Wix.Com Ltd (WIX) 2017 Q3 法說會逐字稿

Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wix.com 2017 Third Quarter Financial Results Conference Call. (Operator Instructions)

I will now hand it over to Maggie O'Donnell, Director of Investor Relations.

Good morning. Welcome to Wix's Third Quarter 2017 Earnings Call. Joining me today to discuss our results are Avishai Abrahami, CEO and Co-Founder; Nir Zohar, President and COO; and Lior Shemesh, CFO. Just as a note, Nir is here with us today, but he has lost his voice, so he won't be speaking much.

During this call, we may make forward-looking statements, and these statements are based on current expectations and assumptions. Please consider the 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. You can find all reconciliations between our GAAP and non-GAAP results in our press release and presentation slides on the Investor Relations section of our website, investors.wix.com. On our Investor Relations site, you can also find our shareholder update and supplemental data substitutes that we will post to provide some additional detail on our results.

Now I'll hand it over to Avishai Abrahami, who is going to say a couple of quick words about the quarter, and then we will go straight into Q&A. Avishai?

Thank you, Maggie, and good morning, everyone. I would like to quickly say a few words, and then we will be happy to take your questions. We had another great quarter, and we saw continuous improvement in all of our key metrics, allowing us to raise our full year guidance.

Revenue and collection both beat the high-end of our expectations. Revenue grew 47%, and collection grew 38% over the last year. We generated free cash flow of $90 million this quarter, which is double what we did a year ago. So I'm really happy about these fantastic results.

Our main priority continue to be our users. This quarter, we've added 5.2 million registered users and over 188,000 premium subscriptions. Earlier this year, we talked to you about how we are investing in several initiatives to scale and improve our global support function. As part of this effort, we've improved our product, launched some new support tools and hired more support agents.

I'm happy to report that through these efforts, we have greatly improved our support we give our users. We view our users with the highest regards and care that they get great service.

Turning to our product. A year after adding ADI to our platform, we are seeing it drive significant improvement to conversion rates. This quarter, conversion rates reached all-time high levels. In addition, I have been surprised to see that Wix ADI is not only being used by user with limited technical skill, but also by experts, developers and designer looking to finish their project faster. In July, we announced Wix Code, and I'm excited to share that Wix Code Beta was a great success, with nearly 7,000 participants, which was a much higher number than we expected.

Wix Code Beta uses who have created a huge variety of website and application, which have been exciting to see. We believe that Wix Code grow our total addressable market 10x what it is today.

Given the success of the beta, we are planning to begin rolling out Wix Code publicly in the coming weeks. With the Wix Editor ADI and now Wix Code, we truly have a platform that enable any user, at any skill level to create any type of content online.

To summarize, this was another great quarter that proved our focus on building the best technology and products directly contribute to our growth.

Thank you for your time today. We will now turn to your questions.

(Operator Instructions) Your first question comes from Sterling Auty of JPMorgan.

This is Ugam Kamat on for Sterling Auty. Thanks for taking the question. Strong quarter across the board on collections, but if I look at the average collection per subscriber, the metric has been down sequentially, around 4%. Is it because of larger number of users shifting to monthly subscription? Or is there like people trying to get into more basic products?

So actually, I think that the right calculation to look at it -- sorry, this is Lior. The right calculation to look at it is, basically, looking at the annual subscription coming from newcomers. And definitely, we consider if it's actually increased. It also depends when you do the calculation out of the overall ARPU and subscription, it might be misleading because we also -- you also need to look at the ratio between monthly to yearly. Overall, we do see increase in ARPU from newcomers. And I think that it's actually going to increase in the future, while we see more and more users actually using vertical solution. And I think that one -- another data point to add to that, we see that approximately 30% of our newcomers using right now any kind of vertical solution that we provide, and we are very excited about it.

Your next question comes from Deepak Mathivanan from Barclays.

