CreditCards.com Files for IPO
CreditCards.com has filed to raise up to $115M in an initial public offering.
Earlier this morning, CreditCards.com, an online credit card portal that built its business around a valuable domain name, filed to raise up to $115M in an initial public offering. Although the exact valuation of the firm is not yet known, the firm’s S-1 filing with the SEC validates my previous assumption that the 2006 purchase of the firm was north of $100M.
In October 2006, we paid approximately $133.8 million in cash (counting approximately $350,000 in transaction fees and expenses) and issued approximately 2.1 million shares of Series A-1 convertible redeemable preferred stock at a price per share of $7.82 to the owner of the Predecessor in exchange for substantially all of the assets of the Predecessor.
That values the firm at more than $133.8M.
Internet Real Estate Group sold the domain to Click Success in 2004 for “only” $2.75M. Daniel H. Smith pocketed $97.7M from the sale to an Austin Ventures-backed group in 2006. The purchase by the group in 2006 from Click Success was financed partially with debt from American Capital Strategies (NASDAQ: ACAS).
CreditCards.com’s S-1 filing is a treasure trove of information regarding the firm’s traffic (they actually have more than one domain driving traffic) and earnings per visitor. In the first half of this year, the firm received 5.899M visitors and earned $4.64 per visitor. The traffic was up only slightly from the same period last year, but revenue per visitor increased 46%:
The increase [in revenue per visitor] was primarily driven by higher number of offers and conversion rates of website visitors into submitted or approved applications and higher prices that we negotiated and received from credit card issuers.
In 2006, CreditCards.com had $43M in revenues and a net income of $18.4M. That net margin shows why a business based primarily on a domain name and search engine optimization, and which carries no inventory, is such an appealing investment opportunity.
