Thank you. 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. 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 updates, 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 Avishai.
Hi, everybody, 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. First of all, we got a chance now to see how places that came out or almost came out of Corvid now reacted. 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 was created when people were at home, forced to think about how to 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. 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 on Wix.com on the general population of Wix.com, I want to point out also two specific trends that we're seeing. Our e-commerce growth rate has more than doubled the average growth on Wix.com, 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 has more than doubled the growth rate on Wix.com. We look at both of those as very important indicators, and we're very happy because we invested a lot to develop them in the last couple of years.
And during the pandemic, another thing that we can mention is that we show that our ability to release and invest in products have not slowed down. Support has been doing an amazing job to be able to carry for this strong demand of our services and our products. Really, a fantastic quarter, and I want to take this opportunity again to thank everybody at Wix.com 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 away . Thank you.
Great. Thanks, Avishai. Can we now turn to the Q&A, please?
Thank you. To ask a question during the session, you will need to press star then one on your telephone. We ask that you limit yourself to one question and one follow-up. Our first question comes from the line of Ron Josey with JMP Securities. Your line is now open.
Thanks for taking the question, and great numbers, guys. Nir, Avishai, 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. Can you give us a little more insight on maybe the type of business that's coming to wix.com? Do you think this is newer businesses, just we're all seeing the rise in business formations here, or just existing businesses that are realizing that they have to come online? With that knowledge of your sub base, how are you ramping marketing and really targeting continued growth on the marketing side? If you can talk about your marketing approach as you know who's joining the business. Thanks, guys. Congrats again.
Well, thank you so much. 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. This is a global phenomenon. But we also see a lot of businesses rebuilding their online presence. They used to have some kind of a store, and they decided that they need to do something better. That's another very common thing that we're seeing now. 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. That's the last part that we're seeing. I would say on all fronts, we're seeing massive growth.
And I think that really, I think this pandemic actually pushed people to do something that they always knew that they need to do. I need to move on. I need to have a store. I need to do that, right, and then its, but i t was always the thing that you do next month or tomorrow. And now it's something that you do today. And the fact that people are trying to see the tool and playing with Wix.com and understand how easy it is, that they can do so much of their business, I think that that was an incredible thing. Because now they know what they can do, and a lot of them are just doing that. So that's pretty much the deal.
And thats the system.
In terms of marketing, I think that 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 first couple of months, we can actually go to a higher absolute number, right? Because you divide the absolute cost of marketing with the subscription value. 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 right. Thank you, guys.
Thanks, Ronald. Can we have the next question, please?
Thank you. Our next question comes from the line of Ygal Arounian with Wedbush Securities. Your line is now open.
Hey. Good morning, guys. Thanks for taking the question. I wanted to dig in a little bit on what you guys called out in investor letter as an elevation of brand perception among the agencies, and just ask if you could expand on that a little bit more. Obviously, Editor X is rolling out and you have the 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. The second question on collections, the guidance range was a little bit wider than it usually is. You obviously had really strong conversion this quarter.
You talked about negative churn, cohorts from the first and Q2 , 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 the mix in what we might see over the next couple of quarters in that area? Thanks.
Of course.So what we're seeing is that the conversation, and if you look at the forums or communities of agencies, we can see that the conversation has changed, right? In the past Wix.com was do it yourself, and now we can see a lot of them are discussing that as Wix.com is today is probably the best choice also for them. Anything that has to do with the brand, it takes time for it to completely mature. I think the driving force behind it are a lot of product improvements, from SEO to performance to things that allow them to manage multiple accounts and manage teams. This is a lot of what we've been doing there, and a lot of it is working extremely well. Editor X is starting, right?
What I'm talking about now is before even the effect of Editor X, this is extremely important for our future, I think, to have this amazing extra tool. 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. Obviously with WordPress, it's extremely hard to maintain a high level of security for your sites because most of the hacks you hear about are on WordPress, right? I don't know if you ever even heard about one Wix.com site that was hacked, right? It's extremely hard to hack into a Wix.com site, they have to do nothing for that. Usually this is something they're spending tons of energy on doing, right?
And with Wix.com, they just have to do nothing in order to get a better solution. This is also true for many other things that they have. By enabling them to be more productive and actually provide a much better product for their customers. We're seeing that the brand perception is changing, and a lot of them is now moving to use Wix.com. We also have, of course, the account management, where we work with them and help them understand the platform and what they can do. This is another contributing factor.
