Wix.com (NASDAQ: WIX)
Q1 2024 Earnings Call
May 20, 2024, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, and thank you for standing by. Welcome to Wix first-quarter 2024earnings 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.
[Operator instructions] Please note that today’s conference is being recorded. I will now hand the conference over to your speaker host, Emily Liu of investor relations. Please go ahead.
Emily Liu — Investor Relations
Thanks, and good morning, everyone. Welcome to Wix’s first-quarter 2024earnings call Joining me today to discuss our results are Avishai Abrahami, CEO and co-founder; Nir Zohar, our president and COO; 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 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 in our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com.
Should you invest $1,000 in Wix.com right now?
Before you buy stock in Wix.com, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wix.com wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $566,624!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of May 13, 2024
With that, I’ll turn the call over to Avishai.
Avishai Abrahami — Co-Founder and Chief Executive Officer
Thanks, Emily, and good morning, everyone. We had a fantastic start to 2024 as we built upon the strong momentum and milestones over the last year. We exceeded our expectations across many areas of our business in the first quarter by executing on our product strategy, growth initiatives, and commitment to balanced profitable growth. As a result, we continue to differentiate ourselves and grow market share as users increasingly choose Wix the go-to platform to achieve their goals online.
We kicked off the year with a strong growth booking in Q1 grew to more than $457 million, exceeding expectations. Revenue grew to $420 million, above our guidance. This outperformance drove free cash flow, which grew to more than $111 million. This new high-volume mark in our profitability journey is a milestone that we, all, will go into more details shortly.
The strong growth we saw this quarter was driven by improving business fundamentals, which I’ll let Nir discuss in a few minutes. An incredible product innovation. In particular, we are seeing remarkable results from the product milestone achieved last year, a leading portfolio of AI technology and Wix Studio. First, AI — first, our suite of AI part product is performing extremely well.
Notably, this quarter, we released the highly anticipated AI Website Builder. This is our cornerstone AI product. It leverages our 10-plus years of web creation expertise and unparalleled knowledge based on users’ behavior through a conventional and conversational AI chat experience. Users describe their intent and growth AI technology then creates a professional, unique, and fully built-out website that meets the user needs entrant.
Importantly, the AI-generated site includes all relevant pages with personalized layout themes, text, images, and business solutions such as scheduling, e-commerce, and more. Best of all, this website are fully optimized with Wix-reliable infrastructure, including security and performance as well as built-in marketing, SEO, CRM, and analytics tools. There is truly nothing like this on the market. Excitingly, feedback on the AI Website Builder has been incredible. In just a few short months since its launch, hundreds of thousands of sites have been already been created using this tool by both Self Creators and Partners.
This strong response and utilization is a testament to the depth of our AI expertise and strength of our product. We did not step up the gas after this milestone release and recently added more products to our AI portfolio in order to make the site-building experience easier and more enjoyable. In April, we released a suite of AI-powered image enhancement tools that provide users with the capability to create professional images on their own. High-quality images are an essential part of a professional website but often hard to achieve without the help of professional photographer.
New users will be able to easily erase objects, generate images, and edit them to add or replace object with a simple prompt, all without ever leaving the Wix product studio. A few weeks ago, we also released the AI portfolio creator, which uses in-house AI image clustering technology and the latest AI model to enable users to easily and professionally showcase an online portfolio. This creates a smooth intuitive portfolio-building experience that generates unique and professional options in moments. This new capabilities are just the start of a robust pipeline of AI-enabled products still to come this year, including a variety of vertical AI business assistants that will be released for the year.
A couple of these assistants are currently in beta testing and seeing great results and feedback. I can’t wait to share this and more. We are seeing a tangible benefit from our entire AI offering, particularly, better conversions among users into premium subscription. I strongly believe that our AI capability will be significant — a significant driver of Self Creators growth in 2024 and beyond.
