Studio 2 shares the same underlying document with Wix Harmony, so a DIY site can be opened by a partner in Studio 2 and taken further, creating a new lead source for our agency ecosystem and a new upgrade path for us.

When I step back and look at the portfolio — with Wix Harmony for self-creators, Base 44 for software and applications, Symphony for business operations, and Studio 2 for professionals and agencies — I do not believe anyone in our space can match its breadth. Each product extends our reach in a different direction, and each is seeing monetization today. Our focus from here is execution — getting these products to a mass and global distribution and converting that into durable growth and long-term value for shareholders.

One last item before I hand it over to Nir. As of today, Nir Zohar is co-CEO of Wix.com. Most of you on this call know Nir. He has been with me since the very beginning, first running operations and then as President for well over a decade, and there is no decision of consequence in this company’s history that the two of us did not make together. We have reached the point where we finish each other’s sentences, and honestly we have been there for a while.

So what does this mean day to day? Nir takes the business side of the house — how we go to market, how we operate, how we scale. I take the product side — what we build, how AI shapes it, and the technology underneath. That is the arrangement that got us here and now it is reflected in our titles. For me personally, it frees up more of my week for projects like Base 44, Symphony, and Studio 2, which, after everything I just walked you through, is exactly where I want to be, and I get to do that with complete confidence in who is running everything else.

I could not be happier about this. Nir, over to you.

Nir Zohar (President)

Thanks, Avishai. Before I turn to the quarter, a few words on this morning’s announcement. Avishai and I have worked side by side for almost two decades, and in all that time we have never needed a title to tell us who does what. That does not change today. What changes is that our structure now matches the way the company has actually been run for years, and that Avishai gets more room to do what he does better than anyone, which is build. I am honored by his trust, and I take the responsibility that comes with it very seriously.

The best way I know to mark the occasion is to get straight into the results. Now let’s take a closer look at Base 44 and the progress we’ve made in scaling the business to nearly $250 million of ARR today, less than two years after Maor founded the business. The incredible growth in a completely new TAM has been driven by continued momentum in our top of funnel as well as strong renew. Impressively, the rate of conversion from new free users into paid has significantly improved over the past few months.

We expect to continue to benefit from these trends as the vibe coding market grows rapidly and AI fluency improves among consumers, underpinned by Base 44’s leading product platform as well as our aggressive but disciplined sales and marketing investments. To capture this substantial opportunity, September also marked the one-year anniversary of Base 44’s first quarterly cohort, an important milestone in evaluating our performance against the high expectations we set a year ago.

First, retention of this first cohort outperformed our expectations at the 12-month mark, a strong signal that users are achieving their goals with Base 44. Encouragingly, these renewal rates have steadily improved across each subsequent Base 44 user cohort. Second, bookings dollar retention of this first quarterly cohort performed even better than the purchase retention rate. This was driven in part by users regularly upgrading to higher-tier subscriptions, finding more value as we continuously made improvements to the platform.

Finally, subscription mix is also improving, with annual plans accounting for more than 20% of subscriptions purchased by the September 2026 new Base 44 cohort. This is a significant increase from approximately 5% in the September 2025 cohort. Healthy renewal and monetization trends combined with a more favorable duration mix give us confidence that Base 44 will be able to deliver durable growth over the long term. Given the strong historical data we’re beginning to see, as well as outstanding top-of-funnel demand volume today, we expect sales and marketing investments to support Base 44 acceleration, which Lior will talk about shortly. As part of this activity, we are investing in building out our first enterprise sales team for Base 44, which we expect to ramp up in the coming quarters.

We already serve quite a few Fortune 500 companies organically and believe that, with a focused sales effort supporting a leading product, we can unlock even more TAM. This sales team is just one piece of the broader organizational build-out of Base 44 executed over the past few quarters, driven by new hires and, more significantly, the allocation of existing headcount from core Wix.com. As we chase growth aggressively in the vibe coding space with Base 44 and expand to serve a larger market in the online creation ecosystem with Wix.com, we will be doing so with a leaner, more agile team following our reorganization efforts this summer.

