2011 is shaping up to be an active year for US-based Internet and new media IPOs. Recent IPO filers include real estate information marketplace Zillow (ZLOW), leading online professional network LinkedIn (LNKD), online vacation rental marketplace HomeAway (AWAY) and Internet radio provider Pandora Media (P). Many more high-profile US Internet companies are anticipated to file for an IPO in the coming months.
Zillow, Inc., which operates an online marketplace providing detailed real estate information on 100 million US homes, filed on Monday with the SEC to raise up to $52 million in an initial public offering. The Seattle, WA-based company, which was founded in 2004, booked $30.5 million in sales last year, up from $17.5 million in the year ago period. The company turned EBITDA positive in mid-2010. Citi is the lead underwriter on the deal.
LinkedIn, the leading professional social networking website with more than 90 million members worldwide, filed in January with the SEC to raise up to $175 million in an initial public offering. A quick glimpse of the numbers suggests that the company could easily be in the $2-$3 billion range (if not higher) given an annualized revenue-run rate of $250 million, top-line growth of 100% and current EBITDA margins of 18-20%. The company has been cash flow positive for at least three years with annualized cash flow from operations close to $50 million. While the company has been deploying much of that cash back into the business in the form of capital expenditures to support its platform growth, the business model appears highly scalable and should generate meaningful amounts of free cash flow as the business scales.
The Mountain View, CA-based company, which was founded in 2003, booked $201 million in sales for the 12 months ended September 30, 2010. Morgan Stanley, BofA Merrill Lynch and J.P. Morgan are the lead underwriters on the deal.
HomeAway, Inc., which operates the world's largest online marketplace for vacation rentals, filed in March with the SEC to raise up to $230 million in an initial public offering. The Austin, TX-based company was founded in 2004 and launched commercial operations in 2005.
According to the SEC filing, the vacation rental website attracted over 220 million visits and averaged over 9.5 million monthly visitors last year. Travelers use the website free of charge and are able to search through more than 500,000 paid listings for vacation rentals of properties located in more than 145 countries. The rapidly expanding company generates revenue by charging property owners for one-year listings; it booked $43 million in Adjusted EBITDA on $168 million in sales last year, a 40% increase from the $120 million in sales booked in 2009. The company booked $18 million in sales in 2006, respresenting a 75% four year-CAGR. HomeAway also benefits from strong cash flow generation ($62 million in 2010; +38% YoY) thanks to its advance payment, subscription-based model and high renewal rates (76%).
Principal shareholders include Austin Ventures (24% stake), Redpoint Ventures (19%), Technology Crossover Ventures (15%), Institutional Venture Partners (9%) and Tiger Global Management (6%). From 2005 to 2010, the company has raised an impressive $404 million in equity and $111 million in bank debt. Morgan Stanley, Deutsche Bank Securities, Goldman, Sachs & Co. and J.P. Morgan are the lead underwriters on the deal.
Pandora Media is the leading Internet radio company in the US with a 50% share (in terms of listening time) among the top 20 stations and networks in the country. As of last month, it had 80 million registered users, more than double the number of users it reported at the end of 3Q10. Pandora was founded in 2000 as TheSavageBeast.com before changing its name in 2005, when it launched its well-known Music Genome Project, which uses proprietary algorithms to create music content tailored to the tastes of each individual user. Since 2005, its listeners have created over 1.4 billion stations using its unique technology, which provides access to over 800,000 songs by more than 80,000 artists.
Pandora Media filed in February with the SEC to raise up to $100 million in an initial public offering. The Oakland, CA-based company, which was founded in 2000, booked $138 million in sales for the 12 months ended January 31, 2011. With backing from venture firms such as Crosslink Capital (23%), Walden Venture Capital (19%) and Greylock Partners (14%), all of which most recently invested in August 2010, the company has grown rapidly over the past few years. For the year ended January 31, 2011, it booked $138 million in sales (87% advertising; 13% subscription services), nearly tripled the $55 million it booked during the year-ago period. Pandora intends to use a portion of the IPO proceeds to redeem convertible preferred stock. Morgan Stanley and J.P. Morgan are acting as the lead managers on the deal.
No pricing terms or timing have been announced for these IPOs.
