Good morning. My name is Scott and I will be your conference operator today. At this time, I would like to welcome everyone to the Wix.com 2017 First Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Ryan Gee, Manager of Investor Relations, you may begin your conference.

Good morning. Welcome to Wix’s first quarter 2017 earnings conference call. During this call, we may make forward-looking statements based on current expectations and assumptions. Please consider these risk factors included in our press release and most recent Form 20-F that could cause our actual results to differ materially from these forward-looking statements. We do not undertake any obligation to update these forward-looking statements. In addition, we will comment on non-GAAP financial results, and you can find all reconciliations between GAAP and these non-GAAP results in our press release and presentation slides on our IR website. Shortly, I’ll hand it over to Avishai, who is going to say a couple of quick words about our quarter. And then we’ll go straight into Q&A. Earlier this morning, we posted our results on our IR site to provide you some additional details. So with that, I’ll now turn it over to our Co-Founder and CEO, Avishai Abrahami.

Thank you, Ryan and good morning everyone. I will quickly say a few words and then we’ll be happy to take your questions. We had another outstanding quarter and it is a fantastic start to the year. A few highlights about the first quarter. We added nearly 6 million registered users than most ever. We added 208,000 premiums subscription also the most ever. In our collection, for the new subscription are up about 11% year-over-year. The combination of accelerating user growth, better conversion and the higher collection per subscription is driving outstanding results. In the first quarter, collection grew by 51% year-over-year, to $114.5 million, well above the top end of our guidance. We generated $17.5 million in free cash flow, excluding acquisition cost well above our guidance for the quarter. The ability to create this type of cash flow, while increasing the investment in marketing and R&D is truly amazing, and illustrates the strength of our business model. As a result of this strong start, we are raising our full year guidance yet again. Our product team continued to deliver and drive market leading innovation and our marketing team execution continues to be world-class. Finally, we were happy to officially welcome both flok and DeviantArt to Wix in the first quarter. And we have already started working together to create even more innovative products. I am very encouraged by a momentum as we kick off 2017 and believe that we have a great year ahead of us. Again, thank you for your time today. We will now turn on to your questions.

[Operator Instructions] Your first question comes from the line of Samad Samana with Stephens Inc., your line is open.

Hi, good morning. Thanks for taking my questions and congrats on an awesome quarter. Couple on my end, when we think about ACPS being up 11% year-over-year. Can you give us an idea of how much of that is from adoption of vertical apps versus app store purchases? Maybe break it down little further what specifically is driving that.

Hi, Samad. This is Lior. Certainly, although not provide specific numbers or breakdown of what caused to that, but in general we’re talking about mainly three factor. The first one, we certainly see more adoption of vertical solutions. That was started from the beginning of next year – of last year. We’re talking about booking, e-comm and so on. The other one is obviously, better adoption of market. The third one we see more and more people who actually choosing more and more expensive packages, because we actually adding value. What we’ve seen is that, as we mentioned many times in the past, we’ll keep on testing our process. We’re keep on testing our packages process. The fact that we’re hedging more and more and more solutions, more and more functionality to our customers, we’re keep on testing that and based on that we actually also from time to time updating our pricing. So that was mostly, because of those reasons, we see the really, really nice increase in our ARPU.

We did notice yesterday that you’re maybe testing a price increase for at least the VIP, few of your products and it was quite significant somewhere between 15% and 30%. And we know which has pricing all the time. Maybe, could you tell us what you think, when the last time you raised prices was and maybe what the appetite you think as per price increases given all the improvements you’ve made to the products over the last couple of years.

Hey, Samad. This is Nir. So I think actually that specific test that you talk about is already has been changed. But as we said we always are to trying different things around the [indiscernible] of our pricing page. Generally assume that the appetite matches, as Lior just mentioned the improvements as we give in our functionality and features. And our aim is to see what the optimal price, where we can charge. While, obviously more than anything we want to make sure that we don’t compromise and go. So never introduce any kind of the change that we have decrease conversion in anyway.

And just one last housekeeping question if I may. Lior, the company mentioned a new product going little bit in June and being released later this year. Are you baking anything into the updated guidance from this product or would that be incremental after its release. Thanks again for taking my questions and congrats on the quarter.

So, none. When we provide guidance is based on what we know as of the day that we provide the guidance. Because we don’t know – we are super, super excited about this product, but we cannot predict at this time, the results of it and this is why, it’s not process all guidance.

