Ladies and gentlemen, thank you for standing by, and welcome to Wix' fourth quarter and full-year 2020 earnings call. At this time, all participant lines are in a listen-only mode. After the speakers' presentation, there will be a question- and- answer session. To ask a question during the session, you will need to press star then one on your telephone. We ask that you please limit yourself to one question and one follow-up. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to turn the conference over to your host, Maggie O'Donnell, Director of Investor Relations. Please go ahead. Thanks, Sarah. Good morning, everyone, and welcome to Wix' fourth quarter and full-year 2020 earnings call. Joining me today to discuss our results are Avishai Abrahami, our CEO and co-founder, Nir Zohar, our President and COO, and Lior Shemesh, our CFO. During this call, we may make forward-looking statements. 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 these forward-looking statements. 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 our interactive analyst center on the investor relations section of our website, investors.wix.com. With that, I will now turn the call over to Avishai for some opening remarks. Avishai? Good morning, everybody, and thank you for joining us today. I think that if you look at the numbers, it's obvious to see that this was our best year ever. It's really exciting for us. Even more than that, I want to point out two things that might be less obvious that I get excited about even more. This is that we have incredible, more than doubling growth on e-commerce, and of course, more than doubling growth on partners, people that are building websites for others. Both those things represent new kind of businesses that which we sell, new revenue streams that we have now on Wix. Both by nature are compounding. E-commerce because you have more people adding and also they add more payments. On the other hand, all of the partners because they build multiple websites. That's their business, to build more and more websites. For us as Wix, this is a big turning point where we are actually expanding our offering to be much wider. In fact, if you look at that and you think about the growth rate of Wix and the size and renewal of things on the Internet, of online presence on the Internet, I believe that it's, well, maybe a bit ambitious but achievable to assume that in five years, half of all the new things on the Internet will be built on Wix. In fact, I'm so confident about it that I have to say that if we continue to have great execution, then this is something that we should achieve. For me as the CEO of Wix, this is super exciting. It's really amazing to be in a place that you see such growth in all of the new things we released, and of course, that it positions us as such a core part of the Internet going forward. Thank you, everybody. Thank you for joining us. With that, I'll go back to Maggie. Thank you, Avishai. All right. I think we are ready for Q&A. Operator? Thank you. As a reminder to ask a question, you will need to press star then one on your telephone. To withdraw your question, please press the pound key. We also ask that you please limit yourself to one question and one follow-up. Our first question comes from the line of Brent Thill with Jefferies. Your line is now open. Thank you. Avishai, just your vision of moving upstream to service not only small businesses, but mid-enterprise and enterprise, can you just update us in terms of the vision and traction you're starting to see beyond the smaller startups? Of course. how much do you want- Actually, this goes in a few different directions. The first thing is that the product today is a product that fits. You can build huge websites with Wix. Beyond that, it's also Editor X, which allows you to create this very sophisticated design going all the way to what you would see in the most complex websites existing today. The business stack below that, the ability to actually use Velo and connect everything to your back end, to your enterprise offering. Of course, the challenge, because most of the larger customers do not build the website themselves. They work with partners. They have somebody that does it for them. Our ability to serve those with a great offering as well. All of this has pretty much happened this year. For me, it's really exciting. We're already starting to see. We shared some examples on the Editor X launch two weeks ago. We're really starting to see more and more larger companies using Wix. Thank you. Of course. Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Your line is now open. Yeah, thanks. Hi, guys. Just one question from my side. Looking in the presentation materials, the discussion around the take rate on payments, it's a really impressive rate for a company being in the payments business as long as you have. I'm curious what's allowed you to get to those level of take rate. Are those take rates when you first start with a customer? Do you ramp to those levels? Are you at those levels from the beginning, and they hold steady when a customer comes onto Wix Payments? Hey, Sterling, it's Nir. Thank you, and I think it's a great question, as you raised it relatively early. Actually, I'm 100% sure that the take rate is actually going to improve over time, as you've seen it improving so far. When you look at a specific customer, then you don't ramp up. We start at a higher take rate. Obviously, our ability to increase the overall take rate on the platform comes from the ongoing improvements that we apply to the platform and the expansion we are doing to the platform also internationally. Got it. Thank you. Thank you. Our next question comes from the line of Ron Josey with JMP Securities. Your line is now open. Great. Thanks for taking the question. A similar question in terms of the graduation rate for users. I was pretty impressed to see 37% of 2020 cohort revenue from newer online customers or subscribers or commerce subscribers. I think you talked about maybe a 2x increase in terms of the rate of those subscribers adopting G Suite and Ascend and Facebook ads. Can you just talk about the journey of how a