Wix.Com Ltd

NASDAQ:WIX

Earnings Call Transcript 2021-Q2

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Wix Q2 2021 earnings conference call. At this time, all participants are in listen-only mode.

After the speakers presentation, there will be a question-and-answer session [Operator Instructions] I'd like to hand the conference over to your speaker today, Maggie O'Donnell, Director of Investor Relations. Please go ahead.

[Maggie O'Donnell, Director of Investor Relations]

Thanks, Angie. Good morning, everyone. And welcome to Wix's Second Quarter of 2021 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, as well as Joe Farrell of [Indiscernible].

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 SEC 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 key operating metrics. You can find all reconciliations between our GAAP and non-GAAP results in the Earnings materials in our interactive analyst center on the Investor Relations section of our website, investors.wix.com.

With that, I will now turn the call over to Joe, who will be moderating the Q&A with the team. Joe go ahead.

[Joe Ferrell, Company Participant]

Thanks Maggie, and thanks everyone for joining us today. We're going to do something a little bit different on this call. I'm going to start off by just moderating a bit of a Q&A between Avishai, Nir and Lior. There are several things that we want to just make sure are captured on this call.

You can obviously read a lot of the materials that we already provided. And then we will go ahead and move to some questions from those that have dialed in and queued in. So we'll start on Avishai. Just startup and giving your thoughts on the results here that we just released for Q2.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

Well, first of all, I want to say that I'm very proud of the Wix team on execution this quarter. While and obviously we ended up in the lower end part of our guidance. Most of it, I think, is because we give the guidance based on assumptions that were proven to be wrong.

What we assume that -- it's coming out of 2020, we assume that one or two cases is going to happen, either COVID going to come back big time and going to have to look down, or more likely the vaccines are working. And we're going to end up with the world moving back to normality.

And we actually seen first the waves of users that are starting to build the regular offline businesses, like hotels, restaurants, events, and all those things just started and sadly Delta has arrived and the world has moved to a place which nobody knows what's going to happen next.

Are we getting more lockdowns or this is just a phase? Are government going to do again stimulants? Are governments pay salaries again, people don't working. There's a lot of confusion around that and that confusion is something that we did not predict because if we will stay online we know what happens.

If people move back to normality and we now have it's [Indiscernible] generally, I mean, we didn't predict. What we can see from uncertainties that we actually had less people joining Wix right. And if you look at the quarter, that was the only negative. At KPI, we had everything else is actually positive.

So for me, it's a very interesting thing to see how long [Indiscernible] will happen. And yet, and think that [Indiscernible] everything else, and we're going to talk about it, right then is pretty much stayed the other thing that's going to be delayed is that we had a bigger part and deals and a lot of those people were kind of like a be delay to Q3.

And this is mostly, for what we analyzed, a lot of people went into vacation, but that's not an excuse. I think that the underlying fundamentals of the business is still doing really well.

[Joe Ferrell, Company Participant]

Great. So you talked about the uncertainty that we've experienced. How do you know -- how do you feel so confident that it is the uncertainty here that caused our Q2 results coming where they are? What if it's competition, what if it's product fatigue? Why do we believe it's uncertainty?

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

So what we look at many given things for that, right? But I am going to point out you talked about competition, so I think we published, their results yesterday, and we can see that on every metric, we are actually growing faster, right?

We have more subscriptions. And this is an absolute numbers and percentage number as a basis, much bigger so we actually ended, what's more on collection were going faster, on revenues growing faster.

And so I think that it's probably not competition, right? We've seen it with everything around. The other thing we look at, right, is that what happens -- like what kind of things that uses a building and we've seen these really massive move to offline in the beginning of the year.

And then it stopped, right? Well, it dis start, but it went down to the lower amount of users joining Wix. So, I think that we can be -- and of course the answering reduced that we talk to our users, we talked to a lot of our users, right?

We had a lot of people at least to do that all the time. And if you -- I talk to my friend in Israel, tend to be just a bit ahead of the course because we have more vaccines than any other place. Dr. [Indiscernible]. they don't know what it should be doing, like, oh, my God, should I close the business again?

Should I wait for a lockdown? We'll there be school and logical in September. Nobody knows. And this is something that obviously a users being voted on a lot more sensitive than most users or most businesses on the planet. So I mean that is a massive effect.