Two questions for me. So first, Avishai, over the last 2 to 3 years, you've launched one moonshot product every year, new Editor, ADI, and then, Wix Code more recently. What is the product that you have sort of in mind for 2018? I mean, if you don't want to be more specific, maybe what areas you think are the opportunity to explore a new product? And then, second question for Lior. It looks like from your cohort data, you saw some subscriber gains from the earliest cohorts. Can you talk about what's driving that, and how we should think about that going forward?

So about the moonshot product of next year. So this is not a target, right? This is not something that we set to do. We always have projects running here in the Wix Lab, where we are working on something new, and then, when we see that something materialize to have a lot of potential, then we focus on executing it and completing it. And to say that I know exactly which one is going to be the moonshot product of next year, I think, I have a very good -- I have an idea, but I'm still waiting to see how it matures. And -- but I do feel very confident to say that we're going to have -- next year is going to be a more interesting year. We're probably going to have more than one initiative that will add something very significant to what we do.

Deepak, this is Lior. So with regard to your question, we actually see a few things that were happening in the last few months. The first one is, obviously, we reached a record high of conversion. I think that it's really interesting to look at the new quarter, of Q1, so the latest quarter, the Q1 '17. And for the first time, we actually passed the 4% conversion. This is quite amazing when you compare it to the previous yield, but we also saw that there is increase from all the codes. And the bottom line is product. I think that what everything that we've done in the recent quarters, years, and especially with the ADI, we saw that there is very nice increase in conversion. At the same time, we also saw that there is quite a big improve in renewal. Meaning that people are more satisfied with the solution, and they are getting and looking for something that they are really need and they are really getting it with the Wix platform. So you're absolutely right about it.

Your next question comes from Ron Josey from JMP Securities.

I just wanted to ask specifically on code, with the pending global launch. Can you just talk about what in data gave you more confidence in deciding to launch the product? Maybe talk about the process of signing up the 7,000 web developers given -- I think you said it was better than you expected, and building a community here on [web pros] is truly -- clearly a key component going forward. And then, also, any intel on the business model would be helpful?

All right. So that's like 5 questions, but I'd be happy to answer. It's super exciting. So first one, is that, what gives us so much confidence? I think that there are 2 sides to that question. The first side is that the kind of users that have been using Wix Code. So we got the traditional developers, right? And that was expected. Then, we got designers, and that was -- we anticipated that some will be able to master code as it requires real programming in some cases. But the thing that we found out that lot of them did, more than that, we saw that, even that is a relatively small number, 7,000, right? We're adding 2 million users every month. And the beta is 7,000. There's already a community of people that help and solve problems for others and even a guy that is (inaudible) that don't know how to program, to do everything they can in code and then he'll come in and finish it, okay? And those kind of things created, at least with me, the belief that this product, that the crowd that can use it is much bigger than what we anticipated. In addition to that, we got a lot of regular users, right, using Wix Code. A lot of them are just owners of small businesses, some are in college, but they have some knowledge about how to do basic -- very basic programming and that's enough. They could do really incredible projects. The other side of it is that I got very excited about, is when I look at the projects, right. So the way I thought about always is when you see a mass of things that -- complete websites and then some internal applications, but we've got, like, really creative projects. So from the standard real estate company that is now managing a branch of their portfolio on the Wix Code side to a few other running standard websites. But then, we've got things like an encyclopedia for plants, all right? That's completely something different. We got portals for traveling where somebody is doing it that can match you up with anything you want, from the hotels to the tour guides, recommendations. And it's a full-blown product, and done in months, right? And it's already working. And then, we could see a lot of those very unique projects, security projects, creative designer that allow it to get too many quotes from work. So lot of things that we didn't anticipate that are manifesting themselves, we'd use the creativity into reality, using code. And then, something that is pretty much, at least for me, amazing to see. The last part about the pricing. So we're going to start, like everything we do in Wix, right? We're going to start, currently -- the current pricing model, then we're going to start testing and to find writers who write pricing for different parts of Wix Code. This is something that we do with every product. So we optimize and it's usually the most glaring. We tried to find the right point between a conversion to a user value. However, Wix Code, when somebody builds a complete portal for tourism, and at some point, you're probably going to need more functionality, which is more of a higher end functionality. And I think it will probably require some additional price tiers, probably higher-priced tiers. And we've got some request from users to say that they wanted their databases, their own system. So this probably is going to present opportunities, but I think that you're going to see more about that in the second half of '18. And -- when we're going to start, actually, having more concrete data after testing, and then, we'll be able to stand behind the numbers that we give.

