Wix.com Ltd (NASDAQ: WIX) Q1 2020 Earnings Call Transcript

Wix.com Ltd (WIX) Q1 2020 earnings call dated May. 14, 2020

Corporate Participants:

Maggie O’Donnell — Investor Relations

Avishai Abrahami — Co-Founder and Chief Executive Officer

Nir Zohar — President and Chief Operating Officer

Lior Shemesh — Chief Financial Officer

Analysts:

Ken Wong — Guggenheim Securities — Analyst

Naved Khan — SunTrust Robinson Humphrey — Analyst

Brent Thill — Jefferies — Analyst

Ron Josey — JMP Securities — Analyst

Ygal Arounian — Wedbush Securities — Analyst

Deepak Mathivanan — Barclays — Analyst

Mark Zgutowicz — Rosenblatt Securities — Analyst

Jason Helfstein — Oppenheimer — Analyst

Sterling Auty — J.P. Morgan — Analyst

Jonathan Kees — Summit Insights Group — Analyst

Mark Mahaney — RBC Capital Markets — Analyst

Nat Schindler — Bank of America Merrill Lynch — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Wix’s Q1 2020 Earnings Call. [Operator Instructions]

I would now like to introduce your host for this conference call Miss. Maggie O’Donnell, you may begin.

Maggie O’Donnell — Investor Relations

Great, thank you. Good morning everyone and welcome to Wix’s first quarter 2020 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.

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, presentation slides, shareholder update and our Interactive Analyst Center on the Investor Relations section of our website, investors.wix.com.

Before I turn the call over to Avishai, I just want to say that we hope that everyone listening today is staying healthy and safe. We also appreciate you taking the time away from home schooling your kids and taking care of your loved ones to be on our call today. Avishai?

Avishai Abrahami — Co-Founder and Chief Executive Officer

Hi, Maggie. Thank you, Maggie, and hi everybody. As we go into this call, I want to say first that at Wix, right, when you look at this crisis, we are kind of in the sidelines of this crisis, we do not handle the medical part of it or the biology part of it right, but we do have the responsibility to help people in how they manage their businesses in this hard time. And one of the things that we’ve seen during this this is all small businesses are behaving in a time of crisis. I want to say that for me, personally, it was an amazing experience.

What we’ve seen is huge amount of innovation in the face of a crisis, where people that used to teach fitness, for example right, learn that they cannot do it in a physical location, a huge amount of them quickly adapted and changed to do it online or to do different ways of performing the same actions. And if we look at what happened in the last few months, I’ve got to say that to me it was amazing to see new innovation happen so quickly. We’ve seen grocery stores that move online. We’ve seen education institute that has been now using Wix to teach classes. And we have seen so many new things that is happening in this short amount of time that it is incredible.

Another thing I want to point our is that, the people working at Wix. So if you look at what happened to us in the last couple of months, the first thing happened that is that, the way we work changed. People moved to home, some of our call centers were closed and yet, the team in Wix has put so much effort in order to continue and support our customers.

I want to point, support agents, for example, one of the thing that happen there is that with about half of the work force there to handle twice the load like the calls and again they did it in the same amount of time and pretty much with the same satisfaction from resource from customers. This is due really to just people following themselves and understanding that this is a time they have to do so much more for our customer. At this critical time, I want to point out product for the client where people can very quickly innovate it and change things in the product in order to fit a universe where people don’t meet in person. So integration of Zoom for our scheduling and booking platform is just one example. And really as a CEO, looking at what happened during the last couple months, I want to say, I’m really proud to be part of Wix to see what our employees did by themselves and even more at our customer to see how resilient and innovative so many of them have been.

Obviously, if we look at the last couple of months, as I am sure all of you had a chance to go over and seen the PR, the numbers are great, growth has been incredible. I think the understanding of how important it is to have your business on the Internet is dramatically grown, and but I think that if you look on the long-term, I think that this effect is probably a lot more fundamental. So many people have been now locked at home for months having a chance to rethink about how the difference. And in many ways reestablished your business and learn about how they can do better by being online. And we’ve seen many cases of people moving traditional businesses that has been done in same ways for hundreds of years into a new format, which is completely online. And I think that this change in perception, change in behavior is something that is probably going to last, and in many ways, just accelerated what would have happen naturally over the next decade or two.

In addition, I want to say that when it comes to predicting how things going to behave it’s probably a bit say that, as nobody really knows if this is the end of the COVID-19 or we are going to have COVID-19 part two, nobody really knows if there is going to be COVID-20 coming at some point, nobody knows how long this will last. However, I do believe that we can look at what we’re seeing today and in a reliable way predict that this is probably the changes that we’ve seen is users behavior are probably going to last for a long time.

