A look at Xoom as a potential investment idea.

1. NASDAQ: XOOM
Jason A. Moser
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2. Money transfer services represent a
tremendous global market opportunity.
Advancements in technology are changing
the way money is moved around the globe.
Xoom’s digital platform, capital light
business model, risk management system
and massive market opportunity make it a
compelling investment today.
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The idea

3. 3
What does Xoom do?
Xoom provides consumer-to-consumer
online money transfer services. In
particular it focuses on the US-
outbound corridor, transferring
money from the US to any one of 33
different countries today.

4. 4
Who is Xoom’s customer?
“Our typical customers left their home
countries and moved to the United
States to seek better employment
opportunities and to support their
family and friends back home.”

5. Market opportunity
5
This was the total size of the global remittance
market in 2014 according to the World Bank.
Total amount of remittances received in 2014 by
China, India and the Philippines according to the
World Bank.
The total addressable market for Xoom today based
on the 32 countries it currently serves.

6. Market opportunity
6
Source: Company filings

7. How does Xoom make money?
Transaction fees charged
to customers. Service fees
generally vary by country,
type of funding source,
disbursement currency
and send amount.
Xoom also generates
revenue from foreign
exchange spreads on
transactions where the
payout currency is other
than US dollars.
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8. How does Xoom make money?
In February 2014 Xoom acquired BlueKite, and introduced
cross-border bill pay as well as mobile phone top-up
payments for its customers in five countries toward the end
of 2014. The fee per bill paid is $2.99 and the feature will roll
out to additional markets in the coming year.
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9. Xoom customers do not pay originating agent
commissions.
The majority of transfers are funded directly
from bank accounts, which lowers the cost of
sales.
Xoom is not weighed down by the costs of
maintaining a physical infrastructure.
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Capital light

10. Origination: All transfers originate online or via
mobile device so there are no physical locations
to deal with.
Funding: Transfers come from a US bank
account, credit or debit card. With no
originating agents accepting cash, Xoom doesn’t
incur the costs or commissions associated with
physical agent-based origination and funding.
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How does it work?

11. Disbursement: Recipients accept the money as
they choose (direct deposit in all countries, cash
pickup via bank partners in most, even home
delivery in Dominican Republic and the
Philippines).
Transaction processing: Proprietary risk-
management model allows Xoom to fund
instantly in most cases while minimizing risk of
loss at the same time.
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How does it work?

12. 12
How does it work?
Source: Company presentation

13. Active customers
Gross additional customers
Total transactions
Mobile transactions
Average transactions per customer
Average revenue per transaction
Loss rates
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What metrics matter?

14. Mobile matters
14
Percentage of Xoom transactions made from mobile devices
Source: Company filings

15. Fundamentals of funding
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The percentage of Xoom’s GSV (gross sending volume) that is funded by
bank accounts through ACH (Automatic Clearing House).
The percentage of ACH funded transactions that Xoom processes instantly
in order to expedite disbursement by its partners.
Xoom calls this “instant ACH.”
The number of days Xoom is exposed to the risk of reversals for ACH
transactions. Reasons for reversals include bounced checks, invalid
accounts, fraud, etc.

16. Risk management
16Source: Company presentation

17. Risk management
17
Source: Company filings
Fact: 30% of Xoom’s workforce is dedicated to risk management.

18. Tomorrow versus yesterday
Xoom (XOOM) Western Union (WU)
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Source: S&P Capital IQ

19. Margins mean money
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This is the target range for the company’s sustainable gross margin.
“ACH risk management requires that a merchant take on four days of
funding risk. We have perfected our risk management systems to allow us
to make a decision to give the consumer an instant experience, even
though we're taking on four days of funding risk almost all the time.
So we get these great margin benefits, the consumer gets a great price,
and yet the consumer also has a very fast experience. There is no one that
we know of who does this.” Xoom CEO John Kunze

