The firm is opting for an unconventional auction-style IPO, in which the offering price will be determined by Google and its underwriters only after bids from interested investors have been submitted and analyzed.
In addition, the company’s ownership will be structured in such a way that co-founders Sergey Brin and Larry Page, and to a lesser extent CEO Eric Schmidt, will retain most of the control of the firm.
The filing also gives an unprecedented level of insight into Google’s very healthy finances. Notably, it had sales of almost a billion dollars last year, is profitable in nine-figures, and has almost a half a billion dollars in cash in the bank.
The company hardly needed to go public, and the S-1 indicates that its hand was forced by SEC rules about private companies over a certain size. Yesterday was the absolute latest date Google had to file disclosures under these rules.
Google made a profit of $105.6m last year, on revenue of $961.8m, up 176% on 2002’s revenue of $347.8m. Profit was $99.6m in 2002. The firm has been profitable since 2001, when it recorded $6.9m net income.
The company recorded more revenue in the first quarter of this year, $389.6m, than it did in the whole of 2002. Compared to the first quarter of 2003, revenue was up 117% in the three months ending March 31 2004.
Advertising now brings in 95% of Google’s revenue. The remainder is made up of license fees from syndicating its search engine services and selling its enterprise search appliances. In the first quarter, ads brought in 96% of revenue.
Profit for the first quarter of this year was $63.9m. But Google does not anticipate maintaining these growth rates, and does not believe it can maintain its level of profitability, according to its SEC filing.
We believe our revenue growth rate will decline as a result of anticipated changes to our advertising program revenue mix, increasing competition and the inevitable decline in growth rates as our net revenues increase to higher levels, the filing says.
The company said the ads it provides via third party sites, its Google Network, are less profitable that the ones served up at Google’s own sites, due to the revenue sharing agreements it has in place with partners.
The firm had $454.8m in cash and equivalents on its March 21 2004 balance sheet, and total assets of $1.07bn.
In the risk factors section of the filing, Google names Microsoft and Yahoo as its biggest competitors (despite the fact that Microsoft’s search engine isn’t out of beta yet) and identifies extending its popularity to non-PC platforms as a challenge.
This article is based on material originally published by ComputerWire