With this, I want to thank everybody for be here today and joining us on this call. And I will now go back to Maggie, so we can answer your questions.

Maggie O’Donnell — Investor Relations

Thanks so much, Avishai. Can we have the first question please, Operator.

Questions and Answers:

Operator

Our first question comes from Ken Wong with Guggenheim Securities.

Ken Wong — Guggenheim Securities — Analyst

Great. Thanks for taking my question and glad to see everyone is safe. Obviously, we’ve got a chance to look through the prepared remarks, and thank you for all the really good April details, but I guess we’d love to get a sense for how those strong April trends have progressed into May?

Avishai Abrahami — Co-Founder and Chief Executive Officer

Well, as I said before, currently we don’t see anything decreasing, and in fact, we’ve seen some positive changes and even stronger. I think that most of the world is still in the same spot right, where people are still in isolation. So I wouldn’t expect to see any change and I do believe that this change is probably going to take us much farther in May.

Ken Wong — Guggenheim Securities — Analyst

Great. And then, if maybe I could follow-up, you guys mentioned, you’ve got 2x the volume going to about half of the customer support agents, since some of your offshore ones had to be closed. Just wondering how that might impact the potential uplift that you guys were expecting to get from the customer care initiative? Any color there would be great. Thank you so much.

Nir Zohar — President and Chief Operating Officer

Hey, Ken. It’s Nir. So I think that first and foremost, we are today extremely happy that we made the investment last year into our care and into our call centers, because as Avishai mentioned, the disruption of the work from home, it took us — the more native call centers actually managed to move to work from home very seamlessly quickly, but our offshore ones it was harder and some of them are still missing a big chunks of the workforce, which basically means that we’re still at some point we were down 400, now we’re down to 200 agents. It’s a significant amount.

And also again as Avishai mentioned in his remarks, the huge boom in demand for our platform, obviously also resulted in a very big increase in the people who are pouring in and asking for our service. So I think we’re very happy we made that investment, because it allowed us to keep on service going even though we are stretching, people are working very hard to deliver that service, and we managed to do it. And we keep on trying to back fill the ranks and make sure that we keep on giving that great service. I think that naturally some of the process we are aiming for in terms of the new approach to how to do more personal oriented care is delayed. It has not stopped, we’re just moving slower. So my belief is that we still have not seen the potential upside value, we’ll probably see that just later than we originally expected.

Maggie O’Donnell — Investor Relations

Great. Thanks for your questions, Ken. Can we have the next question please.

Operator

Our next question comes from the Naved Khan with SunTrust.

Naved Khan — SunTrust Robinson Humphrey — Analyst

Yeah, thanks a lot. Two if I may. Can you just talk about the pause in the price increase that you’re doing on renewals? Is this something that can be resumed perhaps next year or what is going to be the deciding factor there? And then just in terms of the markets that are probably coming out of the lock downs, can you maybe share some trends out of those, are they’re seeing a pickup in growth or vice versa?

Nir Zohar — President and Chief Operating Officer

So for the first question about the price increase suspension, I think we mentioned that also in the — Avishai mentioned that in the shareholder letter from April. As we saw that first and foremost, it’s the right thing to do for our customers in a time when they are pressured, and you don’t go to your users and the customers and just raise prices on them. It just doesn’t really make any sense, so it is clear for us that it’s the right thing to do is to stop that. It had some small impact on Q1, and probably a bit of a larger impact on the Q2, a few millions of dollars. But you have to remember we initiated this in last May. So the time to resume it, most of it will only be in 2021, and we have enough time until then in order to consider whether you want to do it or not and exactly how. I couldn’t understand the second question, do you mind repeating it?

Naved Khan — SunTrust Robinson Humphrey — Analyst

Yeah, any early trends you can share from the markets that might be coming out of lock-downs, maybe pick up in demand or perhaps not? Just any color or commentary on that?

Avishai Abrahami — Co-Founder and Chief Executive Officer

Countries that have eased down at this stage from their isolation, we do not see a change in how they behave, which is one of the reason we are led to believe that this change is more fundamental there, and long-term than just temporary.

Naved Khan — SunTrust Robinson Humphrey — Analyst

That’s very helpful. Thank you.

Avishai Abrahami — Co-Founder and Chief Executive Officer

Of course.

Maggie O’Donnell — Investor Relations

Thanks, Naved. Can we have the next question, please?

Operator

Our next question comes from Brent Thill with Jefferies.

