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OpenTable, Inc. (NASDAQ:OPEN)

Barclays Internet Connect Conference

March 06, 2013 3:15 pm ET

Executives

I. Duncan Robertson - Chief Financial Officer, Principal Accounting Officer and Secretary

Analysts

Mark May - Barclays Capital, Research Division

Mark May - Barclays Capital, Research Division

Good afternoon. Thanks, everyone, for joining. I'm Mark May, I'm one of the internet analysts here at Barclays. And it's my pleasure and I appreciate Duncan Robertson, the Chief Financial Officer of OpenTable, for joining us today. Thank you.

Maybe for the few of us in the audience that aren't that familiar with the OpenTable story, if you wouldn't mind, maybe just kicking us off with a brief introduction of the business and maybe a little bit about your background and your role at the company and then we'll get started.

I. Duncan Robertson

Yes, absolutely. Well, thanks for the opportunity to be here. As Mark said, I'm Duncan Robertson, CFO of OpenTable. I've been with the company for just over 1.5 years. And I think the company itself often doesn't require that much introduction to consumers, but let me give you a brief overview of what we do. We are the world's leading provider of online restaurant reservations. And what that means is we're connecting a network of about 27,500 restaurants with the world's most vibrant community of diners visiting our platform which, when I say platform, means our desktop site and our apps and our mobile site. And what that resulted in, in Q4, was we seated approximately 33 million diners in our restaurants across North America, which is Mexico -- for us, Mexico, the U.S. and Canada. And then we've taken the same model that we followed in North America and we've extended that into 3 countries outside of North America, which is the U.K., Germany and Japan. And really following the same playbook, which is aggregate the best inventory, at the best restaurants in each of the cities in those countries. In Japan, we're really just focused on Tokyo. And over time, what happens is the inventory of restaurants builds up to be something that's appealing and interesting to consumers, and so that builds the awareness of our destination site. In all countries, except the U.K., that's branded as OpenTable. In the U.K., we've branded it as toptable, which was an acquisition we completed in late 2010. And as a result, we get this very nice network effect at the local level between the restaurants that we have on our network and the diners that are using our platform to make reservations and explore and decide where to dine through our network.

Mark May - Barclays Capital, Research Division

Great, that's good. Maybe we can talk first on the paying restaurant customer side of the business; the supply side, if you will. Despite the fact that the company is around 50% penetrated in the U.S. of ERB customers, ERB restaurants, and I think 70-plus in some cities or regions, the net restaurant additions remain very solid. So maybe you can give us a sense of why that is. Maybe in the context of how you're doing in some of the Tier 1 or larger markets, where you're at in some of the smaller markets and how we should think about that side of your business over a 3- to 5-year time frame.

