Good morning, and thank you for standing by. Welcome to the Wix's second quarter conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question- and- answer session. To ask a question, please press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Emily Liu, investor relations. Please go ahead. Thanks. Good morning, everyone. Welcome to Wix's second quarter 2026 earnings call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder, Nir Zohar, President and Co-Founder, 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 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. Thanks, Emily. As I mentioned in our shareholder letter, our strategy is centered on deepening our ownership of the technology stack behind our AI products while expanding Wix's role across the AI ecosystem and throughout the entire user journey, from ideation online to fully operational businesses and deployed software. We're pursuing these through two distinct purpose-built paths rather than betting on a single outcome for how AI reshapes online creation. Wix Harmony continues to serve self-creators through visual drag-and-drop creation paired with AI. Base44 serves a different and fast-growing motion, natural language, vibe-coded app, and software creation. Running both in parallel means we capture demand wherever the market evolves. We achieved a significant product milestone this quarter in support of this strategic priority with the introduction of Base1, the first platform in its category to launch a proprietary LLM. Building this model in-house was a deliberate choice that gives us tighter control over quality, faster iteration cycles, and a better long-term cost structure. It also means every interaction on the platform continues to compound into a proprietary data asset, one that keeps improving Base1 rather than benefiting an external vendor's model. On the economics, Base1 is also driving tangible margin improvement for Base44. As we shift more inference to our own model and continue cost optimization work, we see AI-related costs fall across free and paid users, improving the Base44 gross margin from roughly 0% when we started the year, to approximately 60% in the second half of the year. This trajectory reflects the business moving past early-stage hypergrowth economics toward a more sustainable margin-healthy model with further room to improve. Base1 also demonstrates what is possible when bringing together Wix's 20 years of expertise building and making complex technology accessible to everyone with Base44's nimble and ambitious AI-powered workflow. The same data science organization that led the development of the Wix Harmony LLM, our first purpose-built AI model introduced earlier this year, was able to support the Base44 team directly with existing research, infrastructure, and experimentation capabilities achieved over years of AI development. This team, which I work closely with, played an invaluable role in the creation of Base1 and was a major reason we were able to bring our model into production so quickly. With continued demand strength and now more control over the technology stack powering the platform, we are doubling down on a strategy that has already proven successful. The vision behind Wix Harmony is focused on building AI and human collaboration into the core editing experience, helping users generate, refine, and iterate on content while staying fully in control of the final result. This reflects the broader principle behind everything we build. As the market, the technology, and user expectations keep shifting, our focus is to continuously evolve our platform to the needs of our users. We've continued to make significant advancements in Wix Harmony as part of this ongoing commitment. Our focus now is execution, leaning into our position of strength to create products that generate real value for users and durable growth for Wix. With that, I'll turn it over to Nir. Thanks, Avishai. I want to start with a quick overview of the growth trends we're seeing across the business, then explain how those insights inform our investment strategy. We continue to execute on our plan in the second quarter with steady top-line performance. Bookings grew 12% year-over-year, and revenue grew 15% year-over-year, driven by strong Base44 performance and continued growth in our core Wix business in line with our expectations with encouraging performance from Wix Harmony. As a result, year-over-year Self-Creators revenue growth accelerated sequentially to 14% this quarter, underpinned by healthy business fundamentals, including improving conversion from free to paid users, stable retention behavior, and a robust top of funnel. Partners revenue grew 17% year-over-year, in line with the expectations we provided in early June. We saw a step-up in Base44 contribution to the partner segment in the second quarter as professionals increasingly leveraged AI and AI agents in their workflows and expanded their pipelines to include software creation. GPV in Q2 grew 3% year-over-year, driven primarily by the wind down of our subsidiary, Inkfrog, as part of our organizational realignment in June to refocus efforts on high return products. Inkfrog had moderate contribution to GPV, but low monetization. Its wind down improves our mix towards better monetized GPV dollars, resulting in better take rate. After our June outlook adjustments related to our partners business, I want to make it clear that our partners business remains a key area of investment and focus. We are