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OpenTable |
OPEN, C+, 7 |
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Updated with $31.89 close |
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Online restaurant resv |
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Post-IPO shrs: 21.6mm |
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San Francisco, CA |
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2006 |
2007 |
2008 |
MarchQtr 09 |
IPO Mkt |
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Rev ($mm) |
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$27 |
$41 |
$56 |
$16 |
Cap (mm) |
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Gross profit % |
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35% |
31% |
32% |
32% |
$542 |
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Operating income % |
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0% |
-2% |
1% |
5% |
@$20 |
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Net after-tax income |
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$0.2 |
$9.2 |
-$1.0 |
$0.4 |
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Net income % |
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0.7% |
22.4% |
-1.8% |
2.3% |
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2008 Quarterly Progression |
2009 |
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March |
June |
Sept |
Dec |
March |
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Rev ($mm) |
$13 |
$14 |
$14 |
$15 |
$16 |
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Gross profit % |
30% |
31% |
33% |
32% |
32% |
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Operating income % |
3% |
0% |
-1% |
2% |
5% |
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Net after-tax income |
-$0.1 |
$0.2 |
-$0.3 |
-$0.9 |
$0.4 |
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Net income % |
-1% |
2% |
-2% |
-6% |
2.3% |
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VALUATION RATIOS |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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annualized quarterly results |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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OpenTable (OPEN) |
$542 |
8.5 |
370.3 |
9.9 |
12.2 |
11% |
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OVERVIEW |
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. Strong branded position in the US market, weaker in non-US markets |
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. Valuation: price range increased to $16-18 from $12-14, showing there is good demand for the IPO |
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. The strongest quarters are the 4th & 1st (just ended) so sequential revenue progress may depend somewhat on economy |
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. Uses a diner’s loyalty program to encourage repeat, recurring reservation business |
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. Relatively low gross profit of 32% |
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BUSINESS |
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. Online network connecting reservation-taking restaurants and people who dine at those restaurants. |
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. Solutions include a proprietary Electronic Reservation Book, or ERB, for restaurant customers and www.opentable.com, a popular restaurant reservation website for diners. |
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. The OpenTable network includes approximately 10,000 OpenTable restaurant customers spanning all 50 states as well as select markets outside of the United States.
. During the three months ended March 31, 2009, seated an average of approximately three million diners per month. |
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REVENUE MODEL
½ about recurring |
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. Restaurants pay a one-time installation fee for onsite installation and training, a monthly subscription fee for the use of our software and hardware and a fee for each restaurant guest seated through online reservations. The online restaurant reservation service is free to diners. |
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. Recurring revenue: for the twelve months ended December 31, 2008 and the three months ended March 31, 2009, subscription revenues accounted for 54% and 52% of total revenues, respectively, and reservation revenues accounted for 41% and 43% of total revenues, respectively. |
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. International: revenues outside of North America for the twelve months ended December 31, 2008 and the three months ended March 31, 2009, were $2.8 million and $0.8 million, respectively, or 5% and 5% of total revenues, respectively.
. Closed offices in Spain and France in the fourth quarter of 2008. In many international markets OPEN is not the first entrant and there exists greater competition with stronger brand names than OPNE has faced in North American markets |
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LOYALTY PROGRAM |
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Dining Rewards Loyalty Program |
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. The standard award is 100 points per reservation |
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. Every 100 Dining Points is equal to one dollar |
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LITIGATION |
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. In July 2007, a complaint was filed against the OPEN by Online Reservations LLC ("Online Reservations") alleging intellectual property rights infringement. On March 19, 2008 the OPEN reached a settlement with Online Reservations in the amount of $1,600,000. The settlement was recorded as general and administrative expense in the third quarter of fiscal year 2007 |
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. On May 12, 2009, Mount Hamilton Partners, LLC, or Mount Hamilton, filed a patent infringement lawsuit against us in the United States District Court for the Northern District of California, seeking, among other things, a judgment that we have infringed a certain patent held by Mount Hamilton, an injunctive order against the alleged infringing activities and an award for damages. If an injunction is granted, it could force OPEN to stop or alter certain business activities, such as certain aspects of OPEN’s points-based loyalty program, |
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SEASONALITY |
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The number of reservations made through OPEN’s system has generally increased at a higher rate in the first and fourth quarters compared to the second and third quarters. |
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COMPETITIVE ADVANTAGE |
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. OpenTable online reservation network communicates directly and in real time with the OPEN’s ERB software maintained at each restaurant. |
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. Additionally, OPEN offers diners all the conveniences and time savings associated with booking reservations online, including the ability to: book reservations around-the-clock, even when restaurants are closed; find available tables in real time across a selection of local restaurants; receive immediate confirmation of the reservation via email; change or cancel reservations online; and earn Dining Reward Points, redeemable for Dining Cheques accepted by OPEN’s restaurant customers. |
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INTELLECTUAL PROPERTY |
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Relies on a combination of patent, trademark, trade secret and copyright law and contractual restrictions to protect intellectual property. These afford only limited protection. |
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EMPLOYEES |
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As of March 31, 2009, had 300 full-time employees including 100 in operations and support, 81 in sales and marketing, 69 in technology and 50 in general and administrative functions. |
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USE OF PROCEEDS |
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Use of $26.3mm in IPO proceeds from sale of 1.6mm shares |
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(stockholders intend to sell 1.4m shares) |
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General corporate purposes |