I. Duncan Robertson

Sure. So the supply side or the restaurant side of the network, as you mentioned, has continued to grow quite nicely. I think on a sequential basis in North America in Q4, just to give you some context of the numbers, we added I think 826 restaurants. The install base grew by 826. And that was up from I think 602 in Q3. So as you say, it continues to grow quite nicely. And that's really developed by a local sales team that we have across North America. I think at the end of December, we had about 122 people in our sales and marketing team, which is the part of the company that continues to bring new restaurants into the network. The ability to add restaurants to the network via our sales team is really twofold, and it differs slightly between the more penetrated or the old -- some of the larger, more penetrated markets that you referenced and the less-penetrated markets. And the same model that I'm going to describe in North America applies to our international businesses, as well. Only in many of those cases, they're even less penetrated than some of the cities and metros in North America. So in an established well-known market, and when I say well-known, I mean well-known amongst the restaurant community and the diner community. Obviously, there's 2 factors that play into adding restaurants. One is we've developed what is arguably the best product for a restaurant or a restaurateur to think about how they would run their business in any way other than a pen and paper. And obviously, we've got thousands of restaurants now that have decided that it is indeed a better way to manage their business. And what I mean by that is really for them to understand how to provide a better level of hospitality and use the hospitality services that we've developed and embedded in our product to offer services that the dining and the table management and the wait staff management and the e-mail, the diner e-mail marketing programs that they can, out of the product. In an established market, they obviously understand that OpenTable is a very powerful demand creation tool or product for their business as well, because so many people in cities like New York or San Francisco or Boston are visiting our platform to make dining decisions, and restaurants -- and restaurateurs in those cities understand that being a part of this vibrant network of diners benefits them from a demand creation perspective. In newer cities or less penetrated markets, obviously, our sales team can't rely to the same extent on the demand side of the appeal of our product. So in those cases, our team is really selling the product on the merits of running the business on our ERB, Electronic Reservation Book, platform versus something else, which in 99% of the cases is running on a pen and paper book. And I think we've developed the product to such a stage we're on version -- at currently on version 10 of the ERB. So if you think about it, that's 12 years or 13 years of product development that's gone into what restaurants use to manage, not only their online reservations, but their telephone reservations, their walk-in reservations, the entire side of the hospitality part of that business. And certainly, we have high-profile and very valued restaurateur customers, such as Thomas Keller and Gordon Ramsay, who've selected OpenTable as the product that they're going to run their business on for the merits of the product as it stands.

Mark May - Barclays Capital, Research Division

On the restaurant product side, you talked about wait staff management, e-mail marketing. Is there something changing there? It feels like that the company is kind of accelerating the amount of product development that's being done on the restaurant side. What are some of the specific -- is that true? And if so, what are some of the specific functionality that you're adding or plan to add to really improve the value that you're delivering?

I. Duncan Robertson

Yes. The focus of ours is -- has really been to think about how we can provide restaurant owners with a product or a service that enables them to provide diners with better hospitality. And so there's essentially 2 elements to that: One is to understand how we can be helpful to restaurant managers and owners and operators in terms of the data that we're providing to them through our ERB service and platform. And that's not only the table management and the wait staff management that's embedded, the services that are embedded in the product, but it's also guest information and diner history, so that restaurants can build up and understand their diners better. Because the more a restaurant can understand or know who's walking in the door, the better the differentiated kind of dining experience that they can provide to a diner. And a lot of that is funneled through essentially the extranet that our restaurant customers use. We call it Restaurant Center. And that's really a portal for us to communicate with restaurants about the business that they're doing with us, and we have a heavy focus on providing them with more and more information around not only their restaurant but relevant information about the metro that they're in, in terms of diner trends, whether it's mobile trends, trends just in terms of that metro versus the country as a whole, really trying to help them get better information. The other area that we're investing in currently is that we're developing -- for 14 years now, we've been running on -- the restaurant product has essentially been running on the same platform, which if you think about it is largely a distributed database of -- we have approximately 20,000 restaurants worldwide using this ERB version -- ERB product. And what we're currently working on is a significant change to the architecture of the way that product operates in that we're taking the data out of these distributed databases, which are the computers that run in these restaurants and putting that data in the cloud. So the front-end product that restaurants will interface with will no longer be the product that you might have seen at host stands across North American in restaurants. We're piloting that product today on an iPad, and we expect to launch that new product sometime later this year, likely in Q3. So the front-end interface will be very different for restaurants, but more importantly, the ability for OpenTable to access real-time data around not only online reservations, but telephone reservations and walk-in reservations across our entire network of restaurants is very important for us.

Mark May - Barclays Capital, Research Division

And that conversion from distributed to cloud doesn't happen overnight, but help us think about kind of the economic impact as that transition happens. There might be some revenue implications, there might be some expense and cost implications. Can you just walk us through kind of the framework for how to think about that?

