OpenTable Chows Down On U.S. Growth, But International Losses Spoil The Fun

| About: OpenTable, Inc. (OPEN)
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OpenTable (NASDAQ:OPEN) continues to build on its strong presence in North America’s online restaurant reservation industry, with the company now just shy of 20,000 restaurant customers in the region. OpenTable seated over 113 million diners in North America last year with 30 million of them being seated in the last quarter of the year – indicating that OpenTable now seats 10 million diners through its web- and mobile-based services each month. The cash registers continue to ring in tandem with the company raking in $162 million in total revenues for 2012 – a 16% increase from 2011 figures – to which reservations contributed nearly 60%. On the flip side, OpenTable’s international business is still bleeding cash with these operations losing more than $9 million over the year. But then, this is still a better performance than in 2011 when international operations reported a net loss of $11 million.

We leave our $53 price estimate for OpenTable’s stock unchanged as the company’s performance in Q4 (and full-year) 2012 was in-line with what we forecast in our analysis.

See our complete analysis for OpenTable

Strong Diner Growth Was Quite Expected

Growth in the number of diners seated by OpenTable shows a discernible trend which it seems to stick to quarter after quarter. Over a year, the number of diners seated shows a spurt in the first and fourth quarters, moderate growth in the second quarter and negligible to negative growth in the third quarter. We detailed this in our recent article "What Is OpenTable’s Downside From Slowing Diner Growth?"

Considering the period in question was the fourth quarter of a year, total diner figures jumped 10.4% from the Q3 2012 value of 29.4 million to reach 32.8 million. Needless to say, more than 90% of these diners were seated in restaurants across North America – OpenTable’s stronghold. Talking about performance over the year, OpenTable seated 123 million diners worldwide in 2012, which is 27% higher than the total figure for 2011.

As 113 million of these diners were seated in 19,801 restaurants across North America, this works out to a little over 5,700 diners seated per restaurant in this region over the year as shown in the chart above.

But OpenTable Really Needs To Take A Hard Look At Its International Business

As we mentioned above, OpenTable’s operations outside North America is becoming a serious concern due to losses they have piled on since the company decided to expand its business geographically. OpenTable currently focuses on a handful of developed nations outside of North America, such as the United Kingdom, Germany and Japan. But there has hardly been any success abroad yet, with the possibility that the operations might breakeven five years down the line also looking remote.

We spoke about the international business’ drag on OpenTable’s overall performance in our article "OpenTable Would Be Worth $70 If You Ignored Its International Business" – and given its success abroad so far, OpenTable should focus on its home turf rather than spend millions in expanding services overseas when the prospects of becoming profitable here looks well into the future.

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