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Kayak Debuts On Nasdaq A Billion Dollar Company

Update: Shares of Kayak Software Corporation jumped almost 30 percent on the company’s first day of trading on the NASDAQ exchange Friday. The successful public offering must be a relief, considering Facebook’s disappointing IPO on the same stock exchange using the same corporate bankers back in May.

BOSTON — Online travel agency Kayak Software Corp. debuted on the Nasdaq Friday morning under the ticker symbol KYAK. In its initial public offering, the Norwalk, Conn., company is issuing 3.5 million shares at $26 apiece, above the range analysts had expected. That values Kayak at $1 billion overall.

Most of the company’s staff is located just west of Boston, in Concord, at Kayak’s technology center responsible for the company’s Web and mobile interfaces.

Kayak co-founder and CTO Paul English. (Flickr/rfong)

Kayak co-founder and CTO Paul English. (Flickr/rfong)

“If you look at all the travel websites, it’s painful,” co-founder and CTO Paul English told the website TechCrunch earlier this year.

“Travel’s supposed to be fun. The planning part and the booking part is awful. And the customer service. And I think we’re seen as the innovators in this space, and I just think there’s a lot opportunity to make things simpler, and that’s what we’re focused on doing.”

Kayak.com aggregates hundreds of travel sites. Founded in 2004, it’s popular among users because it’s fast and easy to use. To reach those many users, travel providers pay to be included in the website’s search results. That’s different from many of Kayak’s competitors. They make most of their money off commissions when people book travel.

While the growing online travel market has been good for the company, whose revenues grew to $225 million in 2011, the IPO market has not.

“Kayak is really one of the companies that suffered because of the Facebook debacle,” said David Menlow of IPOfinancial.com.

Menlow says Facebook’s disappointing public offering has scared away many individual investors who otherwise would have been interested in backing a tech company. He says Kayak went public with a relatively small number of shares to ensure strong demand for its shares, rather than waiting for investors to get their appetites back.

“It’s important to realize that the company first filed to become public in November of 2010,” Menlow said.

That’s a long wait for a company trying to go the next level. In the meantime, other online travel websites such as TripAdvisor in Newton have been growing.

“[Kayak’s] been doing really well, but it has a lot of challenges ahead for itself,” said Ali Naveed, senior analyst at the Boston research firm Trefis. He says Google is rolling out its own travel search product after buying Cambridge-based ITA Software two years ago. Naveed says the online travel market has plenty of room to grow, so Kayak still has plenty of potential.

“It has a lot to do with innovation and product enhancement,” Naveed said. “As long as they’re able to provide a user-friendly option to customers, they’ll maintain a competitive edge.”

Kayak’s successful IPO may also have a positive ripple effect for the local economy. A thawing IPO market is positive for companies considering the same move. Meanwhile, venture capital firms that invested in Kayak have been waiting for years to cash out. By selling part of the company on the public markets, some of those dollars will be available to invest in new start-ups.

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