Brent Thill — Jefferies — Analyst

Thank you. Just given your comments about this is a more fundamental long-term change, I think many investors are scratching their head why given the strength you’re seeing, why you would remove the metrics in the back half? If you could just talk to the thought process around that, given it is a recurring model.

And number two, if you have any color just geographically, did you see even surge across the globe, or was there one region where you saw a surge and you haven’t seen that in other regions? Any color geographically would be helpful? Thank you.

Avishai Abrahami — Co-Founder and Chief Executive Officer

So I think that I’ll start with the second part of your question. As surprising as it is, it seems that we’ve seen the same the reaction globally. And of course, there was a deal over time offset, and you can trace that to corona. And it was more known to places that have the virus growing. But beyond that, the reaction was pretty much all around the planet.

Nir Zohar — President and Chief Operating Officer

In terms of the first half of the question, about the second half, I think what we’ve seen is — and as Avishai mentioned is I think a few times already on this call, we’ve seen a major shift and it happened extremely quickly. And even within that time frame, things have changed. The first two weeks of the crisis or the last two weeks of March, we actually saw declines in some cases. Our Q1 numbers would have probably been higher without those two weeks and the coronavirus in those two weeks. And then it flipped and reversed and we’ve seen a surge on all metrics in April.

So first of all, I think there is a lot of variables that it’s very, very hard to determine exactly what you work, how, and in what form of fashion. What will be the exact effect and changes, if any, when countries completely move out of lockdown [Phonetic] will it be a complete move or a partial move? Will there be more outbreaks, as Avishai said, there will be — whether we actually be mutation and an other virus, because people don’t move out at this stage. And also as we were probably facing a big financial crisis, what will the impact of that be? We are very confident that we are — much of you were geared up for this kind of crisis. Also, we are very well geared up for financial crisis. And again, our customers will need our products, will need our services in order to be successful in a shifty world like that. But all that being said, we saw that it is very hard for us to give the second half guidance at this point and we wanted to be responsible in what we give out.

Maggie O’Donnell — Investor Relations

Thanks for your question, Brent. Can we have the next question, please?

Operator

Our next question comes from Ron Josey with JMP.

Ron Josey — JMP Securities — Analyst

Great. Thanks for taking the question. I wanted to ask about the conversion to higher-priced packages. I think you — just diving a little deeper here with free to paid subscribers rising given more registered users are becoming paying users and these subscribers are signing up for these more expensive packages, I think you highlighted business unlimited in stores and others, can you just talk about these conversion rate improvements that you’re seeing at these higher levels? I think others in the industry aren’t necessarily seeing those. And just maybe any insights on these registered users, are these that are they are signing up for newer packages, are these registered users that have been on the site for — using Wix for a while, and they’re finally upgrading? Or these newer users? And I guess I’m talking about that 76% growth in April cohort collections.

And then just a little bit more details. Avishai, I think you said and Lior, I think you said, these trends continued into May. So any insights on just, Nir you just talked about guidance, but just any more insights on why not maybe provide that guidance, is it just things are getting better and better and it’s unclear or just perhaps the fear of things slowing down? Thank you.

Avishai Abrahami — Co-Founder and Chief Executive Officer

And so the second question is about the yearly guidance and I’m guessing, right. Okay monthly [Indecipherable] things. So I’ll answer the first one and conversion to business packages. I think that one of things that’s changed is that, think about it before corona time, a lot of the businesses would have the transaction done offline, right. So if you go and meet your personal trainer you could pay him on the spot. If you go and you want to — if you have a bicycle store, people will usually come to the store and buy, some online, but a lot of the stuff done offline, right. A lawyer would charge mostly offline for other services. Corona changed that. And in order to — so the emphasis on how easy it is for people to pay offline compared to online and that was a big change that we’ve seen, and a lot of businesses just want fully to be able to do everything online and the result that was that, they needed more way to transact with their customers. And this of course, affected existing customers and new customers in a very similar percentage. And I think that kind of explains that. And Nir, do you want to answer the second one?

Nir Zohar — President and Chief Operating Officer

Yes, Avishai. Just Ron, were you asking about Q2 guidance or the annual again, I wasn’t sure?

Ron Josey — JMP Securities — Analyst

Yeah, I guess the first question was around just like the premium model that Wix has. And then on the guidance, just what Brent was asking to a certain extent just trends are getting better in May is just the visibility in the business and is it more fear that this could turn around and this is temporary, but it seems like this is a longer-term event. So just trying to understand, unpacking it a little bit more. Thank you.

