Kayak Software Files For IPO

Kayak Software, which owns the travel site Kayak.com, has filed for an initial public offering, hoping to raise up to $50 million as Google prepares to enter the online travel market.

Kayak, which declared its IPO plans Wednesday in a filing with the Securities and Exchange Commission, did not provide a date for the IPO, but said the lead underwriters would be Morgan Stanley and Deutsche Bank Securities. Other underwriters include Piper Jaffray, Stifel Nicolaus Weisel, and Pacific Crest Securities.

Kayak did not list a symbol or say which stock exchange it would trade under. The company said it hopes to raise at least $50 million, but that's a rough estimate that could vary considerably from the actual money raised.

Cofounders of Expedia, Travelocity, and Orbitz founded Kayak in 2004. The site aggregates flights and available rooms from multiple airlines and hotels, respectively, giving users the opportunity to compare prices.

As of the end of October, the company had 140 employees and local websites in the United States and 14 other countries. In the first nine months of this year, the site generated $128 million in revenue, representing year-over-year growth of 48%, according to the filing. For the quarter ended September 30, the company generated $48 million in revenue, an increase of 80% year over year.

Despite the strong growth rate, the company listed as a key risk factor Google's announcement in July that it would acquire ITA Software, a maker of applications for organizing airline travel data, for $700 million. ITA customers include Kayak, as well as Alaska Airlines, American Airlines, Bing, Continental Airlines, Hotwire, Orbitz, Southwest Airlines, TripAdvisor, United Airlines, US Airways, and Virgin Atlantic Airways. The deal is pending approval from federal regulators.

"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," Kayak said in the filing.

The company also said that Google in September accounted for about 30% of travel searches, and that number could increase substantially if the ITA deal went through. In addition, Google could decide to offer its own travel services and compete with companies like Kayak.

In announcing the acquisition in July, Google said it had no plans to sell airline tickets directly or to dictate ticket pricing. The company also said it would honor ITA's existing agreements and hoped to attract new customers.