[Joe Ferrell, Company Participant]

Yeah.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

To be fair, right? We didn't predict it because -- this is not our profession we don't know how to predict vaccinations and virus behavior. And if you go back to Q1, nobody really predicted it. However, we probably should be more cautious on guidance and provided the guidance with shares.

We really have a good idea on what we think would happen with the Corona and the vaccine, but we should probably take into account that this is not our profession and we should have given the wider guidance.

[Joe Ferrell, Company Participant]

So you've mentioned fundamentals are strong. Dive into that a little bit more. What are some of the positive trends that we saw in the quarter?

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

So the most important rights -- so the most important KPI for us is always a conversion, right? How many of the fused account to which [Indiscernible] actually convert? And this number is higher than it has ever been, so that's the first one. Then output, right? Per-user is -- also this is the highest ever, right? So Wix again, it's the highest ever.

Renewal is stable And it's unchangeable unlike Q2 last year. It was a massive quarter. And you would imagine that the amount renewal actually going to go less, likely going to be higher [Indiscernible], but we don't see that. We're actually seeing consistent and actually -- and improvement. So, and those I think are the most important three KPIs.

We just see other things, right? E-commerce as a percentage of our business has grown again. We see that Wix expanded, is doing very well and is in line with our target for the year. Partners and designer industry joining [Indiscernible] or do any much faster than before. We actually accelerated than that.

KPI, which is a cornerstone of our future strategy. So I have to say again, with the exception of the amount of [Indiscernible] joining Wix, everything else looks really good.

[Joe Ferrell, Company Participant]

And Product Development, too. We had an announcement yesterday about a new product.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

So there's a lot of new products coming. Of course, product development was not hurting anyway, and is a big bond region. I'm so proud of the team and what happened in the -- in the last 6 months.

[Joe Ferrell, Company Participant]

Great. So let's dive in a little bit more on the cohorts because as you said, that's really the key piece of this and Nir, I want to turn to you on cohorts. We obviously added some really large cohorts in 2020, and I think a lot of investors are going to wonder why -- how are those happening, now we're anniversary the first really big quarter of large cohorts from Q2 '20. What are we seeing now as we start to lap those?

[Nir Zohar, President & Chief Operating Officer]

Sure. As you said, these are the [Indiscernible] of 2020, which is under COVID the Q2 cohort, but also through 2020, If you look at all the cohorts. then they're basically better than pre-COVID cohorts in every KPI. So they are essentially bigger.

We have a much higher intense over the users score to build the business. We see that by them, buying and choosing higher-priced packages. The Venus packages which leads to higher ARPU that Avishai mentioned.

When they do that across-the-board in higher conversion. Again, something's obviously I highlights for the current quarter, but then being going on for over a year now, They're adopting more business applications, such as Google Workspace, and [Indiscernible].

Their GPV is higher, and I think this is basically the key theme that we've seen throughout the year, and definitely now as they renew, they actually have better retention. Across the board these cohorts are stronger and it's important to mention that the behavior aside from the annual retention, which we still need to see how it goes over time, but in very good [Indiscernible] it's the same.

This is also going the same into 2021 -- or for Q1 and Q2 of 2021. But basically we've seen the impact and it seems continuing going forward.

[Joe Ferrell, Company Participant]

Great. And just to focus a little bit more on commerce as part of that. Obviously, I mentioned strength there. We shared in our materials Q2 collections were 35% comprised of commerce this quarter, which was up from Q1. So we're seeing strong strength in online commerce. Share, Nir, why that's so beneficial for us?

[Nir Zohar, President & Chief Operating Officer]

So I [Indiscernible] you -- this is something that is being going on for a while now [Indiscernible] is -- it's becoming more and more significant and I believe we'd knew would continue. Any -- because when you look at our commerce glossary, we basically have a compounding SEC. things like, first of all, commerce is not only retail, it's not only stores.

It's every activity of our users can become, to some extent, in online commerce transaction and we support that for the booking of events, through the restaurants, hotels, the fitness trainer, and so on and so forth. For all of those, first of all, they convince the impact was before moving between the online and offline. We also introduced the POS.

