[DD] WIX: The Market Says "Dead Legacy Tech." The Math Says "Rule of 40" Cash Cow (9x EV/FCF).
I've been screening for value in SaaS lately because everything feels expensive, and I kept ignoring **Wix (WIX)**. Like most of you, I still thought of them as that annoying legacy website builder from 2015 that loses money and gets crushed by Shopify.
But I finally dug into their 10-Ks and updated guidance for 2025, and honestly, the numbers tell a completely different story than the sentiment.
It looks like a classic capital return play that's being priced like a distressed asset. I wanted to throw my thesis out here to see if I'm missing something obvious.
Here is the raw math I’m looking at:
1. They actually stopped burning cash
This was my biggest surprise. I thought they were unprofitable. Turns out management did a hard pivot on efficiency over the last 18 months and it's showing up in the GAAP numbers.
Check out the Free Cash Flow (FCF) margin ramp:
* **2022:** 2% (Barely broke even at $32M)
* **2023:** 16% ($246M)
* **2024:** 28% ($488M)
* **2025 (Est):** 30%+ (On track for \~$600M)
Basically, they hit the "Rule of 40" way faster than anyone expected, but the stock price hasn't really moved to reflect that they are now a cash cow.
2. The Multiple is weirdly low
If you look at other SaaS companies growing revenue in the double digits with 30% margins, they usually trade at a premium. WIX is in the basement.
* **WIX is trading at \~9.0x EV/FCF.**
* **The median for their peer group is around 14.2x.**
* **The "Quality" names trade at 15-25x.**
Even if you don't think WIX is a "premium" asset, a 40% discount to the *median* seems excessive for a company printing $600M a year in cash.
3. The "AI Risk" might be backwards
The bear case is always "AI will make website builders obsolete." I looked into this, and it seems like AI is actually acting as a funnel for them right now.
Two things stood out in the segments:
1. **Partners (Agencies):** This isn't DIY revenue. This is B2B revenue from agencies building sites for clients. It grew at a **30% CAGR** and hit **$610M** in 2024. This revenue is way stickier than the churn-heavy DIY stuff.
2. **Base44:** They bought/launched this AI app builder recently. It went from **300k users in June '25 to 2 Million in October**. I haven't modeled much revenue from this yet to be safe, but it gives them a foot in the door of the $25B low-code market.
Valuation / Summary
I ran a DCF assuming they just hold the line on margins (low 30s) and keep growing revenue at a boring 15%. My model spits out an intrinsic value of around **$170**.
Even if I'm wrong on the growth and just apply a standard 14x multiple to their current cash flow, the stock should be significantly higher than $96.
**Where could I be wrong? (Bear Case)** I'm trying to kill this trade before I size up.
* Obviously, Shopify is the elephant in the room. WIX seems to be winning on "services" websites vs. pure e-commerce, but the overlap is scary.
* Are SMBs about to get crushed in 2026? If the macro turns, their churn could look ugly fast.
Has anyone else looked at their Partner numbers recently? Am I overestimating the stickiness there?
**Disclosure:** Long WIX.
**Reference:** I put all my charts and other details into a PDF if you want to check my math on my blog: [https://www.tomalphatrades.com/p/report-wix-96-target-170-the-math-the-market-misses](https://www.tomalphatrades.com/p/report-wix-96-target-170-the-math-the-market-misses)
