Wix is laying off approximately 1,000 employees, roughly 20% of its workforce, in the largest round of cuts in the company’s history. CEO and co-founder Avishai Abrahami announced the decision on 28 May in a message posted publicly on X and sent simultaneously to all staff. He framed the restructuring as a companywide change driven by two forces: a currency mismatch that is making the company’s Israeli workforce increasingly expensive in dollar terms, and a fundamental shift in how software companies need to operate in the age of artificial intelligence.
Wix employed 5,277 people at the end of March 2026, with more than 60% based in Israel. The cuts will reduce headcount to roughly 4,200. Affected employees will receive what Abrahami described as personally curated separation packages and will be contacted individually. This is not the first time Wix has laid off workers, but it is by far the largest reduction, surpassing previous cutbacks during the pandemic adjustment period in 2022 when the company trimmed about 100 positions.
The shekel problem
The Israeli shekel has strengthened sharply against the US dollar over the past two years, rising roughly 14% in 2025 and a further 7% in the first five months of 2026. For a company that earns the vast majority of its revenue in dollars but pays the majority of its workforce in shekels, the effect is a structural cost increase that no amount of product improvement can offset. Currency fluctuations have always been a risk for Israeli tech companies, but the speed and depth of the recent shekel rally has caught many off guard. The Bank of Israel has intervened modestly to stabilize the currency, but the trend has been driven by strong inflows from tech exports, natural gas revenues, and foreign investment in Israeli innovation.
The currency shift has hit the entire Israeli tech sector. A startup that raised a million dollars when the exchange rate was 3.7 shekels to the dollar now finds that same million buys roughly 700,000 fewer shekels. Israeli engineering salaries have risen 15% to 20% in dollar terms within a few months, making Israeli developers among the most expensive in the world, sometimes more costly than their counterparts in Silicon Valley. The Tel Aviv office of Google, for example, has been actively recruiting senior engineers at compensation packages exceeding $300,000, placing upward pressure on all local tech wages. Wix, based in the Tel Aviv suburb of Givatayim, has felt this acutely. With more than 3,000 employees in Israel and revenue denominated almost entirely in dollars, the company’s cost base has been rising faster than its top line can grow.
Many Israeli tech companies have responded by opening offices in lower-cost jurisdictions such as Eastern Europe, India, and Latin America. Wix itself has expanded its presence in Lithuania and Ukraine in recent years. However, the core product development has remained heavily concentrated in Israel, making a full relocation of engineering talent impractical in the short term. The layoffs, therefore, serve as a painful but necessary adjustment to bring costs in line with the new currency reality.
AI is the other half of the equation
Abrahami described the current moment as the most significant shift in how companies are built since the invention of modern programming languages in the 1970s. He said Wix is moving to a flatter organizational structure with fewer management layers, designed to enable faster decisions and clearer ownership. The company has introduced new roles, including a position it calls xEngineer, a design-first engineering role built around AI-native workflows, and Creators, a broader category for employees working primarily with AI tools. These roles signal a strategic pivot from a service-oriented SaaS model to an AI-driven platform where human workers guide and verify outputs rather than build everything from scratch.
The restructuring is not abstract. Other SaaS companies have made similar moves in recent months, with ClickUp cutting 22% of its staff and GitLab restructuring for what it called the agentic era. The common thread is that companies are eliminating roles they believe AI can perform or augment, then reorganizing around a smaller workforce that directs AI systems rather than doing the work manually. In Wix’s case, many of the affected positions are in customer support, manual site-building services, junior engineering, and middle management. The new xEngineer roles combine traditional engineering skills with product design and AI orchestration, reflecting a vision where a single individual can manage multiple AI agents that write code, generate design variants, and run A/B tests autonomously.
Wix has also invested heavily in its own AI tools. The company launched Wix Harmony in 2025, an integrated AI-powered editor that generates entire websites from a few prompts. It later introduced Wix Vibe, a headless AI site creation tool, and acquired Base44, a vibe-coding platform, for $80 million in early 2026. Base44 allows users to describe applications in natural language and have AI generate fully functional code. The platform reportedly reached $100 million in annual recurring revenue within roughly a year of its founding, demonstrating strong market demand for AI-first development environments. However, integrating Base44 into Wix’s broader ecosystem has proven challenging, with users reporting inconsistencies between the AI-generated code and Wix’s proprietary components.
