OpenTable ( OPEN ) recently revealed its performance figures for the first quarter of 2011, and the company seems to have done a fair job overall. But the figures were clearly not as high as was expected by the company's investors, as the stock price dropped almost 15% in the wake of the announcement. The company reported net income of about $4.2 million for the quarter. While this figure is about 66% higher than the value reported a year ago - it is about 18% lower than the $5.1 million reported in the last quarter of 2010. As the leading provider of free and real-time online restaurant reservations, OpenTable is comfortably ahead of its competitors like Urbanspoon, owned by IAC/InterActiveCorp ( IACI ), and UK-based companies liveRES Ltd and Livebookings Ltd.
We currently maintain a $94.64 price estimate for OpenTable , a premium of roughly 5% to market price.
The core restaurant reservation business has shown decent growth..
OpenTable now has more than 14,500 restaurants across North America as its customers - with more than 21,000 restaurants around the world using the OpenTable restaurant reservation system. This includes the international restaurants added through the company's acquisition of toptable.com last year.
The company looks poised to complete the addition of more than 50% of the 30,000 full-service reservation-taking restaurants in North America as its customers in the next quarter.
… but costs and taxes seem to have caught up with the company
OpenTable reported operating expenses in excess of $3 million for this quarter - double the figure a year ago and 11% higher than that for the last quarter of 2010. This comes from the fact that SG&A expenses for the company are growing substantially due to increased focus on international business.
Also, the company saw an effective tax rate of 36% for the quarter. This seems to be one of the biggest factors leading to the drop in earnings - and can significantly reduce the value of the company if it remainselevated in the years to come.