Your next question comes from Samad Samana from Stephens Incorporated.

A couple on my end. First one for Lior. Lior, when I think about the initial commentary for R&D investing for next year, and assessing the context of R&D investment expense this quarter and the guidance for the rest of this year. Maybe, could you help us understand, how much of that acceleration is due to keeping investment for the ongoing innovation you guys are driving, versus new product development, and upkeep of the existing platform? And then, if there's any change to the R&D investment philosophy there, just because it seems to not be getting as much leverage as we had originally anticipated? And then, I have a follow-up question.

Sure. So let me start with the fact that except of 2 things, which I elaborate, we do see leverage coming next year from the ongoing operation. Meaning that, obviously, we always have seen that, that seat and develop the new generation of Wix, the new products of Wix, and also, the existing one. And the announcement to the current products. So there is nothing new about it. In the last quarter, we slightly increased the recruitment in order to support the Wix Code because we see a huge opportunity in 10x bigger market. So I think that, that was very, very important for us, but it was not extraordinary to the ongoing plans. And I think that you can notice that from the fact that the free cash flow has not been changed in terms of our guidance for 2017. Actually, we slightly increased that. Going back to 2018, most of the increase, which I elaborate about in the shareholder report, is basically coming from 2 things. The first one is from the Israeli shekel and the dollar rate. The Israeli shekel has strengthened against the dollar in the last few months. I assume that if the spot of the Israeli shekel and dollar rate remain as it is right now, the impact is going to be about $12 million for next year, which will mainly impact the R&D because most of the salaries, obviously, in Israel are R&D cost. So this is one, but this is only with the assumption that there is no change with the dollar Israeli shekel, and unfortunately, it is what it is. The second thing is about DeviantArt. We said back in Q1, that we are going to invest in 2017 about $8 million to $9 million and the same for 2018. And we're going to get to a breakeven point at some point of time at 2019. True, we didn't elaborate where those expenses are going to be, but most of it, obviously, it's R&D because we are working on the product and integration, and so on. And by the way, we feel very excited about this opportunity. So those of 2 things has an impact of approximately $20 million and most of it is going to be in R&D. So to answer your question, excluding those 2 effect of DeviantArt and the dollar and Israeli shekel rate, we would have seen leverage in the R&D by approximately 1 to 2 points year-over-year. It doesn't change the philosophy of the R&D as a way that we see that. I actually see the R&D as part of the growth. And I think that our investments in R&D has proven that the ROI of those investments were really positive because for 2017, the year-over-year growth is 40%. The same as the last 2 years. But overall, there is no change in philosophy with regard to the R&D.

That's helpful. And then, maybe, a follow-up for Avishai. So the decision not to advertise at the Super Bowl, I'm just curious, how we should think about that in the context of Wix's overall marketing efforts? And if there's -- again, if there is a certain end result that you're trying to drive by making that change, and maybe the type of customer that you're marketing to going forward?

So well, I think that, that decision is coming from a couple of things that happened. So the first thing is that we are increasing our marketing budget next year, right? So obviously, we have the budget to do another Super Bowl. But -- and we're very happy with the one, with the previous ones that we did before. Thing is that, I think, first of all, the world is changing, right? More ways to advertise today. And a lot of them, at least an efficient route at least as the Super Bowl. So this is first thing. The second thing is that -- and there are more (inaudible) so we can measure them better. We can actually do things, we believe we could do better things with them. Especially now that a lot of what we're going to be focused on next year is around code and the verticals, which -- we prefer to go into the more, a bit more, I would say, professional or semiprofessional crowd, and when we're marketing to those guys, it's much better to do it with a focus to marketing, not necessarily with such a broad one. Saying that, we're going to still keep -- now this is an influential marketing cost. Of course, we took from the Super Bowl, but everything else that we'll do will probably stay the same. So we look at it as a small change in terms of do we do the Super Bowl or not? Because we have alternate media and it allowed -- the alternate media allow us to do more focused and actually utilize higher marketing budget and understanding better.

