We estimate that the net proceeds from the sale of 5,220,893 shares of our
common stock that we are selling in this offering will be approximately $74.7
million, based on the initial public offering price of $16.00 per share, and
after deducting underwriting discounts and commissions and estimated offering
expenses payable by us. If the underwriters’ option to purchase additional
shares from us is exercised in full, we estimate that we will receive additional
net proceeds of $14.1 million. We will not receive any proceeds from the sale of
shares of our common stock by the selling stockholders.
The principal purposes of this offering are to obtain additional capital, to
create a public market for our common stock and to facilitate our future access
to the public equity markets. We plan to invest the net proceeds in short-term,
investment-grade, interest-bearing securities such as money market accounts,
certificates of deposit, commercial paper or guaranteed obligations of the U.S.
government. We currently intend to use the net proceeds received by us from this
offering primarily for working capital and also for general corporate purposes.
We may also use a portion of the net proceeds received by us from this offering
for acquisitions of complementary businesses, technologies or other assets. We
have not entered into any agreements or commitments with respect to any specific
acquisitions and have no understandings or agreements with respect to any such
acquisition or investment at this time. We cannot specify with certainty the
particular uses for the net proceeds to be received by us from this offering.
Accordingly, our management team will have broad discretion in using the net
proceeds to be received by us from this offering.
The markets in which we compete are highly competitive and are highly
fragmented. However, we believe we have competitive strengths that position us
favorably in our markets, including the convenience, speed and competitive cost
of our services. Our largest competitors are The Western Union Company and
MoneyGram Payment Systems, Inc. We also compete against country-specific
players, banks and informal person-to-person money transfer service providers
that evade regulation. For example, in money transfers sent from the United
States to India, we compete with ICICI Bank. In the future, new competitors or
alliances among established companies may emerge.
Company Description
Xoom is a pioneer and leader in the online consumer-to-consumer international
money transfer industry. Our customers use Xoom to send money to family and
friends in 30 countries. Since January 1, 2008, our customers have used Xoom to
send $6.6 billion, including $1.7 billion in 2011 and $3.2
billion in 2012.
According to the World Bank, international consumer money transfer volume
totalled $513 billion worldwide in 2011 and is forecasted to grow to
approximately $685 billion by 2015. Our modern online and mobile platforms
disrupt traditional forms of money transfer and deliver our customers a
convenient, fast and cost-effective way to send money.
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. Our customers represent a broad range of professions and education
levels, but share common traits in that they have bank accounts and actively use
the Internet or mobile devices. They maintain close ties to home and regularly
use Xoom to help their family and friends in their home countries afford basic,
and sometimes dire, needs for food, shelter, healthcare and other critical,
non-discretionary expenses.
We earn and maintain our customers’ trust by providing a high level of service
through convenient, fast and cost-effective money transfers. Xoom’s money
transfers are initiated online or through a mobile device and can be sent at any
time, from any Internet-enabled location. Recipients receive money in the manner
they prefer and to which they are individually or culturally accustomed, at
major banks and leading retailers. We believe we process and complete money
transfer transactions as fast as, or faster than, our competitors, and our
customers and their recipients can track the status of their transactions in
real time, providing them peace of mind. Our business model allows us to provide
our customers with cost-effective money transfers because we do not pay
originating agent commissions and the majority of our transfers are funded
directly from bank accounts, which lowers our cost of sales.
Our solutions are built on our proprietary technology which, combined with our
risk management capabilities and global disbursement network, constitute our
operating platform. Our technology enables easy-to-use online and mobile sender
interfaces, effective risk management and seamless integration with our
disbursement partners’ systems. We have developed extensive partnerships with
major banks and leading retailers who form our global disbursement network
across 30 countries and deliver a high quality of service through
regionally-recognized, trusted brands.
We generate revenue from transaction fees charged to customers, and from foreign
exchange spreads on transactions where the payout currency is other than U.S.
dollars. Service fees vary by country, type of funding source, disbursement
currency and send amount, but do not vary by method of disbursement, how the
transaction was initiated (via computer or mobile device) or the location of the
customer. Our foreign exchange revenue is derived from the difference between
our cost to buy local currency and the price at which we sell the currency,
referred to as our foreign exchange spread. Our foreign exchange spread varies
by country, but our spreads have typically ranged from approximately 1% to 3% of
a transaction’s principal send amount.
We believe our business model is often characterized by predictable and
recurring revenue from our large and growing base of new and repeat customers.
We have achieved significant revenue growth as our customer base has expanded.
From 2008 to 2012, our revenue increased from $14.1 million to $80.0 million,
representing a 54% CAGR. We incurred a net loss of $5.9 million in 2012 as we
continued to invest in growing our revenue. We have incurred net losses
primarily as a result of long-term investments in our service innovation,
solutions and marketing programs to increase brand awareness.
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We were incorporated in California in June 2001 and reincorporated into Delaware
in November 2012. Since our inception we have provided consumer-to-consumer
online money transfers. From 2003 to 2005, we also offered other services within
the money transfer business. In 2006, we chose to focus solely on our current
business model, providing online consumer-to-consumer international money
transfers.
Our principal executive office is located at 100 Bush Street, Suite 300, San
Francisco, CA 94104. Our telephone number at our principal executive office is
(415) 777-4800. Our website address is www.xoom.com.