Thank you, and good morning, everyone. Welcome to Wix's Q3 2020 Earnings Call. Joining me today to discuss our results are Avishai Abrahami, our CEO and Co Founder Nir Zohar, our President and COO and Lior Shemesh, CFO. During the 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. I would also like to mention that we will be holding a virtual management update in early December, so please stay tuned for more information within the next few weeks.
With that, I will now turn the call over to Abhishek.
Hi, everybody, and thank you so much for joining us today. I'm sure as you can see, Q3 results are fantastic, right? Growth has continued from Q2 and with a very strong momentum. We are very happy about the quarterly results. And I want to point out a couple of things in addition to that.
So first of all, we got a chance now to see how places that came out or almost came out of corona reacted. And we see that it seems that this trend of growth has stayed even when the pandemic has slowed down, which is something that we contribute to the fact that it's probably a different way of thinking from people and different behavior that is was created where people were at home for us to think about how they do things or use the Internet to order. I know that from personal experience, my parents now order things online. They never did that before. And I think this is a trend that we're seeing as something that is very strong and growing.
Beyond the phenomenal growth that we had in Wix, I want to on the general population of Wix, I want to point out also 2 specific trends that we're seeing. Our e commerce growth rate has more than doubled the average growth on Wix, which is saying that even though we've grown so much faster, e commerce has actually doubled, more than doubled that. The same is also true for agencies and partners that also the collection from them is more than double the growth rate on Wix. We look at both of those as very important indicators. And obviously and we're very happy because we invested a lot to develop them in the last couple of years.
During the pandemic, another thing that we can mention is that we show that our ability to release and invest in products and not slow down, support has been doing an amazing job to be able to carry through this strong demand of our services and our products. So really fantastic quarter and I wanted to take this opportunity again to thank everybody at Wix for their incredible effort to help our customers during this hard time and to say to all of our customers, amazing to see what you guys have done and how many incredible businesses are now flourishing on Wix. Thank you.
Great. Thanks, Abhishek. Can we now turn to the Q and A, please?
Thank you. Our first question comes from the line of Ron Josey with JMP Securities. Your line is now open.
Great. Thanks for taking the question and great numbers guys. Nir, Abhishek, I wanted to ask a little more about the subscriber base, just seeing the accelerating growth that we're seeing, not only overall, but for higher priced packages like stores and you talked about Avishai e commerce growth and then agencies and partners. And so can you give us a little more insight on maybe the type of business that's coming to Wix? Do you think this is newer businesses?
We're all seeing the rise in business formations here or just existing businesses that are realizing that they have to come online? And with that knowledge of your sub base, how are you ramping marketing and really targeting continued growth on the marketing side? So if you can talk about your marketing approach as you know who's joining the business. Congrats again.
Thank you so much. So I think that we're seeing both. We're seeing a lot of brick and mortar businesses that are moving online. And obviously, during the pandemic, this was a crucial thing because a lot of them had to close the physical store. And this is kind of a global phenomena.
But we also see a lot of businesses rebuilding their online presence. So they used to have some kind of a store and decided that they need to do something better. So that's another very common thing that we're seeing now. And the last part is, as you said, there's an incredible number of new businesses that are being formed now, people that have to find a new way to support themselves. And so that's the last part that we're seeing.
So I would say on all fronts, we're seeing massive growth. And I think that really, I think this pandemic actually pushed people, right, to do something that they always knew that they need to do, right? We need, oh, I need to move online. I need to have a store. I need to do that, right?
And then it but it was always a thing that you do next month, right, or tomorrow. And now it's something that you do today. And the fact that you take time to see the term and playing with Wix and understand how easy it is that they can do so much of their business, I think that doubt was an incredible thing. So because now they know what they can do and a lot of them are just doing that. So that's pretty much the growth.
In terms of marketing, I think that no, we continue to see exactly what we've been doing all the time, which is investing where we see that the marketing is efficient. And a lot of it's pretty much in line with our current always strategy, which is measuring time to return marketing investment. And obviously, as we gain more on the subscription in the 1st couple of months, we can actually go to a higher absolute number, right, because you divide the absolute cost of marketing with subscription value. So we see that, and we're very happy about it. We believe that a lot of it will continue post pandemic again because consumers and businesses' behavior has dramatically changed.
