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Xoom Corporation (NASDAQ:XOOM)

Q3 2013 Earnings Call

October 22, 2013 5:00 PM ET

Executives

Gloria Lee – Director, IR

John Kunze – President and CEO

Ryno Blignaut – CFO and Chief Risk Officer

Analysts

Darrin Peller – Barclays

Mayank Tandon – Needham & Company

Colin Sebastian – R.W. Baird

James Friedman – SIG

Andrew Jeffrey – SunTrust

Operator

Good day, ladies and gentlemen and welcome to Xoom Third Quarter 2013 Earnings Conference Call. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call maybe recorded.

I would now like to hand the conference over to Ms. Gloria Lee, Director of Investor Relations. Ma’am, you may begin.

Gloria Lee

Thank you, operator. Good afternoon, everyone and welcome to Xoom’s third quarter 2013 financial results conference call. On the call with me today are John Kunze, our President and CEO and Ryno Blignaut, our Chief Financial Officer and Chief Risk Officer.

We will begin the call with some prepared remarks from John and Ryno and then we will open up the line for questions. A more complete disclosure of our results can be found in our press release issued about an hour ago as well as in our related Form 8-K furnished to the SEC earlier today. To access the press release and the financial details, please see the Investor Relations section of our website. As a reminder, today’s call is being recorded and a webcast replay will be available following the conclusion of the call.

During the call, we will be referring to both GAAP and non-GAAP financial measures. The reconciliation of our GAAP to non- GAAP financial information is provided in our press release, which is available on our website. All of the non-revenue financial measures we will discuss today are non-GAAP unless we state that the measure is a GAAP measure. The primary purpose of today’s call is to discuss our third quarter 2013 results. However, some of the information discussed during this call including any financial outlook we provide may constitute forward-looking statements within the meaning of the U.S. federal securities laws. These statements are subject to risks, uncertainties and assumptions and are based on financial information available as of today. We disclaim any obligation to update any forward-looking statements or outlook. Risks and uncertainties that would cause the results to differ materially from those expressed or implied by any such forward-looking statements include those summarized in the press release that we issued today. These risks and additional risks are described in filings with the SEC including Zoom’s quarterly report on Form 10-Q and the prospectus for our follow-on offering in September which I encourage you to read.

I will now turn the call over to John.

John Kunze

Thanks Gloria. Good afternoon everyone and thank you for joining our third 2013 earnings call. I am pleased to report that Xoom has delivered another strong quarter with revenue of $32.3 million, an increase of 62% from a year ago. Gross sending volume or GSV of $1.5 billion and we acquired more than 120,000 new customers and ended the quarter with over 997,000 active customers or 31% and 39% growth from a year ago respectively. We are very pleased with all our Q3 financial metrics driven by our balanced growth in all corridors and including upside from our India corridor as the volatility of the rupee versus the dollar continued during parts of the quarter. Ryno will provide more details on all of this shortly.

Consumers continue to choose Xoom as their digital remittance solution. Our superior suite of services including fast funding combined with fast payouts together with a seamless, frictionless, easy-to-use consumer experience provide customers just what they need, ease of use, reliability and speed. And because our services are available digitally 24/7 from a desktop or mobile device, the added benefit of convenience makes our service irresistible. The driving force behind the success is our proprietary risk management, which is built on 10 plus years of technology development, risk analytics and massive volumes of transaction history.

We combine our many years of innovation related to anti-money laundering, acceptable use of service, fraud, bounced checks and regulatory requirements with more than 25 million transactions of data. This allows us to both provide the good customers with an easy-to-use frictionless experience while stopping almost all the risky transactions. As a consequence, we run our business on lower screen and reject rates and much lower loss rates in the average e-commerce business. More than a third of our business is dedicated to this effort and we are constantly improving this critically important asset and differentiator.

Risk management allows us to offer an easy-to-use experience along with nearly internal processing of transactions, but our internal processing is only half of the speed question. The second half of the speed question is our disbursement partners. We are dedicated to and have an ongoing commitment to work with our disbursement partners to move the Xoom payouts to an instant service level or one that is as nearly instant as possible. Our cash payouts are almost all available in minutes and some in seconds. Our deposit services continue to be highly differentiated on speed and quality. Again, when we combine near instant funding with fast payout, with the convenience of digital channels, we offer an unbeatable value proposition.

