Wix Faces 27% Share Plunge After Q1 Expenses Surge 46%
WIX•Wix's Q1 non-GAAP operating expenses jumped 46% year-over-year, driving S&M costs up 88% to $190.7 million and collapsing operating margin from 21% to 5%, which sparked a 27% share plunge erasing $1.1 billion in market value. The company announced a 20% workforce reduction as Hagens Berman probes its AI-related spending.
1. Q1 Expense Surge and Margin Impact
Wix reported a 46% year-over-year increase in total operating expenses for Q1, led by an 88% rise in non-GAAP sales and marketing expenses to $190.7 million. This front-loaded spending on AI initiatives for Base44 and Harmony drove the non-GAAP operating margin down from 21% to 5%.
2. Share Price Reaction
Following the earnings release, Wix’s share price plunged by 27%, wiping out more than $1.1 billion in market capitalization in a single session as investors reacted to the unexpected expense growth and margin erosion.
3. Hagens Berman Investigation
National shareholder rights firm Hagens Berman has launched an investigation into whether Wix misled investors regarding its AI-related expense build and potential securities law violations tied to the rapid cost increases.
4. Workforce Reduction
CEO Avishai Abrahami announced a 20% workforce reduction—over 1,000 roles—to streamline operations, citing elevated AI compute costs and currency headwinds from a strong shekel as key drivers of the decision.
