OpenTable IPO nets $55.8MOpenTable IPO nets $55.8M

Alan J. Liddle

SAN FRANCISCO OpenTable Inc., an online reservation services firm, said some of the proceeds from its initial public offering last week will be used to enhance marketing, which could be good news for its nearly 11,000 restaurant clients.

Ten-year-old OpenTable, which said it served 9,548 U.S. restaurants and 1,097 overseas locations as of March 31, made its initial public offering of 3 million shares at $20 a share last Thursday. In doing so, the San Francisco-based firm raised $29.3 million for itself and $26.5 million for the original shareholders, after a $4.2 million discount for the underwriters.

OpenTable said it would use IPO proceeds for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters, and capital expenditures, according to documents filed with the U.S. Securities and Exchange Commission. The company said the proceeds might also be used to “acquire or invest in complementary technologies, solutions or businesses or to obtain rights to such complementary technologies, solutions or businesses.”

The OpenTable IPO last Thursday saw an opening price of $24.50 a share and closed at $31.89. In trading on Friday, before the Memorial Day holiday weekend, OpenTable's share price closed at $28.71.

On Tuesday, OpenTable's stock fell nearly 7 percent on Tuesday to close at $26.72 a share.

In pre-IPO moves last week, OpenTable twice raised the price at which it planned to offer shares, first from a range of $12 to $14 to $16 to $18 and then to $20 the day before the offering.

OpenTable’s largest shareholder investor groups before and after the IPO were Benchmark Capital Partners of Menlo Park, Calif.; funds affiliated with Impact Venture Partners of Austin, Texas; InterActiveCorp of New York; and funds affiliated with Integral Capital Partners of Menlo Park. Combined, those entities were to control 57.7 percent of post-IPO shares, according to filings with the SEC.

For the quarter ended March 31, OpenTable said its net income was $366,000, compared with a net loss of $87,000 in the same period a year ago. Revenue rose 20.6 percent, to $16.0 million. The total number of the restaurants served by the company at the end of the period -- 10,645 -- was up 26.7 percent from a year earlier, OpenTable said.

During the quarter, OpenTable said its technology and services seated, on average and in aggregate, 3 million diners in client restaurants each month.

For the year ended last December, OpenTable reported total revenues of $55.8 million, up 35.7 percent from the previous year. The company said it had a fiscal 2008 net loss of $1.0 million, versus net income of $9.2 million a year earlier. The company indicated in filings with the SEC that the net loss was, in large part, linked to the cost of ongoing overseas expansion.

OpenTable’s website at www.opentable.com permits consumers to search for available seats at participating restaurants, make real-time reservations, participate in a loyalty program with incentives and contribute reviews. Consumers pay no fees.

Participating restaurants pay a one-time installation fee, a fee for each person seated using OpenTable systems and a monthly subscription fee for use of the vendor’s software, in-restaurant hardware and services. In addition to managing and processing online reservations, OpenTable’s in-restaurant Electronic Reservations Book, or ERB, also helps operators track their patrons’ preferences for such things as dining times, wine varieties and table locations, among others.

Contact Alan J. Liddle at [email protected].