already actively testing new solutions with our agency partners and believe that these solutions will align our platform with how the partners and agencies ecosystem is evolving. Turning to Base44, which continued on its strong growth trajectory in Q2. Top of funnel demand remained elevated with the newest cohort outperforming the previous one, while renewal activity led overall Base44 growth. Encouragingly, we continue to see more new and existing users choose annual plans as they increasingly trust Base44 for their software needs. Given the continued strong demand, meaningful product improvements, and the significantly improved margin profile of the Base44 business driven by Base1, which Lior will speak to in more detail shortly, we plan to invest further into Base44. As a result, we are raising our TROI target moderately, underscoring our confidence that the opportunity in front of us remains competitive but massive. Our priority is to aggressively capture Base44 market share as the AI-powered app creation space continues to be dynamic and growing with strong belief that the strategic investments we're making today will drive sustained growth and market leadership over the long term. With that, I'll hand it over to Lior, who will discuss how we expect these priorities to flow through the financials. Lior? Thanks, Nir. In the second quarter, we delivered continued solid top-line growth and continued to position the business for long-term success and free cash flow generation by innovating our platform and managing the business with discipline. You just heard from Nir about our strategic priorities and top-line trends, so I'll focus my remarks on the cost side of the business, where we drove strong execution on initiatives that I believe will create meaningful leverage over time. I am proud to say that we have delivered on a key initiative planned for this year. A company-wide priority for 2026 was to lower inference cost with our own LLMs. We started with our Harmony model earlier this year. In June, we launched our Base1 model, which we believe structurally improves the margin profile of the business, and we are seeing immediate results. We now expect non-GAAP gross margin for Base44 to be approximately 60% in the second half of this year. This is a very significant improvement from the near zero gross margin entering 2026. These cost savings are expected to translate into approximately two points of total non-GAAP gross margin improvement in the second half of the year versus the first half of the consolidated business. Turning quickly to the second quarter, let's start with gross margin. Our second quarter total non-GAAP gross margin was 67%, a slight increase sequentially and down three points year-over-year. Our lower year-over-year total non-GAAP gross margin was driven by continued elevated investments in Base44 to support its rapid growth and elevated AI compute costs as we scale and maximize gross profit dollars. Our second quarter margin reflects stable growth margins in our core Wix business compared to the prior year period. Total non-GAAP operating income came in at 12% of revenue, primarily driven by continued higher levels of sales and marketing expenses in the quarter. Non-GAAP S&M expenses remained elevated in the second quarter as expected, as we continued to accelerate marketing investments into Base44 in order to capture strong top of funnel demand trends throughout the quarter, while also seeing AI inference and compute costs associated with free Base44 users continued to increase sequentially. As Nir discussed, with the margin profile of Base44 fundamentally improved, we are going to lean into S&M expenses to capture increased demand. As a result, we plan to reinvest the entirety of the gross margin savings I just discussed back into sales and marketing activities. As a result, we anticipate third and fourth quarter sales and marketing activities to remain elevated as we now aim towards a moderately longer TROI. Turning to our balance sheet. We ended Q2 2026 with approximately $960 million in cash and cash equivalents and $1.63 billion in short and long-term debt. Let's turn now to the outlook for the third quarter and second half of 2026. We are maintaining our current guidance and continue to expect bookings to grow at a low-teens percentage, lagging revenue growth by a few points, and revenue to grow at a low-to-mid-teens percentage on a year-over-year basis for the full year. We expect third quarter revenue to grow at a low-double-digit percentage on a year-over-year basis. For the full year 2026, we are maintaining our expectation for free cash flow margin, excluding acquisition and restructuring costs, to be in the high-teens. Our full-year outlook assumes that the approximately two points of non-GAAP gross margin improvement in the second half in the consolidated business will be reinvested into Base44 sales and marketing through the rest of the year. This reflects our expectation that demand for Base44 will remain elevated, enabling us to capture additional market share as the business continues to outperform. We expect to offset this increased sales and marketing investment in Base44 with lower AI costs and decreased marketing costs for core Wix in the second half of the year, in line with seasonality and lapping the Super Bowl investments earlier this year. We expect R&D expenses to remain stable in the second half of the year compared to the first half, as the FX headwind from a strengthening Israeli shekel offsets