new commerce subscriber goes about adopting these products? Is this something immediate? Is this something that happens over the next couple of months once they start using the product? That would be helpful. Then maybe Lior on subs, I have to ask, with 185,000 new subscribers this quarter, can you just talk about the strategy here? I think they declined sequentially, just maybe a little bit more about just the new subscriber growth. Thank you. Of course. Most of the time, what we're seeing is that people will start with a very basic e-commerce business. As time passes, they will extend and add new things to it. It's not like you come in one day and build everything. For example, if you look at the automatic advertising product, that can happen after a few years or after a few months, but it almost never happen in the first month, right? We're seeing that the consumption of additional tools from us, the more people know the system, they understand the system and actually appreciate it and have trust with it, right? That's where they start looking around and seeing, okay, how we can accelerate the business. Normally, people will come to Wix, and in the first couple of, I would say, week or so, they'll build their online presence for the basic offering, right? If it's a shopping cart business, they add the products, they set up the billing, the payments, the policies, and they'll try and start selling. If it has to do booking, they'll build the basic offering of booking, add some of the teachers, some of the classes, and start working from that. After that, they usually start using the applications, right? The native application. After that, they start going deeper and deeper into business tools. Usually, a process that takes a bit. It usually takes time, and that's what we're seeing. By the way, another thing that we're seeing is that a lot of them will start adding different tools. Somebody that has a booking business will start selling products, right, to his customers. We're starting to see there. Somebody that's doing selling product will start offering classes and teaching and things. We're seeing a lot of this cross between the verticals. Hotels, obviously, they have a store, they have a spa. There's a lot of a cross between the verticals. It's more of a vertical offering, necessarily vertical customers in many cases. Lior, you want to take the second one? Yeah. Hey, Ron. With regard to the question about the net subs, so Q4 2019, actually, the growth was about 107% more than Q4 2019, meaning that 2020 actually growth was more than double than Q4 last year. That said, Q4 was, in a way, also impacted by typical seasonality, with a bit of a higher volatility due to the epidemic. Probably also because we came out of a very strong Q3. Obviously, we see that the impact is kind of temporary for the fourth quarter, and it's also reflected in the Q1 guidance that we provided, that the growth, for example, of creative subscription is more than 30%. I think that it's also important to mention that the value of each subscription is so different. It's really hard to measure and compare. This is why, by the way, in a way, we are valuating or looking at ourselves as the value of the cohort. Just as an example, I think that we also provided to you in the shareholder update, the 2020 cohort generated nearly 7.5x the amount of revenue compared to 2016 cohort. I think that it's a great indication to understand that each subscription today, the value of it is much higher than a subscription a year or two or three years ago. I hope that it answered your question. It does. Thank you very much. Thank you. Our next question comes from the line of Naved Khan with Truist Securities. Your line is now open. Yeah, thanks a lot. Avishai, on your vision of maybe accounting for 50% of new sites in five to seven years, where do you think you are on that metric today in terms of share? Then maybe, if I heard you correctly, just a clarification, did you say that the contribution or the growth in partner channel doubled last year, and how should we think about growth in the channel for this year? Yes. I did mention that, and I think that hopefully it will more than double next year as well. This is something that two and three years ago we spoke to everybody here, and we mentioned that we're going to invest into that, and I think we're seeing really massive success. I think that 50% of the new sites being on the internet built in Wix, obviously it's an ambitious goal. Right? I think that as a company, you want to be ambitious. I think that if you just play a little bit with the mathematics, and you'll see that it's not hard to imagine that we'll be there. It's actually very likely that unless something changes, we'll be able to achieve that. Of course, we'll need to do an excellent execution, and we have to continue to innovate and drive product. I think this year's growth rate, and we look at the history of the growth rate, is such that it's showing that it is very likely to happen. Well, it can be not five years, but six years. Right? It can also probably be four years. I think when I say five to seven years, I believe that it is something that is very achievable. For me, the message internally for the company, it is a very important thing because this is really something we believe we can achieve, and this is something that we work very hard to achieve. Thank you. Thank you. Our next question comes from the line of Ken Wong with Guggenheim Securities. Your line is now open. Great. Thank you for taking my question, guys. I wanted to maybe touch on payments again. Previously, you guys updated us that about 30% of the install base had attached payments and 80% of the new. Any refresh to those numbers? On the take rate, as you think about where you guys could go, any rough sense of what that ceiling is? Some of your competitors out there have roughly 250 basis points. Is that what we should be thinking for Wix Payments longer term? Hey, Ken, it's Nir. In terms of, I think the 30%, 80%, it's growing. It hasn't changed dramatically. I don't think there's something different to report at this stage, but the adoption continues at a