That's great. Thank you, guys.
Thanks, Ron. Can we have the next question, please?
Thank you. Our next question comes from the line of Yigal Arounian with Wedbush Securities. Your line is now open.
Hey, good morning guys. Thanks for taking the question. So I wanted to dig in a little bit on what you guys called out in investor letter as elevation of brand perception among the agencies. Just ask
if you could expand on that
a little bit more. Obviously, Editor X is rolling out and you have the new e commerce solution. Maybe just highlight what it is among the conversations you're having with agency partners that's getting you to be at that place and how much more room you think you have to go before you're at the brand perception that you want from agency partners? And then the second question on collections, the guidance range was a little bit wider than it usually is. And you obviously had really strong conversion this quarter.
You talked about negative churn, cohorts from the 1st and second quarter, the cohort value kind of accelerating. As we think about that range and some of the unknown environments still, what are the things that you see getting you to the low end versus the high end and some of kind of like the mix and what we might see over the next couple of quarters in that area?
Of course. So what we're seeing is that the conversation and if you look at the forums or communities in the of agency, we can see that the conversation has changed, right? In the past, we've got do it yourself, and now we can see a lot of them are discussing that as Wix is today, is probably the best choice also for them. And anything that has to do with the brand, it takes time for it to completely mature. But I think the driving force behind it are a lot of products improvements from SEO to performance to things that allow them to manage multiple accounts and manage teams.
So this is a lot of what we've been doing there and a lot of it is working extremely well. Editorex is starting, right? So what I'm talking about now is before even the effect of Editor X, and this is extremely important. For our future, I think, to have this amazing answer to. And I'll give you one example.
I think that one of the discussions that we're seeing a lot now is that it's about security, right? The traditional tool that agencies would use is WordPress. And obviously, with WordPress, it's extremely hard to maintain a high level of security and for your sites because most of the hacks you hear about are on WordPress, right? And I don't know if you ever even heard about 1 weak site that was hacked, right? It's extremely hard to hack into a weak site.
And they do have to do nothing for that. So usually, this is something they're spending tons of energy on doing, right? And we wish they just have to do nothing in order to get a better solution. This is also true for many other things that they have. And by enabling them to be more productive and actually provide a much better product for their customers, right?
We're seeing that the brand perception is changing and a lot of them are not using moving to use Wix. We also have, of course, the account management where we work with them and help them understand the platform and what they can do. So this is another contributing factor.
Hey, Igal, it's Nir. I'll take the second question about Q4. And I think obviously Q4 ties up directly to what we've seen in Q3, right? Even as Avishai mentioned, even as we've seen economies going into some form of normalcy and going back to regular economy behavior, we still see have seen a tremendous amount of growth in Q3, which is carrying over to Q4, which is also why we are giving a strong guidance that we believe reflects a lot of growth. That being said, regularly Q4 has some effect of seasonality.
It's really hard to say how that seasonality will behave this year since some of that seasonality is attached to consumer behavior, which is quite different this year. Some of it is attached to the fact that people are going on vacation, which is hard to believe that many people will be able to go on proper vacation this year. In light of that, we prefer to have a wider range than what we usually have at this part of the year. But obviously, obviously, it's still very it's very, very it reflects a very high level of growth, 35% year over year growth in Q4, which we're very happy about. And obviously, it also sets us up very well into 2021.
Thank you. Our next question comes from the line of Mark Mahaney with RBC. Your line is now open.
Okay, thanks. Two questions, please. You've leaned in heavily into marketing this year, marketing intensity as as a percentage of collections of revenue is up. Could you just talk about some of the learnings you've had from that? And is that something that you think is a sustainable shift?
You want to run the business with greater marketing intensity now than you've done in the past? And then secondly, just spend some more time on e commerce solutions that you've rolled out in the middle of this year. You announced a series of new products and features. I think that's probably one of the single biggest new growth areas from the COVID crisis, the growth of online commerce. Do you feel like your offering now is full and complete?
Are there particular areas that you still want to build out? And are there particular e commerce solutions, Wix Stores that you think have really resonated really well? So just talk about how you've been able to take advantage of what's clearly been an inflection in online commerce demand? Thanks a lot.
Hey, Mark. This is Leo. I will take the first question about the marketing. As you guys probably know, we invest in marketing based on the TRY. And this is like the only KPI that based on that we actually determine how much money to invest marketing.