Doing more with less is something we know how to do well. We operated with 25% fewer total employees at the end of the third quarter compared to the end of 2022. Over this same period we delivered double-digit bookings growth, accelerated innovation with the rollout of a number of marquee products, and significantly expanded our TAM. Going forward, we will continue to build an organizational structure primed for growth and speed. With that, I’ll hand it over to Lior, who will discuss the financials.

Lior Shemesh (Chief Financial Officer)

Thanks, Nir. You just heard about the tremendous progress we are making across the business. Base 44 continued to outperform expectations this quarter, and I am proud of how we have built and scaled a durable business model — just one year post acquisition. I am bullish and believe that, in addition to Base, we have multiple avenues for long-term growth and expect these avenues to drive financial upside from here. Let’s start with gross margin. Total non-GAAP gross margin was 69% in the third quarter, consistent with 69% in Q3.25 and up 2 percentage points sequentially, as we benefited from a full quarter of efficiencies and driven by our Base 44 model. Base One, as I mentioned during the last call — with the launch of Base One we have structurally improved the margin profile of the business. The proof is in the results. Our non-GAAP gross margin for Base 44 was 58% in the third quarter, and I currently expect an even higher margin in the fourth quarter.

This should result in a second-half non-GAAP gross margin for Base 44 of approximately 60%, a remarkable accomplishment in just six months. We believe we can continue this trajectory, with Base 44 margin potentially approaching that of core Wix.com already next year. It’s also important to note that our free user AI costs have declined by more than 50% in the third quarter sequentially as we began to route more traffic to Base One and execute on broader optimization initiatives. We now expect total AI costs for all free and paid users to represent less than 30% of total bookings in 2H. With demand strong, AI costs under control, and the Vibe Coding and personal superintelligence opportunity massive, we are going to lean even further into investing to capture market share.

As a result, we anticipate our fourth quarter sales and marketing activities to increase relative to the third quarter, but importantly still well within the guardrails we established last quarter. In addition, we’re in the early innings of establishing a best-in-class enterprise sales team. This should allow us to lean into the massive opportunities in front of us to drive future growth. I will touch on the impact of these initiatives on our free cash flow outlook shortly.

Total non-GAAP operating income came in at 12% of revenue. This was primarily driven by higher levels of non-GAAP sales and marketing, as we continue to accelerate marketing investments into Base 44 in order to capture strong top-of-funnel demand trends throughout the quarter. Finally, looking at our balance sheet, we ended Q3.26 with approximately $1.05 billion in cash and cash equivalents and $1.63 billion in short and long-term debt. Let’s turn now to the outlook for the fourth quarter and full year of 2026. For the full year 2026, we are maintaining our top-line guidance. We continue to expect bookings to grow at a low-teens percentage and revenue to grow low to mid-teens on a year-over-year basis. We expect fourth quarter revenue to grow at a low double-digit percentage on a year-over-year basis, with fourth quarter bookings growth continuing to lag revenue growth for the full year 2026.

With more visibility approaching the end of the year, we now expect free cash flow margin, excluding acquisition and restructuring costs, to be approximately 16%, down slightly from our previous target of high teens, primarily driven by the accelerating investment in Base 44. Our aggressive push into marketing is paying off. This is clearly reflected in Base 44’s milestone ARR performance of nearly $250 million dollars, which was higher than what we expected at the beginning of the quarter. With the majority of Base 44 subscriptions billed monthly and growth ramping through the latter half of the year, we expect the strong ARR momentum this year to gradually translate into bookings and revenue dollars over the coming quarters.

Our full-year outlook continues to assume that the anticipated step-up in gross margin will be reinvested into Base 44 sales and marketing activities for the rest of the year. This updated outlook also includes the prepayment of GPUs required to run our model for the next couple of years, resulting in a working capital headwind in the fourth quarter of approximately $10 million. In conclusion, with the third quarter’s results demonstrating that we are on the right track, I am even more confident in our near-term strategy. The team is incredibly focused on executing heading into the end of the year, operating with efficiency and conviction. I am encouraged by the explosive growth and fantastic gross margin improvement of Base 44 since its acquisition, and I believe that the investment decisions that we are making today will pay off in the long term.

