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), an online and mobile-based provider of money transfer services around the globe, zoomed higher by as much as 22% after the company reported better-than-expected first quarter earnings results.
So what: For the quarter, Xoom delivered a whopping 48% increase in revenue to $35.9 million as gross sending volume grew 49% to $1.6 billion and transactions jumped 42% to nearly 2.9 million. Active customers and new customers, two key measures of ongoing returning and new cash flow, grew 34% and 7%, respectively. Adjusted profit for the quarter tripled to $0.06 per share from $0.02 in the year-ago quarter. By comparison, Wall Street was looking for just $34.3 million in revenue and a $0.04 loss per share! While Xoom's second-quarter guidance of EPS ranging from $0.02-$0.06 on $38 million-$40 million in revenue was right in line with expectations, its full-year forecast of $157 million-$162 million in revenue and EPS of $0.15-$0.22 compares favorably with the Street's current consensus of $156.9 million in revenue and $0.09 in EPS.
Now what: Even at the high end of its EPS estimates, Xoom isn't cheap at more than 100 times this year's expected profits. But you're going to receive incredible growth prospects in return as you can tell by its transaction and active customer growth. I would suggest using your best judgment and not chasing Xoom into the stratosphere considering its already pricey valuation, but I could very well see this company continuing to outperform expectations and handily outgrowing its peers thanks to its mobile niche. With that being said, shares may still be a bargain even following today's pop to the upside.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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