Wix.com ( NASDAQ:WIX ), an international leader in no-code website development, has seen its stock price cut in half since reaching an all-time high in February. Though the company revised its full-year revenue and cash flow guidance slightly down during the second quarter, the ongoing sell-off could serve as a great potential buying opportunity for investors. Let’s see why. Image source: Getty Images. Wix’s business model at a glance

Unlike the popular e-commerce website-building platform Shopify , Wix has opted to take a horizontal approach to growing its share of the web development market. Not to take anything away from Shopify, but the company clearly has a narrow focus on serving e-commerce customers. Wix, on the other hand, has much broader ambitions.

With Wix, entrepreneurs and businesses of almost any type can utilize the company’s intuitive drag-and-drop platform to easily create the internet presence they want. Whether the user is a photographer, fitness influencer, event planner, restaurant operator , or just about any other profession, Wix has a solution to fit their needs. To aid in this website-building process, Wix offers more than 900 designer templates as a starting point for its customers.

Once one of Wix’s more than 210 million registered users completes the website design phase, they can select the URL and subscription duration they want in order to officially publish the site. And if the users experience any hiccups along the way, Wix offers 24/7 customer support to help smooth out any potential problems. More than web design

Undoubtedly, Wix’s core subscription platform looks quite attractive on its own. In the last 12 months, revenue from “Creative Subscriptions” amounted to $879 million — up 25% year over year. But there’s much more going on under the hood.

Through several acquisitions and the internal development of additional features, Wix is becoming a more complete digital operating system for its business customers. Whether it’s scheduling, email marketing, online ordering, loyalty programs, or much more, the company has a suite of backend tools that businesses can utilize to bolster their operations. Wix records any money collected from these features as “Business Solutions Revenue,” and this segment has seen rapid adoption too. In fact, over the last 12 months, business solutions revenue has grown 86%.

But it’s not just the pure revenue growth from this category that should excite investors. These additional features also help lock in customers as the company reported a net revenue retention rate of 113% in 2020. As Wix continues expanding its business-related tools, the customers that make use of them should have a harder time switching to competing services. Growth at a reasonable price

Currently, Wix trades at an enterprise value (market cap minus net cash) of $10.2 billion. That looks like a reasonable price considering management expects to receive $15 billion in collections from its existing customers over the next 10 years. As further context, Wix has an enterprise value to expected current year revenue multiple of 8.1 times.

Though it’s difficult to value Wix based on any cash flow or earnings metrics given that it continues to invest heavily back into the business, Wix’s digital model and low costs required to retain customers should bode well for profitability as the company scales. In fact, Wix has shown glimpses of its profit potential in the past.

In 2019, Wix generated an operating cash flow margin of roughly 20%. However, over the last year and a half, Wix peeled back on collecting profits to pour money into coping with the increased demand spurred on by the pandemic. If investors need added confirmation that its recent stock decline presents a good long-term opportunity, Wix itself bought back $200 million of shares at a 20% premium to the current price over the past few months. 10 stocks we like better than Wix.com

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