I’d like to finish with an update on Wix Studio, which continues to perform ahead of plan. Since its launch in August, over 1 million Studio accounts have been created by agencies and designers. The majority of the Studio accounts are created by larger agencies completely new to Wix. This is an encouraging sign that we continue to win market share.
Existing professionals are also increasingly using Studio to complement their classic editor project with most of our top partners having built at least one project on Studio. Moreover, fast conversion of these accounts has resulted in more Studio premium subscriptions than anticipated. This high conversion demonstrated powerful design creation and workflow management capabilities a professional cannot get anywhere else. As a result, we expect the lifetime value of our Partners’ user base to continue to improve as Partners build more projects on Studio over time.
As a reminder, the lifetime value of our Partner is already multiple times higher than that of our Self Creators. We continue to add new innovative capabilities and improve the Studio platform. In April, we introduced the ability for Partners to share student templates in the marketplace. This feature enables Partners to market and sell Studio templates they’ve created, thus increasing the earning potential while organically fostering the Studio ecosystem.
With more new features on the horizon, we remain confident that Studio will be a significant driver of Partner growth in the years to come. With the momentum we started this year, I’m confident that we will successfully — we are successfully executing on our strategic initiative and growth filers. These are many exciting things are still to come in 2024 and made possible by an incredible team here at Wix. So, thank you to the entire team for your hard work and dedication to our users.
With that, Nir, over to you.
Nir Zohar — President and Chief Operating Officer
Thank you, Avishai, and thank you, everyone, for joining us this morning. I’d like to expand on what we’ve seen in the first quarter in terms of our user cohorts and business fundamentals and explain how they drove our strong results. Starting with our user cohorts. We are extremely encouraged by the quality of our funnel this quarter, demonstrated by the exceptional strength of our newest user cohorts.
The Q1 ’24 user cohorts of approximately 4.9 million new users collectively generated more than $32 million in bookings in the first quarter. This is 6% higher than the bookings generated by our Q1 ’23 user cohort in its first quarter, despite a slightly smaller base of users. This further underscores the improving fundamentals of our business. The Q1 ’24 cohort now replaces the Q1 ’23 cohort as the strongest non-COVID cohort in our history.
As a result, returns on our acquisition marketing investments remain elevated. We remain on pace to sustain a time to return on investment, or TROI, of four to five months. At the same time, we continue to see strong performance from existing cohorts as evidenced by the ongoing growth of our Q1 ’23 cohort, which has generated over $83 million over the past five quarters. This is 5% higher than the cumulative bookings generated by the Q1 ’22 cohort in the same time frame.
The incredible performance of our newest cohort and continued strength of prior cohorts are driven by robust conversion and improving monetization. I’d like to spend a few minutes talking about these business drivers. First, we’ve seen conversion tailwinds from the several initiatives we began last year and continue to build upon. These include: one, focusing on our marketing investment on attracting higher-intent users, particularly Partners and commerce users; two, the success of our expanding portfolio of AI initiatives which we continue to expand; and finally, the early outperformance and momentum of Wix Studio, which is driving high conversion and lifetime value of Partners.
As a result, the most recent cohort experienced record conversion. This is a tangible indication that our strategic growth plan is working. Second, this strong conversion is coupled with improved monetization of both Partners and Self Creators. ARPS is increasing as we expand our offering and progressively bring on users with more complex needs.
These users are purchasing higher priced packages, adopting more business applications, and generating more GPV. As we mentioned in February, we began updating package pricing this quarter for new and existing users. This is part of our ongoing strategy to align pricing with the continuously growing value our platform delivers to users. Our users have historically responded well to previous pricing updates, so we knew what to expect going into this one.
Nevertheless, I am pleased to share we have seen better-than-expected user retention from this most recent price change. This is a driver of our increased guidance, which Lior will discuss shortly. The combination of steadily increasing ARPS, along with strong retention, is evidence of our growing value proposition. Additionally, ARPS benefited from robust commerce growth.