savings from our organizational realignment. As a result, we continue to expect non-GAAP operating margin for the consolidated company to step up in the second half of the year, putting us on track to achieve our free cash flow outlook. Our conviction in our near-term strategy and ambitious AI-focused product roadmap remains unchanged. The team is incredibly focused on executing our shared vision, and I am confident that key initiatives like Harmony and Base44 are the right areas of investment. We are utilizing this year to lean into our future growth and leverage AI across every function to drive higher output. The decisions we are making today will pay off in the long term as we continue to build, refine, and deliver products that capture additional market share and drive compounding financial performance for our shareholders. Operator, we are now ready for questions. Thank you very much. At this time, we will conduct a question- and- answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please wait while we compile the Q&A roster. Our first question comes from the line of Ygal Arounian of Wedbush. Ygal, your line is open. Hey, good morning, guys. I want to first dig in on Base1 and the proprietary LLM. If you could expand on the product in general, how it's built, but maybe if there's any quality trade-offs and potential for further AI cost improvements and compute cost improvements over time. Just love to get a little bit more detail on that, and then have a follow-up. Of course. Base1 is a model that we train in-house. A big part of the concept is that we always keep training it based on what we see that works better for our users. This is a lot where the secret sauce is. How do you know what is good? How do you know what is bad? Because essentially, every time you write a prompt, in Base44, the models usually generate thousands of hundreds of thousands of source code lines, and we have to somehow know how to pick the good results versus the bad results. Once you do that, we're able to push that back into the model and keep training it to continuously be better. Today, because of this approach, we're in a place that we can already see that the result of Base1 are better than any of the models that we have from frontier providers. Okay. It's not better for everything. I want to be very clear about it. It's better for Base44, right. We do see a significant improvement. Of course, the cherry on the top is the fact that it also costs dramatically less. We think that this is part of a very long-term strategy where we'll be able to continue and improve Base1 as a result of that, continuously improve one of the critical parts of Base44, making Base44 a better product. Okay, great. Thanks. Can you maybe just give an update also on what you're seeing in the partner ecosystem as more builds are going towards vibe coding and AI builds, and how's the competitive environment changing around that as well, maybe with Base44 in particular, but just more broadly in how that cohort is building and starting sites and online experiences. Thank you. Hey, Yuval. It's Nir. I think I'm not going to go back to what we already shared, but I do want to talk more broadly on kind of the dynamics we're seeing. There's definitely more and more appetite also for the part on the partners ecosystem for AI solutions and AI products. We're seeing this across the board. We're seeing this obviously with the ones who are using Harmony on the Wix side. We're seeing it with more and more of them using Base44. Some of which to create websites, some of which to create and build applications for their clients. We also definitely see it in those kind of conversations we're doing with all of our advanced beta testers on new products that we intend to release to the hands of the partners. I think from that standpoint, we're probably going to keep on seeing that. Our goal is to be able to deliver value, across the full portfolio of our products and offerings. Great. Thank you, guys. Thank you very much. Our next call comes from the line of Elizabeth Porter. Elizabeth, your line is open. Great. Thank you so much for the question. I wanted to follow up again on the Base44 gross margin improvement, which is really impressive. How much of the expected improvement to the approximately 60% non-GAAP gross margin in the back half of the year has already begun to be reserved versus remaining kind of in the forecast period? What percentage of inference traffic is currently running through Base1? Are there any constraints we should consider before broader deployment? Thank you. Elizabeth, it's Lior. What I can tell you, the range that we provided for the gross margin, we already see it. I think, this is why we feel a lot of confidence about what we've managed to do. It was not happening like in day one. It happened gradually, over the last few weeks. We've already started to see the increase in gross margin within the range that I already provided within my guidance. Great. Then just as a follow-up. I believe Base44's earliest annual cohorts are approaching or starting to pass their first renewal period. Just curious what you could say about the renewal behavior relative to some of the monthly cohorts or core Wix, and what are some of the cohort indicators that give you confidence that the Base44 ARR is durable? Thank you. Hey, Elizabeth. Yeah, you're correct. We are nearing kind of the first round of the annual renewals, for Base44. Naturally, we're not there yet, so we're not ready to comment or