Wix shares drop as AI-driven costs weigh on upbeat Q3, extending a nearly 50% slide this year
Despite accelerating growth at newly acquired Base44, investors react to rising expenses and mounting pressure.
Israeli company Wix, which develops a platform and tools for building websites, published strong results for the third quarter of 2025.
Wix also reported rapid growth at Base44, the promising startup it acquired last summer that enables programming through natural-language prompts, but despite this, the company’s stock fell by over 15% at the opening of trading on Wall Street. Wix dropped below a market cap of $6 billion, with its shares down around 50% this year.
The decline in the share price reflects, among other factors, broader market volatility and heightened tension ahead of chip giant Nvidia’s earnings release, as well as investor concern about the significant spending required by companies to keep pace with the new AI-driven landscape.
Wix recorded revenues of $505 million in the third quarter, a 15% increase compared to the same quarter last year. On the bottom line, the company reported break-even results. Operating cash flow reached nearly $130 million, and without the one-time $80 million expense related to the Base44 acquisition, cash flow would have totaled $160 million, 32% of revenue.
Wix emphasized that the integration of Base44, Maor Shlomo’s company, which enables coding through ChatGPT-style prompts, is progressing faster than expected. According to the company, Base44 has already reached 2 million users, a sevenfold increase since June, when it was acquired.
In addition, Base44 is on track to achieve an annual recurring revenue (ARR) rate of $50 million, consistent with projections made when the acquisition closed. Wix also noted that it sees potential for Base44 to reach $100 million in annual revenue in the foreseeable future.
However, despite the positive results, Wix appears to be encountering the “Nice syndrome”: significant investments in developing AI capabilities are viewed as essential for future growth, yet they weigh heavily on profitability.
Investors, who were initially enthusiastic about anything AI-related, are beginning to confront the high development costs, and the reality that the hype carries a complicated financial dimension.
In this context, Wix slightly narrowed its annual revenue forecast to approximately $2 billion. At the same time, it reduced its projection for operating cash flow to 30% of revenue. Although this remains a strong level compared to the broader market, it is lower than what the company had highlighted over the past year.
Against this backdrop, operating expenses will rise to 50% of revenue, and in practice may climb even higher, because under the acquisition agreement, Wix is obligated to make additional payments tied to performance benchmarks that Base44 is currently exceeding.
For the fourth quarter of 2025, Wix expects revenues of $521 million to $531 million.