Nir Zohar — President and Chief Operating Officer

No, I would — yeah, I think it’s definitely — I don’t think that fear will be currently something that will define in a good manner. I think — listen, it’s clear that we have a very strong positive trend in the business. We’re not trying to — we’re clearly trying to describe that, and we just wanted to also share and explain the April numbers, but I think what you see from the April numbers in that massive change that is driven by very high demand and also very high intent of business which relates to what Avishai just told you in the first half of the question is that it’s clear for us that, it’s a very positive direction, but again, we are seeing so many moving parts that are not only moving positively, but are also changing in a relatively big manner. So I think that more than anything else. We just want to be prudent and not just throw numbers out, we want to be very, very clear about that.

Ron Josey — JMP Securities — Analyst

Got it. Thank you.

Maggie O’Donnell — Investor Relations

Thanks, Ron. Can we have the next question please.

Operator

Our next question comes from Ygal Arounian with Wedbush.

Ygal Arounian — Wedbush Securities — Analyst

Hey, good morning everyone. So my first question. I want to ask big picture and honing in on the three-point growth drivers that you talk about in the investor letter. On the one on providing tools for businesses to grow online. So a lot of what you noted in the letter, you’ve seen on top of the strength — in users and subscribers, you’ve seen significant step-ups in payments to send Wix Stores, so commerce in general is kind of moving up and feels like becoming a bigger part of the platform. I just wanted to — I wanted to get your thoughts on how you think about Wix’s positioning, how you’re setting yourself apart from peers may be whether it’s versus an e-commerce only platform or other web builders and how that helps you kind of capture greater share and what at least early on is looking to be like a — like a much larger market near term? And then maybe I’ll ask my follow-up after that.

Avishai Abrahami — Co-Founder and Chief Executive Officer

Well, I think that if you look — if I understand — I think the question is how — why do we see such growth? I think a lot of investment into product has created a very valuable platform and we always been leading right in the — for people to — there’s ability of people to design a website and then big emphasizing on design because really a lot of the core value of Wix, if you look at three or four years ago was the ability to really design almost anything you wanted, and then look professional and to present a business in a great way. And the last three years, what we’ve seen that we’ve added a lot, not just in order for you a presented business but also to manage it and make sale online and that is usually seeing this growth.

I think that today, our solution on scheduling and booking events, and of course restaurants, and e-commerce are at least as good is any other platform out there. When it comes to position in marketing and I think that what we found is that for us, it’s easier to continue and leverage the brand of Wix and build from that and continue to explain about that you can really design your and look and control your brand identity and create the visual in business that you want and then talk about the business there. And it allow us to distinguish ourselves because nobody else something that is even similar to that. I think this is how we see that at least for now. One of the things that we’ll even take it more to the extremes of course Editor X, where Editor X as far as the — I believe by far the strongest professional platform to lead the website.

And then of course, use any of the vertical offering that you need and top of that. And which would be anything again from events all the way for every — one vertical all the way to e-commerce. So I believe that the combination is creating a very unique offering. And if you look at our most businesses run and survive, if you have a store most of the time, what you do is that most stores behave very similarly, right, very few a lot of different needs and how they sell products. But then where you excel as a business is how you present your products to your customers. And I think this is also where Wix excel over everybody else.

Ygal Arounian — Wedbush Securities — Analyst

Thanks. So my next question was actually on Editor X and agencies, and that hasn’t gotten as much attention this quarter as it usually does. So I just want to you — in investor letter, you also noted that that’s still on track for the summer. Yeah, I want to ask how conversations with agencies have been going around that. It sounds like the timeline wasn’t pushed back at all. But given the current environment, maybe there is — there has been changes to the way you’re approaching agencies, I mean, are you seeing agencies owned business doing well and being receptive in this environment as well? Has COVID kind of accelerated and help that push to get Editor X out into the market as well or has it been neutral or more of a headwind? Thanks.

Nir Zohar — President and Chief Operating Officer

So, yeah — so I think when we look at — and I think it’s a great question in tying it up because this is also how we think about it internally. When we look at the partners and how COVID affected the partners. It’s actually a little bit similar to what we’ve seen all for our own business. So the first two weeks or so kind of mid-March till the beginning of April was slightly shaky. I think that people were trying to kind of get an understanding what’s going on, but then people understood the need and there was a boom of demand to move businesses online. The same thing actually also apply to our partners and their — demand for them is also boomed just as well. And naturally, we were — first of all, very happy for them and very happy to be — to we can facilitate and help them on their journey there. And also very happy that we had the team of account managers in New York that can walk them through and help them out. So that was I think another great investment or something that we’re very, very happy that we invested into last year and positioned us very well for this crisis.