I. Duncan Robertson

Sure. I think, firstly, you're right to say that it doesn't happen overnight. In North America, at the end of Q4, we had about 17,200 restaurants using the ERB product today. And we don't expect that later this year, as we launch the new product, we don't expect an immediate upgrade or switch of that installed base. What we do anticipate is that we will, for new customers signing up to the OpenTable product later this year, the product that we will offer them will be the new cloud-based solution. And over time, we have an expectation that the existing installed base will migrate onto the new product. From a revenue perspective, in Q4, 34% of our revenue was associated with subscription revenue, which is paid on a monthly basis by restaurants making use of the ERB. And in Q4, that average subscription price per ERB restaurant in North America was $250. If you think about what we're providing restaurants, we're essentially a vertically focused SaaS business that enables them to -- we provide them the solution to run their table and guest management services and access the OpenTable network to seat diners. And so our expectation is that we're essentially upgrading the SaaS product that we've been licensing to restaurants for many years. The most obvious change is that it won't run on a Lenovo PC anymore. It'll run on -- initially, run on an iPad built off the iOS platform. But our expectation is that restaurants are paying for the service and that we would expect that subscription revenue -- we have no plans to change our business model, which relates to a subscription revenue for restaurants using our service on a monthly basis and then a per-seated diner fee, and that strategy will continue.

Mark May - Barclays Capital, Research Division

Okay. So that kind of addresses the revenue side. What about some of the costs that you incur in the current ERB platform and how they compare to cloud?

I. Duncan Robertson

Sure. So the current -- the costs associated with the current ERB platform, other than the engineering costs to develop and maintain that platform, which will continue on in the new platform, if you think about the installation of new ERB customers, it's approximately an all-in cost of around $2,000 for OpenTable when we sign a new customer.

Mark May - Barclays Capital, Research Division

That's what, hardware [indiscernible], the...

I. Duncan Robertson

Very roughly speaking, that $2,000 comprises approximately $1,000 in hardware cost and then a $1,000 split between sales commission, what historically we've called installation costs, travel and training costs. And so if you think about the new ERB in the cloud product, there is an expectation that since we're moving away from a PC-based system to an iPad-based system, there is some ability to potentially save on that $1,000 of hardware cost. And as we continue -- we're testing the product with restaurants today in San Francisco. Once we've finalized the actual form factor and other specifications of the product, we'll have a better idea as to what, if any, hardware costs will be involved in the installation and the signing of a new restaurant customer. In terms of the -- obviously, we're going to continue to pay our sales team sales commissions, so I don't anticipate that those costs will go away. And we found that over the years, the face time that we have with restaurants at the time that we get them up and running on the network has turned out to be a point of value that restaurants appreciate. They like having somebody from OpenTable who understands the system and how it works and how they can maximize the benefit of using the system. They appreciate that touch point. So I think we're sensitive to that and wouldn't be looking to save a few dollars here and there by removing that from the on-boarding of a new customer. So the concept might no longer be an installation of a new restaurant. It might be more a training and consulting period that we would spend with restaurants to help them understand how they can maximize the value of the system.

Mark May - Barclays Capital, Research Division

It sounds like that you could still subsidize the hardware in the cloud and still make out better. Is that something that you're contemplating?

I. Duncan Robertson

Well, if -- I mean, if an iPad is -- if we decide to provide restaurants with iPads instead of the system, an iPad's running at $399, as opposed to approximately $1,000 -- so, yes. But if so -- I would underscore that our objective here is not to try and save money on the additions to our installed base, it's really the benefits that we see around being able to access information in a more efficient way.

Mark May - Barclays Capital, Research Division

Okay. Maybe we could switch to the consumer side of the business? I know one of the things that you've talked about is projects to help improve the conversion rate, both on desktop and on mobile. Could you give us a sense of, I don't know, what conversions rates are today on both platforms, by geography, by time of day, whatever you want to give us? And what makes you think they can improve? What's kind of the goal there? And what are some of the specific things that the company is doing to help improve conversion?