I believe our leading product platform will continue to strengthen and get into the hands of more users, which I expect will deliver healthy financial performance for our shareholders. Operator, we are now ready for questions.

OPERATOR

Thank you. At this time we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 11. Again, we ask that you please limit yourself to one question and one follow-up. Our first question comes from the line of Igal Arunian of Wedbush. Your line is now open.

Igal Arunian (Analyst)

Hey, good morning. Good afternoon, guys. New Year — congrats on the official title switch. Two questions. I’ll ask one, then I’ll ask a follow-up. First, on Studio 2 and the decision to make that an open building environment — can you talk a little bit more about what you’re seeing, why that decision makes sense versus having a closed platform, which is what Wix.com has been historically, and then how you expect this to reinvigorate partner growth?

Avishai Abrahami (Chief Executive Officer)

Of course. So I think that being a closed system had a lot of advantages in the past, mostly because of security — right? So the same path that you could see Apple taking: when you control the environment completely, then you can provide better security for your customers. Today with AI, we think that a lot of this gap on security is closed, and so we now feel comfortable that we can run Studio 2 as safe as it needs to be and as secure as it needs to be.

On the other hand, the creation process that modern creators do on the web has also changed. In the past, it would be a very small set of tools — Adobe would be the leader — and then people would go and convert from that to Wix.com or to any other kind of web format. Today it’s different. I think AI has become a tremendous part of it — a big part of it — and a strong, suggestion part of the workflow. And in order to be able to enable that on Wix.com, we needed to be an open platform.

The combination of being able to be as secure as needed and fitting into the modern workflow are the reasons behind why we felt it is important. The benefit of that is, of course, that it allows you to build almost any website on Wix.com now. And because also you can export projects, it allows us to have a substantially better enterprise offering, especially for larger companies that need to do the hosting themselves behind their firewall or on their own servers. So now you can do it. So I think that it was time already to do it, and I feel comfortable with the fact that we did.

Igal Arunian (Analyst)

Okay, very helpful. And then a question on Base 44 and the marketing investment. So, understood that the monthly-to-annual subscription trend is moving in the right direction. You’re seeing good retention. You also talk about the category still forming and being early days, trying to build recognition, driving sign-ups. Just, can you talk, as the category is forming — and maybe over the last year it’s gone from brand new to the growth mode, a little bit of maturity there — what differentiates Base 44 as a product or otherwise that sort of gives you the confidence that making this investment is the worthwhile one versus investing into core Wix.com? Thanks.

Nir Zohar (President)

You want to take the product side? I’ll take the—

Avishai Abrahami (Chief Executive Officer)

Yeah. I think that this is a new category that is from now, right, and it competes with legacy ways to create applications and legacy ways to create websites. And I think that when a new category is being created and you grow tremendously fast in that category, it’s a great investment. Historically, it’s been shown. There are a lot of things that make Base 44 unique, especially the ease of creating complete applications and the quality of that. So we are feeling very confident that if we work well and continue to deliver great products and do aggressive marketing, we’ll take a big portion of that new market that is being formed now.

And so I think it’s an opportunity that most companies get very rarely, and we’re very happy to have one.

Nir Zohar (President)

And to complement that — Igal, this is Nir, and thank you for the congratulations. You know, the other, you know, the supporting side of it are obviously the results as they come in over time. If you all remember, this is — you know, it’s been a year and a half, or I can say only a year and a half, since we acquired Base 44, and many of the things that we put in place are materializing. And as we see them materialize, they give us more and more and more confidence.

So naturally, you know, when we set ROI, for example, we then measure the return of investment over time. Since people are buying almost immediately, we started getting money back immediately. So we’re maturing with the cohorts to see how they play out. And the fact of the matter is that, as Avishai said, the product is superior in many cases. We managed to take the lead in North America and in the U.S., which obviously is the biggest — central, the way we perceive it — the most important market. But we’ve also seen monetization improving, conversion improving. We started to get some of the retention of the annual subscriptions coming in, seeing them even better than we initially anticipated.

So all of that gives us confidence that this is a really good time to kind of press the gas pedal and go even more aggressive after growth and invest even further.