We spent in order to be able to capture some of the old [Indiscernible] activity as well. And that's something that will increase over time. That it's a very wide range of commerce on our platform. So obviously, the capture more and more of it increases. The second part that compounds it -- compound this growth is the solution of the products and the services.

We've been delivering a huge amount of value for each and every one of those [Indiscernible] verticals over the past few years and even more so in the past year since COVID hit and they had more need to do things online. We've done so by investing heavily into our R&D team and into our technology and innovating all the time.

We've also done so by acquisitions of companies and products that complement our offering and we've seen that they are doing more and more of that in the past 12 months and we obviously will continue with that. And we see obviously great value out of it because the [Indiscernible] value to the user and [Indiscernible] then convert at a higher rate, generates more GPV and staying with us for a long time.

And as I said, [Indiscernible], this compounding effect is we expanded payments itself, the product itself is keeps only enrolling expanding. We are being able by making better to touch more GPs and get a better take rate. So obviously that's also another thing that's expanding the financial contribution that the commerce has going back to -- back to it.

[Joe Ferrell, Company Participant]

Great. And another, I think exciting growth area that's contributed a cohorts as well as partners. Avishai, can you give a quick update on what we saw in partners this quarter as well?

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

So the speed in which we signed new partners is that their speed of all time. And of course, that number is also the number of active partners, like freelancers, agencies. Working on Wix is also at the highest ever. We -- Editor X is doing well and it's growing, again, 30% quarter-over-quarter. So we're very happy with that.

It is, of course still small compared to the size of Wix, right? Because the base is so small, but it's getting -- I think next year we're going to see actually that it is becoming significant. [Indiscernible] couldn't -- massive -- the bigger contribution, right of Editor X is always being that it attracts the top agencies to us or top designers. And we're saying that it's doing very well.

A lot of the agencies will start with the Editor X and then also build a lot of projects on the classic Editor. So I would think that was something we believe will happen and we see confirmation for that, that is important. I want to point out that for me, what is a [Indiscernible] deal.

VIstaprint. VIstaprint is in many ways like NTP, what we have in Japan, it's a mega designer -- mega designing issue, why? Because they will build sites for users, and we're been talking about a very large number -- many, many, 100s of 1,000s, that Vistaprint will build those sites on the Wix Platform.

And so we had to using our technology and our product to do that and pretty much everywhere we define a partner. So I think entities before in VIstaprint now is really peak confirmation that the GAAP in technology is so vast that even the big guys one of yours our technology, of course more for demand moving. And so I think that is for me, a very strong point regarding our partner strategy.

[Joe Ferrell, Company Participant]

Let's talk about VIstaprint Mark because obviously that was a pretty significant announcement that we made this morning as well. So Nir, why don't you share a little bit more about why this is such an important alliance for us strategically?

[Nir Zohar, President & Chief Operating Officer]

Absolutely, Joe. I think, obviously, it's a big commercial deal with a big commercial impact. I think that is also extremely important. Avishai, basically saying our business for 20 years of know-how of helping small and tiny businesses on growing online to content, and there are pre demand.

And we become basically this massive biggest on the globe, their ambition and their words, agency for that timing of small businesses designed or their digital presence into market. And in order to do that, meaning someone we need a layer of product and services technology like no other and their choice for that is to come to us and partner with us to deliver that value to the customers.

I think that is massive because if we're to achieve Avishai has more certain role of getting to weeks to power of 60% with everything we were they Internet in 5% in useful now, they need to be able to obviously answered the meaning of everyone.

The sales [Indiscernible], and the people who continued to aid themselves, whether it's a tiny business owner -- [Indiscernible] to go on and use AVI or the classic Editor or the professional designers, the developers with the engine fee using the full loan suite that the Editor X with Velo offers [Indiscernible].

And then these are the bigger companies, the biggest partners that come and say, "We want to have something which is a new layer of technology attached to our own offering that can create something which is bigger than what you've had before."

And I think that this signal, that Vistaprint is choosing to do this without driving all of their massive traffic towards Wix. That's a huge testament to all of the innovation and work within the products and technologies in the last few years includes as well as our brand and the strength of it. So I think this is obviously something very, very exciting for us.

[Joe Ferrell, Company Participant]

Because we know investors want to know beyond strategy commercially, what does this mean for us?

