Recently, the restaurant technology market made news when none other than the tech giant Apple (NASDAQ:AAPL) filed a patent application with the U.S. Patent & Trademark Office for a new ordering and reservation system that could work with their products. Apple's patent application covers systems, methods, and storage media that will help with making reservations and maintaining a wait list for a resource at a restaurant. Essentially, that is what OpenTable (Nasdaq: OPEN) does for a living and as a reaction, the company's stock did take a bit of a tumble from the two-year high it had touched after the announcement of its Q3 results.
Q3 revenues grew 17.5% over the year to $46.7 million, marginally ahead of the Street's target of $46 million. Adjusted EPS of $0.50 was significantly better than the market's projected earnings of $0.42 per share. OpenTable's software is now being used by nearly 31,000 restaurants, reporting 17% growth over the year. The number of people who reserved through OpenTable increased 30% to 38.5 million.
By region, revenues from North America grew 17.7% to $40.6 million. International revenues increased 15.9% over the year to $6.1 million. For the current quarter, OpenTable projects revenues of $50.7 million-$52.1 million with EPS of $0.49-$0.52. These projections were in line with market estimates.
As part of OpenTable's continued mobile growth, OpenTable has made several acquisitions over the last quarter. In June 2013, it announced the acquisition of mobile app developer JustChalo for $11 million. JustChalo was a mobile app developer focused on creating apps for the U.S. restaurant industry. The acquisition will help OpenTable enhance their mobile apps.
In July 2013, OpenTable acquired Urbanspoon's reservation management system, Rezbook. As part of the agreement, OpenTable will now provide reservation systems for Urbanspoon through the site's Rezbook reservation system. Rezbook is used by many famous restaurants, including New York City's Le Cirque and San Francisco's Incanto. Rezbook was becoming a preferred method of reservation for restaurants due to its cost-effective offering. Rezbook charges a fixed subscription of $99 per month, unlike OpenTable's charge of $199 per month and additional $1 per diner who reserved through the site. In addition, Rezbook did not require custom hardware like OpenTable. OpenTable will continue to honor Rezbook's existing contracts, but it will stop offering this attractive pricing to new customers.
Earlier this week, OpenTable announced the acquisition of guest management systems provider, Quickcue LLC, for $11.5 million. The nine employees of Chattanooga, Tennessee-based Quickcue will join OpenTable to help with OpenTable's plans of building a highly sophisticated mobile waitlist technology and a next generation hospitality solution for walk-in restaurants that also accept reservations. OpenTable has nearly 40 customers-- primarily local restaurants, that use the product to accept reservations, estimate wait times, and inform customers through text messages about their table availability. Quickcue will stop supporting its products and instead now focus on developing OpenTable's product lineup.
According to OpenTable's reports, the mobile market for booking reservations accounts for 36% of their reservations made in North America. These acquisitions will help it build an even stronger mobile product to help combat the threat of giants like Apple entering the market.
The stock is trading at $76.71 with a market capitalization of $1.79 billion. It touched a 52-week high of $87.48 earlier last month.
Disclosure: No positions