Igal Arunian (Analyst)

Thank you so much, guys.

OPERATOR

Thank you. Our next question comes from the line of Josh Beck of Rache. Your line is now open.

Josh Beck (Analyst)

Thank you for taking the question, and congrats on your team. I wanted to ask about the kind of retention rates that you’re seeing with Base 44. As you had mentioned, it had been a year and you kind of talked to the strength in the bookings retention rate. Can you kind of double-click and maybe help us understand, maybe at a high level, what’s happening between the core customer retention and the upsell — would kind of like to double-click there.

And then a bigger-picture kind of end-market question: as we look in the years ahead, do you envision a shift towards enterprise and headless just becoming a much bigger part of the business as we think about the years ahead? Thank you.

Nir Zohar (President)

Absolutely, Josh. So I think first for the retention of Base 44 in high level, I would say there’s a combination of a few things working in favor of that behavior that we’re seeing. One, we’ve managed to increase the amount of people buying annual subscriptions. Obviously that has a direct and immediate impact on the levels of retention. And this has been trending upwards and we are very happy about it. But even if we look at the monthly subscriptions, they are trending in a positive way in terms of their retention.

And it makes sense because the product itself keeps on improving. Again, we’re all dealing with a really, really new product and a very new that is being innovated in a very, very, very fast pace. So people are getting more than the people who join today are getting much more than the people who joined six months ago, and those are getting more than what was six months before that. So the product keeps on improving and evolving. The category itself is just the beginning of becoming exposed to the world.

Meaning most people still don’t understand the value that comes from vibe coding. So that on itself obviously is also contributing. We’re building a brand. With brand comes confidence. And as the confidence of the brand is improving, then naturally that also helps in retention and performance. And lastly, I think that there is one thing that is still, we’re still researching and learning is the full cohort behavior, meaning not only how is the dollar being retained, but also how long people stay with us.

Even if people paid for something, then stopped paying and then paying again. We’ve known this kind of behavior on Wix.com for many, many, many years. We are now learning the same kind of behavior on Base 44. It looks very positive and we’re happy about it, but obviously as time progresses, we’ll know better and better. What was the second part of the question? Sorry,

Josh Beck (Analyst)

Headless and enterprise.

Nir Zohar (President)

Oh, about headless enterprise. Well, I think, Josh, that for headless enterprise, it’s a great question. Enterprise for Base 44 comes from, well, actually from demand. There’s a lot of people coming in, a lot of companies coming in and they’re asking us about more elaborate functions and more elaborate ways to use the platform. And so obviously we’re answering that need and building the right offering for them. On Wix.com, as much as Avishai mentioned with the opening of the platform, we believe there’s new opportunities and we’re going to research and go after them. And headless, I think headless goes to a different path in which people are getting to create online. As Avishai said before, it used to be that people would come to these very few places to do so. Now they can start from many different starting points on the internet through a whole lot of different tools.

And I would expect that to expand and become even more differentiated over the upcoming year, two years. And I think that headless allows us to be there and deliver value not only directly on the Wix.com website and the Wix.com funnel. And that on itself I think can become a very big advantage for us over the upcoming quarters.

Josh Beck (Analyst)

Super helpful, thank you.

OPERATOR

Our next question comes from the line of Elizabeth Porter of Morgan Stanley. Your line is now open.

Elizabeth Porter (Analyst)

Great. Thank you so much for the question. I wanted to circle back on some of the sales and marketing investment. You guys have seen really impressive Base 24 gross margins and clearly get the message that you’re leaning in on sales and marketing just given the opportunity. But I was hoping you could unpack the guardrails you’re using for the aggressive but disciplined sales and marketing investment and what would need to change for free cash flow margins to begin to expand again in calendar 2027.

Lior Shemesh (Chief Financial Officer)

Elizabeth, this is Lior. I think that in the last quarter, you know, for me it was very, very impressive because at the same time that we managed to increase the gross margin significantly. Now actually next year we are going to see the gross margin of Base similar to the one of Wix.com, which is kind of amazing achievement that we managed to do in the last few quarters. In addition to that, the demand for Base is simply really, really big, coming from Nir mentioned before, but not just from enterprises, and we are still maintaining the same kiw as we mentioned before.