[Nir Zohar, President & Chief Operating Officer]

Naturally, I'm not going to -- I can't go over the commercial details of the agreement, but if you just think about of what has been announced. Vistaprint are going to move their entire website business, 100s of 1,000s of websites entirely to work on Wix.

They're going to transition all of their new websites being built going forward on their platforming years to come to move to Wix, that's 100s 1,000s more, so only that is massive. But if you think about it, we're not going to be -- the transitioning from offering the site builder experience, which is what they have now, to having the full-grown Wix operating systems for the business of [Indiscernible].

It's going to be about the different applications and the verticals, it's going to be about, the branded assets were -- that's were announced yesterday. It is going to be about the much deeper e-commerce integration about the spend and the CRM is going to be about the ability to capture GPV and to deliver -- to delivery is having to end customers and the other side of those users. So essentially, I think the potential of years also is masking over the next few years.

[Joe Ferrell, Company Participant]

Great. Let's move on to the financials a little bit more. We want to dig into Q2 a little bit of the results. Share, if you could, a little bit more about the results for Creative Subscriptions versus Business Solutions in Q2.

[Lior Shemesh, Chief Financial Officer]

Sure. With regard to the Creative Subscription collection, this is actually what came in as our low-end because of all the reasons that Avishai mentioned before about the number of users coming to Wix. On the other end, the Business Solution actually came a bit better than what we've expected.

We had a really good growth coming from the Wix Payments, even better than the first quarter. While the Google Workspace actually came lower than the first quarter and into as pretty much expected. And I think that we also spoke about it last quarter, about the seasonality effect of it.

[Joe Ferrell, Company Participant]

Great and gross margin a little bit more on what we saw, gross margin by segment as well.

[Lior Shemesh, Chief Financial Officer]

So we actually started to see as expected improvement in gross margin in both places. The first one is in Creative Subscription.

We saw some improvements over there while we actually started to gain the leverage from the investments that we've made in customer support in our infrastructure. I do believe that this is something that is going to continue, especially toward the second half of next year.

And gross margin will continue to increase. Business Solutions, our gross margin actually was better than what I've expected. And it's mainly because payments scale up. While payment scale up, the margin are getting better over there. Obviously, due mostly to the leverage that we see in this business.

[Joe Ferrell, Company Participant]

Great. And then the final thing in Q2 that I think is worth mentioning is around marketing. And what we did with marketing investment in the quarter.

[Lior Shemesh, Chief Financial Officer]

So as you can -- as you could notice, marketing was a [Indiscernible] down than our expectations. But it's mainly due to the ROI, the [Indiscernible] model that we're using, which is based on [Indiscernible] and how much we invest in -- how much we've seen a return. And as we saw that, new users slowdown. So by default, our marketing investments are going down.

I think that it's a great example of how fast we are truly reacting to the changes in market. If you, remember, last year when the demand was a huge, we actually increase our marketing investment quite a bit and it was really fast.

This time is actually the opposite but the reaction is really fast and we always invest when we see the return, we do not do that when we don't see the return.

[Joe Ferrell, Company Participant]

And I think the returns that we're seeing near walk through the cohorts, we're still seeing the benefits from those cohorts that we increased our investment on last year. And that's an example of why we managed marketing the way we do.

[Lior Shemesh, Chief Financial Officer]

Absolutely.

[Joe Ferrell, Company Participant]

Let' go on to guidance. Just talk about how we put together Q3 guidance?

[Lior Shemesh, Chief Financial Officer]

Obviously, we spoke a lot about the uncertainty about the confusion among our customers and how we are going to guide if this is the case. The trend is actually started mid-May, continued to July, even early August, so this is also part of our Q3 guidance.

That said, I feel very good about the Q3 guidance. We're obviously about almost half already in the Q3 quarter. Actually, most of the uncertainty is in the fourth quarter, and this is the main reason why we expanding the range of our guidance.

[Joe Ferrell, Company Participant]

Okay. Just getting back to Q3 before we move into Q4. So we mentioned there were some partnerships booked in Q3 already. Talk more about that and how that affects the guidance.

[Lior Shemesh, Chief Financial Officer]

So as we mentioned before, a significant B2B partnership already booked in the third quarter and is part of our Q3 guidance as well. Actually, we mentioned in the shareholder update that about 70 million of B2B partnerships is part of our second-half guidance. And most of it is already booked in the first quarter.