Hey, Ygal, it's Nir. I'll take the second question about Q4. I think obviously Q4 ties up directly to what we've seen in Q3, right? As Avishai mentioned, even as we've seen economies going into some form of normalcy and going back to regular economy behavior, we still 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 vacations this year. In light of that, we prefer to have a wider range than what you usually have at this part of the year. But obviously, it still reflects a very high level of growth, 35% year-over-year growth in Q4, which we're very happy about, and obviously 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 a percentage of collections or revenue is up. Could you just talk about some of the learnings you've had from that? Is that something that you think is a sustainable shift? Do you want to run the business with greater marketing intensity now than you've done in the past? Secondly, just spend some more time on the 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?
Are there particular e-commerce solutions, Wix Stores, that you think have really resonated really well? 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 Lior. I'll take the first question about the marketing. As you guys probably know, we invest in marketing based on the ROI, and this is the only KPI that based on that, we actually determine how much money to invest in 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 talked about the new state of mind, meaning that the growth looks pretty much stable. I assume that the marketing, as in terms of its investment, will continue to be higher. That said, 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.
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. In the short term, you can see some noises around it, but it's coming from a 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 Avishai. You're asking about e-commerce. In the last couple of years, we heavily invested into making our e-commerce product great. And we enjoyed the last few years we've added things like drop shipping with this channel is telling multi-channel, installment, multi-currency, shipping, and to manage sales 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. Solutions for restaurants, solutions for events, solutions for booking, scheduling. We're pretty much the only platform in the world that does that. There we are definitely the best.
And I think that the combination of all of the strategies, unique offerings, 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 tools like Ascend, and really being helpful for our customers, and to learn and rapidly adapt to the changes that they needed to have in order to support their 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, it's faster than anything on wix.com. 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. Two questions. One, if we look at business solutions, collections, and revenue, it has been slowing over the past few quarters, or basically slowing from Q1 , while creative subscription revenue and collections has accelerated. Maybe how do we think about that? The greatest subscriptions 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 the percent of greatest prescriptions. So just, how are you thinking about one being the funnel to 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, Lior, you did say that marketing would return to a historical % of revenues at some point. Maybe be a little more specific, next year? How are you thinking about marketing investment versus margin growth? Thanks.
Sure. I will start with the first question about the business solution. If you know, we started the business solution, with not full last year, with not full year. We started in the Q2 . Basically, when you look at it on a year-over-year basis, 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 misleading because of the large numbers. I do believe that if we take, for example, next quarter, I do believe the business solution is going to be a higher portion of the overall top.
We would see that already next quarter, and it will continue, meaning that the same phenomena that we've seen in the last few quarter, where business solution is growing, will continue into 2021, and I believe that it will be a slowly but surely, increased portion of our total collection and revenue. Bear in mind that payments, on a year-over-year basis, it was fluctuated by the fact that need to take into consideration where we actually started at. 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, Jason, it is hard to tell exactly your specific quarter and when it's going to happen, and let me tell you why, because it's already happened.
But when you look at collection, you understand that it's a combination of many cohorts, certainly the new one, but also the historic one. Actually, when we start the year, about 85% of our collection coming from historical cohort. 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 is passed, more and more impact, certainly on 2021 and 2022. Then you can start to see that marketing as a percentage of collection will be improving, obviously.
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. Because this is like the true value of how much we're investing and how much money we are generating.
Thank you. Our next question come from the line of Ken Wong with Guggenheim. Your line is now open.
Great. My first question, also digging into payments, would just love to get a sense of maybe how you're seeing the behavior of your install 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 install base? Anything you guys are doing to move those guys onto your product? 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 how that strategy might have evolved in the last six months post-Covid? Thank you.
Hey, Ken. It's Lior. I'll start with the first question about payments. So you're absolutely right. The wide adoption so far has been of the new users adapting payments. We've seen really great levels of attachment and adoption there. More than 30% of all of the sales transactions that's happening on the system are already under Wix.com Payments, with, I would say, if you look at the attachment of the new customers, more than 80% in the eligible countries are onboarding Wix.com Payments. 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.com Payments hood, and we're going to continue doing so in the next year to come. That will be another potential for growth there.