You're absolutely right. We increased marketing investments quite significantly over the last couple of quarters. I believe that it will continue in Q4. And we've talked about the new state of mind, meaning that the growth looks pretty much stable. So I assume that the marketing as in term of its investment will continue to be higher.
That said, and when you look at it in terms of percentage out of revenue and collection, remember that as usual in a subscription model, you first invest in marketing, then you see the fruits of the top line. So I assume that once revenue and also collection will catch up with that, then we are going to be back to where we were before about the marketing as a percentage of collection. Nothing has changed. But in the short term, you can see some noises around it, but it's coming from a really, really exciting and good because we actually are able to increase marketing significantly with the same efficiency, by the way, sometimes even better efficiency and we are truly excited about it.
Hey, Mark, this is Abhishek. You're asking about e commerce. So in the last couple of years, we heavily invested into making our e commerce product great. And we've joined the last year with everything like drop shipping, multi channel, installment, multi currency, shipping and to manage sale tax and a bunch of other features. I think that today we have one of the better e commerce solutions in the world.
And obviously, it was something that was highly needed in COVID, and we saw that the shopping cart business is growing fantastically well. I want to mention that there are some places where we are unique, right, solutions for restaurants, solutions for events, solutions for booking, scheduling. We're pretty much the only platform in the world at Tata. So there we are definitely the best. And I think that the combination of all of them is credit is unique offering where we're able to go and really help so many businesses during the COVID crisis.
And this, again, with all the automatic marketing and it looks like a send and really being helpful for our customers to learn and rapidly adapt to the changes that they needed to have in order to support the business in a world that is completely different. But I do believe that we entered the pandemic with a really strong e commerce offering, and now we're at a place that it's not only grown more than doubled, right, faster than having on Wix. It's also really one of the better products in the market.
Thank you. Our next question comes from the line of Jason Helfstein with Oppenheimer. Your line is now open.
Hey, guys. Thanks. So two questions. 1, if we look at business solutions, collections and revenue, it has been slowing over the past few quarters or basically coming from the Q1, while creative subscription revenue and collections has accelerated. Maybe how do we think about that?
I mean creative subscription is more top of funnel. Is that the leading indicator? If we look, Business Solutions has increased as a percent of if you look at like as a percent of creative subscription. So just how are you thinking about kind of one being the funnel for the other, the leading indicator, then we might think about what that means for the next several quarters? And then just to follow-up on Mark's question, Leo, you did say that marketing would return to a historical percent of revenues at some point, maybe be a little more specific, I mean, next year, how are you thinking about kind of marketing investment versus margin growth?
Thanks.
Sure. I will start with the first question about the business solution. As you know, we started the business solution was not for last year, it was not a full year, meaning that it's all started in the Q2. So basically, when you look at it on a year over year basis, so obviously, right now, the year over year basis has impact by the fact that we already had a payment solution a year ago. Remember that business solution is still growing higher than subscription, but sometimes when you look at it on a year over year basis, it might be misleading because of the large numbers.
I do believe that if we take, for example, next quarter, I do believe that Business Solution is going to be a higher portion of the overall top and we will see that already next quarter and it will continue, meaning that the same phenomena that we've seen in the last few quarters where business solution is growing will continue into 2021. And I believe that it will be slowly but surely increased portion of our total collection and revenue. But bear in mind that payments on a year over year basis was fluctuated by the fact that I need to take into consideration where we actually started at. So it's relatively a young product, and I believe that most of the growth, by the way, of next year on business solution are going to be from payments. So this is with regard to that.
With regard to the sales and marketing, so Jason, it is hard to tell exactly your specific quarter, where it's going to happen and let me tell you why, because it's already happened. But when you look at collection, so you understand that it's a combination of many codes, certainly the new one, but also the historic one. Actually, when we start the year, about 85% of our collection coming from historical cohort. So the impact of the new cohort is very small. If you remember last quarter, we mentioned that marketing increased by 90% on a year over year basis, but actually the value of the cohort also increased by 90%, meaning that those new cohorts are going to have, as time passes, going to have more and more impact certainly on 2021 2022.
