xoom slide deck

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NASDAQ: XOOMJason A. Moser

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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.

The idea

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What does Xoom do?

Xoom provides consumer-to-consumer

online money transfer services.

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Market opportunity

$179B Collective amount that the top four remittance receiving countries (China, India, the Philippines and

Mexico) received in 2013 according to the World Bank.

$123B Amount of outbound remittance sent from the US in 2012 according to the World Bank’s Bilateral

Remittance Matrix.

$81B Amount of 2012 US outbound remittance that went to countries Xoom serves.

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Market opportunity

Source: Xoom Investor Relations

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Market opportunity

$125BAccording to World Bank projections, this is what the total

amount of outbound remittance from the US to the countries Xoom serves will be in 2018 based on the countries Xoom serves today. It does not account for the additional countries that Xoom

will add over the coming 5 years.

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Immigration populationXoom’s typical customers left their home countries and moved to the US to seek better

employment opportunities and to support their family and friends back home.


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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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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.

Capital light

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Where does Xoom go?


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What metrics matter?

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Mobile mattersPercentage of Xoom transactions made from mobile devices


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Loyalty matters


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How it works


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Fundamentals of funding

90% The percentage of Xoom’s GSV (gross sending volume) that is funded by bank accounts through ACH (Automatic Clearing House).

95%The percentage of ACH funded transactions that Xoom processes instantly

in order to expedite disbursement by its partners. Xoom calls this “instant ACH.”

4The number of days Xoom is exposed to the risk of reversals for ACH transactions. Reasons for reversals include bounced checks, invalid

accounts, fraud, etc.

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Risk management


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Tomorrow versus yesterday

Xoom (XOOM) Western Union (WU)

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Margins mean money

65% - 70%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

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Xoom is projected to grow sales at a 15% CAGR over the next five years. In 2018 it should bring in about $250 million sales.

Going beyond that, five more years at a 10% CAGR have revenue in year ten (2023) at $395 million.

Discounted cash flow gives a few different looks at today’s price with gross margin at 68% and cash on the balance sheet: 10% discount rate: $30 12% discount rate: $24 15% discount rate: $18.50

The market’s take on the stock price today is the right one. BUT what could Xoom look like in five years? Is there growth

to be had?

Understanding present worth

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An investment in Xoom is really about what the stock’s going to look like in 5 – 10 years.

With a $700 million market cap, it’s still dwarfed by Western Union’s $8.5 billion.

What kind of multiple would the market assign Xoom in year five (2018) when it’s making $250 million in revenue versus $122 million in 2013? It gets 6X sales today: 6X sales in year five is a $1.5 billion company and $40 stock price with

zero share dilution. Reasonable? Market cap yes, zero dilution no. Don’t try to assign a share price to a growth story. Look at the

company as a whole and assess its competitive position. Do you want to own this business in five years? Ten?

Understanding future worth

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ManagementJohn Kunze

CEO/President since 7/2006 Spent 13 years at Adobe Systems

Ryno BlignautCFO since 3/2008

Chief Risk Officer since 8/2012

No photograph

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ManagementKevin Hartz

Xoom Co-Founder 2001Board Director

CEO and Co-Founder of EventbriteEarly investor in PayPal

Julian KingSVP of Marketing and Corporate

DevelopmentWith Xoom since 8/2005

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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, may

stifle growing market share. Exchange Rates: Weak dollar can ding transactions and GSV. Geography & Regulation: 60% of 2013 revenue was tied to

transfers to India and the Philippines. The Big Macro: Weak economic conditions hamper volume. Float: With a float of 57% shares can be volatile.

Risks

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Western Union: With its vast physical presence it’s not going away, but it is being disrupted thanks to the Internet.

Big banks: See above. PayPal: Doesn’t focus on Xoom’s core market and in fact, as in

many cases, PayPal works with Xoom, not against it. WalMart: WalMart's announced money transfer service isn't

disruptive. It's a bigger threat to Western Union than to Xoom.

Moneygram: Also has relationship with WalMart, also beholden to drag of physical infrastructure.

Facebook: Will Facebook payments wipe out the money transfer industry in the process? Doubtful, but possible.

Competition

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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 key differentiators.

Walmart’s money transfer service isn't disruptive. It's complementary to its physical infrastructure and client base.

Xoom focuses on the US outbound remittance, a small part of an important and growing market.

BlueKite acquisition is in line with stated growth strategy of pursuing adjacent services. Stay tuned.

Bottom line for investors

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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.

xoom slide deck

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