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 to Wix.com Payments also is increasing. I think that definitely Wix.com Payments is going to be a big success story for us in the next few years. Then we'll definitely have to share more and more about it.
In terms of support, I think this has definitely been a critical year for us to invest into care. I think we are all so thankful that we did all this investment back in 2019 and continued into 2020, because it paid off big time this year. We would not have had a chance to give proper customer care to such a huge demand and to such a peak in growth had we not invested originally into the care. 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, first of all, satisfaction and happiness, which directly impacts our brand. It impacts the conversion to premium.
It impacts adoption of higher-priced services, it increases ARPU. Obviously, definitely, it reduces churn and increases loyalty over time. We are very happy with the returns we've seen. We see that there is a very big demand for 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 JP Morgan. 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. Can you give us an idea of what the contribution from that structure is? When you say you count it, are you actually getting the cash up front as well?
Hey, Sterling. This is Lior. You're probably talking about channels, not about partners. You're right. About channels, usually the structure of the deal is with a commitment. By the way, it's not that significant yet. A few million dollars, I assume, for this year, but it's not that significant. Basically, we get a commitment for payments or for number of premiums, for example, for a year, perhaps even more than that. 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 company, 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 approach 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. They feel really, really good about it. They actually benefit from two 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. First, can you talk about what you're seeing in the early days from Editor X monetization? How has attach rate progressed with your expectations, and who are you seeing as the early buyers of the product? Anything you can share on customer profile would be great. 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 and November so far? Is the ROI for customer acquisition on the paid channels relatively stable? Q4 , obviously, with the U.S. elections, is a little bit of a volatile quarter. Just curious on what you're seeing right now.
Thanks, Deepak. This is Avishai. Editor X, well, the product isn't 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 me, remarkably faster than I expected, at least, by agencies. Most of the people that use Editor X will be 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. We're seeing that it's been adopted a lot by the higher agencies and 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. The combination of Corvid allowing you to program into the platform, and the databases, and the CMSs, 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 ones who are developers that build more of the higher brand products. And really fantastic results.
With regard to the net subs during the Q4 . Look, obviously, we are expecting that, because demand is still very high. We expect that net subs will significantly increase on a year-over-year basis. I don't see any differences of what we've experienced in the Q2 and the Q3 . I think that it's important to understand that about 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. It can be even stronger than what we actually expect. Obviously, it's going to be a very strong Q4 . I think that it's also indicated as part of our guidance for the Q4 , 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 . 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 ROI, no exception. The same goes for the Q4 , the same goes for what we've already seen in October. It's going very well with the same efficiency. I assume that we are going to invest more in the Q4 as we've done in the second and the Q3 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 seems like you have some really good momentum. Collections have doubled there, adding new agencies. 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 six months, is it maybe more specifically around Wix.com's brand and capabilities? Would love a little more color on that topic.
Of course. I think that when you look, if I understand the question, is that what happened with the partner? Why is he becoming so successful? I think that, 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.com that have changed, right? We build specific solution for partners to manage multiple accounts on Wix.com, to manage teams that work with Wix.com, to share feedback with the customers. We did a lot on SEO, right, which is probably the best product for search engine optimization. If Google can read you, probably the best way to do is on Wix.com.
We did a huge amount on performance. We did a lot in how you can customize your designs, how you can delegate that to customers. 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. This is something that it takes time to realize, wow, I can do all of this now on wix.com. I think that this is most of what we're seeing now. It's not really related so much to the pandemic. It's more related to things like our account management toward 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 for which It's pretty much product maturity.
Really helpful. Lior, maybe a follow-up for you. The collections growth has really outpaced the revenue growth the last couple of quarters. Certainly that's better than the previous years. I'm just wondering, as you go into 2021, is your visibility improving with this dynamic?
Of course because in the end of the day, collection is transformed into revenue. What we actually see when the gap between collection and revenue increases, it means that we are experiencing higher growth. Usually revenue is based on the growth of the previous few quarters.
For this is exactly what is happening. I think that it's great because we spoke in the past, but also this quarter about the value of the cohort. The value of our newest cohort has increased significantly. You know for example, last quarter, we indicated that the value of the cohort has increased by 90%. Think about it. This is all going to be transformed into a collection and revenue, in the next few years. The overall value of the cohorts has increased to $9.2 billion, up 43% on a year-over-year basis. This is something that provides me a really good understanding of what to expect from our business going forward. This is truly exciting.