And then you can start to see that marketing as a percentage of collection will be improving obviously. But we will always but we will always invest marketing based on TRY because the way that we look at marketing and measure marketing is not out of the overall collection, but out of the TRY for the specific cohort and because this is like the true value of how much we're investing and how much money we're generating.
Thank you. Our next question comes from the line of Ken Wong with Guggenheim. Your line is now open.
Great. My first question, also digging into payments, we just love to get a sense of maybe how you're seeing the behavior of your installed base react to the payments product. I know a lot of the benefits have come from the new cohorts coming in at 80% attach rate. Any benefits on the installed base? Anything you guys are doing to move those guys onto your product?
And then second, on the customer support initiative, it seems like it's grown to be something much larger and perhaps more strategic than any of us anticipated. Maybe can you give us a sense for kind of how that strategy might have evolved in the last 6 months post COVID? Thank you.
Ken, it's Nir. I'll start with the first question about payment. So you're absolutely right. I mean, the wide adoption so far has been of the new users adapting payment. And we've seen great levels of really great levels of attachment and adoption there.
I mean more of more than 30% of all of the sales transactions that's happening on the system are already under Wix Payments with, I would say, over if you look at the attachment of the new customers, more than 80% in the eligible countries are onboarding Wix Payments. So we see that as a great success. I think that in terms of the existing user base, we already managed to somewhat convert some of them to be under the Wix Payments hood and we're going to continue doing so in the next year to come. That would be another potential for growth there. And the second thing is you have to remember that we're also seeing these stores that just joined earlier throughout the year starting to mature.
As they mature, the volume on the stores is increasing and obviously that contribution
Wix Payments also is increasing. So I
think that definitely Wix Payments is going to be a big success story for us in the next few years and they will definitely have to share more and more about it. In terms of support, I think this is definitely has been a critical year for us to invest into care. And I think we are all so thankful that we did all this investment back in 2019 and continue into 2020, because it's paid off big time this year. We would not have had a chance to give proper customer care to such a huge demand and such a peak in growth had we not invested originally into the care. So I think that our strategy continues as we wanted it to be, which is giving better and better care, going more proactively and talking more to our users, helping them convert, helping them move along the journey, build a full business, understanding that it will contribute to, 1st of all, satisfaction and happiness, which directly impact our brand.
It impacts the conversion to premium. It impacts adoption of higher priced services. It increases ARPU. And obviously, definitely, it reduces the churn and increases loyalty over time. So we are very happy with the returns we've seen.
As you see that there is a very big demand to our services and the growth continues, obviously we'll continue to invest into those areas of care in the next year.
Thank you. Our next question comes from the line of Sterling Auty with JPMorgan. Your line is now open.
Thanks guys. So I'm just curious, I want to
make sure I understand. There was the comment in collections talking about the partners and I don't know if it's agencies as well, but just partners are prepaying the collections or that's what's counted in collections. You give us an idea of what the contribution from that structure is? And when you say you count it, are you actually getting the cash upfront as well?
Sterling, this is Lior. You're probably talking about channels, not about partners. So you're right, about channels, usually the structure of the deal is with commitments. By the way, it's not that significant yet, a few 1,000,000 of dollars, I assume, for this year, but it's not that significant. So basically, we get a commitment for payments or for number of premiums, for example, for a year, perhaps even more than that.
So this commitment is part of the deferred revenue and therefore it's increased collection. Sometimes we get the money up front, sometimes we get the money as installments. It really depends on the nature of the agreement. But revenue, obviously, it's recognized over time where they actually use the service and provide the service to their customers. I think that what is interesting about the channel is that a few years ago, those guys, like carriers, hosting companies used to use white label, not so good platform to provide to their customers.
They understood that they are losing their customers because of really bad service. Today, it started when they actually approached us to use Wix in order to make sure that they get a better service to their customers and to keep their brand strong. This is what happened with NTT, with Vodafone and a few other examples that we already had. And they feel really, really good about it. And they actually benefit from 2 places.
The first one is obviously keeping the brand strong by the fact that they are providing the best platform in the world. And second, they make sure that their business are more successful and obviously they benefit in indirect way from that fact.
Thank you. Our next question comes from the line of Deepak Mathivanan with Barclays. Your line is now open.
Hey, guys. Thanks for taking the question. Two quick ones. So first, can you talk about what you're seeing in the early days from Editor X monetization? How has attach rate progressed?