speak about it. In terms of what we're seeing in terms of the monthly behavior on Base44, we commented on this in the past. Naturally, it is not at the same rate as Wix, which makes a lot of sense. Wix is a brand and a product that has been in existence for many years. We have a much higher annual rate there. People know the brand very well. That being said, we are seeing an improvement almost every month in terms of the behavior there. We take all of that into consideration when we are assuming our growth trajectory, both for the ARR as well as how we spend our TROI. I would say we feel comfortable. Great. Thank you. Thank you very much. Our next question comes from the line of Alexei Gogolev of JP Morgan. Alexei, your line is open. Thank you. Hello, everyone. Can you hear me? Yes. Yes. Great. Thank you. I wanted to follow up on Elizabeth's question about the traffic running through Base1. Any update there? Generally, what are the biggest drivers of Base44 demand right now? Maybe you can talk about user types or channels and what indicators tell you that demand remains elevated. We already are running significant traffic on models that are not the classic frontier models. By saying that, we continuously now test what is the right balance and how to effectively use each model that we have. It's very complicated because we were all trying to estimate what is the best model to solve that specific application that the user is trying to build, right? That varies a lot. I think that the interesting part is that our ability to predict better which models to use is also improving. The biggest drivers for Base44 demand is actually the satisfaction of users from the application that they build. What we see is that when somebody is successfully building an application and he's happy with what he built, he'll share it with his friends, he'll share it with coworkers, and that is the biggest driver of new users. In addition, of course, to marketing. Of that, we are such big believers in the product quality, that the better the product quality is, the better demand will become. We've seen that in the early days of Wix, of course. We are very familiar with this pattern of behavior. In terms of user types, I would say about 40% of our users are trying to build personal projects and things that are related to their life or their personal goals in life, and 60% are business. Business-oriented applications, people taking that to what they do at work. In addition, when you look at the business segment, you see a big variety. However, maybe one thing worth emphasizing is that we have more enterprises than we have at Wix. We ended up having more large businesses on Base44 than we have at Wix. Beyond that, it's a big mix, and I think the fact that it's a big mix is a huge part of the strength of the product, just showing that it's versatile enough that it can be used by many kind of people in many different scenarios. That is a big way for us to appreciate the potential strength of Base44. Thank you very much, Avishai. Just a quick follow-up. To what extent is partner activity migrating towards Base44, and how do you ensure that this increases total lifetime value rather than shifting revenue between those buckets? Well, what we see now is a beginning, and it might be a big trend, but we don't know yet, right? It's very early. It's kind of hard to estimate how the world will evolve with different AI technologies, because it never happened before. What we can say is that we do see some partners that reduced their activity on Wix. A lot of them have increased their activity on Base44. I want to be clear. It's not that people are just moving between Base44 to Wix and Wix move to Base44, right? We see that also people that use some of our competitors and agencies there are moving to Base44. I'm sure some of our partners have left and are using different products in the web coding offering. We do see this migration. I think it will be very irresponsible for me now to try and predict how it evolve in the next year. We'll update when we have more information. Thank you very much, Avishai. Thank you very much. Our next question comes from the line of Stefanos Crist of Needham & Company. Stefano, your line is open. Hi. Just wanted to follow up on that last question. As you see some partners shifting to Base44, can you talk about the difference in economics for someone that switches, maybe just on revenue or margin contribution? Thank you. I think the answer is, there's no clear answer. It depends what they're doing. A lot of those partners actually ended up doing more heavy applications for their customers. In fact, in my conversation with partners, one of the things they were very happy about is that from building a website and charging $1,000, now they can build application and charge $15,000 or $30,000, okay? I think, again, even for them, a lot of it is new and it's being reshaped. In terms of the general value and the economy inside for Wix, there is that. I would say at this stage, I would pretty anecdotal, because you might build less projects but more expensive project, then you utilize more of Base44, then the result of that is that our take from that is a bit bigger. However, this is yet to be proven, and we need to wait a few more, at least months, to be able to come back with a clear number. Yeah. With regard to the margins, I think that right now, when we started to use Base1, I think that right now Base44 is more or less the same profitability as many other software