Naturally, they see Editor X as a key component of what it can offer them. They have been using it. We’ve actually just moved Editor X last week to an open beta and we’re seeing tremendous results and the way I — the way I measure tremendous results is we’re looking at the websites that have been created on Editor X, and it’s mindblowing. It’s giving really everything that we hoped for. And then in some cases, things that we didn’t even imagine. So in that aspect, we’re getting great feedback and reviews. And also issues and bugs, which we are fixing, which relates to the timing of the release, but the release remains — and before in the summer, we are trying to expedite, but it also based and also fixing feedback and getting and make sure that incorporate everything that the people need in order to make it the best product for their usage.

Maggie O’Donnell — Investor Relations

Thanks for your question. Ygal. Can we have the next question, please?

Operator

Our next question comes from Deepak Mathivanan with Barclays.

Deepak Mathivanan — Barclays — Analyst

Hey, guys. Thanks for taking the question. Can you provide some color on the payments adoption, you noted that Wix Payments merchants — new Wix Payments merchants grew over 100% month on month. What is the penetration right now among new merchants? And are you seeing some migration from other payment methods into Wix at this time as well?

And then second question, Nir, Can you talk about the marketing efficiency side. You noted that the gap is stable, but given the tailwinds on demand and also conversion on the platform. Are you reinvesting back to — into the platform to sort of grow faster or should we expect stronger leverage in 2Q?

Nir Zohar — President and Chief Operating Officer

So regarding the first question about Wix Payments, obviously, we’re seeing a very high adoption. You have to remember this is — this is relatively young product, we launched it last year. We are also already seeing about 30% of the total GMV running through Wix Payments, down from basically zero a year ago. And if you look at the overall adoption rates for the new users in the countries where we supported which is most of them. It’s above 80%. So we are very, very happy with the adoption. And the penetration and naturally, the demand that is coming into the door now which is very business-oriented and transactional into orientation as well is also a great place to have this product. It also relates to what I wish I said before about how we were kind of having all of these building blocks in our strategy to be in a place where we can support any kind of business online. And obviously payment is a big part of that as well.

To your second part of the question about the marketing investment, so, generally, the efficiency is very similar to what we’ve done in the past, slightly better in some cases, but generally, we’re investing according to the same formula we always have. The way we think about it is that we are — well, our goal is always to manage growth and achieve faster growth — the fastest growth that we can. So when we see this amazing organic demand for our business — for Wix and for our product, and we basically invested into that demand in order to get even better results. And since you’ve seen that clearly in what we shared in April and the goal is to keep on doing that according to the same efficiency.

Maggie O’Donnell — Investor Relations

All right. Thanks for your question. Deepak. Can we have the next question, please?

Operator

Our next question comes from Mark Zgutowicz with Rosenblatt Securities.

Mark Zgutowicz — Rosenblatt Securities — Analyst

Thank you. Just a couple of quick ones. Just curious what’s been the primary driver of conversion. There is — you mentioned Editor X and potentially other products. Just wanted to get a sense of, if you could quantify perhaps what conversion is trending and what may be driving that? And then if you could just quantify your exposure to e-commerce, maybe just simply percentage of Wix sites that are accepting payment maybe pre-COVID and how you see that perhaps trending post this — or in this COVID environment? Thank you.

Avishai Abrahami — Co-Founder and Chief Executive Officer

So, of course, I think that the primary reason for conversion on Wix is always one of two things. As your own domain and which would mean that you have www your name dot com, right? So that’s one of the primary reason for upgrading to a premium package. The other one is when you want to do transactions in e-commerce or similar things on a site, then again, you have to be a premium user. And I think that this did not change during the last few months. What did change right is that — I want to say again, like just to be clear, Editor X is still not — it’s still in beta that’s not part of what discussing with you. What did change is that last year we spent a huge amount of effort on improving our business offerings, e-commerce included, and I think that this, as we said, we’re probably be very effective this year and combined with Corvid has created the increase that you are seeing today.

And as for exposure to e-commerce, I don’t think we’ve ever discussed the exact number of a website that had transaction capabilities. We did however mentioned, the total amount of verticals in Wix, right, and the number currently is — I’ll just check here, I want to be sure that they know the actual number in Corvid. The number is now over 44%. So it’s pretty much in — we’ve seen a higher percentage going up and — and I think that. Another thing to emphasize here is that when we speak about transaction website and businesses that are selling online, you have to remember that we do more than just e-commerce, right. We also have scheduling and booking, we have restaurants, we have events, we have apparels. So it’s more than just the standard the shopping cart.

