After a sharp stock drop, is Wix guarding against activist investors again?
Discounted $250 million raise and accelerated buyback follow a 26% share decline so far this year.
Israeli software company Wix ended 2025 with strong operational momentum, but simultaneously raised $250 million in a private placement at a discount to its already weakened stock price, a move that drew attention beyond the earnings themselves.
The company published fourth-quarter and full-year results that may offer some reassurance to cautious investors and, at least for now, ease concerns about a broader “software apocalypse” weighing on the sector.
Wix, which developed a platform for building websites and online stores, closed 2025 with 13% annual revenue growth, reaching $1.99 billion. Fourth-quarter revenue rose at a similar pace to $524 million. On a GAAP basis, the company posted a net profit of $50 million for the year. After adjusting for one-time and accounting items, profit totaled $442 million.
Cash flow from operations was strong at $600 million, representing roughly 30% of revenue. This figure was recorded before the $80 million acquisition of Base44 last June. The acquired company, founded by Maor Shlomo only one year ago, has met expectations so far, with its annual revenue run rate recently surpassing $100 million, in line with early forecasts.
Base44 introduces Wix to the world of “vibe coding,” and together with Wix’s newly launched AI solutions under the brand Wix Harmony, the company aims to enable faster and simpler website creation by integrating advanced automation and coding capabilities.
However, the most striking element in Wix’s announcement was not the financial performance, but the decision to raise $250 million at a 5% discount to the market price. Like many software companies, Wix has suffered from negative investor sentiment, with its shares down 26% since the beginning of the year. Despite several quarters of steady performance, the company trades at a market value of approximately $4 billion, near the lows seen during the 2022 market downturn.
The proceeds from the fundraising are largely intended to support an aggressive $2 billion share buyback program. Wix announced the repurchase plan in January with a relatively short two-year timeframe, aiming to signal confidence to Wall Street. According to company president Nir Zohar, most of the program is expected to be completed before the end of 2026.
The private placement was led primarily by Durable Capital Partners, which already owns about 2% of Wix and will contribute most of the new capital. Each investment unit consists of ordinary shares sold at a 5% discount and warrants allowing investors to purchase an additional 0.25 share at a 25% premium to the current share price, exercisable within three years.
The identities of additional participating investors have not yet been disclosed. However, they have committed to a one-year lock-up period, preventing them from selling their shares during that time.
Wix presents the investment as a vote of confidence during a challenging period and argues that the lock-up structure will allow it to execute the buyback program without immediate dilution pressure. That said, the company was not short of liquidity even before the deal. In addition to its strong operating cash flow, it raised $1 billion in zero-interest convertible bonds several months ago.
At the end of 2025, Wix held nearly $1.7 billion in cash. Of this, $1.2 billion is recorded as liabilities related to the convertible bond issuance.
It is possible that the company also seeks to strengthen its shareholder base with a supportive long-term investor such as Durable Capital. During the 2022 downturn, activist fund Starboard Capital built a 9% stake in Wix amid the depressed share price and later pushed for changes within the company.
Looking ahead to 2026, Wix is guiding for growth roughly in line with 2025 levels, both in the first quarter and for the full year. Free cash flow margins are expected to moderate to around 20%, compared with 30% in 2025, as the company increases investment to capitalize on what it sees as positive market momentum.
Alongside Base44’s rapid growth and its progress toward meeting performance targets, milestones that could soon earn founder Maor Shlomo an additional $90 million in Wix shares, the costs associated with that growth are becoming clearer.
As free usage of Base44’s programming tools expands, Wix is incurring significant expenses due to users’ heavy consumption of large language models. Under accounting rules, the company reported an operating loss of $72 million in the most recent quarter, compared with an operating profit of $36 million in the fourth quarter of 2024.
Part of the rise in expenses is also attributed to substantial marketing investments aimed at positioning Base44 against competitors such as Lovable, including high-profile advertising during the Super Bowl.
“The free use of AI has increased our costs in the short term,” Nir Zohar, President of Wix, said on a call with analysts. “But we believe that over time margins will improve and Base44 will become a profitable growth engine. Wix’s current share price does not reflect our future opportunities.”
Toward the end of the call, a missile alert from Iran could be heard in the background.