What's your expectations? And who are you seeing as the early buyers of the product? Anything you can share on customer profile would be great. And then second question, Lior, can you provide some additional color on the Q4 guidance? What are you seeing in terms of net customer adds growth in October November so far?
Is the ROI for customer acquisition on the paid channels relatively stable? 4th quarter, obviously, with the U. S. Elections is a little bit of a a volatile quarter. So just curious on what you're seeing right now?
Hi, Deepak. This is Abhishek. So Editor X, while the product is better, right, we are still not pushing it aggressively. But we're seeing already that it's been adopted very quickly, In fact, faster than we dramatically faster than I expected it place by agencies. Most of the people that use Editor X will be the more of the higher brands because they have time to actually work a lot on a project and fine tune it to the exact level that they need.
So we're seeing that it's been mostly adopted by it's been adopted a lot by the higher agencies brands. And so we're very excited about it. Of course, it's a professional tool, right? For me, myself, I still struggle to finish a website with Editor X because it's not that easy. But when I do manage to do it, I really enjoy the fact that I could do exactly what I envision in my mind.
And the combination of COVID allowing you to program into the platform and the databases and the CMS makes it a unique offering. Nothing else in the world as far as I know at this stage is even close to be similar to that. So it's a really broad offering of functionality that for now seems to be achieving exactly the thing that we hoped for, which is going after the agencies, partners, the one who are developers that build more of a higher brand products, really fantastic results.
With regard to the net subs during the Q4, so look, obviously, we are expecting that because demand is still very high. So we expect that net sales will significantly increase on a year over year basis. I don't see any differences of what we've experienced in the second and the third quarter. I think that it's important to understand that about like what is going to happen in the Q4. For example, there can be a situation where actually people are not going to go out for vacation because of what is happening.
So it can be even stronger than what we actually expect. So obviously, it's going to be a very strong 4th quarter. I think that it's also indicated as part of our guidance for the 4th quarter on the high range of about 35% on a year over year basis, very similar to the Q3, which actually has a higher growth than the Q2. So we feel very excited about it. With regard to the marketing, again, no matter what channel we are using, we are always do it based on the TRY, no exception.
The sales growth for the Q4, the sales growth of what we've already seen in October is going very well with the same efficiency. And I assume that we are going to invest more in the Q4 as we've done in the second and the third quarter about the marketing
expense. Thank you. Our next question comes from the line of Josh Beck with KeyBanc Capital Markets. Your line is now open.
Thanks for taking the question. I wanted to follow-up on partners. Certainly, it seems like you have some really good momentum. Collections have doubled there, adding new agencies. So I'm just kind of curious, the conversation that you're having with these partners, are you benefiting because the category awareness has gone up because the way the world has changed in the last 6 months?
Is it maybe more specifically around Wix's brand capabilities? Would love a little more color on that topic.
Of course. I think that when you look at if I understand the question, it's like what happened with the partner? Why is this becoming so successful? I think that the so this is obviously not a pandemic conversation, right? Those people do what they do.
They've been doing that before the pandemic and they'll continue to do it after the pandemic. So this is something that changed in how we are being perceived and how we are being used. A lot of it is coming because of functionality on Wix that have changed, right? We built specific solution for partners to manage multiple accounts on which to manage teams that work with, to share feedback with the customers. We did a lot on SEO, right, which is probably the best product for search and optimization.
So Google can read you high in the best way today is on Wix. We did a huge amount of performance. We did a lot in how you can customize your designs, how you can delegate that to customers. So we spent in the last couple of years a lot of effort making our product really fit an agency that develops websites for other people or e commerce solution for other people. And this is something that it takes time to realize, wow, I can do all of this now in Wix.
And I think that this is most of what we're seeing now. And so it's not really related so much to the pandemic. It's more related to things like archive management towards them, our support toward them, the community that we have, the ability that we give them to do so many things and how efficient they are toward their customers, the release of COVID, our coding platform. All those things support growth that we see there. And so it's pretty much product maturity.
Really helpful. And Lior, maybe a follow-up for you. The collections growth has really outpaced the revenue growth over the last couple of quarters. Certainly, that's better than the previous years. So I'm just wondering as you go into 2021, is your visibility improving with this dynamic?