Maggie O’Donnell — Investor Relations

Great. Thanks for your question, Mark. Can we have the next question, please?

Operator

Our next question comes from Jason Helfstein with Oppenheimer.

Jason Helfstein — Oppenheimer — Analyst

Thanks. I want to ask a bit about conversion. So after about three quarters of declining conversion premium as a percent of registered users. It would appear to — obviously third quarter would be higher. Maybe just give us some thoughts how you’re thinking about kind of conversion, post-COVID?

And then second, with you lapping the price increases starting in the third quarter. Yeah, I would imagine, most of that impacts Creative Solutions, what’s the best way to think about kind of the drivers between ARPU and subscriber growth like starting in the third quarter to the extent you can provide some color. Thanks.

Avishai Abrahami — Co-Founder and Chief Executive Officer

So I think just when it comes to conversion. Obviously, now we can see an increase. I think that this increase is the derive from — and as you said COVID, but also from a lot of the work that we’ve been doing in the last couple of years. So I do suspect that what — the part that is the result of the work we’ve been doing on the product over the last couple of years will stay with us.

As for COVID, it’s very hard to know, because I don’t know how much of the changes that we’ve seen. We stay in people’s minds and that is what drives, right the conversion change. So it’s very hard to predict how things will change after COVID. I guess, I said before and I strongly believe that we — this is not a temporary change, a lot of what we’re seeing now, part of it — a lot of which will stay and we live as forward. And so, April, why the 76% higher conversion at higher prices and — I don’t know really what to predict — that’s going to go to 60%, 50% of it was before or it might go to 90% higher than it was before. So it’s very hard for us to predict. We can talk about what we’re seeing now. And again, I do believe that what we’re seeing now is a massive change in our — people perceive and think about their businesses. And Nir, you want to take the second part.

Nir Zohar — President and Chief Operating Officer

So with regard to the, to the second question, I think that there are like two separate things over here, the growth of subscriptions and ARPU. Now obviously, products as always is key to our increasing conversion and this is what we’ve always seen. I mean we talk about the Editor X that we are going to launch soon and obviously, it’s going to have an impact on conversion and we hope that this will be the case. And besides that, many other features and products that will keep on releasing. I mean that was have always been the case except of the big demand that we see right now for what is happening in the market.

With regard to the ARPU, I think that we clearly see right now, the demand to our product, people need all kinds of business applications, people need to use Ascend, people need to use all kind of features and products to head and to manage their business, communicate with their customers. So obviously, we think that it will continue the same goal for the payment solution and other stuff that we are going to present in the future. So obviously, we see the change in mix in the trend of people actually using more features and more products and obviously that is going to have a significant impact on ARPU also in the future.

Maggie O’Donnell — Investor Relations

Thanks for your question, Jason. Can we have the next question, please?

Operator

Our next question comes from Sterling Auty with JPMorgan.

Sterling Auty — J.P. Morgan — Analyst

Yeah, thanks. Hi guys. One question and one follow-up. In terms of the business solutions, you talked about the three big contributors, G-Suite, Payments and Ascend. Can you give us a sense of the rank order of just what are the — which one is the biggest contributor and what kind of growth rates you’re seeing out of those big three.

Nir Zohar — President and Chief Operating Officer

Yeah, so G-Suite right now is the biggest item, and obviously it really depends, Sterling. I think that Payments is growing much faster. So I think that — I think that the picture is going to change in a few quarters or few years from now obviously, we think that Payment is going to be larger in the future, but right now as I mentioned, G-Suite, Ascend is growing quite significantly, especially right now in light of what is happening. And we do believe that this trend is going to continue. Also in the future.

Sterling Auty — J.P. Morgan — Analyst

That makes sense. And then one quick follow-up. Can you characterize the promotional activity that you used during March and April through the crisis?

Avishai Abrahami — Co-Founder and Chief Executive Officer

I think that promotional in terms of advertisement. Sterling, could you clarify the question a little bit by promotional what you mean?

Operator

His line is actually left the queue.

Avishai Abrahami — Co-Founder and Chief Executive Officer

So I — okay. Hopefully we’re answering the right — the right question. If you mean by how many sales and — sales campaigns we’ve done. I think it was slightly above the regular but we are trying to support this huge demand that we saw. So it made those expense to add them mostly I think in April in somewhat in March.