I. Duncan Robertson

Sure. So the reason conversion is important to us is we are very focused on, as we think about -- we're very focused on seated diners and growing seated diners in our network. Just to give you the context, we think there are approximately 740 million people seated through reservations in North America each year. And last year, we seated approximately 15% of those. So how do we think we can manage the business to increase that 15% over time? Conversion is one item that we can influence to improve that number. And you're right that now we essentially have 3 platforms that consumers interface with OpenTable. There's the original one that the company developed on, which was the desktop. And over a pretty short period of time we, like many other companies, have seen the shift to mobile have a significant impact on our business. So the 2 other platforms that are meaningful to us now, which we aggregate when we refer to mobile traffic, are tablets and smartphones. And in Q4, those 2 platforms contributed to 1/3 of our reservations. So clearly, 1/3 and growing as a percentage in terms of mix. So clearly, very important for us to understand the form factor that we're providing consumers as they interface with OpenTable. Because we recognize that how people use the system at a desktop is different from the way people might use it on a smartphone. And so our engineering team and our consumer product team, their work is largely focused around finding those elements that can improve conversion across the platform. You're right. I'm not going to give you statistics by platform or by time of day, other than to say we think there are opportunities to make improvements on the product. We called out one nice recent win, specifically it was in the U.K., we relaunched the toptable app, iPhone app, in December. And we saw conversion on that platform double between the old iPhone app and the new app. Earlier last year, we had relaunched the mobile site, m.opentable.com. We are continuing to think about what kind of content we have on the devices, whether it be maps or menus or reviews. And really, all of those -- many of those factors, and the reason we're looking at that is how we can positively influence conversion on the consumer side.

Mark May - Barclays Capital, Research Division

You talked about improving conversion is just one of several ways that you can get that other 85%. What are some of the other things that -- we've heard from investors, "Why doesn't OpenTable do more marketing?" Awareness marketing. Maybe particularly in some of the Tier 2, Tier 3 markets? What do you think of that? And what are maybe some of the other options that the company could explore to capture that other 85%?

I. Duncan Robertson

The 2 other important drivers for us are new users and how we can continue to build the funnel of new users for the platform, be it desktop or smartphone or tablet. And then the other is frequency. And so that we have work underway to focus on not just the conversion that we were talking about, but new users and frequency as well. In terms of marketing, you're right that historically, in North America, the company hasn't invested significantly on either online or off-line marketing. Since we've had a very effective funnel for new users, which historically has been restaurant -- primarily being driven by restaurants' websites, where the awareness of OpenTable is built over time through consumers discovering the brand and the product that we offer through people making reservations on restaurants on websites, seeing that experience branded as OpenTable and eventually migrating to become a user. We have a very strong set of partners that we also use to generate new users. And those are fantastic brands, Internet brands like Apple and Google and Yelp and Bing and Yahoo! and TripAdvisor and others. But we recognize that less than 10% of our reservations come through those partners. And so ultimately, we think that we can continue the funnel of new users by making sure that we're getting that funnel through restaurants' websites. But we'll continue to explore other ideas. I mean, I think Q4 and February and March in the U.K. market is a great example of our willingness and ability to explore both online and off-line marketing. In Q4, we started to spend more just in terms of online marketing and saw some favorable results from that such that we decided, well, you saw the Q4 international results where we saw seated diners accelerate -- growth rates accelerated and grew 35% year-over-year. Much of that was associated with some of the success that we saw from online marketing in the U.K. Then we decided -- for various reasons, we decided that was the right time to really focus and build the -- make sure that people in the U.K. market and largely, London, have the right understanding of what the toptable brand is. So for the past 4 weeks, we've been running an outdoor campaign in London, really making sure that we work to broaden the consumer awareness of London. And obviously, we're looking at the results of both that online spend and that off-line spend, and we'll bring that knowledge back to our market in North America and make decisions as to how we might continue to influence the business over here.

