What happened

After reporting preliminary revenue for the fourth quarter on Jan. 7 that was better than expected and offering up guidance for additional sales growth in 2019, DexCom (NASDAQ:DXCM) saw its shares jumped 17.7% in January, according to S&P Market Intelligence

So what

DexCom markets continuous glucose monitors (CGM) that diabetics use to better track their blood glucose levels. And thanks to the launch last spring of the G6, its latest system, 2018 was a banner year for the company.

A man in a suit sits in a yoga pose as money falls down around him.

Image source: Getty Images.

Preliminary figures unveiled in early January show sales increased 42% year over year to $1.025 billion in 2018, including sales of $331 million in the fourth quarter, up over 50% from Q4 2017. The figures were particularly surprising given that management had said in early December it expected sales of just $975 million for 2018, implying fourth-quarter revenue of $281.4 million based on sales through the first nine months of the year.

Management also outlined a goal for sales in 2019 to grow between 15% to 20% -- or between $1.175 billion and $1.225 billion. That's in keeping with its outlook for compound annual revenue growth of 15% through 2023.

Check out the latest DexCom earnings call transcript.

Now what

Typical insulin-dependent diabetics spend about 70% of their day outside their desired blood sugar range. And since inadequate control of their blood sugar can lead to life-threatening disease progression, technology that can improve insight into highs and lows is important to achieving better outcomes.

In the future, DexCom aims to launch cheap, disposable sensors that could expand its market opportunity from about 3 million insulin-intensive people in the U.S. today to over 30 million type 1 and type 2 patients. If it can deliver on this target, then DexCom's peak revenue opportunity could be significantly higher than it is today. For perspective, management's growth-rate target translates into roughly a doubling of revenue over the coming five years.