So in a way, it's create a larger sequential decline in the fourth quarter because of that. Very important for me to mention, and we have actually saw that also in the second quarter, the B2B partnerships is something that is part of our strategic initiatives. We believe that long-term, it's going to be obviously solid and generate a very steady cash flow for us.

But at the very beginning, it is lumpy, and this is something that we've seen in the second quarter and again, we just book a mega-deal in the third quarter, which make it even more lumpy.

But obviously, long-term, we believe that it will be much more solid. But they think that it's also another good example of how we drive growth, organic growth, through our new initiatives and it's already contributing in the third quarter. It's also -- will contribute in the fourth quarter. And I expect it to continue growing also next year.

[Joe Ferrell, Company Participant]

Great. And finally, in Q3, we give overall guidance. But can you give a little color on segment in Q3, to guide by segment?

[Lior Shemesh, Chief Financial Officer]

Yes. So what I can say that Business Solutions will actually [Indiscernible] between Q3 and Q2. We feel some impact from Q2 going into Q3, mainly in applications.

We see strong growth. We predict strong growth in payments in the fourth quarter due to seasonality. Very important to mention, payments in general still on track, and it's doing very well.

[Joe Ferrell, Company Participant]

Great, and then Q4. You mentioned that's where most of the uncertainty is. But we still provided guidance. So how did we come up with -- and think about it -- how do we think about the guidance for Q4 full-year here?

[Lior Shemesh, Chief Financial Officer]

So obviously uncertainty make it's harder to predict with self-precision, we usually able to do. So basically the way that we're looking at it in a two scenarios. The first one is capture the lower-end, if uncertainty continues to drive down.

The second is the high-end it seems actually improve from here. So I have no idea what makes more sense or what is going to happen. But this is why we provide the wider range to capture both of those options.

[Joe Ferrell, Company Participant]

So this is a true range of about comes for the remainder of the year that we're providing.

[Lior Shemesh, Chief Financial Officer]

It is a true range and most likely will be within the range.

[Joe Ferrell, Company Participant]

And then finally, we updated pre-cash flow. How is all of this changing our investment plans for the year?

[Lior Shemesh, Chief Financial Officer]

So actually none of -- nothing of the things that happened actually impact on our plans because we view that as something that is a temporary effect. We don't know how much time it will last, but at some point of time it's going to stop and we are building the Company for the long term.

It's not going to have any impact on our decision to continue our growth in investment. Obviously, except of marketing, which is -- by default, is doing based on the traffic, based on the number of users that join Wix, and it's based on DIY. But besides of that, we're not doing any other changes to our plan. And by the way, this is why you see that most of the effect of the decrease in our guidance reflected as part of our pre-cash flow.

[Joe Ferrell, Company Participant]

Okay, great. I think that they're all helpful items. Maggie, I'll turn it back over to you and I think we can take some questions from others on the phones.

[Maggie O'Donnell, Director of Investor Relations]

Great. Yeah. Operator, I think we're ready for questions now.

[Operator]

Certainly. [Operator Instructions] Your first question comes from the line of Ron Josey with JMP Securities.

[Ron Josey, JMP Securities]

Great, thanks for taking the question and appreciate this new format. I wanted to talk a little bit more, at just the top of funnel slowdown and good to hear all the commentary around that. But can you speak to just how the slowdown is affected more presence versus commerce differently.

I guess the question is, it seems like online activity for commerce continues to do well from your comments around Wix Payments, but talk to us more just about presence, and how that was put on hold. And then, a follow-up there. You know, Avishai, you're near.

In the letter, you talk just about demand was pulled forward due to higher conversions in 2020. Though, I think ARPU is at the highest ever and the 2020 cohorts, sewing better retention.

Just talk a little more about what do you mean by pull-forward or folks not up-selling or buying more products because they're starting out at a higher level or just any insights on that. So pull-forward and then presence versus commerce. Thank you.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

Of course, this is Avishai. I'll start with commerce. I think that what we're seeing is that -- the thing about presence -- so presence will be things like events or people doing something for a store or for? [Indiscernible] or for many other things that are not only based on online.

