Israel's Wix Buys Art Platform DeviantArt for $36 Million

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File photo: The offices of website-designer firm in Tel Aviv, Israel on July 4, 2016.
File photo: The offices of website-designer firm in Tel Aviv, Israel on July 4, 2016.Credit: Baz Ratner, Reuters, the Israeli maker of tools for building and managing websites, unveiled its first-ever overseas acquisition on Thursday of Los-Angeles based DeviantArt for $36 million and raised its revenue outlook for 2017.

Wix said it paid $33 million for the online community for artists and designers   and assumed $3 million in debt. The takeover will increase its 2017 revenue outlook by $8 million to between $417 million and $419 million.

Wix, which helps small businesses build and operate websites, will have access to DeviantArt’s more than 40 million registered members and over 325 million pieces of original art.

On the Nasdaq at mid-morning Thursday, Wix shares were down 2.6% at $63.85.

Founded in 2000, DeviantArt’s platforms lets artists display their work, build a reputation and develop a bigger audience. With virtually no investment in marketing or advertising, the company generates revenues of about $8 million annually from subscriptions to its premium service and commissions on sales made through its platform, Wix said. It counts 40 million users who have displayed more than 325 million works of art.

Wix provided few details about its plans for DeviantArt, but it said the U.S. company would maintain its own brand as Wix provides technical and marketing expertise and helps it expand the offerings on its platform. DeviantArt cofounder and CEO Angelo Sotira will join the Wix management team.

The acquisition appears to be part of Wix’s strategy of courting paid subscribers by developing products for niche users such as photographers and musicians. Wix, which has over 100 million registered users, saw its revenue grow 48% in the fourth quarter of 2016 to $84.2 million and had $172 million in cash at the end of the year.  

Investing in DeviantArt’s platform will mean taking on additional employes and reducing 2017 free cash flow by $8 million to between $63 million and $64 million, Wix said.

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