Our customers continue to prove their loyalty to Xoom. During the quarter, we added more than 120,000 new customers and ended the quarter with over 997,000 active customers. The active customers, those that have sent at least one transaction in the last year grew 39% from year ago and our repeat customers drove more than 90% of our gross sending volume in the quarter. Meanwhile, our strategic initiatives are well underway. During the summer, we launched bank deposits directly to non-resident external or NRE and non-resident ordinary or NRO bank accounts in India. Our Indian customers can now send money to their NRE or NRO accounts in less than four hours during Indian banking hours. We are excited about this opportunity to better serve the Indian community.

Mobile also continues to be a growth driver for us. In July, we launched our mobile app in Spanish for both Android and iOS to better serve our Hispanic population. As you already know, the adoption rate of mobile is high among our Hispanic customers. So we are pleased to provide this important update that makes our app story relevant to the large number of Hispanic consumers who are uncomfortable or unable to use English language services. We are happy with our mobile efforts as a whole. Mobile as a percentage of total transactions during the third quarter was 37% compared to 22% a year ago. During Q3, approximately $346 million of our GSV was sent from mobile devices, which represented growth of approximately 214% compared to a year ago.

Finally, on the partnership front, we expanded our footprint in Ecuador with the new Easypagos partnership during the quarter. Our partnership expands our payout network to more than 1000 locations in Ecuador. In summary, we are thrilled with our results and strong execution in the quarter and look forward to even greater strides in the near future.

With that, I will turn the call over to Ryno.

Ryno Blignaut

Thanks John. Good afternoon everyone. I have three topics for today’s call. I will walk you through details on the quarter, provide some more color on our recent fund raising activities and finally provide an updated view on the remainder of 2013. Revenue for the third quarter of 2013 was $32.3 million, an increase of 62% from the same quarter a year ago. This is also $4.8 million above the midpoint of the guidance we provided on last quarter’s earnings call. India contributed the bulk of this upside, but all our other corridors also performed well across the board. We had three great initiatives in India during the quarter namely the ongoing impact for our bank deposits and Amitabh Bachchan’s endorsement campaign joined by the launch of deposits to NRE, NRO accounts in July.

The unprecedented volatility of the Indian rupee also continued during Q3 with the currency devaluing against the dollar by more than 10% during August only to dramatically reverse the strength on strength by almost the same number during September. We continued to estimate that about a third of our Indian active customers are very motivated by their perception of where the rupee exchange rate is heading, so therefore attempt to time their transactions to receive maximum rupees for their dollars. This behavior was consistent with our experience during Q2 2013 and Q2 2012 when the rupee was also volatile. And I will discuss the impact of this volatility on our updated guidance a bit later on this call.

Gross profit for the third quarter of 2013 was $21.9 million, an increase of 64% from the same quarter a year ago. Gross margin for the quarter was 68%, down slightly from 70% in Q2 2013, but still within our targeted range of 65% to 70%. This slight decrease was due to transaction losses being 3 basis points higher at 26.5 basis points of GSV and the ACH funding mix being a few percentage points lower in Q3 2013 compared to Q2 2013. As discussed before both these components of COGS are somewhat variable by nature which is why we target a range for gross margins.

Now I will move on to our operating expenses. GAAP operating expenses for the third quarter of 2013 totaled $19.3 million, an increase of 30% from the same quarter a year ago and up 3% from Q2 2013. Marketing continues to be our largest line item, the bulk of which comprises direct marketing expenses such as online buys, television ads, Refer a Friend Bounty to acquire new customers. The $40 cost per acquired customer or CPA in Q3 2013 is at the low end our targeted average range of $40 to $50. You should expect this number to be close to $50 in Q4 2013 as we spend more leading up to Christmas. We will constantly challenge ourselves to stay at the high end of this range as long as we are acquiring new quality customers. Technology and development increased 53% from the same quarter a year ago as we continued to expand our product and engineering teams to keep innovative on our service.

Customer service and operations increased 21% from Q3 2012, while transactions increased 56% which continues to illustrate the operating leverage we have available in the business. G&A increased 44% from Q3 2012 mainly as a result of increased headcount and professional services in preparation for our IPO earlier this year and for our ongoing public company responsibilities. Adjusted EBITDA for the third quarter of 2013 was $3.3 million or 10% of revenue compared to a loss of $828,000 for the same quarter a year ago. This also represents a $3.8 million positive variance from the midpoint of the guidance we provided during the last earnings call mainly the result of $4.8 million of incremental revenue at a 68% gross margin and the marketing CPA for the quarter coming in at $40 per new customer which is at the low end of our expected CPA range.