Mark May - Barclays Capital, Research Division

Right. Is it -- so you stepped up your off-line and online marketing in the U.K. later last year -- at the end of last year. Is it possible that, given how well that went, that would give you added confidence to maybe start doing that here in the U.S.? Or were there some unique things about the U.K. market that drove the company to kind of step on the pedal on marketing [ph]?

I. Duncan Robertson

I think we will certainly take the learnings that we have from what we've been doing in the U.K. We have 1 marketing team that spans both countries. And so it's not -- we'll apply what we know and think about it carefully in the context of the North America market. There were some unique factors related to our U.K. business that motivated us to undertake both online and off-line spend, which was, briefly, we had spent a lot of time aggregating the best restaurants -- the best tables at the best restaurants in London. And we had finally got the perfect product -- consumer product, into the hands of consumers, namely the new iPhone app and the new mobile site, and had the strong brand awareness of toptable amongst consumers in the U.K. Yet, the brand awareness was heavily associated with offers and promotions in the U.K., which was the legacy toptable business, as opposed to the knowledge that consumers have in North America that OpenTable is access to real-time restaurant reservations. And so the purpose of the spend in the U.K. was less about building brand awareness specifically around toptable, it was about broadening the awareness of what toptable is for consumers in the U.K. And that's why we felt it was right to spend -- make that investment recently.

Mark May - Barclays Capital, Research Division

I wanted to go back to a comment you made earlier around how the partner sites represent less than 10% of your seated diners. Yet, my understanding is it's an important channel for new customer acquisition. So maybe if you could talk about that in the context of the mobile -- the subsidized mobile websites and kind of why you decided to run that promotion, which I think maybe is still going on.

I. Duncan Robertson

Yes, so slightly different element. The partners are 1 channel -- our partners are a channel for us to continue to build the user base of OpenTable. And that will continue. I think adding the support to Siri through Apple towards the end of last year was probably the last high-profile partner that we added to the network. But there's a long list of 600-odd partners that we work with. The mobile-optimized websites for restaurants that you're referring to was something that we launched in October of last year. And what that was, was we'd recognized that prior to the launch of that service or offering to restaurants, fewer than 10% of restaurants had mobile-optimized websites, which meant that consumers -- as consumers have shifted to mobile devices, that the ability for consumers to discover and make reservations on restaurants' websites had been impacted negatively because restaurants hadn't kept up with the technology to have mobile-optimized sites. So we decided to essentially develop on our restaurants' behalf approximately [ph] -- 20,000 websites that we are offering to our restaurants to adopt and have these mobile-optimized solutions. I think by the end of Q4 -- by the time of our Q4 earnings call, we signed up just over 2,000 restaurants making use of that. And we continue to market that because we think it's an important element of a restaurant's marketing capability to address mobile traffic, just like we think it's important to address mobile traffic through our m. site and our apps.

Mark May - Barclays Capital, Research Division

Okay, makes sense. Sure.

Unknown Analyst

So just 2 quick questions. One is, I don't know if you give any metrics for free cash flow for '13, but could you give us some kind of sense on is it break even, is it positive? Any kind of quantification would be helpful. And then also, can you talk about what you've done in the acquisition side, how those have gone and how much more you -- how acquisitive you're going to be over the next 1 to 2 years?

I. Duncan Robertson

So your question around free cash flow was for which part of the business?

Unknown Analyst

The whole business.

I. Duncan Robertson

The whole business?

Unknown Analyst

Correct.

I. Duncan Robertson

So I think free cash flow in Q4 was $14-point-some million, and our CapEx was approximately $2.4 million in Q4. CapEx for us is generally split between the restaurant equipment that I was talking about earlier, the $1,000 per that we sign up and then just partially the engineering and infrastructure that we have in our engineering team. And so as long as we continue to sign up restaurants, it'll be the $1,000 per. As we were talking about earlier, as we shift to the new product, there's an opportunity to change that CapEx spend, but we don't know right now what that would be.

Unknown Analyst

So free cash, just so I understand, is about $12 million?

