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Why Xoom Shares Lived Up to Their Name

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Xoom (UNKNOWN: XOOM.DL  ) have rocketed higher today and are now sitting 15% above yesterday's close after obliterating analyst estimates with strong earnings.

So what: Wall Street was looking for revenue of $26.2 million and a loss of $0.07 per share. Xoom didn't settle for this -- its results, which showed 60% year-over-year revenue growth to $33.5 million and a stunning $0.14 in adjusted earnings per share, were far better. Third-quarter guidance was also slightly ahead of estimates, with a range of $27 million to $28 million in revenue coming up against the $26.7 million consensus, and a $0.02 to $0.07 loss per share against the $0.06 loss per share Wall Street had sought.

Xoom's full-year guidance for 2013 was significantly improved by today's big outperformance, as the company now sees an EPS range of $0.05 to $0.13, in stark contrast to the $0.18 loss per share that Wall Street projected. Xoom's $115 million to $117 million revenue guidance for 2013 also trounced the $106.9 million consensus.

Now what: Xoom is certainly zooming, with high double-digit growth in revenue, transaction volume, and active customers to go along with a major swing from loss to profit. The company's Indian business was called out as a particular source of strength, and with so much potential left on the subcontinent, there might be a lot more to this story. Investors should start taking a closer look at this upstart, which has now risen well past its early 2013 IPO closing price after enduring a largely mediocre public life.

Want more news and updates? Add Xoom to your Watchlist now.

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  • Report this Comment On July 26, 2013, at 10:50 AM, GreatCompanies wrote:

    Interesting. But since almost all their revenue outperformance was driven by the Indian rupee ($6M out of $8M attributed to Indian customers locking in a weak rupee exchange rate), why not just buy and sell the rupee? It's troubling that they're less a stock and more a proxy for one country's currency.

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