high pace. I think that in terms of the take rate, then yes, I think that definitely over a longer period of time, we will get to industry standards as we keep on evolving the product and expanding it. That's definitely the goal. Great. Thank you. Thank you. Our next question comes from the line of Nat Schindler with Bank of America. Your line is now open. Yeah. Hi, guys. You mentioned in the gross margin discussion that the decline was partially due to the customer care expansion. How much of that is leverageable? Longer term, where do you think the gross margins will settle out? Secondly, if I look at your TROI slide, I think this is one of the first times I've seen just on the Q1 slide, which should be, I think on average, 10 and a half months of time on that Q1 result, and it still hasn't gone into positive returns. A little off your seven to nine. Was that a function of just Q1 this year and some seasonality, or is that an actual trend that you're looking to expand your TROI? I will start with the first question about the gross margin. I want to divide the question, the answer into two. First, let me talk about the creative subscriptions. You're absolutely right. The creative subscription is actually the gross margin went down as a result, mainly of the expansion of our customer care to address the huge demand that we see right now, but also in the future. Obviously, we see that demand continue to grow. We have to make sure that we prepare ourselves, prepare our ability to support users that come to Wix and looking to build an online presence. We hired about 700 agents in 2020, which obviously has a full impact on 2021, but we will continue to hire more, about 600 more in 2021. It has an effect. To your question, you're absolutely right. We mentioned that by the second half of 2022, we are going to be back to about 80% of gross margin as we stop hiring in accelerated mode. Also, there is a lot of infrastructure improvements that we've done in order to support this growth, that we won't do obviously in the near future. Definitely, it's kind of a temporary effect in order to answer the growth, and we feel very good about it. With regard to the business solution, nothing dramatically changed except of two things. The first one is the change of mix Well, payments become more dominant in terms of the business solution. Actually, in 2021, it will be the number one revenue stream on the business solution. Kind of amazing, taking into consideration that we just started this business. The gross margin of payments is increasing as we scale up. We talk about the take rate, for example. We also are investing a lot in order to build the infrastructure to support payments, everything about the onboarding process, about the support. Next year, for example, we are not going to invest as much as we are investing this year. Gross margin is expected to go up as well there. It's also important to mention that the focus of business solution is about the product for users, not necessarily the gross margin. In the end of the day, it generates incremental free cash flow to our balance sheet. This is very important. It also has an indirect effect over the retention of the creative subscription. This is obviously something that is very important for us. Avishai, I just want about the question about TROI in the first quarter. It was influenced by a couple of things. First of all, was that if you remember in the first month of the pandemic, everything actually slowed down a bit, and then it accelerated, obviously, it's in that quarter. The second thing is that we spent marketing dollars in launching new products. You always spend there to start creating this pool. That was mostly the effect of that. The last part of it was that we started investing into e-commerce product and the behavior of retaining cash is influenced also by, of course, our take rate and that's something that we have to learn how to include better to the mathematics. I want to say that as the CEO, we came up with the number seven to nine months because we felt that this means that we're efficient in a certain way. For me, if we're in 10 months or it's actually better than if we are in six months, right? That actually is what I would be worried about more. By the way, last year, we came back again to the same range of seven to nine months. Thank you for noticing that, and I think it was influenced again by the pandemic, releasing of new products and then trying to think about what is the model with which we should measure all the commerce things, which, of course, have a different way to behave in terms of return on investment. They tend to go more in the future, right? If in the first year you get X, usually in the second year, you get 1.5 or 2X from them. Maybe we should be a bit more open to spending a bit more on those guys. Makes sense. Thank you. Of course. Thank you. Our next question comes from the line of Jason Helfstein with Oppenheimer. Your line is now open. Hey. Everybody, thanks. Maybe start with a question about your comment about you're targeting half of all new sites or things, in five to seven years. Where are you today? Kind of what's the starting point that you're using to get to that glide path? A question about the gap between collections and revenue. Maybe take us through just the puts and takes because we get a lot of questions from investors on kind of, we go through periods where obviously the gap, right, because the program is expanding and then it narrows. Just take us through that. Thanks. All right. I think that, if I answer one of your questions, as far as I know, if you look at the internet, you have to divide it between a few different sectors. The first thing would be people that are building small business website, mostly building themselves. I think there's self-creators, which is, by the way, a trend that is super growing on the internet, right? That trend in itself is growing. In that trend today, I think Wix is already about 50% or very close to 50% of new sites being created on the internet today from self-creators on the internet. If you look at partners and designers, so it's very hard to estimate exactly what