Thank you. Our next question comes from the line of Naved Khan with Truist. Your line is now open.
Yeah. Hi. Thanks a lot. I've got two questions. Maybe talk a little bit about the customer care initiative, and then previously, you talked about at least a 3x ROI. How do we think about it now? Is it still the same or higher? How should we think about gross margin impact for next year because of the investment you're making today? 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?
Okay. Shiri, it's me. I'll take the customer care, then can pass it on to Lior to talk about the gross margin. As I mentioned before about customer care, obviously, as I said before, we're very happy we made that investment. 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 having the agent 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. Naturally, yes, we want to engage more, not less.
This is a big part and big chunk of what we set up to do. 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 has 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 a growth of 50% to 70% of the volume, which is an amazing achievement in my mind. 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, Lior, you want to take it?
Yeah. 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? When we look at the P&L, obviously, so we increase the investments in support, and it's all recognized now, while the benefit of top line has 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, 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 managed to support and increase the value of those cohorts just from the fact that we have those people to make it happen.
Otherwise, we couldn't reach to this value of cohort without this support. I assume that when you look at the gross margin of the overall basis, I tend to look at it as kind of a short-term noises. Yeah, 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, nothing has changed in terms of the model. Hey, Naved, it's me again. In terms of the heightened conversion, first of all, you're correct. We are probably at the highest conversion we had in the past two years. And there's a few drivers to it.
First of all, if I circle back to the beginning of your question, 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. Avishai mentioned before all the new introductions we did to Wix Stores
The improvements we've done around the support, the product's functionality and support for partners. 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 restaurants vertical, the musicians, the artists, the photographers, pretty much across the board. All of these improvements, obviously, always improve conversion. 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. By the way, it affects the new cohorts and the newcomers, but you also see that within the existing cohorts, okay? A much higher intent coming in and finishing a website and transitioning a business to be an online business.
I think all of these together are obviously 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.
Avishai, 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-com? I know theres different plans, but are you seeing a 20%, 30%, 40% uplift in pricing on those as they move to e-commerce? Can you give us just a sense of what you've seen so far on the economics of an e-com customer?
Yeah. Obviously the e-commerce packages are more expensive, and you kind of like touched the right numbers. But the biggest, I think, difference is in the Wix Payments, because we're Wix Payments, and this is something that we're seeing that it enhance the value over time as businesses are becoming more successful. That's another side of it. Of course, you also have to take account that it's more popular to have Ascend, and it's more popular to have 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.com customers, the normal Wix.com customers. But we're going to continue to monitor that to 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. It's definitely those are more valued customers.
Great color. Thank you.
Of course.
Thank you. Our next question comes from the line of Mark Zgutowicz 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 cohort conversion. You mentioned it was near two-year high levels. I'm just curious how that might be representative in 4Q and how that may carry into 2021. Does that imply net add growth in 2021, or is that unlikely given the comparison? Thanks.
Yeah. We do believe that increase in conversion is sustainable, right? We talk a lot of time about the new state of mind, but it's got to do also with the fact with people are coming with more intent. We have more products. Avishai mentioned all the different products, for example, that we actually launch on our e-commerce solution. This is the major contribution to the increase in conversion. This is all going to stay with us. It's not going to disappear. We obviously assume that also the Q4 and certainly next year, it's going to benefit from this increase in conversion. You know actually, we know from the historical numbers of Wix.com, 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 Q4 guidance. If conversion will be higher, it is 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? Anything that surprised you, either from a country or a geographic basis as you've seen the results come in over the past two quarters? Thanks.
I think 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're very happy about. Overall, there's a lot of global strength. Our product is global. We operate in 190 countries across the globe. Europe has been very strong. Latin America has been accelerating over the last few quarters. 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 in 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, go into product development, or all across. We've definitely seen a huge growth globally this year.
Does the really strong business formation in the Q3 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? What do you mean by business formation?
Yeah. In the Q3 , the U.S. saw really strong growth, I think about 80% year-over-year in terms of applications for tax IDs for new businesses. Obviously a lot of new businesses getting started in the U.S. in the Q3 . I was just wondering if that sort of factored into the results you saw in the Q3 at all.
I think that the answer is A, yes, absolutely. B, I think we all see that it's a new 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.