Nir Zohar — President and Chief Operating Officer

I think that one of the benefits, right, that we know is if you look at some of our peers and a lot of them started to give ways for businesses to establish them in a three-way, right, because demand in businesses that during the Corona are suffering not to have extra payment in order to start working on the platform to give those businesses opportunity, right, to have a — and way to start establishing themselves online. For us, it was less of an issue, we always have the free offering and which is a great free offering. So we didn’t really need to make those changes. And so most of what we did in terms of that was just continue with the standard model that is always around businesses in a risk-free way to test a platform build their online offering and then upgrade when they feel comfortable doing that. So we didn’t need to do so many promotions.

Maggie O’Donnell — Investor Relations

Great, thanks for your question, Sterling. Can we have the next question, please? Our next question comes from Jonathan Kees with Summit Insights Group. Jonathan, your line is open, you can ask your question.

Jonathan Kees — Summit Insights Group — Analyst

Hi. Can you hear me now?

Avishai Abrahami — Co-Founder and Chief Executive Officer

Yes.

Jonathan Kees — Summit Insights Group — Analyst

Okay, great. Super. Thanks for taking my questions. And sorry about the mute button there initially. Wanted to ask in terms of the sales teams for the agencies, you kind of talked about how they were helpful with the account managers being there, once the demand spiked up. Just wondering, usually the sales agencies you have that, doing a lot of a direct contact. They’ve been performing obviously, there’s a drop off you’re talking about with the partnerships — with the partners in March and in April. They’re performing to expectations or are they exceeding it? And also wanted to ask about Corvid saw the statistics, great statistics that you had for April. Just wondering, I didn’t see anything statistical for Corvid. Is there anything you can share for that in terms of how that’s been performing, other than what was quantitatively — qualitatively discussed in the update? Thanks.

Avishai Abrahami — Co-Founder and Chief Executive Officer

I will start with the Corvid first, and — because that’s just — Corvid has acted exactly the same as everything else on Wix, which is every parameter that we know how to measure has — went up dramatically. And in terms of the industry team, I think that — when we look at the larger deals, of course, with the enterprise customers, it was — it is delayed, but if you look at the smaller deals, it actually on — what we expected, and in many ways actually accelerated. And I think to say that is maybe very well in that is that as far as we know — every agency using Wix during this time is sold out, meaning they all have reached their limits of what they can supply and our sales team is working very hard to support them for this level of demand.

Jonathan Kees — Summit Insights Group — Analyst

Great. Appreciate that.

Maggie O’Donnell — Investor Relations

Thanks, Jonathan. Can we have the next question, please?

Operator

Our next question comes from Mark Mahaney with RBC.

Mark Mahaney — RBC Capital Markets — Analyst

Hey, thanks. Two questions. Somebody already asked about marketing efficiencies. And I think your response was that you’re seeing relatively similar levels of marketing efficiency. And I guess, I’ll just push you on that a little bit. My guess is that you actually have seen improved marketing efficiencies. I think overall marketing costs advertising costs have come down, it’s allowed you to probably lean in and you’re clearly getting great conversion customer responses. So my guess is that, the question is how sustainable is it, but I know ad rates have come down. So my guess is that you’re seeing elevated potential — elevated TROIs on this cohort. So just comment on that please.

And then the second point, when you talk about these transformation factors, and I think that’s the expression used. One of the things I found really interesting was this — I did at the global rise in unemployment rates and the need for individuals to turn to the Internet to find a source of income. I’ve worried about the second wave impact of COVID, all the dislocation amongst small businesses and how that would be a negative drag in the back half of the year. But you make me think now that actually maybe even the second — a potentially second tailwind. So I guess the question is do you have — do you have any great data or what you’ve seen so far in terms of how many of your new customers are people who have been displaced and are actually are looking to kind of launch a new career or setting or — trying to generate a new stream of revenue. I’d — I think that would be a very interesting twist or turn here that I don’t think most people would have thought about I hadn’t. Thank you very much.

Nir Zohar — President and Chief Operating Officer

So Mark, with regard to the first question about the efficiency of marketing, no — first of all, I think that is important to understand that we actually managed to increase significantly the marketing, while being efficient as before and even better and you are right about it. In some cases, we were better, in some cases, we were the same. But I think that the most important thing that it was a significant increase with more or less the same efficiency. And obviously, we are super happy about it, because it obviously help us to meet the high demand that we also flow in the market. Obviously, we hope that it will continue.

Lior Shemesh — Chief Financial Officer

Hey, Mark. It’s Lior. Regarding the second question about the second wave. So I think one of the things we’ve always found that it’s there is just kind of common misperception thinking about the small business as the units instead of thinking about the person behind the small business or the unit — and the business owners to people, who are the entrepreneurs, the people who initiate the business.