Talk about 13 months if you remember two quarters ago and we are still maintaining the same tri and we are act accordingly. Meaning that as long as we see that we manage to maintain the same tri, so obviously we are going to continue to invest in marketing and I assume that it will also continue for the next year. That said, I think that, you know, with regard to next year I can tell you that I don’t think that next year in terms of the absolute free cash flow in dollars, I don’t think that it will be less than this year obviously because we see the expansion of the margin and so on. But it really, really depends also how much we are going to invest in marketing. And this is something that really depends on the demand that we are going to see for Base or for the new products.

But I do believe that it’s going to be higher than this year free cash flow. And obviously, you know, during February, we’re going to provide much more information about it.

Elizabeth Porter (Analyst)

Got it. Great. And then as a follow up, I wanted to touch on the partner side. And the question is, how much of the slowdown would you attribute to the reduced investment versus changing customer behavior with the AI native tools? And are you seeing evidence that Base 44 is capturing demand that would have stor gone to Wix Studio? And how are you viewing Base 44 as incremental versus cannibalistic? Thank you.

Nir Zohar (President)

Hey, Elizabeth, Nir here. So I think some of it to a limited extent is the reduced investment, which I think we kind of quantified to a large extent back in June. But definitely it starts from also a change in demand and a change in customer behavior. Definitely, I would say some portion of it is going to Base 44 or maybe to other AI tools. And I think definitely it has to do with a change in the lay of the land in terms of what agencies and partners can do with AI tools.

What can small businesses do without agencies using AI tools? Which also obviously has an impact. And in a big part, the way we curated the roadmap for the new Studio version for Studio 2 was in order to bridge as much of that gap as we can. The openness that Avishai mentioned before, both in the remarks and on the Q and A, plays a big part in it as well, because it essentially allows people to benefit from Studio 2, but use whatever kind of workflow they’re interested in.

We’re in this kind of a new era, a new world where there’s so many different tools and different capabilities and new ones come up. And we don’t want to try to limit our partners. We want to help them actually benefit from as much value as they can and to work in the most efficient path that they see fit, which is a big part of what we’ve done with Studio 2. Naturally, it’s only just being released, so we don’t have. We can’t quantify results. But what we definitely hope that it can create a positive impact in the next few quarters.

Elizabeth Porter (Analyst)

Great. Thank you.

OPERATOR

Thank you. Our next question comes from the line of Mark Zagorovich of StoneX Financial. Your line is now open.

Mark Zagorovich (Analyst)

Thank you. Good morning, everyone. Just a question on Base One. I’m curious what percentage of your free users’ tokens ran through there in 2Q versus 3Q, where the paid user adoption is, and how much of the greater than 50% quarter over quarter reduction in free user AI costs reflects routing versus usage or cost per token. Thanks.

Avishai Abrahami (Chief Executive Officer)

Today the majority of our users are using Base One. I gotta say that on a personal note, I used to use Astra most of the time and last couple of months I’m only using Base One, especially in the last month. You should try it. I think it’s pretty impressive for what we do at Base 44. I think it’s a better model today. And of course the vast majority of a reduction in cost delivered because of Base One because the cost of token needs is significantly less than with the other frontier models.

So it’s a great model. Most of our customers are using it now and it’s the default unless you change specifically that’s the one that you’ll be using. It’s doing, I would say, fantastically well, worth testing. And that’s the reason we can be so efficient.

Lior Shemesh (Chief Financial Officer)

Mark, so Avishai’s answer is the same both for free and paid. Meaning that it’s mostly because of that.

Mark Zagorovich (Analyst)

Got it. Just a quick follow up. Separate question on partners. Can you quantify 3Q partners revenue that came from Base 44?

Lior Shemesh (Chief Financial Officer)

No, don’t provide it separately. I mean in some cases we started to see some partners using Base. In some cases it’s really hard to say who is the partner and who is not a partner. But we are not providing this on a separate basis. But we assume that it’s small but growing.

Mark Zagorovich (Analyst)

Okay, got it. Thanks guys.