companies. I believe that there is more room for improvement. Definitely, the gross margin and profitability is much better than what it was like even just a few months ago. Got it. Thank you. Just to follow up, on the Base1 cost savings, is that expected to only help Base44 margins or can that help the rest of the company? Thank you. Well Go ahead. Base1 used for Base44, we did the same thing, if you guys remember with Harmony. With Harmony, we also use our own ML model that we managed to reduce costs significantly. You can say that we're using the same strategy across the board, and this is why we saw increase in profitability in the second half of the year compared to the first half. Great. Thank you. Thank you very much. Our next call comes from Josh Beck of Raymond James. Josh, your line is open. Yes. Thank you for taking the question. I wanted to ask about the TROI framework. I believe historically it's been less than 12 months. With the opportunity you see ahead, you're kind of willing to lean in. Any kind of metrics you can share on how much you're willing to extend it? Is it at somewhat of a maximum point as we exit the year, or is that something that could maybe flex up higher based on market conditions? Hey, Josh, it's Nir. First of all, this is a framework that allows us to run investment into marketing what we deem is the right cadence and the right risk profile, so to speak, on the investment. Sorry? With high discipline. Yes, with very high discipline. To your question, is there a ceiling or a max? The answer is, right now, we think we deem this is to be in a very good framework, and we don't expect to increase it necessarily anytime soon. Obviously, many things can change over time that can benefit it, okay? Either whether it's going to be more improvement on the gross margin, that can be something that's interesting for us. Adaptation of more into annual subscriptions on the Base44 subscription, which will just drive more of the TROI forward, meaning that we collect faster. There are so many different parts and moving parts throughout this, how we calculate this, that we definitely can make adaptations through it, but it's always through a very clear formula. It's about us understanding how quickly we can get the investment back. Okay. Then maybe a follow-up for Lior, just on how to think about bookings. If you look to last year, it's kind of been within a point of revenue growth and obviously dipped about three points below. Is that a good baseline to use as we model going forward until we maybe start to lap some of these changes? Any pointers on bookings or any color on how we should think about modeling partners as well? Thank you. Well, at this point of time, definitely you see in our 2026 situation where you see that revenue growth is higher than bookings from obvious reasons, but it doesn't mean that it will continue into 2027. It really depends on how fast we are going to generate more growth, for example, from Base or from other new product that we are going to launch. Meaning that if we see that we can get a new product, like a new funnel, more customers, generate more growth, Base44 continue under the same rate and even accelerate, for example. It might be a situation where we see acceleration in bookings. It's really, really hard for me to tell you that the same cadence actually will continue into 2027. It might change. I actually hope that it will change. Okay. Very helpful. Thank you. Thank you very much. Our next question comes from the line of Ken Wong of Oppenheimer. Ken, your line is open. Fantastic. Thanks for taking my question. Just wanted to dig in on Josh's booking question just now. Any assistance in terms of thinking about that low teens bookings trajectory in the second half? Is it kind of a dip and then re-acceleration, fairly consistent both quarters? That spread between revenue and bookings of a few points, is that pretty consistent in both 3 Q, 4 Q? Hey, Ken, this is Lior. Let's try to understand what is the reason first, and then I can answer you. The reason is, we spoke about it before, about partners. We do see a situation where when we are going to deliver more AI tools to our partners to try obviously to accelerate the growth in partners. We are going to see more partners coming to Base. It's hard for me to tell you about 2027, if it will continue the same way. As I mentioned before, I hope that that won't be the case. What's happening the second half of the year is mostly because of partners, and obviously, we are dealing with it. Right now, the entire company is concentrated only on one thing, to generate more profitable growth, and we are doing it through Base, but also through our new product at Wix. We spoke about it before, more tools to our partners, definitely with Harmony. I certainly hope that it will change in 2027, but it's too early for me to say. Okay, understood. Then just on the revenue guide, the implied Q4 number does seem to suggest a bit of acceleration there, and the comp is still pretty tough, and the bookings have been a little soft in the first half. Just the confidence in that 4Q revenue number, what's underpinning that, Lior? I think that the Q4 revenue, first of all, I don't see it much different than the Q3, meaning that I don't see acceleration in Q4 compared to Q3. Definitely we see a lot of benefit coming mostly from Base44 into the numbers. Q3 and Q4 revenue growth on a year-over-year basis, more or less the same, but I don't see acceleration Q4 compared to