OpenTable Inc. (
reported earnings of 31 cents per share in first-quarter 2014,
which beat the Zacks Consensus Estimate by a penny. EPS
(including stock-based compensation) declined 5.6% from the
year-ago quarter. The year-over-year decline was attributed to
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Revenues surged 18.2% year over year to $53.8 million and were
almost in line with the Zacks Consensus Estimate. Revenues were
within management's guided range of $53.3 to $54.9 million. The
year-over-year growth was driven by 26.6% surge in reservation
revenues (63.7% of revenues) and 12.9% increase in subscription
revenues (30.8% of revenues).
North America revenues jumped 16.5% from the year-ago quarter to
$46.0 million, driven by strong growth in both reservation (up
22.3%) and subscription revenues (up 12.4%). Revenues were within
management's guided range of $45.8 to $47.0 million. Rezbook
contributed $101K to reservation revenues and $442K to
Installed restaurants base in North America was 23,862 compared
with 19,801 at the end of Mar 31, 2014, which include Rezbook's
1,967 restaurants. Seated diners (in thousands) were 46,774
compared with 37,356, up 24.0% year over year. Rezbook
contributed 1.1 million seated diners in the quarter.
It was noteworthy that, during the quarter, approximately 42.0%
of the North American seated diners made reservations through
mobile devices. The company's pilot mobile payments service in
San Francisco was well-received during the quarter. The company
plans to launch payments service to at least 20 new markets in
the second half of 2014.
International revenues increased 28.9% year over year to $7.8
million (toward the high-end of management's guided range of
$$7.5 to $7.9 million), driven by strong growth in both
reservation (up 55.5%) and subscription revenues (up 17.0%).
International installed restaurants base was 7,721 compared with
7,829 at the end of Mar 31, 2014. Seated diners were 4,271
compared with 3,088 at the end of Mar 31, 2014, up 38.0% year
OpenTable reported adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) of $20.7 million, which
increased 4.4% from the year-ago quarter. This was slightly
better than management's guided range of $18.7 to $20.2 million.
Total operating costs and expenses as percentage of revenues
increased 310 basis points (bps) from the year-ago quarter to
81.3%, driven by 270 bps jump in sales & marketing and 170
bps surge in both technology related expenses and operations
& support related expenses. These fully offset a 300 bps
decline in general & administrative expense.
Operating margin (including stock-based compensation but
excluding one-time items) contracted 190 bps from the year-ago
quarter to 22.2%, primarily due to higher operating expenses.
Net income (excluding stock-based compensation and one-time
items) was $11.0 million or 45 cents compared with $10.7 million
or 45 cents reported in the year-ago quarter. EPS were better
than the management's guided range of 39 to 43 cents.
OpenTable exited the first quarter with $117.6 million in cash
& cash equivalents.
OpenTable expects revenues to be in the range of $54.7 to $56.3
million for the second quarter of 2014. North American revenues
are expected to be within $47.0 to $48.2 million, while
International revenues are likely to be within $7.7 to $8.1
Management expects the average ERB and Guest Center subscription
rate to be $242 for the second quarter. OpenTable expects North
American other revenues to be approximately $2.6 million for the
For the second quarter, adjusted EBITDA is expected to be in the
range of $20.1 to $21.9 million. North American adjusted EBITDA
are expected to be around $22.2 to $23.4 million, while
International adjusted EBITDA loss is likely to be within $2.1 to
Non-GAAP EPS is expected to be in the range of 43 to 48 cents.
The mid-point of the guided range is much higher than the Zacks
Consensus Estimate of 35 cents.
For fiscal 2014, revenues are expected to be in the range of
$221.9 to $228.1 million (prior guidance $221.0 to $229.0
million). North American revenues are expected to be around
$189.7 to $194.3 million (prior guidance $189.0 to $195.0
million), while International revenues are expected in the range
of $32.2 to $33.8 million (prior guidance $32.0 to $34.0
For 2014, non-GAAP adjusted EBITDA is expected to be in the range
of $83.6 to $89.5 million. North American adjusted EBITDA are
expected to be around $88.8 to $93.0 million, while International
adjusted EBITDA loss is likely to be within $5.2 to $3.5 million.
Non-GAAP EPS is expected to be in the range of $1.81 to $1.96
(prior guidance $1.71 to $1.92) per share. The mid-point of the
guided range is much higher than the Zacks Consensus Estimate of
OpenTable offers mobile and web solutions that enable users to
book restaurant tables. We believe the substantial increase in
mobile user base is a significant growth opportunity for the
company. The company's partnership with
will drive its market share, 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.
Moreover, increasing competition from
and the speculated entry of
into the restaurant reservation business may increase competition
Currently, OpenTable has a Zacks Rank #3 (Hold).