Wix’s Base44 nears US$250m ARR as its gross margin climbs to 58% from near zero

01Why a vibe-coding product starts near zero

Vibe coding, as Wix describes it, is building an application by describing it in plain language.⁶ Every prompt runs through a large language model, and Wix calls compute and inference spend “the largest cost driver in AI-native businesses”.³ Inference is the computing consumed each time a model answers. While Base44 ran on models bought from outside, that bill grew with use, and Wix says the product entered the year with a gross margin near zero.³ Wix names no supplier in these documents.

So it built its own, as it had already done for Wix Harmony.⁴ Base 1, Base44’s proprietary model, launched with the second-quarter results, and the third quarter was its first full one.²³ Sending prompts to Base 1 instead of a bought-in model is what moved the margin; Wix also credits other work on inference costs.² It does not make the bill disappear. Wix’s research costs include “increased GPU investments” to train its models, and it expects a working-capital hit of about US$10m in the fourth quarter from prepaying for GPUs “required to run our models for the next couple of years”.¹² In our reading, paying for chips in advance replaces part of a bill that used to rise with each prompt. Across the whole company, non-GAAP gross margin was 69%, up two points from the quarter before, which Wix puts down mainly to that full quarter of Base 1.²

02What the 58% counts

The figure covers paying users only. Wix says gross margin “takes into account only AI costs incurred by paid users as well as hosting, customer care and overhead expenses”. AI costs for free users, who are Base44’s sales funnel, go elsewhere: they sit in sales and marketing.² Those fell more than 50% from the previous quarter, which Wix attributes mainly to routing free users’ prompts through Base 1.² The wider measure Wix gives is total AI cost for free and paid users as a share of Base44 bookings, now expected below 30% in the second half, against an earlier expectation of 30% to 40%.²

03Where the saving went

Wix said in August that it would put the AI savings into Base44’s marketing, and it did. Non-GAAP sales and marketing rose 46% to US$185.5m, 33% of revenue; non-GAAP operating margin fell to 12% from 18%.¹²³ Free cash flow excluding restructuring was US$99.6m, or 17% of revenue, against US$159.4m a year earlier.¹ The full-year guide has moved from the low- to mid-20s in March, on a slightly different definition, to high teens in August to about 16% now.¹³⁵

The rest of Wix is growing more slowly. Bookings rose 11% to US$573.0m and revenue 13% to US$570.2m, with total recurring revenue up 15% to US$2.02bn; Base44 is about 12% of that (our arithmetic, its figure being a later date). Wix expects fourth-quarter bookings to lag revenue again on softness in its Partners business, the agencies and resellers who build for clients.¹

Nir Zohar, co-founder and president, became co-chief executive alongside Avishai Abrahami, effective immediately; Zohar takes business strategy, go-to-market and operations and Abrahami takes product, AI and technology.¹ Wix’s shares closed at US$69.75 on 9 November, down 8.3%, the day before the results.⁷ What to watch: the fourth-quarter margin against the 60% Wix has promised, and whether marketing spend falls once the margin is there.