Wix's Base44 bet comes at a price as losses widen to $76.4 million
Heavy spending on the vibe coding platform, higher computing costs and aggressive marketing overshadow rising revenue, as the company targets AI-driven growth.
Wix's aggressive push into artificial intelligence continues to reshape its financial results. While the company's acquisition of AI startup Base44 is fueling growth, it is also weighing heavily on profitability, pushing Wix deeper into the red despite rising revenue.
In the second quarter, following the completion of a painful restructuring that saw the company lay off around 1,000 of its roughly 5,000 employees, Wix reported a net loss of $76.4 million, compared with a net profit of $57.7 million in the same period a year earlier.
Wix had already posted a $57.5 million net loss in the first quarter of 2026, after which it announced the broad cost-cutting program. The company said the restructuring was driven by higher operating costs caused by the strengthening of the shekel against the dollar, as well as the rapid adoption of AI tools that are changing how software is developed and sold.
According to its latest filing, Wix now employs approximately 4,300 people, although the company's continued investment in AI raises questions about whether it will maintain that workforce over the longer term.
The latest results also reveal that Wix paid an additional $41 million to Base44 founder Maor Shlomo, after the startup exceeded the performance targets set in the original acquisition agreement. The deal, signed in the summer of 2025, initially valued Base44 at $80 million. Including previous earn-out payments, the total consideration has now exceeded $150 million.
The widening loss also reflects the rapidly growing cost of operating Base44. The natural-language programming platform, acquired roughly a year ago, carries substantial computing costs while also requiring heavy marketing investment as competition in AI coding intensifies. As a result, Wix's sales and marketing expenses jumped 67% year over year to $173 million during the quarter.
Looking ahead, Wix is increasingly centering its strategy on Base44, which appears to be fundamentally reshaping the company's business model.
During the quarter, Wix unveiled Base 1, Base44's first proprietary large language model. According to the company, the model is expected to significantly reduce computing and inference costs, currently the largest expense associated with its AI products.
Wix expects Base44's gross margin to reach approximately 60% during the second half of 2026, compared with a margin that was close to break-even at the beginning of the year.
Rather than allowing those savings to flow directly to the bottom line, however, the company plans to reinvest much of them into expanding Base44's marketing efforts in an attempt to accelerate growth and increase market share. Wix believes lower AI infrastructure costs, combined with reduced marketing expenses in its core website-building business, will help offset the increased investment.
Cash flow also weakened during the quarter, declining to $61 million.
The company attributed part of the decline to another major management decision that now appears poorly timed: its $1.6 billion share repurchase program. Wix financed the buyback using a significant portion of its cash reserves, reducing the financing income generated by those holdings. In hindsight, the move has proved costly, with Wix shares falling nearly 50% since the buyback was completed. The company's market capitalization now stands at approximately $2.4 billion.
Despite the losses, revenue continued to grow.
Second-quarter revenue reached $563.1 million, up 15% from a year earlier. The growth appears to have been driven largely by Base44, although its expansion may also be cannibalizing revenue from Wix's traditional partner business, which serves agencies and small businesses that build websites for clients.
For the third quarter, Wix expects revenue to grow at a low double-digit percentage rate year over year and anticipates that adjusted operating margins will improve during the second half of 2026, helped in part by lower AI-related costs.
The company left unchanged its full-year guidance, forecasting annual revenue growth of slightly more than 10%.