Your next question comes from the line of Deepak Mathivanan with Barclays. Your line is open.

Hey, guys, thanks for taking the question. Two questions from me. So first, marketing leverage came in pretty strong in 1Q, but cost per user continues to increase. Can you provide more color on that if that’s aimed as acquiring high quality users? Can you provide more color on how you’re implementing that? And then second on long-term packages, how big is the two year and three year package is now. Is – I mean, are the customers that you’re acquiring for these packages, typically better business – have a better business profile. Do you expect to see low churn from these customers. Thanks.

So with regard to the marketing question, usually the first quarter we see a big investment from outside on marketing. It’s also from the Super Bowl campaign. We are talking specifically about brand. In general, marketing is done by TROI. TROI remain the same, while we manage to increase number of users quite dramatically, if I may say. I mean if you look at the overall marketing in dollar, there was a great – big increase from last year. But it was done while maintaining the same TROI of seven to nine months is always done. So that was really, really great for us and by the way, this is growth and grow, because it’s enable us to take parts of the money increases back on growth. With regard to the – and, obviously the second thing is about what I mentioned, the beginning of the year the first quarter, we targeted the marketing as a percentage of collection to be at 46% and for the entire year is 40%. So we are in line with that. We end up this quarter with 46% as we guided and we still seeing that the full year is going to be about 40% of our collection in line with our TROI model. With regard to the two and three years, obviously, we saw some impact out of it, it was not huge we’re talking about a few millions of dollars, but in any case it was not significant.

Got it, thanks a lot.

Your next question comes from the line and Jason Helfstein with Oppenheimer & Company, your line is open.

Hey, guys. To product related, I guess, and then housekeeping. Can you give us an update on ADI, specifically related expansions in different verticals? Any verticals you’ve either added and then kind of what you expect over the next call it, few quarters with respect to verticals and languages. Any color you can give us on, what your expectations are for conversion rates for DeviantArt. How you’re thinking about that playing to the model overtime. And then just lastly, housekeeping, what was the currency impact in the quarter for collection and revenue. Thanks.

So, maybe I should start with ADI. So we’re very happy with the results we currently have with ADI, and we can see very clearly that it actually helping users with less technical skills to complete their website and fantastic results. We’re still focusing on improving the algorithms and improving the additional values that we provide users. So it’s going to – we have no media plans to add new verticals. When it comes to additional languages, that will be the next, so after we add more verticals, that would be the next thing. And so it’s going to be – I expect that that’s something that will go happen later on in future quarters. Regarding DeviantArt, so I think that, we just started working with the team and we were very happy to learn, it’s a team that, I would say, is almost religious in their belief and support for DeviantArt, and those people are really – they love what they do. And we’re just starting to form to plans and to form the product plans and then believe as Lior mentioned, the first part will be integration of some elements and revamping. DeviantArt interface to make it more than something that is why we’re working on now. So it will take awhile until we actually include that into the – into being part of the Wix product. And so I think that this has been my answer to your first a question and for the third one I believe Lior will take it, right.

Yes, if you insist. With regard to the currency, so [indiscernible] it was immaterial. I mean, I think that we’ve reach into to a point where currency effect is no longer material. I don’t know unless, we’ll find out that there are some other market changes. It was less than $500,000. So we do not include as part of our numbers, because it’s simply not material.

Thank you.

Your next question comes from the line of Sterling Auty with JPMorgan. Your line is open.

Yes, thanks. Hi, guys. I wanted to start with can you give us a sense, I didn’t go through the presentation, so there I apologies, but can you give us a sense, how much of the premium subscriptions came from new registered users this quarter versus previous cohorts?

Hey Sterling, it’s me. So we’re talking about the state of 40%, 41% new and 59% out of – for the cohort.

And if you look at that trend overtime and maybe some additional comments is Wix ADI is a verticals, what do you think is driving the conversion out of previous cohorts?

So this is Avishai. I believe that it’s a combination. So of course it helps and I think the vertical side also its helping a lot. So I think that where the point where we’re seeing the most amazing about conversion, right, which is a compound in value, meaning that you have to – every step is multiplied by the next step. And it’s not sound, so it’s actually bigger. The effect is because the compounding effect it’s dramatic. And so we see all of those elements coming into play now and I think that’s something that brings that ability to have an incredible product.

Your next question comes from the line of Mark Mahaney with RBC. Your line is open.