Q3. Okay, perfect. Thank you. Thank you very much. Our next call comes from the line of Robert Coolbrith of Evercore. Robert, your line is open. Hi, two questions, please. As partners use Base44 in place of Wix Studio, just wondering if you could talk about attach rate of Wix Business Solutions on a headless basis. Maybe also just some early learnings from some of the headless initiatives you have with the LLM partners as well. Just wanted to double-click on the GM profile in H2. I think you said one to two points of benefit, H2 over H1 from Base44, or the Base1 model specifically. You also talked about some AI savings in the rest of the business. Just wondering if you were to put that all together, maybe you could give us a consolidated view of the GM improvement in H2. Thank you. Yeah. I will start with the gross margin, and about the two points that you just mentioned. Avishai will continue with the first one, or Nir. With regard to the gross margin improvement in the second half, I said that it's going to improve by two points, and this is mostly coming from the savings that we see compared to the guidance we provided previously about Base44, meaning that the improvement in gross margin, and the usage of the model of Base1, and the fact that, as Avishai mentioned, that it's even performed better. We see that the usage of Base1 is even much higher and better than what we expected, and faster. Therefore, we updated the gross margin as a result of that, meaning that we see a dramatic change in gross margin of Base44, and it's translated to a two points improvement in the consolidated revenue, in the consolidated gross margin. Hey, Rob, for the first part of your question. As Avishai mentioned before, you asked about partners using Base44 instead of Studio. The dynamics here, as Avishai said about partners and Base44 are very early. I think it's too early to comment about whether it's supplementing or it's actually additional. By the way, we are seeing some that are using both for different use cases. I think that as time progresses, we'll probably have segmentation more and more of some partners and agencies that are sticking to one product or other that are using different products for different kind of projects that they're doing. I think it's early in this cycle. It's definitely an evolution of this segment, and it should be very interesting. Our goal is to try to be there and deliver the right value, whether they're trying to go one way or the other. By the way, to some extent, the second part of your question was about headless, it also applies to headless. Obviously, in a world where there are more and more agentic solutions out there, we want people to be able to benefit from the value of the business stack that's on Wix in a very easy manner. This is what this headless is all about. It's something we're starting to see pick up, but again, it's an early cycle. Obviously, it is aimed towards people who are more professional in their use and what they're trying to build. We're seeing traffic coming to this from various places over the Internet, where the professionals are dealing and working with agentic solutions. It can be things that are coming from Anthropic, OpenAI, our own stack. Our goal is to definitely be there, and add that to the portfolio of solutions that we offer the professional crowds. I do think that in the coming few quarters, it's going to become more and more clear exactly what is the preferred path for each and every one of them. Great. Thank you. Thank you very much. Our next question comes from the line of Naved Khan of B. Riley Securities. Naved, your line is open. Great. Thank you very much. I understand you guys are not updating the ARR for Base44, but just curious if the trajectory is similar to what we saw between your last few updates. Are you still taking share from Lovable in the U.S.? Are you still ahead there? I think that's something you had pointed to before. That's my first question. In terms of just the Base44 mix of monthlies versus annuals, can you just maybe talk about how that mix looks like? Seems like you're getting more annuals versus monthlies, but any color there would be helpful. Thank you. Hey, Naved. For the ARR, as we said before, this is not a KPI we intend to report. It's trending in similar manners as before. In terms of what you ask about the mix of monthly and annual, yes, I would say there's more adoption of annual, but we're not in a place where we want to break it out to the exact numbers right now. For the Lovable market share in the U.S., you want to comment on that, Avishai? Yeah, I think that it's important to say we're not taking shares from Lovable. We are inventing a new market together with Lovable. We are competing on the percentage of that going forward. I think it's mostly us supporting each other more than competing with each other by educating the market and educating people to the fact that they can now build applications themselves and invent products and actually manifest that in reality, which still is shocking for most people. I would say we more support each other than competing with each other. Yeah. Thank you, guys. Yeah, I misspoke. I think you had said that you were ahead of Lovable in terms of taking the share. About what? taking share It's very hard if you're trying to find the precise market split between us to Lovable. It's extremely hard. They are a private company. They report numbers based on metrics that are not clear, okay? It's very hard for us to distinguish