When people don't know if we're going to go back to lockdown who's in slowdown there. We also seen a bit of a slowdown in commerce, but not as strong, the gaps -- basically, we can see about 10% to 20% improvement in the percentage of commerce in Wix.

This is coming from tourism, the one that we just described and the other is that we continue to invest in commerce a lot and the products are getting better, so we have more customers with commerce. I still -- [Indiscernible] -- regards to your second question, while we saw and beating their first last year is that -- cohorts that we had in the past, right?

So we're converting faster than before. And a lot of it was that because of the pandemic made it more of an urgent thing for people to finish their online presence and to start working with that. So that is the fact that we've seen. And then we've seen that slowdown with -- along with new user registration.

[Ron Josey, JMP Securities]

Thank you.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

But I just want to point out that the cohorts conversion is still higher than 2019, so it's not as high as 2020, but we also see a significant improvement there compared to the past.

[Ron Josey, JMP Securities]

Thank you, Avishai, very helpful.

[Operator]

Your next question comes from the line of Elizabeth Elliot with Morgan Stanley.

[Elizabeth Elliot, Morgan Stanley]

Hi. Thank you so much. Just a quick question on the progress on the 10 billion GMV intake rates. I know you guys mentioned it's trending to your goal, but kind of any signposts that may guess, incrementally more confident on hitting those goals and can [Indiscernible] expansion to the new [Indiscernible] and adoption of Wix Payments as the default option would be helpful.

And then, kind of, any color on -- if the fact that about 40% of GPD is services-oriented. Does that have any incrementally hurt by some of the COVID variants? And then I have a follow-up. Thanks.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

A lot of questions. But I think yes, we are in line with the targets that we placed. We do see that GPV being where it was for service-oriented. So it's still in this area. And we are seeing the component beneficial to 20 obviously, right into that because people that head there and because we essentially stay pretty much the same as it used to be.

And we had a lot of commerce happening into 2020, but we have even more commerce in percentage coming this year. So, in terms of globally, we don't have Wix Payments yet in all the countries that we sell.

This is something that we're working very hard to close, so we can offer it in more countries. In the countries that we do offer it we're saying that adoption is better than before. And so higher than before. I think that answers all of your question or did I miss one?

[Elizabeth Elliot, Morgan Stanley]

That was helpful. Thank you. And then just a follow-up on the VIstaprint announcement. Can you walk us through how customers start adopting the Wix platform and any expectations on when those users from B2B partnerships start to move over.

Is there any delayed timing we should expect? And a higher level of the go-to-market strategy on finding new partners and how you think you can accelerate adding more partnerships to the model? Thank you.

[Joe Ferrell, Company Participant]

Lior, you want to take that?

[Lior Shemesh, Chief Financial Officer]

Sure. Yeah, I'll take this one. So if in terms of -- you asked about [Indiscernible] how do the customers – they [Indiscernible] customers started adopting Wix. Well, the goal is to have them in a case where -- when they -- just when they grow into Vistaprint funnel.

And after the initial and broadening of the Vistaprint products. We will find the best way places to offer them the week offering according to who they are, obviously will play with that. We'll segment that. But the goal is to learn that final and offer the put the [Indiscernible] in the best possible in their head.

Headwind, the best possible way. And another thing that's going to happen there is Vistaprint required 99 designs a while ago. And also part of the offering will be an offering which is very much agency-like doing for me for which the Wix platform will be the technology of product platforms that will empower. In terms of styling, then we're talking -- it's going to be soon, We're talking about early next year.

[Elizabeth Elliot, Morgan Stanley]

Great. Thank you.

[Operator]

Your next question comes from the line of Brad Erickson with RBC Capital.

[Brad Erickson, RBC Capital]

Hi, thanks, guys. I guess first just a little more clarity on the guidance and the uncertainty you're talking about. I think we can all understand and I guess appreciate what would happen if -- to the business if COVID totally flared up again and everyone kept their businesses online, but to the degree that things would have or do fully reopen, can you just clarify what would the acute effects of that be on your business? And then I have a follow-up. Thanks.

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

Yeah. I think that the -- I think that was a big part of what we give the guidance the way we did, we assumed that this is what's going to happen. And if you are familiar with our business, we have a lot of things like restaurants, hotels, events, and a lot of places like studios for yoga, fitness, beauty salons, and a lot of those things that were really hurt during the pandemic.