Two questions. First on this Wix Video, could you talk a little bit more about – in any more detail what this product is and potential monetization impact of the product. And then in terms of the users – the user growth that you had any color on the source of those users, where they come from either vertical wise or geographical wise? Any color on how that if there’s a difference in what these users are like versus users you brought in over the last two years. Thank you.

Of course. So maybe I will start with Wix Video, so Wix Video is actually a product that we look at, it is something that has three kinds of the parts. The first one is that we build something called video platform. This is a product that delighted to store and then it actually broadcast video and pretty much everyone in the world, super high quality, super fast, it does all the coding, the CDA negotiation, all of that. And this is something that we are actually offering now also it’s a platform, so it’s not a Wix. And the second part of it rises, of course that we now enable users to build video centric websites. So if you have a lot of videos anyone to be able to offer that new users on your website, all right. We have a really fantastic solution for that now and we believe that this opens flash new market. And of course it will update YouTube branding, it’s without any kind of buying, full control of your own content and you can monetize in any way you choose. The third part of the – is that we have also enabled all the out of verticals to use video. And this is something that will happen more and more now and you’ll see that, so if you want to present stores with video, that is now pretty much possible. We actually have a better integration going forward. So overall to complete and on which is from – platform to website – and I borrow that, and then support the video for all verticals. I know that for myself and they choosing itself and I have to look at, they can have to photos or videos, videos are so much better, because you actually get a real perspective of what you see, right. Then it’s not that you get 10 foot pool to look like its 100 feet pool, right. So this is one of the things that I think that is just an example how significant it is.

Hi. Hey Mark, it’s Nir for your second question about the user growth, so in terms of the sources, it’s kind of – there isn’t one – specific one that is growing faster than the others, it’s the general broad range of success in all of them. I think that is much, it’s a great testament, not only for the amazing job that our marketing team is doing, but also to you to be increasing our brand recognition in value. In terms of geographies again I think we see growth all across the Board, but it’s worth mentioning pin pointing for the business spot line on the U.S., which is actually growing very fast now and obviously something very, very fast, we’re very happy about it.

Hey Avishai, back on the video, I would think that there’d be enormous interest in something like this. I mean there’s – this broad trends called the video application of the Internet. So I guess the question I have is, is this just going to be standard part of the subscription package or where would subscription do you have to subscribe to in order to get video. And then do you have any early readings at all is what satisfaction levels are like with clients who new customers who’ve used this product.

Yes. So I think you asked couple of questions, so first of all I think that video is going to be a critical part of the Internet. And we see that’s rights, we see that today, we see that side it has more videos convert better. I mean, note for us – 10 if a user wise is building side is we – more video and better video. His customers, right, working there better, which we think it’s fantastic. So yes, we see that. We also thinking – we’re still thinking about how to packages and like always we’re going to test and we do believe that some of the video capabilities will definitely have to own vertical offering packaging because in many ways it is and there is a lot of businesses on the Internet that actually need the ability to have your own subscription only video website. So it’s going to be very interesting to see either evolves, but without that – it’s super exciting, it’s a huge opportunity. And I think that we definitely have today the base video platform that is available to small businesses and/or to almost anybody.

Your next question comes from the line of Ron Josey with JMP Securities. Your line is open.

Great, thanks for taking the question. So we talked a lot about product and we saw a launch video and the new platform products fairly close to launch talking about ADI improvements. Anything else that we can expect this year just in terms of number of product verticals or products launch and then structurally speaking just curious how do you manage your balance new products like video versus improvements to existing products like ADI that are already live and constantly being updated? And then one quick follow up Lior, I think you said earlier that more users choosing more expensive packages. Just wondering if they’re doing that sooner in the process as website completion rates are improving? Thanks.

So the first question is about the new products. So, you’re going to see [indiscernible] a couple of new products and move them verticals, but not only. And so that will happen this year. And we are very – I was always very excited. And the way that we manage the balance is that – well I would love to say that it’s only doing by mathematically projecting the amount of growth that we’ll have from each one of them, which we can do. However, we also have to consider human resources meaning that if we have a team like ADI we can includes to a share amount and then we have to let it and become again team with a strong chemistry and then we can add more people do it. And so this is one of the things that we always have to focus on. On the other hand, a lot of the opportunities that we see, okay. And then I want the things that we know that, if we had the right offering for that that will be great thing, okay, sometimes we don’t have the they available throughout for that. So it’s always a balance and we always do intent and these are the two things that we are balancing between them. I would say that although I think that we’re doing pretty well in that and but of course there’s always some ready cost that’s I’m really sad that we don’t have the best solution for. And that I will always wish that we’re already had it.