Your next question comes from Nat Schindler of Bank of America.

One question in 2 completely unrelated parts. So first, can we follow up on Ron's question about business model for Wix Code in just a little bit more detail here? Not specifically what you're going to charge, but how are you going to charge? Is this going to be sold in -- very similar to your core product? Or is it different? It has a different customer base, and one that is usually reached by enterprise software sale. So is there any change to how do you envision going to market on this versus what you're doing currently? And the second part of the question, again, it's completely unrelated. So kind of this still 1 question, is if you look at what -- you mentioned the ADI as driving conversion and -- this quarter, but specifically, back in Q1, I think we've had a little bit of a pump fake, thinking that the ADI was a major driver of the upside there and that got people almost overexcited on what could have happened in the future. What gives you the confidence that this quarter, specifically, it is the ADI that's causing things to improve conversion and really causing some growth to accelerate with users?

So let me start with the second one, okay. I think that's the easier one, right? So ADI, we release it about a year ago. And since then, we improved. It was doing okay, but then, there were so much things we could fix and then improved it. It was very obvious. And we continuously did that. And then last 6 to 7 months, we've been testing it on various different kind of traffic environment scenarios, directing traffic to ADI, outside, without ADI, trying to understand we need to drive more impact, being smarter about who gets it? Who gets ADI? Who gets the combination? Who gets to the Editor. And I think that today, when I look at all those tests, I think that we have valid statistics to say that there's significant impact. ADI is driving conversion up. It was kind of also easy to see because if you look at the other thing that we did this year, this is the major change that we did in conversion afterwards, really upwards, and pretty much the same time that we did most of the improvement in ADI, which is around the beginning of the first quarter. So that allow us to say that. I want to mention, again, that ADI in itself, right, is an amazing product, but when combined to the Wix Editor, that's when it really shines because people were going to ADI, do something then they want to tweak it a bit more and do some small changes. And then they will go to the Wix Editor and finish it. And I think this is where Wix is so powerful. So this is why I'm excited about taking it even one step. So we have ADI where you start, then Wix Editor, you can finish everything. Then code, make you do unbelievable things. So we keep bringing this whole platform of things that you can use. So I hope that this answer your -- the second part of the one question built for many, many different subjects, okay. Now we'll go to the first question -- and to the first part of the first question, sorry. And so business model for code. So I think that -- I want to be clear here, we're not building an enterprise product, okay. Wix Code is not enterprise product. We're not installing service for you. We're not building this cloud deployment for you. We're not going to have sales -- enterprise salespeople running around and trying to sell you a million-dollar project. And we're not going to have profession services running after that, at least not in any future that I see currently. What we -- the way towards is like, so we have police department now that can use in ADI, okay, and in the code -- sorry in the beta. So they have their own internal systems. They want Apollo, that they can do a lot of different things. They're probably going to need a different way to secure their databases because they're sure they're going to want to have advanced monitoring on this and advanced other things they want to do on it. So they will probably need a way to isolate their service. They will probably need a way to install things on the server, which normally we don't give. And then we need access to large kind of APIs. So it's very likely that very soon they're going to tell us, "Okay, guys. We're very happy with (inaudible). How do we take it to the next level?" And then we will say, "Okay, you can get your own environment, and it will be a different price, right?" So this is the kind of example of how I think about things. The database of ADI -- of code is a really good database. Most of what I would say small- to medium-size businesses will need. But if you are building Yelp, okay, on top of it, for example, okay, which is something that we saw some of our users trying to do similar things to Yelp, then, of course, you need a different scale of a database. Again, this is a way for us to upsell and sell you a different product, but it's all going to be in the Wix Code, which is, I mean, we're not doing professional services. We're not going to build something just for you. We're just going to build a path to upgrade to a higher, and higher, and higher level of service. And this is how we think about it. Theoretically, I think that with the technologies that exist today, we can scale it out that, in the future, you would actually be able to build Yelp on Wix Code. But we'll need to see that the demand is there, and then we need to provide a solution. And I think the pricing should correlate to that.