And we expected that once COVID would end. And we'll be -- well, at least a lot in a much better place, we would see that acceleration into those businesses, that first of all, it's a natural part of our business, but also was lacking in 2020 and we're going to be some catch-up.

What we ended up seeing is that it started to be that and then of course when it became obvious that we did not yet finished with pandemic, it actually went back to slow now. Is this answering your question?

[Brad Erickson, RBC Capital]

Yes, that's what we're getting at. And then just a follow-up on the B2B partnerships. You mentioned that another one push to the second half, I think this came up maybe last quarter as well. The question is what's your confidence level and everything closing in second half that you've contemplated in the guidance for the second half of the year? Thanks.

[Lior Shemesh, Chief Financial Officer]

As we mentioned, we have about, I think it will be the only time that we actually providing those numbers. I think that's -- the intention is to be like very transparent in terms of what we have in the second half of the year for our guidance and also to explain the lumpy nature of this business, at least at the very beginning.

What I can tell you, is that on the second half of the year, we have about 70 million as part of our guidance. We're all -- most of it's already been signed and booked. We do anticipate to close more deal in the second half of the year. But again, as I mentioned before, most of it already done.

[Brad Erickson, RBC Capital]

Got it. Thanks.

[Operator]

Your next question comes from the line of Ygal Arounian with Wedbush Securities.

[Ygal Arounian, Wedbush Securities]

Hey, good morning, guys. So I think one of the themes we've noticed is as we've gone through earnings is that some of the larger, more established customers are not necessarily hitting pause or [Indiscernible] of them are concerned just not hitting pause, so whether it feels the smooth smaller ones are.

Are you seeing that? Also, like in your -- you said that the agency and partner business is stronger than it's ever been. Is the top of the funnel there seeing the same kind of impact or are your agency partners at least doing a little bit better than maybe about the rest of the top of the funnel? And then, the second question, just go back to the comments on the pull-forward.

I just wanted to be clear. It sounds like you are saying, that the pull-forward was in conversion and not in new users. Is that the case? And are you -- why fully confident that it wasn't a pull-forward for the users?

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

Let me try and answer first question, right? So we do see a bit of a slowdown also with new projects coming to partners. And so they are experience similar effect to us. Although, not on the same scale, on a smaller scale. which makes sense.

The pull-forward -- what we call pull forward, is that, let's say that we have a cohort from 2017, right? So most of the users will convert in the first few months, and then we have this amount of users that join for free and they're playing with Wix, but that will convert over time.

And if you look at really [Indiscernible] you still see that users that joined Wix 5/7 years ago, S3 users and play with the product will suddenly convert. This is something that has been true for all of the life of the Company. Old cohorts are still converting.

And while we've seen in 2020 that the rate of that conversion went up, right? So why admitted that we felt as if we pulled and we made that conversion going from these in a few months or in a few years to faster conversion. And this is at least how we perceive that to be.

While we're still so just to, so if we look at 2028 was a high rate, but if we look at how it behaved -- compared -- how these behaving now compared to 1918 or the early part of '20, right? Then that effect is actually better. So we are somewhere in between what used to be in the past to where we were in 2020. And so it is still better than most of our history, but not as good of course, as when corona just -- the pandemic exploded.

[Ygal Arounian, Wedbush Securities]

Thanks. And just one more quick follow-up on the B2B stuff. We spent a lot of time on it last quarter? It felt like the way you guys talked about it was that it wasn't as important to part of the big picture or the plan for the business and it feels like you talked about it now.

It is and it's a big, much bigger part of the overall strategy. Is that, right read, are you stepping into that more? Is it a bigger part of your growth going forward than it's been in the past? Thanks, guys.

[Lior Shemesh, Chief Financial Officer]

Yeah. I think that -- it's really depends on -- first of all, on the nature of the partner. I think that you know Avishai and Nir mentioned before that's how -- it's all connect to the overall strategy of obviously serving more people, in a way also, acting as a huge agency for us.

Every customer is strategic for us, obviously. And I believe that in the past back a few quarter ago, it was not that big. We just started the business. I believe that as time progresses, we actually have seen that there is a really huge demand to the Wix brand from those partners.

