OpenTable Beats on Earnings & Rev - Analyst Blog

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OpenTable Inc. ( OPEN ) reported earnings of 37 cents in the third quarter of 2013, which comprehensively beat the Zacks Consensus Estimate by 8 cents and surged 27.6% from the year-ago quarter. The strong year-over-year growth was driven by robust top-line performance.

Quarter Details

Revenues surged 17.5% year over year to $46.7 million and were slightly better than the Zacks Consensus Estimate. The year-over-year growth was driven by 27.1% surge in reservation revenues (60.0% of revenues) and 10.8% increase in subscription revenues (34.0% of revenues).

North America revenues jumped 17.7% from the year-ago quarter to $40.6 million, driven by strong growth in both reservation and subscription revenues. OpenTable's recent acquisition Rezbook contributed $0.5 million in revenues. International revenues increased 15.9% year over year to $6.1 million.

Installed restaurants were 30,964 compared with 26,360 at the end of the year-ago quarter. The acquisition of Rezbook added 2,398 restaurants during the quarter. Total seated diners were 38,514K compared with 29,740K reported at the end of the year-ago quarter. Rezbook contributed 773,000 seated diners in the quarter.

It was interesting to note that approximately 41.0% of the North American seated diners made reservations on a mobile device during the quarter.

OpenTable reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $20.0 million compared with $17.5 million in the year-ago quarter.

Total operating costs and expenses as percentage of revenues increased 120 bps from the year-ago quarter to 78.1% as a 230 bps decline in general and administrative expense was offset by a 100 bps, 90 bps and 170 bps rise in operations and support, sales and marketing and technology related expenses, respectively.

Higher level of investment hurt profitability as OpenTable reported operating margin (including stock based compensation but excluding one-time items) of 25.8%, down 10 bps from the year-ago quarter.

Net income margin increased 190 bps from the year-ago quarter to 18.9%, primarily due to lower tax rate.

OpenTable exited the third quarter with $102.8 million in cash & cash equivalents.

Guidance

OpenTable expects revenues to be in the range of $50.7 million to $52.1 million for the fourth quarter of 2013. North American revenues are expected to be around $43.1 million to $44.1 million, while International revenues are likely to be within $7.6 million to $8.0 million.

For the fourth quarter, adjusted EBITDA is expected to be in the range of $21.9 million to $23.3 million, while earnings are expected to be in the range of 49 cents to 53 cents.

For full year 2013, revenues are expected to be in the range of $188.5 million to $189.9 million. North American revenues are expected to be around $162.9 million to $163.9 million, while International revenues are expected in the range of $25.6 million to $26.0 million.

For 2013, adjusted EBITDA is expected to be in the range of $80.8 million to $82.2 million, while earnings are expected to be in the range of $1.94 to $1.98 per share.

Our Take

OpenTable offers mobile and web solutions that enable users to book restaurant tables. The company reported an impressive third quarter and provided positive fourth quarter and full year guidance. We believe that the strong growth in mobile user base is a significant growth opportunity for the company going forward.

Moreover, OpenTable continues to expand in the overseas markets, which will boost top-line growth. Additionally, continuing investments in marketing activities will boost traffic going forward. However, these investments will keep margins under pressure in the near term.

Currently, OpenTable has a Zacks Rank #3 (Hold). Other stocks that are performing well at current levels include Support.com Inc ( SPRT ) , Callidus Software ( CALD ) and Facebook ( FB ) . All these stocks carry a Zacks Rank #1 (Strong Buy).



CALLIDUS SOFTWR (CALD): Free Stock Analysis Report

OPENTABLE INC (OPEN): Free Stock Analysis Report

SUPPORT.COM INC (SPRT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CALD , OPEN , SPRT

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