Your next question comes from Jason Helfstein with Oppenheimer.

This is Jason's associate (inaudible). So my question is about Wix Code and premium subscription. So how would you think about Wix Code contributing to revenue in 2018? And do you expect a jump in premium subscriptions representing the business that the web pros represent?

This is Lior. So I think that there can be multiple contribution. First of all, with how to tell exactly where this contribution is going to be. If it's going to be late 2018, but I think that most of it is going to be in 2019. And the contribution can be in a way of, again, increasing conversion. So if, for example, we are talking about pros and the designer using the Wix Code, so they basically can increase the use of the Wix platform because right now, they can build, for example, website for a real estate broker. So we've just increased their options in terms of how to use the Wix platform. So I think that it might increase conversion. It might increase ARPU as Avishai mentioned, because we think that they are going to do some -- they're going to use more functionalities, uploading more media. So obviously, it also -- in some of the cases, it might change the pricing. The solid impact is simply because of the fact that it's opened a much larger market for us. And I'm talking specifically about the pros. We know that approximately 90% of the website in the world are built by pros. So I think that this market is larger. And I think that it's opened a really -- a big opportunity for us, which I think that we will benefit in the future quite significantly.

Your next question comes from Brent Thill of Jefferies.

You mentioned conversion rates are an all-time high. I was just curious if you could walk through what you see as the primary factors for driving that improvement? And how much room is left from your perspective to keep driving these record highs in conversions.

So if you look at -- just to show how we look at it. If you look at the cohorts graph that we gave, you can see that we just passed 4% conversion on the first cohort. And you can do it by just dividing the amount of free users by the active premium. Sorry, the active premium s divided by the amount of free users. They corrected me here, and how to calculate percentage in the correct way. And I think that the key driver for that, I think, is a combination of the products we launch. ADI will probably be in the lead, but also a bunch of the improvements in verticals. And I think the Editor itself, I think we're getting more -- we're able to solve better and an easier way more of what users are trying to achieve. I think this contributes a lot. The other side of it, of course, is that I think our marketing department is continuously working on the brand. And we continue to see those users that come to Wix not because they searched the Internet on how to build a website, but because they went to Wix because they know it's the best place in the world to build a website. And those users, of course, tend to present better. So obviously -- so those are the kind of reasons that we see. I think that if you look at all of them, another reason that there's no reason that why we shouldn't continue to improve on. And the other thing that I love to do is it actually looking at the conversion on the last 5 years, right? If you look at it, you can actually calculate it. I think on Q1, and the year before, every year in the last 5 years, conversion went up, okay? A very few companies that can go and say that, and we can clearly say that and actually show it. So I think that you're probably going to see the same next year and the year after because I think there's so much more we can do with ADI in the verticals and Code will also contribute to that.

Your next question comes from Alyssa Johnson of KeyBanc Capital Markets.

I wanted to ask you about kind of ADI rolling out internationally. What are the kind of the challenges and steps you have to take in order to do that, and kind of how long does it take for a given geography to kind of go out to new international and kind of what would be the scope that you guys are thinking on that?

Just so you know, this is the exact same question I asked my team. Why does it take you so long? I thought you can do it in a week, and they keep not agreeing with me. So I'll try and give you the reasons that they think are right, which is, ADI builds not just the layout of the website. It also creates the content. The content being the actual text and the images that fit, right? And obviously, if you go to Brazil, you need to change the text to Portuguese. If you go to a Spanish-speaking country, there should be Spanish. And that's kind of a thing that we have to do for every language that we support, okay? And if many countries can use English as some kind of a thing that everybody understand, and then they write their own text, ADI is trying to help you by writing a lot of the text for you. The other part of that are the images. And the images are, in Brazil and the United States, when we do a template, they can be very similar. When you do a Wix ADI site, they have to be a lot more localized. And the same thing goes for Europe. People want something that convey their culture. So it's a bit more than effort. The other side of it is that in some places, content is a bit different. So in the U.S., testimonials will take a bigger role than in Europe, for example. And things of this nature also something that we have to think about in ADI. Saying all of that, we are working now on releasing more languages. I think that the product is definitely in the place that it should be launched in more markets. And I believe that we're going to see it very soon.

