recently announced acquisition of Quickcue, which develops guest
management system software, reflects the company's focus on
fixing loopholes in its current product offerings.
Quickcue's solution helps restaurant reception staff to manage
tables and waiting times on a real-time basis. Moreover, it helps
the restaurant to keep track of the customer preferences and
prior visit details. The whole process runs on an
The acquisition will help OpenTable's mobile customers to find
restaurant vacancies from waiting lists on a real-time basis, a
service the company did not offer. OpenTable also announced that
it will continue to serve Quickcue's 40 existing customers.
OpenTable also said that Quickcue will develop new hospitality
solutions for walk-in restaurants that also accept reservations.
The new solution will further expand OpenTable's customer base in
the long run.
OpenTable is paying $11.5 million in cash for Quickcue, which
will not hurt its strong cash balance ($102.8 million at the end
of Sep 30, 2013). Additionally, the acquisition is not expected
to impact the fourth-quarter and full-year 2013 outlook provided
by the company on Nov 5, 2013 (
OpenTable Beats on Earnings & Rev
Acquisitions and partnerships have played an important part in
developing OpenTable's growth trajectory in recent times. During
the nine months ending Sep 30, 2013, OpenTable acquired three
companies for approximately $24.4 million.
The acquired businesses include Foodspotting Inc. (Jan 2013),
Rezbook reservation system from Urbanspoon (Jul 2013) and part of
JustChalo Inc. OpenTable also entered into partnership with
, allowing visitors to make reservations directly from the
restaurants mobile Facebook page.
We believe that strong cash balance will allow OpenTable to
pursue further acquisitions to expand its product portfolio as
well as competitive position. The company faces competition from
the likes of Livebookings, UReserve and CityEats.
acquisition of SeatMe also increased the competition for
OpenTable. However, the major concern relates to the speculated
entry of Apple into restaurant reservation business. Reportedly,
the iPhone maker has recently filed a patent on restaurant
reservation and ordering system.
Nevertheless, we believe that the strong growth in mobile user
base and expansion in the overseas markets will boost top-line
growth. Additionally, continuing investments in marketing
activities will boost traffic. However, these investments will
keep margins under pressure in the near term.
Currently, OpenTable has a Zacks Rank #2 (Buy).
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