are their numbers on the planet, but I assume always that their number on the planet is probably equivalent to the amount of people using Photoshop, right? It's not exactly, but very similar, so about three or four million. We are getting to be about, well, I don't know if we disclose that number or not, but we're already double digits from that, right? Even without doing, just continue to grow in the same rate that we grow, we'll be at 50% of those. Those guys are responsible for two kind of websites. They're responsible for people that buy websites, so they have somebody else designing their website. Of course, for most of the enterprise or large companies website. I think just by looking at those two key factors, you can see that it's very achievable for us to be 50% of all new internet websites. The one thing that we don't address as much today, but we're seeing growth already with Editor X happening today, are companies building their own websites, so enterprises or medium-sized companies or large-sized companies. Again, we're seeing growth with Editor X, which is surprisingly fast, 10% month-over-month. More than 10% month-over-month. I think that if you factor all of that, it's very easy to extrapolate that we'll probably be at 50% of all new websites being built in the world within five years. Hey, Jason. With regard to the second question about collection and revenue, a general comment about it, I think that we need to relate to two different behavior. The first one is the creative subscription, which mostly is recognized over time, as you know. business solution is mostly recognized immediately, for example, payments. Collection is equal to revenue, with regard to payments, for example. In Q4, we had more collections coming from payments than what we anticipated initially. Therefore, the revenue was all recognized immediately, and it was increased more than what we anticipated, as I mentioned before. Obviously, the gap between revenue to collection, it really depends on the nature of the growth. If the growth is more coming from creative subscription, you will see that the gap is increasing. If you see that the growth of business solution is increasing, so the opposite. It really depends. Again, this quarter, it was very nice to see how business solution is scaling up, especially payment, which obviously was all recognized. Thank you. Thank you. Our next question comes from the line of Ygal Arounian with Wedbush. Your line is now open. Hey, good morning, guys. Thanks for the questions. I wanted to ask around the $60 million in incremental investments this year, and how you think about that being the right level of investment, how that flows through to the revenue collections guidance, this year and next year as well. Within that, you have two real big initiatives, I guess, right? Editor X and the partners, commerce. Is Editor X, with the 200,000 subs, kind of tracking where you thought you'd be at this moment? How does Editor X contribute to commerce? Are you seeing more commerce sites being built on Editor X? Is it a boost to the commerce initiative? I have a few kind of technical follow-ups I'll ask after. I will start with the $60 million incremental investments that we've made. We mentioned that we are going to use it for several things. The first one is about the care headcount, expanding it. It's a good question because internally, we try to understand how many people, how many agents we need to support the continuous growth. We also assume that the growth will continue. We talked also last quarter about a new state of mind, and it's actually happening. The growth continue, and the demand is actually increasing. In order to support that, we have to recruit more people, more agents, and it takes time to train them. I believe that 2021, we are going to increase the investment, as we mentioned before. We are going to see the benefit of it already in 2021, but mostly in 2022, as the gross margin actually increasing again to 80% for creative subscription. We are going to use it in order to support payments. We talk about the payments, the product, and the growth, and how we increase the take rate. There is a huge opportunity for us on payments. Payment is already started to deliver free cash flow on the bottom line. I think that next year it will be much more significant for us. The same goes for accounts management. We believe that this is the appropriate amount that we need to invest. Obviously, we are not doing it in day one. It will be based on the actual growth that we are going to see and witness throughout the year. I just want to add that I think that in many companies that have a balance sheet as strong as ours, will use that in order to grow the business through M&As. I think that our approach is that most of our growth will always come from innovation. I think we've proven that investing into innovation, it what works best for us to generate that future growth. Okay, helpful. Just a couple of mechanical things. People have asked about payments and the take rate. Can you just explain the gap between the 1% and what's listed on your website, which kind of amounts to 2.5%-3% already. What's the difference between what's listed on your site and what you're recognizing? Are chargebacks being accounted for in the take rate or as a cost? Then, again, going back to the creative subscriptions collections, which decelerated this quarter, and you're expecting to accelerate again next quarter. Is that all coming from the kind of pull forward you talked about in subs in Q3 and normalizing again in 1Q? Or are there other seasonal elements that are causing that? I'll start with the second question. It's exactly what we said before about the seasonality effect that we've seen and the volatility that we had in the fourth quarter, again, especially after a very strong Q3. We already see on January number that it's going up again to more than 30% on a year-over-year basis. I think that it's a great indication for the fact that it's only a temporary effect, and we are back to the growth that we've seen before. For Editor X, you asked about the growth for Editor X. I got to say that your first