GAAP net income for the third quarter of 2013 was $1.2 million compared to a loss of $2.3 million in Q3 of 2012. GAAP diluted earnings per share was $0.03 compared to a $0.45 loss a year ago. Non-GAAP diluted earnings per share for the quarter were $0.06 on a weighted average number of shares of 38.2 million. Full reconciliation tables between all GAAP and non-GAAP metrics are included in our earnings press release issued earlier today.

We successfully completed two important fund raising activities during the quarter. In mid-September we sold 3.6 million shares in a public follow-on offering at $30.50 per share resulting in net proceeds of $104.8 million to Xoom. $49 million of these proceeds were effectively used to pay back the entire outstanding balance on our previous line of credit as of June 30, 2013. In September we also expanded and amended our line of credit from $80 million for two years to $150 million for three years providing us with additional cash flow flexibility.

As discussed previously, our cash disbursement pre-funding customer funds receivable, customer liability and line of credit balances are all related and materially impacted by the day of the week on which a quarter ends. On Thursdays and Fridays we pre-fund our disbursement partners for the weekend transactions while we in turn only received the funds from our payment processors for these transactions on the following Monday.

When we experienced large payment volumes on a Thursday or Friday in case for example a pay day or sudden rupee movement, we will often draw from the line of credit on Thursday and repay in full the borrowed amount the following Monday when the ACH rule settles. As a result of these fund raising activities, we ended the quarter with $240 million in cash, cash equivalents, disbursement pre-funding, and short-term investments compared to $167 million from June 30, 2013.

Finally, let me walk you through our guidance for Q4 2013 and our updated view for the full year 2013. Please note our guidance for the fourth quarter has not changed materially from what was provided during our previous earnings release. For Q4 2013 we now expect revenue to be between $30.2 million and $31.2 million due to obvious unpredictability of the rupee exchange rate we continued to plan our Indian volume as if the rupee is borrowing in the eyes of our consumers. We therefore expect Q4 revenue to be lower than Q3, but the middle of this range still showing healthy 39% year-over-year growth from Q4 2012.

We expect adjusted EBITDA to be between breakeven and a profit of $1 million, GAAP diluted net loss per share to be in the range of $0.07 to $0.05, non-GAAP diluted net loss per share to be in the range of $0.03 to $0.01. For the full year 2013 we now estimate the following. The revenue to be between $120.3 million and $121.3 million, adjusted EBITDA to be between $11 million and $12 million, GAAP diluted earnings per share to be in the range of $0.06 to $0.09 and non-GAAP diluted earnings per share to be in the range of $0.18 to $0.21.

Thank you very much everyone. I will now turn it back over to John for final comments before we move to Q&A.

John Kunze

Thank you, Ryno. We are very pleased to have closed our third quarter as a public company with good results. We will continue on our mission to disrupt the money transfer market and bring the majority of it to digital channels. The convenience combined with the speed and the overall value proposition makes the shift to digital inevitable. I would like to thank our customers for their continued loyalty to the Xoom service. Here at Xoom, we are relentlessly innovating and optimizing. Thanks to the great efforts of our employees. So we may continue to delight you with our service and continue to earn new business. Thank you very much. Now we will take questions. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from Darrin Peller from Barclays.

Darrin Peller – Barclays

Thanks. Nice job guys. Just want to start off with the active account numbers and the customer numbers there as well as turn. I mean when you look at the actual number of customers you have I mean that beat us but it was more a function of the actual what looks to be churn levels coming at lower than expected. Is this a function of the mix in terms of India obviously having a big – a much stronger contribution in your numbers now than used to be the case or is there another element happening here in terms of loyalty and just marketing programs?

Ryno Blignaut

Hi Darrin. This is Ryno. I think you are it’s a factor of India being – the Indian customers obviously being motivated in the corridor to come back yet again and that essentially causing the slightly lower churn, so it’s more a timing issue than anything else.

Darrin Peller – Barclays

Okay. And then just shifting gears to the customer acquisition costs side as well as really just gross margin and costs there as well. It looked lower to us to than we had expected in the customer acquisition side seem to be down a bit versus last quarter at least. Can you give us a little color on that again maybe I missed on the prepared remarks but what are we – what should we be expecting going forward on that front. And then maybe talk about the gross margin also came in a little bit lower than it was last quarter?

