Wix Slashes 1,000 Jobs: AI Shift and Weak Results Force Major Restructuring

Israeli website-building giant Wix is cutting 1,000 jobs—about 20% of its workforce—in the largest layoffs in its history. The move comes as the company grapples with eroding profitability and a changing technology landscape driven by artificial intelligence.

At the end of the first quarter, Wix employed 5,277 people, with over 60% based in Israel. The layoffs are part of a broader efficiency plan as the company adapts to the AI era, where many traditional development roles are becoming less necessary.

The Rise of Base44

Much of Wix's recent growth has come from Base44, a vibe-coding platform acquired from founder Maor Shlomo. Base44 allows users to build software using natural-language prompts, and its annual recurring revenue reached $150 million in May—well ahead of targets. However, the platform's success comes at a cost: heavy marketing investment and significant computing expenses.

Financial Struggles

Wix reported a first-quarter loss of $57.5 million after several profitable quarters, despite a 14% revenue increase to $541 million. Cash flow fell 21% to $112 million. The company attributed the loss to a jump in marketing and sales expenses, as well as additional payments to Shlomo under the Base44 acquisition agreement.

In March, Wix launched a $1.6 billion share buyback to restore investor confidence, but the move has so far failed to achieve its goal. Operating expenses jumped 50% in the first quarter to $423 million, equal to 35% of revenue, compared with 21% a year earlier.

AI Investment and Market Concerns

Investors are worried that Wix's website and online store-building tools may become less relevant in the AI era, as users turn to vibe-coding tools like Base44. To address these fears, Wix is investing heavily in developing its own AI model, which CEO Avishai Abrahami says will make Harmony, Wix's AI-powered website-building system, more accurate. For now, the project is another major expense, but the company expects it to reduce inference costs in the future.

Return-to-Office Mandate

Several months ago, Wix ordered employees to return to full-time work from the office, sparking broad opposition and debate across Israel's tech industry. Despite this, the company's workforce shrank by only 63 employees in the first quarter.

The Double-Edged Sword of Base44

Base44's rapid growth presents Wix with a challenge: while it positions the company as an AI leader, it also drives up computing costs and requires additional payments to Shlomo. In the latest quarter, Wix paid Shlomo another $38 million and expects to make more payments later this year.

Wix's stock has lost half its value this year, and the company now trades at a market value of about $2 billion. The layoffs and strategic shifts are seen as critical steps to navigate the turbulent tech landscape.