OpenTable brings an inefficient, fragmented market online ... While we have implemented a variety of marketing ... Andro
Corporate Presentation
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Forward-Looking Statements
This presentation includes forward-looking statements. We have based these forward-looking
statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be
achieved. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to
those discussed in our reports on Form 10-Q and other filings with the SEC. OpenTable is providing this information as of the date of this presentation and does not undertake any obligation to update any forward looking statements contained in this presentation as a result of new information, future events or otherwise.
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Company Overview and Strategy
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Our Challenge: Computerizing Restaurant Inventory Suppliers
Inventory Management
Dozens of Airlines
Sabre, Amadeus, Galileo Worldspan
Tens of Thousands of Independent Restaurants
Inventory in paper book
Consumer Interface
Airline Reservations
Restaurant Reservations Phone and voicemail reservations
• OpenTable was founded with the vision of delivering the convenience of online booking to restaurant reservations; however, a number of characteristics of the restaurant industry made delivering that vision particularly challenging. • Restaurant table inventory is highly fragmented, with tens of thousands of restaurant suppliers. And, reservations are managed in pen-and-paper reservation books instead of electronic form.
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How We Solved The Problem Suppliers
Inventory Management
Dozens of Airlines
Sabre, Amadeus, Galileo Worldspan
Tens of Thousands of Independent Restaurants
OpenTable Electronic Reservation Book
Consumer Interface
Airline Reservations
Restaurant Reservations
To address these challenges, we made three big investments: • Developed our Electronic Reservation Book (“ERB”) to computerize the restaurant’s table inventory • Built a national sales force to help restaurants replace their pen-and-paper books with our ERB • Created OpenTable.com – a consumer destination website where diners can book online reservations at partner restaurants
After 12 years and $65 million invested, OpenTable has emerged with a fast-growing, highly defensible business model. CONFIDENTIAL
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Our Strategy
Our strategy is simple: We grow the OpenTable network by adding restaurants and attracting more diners. The more restaurant selection we offer to diners, the more diners use the system. The more diners use the system, the more value CONFIDENTIAL 6 we offer to restaurants.
Company Highlights
• OpenTable brings an inefficient, fragmented market online • We have a strong competitive position • The business model is highly predictable • OpenTable has a proven model, with operating leverage that has yielded increasing margins • We are investing significantly to replicate our success internationally
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Our Benefits for Restaurants
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OpenTable Replaces Restaurants’ Pen-and-Paper Book
• Table inventory is tracked in pen-and-paper book
• Guest preferences are stored in margins of reservation book or manager’s memory • Diners can’t make reservations online or around-the-clock
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We Computerize Restaurants’ Host Stands
Our proprietary software includes: • Reservation Management – All available reservations managed through OpenTable ERB, both phone and online • Table Management • Guest Management & Marketing – Enables outbound guest marketing directly from restaurant CONFIDENTIAL
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We Help Restaurants Fill Their Seats
Since incorporating the OpenTable.com platform…
our monthly revenues have increased 200%. While we have implemented a variety of marketing and advertising tactics, OpenTable has been
by far the best return on investment. Doug Palley, Owner | Hooked Restaurant | Sterling, VA
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We Have A Simple, Predictable Revenue Model Contribution to 2009 Revenue
5% 8%
Installation Fee • $600 - $700 average one-time fee
Monthly Subscription Fee
52% 48.1%
• List price $199/month with addons available
Approx. $600 per restaurant per month
• Average subscription fee $270/month • High customer retention rates, like a subscription business
Per Seated Diner Fee
(1)
• $1.00 from OpenTable website
43%
• $0.25 from restaurant website • $7.50 from promotional listings • Has the ability to grow as we seat more diners
(1) Excludes costs associated with Dining Rewards Program. Percentage contribution to 2009 revenue rounded up to 43%. CONFIDENTIAL
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The Value Proposition Is Compelling for Restaurants
Monthly OpenTable ROI for Typical Restaurant1 Average Diners Seated via OpenTable Reservations % Incremental to Restaurant Incremental Diners Check Average Per Diner Variable Cost Per Diner Contribution Margin Per Diner Gross Incremental Contribution Margin
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215 $42.503 35%4 $28 $5,940 $270
Average OpenTable Diner Fees
$365
Total OpenTable Expenses
$635
Based on data for the quarter ended March 31, 2010 OpenTable estimate 3 2008 OpenTable Restaurant Survey 4 OpenTable estimate 2
50%2
Average OpenTable Subscription Fees
Return on Investment 1
430
835%
Our Benefits for Diners
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We Eliminate the Hurdles of Phone Reservations
12:30 PM Voicemail
11:00 AM No Answer
7:15 PM Put on Hold
