Travel search engine Kayak just filed an S-1 statement with the SEC for a proposed initial public offering. The company hopes to raise $50 million, according to the filing. For the nine months ended Sept. 30, 2010, Kayak generated $128 million in revenues, growing by 48 percent from last year. For the third quarter ended Sept. 30, Kayak generated $48 million in revenue, representing a growth of 80 percent from last year. Net income was down for the first three quarters to $6.2 million from $10.4 million in 2009.
From January to September, the travel site processed more than 469 million user queries for travel information, an increase of 37 percent from last year. For the last quarter, query volume increased 50 percent compared to the same period in 2009. Kayak’s mobile applications have been downloaded nearly 4 million times since March 2009. In the third quarter alone, Kayak saw 1 million downloads, representing growth of 152 percent compared to the same period in 2009.
Kayak says that one of its risks is that it depends on a third party to query airfare results. Kayak licenses faring engine software from ITA under an agreement which expires on Dec. 31, 2013. ITA’s software powered 42 percent of Kayak’s overall airfare query for the year. Airline travel queries accounted for approximately 85 percent of the searches performed on Kayak for the year and distribution revenues from airline queries represented approximately 26 percent of its revenue for the past nine months.
Kayak said that if the Google-ITA deal goes through, “Google could pursue the creation of new flight search tools which will enable people to find comparable flight information on the Internet without using a service like ours. According to Experian Hitwise, in September 2010, approximately 30 percent of travel searches began with Google. Upon completion of its acquisition of ITA, this number could substantially increase, as Google may choose to offer services that directly compete with the services we offer. Google may also cause ITA not to renew any agreements with us, or to renew agreements with us on less favorable terms. If ITA or Google limit our access to the ITA software or any improvements to the software, increase the price we pay for it or refuse to renew our contract and we are unable to replace ITA with a comparable technology, we may be unable to operate our business effectively and our financial performance may suffer.”
The company said that Orbitz accounted for 18.8 percent of Kayak’s revenue for the year, and Expedia accounted for 24.9 percent of revenues for Kayak. And Google supplies 8.1 percent of Kayak’s revenue via advertising. Kayak, which has raised $22 million in funding, was formed in January 2004 by co-founders of Orbitz, Travelocity and Expedia. The company co-founders include Steve Hafner, CEO, a co-founder of Orbitz; Paul English, CTO, a former VP of technology at Intuit; Terrell Jones, chairman, founder of Travelocity; and Greg Slyngstad, director, founder of Expedia. For more information, visit www.kayak.com.
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