John Kunze

Darrin, this is John. On the new customer acquisition number, we are basically right on our plan there. And we are more efficient in the spend because of the mix of the channels. So that’s why we ended up on the lower end of the range than we would have thought of. And we are quite pleased with the active customer number as you said earlier coming in at 997,000 plus, a good healthy number there. I will let Ryno answer the gross margin question.

Ryno Blignaut

Yes. On the gross margin front, I said some of that in the prepared remarks, but it is combination of a little bit of the India mix. So when India has slightly higher portion of the mix, it tends to drive the average disbursement fee down slightly and therefore the average gross margin up slightly, because the India ACH mix is also higher. So the ACH mix in Q3 versus Q2 was slightly lower. We are talking about a couple of percentage points here. And then on the loss rates as discussed on the prepared remarks, but losses were 26.5 basis points up from 23 basis points, which is nothing to be alarmed about, it’s kind of the normal course of business, but it obviously was slightly higher than the previous quarter.

Darrin Peller – Barclays

Okay, that’s helpful. Just last question of me and I will turn it back to the queue, but with regard to the current build-out you have in terms of received mortgage, that’s obviously going well and you have a lot of strength in your current outbound market being the U.S., but can you talk a little bit about your latest thoughts on new corridors in terms of outbound markets. There has been some talk in the market around London potentially or obviously Canada always comes up. So what is your latest thinking around that in terms of timing potentially and opportunity there?

Ryno Blignaut

Yes, hi Darrin. We are unwavering on this matter and we will continue to focus on the current business, which is U.S. outbound in the 30 markets with the $72 billion TAM or total available market opportunity. And where we I think we have exited this last quarter at about 7% market share number and we are not going to stop focusing on this until we are well on our way to being a disruptor, which in my book would be majority market share, but of course somewhere along that journey, we will have to look at topping up the TAM by getting into new markets of origination, the ones that you mentioned would be the obvious ones, the UK, Canada, possibly Australia, possibly some other European markets. And if you are to open up all those markets, you would probably get somewhere between 50% and 70% expanded TAM. Those are very hard to do. We take this decision very seriously and we know that it’s going to take a lot of effort. So we are not focusing on the short-term at all.

Darrin Peller – Barclays

Okay, alright. Helpful guys. Well, thanks again.

John Kunze

Thank you.

Operator

Thank you. And our next question comes from Mayank Tandon from Needham & Company.

Mayank Tandon – Needham & Company

Congratulations on a good quarter, John and Ryno. Ryno, you talked about the India rupee having an impact, so based on what you said is it fair to say that about a $1.5 million impact was in 3Q on revenue and if that is the correct number, it would imply that 4Q guidance, we still call for sort of a flattish revenue and if I am not mistaken 4Q tends to be a seasonally strong quarter based on some of the holidays etcetera. So maybe you could just comment on that as well?

Ryno Blignaut

Yes, hi Mayank. I think as I said in my prepared remarks off the beat on the top line. The bulk of it was India. So it’s actually more than that number you suggested. If you remember the rupee went from, it was kind of let’s call it boring in July. So in June, we saw the weakness that initially broke 60 for the first time and July kind of hovered around 60 and it was pretty flat which is kind of business as usual. And then in August it just took off and broke 68 and then strengthened again back down to 62. So just to remind you, we get some uplift actually on both sides of that, because people get excited when it weakens, so they send more money, but then when it starts strengthening dramatically, they will also get nervous that it’s going to keep strengthening so they send more money. So the way we plan for and guided to Q4 is the way we have always done it, which is we look at the new customer numbers and we have a range of high end and low end on how many new customers we think we are going to add. Those flow through the model. And then we assume the India rupee is essentially boring again, so there is any dramatic move and then the rupee should be upside to that number.

Mayank Tandon – Needham & Company

Okay. Maybe I misheard you and I was assuming that only a part of the India volume is rupee driven upside and rest was sort of the core business in India?

Ryno Blignaut

Yes. Now so a third of our Indian customers are motivated by the rupee, but they send a lot of money when they are motivated.

Mayank Tandon – Needham & Company

Okay, fair enough. Well I understand.

Ryno Blignaut

And you see that and just to close the loop on that, Darrin, you see that – Mayank, you see that show up in the ATV, you see it show up in the revenue per transaction and you also see it show up in the transactions per active customer.