I. Duncan Robertson

It was about $14 million in Q4.

Unknown Analyst

Including CapEx?

I. Duncan Robertson

That's -- including CapEx, yes. And EBIT -- essentially EBIT.

Unknown Analyst

'13 might be, ballpark, how much?

I. Duncan Robertson

Yes, we don't -- we provide EBITDA guidance for Q1 and the year. We don't provide free cash flow guidance, but...

Unknown Analyst

But higher?

I. Duncan Robertson

EBITDA in -- yes, in our guidance for EBITDA in 2013 is higher than 2012.

Unknown Analyst

Okay. And then just acquisitions?

I. Duncan Robertson

So acquisitions, there's really been -- the company has made, I would say, few acquisitions in its history. The largest being toptable, which was the consumer brand in the U.K. that we acquired in November of 2010. And other than that, they've really been technology add-ons or service add-ons to the core product offering. In the last 6 months that we've made 2 acquisitions, in July of last year, we spent $4 million to acquire a small company that had developed online gift cards, which has been historically been a pain point for restaurants because it was difficult to buy gift cards at restaurants. You had to fill out a form, fax it in, send your credit card information and we've solved that problem through the acquisition of this small company and have -- they were -- when we acquired them, they were in 3 cities. And I think they are now in 14 or 15 cities across North America. In February of this year, we closed an acquisition of a company called Foodspotting, which we -- for which we spent $10 million. What they had developed was a fantastic app tied back to the concept of rich content on our website. One of the elements of rich content is images. People are very, very interested in understanding where they're going to eat and what they're going to eat. And Foodspotting had developed an app that had created more than 3 million images of food over the period of time, had a very vibrant community of people using the app. We had initially started to integrate the image content onto our platform, then got to know the team at Foodspotting, think they're a fantastic group of people that really touch on some of the capabilities that we're interested, which is mobile engineering, design and UX, integration with Facebook. So the team of 10 at Foodspotting is now part of our engineering and product team.

Unknown Analyst

So just last question, so on the acquisitions, did last -- the next 2 years, you think you'll have very few acquisitions? And if you did do a big one, would you do in different vertical?

I. Duncan Robertson

I think it's unlikely we'll do a different vertical since we think we're still pretty early in a market that we have a fantastic business model and a strong leadership position. And so to look into a different vertical I think is unlikely. I think we'll continue to look for the kinds of technology add-ons that we -- that we're -- that the online gift cards, or the images. If we find a group that has -- a good group of people, good technical talent, I think we'll look for those all the time.

Mark May - Barclays Capital, Research Division

Any other questions? Tom?

Unknown Analyst

[indiscernible] to take advantage of the cloud and a more convenient form factor of the iPad. And that must be at a cost. So can you talk about the impact to the margins of the business this year and next from doing that?

I. Duncan Robertson

The work that we're doing around that is obviously being -- we have -- at the end of Q4, we had 113 people in our technology group. And those people are split between the folk that work on our restaurant products and the people that work on our consumer products. The upgrade of -- that you mentioned of the form factor of the product that restaurants are using as well as taking the data to the cloud, is managed by the people we have in our team today. And we feel that, that's roughly the right size team and the right skill set, and they're working on the product right now and they have been working on the product for some months now, to deliver what we expect. So I don't think there's -- that said, we're always looking to add smart engineers to the team. Adding engineers in San Francisco, it's a highly competitive market. I would almost say we can never add enough good engineers. We'd recently opened a small office in Los Angeles because we find that we can access great technical talent down there and it's a slightly less competitive market than the Bay Area. But the people we have in the restaurant product team today are the ones that are executing against this new product we've been speaking about.

Mark May - Barclays Capital, Research Division

Maybe, Anthony, do you still have one? Anthony? Okay.

Unknown Analyst

Generally, as companies scale, certainly customer acquisition costs come down. Can you talk about the trend in your customer acquisition costs?