GPV in the first quarter grew 14% year over year as larger merchants joined Wix and existing merchants on our platform grew their businesses. Growth in GPV was coupled with increased take rate. Our take rate improved to 1.58% in Q1, an all-time high as more merchants chose Wix Payments. Commerce growth continues to be led by our Partners who were responsible for roughly half of our GPV this quarter.
We expect GPV from our commerce users to continue to compound and take rates to remain elevated, driving ARPS improvement going forward. Finally, we also continue to keep close eye on the macro environment impacting the users and merchants on our platform. I’m pleased to say that the solid top-of-funnel and GPV growth trends we’re seeing points to a normal operating environment. The macro has actually been stable and positive from where we stand for the past few quarters.
We didn’t see any change in Q1. This stability has allowed us to execute on our growth initiative, which drove the momentum of last year and a strong start to 2024. The strong fundamentals of the quarter are proof that our marketing strategy continues to work well and the global Wix brand remains strong. We are increasingly attracting higher-intent users with greater monetization throughout their lifetime, particularly commerce users and larger Partners.
We expect conversion and ARPS to continue to improve as we innovate and grow our product suite to better meet the dynamic needs of our growing base of Self Creators and Partners. With that, I will now hand it over to Lior to walk through our financials and outlook. Lior?
Lior Shemesh — Chief Financial Officer
Thanks, Nir. We kicked off 2024 with a very strong start to the year with top-line growth exceeding expectations in Q1, driven by incredible product traction, particularly of our AI offering and Wix Studio, as well as the improved business fundamentals you just heard about from Nir. This was out-pinned by a stable and positively trending macro environment. Strong growth allowed us to achieve record profitability with free cash flow margin reaching 26% this quarter.
As a result, better-than-expected growth and free cash flow generation put us very close to achieving the Rule of 40 in Q1 and for the full year. The growth outperformance in Q1 firms up our expectations for accelerating bookings growth in the back half of 2024, as well as anticipated strong revenue growth across both Self Creators and Partners in 2025. As a result, we are increasingly confident that we will significantly surpass the Rule of 40 in 2025. I will discuss this in more detail along with our updated outlook shortly.
Moving on to the details of the first quarter. Total bookings were $457 million, with growth accelerating to 10% year over year and exceeding our expectations. Total revenue was $420 million, up 12% year over year and above our guidance. Bookings and revenue growth were driven by strong business fundamentals, as well as robust uptake of Wix Studio, new AI products, and our growing suite of commerce capabilities.
Growth is driven by continued innovation to provide the best online creation experience for all users. Our Partners business continued to build momentum and contributed meaningfully to overall growth this quarter. Partners revenue grew 33% year over year as we experience market share gains, larger agencies joining the platform, and better monetization of our existing professional users. This was due in part to Wix Studio, which is beginning to demonstrate early top-line contribution as the product continues to ramp and perform ahead of plan.
With over 1 million accounts today and the number of subscriptions exceeding expectations, we expect Studio will continue to improve the lifetime value of our partner user base. Total non-GAAP gross margin in Q1 was 68%, which was in line with our expectations of 68% to 69% gross margin for the full year. Non-GAAP operating income increased 43% year over year and totals 17% of revenue as our operating cost base remains stable as growth outperformed. We also achieved a second consecutive quarter of positive GAAP operating income and remain on track to achieve GAAP operating profit for the full year.
In Q1, non-GAAP sales and marketing expenses grew quarter over quarter to $96 million as we ramped up investment in Wix Studio as planned. We continue to execute against the streamlined marketing strategy introduced last year, resulting in stable TROI of our most recent user cohort compared to the prior-year growth. Q1 free cash flow, excluding headquarters costs, was over $111 million, our record of 26% of revenue due to strong top-line growth capped with steady operating expenses. I now want to finish by providing some color around our expectations for the rest of 2024.