Yes with regards to your question about users, many, many of them is actually choosing the very, very beginning because they actually getting what they are looking for, so if you’re musician and you get much more than just our creative a regular risk I think you are actually using the musician verticals, the same goes for hotels, the same go for restaurants or for booking. So actually the finding the solution that we are actually looking for and something that they actually can generate value out of it. So most of it is not happening at the very beginning, we do see that some of them over time are upgrading while they see that we provide more and more specific tailor made solution for their needs.

Your next question comes from the line of Naved Khan with Cantor Fitzgerald. Your line is open.

Hi, thank you very much, just a couple of questions so on the guidance I guess the last time around – it included around $8 million from DeviantArt is that’s amount still the right amount to think about when you think of the contribution for this year or has that changed and then just on DeviantArt it’s still early days but as we think out over the medium-term and longer term and what this acquisition can do for the business. Can you just sort of point out the opportunities in terms of what the core can – how the core can benefit from DeviantArt?

Okay so with regard to the first question. Yes it’s still valid in our PR for the acquisition of DeviantArt we stated that the impact is going to be $8 million in revenue and $9 million in collection and this is still valid.

And in with regard the long-term plan, so DeviantArt has about 40 million users. Most of their potential with customers. In addition to that DeviantArt is the largest community probably on earth of designers, we love designers at least because they tend to make websites a lot of people as well and in essentially are kind of acting like a reseller right for us. So and again to compounding value and we believe that and the reason that we went out to do this acquisition is that we believe that the chemistry and the values and the synergies are enormous and we do believe that long term it is going to provide tremendous value.

Your next question comes from the line of Tim Klasell with Northland Securities. Your line is open.

Yes, hi guys most of my questions have been answered but one that goes through how the rollout of ADI International Market that progression – progressing and with the new platform will you be following sort of a similar rollout and/or will it be different thank you.

So ADI is actually being used internationally but mostly in English because this is a number one thing it supports now ADI of course there’s a lot of relevant content that it’s more just the interface that’s the great content. So you said we have to also internationalize and that should well be on translation. So it’s going to take a long until we actually to do that and regarding to the second product, they you’re going to see that it is starting with a closed beta. It’s a very deep product and I believe that it will immediately be available internationally.

Your next question comes from the line of Kerry Rice with Needham. Your line is open.

Thanks a lot. Great quarter guys, maybe first on just the attraction of more registered users and conversions usually site product innovation ADI verticals are doing well is there anything else that you would call out, was a Super Bowl add Campaign historically more effective than it has been in the past or anything else that you highlight related to the above 200,000 net adds or conversion heading about 3% that’s the first question. And then the second question is, I know in the I don’t know if it was the highlights but you talk about scaling infrastructure and I was curious whether or not there you felt like you were kind of starting to bump up against kind of where you were at today. And so it was just then the subsidy or if there was something else that was driving the need to continue other than just additional users needing to scale the infrastructure. Thank you.

So hi it’s Nir, I’ll take the first question. In terms of the improvement, it’s always a combination of a few things. Okay so I think that it’s the ability to run a very efficient marketing I think that isn’t something that we keep on improving on. I think that’s the brand – the strength of a brand is something that’s obviously compounds year -over-year. Super Bowl Campaigns are part of it but not only that there’s a vast amount of activity that is being done throughout the year and the effect of it is something that we keep on benefiting from. And then of course there is all of the recent product releases and improvement that – A, on one and they just make it easier for people to find what they’re looking for to build a website to finish the things – exactly the vision that they want to create online. And secondly, they add capabilities that they were missing before if it’s specific or vertical means that is answered. All of that compound thing that Avishai had mentioned before that kind of the compound being a formula that keep on driving conversion better and better and then better cohort behavior. And for the second question, I think Avishai will answer that.

