OpenTable Inc. (
reported earnings of 47 cents per share in the fourth quarter of
2013, which comprehensively beat the Zacks Consensus Estimate by
7 cents and surged 39.5% from the year-ago quarter. The strong
year-over-year growth was driven by robust top-line performance.
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However, shares plunged 9.2% ($6.91) in after-hours trading. We
believe that the sell-off is unwarranted given the strong
fourth-quarter results and positive outlook for the upcoming
quarter and fiscal 2014.
Revenues rose 21.7% year over year to $52.3 million and were
better than the Zacks Consensus Estimate of $51.0 million. The
year-over-year growth was driven by 32.7% surge in reservation
revenues (62.1% of revenues) and 12.2% increase in subscription
revenues (31.2% of revenues).
North America revenues grew 21.9% from the year-ago quarter to
$44.7 million, driven by strong growth in both reservation (up
30.2%) and subscription revenues (up 12.5%). OpenTable's
third-quarter acquisition of Rezbook contributed $135K to
Installed restaurants base in North America was 23,824 compared
with 19,801 at the end of Dec 31, 2013, which include Rezbook's
2,281 restaurants. Seated diners were 39,770K compared with
29,861K, up 33.2%. Rezbook contributed 1.1 million seated diners
in the quarter.
It was noteworthy that, during the quarter, approximately 40.0%
of the North American seated diners made reservations through
mobile devices. The company also announced that it has launched a
pilot of a mobile payments service in San Francisco, which will
help diners to pay for the meal.
International revenues increased 20.5% year over year to $7.6
million, driven by strong growth in both reservation (up 47.3%)
and subscription revenues (up 10.2%). International installed
restaurants base was 7,729 compared with 7,716 at the end of Dec
31, 2013. Seated diners were 4,241K compared with 2,971K at the
end of Dec 31, 2012, up 42.7% in the quarter.
OpenTable reported adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) of $22.5 million, which
increased 19.6% from the year-ago quarter.
Total operating costs and expenses as percentage of revenues
increased 60 basis points (bps) from the year-ago quarter to
74.7%, driven by 280 bps jump in sales & marketing and 190
bps surge in technology related expenses. These fully offset 360
bps and 50 bps plunge in general & administrative expense and
operations & support related expenses, respectively.
Operating margin (including stock-based compensation but
excluding one-time items) expanded 70 bps from the year-ago
quarter to 28.2%, primarily driven by higher revenue base. Net
income margin increased 330 bps from the year-ago quarter to
OpenTable exited the fourth quarter with $114.5 million in cash
& cash equivalents.
OpenTable announced that it is acquiring start-up Ness Computing,
for approximately $17.2 million in cash, or $11.3 million net of
estimated cash. Ness develops personalized restaurant
recommendation application, which post integration with
OpenTable's current product offerings will attract more
restaurant customers, going forward.
OpenTable expects revenues to be in the range of $53.3 to $54.9
million for the first quarter of 2014, the mid-point of which is
slightly better than the Zacks Consensus Estimate of $54.0
million. North American revenues are expected to be within $45.8
to $47.0 million, while International revenues are likely to be
within $7.5 to $7.9 million.
Management expect the average ERB subscription rate to be $244 in
the first quarter. OpenTable expects North American other
revenues to be approximately $2.5 million in the upcoming
For the first quarter, adjusted EBITDA is expected to be in the
range of $18.7 to $20.2 million. North American adjusted EBITDA
are expected to be around $20.5 to $21.7 million, while
International adjusted EBITDA loss is likely to be within $1.5 to
Earnings are expected to be in the range of 39 cents to 43 cents
per share. The mid-point of the guided range is in line with the
Zacks Consensus Estimate of 41 cents.
For fiscal 2014, revenues are expected to be in the range of
$221.0 to $229.0 million. The mid-point of the guided range is
much better than the Zacks Consensus Estimate of $222.0 million.
North American revenues are expected to be around $189.0 to
$195.0 million, while International revenues are expected in the
range of $32.0 to $34.0 million.
For 2014, adjusted EBITDA is expected to be in the range of $82.7
to $90.4 million. North American adjusted EBITDA are expected to
be around $88.0 to $93.8 million, while International adjusted
EBITDA loss is likely to be within $3.4 to $5.3 million.
Non-GAAP operating expenses are expected to increase in 2014,
driven by higher headcount expenses (up $8.0 million year over
year) and marketing expenses (up $9.0 million year over year).
Earnings are expected to be in the range of $1.71 to $1.92 per
share. The mid-point of the guided range is much higher than the
Zacks Consensus Estimate of $1.77.
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, 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 #2 (Buy). Other stocks that
are performing well at current levels include
Descartes Systems (
Zillow Inc. (
Nuance Communications (
. All these sport a Zacks Rank #1 (Strong Buy).