We expect total revenue in Q2 of $431 million to $435 million, representing approximately 11% to 12% year-over-year growth. For the full year 2024, we are increasing our outlook. We now expect total booking of $1,796 million to $1,826 million or 12% growth year over year. This is up from previous outlook of $1,784 million to $1,813 million.
Additionally, we are raising total revenue to $1,738 million to $1,761 million or 11% to 12% — sorry, 11% to 13% growth year over year. This is up from our previous outlook of $1,726 million to $1,757 million. Importantly, we expect total bookings growth to accelerate in the second half of 2024 to 16% as the high end of our guidance range up from 15% as previously anticipated. This acceleration is expected to come from both Self Creators and Partners.
Self Creators’ growth acceleration is expected to be powered by higher conversion and monetization as a result of our AI products. Meanwhile, Partners’ growth acceleration is expected to be driven by Wix Studio ramping and contributing more meaningful than initially planned. Creative Subscriptions booking is still expected to accelerate to double-digit growth in the second half of 2024. The success of our AI initiatives and Studio will also benefit revenue, though on a smaller scale, due to our SaaS model.
We will see more significant benefit from these dynamics on our 2025 revenue. We continue to expect non-GAAP total gross margin of 68% to 69%, with non-GAAP business solution gross margin to exceed 30% for the full year. Non-GAAP operating expenses are now expected to be 50% to 51% of revenue for the full year, down slightly from our previous expectation of 51% to 52% of revenue. This decrease is due to expected organic improvement in sales productivity and slower hiring as a result of the efficiency initiatives implemented over the past couple of years.
We will continue to gradually invest in our Studio brand as previously planned. This has not changed in our model. We now expect to generate free cash flow excluding headquarter cost of $445 million to $455 million or approximately 26% of revenue in 2024. This is a meaningful increase from $370 million to $400 million, or 21% to 23% of revenue as previously expected.
This significant increase in free cash flow is expected to be driven by a few factors: first, and primarily our higher booking expectations; second, more favorable gross margin mix of Creative Subscriptions growth accelerates; and third, the operating efficiencies I just mentioned as well as general working capital efficiencies. As a result, we are now positioned an entire year ahead of our three-year plan as we did not expect to achieve 25%-plus free cash flow margin until 2025. Finally, we continue to follow through our commitment to allocate 50% of free cash flow generation through 2025 to share repurchases. Following the completion of our $300 million plan in February, we recently implemented an additional $225 million repurchase authorization.
Execution against this plan is currently underway. As a result of this increased repurchase activity and continued share count management, we anticipate to end 2024 with a fully diluted share count of 62 million to 63 million. This anticipated share count, along with stronger free cash flow expectations, translates to a higher free cash flow per share trajectory for 2024 than previously anticipated. The great progress we made in Q1 and the improved booking strength we are now expecting for the rest of the year set us up for anticipated revenue growth acceleration in 2025.
As a result of this broad-based trend and the maintenance of our stable cost structure, we are increasingly confident that we will significantly surpass the Rule of 40 in 2025. With that, we will now take your questions.
Questions & Answers:
Operator
Thank you. [Operator instructions] Please stand by while we compile the Q&A roster. And our first question coming from the line of Ygal Arounian with Citigroup. Your line is open.
Ygal Arounian — Citi — Analyst
Hey, good morning, guys. Great quarter. Maybe first just to dig into 2025 a little bit. On the revenue growth acceleration expectations, I know we’re talking about AI and Studio and everything, but is there any more color into how to think about the contributions from each, or which one is the biggest contributor, how much of the self-creator side is needed to improve to get to that acceleration point? And then follow-up on Studio.
Really strong early success here. You’re talking about seeing better sign-ups so far. You also talked about in the letter features and improvements that are coming. How should we think about or how do you think about the Studio and the Partner opportunity today versus, maybe six months ago before Studio really rolled out? How much bigger do you see it? How much more of the professional and Partner market do you think you can capture? Just a little more details on that.