Mayank Tandon – Needham & Company

Got it. It makes sense. I just had one more question. Some of my other questions were covered. In terms of pricing trends, maybe John you can comment on this, did you notice any type of promotional activity by some of your competitors and if so maybe you could speak to that in terms of corridors and what the implications were on revenue and on the model?

John Kunze

No, I don’t think there is anything notable to mention in this forum. We do see occasional price promotions, but I think the Western Union online fee free offer, which has been in place for a very long time now is probably the one that everyone keeps their eye on the most. And then of course, India being its own context where we are competing with ICICI mostly, that business is already a fee free business and has been for a very, very long time. And we continue to do very well in the phase of aggressive online pricing from Western Union and with our value proposition that we offer in India, in India as well.

Mayank Tandon – Needham & Company

Great, thank you.

John Kunze

Thanks Mayank.

Operator

Thank you. And our next question comes from Colin Sebastian from R.W. Baird.

Colin Sebastian – R.W. Baird

Great, thanks guys. Congratulations on the great quarter. First, Ryno as a follow-up, again in Q4, I guess specifically what is the typical linearity in the quarter of transfers. In other words, is it typically weighted towards late November and December with the holidays and also it sounds like based on what you have seen thus far in October that it’s been a pretty boring quarter-to-date with the rupee?

Ryno Blignaut

Hi, Colin. Obviously, I can’t comment on the current quarter and typically if you take the Indian rupee volatility out of the mix, typically what you would see in Q4 is October being a good month, generally a strong month for the other corridors, November with Thanksgiving quite down again, because of course it’s one fewer day and it’s Thanksgiving and then December you get some uplift in the run up to Christmas.

Colin Sebastian – R.W. Baird

Okay. And then you mentioned the disbursement pre-funding number in the script and I see that was up around $38 million at the end of the quarter. And maybe I just need to know a little bit about this line item, but is this a metric that has any correlation to the strength and pending transactions of revenues or how should we interpret that increase? Thanks.

Ryno Blignaut

Colin, it is definitely related. So disbursement pre-funding is essentially Xoom cash that we pre-funded the partners with. And the only reason it’s in the disbursement pre-funding line item and not on the cash line item is because these aren’t actual physical Xoom bank accounts. So from a GAAP perspective, they are not in cash, but they really are Xoom cash that’s on deposit with the partners for future payouts. So depending on a day of the week and depending on the volume we are seeing on that day in that period that number will fluctuate.

Colin Sebastian – R.W. Baird

Okay. So that looks like a pretty healthy number.

Ryno Blignaut

Yes.

Colin Sebastian – R.W. Baird

And then just if I could sneak one last one in more general question. In the domestic U.S. market for P2P payments for money transfer, the competition here it looks like it’s increasing with (indiscernible) and Square’s new service, etcetera. And I am curious if maybe John if you could weigh in if you expect these companies to emerge as cross-border competitors as well and then based on some of the technology that they are using how they stack up against incumbents such as yourselves? Thanks.

John Kunze

It’s hard for me to comment on their future plans, but I can say that the longest most experienced P2P player in the business is PayPal they had been in the business for about 15 years. Doing P2P, these new entrants have various ways where they are trying to differentiate, but I think the P2P phenomenon has been a part of the industry for a long time now. PayPal is cross-border. I would expect that others who would want to compete with them would also go cross-border, but as the P2P business is very different than a money transfer business, which I can spend a lot of time on with you, but for the most part, the last mile is a very different proposition here, where the P2P players tend to like to hold on to the float as long as possible. In the money transfer business, you want to pay out the money as fast as possible. And in terms of on-boarding of funds, most P2P players put a lot of friction into that experience. And in our business, you have to onboard the funds immediately in order to have a great experience. And of course you have to do all that with no customer friction and on low loss rates to have a healthy business. So it’s just a very different value proposition altogether.

Colin Sebastian – R.W. Baird

Great, thank you very much.

Operator

Thank you. And our next question comes from James Friedman from SIG.

James Friedman – SIG

Hi, let me echo the congratulations. John, I wanted to ask you about some of the characteristics of your agent partners, anything that you could share length of terms or fixed fee per transaction, I am not so interested in the current numbers but the trajectory. How do you see this evolving over time?