Your next question comes from Naved Khan from SunTrust.

I have a 2-part question. So you've been adding north of 5 million users -- registered users for some time. Where is most of the -- how is the growth distributed across the different geos? Which areas or which geos are growing faster? And then, I had a quick follow-up on the product pipelines. So it seems like there's a lot of hiring in the R&D, but if you just look at the product pipeline for the core excluding DeviantArt, how does the product pipeline looks like today versus historical levels?

Yes. So with regard to the users in term of geography, about 1/3 coming from North America. The rest are coming from the rest of the world. Kind of consistent of what we had before, although we see a slight increase coming from North America. Some of the regions we're talking about South America. We are very strong over there. And obviously, in West and East Europe. With regard to DeviantArt, how the product pipeline look compared to other areas?

This year. So I think that, as I said before, we actually have a couple of incredible projects cooking and coming. And so I think that you're going to see some verticals coming next year, but beyond that, a couple of different projects that we really are proud of. I can actually say that one of them is already being tested, and in a very soft launch, and we're not going to say yet which product is that, but I think that we have a lot of really, really cool things coming into next year, probably more than we had this year, I think.

Your next question comes from Lloyd Walmsley of Deutsche Bank.

This is actually Matt Diamond on Lloyd's behalf. I want to segue from an earlier question about the international ADI rollout. I'm curious about what OpEx ramifications that has? I know in the past you've talked about a 7- and 9-month payback for marketing, and it sounds like OpEx is -- or R&D OpEx is ramping up. But how should we think about the OpEx trajectory if the rollout happens sooner or later than expected. Just how should we think about OpEx in that context?

So I think that when we talk about OpEx, I think that let's concentrate on marketing, and then I can basically touch base on the R&D. But with regard to the marketing, it's always by what we call TROI, time return on investment. Meaning that the same is for the ADI and for any other projects, we invest money in marketing with a single KPI that the return should be 7 to 9 months. And this is the way that we operate. We managed to increase the marketing budget significantly over the years, while remaining with the same TROI of 7 to 9 months. So this is something that is very exciting for us. And I think that the ADI opened new opportunities, basically, for people first to complete the website. So I think that, overall, think about it this way. When conversion increase, the TROI basically go down. So it's enabled us to invest more in marketing in order to be back with the same 7 to 9 months. With regard to R&D, I think that I elaborated. I think that R&D is not just about ADI. R&D is lots of thing about new products, about the Wix Code. It's about maintaining the core products that we have. And obviously, we are going to see in the future the leverage coming from the R&D, but at this point of time, as I mentioned before, in 2018, we're going to see some slight -- some kind of increase, but mainly coming from the DeviantArt project, which I mentioned before, and also about the dollar-shekel rate.

Your next question comes from Kerry Rice of Needham.

Two questions, mostly about guidance and maybe 2018 a little bit. You've seen good conversion. You've seen strong net adds. And although you raised full year 2017 kind of guidance for Q4, it's a little bit below what we were expecting. Is that -- would you chalk that up to seasonality? Is there anything else that you're seeing in Q4 that doesn't kind of give you the confidence to raise a higher level of Q4 revenue? And then, looking forward, without the Super Bowl ad, how do we think -- I know you are giving -- not giving 2018 year guidance, but how do we think about a cadence of net adds? So usually you've got a really strong Q1 tailwind, and then it kind of dissipates through the year. So should we think about that being a little bit more dispersed evenly through the year? And then -- sorry for all the questions. And then, around sales and marketing, should we see some additional sales and marketing leverage from -- since you're not spending on a Super Bowl ad? Or is that just reallocated to different channels?