Thank you.
Avishai Abrahami — Co-Founder and Chief Executive Officer
Hey, Ygal, I will start with the first question. I think that the way to understand the 2025 growth is actually looking at the growth of the second half of this year. As you know, revenue lag after bookings. Most of the acceleration in booking is actually coming from Creative Subscription, which will be doubled in the second half of the year.
Part of it is, obviously, due to Studio. We feel much better — and this is also related to the second question. We feel much better results in terms of the adoption of Studio as we anticipated initially. As a result of that, we believe that Creative Subscription is going to be accelerated due to that, meaning, that we are seeing more accounts and more premiums coming out of Studio.
The second thing is about the different AI tools that we launched, and definitely we see the monetization, we see the contribution, we see much healthy cohorts as a result of that, better retention in some way. And as a result of that, we believe that we are going to see acceleration of the Creative Subscription also as a result of the different AI tools. The third thing is, obviously, the price optimization that we’ve made. We are going to see the benefit of it mostly in booking in the second half of the year, and also revenue will follow through 2025.
All that is going to be resulted with better revenue growth than we’ve seen this year.
Nir Zohar — President and Chief Operating Officer
Well, as for Studio, I think that the question was about how do we see it now and what do we think that it means in the long term on our potential. Obviously, as I mentioned in my notes, today, Studio is doing better than we predicted. We think that this is a great sign for the product adoption. Obviously for us partners, agencies are the bigger market that we still not have yet addressed in the past.
So, it’s a great opportunity. With reaching a 1 million registered account already, we’re seeing growth into that market happening very quickly. The business fundamentals of websites built with Studio are better than, of course, Self Creators. It’s usually companies that are going to agencies that have a bigger budget, more experience in the business.
And as a result, we’re seeing better GPV, better retention, and that drives, of course, LTV to be higher. The other thing that I believe is very obvious when you look at the result of Studio is that we are gaining market share in a market that we have not addressed before. So, looking at everything that came from Studio until now and knowing what we are planning to do in the future in terms of product innovation and marketing innovation, I believe that it’s going to continue to help us to gain significant market shares with agencies.
Ygal Arounian — Citi — Analyst
Thanks. Just a super quick follow-up on 2025. I forgot to ask in the initial question. On the margin front, you pulled that number forward by more than a year, right, 25% for 2025, 26% now.
How should we think about the margin trajectory beyond 2024 at this point? Thank you, guys.
Lior Shemesh — Chief Financial Officer
So, look, obviously, I mean, we see the great result of free cash flow for this year. And this is why we mentioned that we do believe that we will significantly surpass the Rule of 40. This will be as a result of both growth but also free cash flow margin. I think that it’s come together because think about it this way.
When we see a significant increase in Creative Subscription, most of it goes to the bottom line as the gross margin of it is really, really high. So, I believe that it means that we are going to see acceleration of both.
Ygal Arounian — Citi — Analyst
Thank you.
Operator
Thank you. And our next question coming from the line of Ken Wong with Oppenheimer. Your line is open.
Ken Wong — Oppenheimer and Company — Analyst
Great. Thank you for taking my question. This is for Avishai, maybe Nir. You guys changed compensation for your partners.
Just wondering what you saw in the early days there. Are you getting the effect on the incremental attach and up market selling that you guys are anticipating? And any color would be great.
Nir Zohar — President and Chief Operating Officer
Hey, Ken. It’s Nir. So, it’s still relatively early, as you mentioned. OK.
This is something we fully implemented early in Q1. The early results are, I would say, very encouraging. We’re seeing that people definitely going to take advantage of it, which means that they are more motivated to onboard Wix Studio for the projects as agencies, and they’re also motivated to use more business functionality and more — drive GPV. And it’s definitely something that we see as driving higher adoption of all of those kind of ARPS drivers altogether on the Partner side.
