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 company-wide 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 AI.

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.

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.

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.

Wix is not the only Israeli company affected, but its exposure is unusually concentrated. 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. This currency mismatch is not new for Israeli export-oriented tech firms, but the magnitude of the shekel’s appreciation over the past two years has been unprecedented. The Bank of Israel has intervened periodically to slow the shekel’s rise, but market forces driven by strong foreign investment inflows and a robust domestic economy have kept the currency under upward pressure.

For Wix, which has historically prided itself on its Israeli engineering talent, the shekel problem has forced a hard reevaluation. Even with revenue growing 14% year over year to $541 million in the first quarter, the company posted a net loss of $57.5 million after several profitable quarters, largely due to the rising cost of its Israeli workforce. Analysts had expected adjusted earnings of $1.22 per share, but Wix delivered only $0.68, missing consensus by a wide margin.

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 organisational 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.

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 reorganising around a smaller workforce that directs AI systems rather than doing the work manually.

The new xEngineer role, for example, blends product design with engineering, leveraging AI code generation and automated testing to accelerate development cycles. Creators are expected to use AI tools for tasks like content generation, data analysis, and customer support, freeing up human workers for more strategic oversight. This shift reflects a broader industry trend where companies are betting that fewer, more AI-savvy employees can produce more output than a larger, traditional workforce.

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 capitalisation to roughly $2 billion, down from a peak of nearly $20 billion in 2021. The decline has wiped out billions in shareholder value and put pressure on management to act decisively.

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. Wix acquired Base44, a vibe-coding platform, for $80 million earlier this year, but the integration has not yet reversed the competitive pressure. The acquisition was intended to bring AI application-building capabilities in-house, but the market has been skeptical of Wix’s ability to execute in a rapidly evolving landscape.

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.

Wix’s response has been to layer AI into its existing platform through Wix Harmony, its core website builder, Wix Vibe, a headless AI site creation tool, and Base44 for AI application building. Base44 reportedly reached $100 million in annual recurring revenue within roughly a year of its founding. But the broader market narrative, sometimes called the SaaSpocalypse, has punished conventional software companies whose products investors believe AI agents could make obsolete.

The vibe-coding threat is particularly existential for Wix because its original value proposition was simplicity for non-developers. Now, AI tools are making it even easier to create websites, apps, and even complex software without writing a single line of code. Competitors like Lovable and Bolt.new are not only targeting the same customer base but also offering faster deployment and more dynamic outputs. Wix’s challenge is to differentiate its AI-enhanced offerings while also convincing investors that it can survive the transition.

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.

This wave is different from the pandemic-era cuts that were driven by over-hiring. Today’s layoffs are explicitly strategic, aimed at reallocating resources toward artificial intelligence and machine learning initiatives. Companies like Wix are betting that by reducing their reliance on human labor and increasing their reliance on AI tools, they can improve margins and stay competitive. However, the risk is that these cuts may also damage morale and reduce innovation capacity in the short term.

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.

Source: TNW | Apps News