Happy IPO Friday! Two tech startups are making their public debuts today: Palo Alto Networks and Kayak Software, and so far, so good on both. Morgan Stanley, scapegoat for the troubled Facebook IPO brouhaha, is leading both, for what it’s worth. Kayak priced its IPO last night at $26 per share, and is looking to raise $91 million at a valuation of $1 billion. Originally, the travel company was looking at shares priced between $22 and $25.
Palo Alto, meanwhile, offered 6.2 million shares at $42 each, after raising the price range from $38-$40 last week, which was up from $34-$37, originally. Both are now trading up.
KAYAK
Trading under “KYAK,” the IPO is for 3.5 million Class A shares, and all those issued prior will be converted to Class B shares with 10 votes each. Piper Jaffray, Stifel Nicolaus Weisel and Pacific Crest Securities are co-managers for the offering, with Morgan Stanley and Deutsche Bank Securities jointly leading. Kayak has 185 employees as of June 30th.
In Kayak’s previous quarter, the travel company reported $73.3 million in revenue, up 39% from $52.7 million in the year-ago quarter, and net income of $4.1 million, or 11 cents per share, fully diluted. Revenue is generated by ads and referrals to airlines, hotels, rental cars, etc.
But you knew all that, right? Here’s the big idea behind Kayak: it makes the still amazingly super-painful process of booking online travel easier by indexing hundreds of travel sites together so you can find the best prices for your flight, hotel, rental car, or cruise.
Kayak lets users book on site, which offers a better user experience. It also has expanded to offer tools that help users interact with the service beyond the initial booking – for example, its Trip Management feature lets travelers build itineraries which can be shared with family and friends and viewed from mobile. This is the kind of thing that helps users develop loyalty, because the service becomes thought of as more than a booking tool.
In 2011, the site saw 899 million user queries, which was 42% up from 2010. People like this thing. Kayak’s mobile apps have been downloaded over 15 million times since their debut in March 2009. During the past quarter, those apps were downloaded 3 million times, or 43% growth over the same time last year.
Kayak has been busy focusing on product since its original filing (ages ago, in late 2010! – yep, Kayak delayed a lot. “Market conditions.” Hmm.) It launched a redesigned iPad app, updated its website’s UI in order to offer a more universal consumer experience across web, mobile and apps, and launched direct booking for flights. But it also lost its first-ever CFO Willard (Bill) Smith, who joined in May of 2011 to help Kayak move towards an IPO. He left the company for a competitor.
One of the biggest threats to Kayak is Google, which bought ITA’s travel search software and launched an ITA-integrated search product of its own called Google Travel. ITA’s software is used by other travel search providers, including Kayak, Expedia, and Microsoft.
This morning, Kayak is up (as of time of writing) 27.85% to $33.24.
PALO ALTO
Santa Clara-based Palo Alto Networks, a network security startup known for its firewall tech, is offering 4,687,259 company shares and stockholders are selling 1,512,741 shares (totaling 6.2 million), and was looking to raise $260.4 million. VC’s Greylock and Sequoia (22.3% before, 20.7% after) aren’t selling. The deal is being led by Morgan Stanley, and includes Credit Suisse, Barclays, UBS and Raymond James.
For the July 2011 fiscal year, the company, valued at $2.8 billion, had revenue of $118.6 million, up from $13.4 million in 2009, and narrowed its loss from $21.1 million a year earlier to $12.5 million. In the nine months ending April 30, it brought in revenue of $179.5 million. The IPO was over-subscribed and this morning was trading up 31%. This morning, it started trading at $55.15 then climbed to $56.40, up 34%.
Palo Alto’s IPO follows a successful IPO from IT management services provider ServiceNow Inc last month.
More to come.