OPERATOR

Thank you. Our next question comes from the line of Ken Wong of Oppenheimer and Company. Your line is now open.

Ken Wong (Analyst)

Fantastic. Thanks for taking my questions. Two for you guys. First, Lior, it sounded like your Symphony Voice bot was British, but setting that aside, just wanted to check on the bookings guide. So you have the implied 4Q bookings. Looks like it will be mid-teens and you guys mentioned low double digits for revenue in Q4. Yet you guys are saying bookings will lag. I’m just trying to kind of marry all of those different pieces, I guess. What’s the right thinking for that 4Q bookings growth?

Lior Shemesh (Chief Financial Officer)

Hey Ken, by the way. Yes, I have a British accent if you haven’t noticed yet. So look, it’s exactly as we mentioned. I think that in the last year we saw that booking lagging after the revenue, which is, you know, kind of obvious because it takes more time to revenue to reflect what we see, right? Now with the market and specifically more about the partners, but we kept the full year range and we provided kind of more specific for the revenue for the last quarter.

So yes, I think that it’s exactly as we mentioned. It can be, you know, revenue probably will be low, low teens, but in bookings will be right behind it.

Ken Wong (Analyst)

Okay, got it. And then Nir, for this enterprise expansion, I guess one, how should we think about how you want to scale that? How large is this investment going to be? Is this a, hey, we’re going to invest in Q4 and then that’s the new run rate or is this something that’s going to ramp throughout the next year plus?

Nir Zohar (President)

Well, Ken, I really do hope it will ramp, but it will only be based on success. Right. It’s assuming we have increased cycle of sales that keeps on returning and then it will make sense to ramp it up so it will be based on what we’re seeing in terms of demand and the ability to successfully meet it. It’s hard for me to say, but I would love to come back and report that we’re putting more behind it because we’re getting more out of it.

Ken Wong (Analyst)

Fair enough. Thanks, guys.

OPERATOR

Thank you. Our next question comes from the line of Alec Brondolo of Wells Fargo. Your line is now open.

Alec Brondolo (Analyst)

Yeah. Hey, thanks so much for the question. Appreciate it. I think maybe two for me. First, could you speak to the percent of Base 44 gross adds in the quarter that came organically versus paid? I think the hope would be that as you deploy marketing dollars, you get some leverage on those dollars over time because you build the brand and then people come to you organically. So any thoughts on progress there would be helpful first. Second, a lot of companies in internet and software are calling out changes to Google Search and Google distribution during the third quarter as causing a disruption in marketing.

Any thoughts on the changing landscape in Google Search and how it impacts Wix.com? That would be great as well. Thank you.

Nir Zohar (President)

Hey, Alex. First, for the first part of the traffic break on Base 44 at this stage, we deem that as being highly competitive, so we’re not going to be sharing those numbers right now. You’re right to assume that we are also bringing in a brand, and over time it should strengthen the organic footprint. But we’re not going to share the cadence and where we are right now in terms of the change in what some companies were talking about with Google. I wouldn’t say that we weren’t aware of it, naturally, but we didn’t see any significant impact or something that we could encounter, so we have nothing specific to call out from that perspective.

OPERATOR

Thank you. Our next question comes from the line of Chris Jeng of UBS. Your line is now open.

Chris Jeng (Analyst)

Hey, thanks a lot for taking my question. I just have one question, but a little more detailed. I just wanted to get a little more color on the free cash flow margin by product. And of course we’ve seen very encouraging updates on Base 44 so far: revenue ramping, AR ramping, costs coming down, gross margin going up. And I think the comment on the AI cost is less than 30% of the second half bookings. With all these moving parts, could you help us level set what your core business is doing in terms of free cash flow margins, maybe for the second half of this year, where your Base 44 gross margin is north of 60%?

And then if you can give a sense of how to think about the gross Base 44 margins this year and as it heads into next year once the margin gets close to the core business of closer to 70% gross margin, where you invest additional sales and marketing savings or the cost savings from LLMC to sales and marketing, as we think about the free cash flow margin for Base 44 next year as well. That’d be super helpful. Thank you.

