While the world marvels at the dazzling potential of AI and Wix's sleek new Studio platform, a quieter revolution is brewing within the company. Wix is not just attracting agencies; it's transforming their very business models, and this shift could be the key to unlocking unprecedented growth in 2025 and beyond.

The clues are scattered throughout Wix's Q1 2024 earnings call transcript, but the implication remains largely unexplored. It's all about the subtle, yet seismic, "SaaSification" of agencies. Traditionally, agencies operate on a project-based model, generating revenue from one-off website builds. This approach is inherently inconsistent, making it difficult for agencies to scale reliably and predict future income.

Wix, however, is subtly shifting the paradigm. Through Wix Studio and the newly introduced expanded partner revenue share, agencies are incentivized to adopt a recurring revenue model, mirroring Wix's own SaaS structure. This shift represents a fundamental change in how agencies approach their business. They're no longer just building websites; they're cultivating long-term relationships with clients, providing ongoing support and services through Wix's platform.

The implications are profound. Firstly, this SaaSification significantly boosts the lifetime value of partner users. As agencies embrace recurring revenue streams, their value to Wix compounds over time, creating a more predictable and sustainable growth engine for the company. This shift is reflected in Lior Shemesh, Wix's CFO, confidently declaring that partners' free cash flow margin will "significantly exceed" the targets initially outlined in the company's three-year plan.

But the story goes deeper. The transition to a SaaS model also fundamentally strengthens the agencies themselves. They gain access to Wix's powerful platform, allowing them to streamline workflows, manage clients more effectively, and expand their service offerings. This, in turn, makes them more attractive to clients, fueling a virtuous cycle of growth.

The numbers tell a compelling tale. With over 1 million Studio accounts created, and subscriptions exceeding expectations, the early adoption has been remarkable. Notably, nearly half of these accounts are from agencies entirely new to Wix, indicating a significant market share grab.

And here's the kicker: Wix is making this transition incredibly appealing for agencies. The expanded partner revenue share, allowing agencies to keep a larger portion of their earnings, further motivates them to embrace the SaaS model. This brilliant strategy creates a win-win situation: agencies gain financial stability and growth potential, while Wix secures a more valuable and loyal partner base.

This quiet revolution is not just about short-term gains; it's about reshaping the entire agency landscape. Wix is effectively creating a new breed of agency, one that's empowered by technology and driven by recurring revenue. This could be Wix's secret weapon, a force multiplier that fuels the company's growth far beyond initial expectations.

Wix Studio Adoption and Financial Impact

The following table summarizes key data points from Wix's Q1 2024 earnings call, highlighting the rapid adoption of Wix Studio and its positive financial impact:

Partners Revenue Growth

The following chart illustrates the growth in partners revenue, driven by increased adoption of Wix's professional platform and the transition to a SaaS model.

Wix Q1 2024 Earnings Call Transcript

May 20, 2024 8:30 AM ET

"Fun Fact Wix's headquarters is in Tel Aviv, a city known for its vibrant tech scene and entrepreneurial spirit, mirroring the innovative culture fostered within the company itself."