The stock collapse that preceded the cuts
The layoffs follow a brutal period for Wix’s stock. Shares fell 27% on 13 May after the company reported first-quarter earnings that missed Wall Street expectations. Revenue rose 14% year on year to $541 million, but Wix posted a net loss of $57.5 million after several profitable quarters. Adjusted earnings came in at $0.68 per share, well below the $1.22 consensus estimate. Operating expenses as a percentage of revenue surged from 21% in Q1 2025 to 35% in Q1 2026, a trajectory that alarmed investors. The stock has lost more than 50% of its value since the start of the year, reducing Wix’s market capitalization to roughly $2 billion, down from a peak of nearly $20 billion in 2021.
The company also acknowledged that its professional developer customers were using competing AI tools, and that its new Wix Harmony platform had gaps and missing capabilities that delayed product updates. The admission was a stark contrast to the bullish tone the company had struck just a year earlier. Analysts on the earnings call pressed management on the timeline for returning to profitability, with several cutting price targets. The layoff announcement, coming two weeks after the earnings miss, was seen as a necessary but belated response to the deteriorating financial picture.
The decline in Wix’s stock mirrors a broader correction in the SaaS sector. The BVP Nasdaq Emerging Cloud Index fell 45% from its peak in late 2021 to early 2026, as investors grew wary of companies with high burn rates and uncertain paths to profitability. Wix, which had been a pandemic darling as small businesses flocked online, saw its growth decelerate as the digital shift normalized. The company tried to position itself as a platform rather than a simple site builder, launching services for payments, e-commerce, and CRM, but these initiatives have not yet compensated for the core slowdown.
The vibe-coding threat
Wix’s core business, helping non-technical users build websites, is being challenged by a new generation of AI-powered tools that let anyone describe what they want in plain language and have an AI build it. Platforms like Lovable, valued at $1.8 billion, and Bolt.new have attracted users who might previously have turned to Wix. The vibe-coding movement has also raised security concerns, with research finding thousands of vulnerabilities in publicly deployed applications built with these tools, but the speed and simplicity of the approach is drawing users regardless. These tools essentially democratize web development even further than Wix’s drag-and-drop interface, reducing the need for templated designs and manual customization.
Wix’s response has been to layer AI into its existing platform through Wix Harmony, Vibe, and Base44. However, the competitive landscape is evolving rapidly. Other established players like Squarespace and Shopify are also integrating AI agents, while startups like Framer and Webflow offer AI-assisted design with greater flexibility. The market for no-code and low-code tools is expected to grow from $15 billion in 2025 to over $50 billion by 2030, according to industry analysts, but fragmentation is increasing. Wix’s challenge is to prove that its AI tools can match the quality and speed of pure-play AI builders while maintaining the reliability and support infrastructure that legacy customers expect.
A pattern across the industry
Wix is part of a wave of AI-driven layoffs that has swept the tech industry in 2026. More than 95,000 jobs have been cut across roughly 250 events so far this year, according to industry trackers. Meta cut 8,000 jobs and Microsoft offered its first-ever voluntary retirement programme. Oracle eliminated up to 30,000 positions. GitLab restructured around AI agents. The pattern is consistent: record or near-record revenues, significant headcount reductions, and the savings redirected into AI infrastructure. In many cases, the layoffs are accompanied by hiring freezes or selective hires in AI, cloud, and cybersecurity areas.
Economists have noted that these cuts are not simply a reflection of belt-tightening after years of over-hiring during the pandemic boom. Rather, they represent a structural shift in how companies allocate labor. Tasks that previously required large teams of engineers, designers, and customer support representatives can now be accomplished by smaller teams using AI tools. For example, a single AI agent can handle thousands of customer queries that previously required a team of dozens. This efficiency gain is a double-edged sword: it boosts profit margins but depresses overall employment in the tech sector, at least in the short term. Policymakers in several countries have begun to discuss the implications of AI on the workforce, with some proposing retraining programs and universal basic income experiments, though no concrete legislation has passed yet.
Abrahami’s letter was notable for its directness. He told remaining staff to treat departing colleagues with respect and acknowledged that the people being let go had built things the company is proud of. He framed the decision as necessary to protect Wix’s users, shareholders, and long-term viability. Whether the restructuring succeeds will depend on whether a leaner, AI-augmented Wix can grow its way out of a currency squeeze and a competitive landscape that is being redrawn by the same technology it is betting on. The company has set a target of achieving non-GAAP profitability by the end of 2026, but reaching that goal will require both cost discipline and a revival of revenue growth. With the stock at multi-year lows and investor patience wearing thin, the next few quarters will be crucial for Wix’s survival as an independent company.
Source: TNW | Apps News