marketing on their numbers from real numbers. I can say that our estimation is that in the more important market, United States, we are ahead of them. To say by how much is, again, tricky. We can only look at secondary metrics that we can measure on the internet, I would say we're in a very good place. Great. Thank you, guys. Thank you very much. Our next question comes from the line of Andrew Boone of Citizens. Andrew, your line is open. Thanks so much for taking the questions. I wanted to go back to Base1. Can you just talk about the improvements of the model? If we think about the trajectory of Base1, should we really think about a parallel path with open source more broadly? As we think about Kimi K3, if we think about other open source models that have come to market, is that the right trajectory of what we see for improvements for Base1, or how do we think about that? Just connect that more broadly to what we're seeing in terms of conversion or retention. How do we think about the improvements of models with Base44 improving the overall business? Secondly, just more of a bigger picture question. A lot of people think about frontier models and their progress, and especially just the competitive threat from Claude Code or other frontier-type models. How do we think about just the competitive moat, broadly speaking, for Base1 and open source more broadly, versus what is the frontier as we think specifically about coding assistance? Thanks so much. All right. Those are three different questions. The first one is Base1, will it improve in parallel with open source models? I want to be saying, first of all, the answer is yes, of course. However, I don't think that that is the most significant part of the improvement. All right? For most of the applications that you want to build today, Kimi K3, GLM-5.2, 5.4, I think, and Claude or Opus 5 or the latest Codex, they are all good enough for most applications, right? Because most of us don't do those complicated things that require that extra few percent in model intelligence. Right? For most of the application, the improvement that we need to make on Base1 are to build those applications better, okay? It's a different thing. It's not about how we make it more intelligent in Hungarian poetry, which is one of the things that on any other of those things, on molecular biology. All those things that those frontier models are trying to push the envelope. A lot of what we need to do is how we make applications that people prompt. A lot of the time, those people are not professional developers, so they don't prompt them in a professional way, right? They're lacking a lot of the definitions. They don't put all the information that you need. How do you make Base1 better at solving those specific problems? Yes, we will benefit from continuation of development in the open source environment. Absolutely. The vast majority of the value will come from what we do and not from improvement in the open source models. How does Base1 improved impact conversion and retention? I believe that was your second question. Well, obviously, if you come to Wix, to Base44, and you prompt something and you get a bad application, you're going to convert a lot less than if you went to Base44, type the same prompt, and get a better application. All right? Even if you don't get a perfect application, but in a place that you can now feel confident that if you start working and continuously to prompt, you'll get to what you want, that's already a dramatic improvement in your chances to convert. We see that, we measure that. We have now a year of consistent measurements on that. We know that that's the case. By improving Base1, I'm confident we will continuously improve Base44 conversion, which is why I'm so excited about it. The other side of it, of course, is exactly the same for retention. What is the competitive moat for Base1 and open source broadly versus frontier models? That's a very long question, and I think that it's beyond the scope of this conversation. I'll just say my two cents. Currently, everybody is using exactly the same algorithm, okay? Yes, we do some engineering modification on top of it, but that's pretty much it. The moat is not huge, okay, for frontier models. However, they've proven in the past that they have the ability to innovate, even within the same algorithm, which is attention-based transformers, right? That's the algorithm. Create new things. If they continue to do that, they'll have some kind of a moat. There is another side to that, is that there is a level where it doesn't matter or legal action or government action will start preventing the evolution and release of new models. We see it with Meta, right? On security, cybersecurity issues. The fact that for a lot of the times, the current model are already intelligent enough. If you're a commercial model, a frontier commercial model, but for the task that your customers need, that extra intelligence that you've added are not significant, okay? It's very hard to justify prices. In other words, it's a very interesting conversation, I think, beyond the conversation of our discussion, but I think it's extremely important for the Western world to have really strong frontier models in the Western world. I really hope that those guys at OpenAI and Anthropic and Google will continue to innovate and drive fantastic products. Thank you. Thank you very much. This concludes our question- and- answer session. 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