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OpenTable, Inc. (OPEN)

Morgan Stanley Technology, Media & Telecom Conference

February 28, 2013 14:25 ET

Executives

Duncan Robertson - Chief Financial Officer

Analysts

Andrew Ruud - Morgan Stanley

Presentation

Andrew Ruud - Morgan Stanley

Hi. Thank you all for coming today. My name is Andrew Ruud, small-cap e-commerce analyst at Morgan Stanley. I am pleased to be joined by Duncan Robertson CFO of OpenTable. Before we get started, I just need to read the disclosure statement. Please note that all important disclosures including personal holdings disclosures and Morgan Stanley disclosures appeared on the Morgan Stanley website at morganstanley.com/researchdisclosures or at the registration desk.

With that I would like to get started. So Duncan there is a lot of things going on at OpenTable a lot of initiatives. In 2013 it seems like you’re going to be pretty focused on and trying to drive better conversion and accelerating seated diner growth. Just give an overview of the business and kind of against that.

Duncan Robertson - Chief Financial Officer

Sure. So quickly thanks for the opportunity to be here. I hope most consumers are in the room are familiar with OpenTable but just for those few of you that aren’t we’re the largest, the world’s largest source of online restaurant reservations. We connect about 27.5 thousand restaurants in the world with a vibrant community of diners which resulted in Q4 but we seated about 30 million diners that’s across our business in North America and then we’ve been replicating more recently the business that we have in North America in three other countries are in the U.K, Germany and Japan.

And we do that really by focusing on two parts two core parts to our business model. One is obviously the restaurants themselves and that’s where we are most focused on providing them with hospitality some of the services that can help them add and provide hospitality services and solutions to their diners. The core product that we’ve offered to restaurants for some years now we’ve referred to as the ERB which stands for electronic reservation book and that essentially replaces what historically restaurants have run their business on which is a piece of pen and paper.

On the diner side we’ve been very busy developing a platform across a number of formats now that originated on the desktop and has grown to become much more than that in terms of mobile devices are an important part of our business these days. In Q4 a third of our reservations originated on a mobile device which for us is a smarphone and a tablet. And so as and as Andrew referenced we are very busy this year focusing around the consumer experience not forgetting the desktop but because mobile is becoming an increasingly large part of our share of reservations very, very thoughtful around what are the kinds of user interfaces and products we’re providing to consumers through the smartphone and tablet platform.

Andrew Ruud - Morgan Stanley

Thanks for the introduction. Could you touch a little bit upon what your strategy is around acquisition of Foodspotting also earlier this morning you announced the Facebook App Places I've Eaten how that is going to help drive see the diner conversion?

Duncan Robertson - Chief Financial Officer

Sure. So it really all Foodspotting and then more recently this morning we announced a new Facebook Canvas App which we’ve called Places I've Eaten really broadly is think of it as I talk about how we are mindful about improving the consumer experience as users of the OpenTable l platform and each of those two pieces that Foodspotting and Places I've Eaten is focused on a couple of areas. One is around experiences. How do we get and provide a better experience to users of OpenTable not just at the time that they are making a reservation which is the we’re certainly and that’s an important element of the lifecycle of a reservation or a dining experience because that’s ultimately what monetizes for us. But how do we think about broadening what OpenTable is instead of just a transactional reservation tool to become a much broader dining experience. And so as people think about what dining means it’s about the discovery and thought process that goes around where do I want to use them, what do I want to use them, what kind of experience do I want to have. And we’ve recognized over the past few months is that images have become an increasingly important card of the diners exploring and deciding and the ultimate selection of where somebody wants to dine and have a meal.

And so Foodspotting was a company that we would actually partner with prior to the acquisition, which closed in earlier this quarter. And in our earlier partnership with them, we had essentially licensed, some we’re using and having access to some of their image content that they generate through a very, very vibrant network of uses of the Foodspotting app, which over a period of time has accumulated more than 3 million images. Certainly of course a large number of restaurants not all of them are obviously OpenTable restaurants, but many of them are. And so our initial concept was make good use of that image content that Foodspotting had aggregated and was continuing to build through the app.

Then and I would say more importantly we got to know the Foodspotting team and it was a team of 10 highly talented people with skill sets that are so important for us as we think about our mobile platform. Foodspotting had some tremendously talented mobile engineers as well as design UX people on the team, all of those people are now working with us not only on continuing to think about what the Foodspotting product is, but more importantly what the OpenTable product is.

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