question was about growth of Editor X, and for me, I think this is by far the fastest-growing product we ever released in terms of growth. Taking into account that this is not something that you just can broadcast and use regular marketing channel because you're going after professional people, I think this is amazing and it's a testimony to the quality of the product and to the quality of the marketing team working on this product. In regards to does it do, it's growing over the 10% month-over-month, 200,000 users already. Really, it's fantastic. In terms of contribution to e-commerce, we do see more e-commerce there, and we do see more complex projects there. I think a big part of the reason for that is that Editor X is really a tool for professionals. I struggle to finish a website with it. It takes me time. Having that, if you use ADI, obviously, it's never an issue. Even if you use the classic editor, it's very simple to do. Editor X is much harder. Of course, people using data, more professional, have bigger projects, deeper projects, and that's part of it. For me, the most amazing thing is that I did not expect it to be anywhere near where it is now in terms of numbers or growth rate. It's amazing. Was there any more questions, or we answered everything? Yeah. What's the difference between the 1% take rate in payments and what's listed on your site? What are the factors there? You have to remember that, first of all, this is a young product and you're evolving it. A lot of our existing users who are transacting on our system are not necessarily on our own gateway, and in which case, we have different kind of commercial terms with the other gateway. Naturally, it's not as favorable as through ours. We're not forcing them to move. We're enticing them to move by offering a better product and higher value. This is also why you see the take rate taking off from the half a percent it was in 2019 to the 1.3% it should be in 2021. We are very confident that it will continue to go up. Great. Helpful. Thank you, guys. Thank you. Our next question comes from the line of Nick Jones with Citi. Your line is now open. Great. Thanks for the question. I guess a follow-up on some of the incremental investment, specifically on the growing the account management team for the high-volume commerce users. How do you feel the Wix platform is positioned against some of the, I guess, competitors for kind of agencies or higher volume e-commerce companies? Is Wix's suite of solutions today adequate for someone to scale to a sizable e-commerce company? Or is that a risk as they get bigger that they turn to maybe custom applications to improve speed or things like that? Thanks. I think that we are to a place where we're actually very competitive in those categories. I think that if you use Wix eCommerce, which is really a fantastic product, then Editor X, which nothing compares to it in ability to design, edit, control your site, works as a team, right? We're the only company on the planet to give you a way to actually work as a team when you build projects like that, right? You can use concurrent editing, right, for that. You have the history, the versioning, and then you have Velo, right? The Wix Code solution. You can actually custom build whatever you need, and you don't have to rebuild new servers and infrastructure. I'd say that if you look at our ability to compete this year on bigger project, it's fantastic. I think we have the best offering on the planet. Great. Thanks. Thank you. Our last question comes from a line of Chris Kuntarich with Deutsche Bank. Thanks for taking my question. Maybe two, if I can. You talked about having these commercial relationships with some of the other gateways. Can you just help us think about the opportunity for Wix to charge a transaction fee similar to what some of your peers are doing on transactions that are taking place on other payment rails and not through Wix Payments? Then just kind of thinking through your 2021 payment disclosures or guidance that you've given here, how should we think about as we look at gross payment volume from existing users versus new users, how should we think about the drivers there? Just curious, why is the revenue guidance so tight at this point in time for a product that's growing so quickly? Thanks. Hey, it's Nir. I'll take the first part, and I think, Lior, you'll cover the second one. In terms of the opportunity to charge transaction fees for other payment gateways, first of all, of course, we have that opportunity. At this stage, we haven't implemented it or don't intend to do it in the near future. We believe that our ability to move the merchants and the customers is through the depth of our product and offering and make it so excellent that it's just much superior. We may do that in the future. Currently, we don't think that that's the best way to go about it. With regards to the 2021 payment guidance, obviously we see a strong growth coming from both existing and new users. For example, a lot of new users in 2020 are driving the growth. In a way, think about it as a compounding effect where you see the growth of our users. In addition, we are getting more because also the mix is changing, and we are getting more kind of business users. We see more than that, and it's actually growing. At the same time, we also increase the take rate. All those indicators actually lead us to believe that the guidance for 2021 is actually something that is quite realistic. We are very excited about it. Actually, I can tell you that it can be even more than that. It really depends on how the year will be and how much people are going to embrace the new product. For example, point of sale is going to move many people from offline to online. It's also going to contribute to our global expansion of Wix Payments. There's a lot of opportunities over there, but certainly also long-term opportunities that we intend to pursue. Got it. Thanks for the color. Thank you. I will now turn the call back over to Maggie O'Donnell for closing remarks. Thank you everybody for joining us today. I hope you have a good day. Bye. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.