GoTo.com: The Little Engine that ...
On June 18, GoTo.com (NASDAQ: GOTO) priced its initial public offering above the expected range at its debut and surged 49% in its first day of trading (shares have traded as high as $69.88). GoTo's performance was particularly impressive given the volatility of tech stocks and the less meteoric debut of other Internet IPOs. An offering of six million shares of GoTo was priced at $15 each through underwriters Donaldson, Lufkin & Jenrette, Salomon Smith Barney, Thomas Weisel Partners LLC and DLJdirect, Inc. The Company had expected the shares to be offered between $13 and $14 a share. The Company raised $103.5 million through the issuance of 6.9 million shares. This was in addition to the Series D Preferred Stock issued earlier in the quarter, which raised $25 million for the Company.
GoTo.com pioneered the online marketplace, pay for performance model that introduces consumers who search the Internet to advertisers who bid in an ongoing auction for priority placement in search results for key words. Consumers conduct keyword searches using the GoTo.com search service at its Web site and at thousands of network affiliate sites across the Internet. Advertisers bid for priority placement in the keyword search results with the highest bidder's site appearing first. Each advertiser pays GoTo.com the amount of its bid whenever a customer clicks on an advertiser's listing. GoTo provides consumers with quick, easy and relevant search listings and provides advertisers with a cost-effective way to target potential customers.
In July GoTo announced an agreement with Netscape Communications (NYSE: AOL) to become a leading search provider for Netscapes's popular Netscape Net Search program. GoTo's relevant, rich search results will be accessible to millions of visitors to Netscape's Netcenter™ as well as to users of Netscape Communicator browser software, where GoTo will be a search bookmark. GoTo will also be available to Netscape visitors on the Net Search page, one of the most heavily trafficked pages on the Internet.
The company reported revenue of $3.6 million in its first quarter as a public company (2nd Quarter 1999), up from $1.5 million in the previous quarter. Jeffrey Brewer, CEO of GoTo.com, remarked "We are very pleased with our 1999 second quarter results, a quarter which marked several milestones for the Company." GoTo achieved significant growth in each of its three core constituencies Ð advertisers, affiliates, and consumers. At the end of June 1999, GoTo had more than 10,000 advertisers, 80,000 network affiliate locations in its Search Syndication Network™ and an estimated 10 million users who benefited from the relevancy and simplicity of GoTo.com. "Paid Introductions" (consumer clicks onto an advertiser's paid listing) have risen from 15,000,000 in the 1st Quarter of 1999 to over 31,000,000 in the 2nd Quarter of 1999!
The company's operations grew substantially to support GoTo's growth. GoTo.com now employs more than 150 people, nearly doubling its payroll in three months. To accommodate the growth in advertisers on the site, GoTo rolled out its automated advertiser account maintenance tool, DirecTraffic Center™, which allows advertisers to instantaneously update their bids. GoTo also announced the launch of its Search Syndication Network™, a revolutionary program that enables any Web site to incorporate GoTo's search functionality into its site for free.
The addition of a new suite of tools for GoTo advertisers includes: a five minute sign up process; real time bid management; the ability to quickly add, modify and delete search terms online; a search term suggestion utility and daily online activity reports. These latest refinements allow advertisers more direct and precise control over their direct marketing.
GoTo is based in Pasadena, California and was launched in June of '98.
Jay Ferguson is a Board Observer. (Please see our list of Portfolio Companies inside)