And I think that if there is one thing that is super clear from the endless amount of examples we see now is that these people will really — will do everything in their power to find a solution to stay afloat. And indeed some of those, some of those shifts and some of those displacements you talk about, some of them are around expanding the current business that already had some online activity and now just expand on at the expense of the offline side. In some cases, it’s in offline business that didn’t have that before and now have evolved it. And again, I think in some cases, it’s easier. So Avish had an example before about fitness trainers, it’s relatively obvious. So for some people, their business — their inherit business it’s — it’s harder to go online. So if you’re — and if you’re hairdresser, then moving online is literally almost impossible. And in this case, obviously, we need to find something else that we need to do.

From our experience now and from our — actually also experience from 10 years ago in the previous financial crisis, when people charter like that and unemployment rates actually go up, which means that they can switch from being any business owner to being deployed very easily. They have to restart, sometimes, it’s something which is adjacent to what they’ve done before, and sometimes, it’s something completely new. I think that at this stage when we are looking at what people are doing. We see all of it, and we also — it’s not only looking at website, we’ve talked with a lot of our customers, a lot of our users to hear what you’re doing. To your point about giving something more deeper analytical and statistical, that’s actually a very interesting idea and we’ll actually try and see if we can garner more of it and maybe we list something around it, because I think everyone will find it extremely interesting.

Avishai Abrahami — Co-Founder and Chief Executive Officer

But I wanted to put some color on it, again, not statistically valid but from conversations I heard which I always do with people joining Wix. I see that a lot of them are coming from the trend that you described. The people that lost their job somewhere and they wanted to restart and do something. And the easiest way to start something with pretty much no money is to do something online. So we are seeing — again conversation I had with users that is a very big part of what is in that I see now.

Maggie O’Donnell — Investor Relations

Great. Thanks for your questions, Mark. Operator, I think we have time for just one last question.

Operator

Our last question comes from Nat Schindler with Bank of America Merrill Lynch.

Nat Schindler — Bank of America Merrill Lynch — Analyst

Yes. Great. Thank you, guys. Two quick questions on — one, can you just — there is a significant disconnect between your guidance for 2Q and your April numbers. And I know that a lot of that has to do with how much of your individual quarter collections in revenue comes from the cohort that came in that quarter. Is there any way you could walk us through the math there that shows why you’re seeing such huge numbers in April — the April cohort versus a substantial, but still relatively modest acceleration in total collections and revenue from what you saw in Q1. Secondly, have you seen anything in the month we did — in April that is showing you that any change in the willingness of consumer — of customers to go for higher price call it maybe annual plans versus monthly. Has there been anything that suggests that people are more worried about their money?

Nir Zohar — President and Chief Operating Officer

So I will answer the first question. With regard to the guidance for the second quarter, so basically, when we look at the increase of our numbers for the second quarter compared to what we had in our plan previously when we provided the guidance for the full year back in February. So there is like three items that we need to take into consideration. The first increase was because of increase in conversion from cohort that we had previous to April. And obviously, we saw a very nice increase over there.

The second one obviously for newcomers. We mentioned before that we managed to our to significantly increase our marketing investment. And we also started to see huge demand in April as a result of what is going on in the market. So that is the reason why — the second reason why we increased the guidance for the second quarter, but we need to remember that a big portion of when we look at the cohort, when we acquire cohort, so actually a big upside of that is going forward. In different words, I think that you need to think about it this way that every call that we managed to increase due to this demand or to the increased marketing investment with the same efficiency, has a very big impact on the growth also in the future, not just on the second quarter. So basically because of our model, It will continue and continue and this is what so nice about it.

The third factor that we had in the second quarter is obviously some stuff that didn’t go well for example like event, but and – or the increased prices that we stopped. So but taking everything into consideration, the second quarter guidance represent about 70% growth on a year-over-year basis. So I think that this is really, really tremendous.

Lior Shemesh — Chief Financial Officer

Hey, Nat. It’s Lior. Regarding the second question about willingness to buy annual versus monthly and whether that has changed. If anything there is a slight increase towards the annuals actually. And I think that generally, there is no real indication that people are spending less. You can see clearly that our users the one who are converting are choosing more of the high-priced business packages than before. And I have to — I think it makes sense. This is not casual spending. This is not — this is something that people deem as mission-critical because it is, mission-critical. They are trying to build their business online, which is going to be the thing that delivers income for them and it allows them to sustain themselves and their families. So I think that in that aspect, we see an increase not a decrease.

Maggie O’Donnell — Investor Relations

Excellent. Great. Thanks for your question, Nat. And thank you, everybody, again for joining today, and please stay healthy and safe. Have a good day.

Operator

[Operator Closing Remarks]