According to the World Bank, India is the largest market for inward remittances of funds. The country is expected to receive $71 billion in remittances this year. China is the second largest market with inward remittances expected at $60 billion. India's remittances are projected to grow 9.4% annually to $85 billion by the year 2015.
Xoom (Nasdaq: XOOM) recently announced their third quarter results with revenues growing 62% over the year to $32.3 million. The number of active customers using Xoom grew 39% over the year to over 997,750 and the volume of transactions grew 95% to $1.5 billion. The company's earnings also improved significantly as earnings grew to $0.06 per share compared with the loss of $0.31 per share for the previous year.
For the current quarter, revenues are projected to grow to $30.2 million-$31.2 million with a net loss of $0.03-$0.01 per share. They expect to end the year with revenues $120.3 million-$121.3 million with net income per share projected at $0.18-$0.21.
Xoom's International Expansion
Over the last few quarters, Xoom has expanded their international operations. Earlier this summer, they grew both their mobile and international presence with the launch of a Money Transfer App in Spanish for Android and iOS devices. The Spanish language App will be providing their Hispanic customers access to a fast and easy channel of fund remittances.
Within the fast growing Indian market, they announced the launch of money transfer service for non-resident Indians (NRIs). Using the new service, NRIs can now send funds to non-resident external and non-resident ordinary bank accounts in India within four hours of the transaction. Xoom still lags behind Western Union (NYSE:WU) as it only allows bank-to-bank transfer and not transfers from agent locations. Western Union, on the other hand, has several agent locations from where customers can pick up funds. It may be an expensive option, but by setting up agent locations, Western Union has managed to establish a much wider market reach. The Indian market is dominated by Western Union which commands nearly 80% of the market share.
As part of additional services to the Philippines, Xoom has launched a new text update service in the country that sends out SMS text messages to both the money recipients and the person transferring the money to let them know the status of the funds transfer. Customers can now track the money transfers from start to end, thus feeling safer about the transaction.
They are also growing their presence through partnerships and have recently tied up with Easypagos to offer their customers the capability to send funds to Ecuador. Within the U.S., they have entered into a strategic partnership with contract-free wireless service provider, Red Pocket Mobile, to help enhance their global money transfer network. The tie-up will open the Xoom website for fund transfer services to the customers of Red Pocket Mobile through both mobile and other electronic devices. Finally, in the Philippines, they have tied up with Banco De Oro (BDO), the largest bank in the country, to provide money transfer services that let customers pick up their money instantly at BDO locations.
Xoom's stock is trading at $27.90 with a market capitalization of $1.04 billion. It touched a high of $36.46 in July this year.
Disclosure: No positions.