Okay. So I will start with the guidance. Obviously, we increased the guidance for the full year. Raising the guidance for a 40% growth on a year-over-year basis. And again, with regard to the fourth quarter, we have a great quarter. The third quarter was really great. And we managed to exceed our own guidance. And we guided for the full year. So Q4, obviously, if we are going to have an upside, obviously, it's going to be more than the model itself. But right now, when we guided, it was based on the KPI that we see as of now. We are overall very happy with the 2017 result because it's the third year in a row when we managed to achieve a 40% growth on a year-over-year basis, but just with a much larger numbers. With regard to the Super Bowl, first of all, you won't see more leverage because, as Avishai mentioned, we are going to take this portion of the branding budget and to allocate it differently mainly to users like pros and designers because we obviously marketing intent to serve the product as well and we think that we have more opportunity and better ROI over there. So this is what we are going to do. So we are just going to allocate differently a small portion of our budget, which is the Super Bowl, but we are not going to lower it. That said, you should expect more leverage in 2018. And we indicated it in the shareholder update by a few points just because of the embedded leverage that we have in our model. With regard to the Q1, Q1 usually, we invest more, not just because of the Super Bowl, but also because it's the beginning of the year. And usually, this is the case. And we see a very good return in the first quarter. I don't think that the overall -- it's overall going to change. Remember that Super Bowl is not something that impact on a specific quarter. It's a brand activity, and it's effective all over the year, not necessarily during the first quarter.

Your next question comes from Jonathan Kees of Summit Redstone.

Mine should be pretty quick, and I'm going to take a different tact with those, with my questions. DSOs ticked up from -- sequentially from recent lows. Just curious in terms of there's been a change in collection process there, and how we should model that going forward? And then, second thing is, that CapEx ticked up. And you're saying that it's because your -- you're going to be staffing more peoples for -- it's in order to accommodate the additional staff. I know you kind of talked about your investments in R&D as well as also just now with reallocating your S&M. Just curious in terms of explicitly talking about your staffing needs, and how that looks going to 2018?

Okay. So with regard to the CapEx, you are right. And I think that it's meant to accommodate the increase in our headcount in, mainly, getting prepared for 2018 as usual. So this is most of our CapEx is around facilities. So we had a modest increase in our CapEx for this year by, I think, that was by about $1 million to $2 million in order to accommodate that. With regard to the days sales outstanding, you are talking about account receivables?

Yes. The trade receivables.

So I think that it's just -- yes, I think that it's just about the end of the quarter and timing of getting the money from the different process of and gateways. There's like, really, nothing unusual over there. This quarter -- the end of the quarter was Saturday. And that was you know the results. So we got the money like a day after. But it sometimes happens.

So you should stay around this level, just for modeling purposes?

Yes. Yes. It shouldn't change.

Your final question comes from Tim Klasell of Northland Capital Markets.

Just a quick question, jumping back to Wix Code. What are the target customers? What are they using now to build their website? And besides, obviously, not the Super Bowl ads, how are you going to try to approach them to convince them to come over to Wix? What marketing, what sales -- specific sales channels are you going to use to address these customers?

So what are we using right now? I think that we've seen that from our talks with (inaudible) a huge variety, okay. So we've seen people using (inaudible), people using WordPress. A lot of them just were using real development tools. So that will be a text editor, code editor, and then, the ability to debug and deploy. So that would -- probably you could say they're using GitHub. The other part of it were people that couldn't -- just couldn't do the project that they wanted, right? And this is -- that was a big part. And I would say probably about at least 50%. So it's a big combination of users. How then do we intend to approach them? So there's something cool about this, in 114 million users, right? And a lot of those guys already are with Wix, okay? So a lot of them heard about us, they played with Wix. They are Wix Users. And so I think that, in many ways, our current marketing strategy will allow us to approach a very large number of potential Wix Code users. The other thing is that those guys tend to be in a very well-defined community or communities on the web, which are very easy to approach and to market into. One of those communities, where we can see a lot of people that are very sophisticated and an ability to do very smart design is DeviantArt. So I think that we're feeling very confident in our ability to approach and find those communities and then talk to them. It's easier to market to well-defined communities than to the broad crowd.

And that was our final question today. This concludes today's conference call. You may now disconnect.