Wix plans to lay off 20% of its workforce, around 1,000 employees, to reduce costs and fund its commitment to artificial intelligence. The company is seeking to boost Base44 and respond to investor pressure, although it maintains a prominent position among the most widely used CMS on the Internet.
Being one of the most popular CMS on the Internet and posting solid growth (from 3.7 to 4.3% year on year according to W3Techs data) will not prevent it, according to Calcalist Tech, from having to lay off a large number of employees. Despite everything, this move is not unusual, since many technology companies are carrying out major layoffs to fund their commitment to artificial intelligence (AI).
The main reason behind this major round of layoffs is not only the commitment to AI. The company has also faced very poor financial results in the first quarter of the year and its shares have fallen over the last 5 years from $300 to just $50. Much of the profits now come from the recently acquired company Base44, which enables code creation with AI, but this business requires substantial investment in marketing and generates significant computing costs that will be covered with the money saved through the layoffs.
Although there have been rounds of layoffs before and they have also been related to AI, previously they affected only the customer service department. But those layoffs are nothing compared with the round now being prepared, which will be the largest in its history.
The cuts will now affect the entire company. Calcalist Tech says the company currently has 5,277 employees and that more than 60% worked in Israel, Wix’s country of origin.
Previously, the company launched a $1.6 billion share buyback program to try to regain investor confidence, reducing its cash to around $900 million, but everything indicates that this has not been enough to convince them. They believe the company faces high risks and doubts precisely because of AI based “vibe coding”, which is affecting the credibility of today’s CMS. They fear that the market will use AI to generate its own platforms for creating websites and online stores outside traditional CMS.
According to W3Techs data compiled by CMS MAG, the market share figures are not bad for Wix. It is one of the leading CMS on the Internet. In fact, it is in third place and continues to gain market share while others, such as open source CMS, are losing it. Despite this, the stock keeps falling mainly due to the risks associated with AI. Curiously, the layoffs will serve precisely to implement more AI in the CMS and promote Base44.
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* Original article written in Spanish, translated with AI and reviewed in English by Jorge Mediavilla.
