OpenTable ‘over the top’

OpenTable (OPEN)
+60% close = at this stage ‘over the top’
. IPO Priced at $20
. 54% more than the original range mid-point of last week
. raised $60mm
. trading Thursday, May 21
. Current price OPEN

IPO report updated with 1st day’s close IPO report

> either the below or it’s such a small offering ($60mm) that the trading is/could be about over enthusiastic ‘diner-investors’ getting nailed by funds who are bailing out of the IPO.
Or perhaps
> It’s about defining & leading a growing market in the US at least, and about recurring revenue. On a comparative basis (CRM) is the best-known recurring revenue high multiple Internet model. It’s a mature company with a trailing 12 months P/E of 113 or so.

but OPEN is defining a growing emerging market, has no apparent competitors that are at the same scale at least in the US, and has constructed some formidable entry barriers to competition such as 10,000 restaurant clients & 3mm reservations for the March 09 quarter.

And once the economy levels & and starts to grow, then OPEN’s growth rate should pick up. In climate of very visible restaurant closings, it’s surprising that OPEN generated a 5 quarters of sequential growth in top line revenue.

What happened here is they picked up market share and may have emerged as the major leader to whomever is second in their marketplace.

Investors are very much attracted to the recurring top line revenue growth generated by OpenTable. Recurring revenues are like the IPO ‘mother lode’ or ‘holy grail’ sought after by investors.


Recurring reservation revenues increased to 43% of revenue for the March quarter, up from 41% in the December quarter — during a time of many restaurant closings, suggesting that OPEN’s client base is includes mostly established, healthy restaurants.


In spite of the economic distress of the past year, OPEN has generated nice sequential growth in top line revenue for each of the past five quarters.


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