John Kunze

I think generally speaking we are non-exclusive three to five year terms with our disbursement partners. And generally speaking we are on fixed fee per transaction deals, so not variable fees like most of the incumbents. And occasionally we are sourcing our foreign exchange from our pay partners although that’s becoming less common we are able to buy now in open markets and source the FX from various partners.

James Friedman – SIG

John, is there any opportunity to negotiate shows down over time?

John Kunze

Well, we are constantly discussing the terms of the agreements with our partners and they are constantly evolving. And depending on the business terms that are at – that in question, we are able to modify those terms if needed as our volume grows.

James Friedman – SIG

Okay and then you had alluded to in your comments the profile of the customer acquisition costs and some of the channels that you are pursuing those came in clearly lower than we had anticipated meaning that the customer number was above but the costs were below. So what is the profile of the channels that you are pursuing and how may that change over time?

Ryno Blignaut

Hi, James, this is Ryno. I think one of the reasons the Q3 CPA came in at the lower end is because of the Indian business we do see over indexing of customer signing up and coming to Xoom through our Refer A Friend Bounty program which is a $30 bounty. So that’s kind of the $30 CPA by definition which is obviously lower than the $40 to $50 range. So when you see a lot of Indians use that program it brings the overall CPA down, so that is one of the reasons the number was at the lower end. And then in terms of where we see that number going it really is as we have always said we target an average range of $40 to $50 and more importantly the payback period on that marketing investment is 6 months to 12 months depending on the corridor. So remember we have this metric that we have used before which is the 36 months gross profit lifetime value which is about $190 currently. And as long as that lifetime value holds and that payback period holds, we are happy to spend at the high end of that range as long as we can acquire quality customers.

James Friedman – SIG

Okay. Thank you for the clarification.

Ryno Blignaut

Thank you.

Operator

Thank you. And our next question comes from Andrew Jeffrey from SunTrust.

Andrew Jeffrey – SunTrust

Good afternoon. Thanks for taking my question. Ryno I think I understand the discussion around the rupee and volatility or a lack there. I guess what I am trying to do as I look to square the circle as we did have very strong new customer growth to Darrin’s point. How much does that inform the sequential quarter revenue visibility or outlook so the fourth quarter and then the proceeding several quarters you look out into ‘14 is that a good leading indicator or is that a volatile enough number given the high repeat proportion of your business as to not necessarily have an impact?

Ryno Blignaut

I think you probably answered the question in that last statement that the new customer number obviously doesn’t drive the next quarter, because 90% plus of the business is repeat, so it doesn’t really impact the next quarter dramatically. Adding enough new customers over a span of time of course compounds in and it impacts the outer year or year number much more than it does the next quarter. So really as I was trying to explain to Mayank earlier in the call as the guidance range has just put the new customer number in, see what the model says and then try and compensate for this rupee volatility on top of that.

Andrew Jeffrey – SunTrust

Okay, that’s helpful. Thanks. And when you look at – we talked about some of the domestic P2P players, but when you look at the competitive environment there are a couple of smaller venture-backed participants from Italy (indiscernible) which I guess is still on sort of a beta mode. Can you speak to Xoom’s relative competitive advantage versus some of the other erstwhile disruptors out there which is you have had a lot of success and I would think they are going to be upstart to who want to challenge your model?

John Kunze

Yes, we are keeping a close eye on the entire industry including new entrants. And I think the differentiation that Xoom has applies mostly to new entrants in fact because they have to deal with the regulatory issues unlike incumbents who are already dealing with that the new entrants have to learn how to deal with that, have to have the regulatory capital. They certainly need to have the risk management in place to offer an easy to use experience without friction and add competitive screen and reject rates and loss rates that mean they can build a long-term thriving business. They need to payout network that can operate on sort of Xoom standard of as instant payouts as possible with full traceability, with full defect management. They need contact centers to be able to deal with the customers who call wanting to make sure that mom got the money and if she didn’t contact center that can confidently deal with the problem. And they also need trust in the consumer and years and years and years of brand building expensive media channels. So I would say we have been at this for more than 10 years and I think we are living proved this is very, very hard.

Andrew Jeffrey – SunTrust

Great, thank you.

John Kunze

Thank you.

Operator

Thank you. At this time I would like to hand the hand the conference back over to Mr. John Kunze for any closing remarks.

John Kunze

Thank you everyone for you time this afternoon. We appreciate your support and interest very much and look forward to ongoing conversation with you. Thanks again and good day.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes our program for today. You may all disconnect and have a wonderful day.

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