20.  An investment in Xoom is really about what the stock’s going
to look like in 5 years.
 Cap IQ estimates have the company reaching $280 million in
revenue in 2017.
 Let’s examine historical numbers and growth rates in order to
better understand the potential for the future.
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Understanding future worth
2009 2010 2011 2012 2013 2014
Active customers 301,840 392,666 516,597 776,426 1,059,689 1,278,646
Customer growth 30.1% 31.6% 50.3% 36.5% 20.7%
Revenue $26,276,000 $32,837,000 $50,020,000 $80,016,000 $122,206,000 $159,084,000
Revenue growth 25.0% 52.3% 60.0% 52.7% 30.2%
Total transactions 2,254,000 2,848,000 4,068,000 6,617,000 9,988,000 12,763,407
Transactions growth 26.4% 42.8% 62.7% 50.9% 27.8%
Avg. transactions per customer 7.5 7.3 7.9 8.5 9.4 10.0
Avg. rev. per transaction $11.66 $11.53 $12.30 $12.09 $12.24 $12.46

21.  Using Cap IQ revenue estimates we can make some basic
assumptions regarding avg. transactions per customer and
avg. revenue per transaction in order to check what growth
rates will be needed in customers and total transactions.
 These numbers seem quite achievable if not beatable. By
then Xoom is a profitable business. What will the market pay?
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Understanding future worth
2015 (est.) 2016 (est.) 2017 (est.)
Active customers 1,495,462 1,747,019 2,073,852
Customer growth 17.0% 16.8% 18.7%
Revenue $194,410,000 $231,480,000 $279,970,000
Revenue growth 22.2% 19.1% 20.9%
Total transactions 15,552,800 18,518,400 22,397,600
Transactions growth 21.9% 19.1% 20.9%
Avg. transactions per customer 10.4 10.6 10.8
Avg. rev. per transaction $12.50 $12.50 $12.50

22. Management
John Kunze
CEO/President since 7/2006
Spent 13 years at Adobe Systems
Ryno Blignaut
CFO since 3/2008
Chief Risk Officer since 8/2012
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23. Management
Kevin Hartz
Xoom Co-Founder 2001
Board Director
CEO and Co-Founder of Eventbrite
Early investor in PayPal
Christopher Ferro
Chief Compliance Officer
With Xoom since 1/2008
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24.  Disruption: Something better can always come along.
 Risk Management: Instant ACH is a key differentiator; any
flaws in risk management could kill margins.
 Security: Breaches in security could send users elsewhere.
 Limits: Sending limits, while part of risk management, could
stifle growing market share but are very reasonable.
 Exchange Rates: Weak dollar can ding transactions and GSV,
particularly in India.
 Geography & Regulation: More than 70% of 2014 revenue
was tied to transfers to Mexico, India and the Philippines.
 The Big Macro: Weak economic conditions hamper volume.
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Risks

25.  Western Union: With its vast physical presence it’s not going
away, but it is being disrupted thanks to the Internet.
 Cards: Visa Direct & MasterCard Send are new offerings
which bypass ACH altogether. Possible partner? Possible
competition?
 PayPal: Doesn’t focus on Xoom’s core market, doesn’t have
same banking relationships in recipient countries.
 WalMart/MoneyGram: Still big and cumbersome networks,
lack Xoom’s core focus.
 Facebook/Social: Will Facebook wipe out the money transfer
industry? Doubtful, but it could play a part in reshaping it.
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Competition

26.  Money is moving around the world at a phenomenal pace and
this is poised to continue.
 This is NOT a winner-take-all situation. There will of course be
more than one winner in this space.
 Xoom’s digital platform, capital light business model and risk
management system together are advantages.
 Xoom focuses on US outbound remittance, a smaller part of
an important and growing market.
 Key differentiators for Xoom today are instant ACH and
customer service/disbursement options.
 Xoom’s complementary services stand to serve as excellent
retention tools that enhance overall customer relationship.
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Bottom line for investors

27. Remember, investing is all
about the future. There are
never any guarantees and you're
taking a measure of a leap of faith
every single time.
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