I. Duncan Robertson

Well, the acquisition cost for us is primarily associated with in North America, I referenced we have 122 people in our sales and marketing team. And they're the team that bring new restaurants into the network for us. What we've seen over time is that in established markets, as restaurateurs and restaurant operators understand the benefits of OpenTable, the productivity of our sales team in some of those more established markets improves because we have the mix of inbound calls versus feet-on-the-street selling efforts shifts. And in established market, we do get more inbound calls wherein new restaurants call us and say they understand the value of being on the OpenTable network. And as a result, the acquisition cost, but primarily as a result of that, the acquisition cost will decline in an established market versus if I look at a market such as Berlin or Frankfurt or Munich, where almost all of our sales in those markets are still the direct productivity of our sales people visiting restaurants and selling them, where the productivity as a result per salesperson is lower, and as a result, the acquisition cost is slightly higher.

Mark May - Barclays Capital, Research Division

Not to speak for you, but it seems like you guys manage that -- you manage it that way. I know there are regional coverage teams. And once you see a Portland, you'll manage Portland out of San Francisco. But as Portland starts to tip, and you can generate -- and the restaurants start to virally grow on their own, then you'll dedicate a salesperson to Portland.

I. Duncan Robertson

That's right.

Mark May - Barclays Capital, Research Division

So you manage it along those lines. Maybe we have one -- we have time for one more over here?

Unknown Analyst

My question to you is, as you look at your mature markets, San Francisco and so forth, we get littered with restaurant addition surveys from you and you seem to consistently beat on seated diners on a quarterly basis. And so I'm curious, when you look at San Francisco and a lot of your mature markets, what is that sweet spot where you get to a certain penetration level of restaurants where things start, as Mark said, to act virally? When was that point in San Francisco? At what penetration level did the hunt for that incremental restaurant not yield the incremental return and you kind of stabilized and get that high flow-through? At what market share level?

I. Duncan Robertson

Yes. I mean, San Francisco market share right now, just so that everybody understands, we're at about -- in the Bay Area, we're at about 72% of restaurants that could use an ERB are using our product. And we're seating 35% of the diners there now. There's not a specific number that we talk about that in terms of at 20% of the restaurants in the network, we start to see the appeal and of the other side of the network driving diners, which then brings more restaurants into the market. But if you look at some of -- it's a correlation or as we track the percentage of restaurants and the percentage of diners, it takes a very long time to add the restaurants to get to a meaningful point where diners are interested and visiting the OpenTable platform. But it's not a statistic that we've spoken about over time that says at 15%, specifically, we see it.

Unknown Analyst

Out of curiosity, when was the last time you really meaningfully added to the sales team in San Francisco? How long ago would that have been?

I. Duncan Robertson

Well, the sales team, I think, in the last -- I think it grew 1 nationally from 121 to 122 in Q3 to Q4. But because the -- as I said earlier, the productivity of our sales team in more mature markets begins to increase as we get more inbound calls, we find it, frankly, less important to continue to add heads in the sales team in a mature market to continue to bring those restaurants in. And in a market like San Francisco, it becomes less interesting, just in terms of the unit adds of restaurants we're adding, and it becomes much more interesting in terms of the quality of the restaurant adds. Because from a consumer perspective, most consumers don't care whether we have 1,100 restaurants or 1,120 restaurants in San Francisco. What you really care about is, do we have the 1,120 best restaurants in San Francisco. And so that is done not by just continuing to expand the sales team, it's by focusing and having the right skill set in the sales team to sell those best restaurants.

Unknown Analyst

And have you or could you provide any color into what type of seated diner growth you're seeing in those mature markets?

I. Duncan Robertson

We haven't provided that information.

Mark May - Barclays Capital, Research Division

I think we have run out of time. But thanks, Duncan. Appreciate it.

I. Duncan Robertson

Sure. Thanks, Mark.

Mark May - Barclays Capital, Research Division

Thanks.

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