MapQuest.com Starts IPO Journey

MapQuest.com first made a splash on the Internet in 1996 with a Web site
that spit out instant driving directions (and accompanying maps) from
anyplace to anyplace, debunking forever the notion that “you can’t get
there from here.”

For new users especially, MapQuest.com provided one of the first “gee
whiz” experiences online. Its URL quickly found an honored place in the
browser bookmarks of thousands of surfers who couldn’t wait to tell
their friends about yet another cool site they found.

Today MapQuest.com is the most popular travel/tourism stop in
cyberspace, comfortably beating out competition such as Preview Travel
and Microsoft’s Expedia and Sidewalk.com, according to Web ratings
measurement company Media Metrix.

Sometime soon MapQuest.com plans to cash in on its word-of-mouth cachet
and brand loyalty with a public offering that it hopes will raise $50
million. The Mountville, Pa.-based company filed an IPO last Friday and
intends to trade on Nasdaq under the symbol MQST.

Its high Web profile notwithstanding, MapQuest.com was formed in 1967 as
a unit of printing giant R.R. Donnelley & Sons, turning out cartographic
products and services.
In 1994 it was spun out as GeoSystems Global Corp., a digital mapping
software company. Donnelley last year sold off all shares of
MapQuest.com, and Trident Capital Partners now owns 36% of the company.

While most of MapQuest.com’s revenues still come from digital mapping
(68% in 1998),
the company is increasing revenues through Internet business products
and services. Using MapQuest.com server software, other Web sites can
post directions to corporate offices for customers bold enough to get
offline and into the real world.

Of course, the company’s Web site offers free directions for users,
generating revenues through online advertisers. According to the
company, MapQuest.com users are better-educated than the average Web
user, have a higher tendency to spend more money online (and,
presumably, are less likely to get lost).

On the surface, MapQuest.com isn’t exactly heading into its IPO with a
head of revenue steam. Its $24.7 million in revenues for 1998 were up
26% from 1996’s $19.6 million and just 15% from last year’s $21.4
million. Great growth in a traditional business, but rather modest when
compared to other Internet offerings.

But there’s good news hidden in the revenue figures; the company is
becoming less dependent on big customers. Revenue from MapQuest’s top 10
customers fell from 58.3% in 1996 to 44.5% of total revenue in ’97 to
27.2% last year. That means MapQuest is selling to more businesses, thus
expanding and strengthening its revenue base.

There are more favorable numbers: MapQuest.com’s losses declined from
$7.6 million in ’97 to $3.2 million last year, another economic anomaly
among Internet stock plays.

Barriers to entry in the Internet map-enabling market are low, and
similar online services now exist, so MapQuest’s directions for success
rest on the company’s ability to build on its strong, recognizable brand
name. Thanks to deals with portal giants Yahoo, Excite, Infoseek and
Lycos, MapQuest may be well on the way to achieving this crucial goal.

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