So you’re asking about scaling infrastructure, so I think that if you look at the technical infrastructure, I think that it’s pretty much the same and meaning that the percentage of that compared to the user growth is pretty much identical. Maybe kind of be higher just because of more database because of more vehicle but it’s kind of minimizing if you look at the cost of that today, because the other thing that is balancing everything is reduction in cost on the infrastructure and cloud infrastructure. The one thing that we always have to think about and plan vertical fully support. Okay, and in theory right we should have increased support every time, but this fair amount of new users, that we have. We’re doing a lot in order to, how to make a lot of the support functions and go over product and see where our users need support. And then out and then how to clear the user interface or make it that user can solve the problems themselves or provide videos that instruct in order to not needing to increase the infrastructure of the support.

Your next question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is open.

Thanks for the question. This is Seth on for Lloyd. Follow-up on ADI if I may. As you anniversary the broad of ADI, can you maybe talk about how you expect conversion rate improvements to trend in the existing markets first rolled out as well as among the cohorts of premium users who came in after as rolled out. And also do you think conversions can continue to go up in older cohorts or does the benefit mostly occur at the time of sign-up.

We believe that – so that was a couple of question, right. So ADI conversion trend is of course positive and we are very happy with it. Overall conversion in rates on previous cohorts, so I think that – part of what happened with ADI is that, previous cohorts did not know they have the options. So lot of them already know how to use the Wix Editor and a result of that – the effected ADI has on the existing order cohorts is not a significant issue on new cohorts. The effect that we’re going to – we expect to see in non-English markets – I personally believe but this again this is a belief it’s not something that I can support with that because we never tested it. But once ADI is translated including the content that is relevant to the other countries, we’re going to see that it is probably going to create the same in equal improvement the one that we saw in the United States and actually the English speaking countries.

Your next question comes from the line of Mark Kelley with Citi. Your line is open.

Hey, thanks a lot for taking the question. The first one is just going back to Wix Video, do you think you’d ever be open to opening I guess allowing your users to open their video inventory to programmatic advertising in the future. And second one just a housekeeping item on the DeviantArt the $9 million and $8 million impact you sighted, I know that’s intact but should we assume that’s fairly linear throughout the year or are there any accounting items we should be aware of in terms of deferred revenue recognition? Thanks.

So, regarding to your first question – are we going to allow our users to use their videos on their websites for advertisement. And the answer for that is obviously, yes. It’s their content, it’s their website and in fact we’re going to partner with advertising agents, platforms in order to allow our users to do that. We strongly believe that it’s their complete – it is their content they can do whatever they think they should do with their content and our job is to provide the tools for them to be successful in doing what they want to achieve.

With regard with DeviantArt collection of revenue, yes we should expect it to be lean on.

Your next question comes from the line of Jonathan Kees with Summit Redstone. Your line is open.

Great, thanks for taking my questions. I want to add my congrats too for the quarter. Just want to talk about two topics one is the other acquisition Flok. I assume you’re going to be integrating that to help with increasing strong platform engagement to Flok yields with a customer loyalty program. I’m just curious in terms of where do you think the contribution or maybe kind of quantify how kind of impact on Flok in terms of the subscribers, the premium subscribers. And then second thing is I guess more of a housekeeping, I know the percent of new subscribers signing for long-term contracts kind of tick down quarter-over-quarter and year-over-year and then monthly subscribers went up as a result. How do you think that should impact, how should I think about impact on deferred revenues trading going forward with that? Thanks.

So I will take the first question about Flok. So I want to say that – when we acquired Flok we looked it as two opportunities. The first one, right, is to include the technology and allow our users to use it. So allowing users basically to build royalty clubs for their users and we think that this is a really great opportunity of course it will not affect the new premiums. But it will make a users business more successful and I believe the results that will be higher royalty for us – for our users. And that opportunity is that Flok is a pretty good business on its own and we are still in the process of examining how we should work with it, and how we should think about it. So but again, I don’t believe that there will be any level of – at least not in the short-term you’re not see that Flok is contributing to a new premium clubs. Probably more to sustaining, existing premium and providing more volumes and maybe some higher output from – to premium users that we would get normally in regular way.

Yes. With regard to the second question, you’re right about the different mix between our subscription between monthly to yearly and as we mentioned before we managed to bring incremental monthly subscription last year. And basically if you take for example this quarter, the first quarter, collection went up by 51% year-over-year, deferred revenue by 53%. So I still seeing the deferred revenue will continue to increase obviously as long as collection increasing. And I don’t seeing that there is a big effect on deferred revenue at least not in dollar value. Since most of the monthly are incremental.

There are no further questions at this time. Thank you for joining, this concludes today’s conference call. You may now disconnect.