Our expectations, again, because it’s still early, for this to keep on expanding and be a great tool for us to increase the connection and the loyalty of the agencies and the partners.
Ken Wong — Oppenheimer and Company — Analyst
Got it. Fantastic. And then maybe just a follow-up, Lior, on the 25% free cash flow margins. I think one other dynamic you guys mentioned was just maybe the tax rate going up.
I guess how should we think about kind of that impact next year relative to what was baked into the targets earlier?
Lior Shemesh — Chief Financial Officer
Look, I think that in terms of the overall tax rate, next year, we are mostly going to use the losses carried forward that we have. So, I don’t think that it will have any impact. Obviously, it’s going to have impact mostly from 2026 onward. But it’s already baked into the numbers, meaning that, yes, we are going to pay more taxes, but on the other end, I think that the benefit that we are going to get from the accelerated revenue with the efficiency that we have with our operating expenses are going to drive free cash flow even higher.
Ken Wong — Oppenheimer and Company — Analyst
OK, perfect. Thanks a lot. Great quarter, guys.
Lior Shemesh — Chief Financial Officer
Thank you.
Operator
Thank you. And our next question coming from the line of Jian Li with Evercore ISI. Your line is open.
Jian Li — Evercore ISI — Analyst
Great. Thanks a lot. First question on the full-year bookings guide. It’s pretty strong second-half acceleration.
I think you touched on a little bit of on the drivers, but can you just parse out a little more how much of this outlook is driven by the current pricing increase contribution versus new product rollout? And I think you mentioned a couple of other products like AI business assistance. Are these baked into the guide, or are these kind of upside? And specifically for Self Creators, should we kind of expect to see the — exiting the year at double-digit growth if you can kind of share your growth trajectory for both? Thanks.
Avishai Abrahami — Co-Founder and Chief Executive Officer
OK. So, I will try to — try to mention again the main reasons, but I think that by far, the No. 1 reason is the increase that we see in our business. And it’s coming from both Self Creators, mostly driven by the different AI tools that we’ve launched, but obviously also from Partners, because we see the adoption of Studio, and we already see the early numbers.
We understand exactly what is the contribution in the second half of the year. And that was — this is like No. 1 reason. We see a much better business, much more creative subscription, more premiums, more agencies coming to Wix, using Wix, new agencies, and also existing agencies using Wix for more of their projects.
I think that the overall contribution of that is the most significant one. This is most of the reason why we increased guidance. Remember that we did the price increase earlier this year, so we have no surprises over there. So, most of the increase that we’ve made this quarter is a result of both AI and Studio rollout and the growing impact that we see.
And this is really exciting. And again, most of the impact is on creative subscriptions to make sure that it’s clear. By the way, we also see the change in mix of our customers, meaning that we already passed the 50% of GPV coming from Partners. So, it means that the different mix using more business solution, as a result of that we see increase in ARPU.
With regard to the second question about Self Creators. So, we are going to see that Self Creators exit 2024 with a double-digit growth. Obviously in bookings, right, but not revenue. The question was about bookings.
Jian Li — Evercore ISI — Analyst
Yep, correct. And if I can follow-up on your comment on Partner’s growth, taking market share, where do you think this market share is coming from? Is it mostly WordPress? Is it from your peers? We’ve seen a lot of kind of product innovation coming out of the space in general. Anything that in particular that you think could drive a more favorable competitive position for Wix specifically? Thank you.
Avishai Abrahami — Co-Founder and Chief Executive Officer
I think that most of the market share is coming from agencies that are using legacy systems. Some of them will be open source like Drupal or WordPress or a big mix of other systems. And so, this is where most of the market share is coming from. In terms of — is there anything that can contribute to better growth, I believe that it’s brand awareness, getting our brand of Studio to be more recognizable and more associated with the function — incredible functionality that it contains.
And then of course, product innovation. And there’s still so much more we can do.
Operator
Thank you. And our next question coming from the line of Trevor Young with Barclays. Your is open.
