Wix.com Ltd. (NASDAQ: WIX) is cutting roughly 1,000 jobs — about 20% of its workforce — making this the largest layoff round in the website builder’s 20-year history. The news, first reported on May 25, 2026 by Israeli outlets including Calcalist and Globes, landed less than two weeks after a Q1 2026 earnings print that wiped out a third of the stock in a single session.
The juxtaposition is uncomfortable but informative: Wix is laying off engineers at the same moment its leadership is publicly betting that AI is the reason the company will be bigger, not smaller. The 1,000 cuts are the company’s attempt to make the AI-era cost structure pencil out.
The Q1 2026 report that triggered the reset
Wix’s Q1 was a story of strong demand and broken profitability. Per the company’s Form 6-K filed with the SEC on May 13, 2026:
- Revenue grew 14% year-over-year to $541.2 million, just shy of the $549.6M consensus.
- Bookings grew 15% to $585.0 million; annual recurring revenue reached $1.903 billion.
- Yet the company swung to a GAAP net loss of $57.5 million, or -$1.02 per diluted share, from a profit a year earlier.
- Non-GAAP EPS of $0.68 missed the $1.26 analyst estimate by 46%.
- Free cash flow held up at $75.0 million, or $112.3 million if you back out acquisition-related costs.
| Metric (Q1 2026) | Value | YoY |
|---|---|---|
| Total revenue | $541.2M | +14% |
| Creative Subscriptions revenue | $382.4M | +13% |
| Business Solutions revenue | $158.8M | +17% |
| Partners revenue | $203.4M | +19% |
| Bookings | $585.0M | +15% |
| Total ARR | $1.903B | +15% |
| GAAP net income | ($57.5M) | from profit |
| Non-GAAP EPS (diluted) | $0.68 | missed $1.26 est. |
| Free cash flow (adj.) | $112.3M | 21% of revenue |
Growth is fine. The problem is the operating expense line. R&D and marketing spend stepped up sharply as Wix integrated its Base44 acquisition and rolled out its in-house “Wix Harmony” generative-AI website builder. Both moves were strategic, both are absorbing meaningful dollars, and neither is yet flowing through to GAAP earnings.
The Base44 paradox: growth that costs money
The single most important number from the Q1 release was an off-the-shelf footnote: Base44, the no-code AI app builder Wix acquired in 2025, hit ~$150 million in ARR as of May 2026, per CEO Avishai Abrahami’s prepared remarks. Base44 has been Wix’s clearest growth lever; new-cohort bookings rose ~46% year-over-year in Q1, with Base44 doing the heavy lifting.
But Base44 is also why Wix burned a hole in its income statement. Building proprietary LLMs (Harmony’s underlying model), serving inference, and absorbing acquisition-related amortization all hit the same quarter. CFO Lior Shemesh told investors that “core Wix Creative Subscriptions gross margin was stable as AI costs remained minimal” — the qualifier matters, because the cost is showing up below the gross margin line, in R&D and marketing.
That is the textbook profile of a company in transition: real product traction, real strategic logic, real margin compression. The market is willing to fund that transition only when the bridge to scale is visible. After Q1, it wasn’t.
The “AI replaces tech jobs” narrative arrives at its enabler
Wix is, by design, in the business of replacing human web developers with software. So there is a certain symmetry in the company concluding that its own internal headcount can shrink as the same AI tools mature. Multiple Israeli reports — Calcalist, Ynet, Haaretz — frame the 1,000 cuts as cross-functional rather than concentrated, with the company citing “increasing redundancy of many roles in the AI era” alongside cost pressure.
The mechanics are blunt:
- End-of-Q1 headcount: 5,277 employees, more than 60% of them in Israel.
- Layoff count: approximately 1,000, or ~19% of total staff.
- Wix officially declined to comment, but did not deny the reports.
- Severance and restructuring charges will hit a future quarter — investors should expect a one-time GAAP drag offset by lower run-rate operating expenses thereafter.
For context, Wix’s prior pandemic-era layoffs were tightly scoped to support and operations roles. The May 2026 round, per Calcalist, is “far broader” and “spans all departments.” Engineering is reportedly not exempt — a signal that the company believes Harmony and Base44 can absorb a meaningful share of the build-and-maintain workload that previously required human developers.
The market reaction: down ~50% YTD before the layoffs leaked
WIX closed at $53.19 on May 22, 2026, against a 52-week range of $51.60 to $190.93 — i.e., the stock is sitting on the floor of its annual range. Market cap stands at roughly $2.23 billion, per StockAnalysis. The slide is meaningfully amplified because the company shrank its own share count in early April through a $1.6 billion modified Dutch Auction tender, repurchasing ~17.5 million shares at $92 — leaving 41,849,511 ordinary shares outstanding as of May 11, per the company’s filing.
Cutting share count in April at $92 has, in hindsight, left the company with a meaningfully smaller equity cushion to absorb a derating to the low $50s. That said, the buyback also concentrates future free cash flow on a much smaller share base — if AI investments do hit operating leverage in 2027, per-share earnings could re-rate quickly.
The Street takes targets down — but stays mostly constructive
Within days of the May 13 print, the analyst desk moved:
- Wells Fargo downgraded WIX from Overweight to Equal Weight (May 14).
- BofA: target to $77 from $95 (May 19).
- Morgan Stanley: target to $112 from $125 (May 18).
- Needham: target to $80 from $115 (May 14).
- UBS: target to $68 from $96 (May 14).
The consensus rating per a 22-analyst survey aggregated by StockAnalysis is still “Buy” with an $86.75 average price target — meaningful upside from the current quote, but only if the cost-out delivers and Base44 stays on its growth path.
What to watch next
Three things will determine whether the layoffs become a turnaround moment or a delaying tactic:
- Restructuring charge size and run-rate savings. Wix has guided to mid-teens % revenue growth and “high-teens” FY26 free cash flow margin (ex-acquisition costs). The layoff is consistent with that guide only if run-rate operating expenses fall meaningfully into H2 and 2027.
- Base44 monetization curve. $150M ARR is real money, but the spread between Base44 revenue and Base44 cost-to-serve has not been disclosed. The company needs to show that as Base44 scales, gross margin holds or improves.
- Partners-business stabilization. Management called out a “softer start” to the year in the Partners (agencies and resellers) business. That is the most enterprise-facing revenue stream and the most exposed to AI substitution from rivals like Webflow and Squarespace.
The next data point that matters is the Q2 2026 release in early August. If revenue stays in mid-teens growth, the operating-expense line bends down, and Base44 ARR keeps compounding, the May 25 layoffs will be remembered as the moment Wix priced AI into its own cost structure. If any of those break, the stock has further to fall.
Sources
- Wix.com Ltd., Form 6-K Exhibit 99.1 — Q1 2026 Results (SEC, May 13, 2026)
- Calcalist, “Wix to cut 1,000 jobs in largest layoff round in company history” (May 25, 2026)
- Globes, “Wix plans 800-1,000 layoffs” (May 25, 2026)
- Times of Israel, “Israeli tech giant Wix said to be cutting some 20% of global workforce” (May 25, 2026)
- Ynet News, “Wix to cut 1,000 jobs as weak results, AI shift pressure company” (May 25, 2026)
- StockAnalysis, WIX overview & analyst targets (accessed May 26, 2026)
- Public.com, WIX earnings history and consensus (accessed May 26, 2026)
Disclosure: This article was produced with AI assistance and reviewed before publication. It is for informational purposes only and is not investment advice.