In Front Of Its IPO, Kayak Reports Growth In Revenue But Income Down

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Late last year, travel search engine Kayak filed for an IPO, aiming to raise $50 million. The company just released a new version of its S-1 today, with updated financials. The company plans to list its stock on the NASDAQ under the symbol “KYAK.”

For the three months ending March 31 of this year, Kayak generated $53 million in revenue, which is up 43 percent from the same period in 2010. The company actually lost money in the quarter in terms of income, with a loss of $6.9 million. Adjusted EBITDA was $8.2 million.

In the filing, the company said it took a loss of $15 million in January 2011, when Kayak migrating traffic from http://www.sidestep.com to http://www.kayak.com. Kayak bought rival SideStep for $196 million in 2007. Because Kayak shut down SideStep’s site and URL, the company incurred a write-down of $15 million in the first three months of 2011.

From January to March, Expedia and its affiliates, including Hotels.com and Hotwire, accounted for 26 percent of Kayak’s revenues, followed by Orbitz, which accounted for 14 percent of Kayak’s revenues for the time period.

For the time period ending March 31, Kayak processed more than 214 million user queries for travel information, representing growth of 48 percent from 2010 and Kayak mobile applications have been downloaded over seven million times since March 2009. From January to March, Kayak saw one million downloads of its mobile apps, which include iPhone and Android apps.

While Kayak isn’t minting money, it’s probably a good sign for investors that the company is at least growing revenue.

One the risks Kayak identifies in the fling relates to Google’s acquisition of flight search software ITA Software. Kayak says that one of its risks is that it depends on a third-party (ITA) to query airfare results. Kayak licenses faring engine software from ITA under an agreement which expires on December 31, 2013.

ITA provides a large chunk (56 percent) of Kayak’s airfare query results and 29 percent of its airfare query results from January to March were obtained from other sources that used ITA. Basically, if Kayak somehow couldn’t use ITA’s software, it would be a big negative for the company. But Google cannot prevent licensing access to ITA’s software from third-parties, according to the DOJ mandate that pushed the $700 million deal through.

Kayak also acknowledged that with ITA’s technology, Google may also create other flight search tools and services that directly compete Kayak. Kayak is afraid that Google will include a better version of ITA’s software, that Kayak won’t have access to. From the filing: These services offered by Google could include enhancements or improvements in performance of the ITA software which may not be made available to us, such as improved performance that significantly increases the speed at which their software returns search results. Although the consent decree requires Google to renew our existing ITA agreement on the same terms, if ITA or Google limit our access to the ITA software or any improvements to the software, separately develop replacement software to which they claim we are not entitled or increase the price we pay for any improvements of replacement software and we are unable to replace ITA’s software with a comparable technology, we may be unable to operate our business effectively and our financial performance may suffer.