Lior Shemesh (Chief Financial Officer)

I will try to provide some insights, with the obvious limitations because we do not provide free cash flow by category. What I can tell you is that for the core business, the free cash flow actually has improved, and it’s coming from a few places. The first one is that we continue to see throughout the year the continued improvement in our gross margin. Talking again about the core business, obviously much more efficient in terms of headcount. We provided some information about it in our shareholder update.

So we are much more efficient today than we used to be a year ago. That also means more efficient in terms of how we do marketing. So the overall free cash flow coming from the core business actually has increased. I assume that we are going to maintain it also for next year, taking into consideration that there is more efficiency, for example, to do in terms of the gross margin we tend to do and also about the business itself. So I believe that the core business, from a free cash flow perspective, is just getting better and better.

Now with regard to Base, I don’t want to provide the free cash flow right now on a separate basis. I think it’s something that we need to talk about in the future, perhaps. But definitely, when I’m looking right now at the gross margin, first of all the gross margin for next year is going to be more or less the same as we said — that’s going to be more or less the same as Wix.com. So the only question about the free cash flow is how much marketing we are going to invest, and this is a question that it’s really hard for me to answer right now, because I hope that we invest even more and further, because it means that we are going to see much more growth within the same PI that we are doing right now. But I believe that as we scale this business and continue with the current cadence of investment, definitely the second half of next year is going to be much more profitable also on the bottom line than the first one because of the scale.

This business is growing so fast that I think that we are going to see kind of free cash flow positive sooner rather than later. But it’s really hard for me to say exactly when. It really depends on the demand and if we manage to continue with the same marketing investments.

Chris Jeng (Analyst)

Thank you so much, Lior, and if I could squeeze in a follow-up: I believe the next update for Q4 will probably be after the Super Bowl. Do you still expect a similar type of brand marketing, especially around the Super Bowl in Q1 next year?

Lior Shemesh (Chief Financial Officer)

What I can tell you is we are going to continue with investment in our brand.

Chris Jeng (Analyst)

Great. I appreciate it. Thank you.

OPERATOR

Thank you. Our next question comes from the line of Stefanos Christ of Needham & Company. Your line is now open.

Stefanos Christ (Analyst)

Hi. Thanks for taking the questions. I wanted to ask what early signs you were looking for for success on Studio 2 and when do you expect meaningful contribution to revenue and bookings?

Avishai Abrahami (Chief Executive Officer)

I think that the number one early sign is the feedback from agencies. Unlike a regular Wix product or even Base 44, which address a very wide and highly differentiated group of customers, Studio is addressing a very specific kind of customer. So we find that mostly, feedback is a very good indication for the product’s success, and for now it looks very positive. Of course it’s early and it’s pre-release. It’s not even the full product release yet.

But if you go to any of the groups, you’ll find that people really like the product and really enjoy using it. So for me, that would be the number one key indicator. I think we’re going to see contribution next year. We hope to be able to become again a very attractive destination for agencies and give them an extremely powerful tool to grow their business. And I think this is a time where a lot of them do need something like that, so I think the timing is also good.

Stefanos Christ (Analyst)

Got it. Thank you. And you also referenced the employee count. Base 44, I believe, is still less than 10% of total. Are there areas outside of—you mentioned enterprise sales—any areas outside of that you’re planning to invest in or grow for Base 44? Thank you.

Avishai Abrahami (Chief Executive Officer)

You mean specifically for Base 44 or generally? Again, right now, we are, I think, at a decent size there, minus maybe the increase in the build-out that we plan already for ramping a sales team. Again, that will be based on results. So the size will be determined by how much more we can pour in and get out. That being said, it’s a good question. I think it’s a very fast-evolving company, not one in which I can make a decision in December that will necessarily be in effect for a full year. I have to question myself all the time what else is needed and what else can be done on one end.

On the other end, they’re very, very, very efficient in how they work. So I believe that we may make more changes throughout the year. That being said, we’ll probably continue doing them by diverting resources from one side of the business to the other, not by increasing the overall size of the company.

Stefanos Christ (Analyst)

Great. Thank you.

OPERATOR

Thank you. This does conclude our question and answer session. Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.