So we do believe that regardless of what we've already signed up, for example, with VIstaprint and others, I believe that we are going to have more, but yeah, everything is strategic to us, this is why everything is important. And remember what we said before in the end of the day, what is important for us is to obviously, serve everyone to be a big part of the internet. And we are doing the right steps to be there and restructurings and those partnerships, very important milestone in our way.

[Ygal Arounian, Wedbush Securities]

Great. Thank you.

[Operator]

We have time for one last question. Apologies, your next question comes from Naseer Khan with Truist.

[Naseer Khan, Truist]

Thanks for taking/ Just a couple of questions from me. On the Vistaprint partnership and how you had expected to start letting in next year. With the migration of these existing customers over to Wix, is there a set-up that we might see and Vista's being subscriber-based once that happens? And then, in terms of the pull-forward, I wanted to just double-click on the historical mix that you guys used to disclose.

It seems like more than half of the net adds were from previous cohorts previously. We haven't obviously broken it out more recently, but how does that ratio look like the new [Indiscernible] coming from new customers versus the older cores?

[Avishai Abrahami, Chief Executive Officer & Co-Founder]

Yeah. The first question was about the migration from those partners? Once it's going to start, yeah, we're going to see many customers, many new Premium Subscription joining Wix. And obviously, it's going to increase the number of Creative Subscription that we have.

It is -- I think that it's too early for me to tell you that it's going to be massive in one quarter or two quarter. But it is significant. I mean, Nir mentioned that we're talking about 100,000 of subscriptions to be migrated to Wix.

So it's a good question if it's going to happen in one year or in six months, I think that it's too early to say. With regard to the second quarter, old cores are typically about 60% of the gross adds in a quarter and only 40% coming from new one, nothing has change in this dynamic in the second quarter is very similar.

[Naseer Khan, Truist]

I got it. Thank you.

[Operator]

Your final question comes from the line of Deepak Mathivanan with Wolfe Research.

[Deepak Mathivanan, Wolfe Research]

Hey guys, thanks for taking the questions just a couple of ones. First, can you give some color on how we should think about the Creative Subscription growth on the collection side in the second half, your guidance for total collections kind of implies de-selling to around 20% range in 4Q. I know they already provided some context on Business Solutions, but anything you can share on the greatest subscriptions will be great.

And then, the same question, just to follow up on the B2B side, how should we think about this going forward in '22 and '23 and so on. I mean, this 70 million is about like a five, six points of incremental growth this year. But do you expect this business to incrementally get bigger and bigger over the next few years? Thank you.

[Lior Shemesh, Chief Financial Officer]

Yeah. So I will start with the second question actually, because it has an impact [Indiscernible] -- or basically as it relates also to the first one. Look, we just started the business. So for example, we mentioned about the 70 million in the second half, which is mostly talking about new premiums. Now, think of [Indiscernible] way.

Those new premiums are going to be renewed. Most likely, we expect those partnerships to be successful for it's even can be more on top of that. So we just started in every big partnership has a bigger impacts on our collection results in a single quarter.

To answer your question, yes. I do believe that it's going to be much higher in terms of the dollar value in the next few yields, because we see the demand in the market to our brand. We've invested in our brand in technology for many, many years and this is part of the reason why the demand sold out.

I do believe that we're going to see more-and-more partnerships like that. And yes, this is business I expect that it will continue to grow, but as I mentioned before, at the very beginning, it is lumpy, so we need to take it into consideration. With regard to the first question that you asked about the Creative Subscription business? Yes.

As Business Solution is low -- are stable due to payments, most of the decrease that we had in our forecast actually is because of the Creative Subscription s. And this is due to the -- you know what, I wish I mentioned before about the uncertainty.

The uncertainty mostly affect the Creative Subscriptions as payments is continuing to grow because it's a compounding effect. So this is how we view things. Obviously, if we are going to see any improvements, first is going to be on Creative Subscriptions.

[Deepak Mathivanan, Wolfe Research]

Got it. Okay. That's very helpful. Thank you so much.

[Maggie O'Donnell, Director of Investor Relations]

Thanks everybody for joining us today that's all the time we have, have a great day.

[Operator]

This concludes today's conference call. You may now disconnect your lines at this time and have a wonderful day.

[Maggie O'Donnell, Director of Investor Relations]

Thank you so much, Angie.