Of course, because at the end of the day, you know collection is transforming to revenue. And what we actually see when the gap between collection and revenue increases, it means that we are experiencing higher growth, because usually revenue is based on the growth of the previous few quarters. So this is exactly what is happening. I think that it's great because we spoke in the past that also this quarter about the value of the court. The value of our newest court has increased significantly.
For example, last quarter, we indicated that the value of the court has increased by 90%. So think about it. This is all going to be transformed into collection and revenue in the next few years. The overall value of the cohort has increased to $9,200,000,000 up 43% on a year over year basis. This is something that provides me a really, really good understanding of what to expect from our business going forward.
So this is truly exciting.
Thank you. Our next question comes from the line of Naved Khan with Truist. Your line is now open.
Yes, hi. Thanks a lot. I got two questions. Maybe talk a little bit about the customer care initiative. And I think previously you talked about at least a 3x ROI.
How do we think about it now? Is it still the same or higher? And how should we think about gross margin impact for next year because of the investment that you're making today? And then secondarily, maybe talk a little bit about the increased conversions you have seen from the last two cohorts you brought in. How much of an improvement is that versus what you had seen historically?
Hey, I'll Shri, it's Nir. I'll take Customer Care and then can pass it on to Lior to talk about the gross margin. So as I mentioned before about customer care, obviously, as I said before, we're very happy we made that investment. And indeed, we've seen that interacting with our customers in-depth, having them on the phone, talking to them, understanding not only what is their current problem that they're calling in with, but actually helping them having the agents fully understand what is the goal of the customer, where he's trying to take his business, then handholding them and helping them along the way is something that we discovered has a big impact on conversion, up to 3x conversion in some of the cases of the people we speak with. So naturally, yes, we want to engage more, not less.
And this is a big part and big chunk of what we set up to do. So it's not only about having a larger force of people who can answer the phones or take on chat, but it's also about a different approach that is much more engaged with the customers. That approach is definitely proven to be effective, very effective in the past year since we started testing it and we will keep on ramping it up. Keep in mind that we are ramping it up while also dealing with growth of 50% to 70% of the volume, which is an amazing achievement in my mind. And I think the team there is doing a tremendous job.
We definitely want to keep on investing in it because we see that great ROI that comes into that investment. In terms of gross margin, Dror, you want to take it?
Yes. With regard to the gross margin, I think that the best way to look at it is to try to understand exactly what is the contribution of support, right? And when we look at the P and L, obviously, so we increased the investments in support, and it's all recognized now, while the benefits of top line have yet to be seen. I think that one of the best way to understand it that if you look at the latest cohorts, since we actually started to heavily invest in support and you look at the gross margin of the new cohorts, it's much more than 80%. Why?
Because you actually see that very clearly, the fact that we have managed to support and increase the value of those core just from the fact that we have those people to make it happen because otherwise we couldn't get, we couldn't reach to this value of cost without this support. So I assume that when you look at the gross margin of the overall basis, I tend to look at it as kind of short term noises. Yes, we invest the money right now. We are going to benefit big time in the future. I assume that on the creative subscription, I still going to see us about, as I mentioned before, about 80% gross margin, short, medium term, also long term.
It might fluctuate a little bit based on when we exactly invest the money for the support team, but nothing has changed in terms of the model.
Hey, David, it's Nir again. In terms of the heightened conversion, so first of all, you're correct. We are probably at the highest conversion we had in the past 2 years. And there's a few drivers to it. First of all, if I circle back to the beginning of your question, then absolutely good customer care is helping and is a good contribution to conversion.
But there's also those many product improvements that we keep on doing. Abhishe, I mentioned before all the new introductions we did to Wix Stores and the improvements we've done around the support the product functionality and support for partners. But it's not only that, it's everywhere around the product. It's in our editors, it's on ADI, it's on our online scheduling product, Wix Bookings, the restaurant vertical, the musicians, the artists, the photographers, pretty much across the board. And all of these improvements obviously always improve conversion.
And then I would say that the last part is that new state of mind that we're actually seeing where there's much higher demand and higher intent. People are coming and it's much clearer to them what they need to achieve. And by the way, it affects the new course and the newcomers, but you also see that within the existing course, okay, a much higher intent coming in and finishing a website and transitioning a business to be an online business. So I think all of these together obviously are what's driving this amazing result in terms of conversion.
