Digital Wire Transfer Service Xoom Beat Earnings, Raises Guidance

Jacob Harper |

On April 23 the money transfer service Xoom Corporation (XOOM) rose 17 percent on raised on an earnings beat and more optimistic projections for the FY 2014 period.

Xoom, which allows US residents to wire money to 30 different companies using only the internet, had a rocky start after its $16 a share IPO in Dec. 2013. Though the promise of being able to easily transfer funds internationally using a computer or smartphone app enticed investors, the stock shed some 25 percent of its value after initial enthusiasm, eventually dropping to $16.90, or just above its IPO price, in early April.

While many of Xoom’s early investors have failed to realize gains, the increase in projected earnings-per-share from $0.15 to $0.22, up from estimates of $0.09 a share, erased a sizable percentage of those losses. Also, the company now reports 1.1 million regular customers, representing an increase of 34 percent. Revenues were also up 48 percent year-over-year to hit $35.9 million.

Concomitant with the raised projections, the company beat earnings for the quarter handily, turning in a slight profit while analysts had expected a loss. However, the stock still trades at a monstrous P/E of 123.13 indicating the stock, even with an earnings beat and sunnier projections, is possibly still overvalued.

The earnings beat adds some validity to Xoom’s business model of facilitating international wealth transfer via the internet; especially on smartphones, which comprise an ever-increasing portion of Xoom’s business. It’s an industry that has received a lot of attention with the rising popularity of bitcoin, whose proponents tend to highlight the cryptocurrency’s ability to easily transfer wealth internationally, albeit it in BTC and not US dollars.

Xoom last saw a major pop on a deal with Colombian retail chain Grupo Exito, who agreed to serve as a brick-and-mortar pickup spot for US-to-Columbia money transfers.
Xoom rose 16.85 percent on the earnings beat to hit $23.02 a share.

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Companies

Symbol Name Price Change % Volume
XOOM Xoom Corporation n/a n/a n/a 0
GIAI Gia Investments Corp n/a n/a n/a 0

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