Trevor Young — Barclays — Analyst
Great. Thank you for the questions. First, on free cash flow margin, any color on margin across Self Creator versus Partner? Is Self Creator approaching that 35% long-term goal from the analyst day? And then second question. Nir, just to clarify your remarks on user retention following the most recent price increase.
Is that retention following the increase better, similar, or worse than what you saw when you took price back in 2022?
Nir Zohar — President and Chief Operating Officer
So, let me start from the second question because it’s just kind of a quick clarification, I would guess, and then Lior can follow up on the cash flow margin. So, in terms of the user retention on the price increase, as the written remark was essentially that it is better retention than what we’ve seen in previous price changes that we’ve done. We’ve always looked at all the data we have and the past changes we then made in order to model and understand what makes sense and what to expect. And we are happy to say that in this case, it was actually slightly better than we anticipated.
Lior Shemesh — Chief Financial Officer
Yes. So, with regard to the first part of the question, so, yes, I mean this year we guided for 26% of free cash flow. So, obviously, it means two things, that in terms of Partners, we are already really profitable on this business. We are happy to say that.
But it also means that the Self Creator business, as you mentioned, is getting closer to 35%. I believe that it’s an amazing milestone for us, which actually demonstrates the strength of our model. And I believe that it will continue. I think that it’s also called for a very interesting fact that Partners, in the long term, I believe that it’s going to be more or less at the same place and even higher.
Trevor Young — Barclays — Analyst
Great. Thank you, both.
Operator
Thank you. And our next question coming from the line of Andrew Boone with JMP Securities. Your line is open.
Andrew Boone — JMP Securities — Analyst
Good morning, and thanks so much for taking my questions. I wanted to ask about the sustainability of your marketing efficiency. What’s driving the recent efficiency? And then why not invest more? Like, why are you guys making the choice to take margin here? And then secondly, can you talk about AI’s impact on driving higher attach? What products exactly we’re seeing higher attach, and how do we expect this to evolve going forward? Thanks so much.
Avishai Abrahami — Co-Founder and Chief Executive Officer
You can talk about the first one.
Nir Zohar — President and Chief Operating Officer
So, in terms of the sustainability of the market efficiency, as we’ve been doing this for almost, I would say, almost two years now, or closing up on two years now, we definitely feel that it is very sustainable. I don’t think anything has driven a massive change lately. It’s a machine that we keep on optimizing and improving. And it’s mainly aimed, at the end of the day, to attract the higher-intent users and the users that we believe will end up also adopting more functionality, more business applications, and the potential of generating more GPV.
Is there a potential room to grow and spend more? We always explore that. And if you have that at the same category of kind of users, then obviously we’ll be doing so. The reason we were able to do this, as a reminder at the end of the day, is due to the strength of our global brand. I think a decade of investing and building a very sustainable and strong brand globally allowed us to go down this path of a much more efficient marketing than we did before.
And we are very happy with this result.
Avishai Abrahami — Co-Founder and Chief Executive Officer
The second part —
Andrew Boone — JMP Securities — Analyst
Anything on AI and attach?
Avishai Abrahami — Co-Founder and Chief Executive Officer
Of course. The question is about which are products are driving more product attachment? What does it mean product attachment?
Emily Liu — Investor Relations
Our AI technology is — including how — like how our AI chat for business, right? It recommends the dashboard product —
Avishai Abrahami — Co-Founder and Chief Executive Officer
OK. So, I think that this is kind of a very — we’re seeing now that even when we look at the site builder, the AI site builder, it actually interviews you about your business, and then it will recommend which products are best for your business. Of course, you can override that, but it’s doing a pretty good job. So, that’s the first one.
The second one is going to be a lot in what we call the business assistance or the vertical business assistance where we think there’s going to be a massive contribution to the exposure of products because it essentially has a conversation with you about what you can do, what is happening in your business, and what tools can help you advance more with your goals. So, if I understand the question correctly, that is the — I believe, the right…
Andrew Boone — JMP Securities — Analyst
Thank you.