Thank you. Our next question comes from the line of Brent Thill with Jefferies. Your line is now open.
Hamishan, good to see the e
commerce business double. I guess if you tie economics to this, is there a sense of the average uplift you're seeing from a customer that was basic to e comm? I know there's different plans, but are you seeing a 20%, 30%, forty percent uplift in pricing on those? As they move to e commerce, can you give us a sense of what you've seen so far on the economics of an e com customer?
Yes. So obviously, the e commerce packages are more expensive. And you kind of like touched the right numbers. But the biggest, I think, difference, right, is in the payment, because we have which payment. And this is something that we're seeing that it enhance, right, the value over time as businesses are becoming more successful.
And so that's another side of it. Of course, you also have to take account that it's more popular to have a send and it's more popular to have Facebook automatic Facebook marketing on top of this product, right? So those customers are probably at least should be valued at twice the average value of a Wix customers, the normal Wix customers. But and we're going to continue to monitor because and then we'll see how it develops, right? A lot of it is new.
A lot of it is influenced by the pandemic, the kind of like metrics that we're watching. So but it's definitely those are more value customers.
Great color. Thank you.
Of course.
Thank you. Our next question comes from the line of Mark Zekawetz with Rosenblatt Securities. Your line is now open.
Hi, thank you. I was just hoping you could maybe comment on the uniqueness or what happened with the 3Q quarter conversion. You mentioned it was near 2 year high levels. And I'm just curious how that might be representative in 4Q and how that may carry into '21? Does that imply net add growth in 'twenty one?
Or is that unlikely given the comparison? Thanks.
Yes. We do believe that increasing conversion is sustainable, right? We talk a lot of time about the new set of mind, but it's got to do also with the fact with people are coming with more intent And we have more products. Vishay mentioned all the different products, for example, that we actually launched on our e commerce solution. So this is like this is the major contribution to the increasing conversion.
So this is all going
to stay with us.
It's not going to disappear. So we obviously assume that also the Q4 and certainly next year, it's going to benefit from this increasing conversion. And as you know, actually we know from the historical numbers of weeks, we always get some kind of an upside to our numbers as a result of even more increased conversion as a result of launching new products and so on. Obviously, this is something that I think that will continue also the next few years. But again, the conversion as we know right now is part of the 4th quarter guidance.
If conversion will be higher, it's going to be an upside to our model.
Great. Sarah, I think we have time for just one last question.
Thank you. Our last question comes from the line of Matt Pfau with William Blair. Your line is now open.
Hey, guys. Thanks for taking my question and congrats on the strong results. Just wanted to sort of understand, if you look at the strong premium subscriber additions over the past two quarters, is there any significant shift from a geographic perspective that you've seen versus the several quarters prior to that? And then anything that surprised you, either from a country or a geographic basis as you've seen the results come in over the past few quarters? Thanks.
So I think we've seen that we've definitely seen I would say we've seen all geographies grow, but probably a little bit more strength coming out of the U. S, which is, I think, great testament to us taking market share, which obviously we are very happy about. But overall, there's a lot of global strength. Our product is global. We operate in every 190 countries across the globe.
Europe has been very strong. Latin America has been accelerating over the last few quarters. So I would say generally, it's an overall growth, It's not only in one geography with the tendency of the U. S. To be a little bit stronger than others.
We always spend a lot of time and effort and also increasing our international expansion, whether it's adding languages or solving local solutions that are different from one market to the other. It can go into marketing, it can go into product development all across. But we've definitely seen a huge growth globally this year.
Does the really strong business formation in the third quarter that the U. S. Saw, does that factor into that acceleration that you're seeing in the U. S. As well?
What do you mean by Business formation. Business formation. What do you mean by business formation?
Yes. So in the Q3, the U. S. Saw really strong growth, I think about 80% year over year in terms of applications tax IDs for new businesses. And so obviously a lot of new businesses getting started in the U.
S. And the Q3. So I was just wondering if that sort of factored into the results you saw in the Q3 at all?
Well, I think that the answer is A, yes, absolutely. And B, I think we all see that it's in your state of mind and thinking online as a primary and critical part of any new business.
Thanks, guys.
Thank you. This concludes today's question and answer session. I would now like to turn the call back to Matt Giordano for closing remarks.
Great. Thanks everybody for joining us today. Have a great day. Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.