Operator
Thank you. And our last question coming from the line of Josh Beck with Raymond James. Your line is open.
Josh Beck — Raymond James — Analyst
Yes, thank you for taking the question. I wanted to kind of follow on to that and just kind of understand with respect to the AI tools. Do you see this primarily impacting the new customers? Any sense of how high adoption you could see maybe among the Self Creators in the years ahead? And then from a product point of view, how much different do you expect this suite of products to look maybe one year ahead or further, just with respect to onboarding and that kind of thing?
Avishai Abrahami — Co-Founder and Chief Executive Officer
So, obviously, when users are building their websites, all the website creation tools are visible to them and are helping them. Most of our users will stay a few years or more than that with the same website and sometimes — and they’ll update it, but they’re not going to recreate it. So, in that term, of course, the exposure is limited. But the integration of the vertical assistance is something that means that every time you go to the website, you’re going to have a recommendation, and the ideas and things you can do with AI.
So, the exposure will be pretty much every time you go into the website. And that is significantly higher. And if you think about the fact that we have a lot of people that run their business in top of Wix, it means that all of those guys will be daily or almost daily exposed to new products with AI. As for how much different the product will be in a year, we always strive to make big changes, but we also work very hard to make sure that we test it very carefully and that part of the known and already learned user behavior that the users have, which is why if you go to Wix today and you use it.
You’re going to find AI tools, but they are not going to replace what you already know how to do. Sometimes, if you want to change an image, for example, it’s easier to click on change image instead of writing to the prompt, hey, please change the third image from the top, right? So, it’s always about the combination of how you do things in a balanced way, while allowing users to feel comfortable with the changes, not move beyond that. Saying all of that, we do have a lot of really interesting things coming with AI that I think are actually changing the potential behavior of users in significant ways.
Josh Beck — Raymond James — Analyst
OK, very helpful. And then maybe just to follow-up on the macro, certainly the commentary I think from Lior was certainly signs of stability. Do you feel like — I know this is tough to judge, but obviously there was a big pull forward, there was a little bit of a give back. But with respect to the pace of new business formation, just demand to build websites, do you feel like we’re at a pretty stable point from here? Are there any particular macro factors that you’re watching very closely that could swing that more positively or negatively? We just would love to hear a little bit more on that topic.
Avishai Abrahami — Co-Founder and Chief Executive Officer
Well, I do believe that — I want to first of all give a disclaimer here. I don’t think anyone here is able to predict the economy, and I think that’s going to always have the bigger effect on anything happening with formation of new businesses. But if we ignore that for a minute, the effect of the economy, and we look at the effect of what’s happening now in the world, I believe that there’s so much potential for new things coming with AI, so much potential new things coming with market trends and new technologies introduced into the market that I believe that we’re going to continue to see significant innovation, growing innovation coming from small businesses and bigger businesses in the world, which will probably result in the formation of additional growth for us. However, of course, economy is going to be always the stronger first to influence everything.
Operator
Thank you. And that’s all the time we have for our Q&A session. I will now turn the call back over to the company for any closing remarks.
Emily Liu — Investor Relations
Thanks, everyone, for joining us today and we’ll talk to you next time. Thanks. Bye.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Emily Liu — Investor Relations
Avishai Abrahami — Co-Founder and Chief Executive Officer
Nir Zohar — President and Chief Operating Officer
Lior Shemesh — Chief Financial Officer
Ygal Arounian — Citi — Analyst
Ken Wong — Oppenheimer and Company — Analyst
Jian Li — Evercore ISI — Analyst
Trevor Young — Barclays — Analyst
Andrew Boone — JMP Securities — Analyst
Josh Beck — Raymond James — Analyst
More WIX analysis
All earnings call transcripts
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has positions in and recommends Wix.com. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.