Need Dinner Reservations…
No Availability CONFIDENTIAL -
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OpenTable Provides the Convenience of Booking Online
• View real-time table availability • Scan a range of relevant dining choices
• Get content about restaurants • Reserve/confirm instantly
• Free to diner • Earn Dining Rewards Points
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Native Traffic Is Dominant Source of Reservations
Online Reservation Sources
OpenTable.com & Restaurants’ Websites 90-95%
Partners 5-10%
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Mobile Provides a New Source for Online Reservations
• We offer apps for iPhone, iPad, Android, BlackBerry, Palm and Nokia, as well as a WAP site. • We’ve seen strong traction in our mobile products: • 4 million diners seated cumulatively… • …generating $200 million in
revenue for our restaurant partners
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ERB Market Opportunities: Grow Restaurants, Seat More Diners North America
San Francisco
100%
100%
75%
75%
50%
50%
~67% 25%
~36% ~8%
42 Million Diners Seated through OpenTable
0%
25%
~24%
5.5 Million Diners Seated through OpenTable
0% Reservation-Taking Restaurants
Diners Seated through Reservations
Reservation-Taking Restaurants
Diners Seated through Reservations
Est. 30,000
Est. 535 Million
Est. 1,350
Est. 23 Million
Note: OpenTable estimates for the year ended December 31, 2009; includes ERB customers only CONFIDENTIAL
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New Growth Initiatives: Early Days, Encouraging Progress OpenTable Connect A Web-based product that lets restaurants receive online reservations from OpenTable •
Designed for segment of restaurants that are primarily walk-in but do take reservations
•
Does not offer the ERB’s operational benefits for reservation-intensive restaurants
•
Priced at $49/month, $2.50/diner from OpenTable.com, $.25/diner from restaurant’s site
•
Currently have 282 restaurants using Connect around the world
(1)
Private Dining OpenTable.com service that helps diners find event venues and restaurants fill private rooms • Priced at $99/month for premium listings
Advertising Opportunity for third parties to promote their products and services on OpenTable.com • Most e-commerce businesses offer complementary advertising on their sites • The demographics of OpenTable users appear desirable to advertisers (1) OpenTable Connect restaurant customers as of June 30, 2010. CONFIDENTIAL
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Opportunity for International Expansion
• Investing to replicate proven North America model • Adapting go-to-market approach by country based on local characteristics and competitors • Maintaining core strategy: Add Restaurants, Add Diners Europe
Year Entered
Installed Restaurants
U.K.
2004
860
Germany
2007
596
Japan
2006
403
Asia
(1) OpenTable restaurant customers as of June 30, 2010. CONFIDENTIAL
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(1)
Our Strategy
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Strategic Highlights
• Strategy - Add more restaurants, which attracts more diners; more diners attract more restaurants • Challenges of building our network have created strong features for business: • Barriers to entry • Ability to deliver strong ROI to restaurant partners
• 12-year first-mover advantage • Brand increasingly synonymous with online reservations
• Focused on winning in newer, international markets
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An Experienced, Proven Management Team
BACKGROUND Jeff Jordan President and CEO; Director Joined in 2007
eBay, PayPal, Walt Disney Corporation
Matt Roberts CFO Joined in 2005
E-LOAN, NetDynamics, Berkeley Systems
Joel Brown SVP, Operations Joined in 2001
Intuit, Charitableway, Arthur Andersen & Co.
Michael Dodson SVP, Sales Joined in 2002
American Express, The Destination Group
Charlie McCullough SVP, Engineering Joined in 2003
Unisys, Wink Communications
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Finance Overview
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Steady Growth in Key Metrics Installed Restaurants North America
Q2’10
Seated Diners
+27%
International
North America
YoY
(thousands)
Q2’10
+52%
International
YoY 15.6
(millions) 14.1 13.3
13.1 12.4
12.1
11.7 10.3 10.6
11.2
10.1 10.3 10.3
9.7
9.1 8.4
8.5
8.6
8.4
Q1
Q2
Q3
8.7
7.2 7.2
6.7
6.2
6.2 5.8
Q2
Q3
Q4
Q1
2007
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Q2
Q3
2008
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Q4
Q1
Q2
Q3
2009
Q4
Q1
Q2
2010
Q2
Q3 2007
Q4
2008
Q4
Q1
Q2
Q3
2009
Q4
Q1
Q2
2010
Strong Revenue Track Record Q2’10
+37%
• Consistent quarterly growth
$22.5
• Significant recurring revenue
$21.3
• High customer retention
$19.1
$13.3
$13.9
$14.2
$14.5
Q2
Q3
Q4
$16.0
$16.4
Q1
Q2
$17.1
$11.8
$9.1
$9.7
$10.5
$8.0 $5.9
Q1
$6.4
Q2
$6.9
Q3
2006
Q4
Q1
Q2
Q3
Q4
Q1
2007
2008 North America
Note: $ in millions. CONFIDENTIAL
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Q3
2009 International
Q4
Q1
Q2
2010
YoY
Strong Growth in Revenue and EBITDA
EBITDA (in millions) (1)
Revenue (in millions)
2006
North America
International
(1) Excludes stock-based compensation expense. CONFIDENTIAL
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2007
North America
2008
International
2009
Total
Attractive Financial Model: North America
2006
2007
2008
2009
100%
100%
100%
100%
Operations(1)
34%
28%
28%
27%
S&M(1)
24%
20%
17%
16%
Technology(1)
15%
14%
16%
15%
G&A(1)
14%
19%
15%
16%
Operating Margin(1)
13%
20%
24%
27%
EBITDA Margin(1)
21%
27%
31%
34%
Revenue
(1) Excludes stock-based compensation expense. CONFIDENTIAL
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Consolidated Financial Model: Target
2006
2007
2008
2009
Target Model
100%
100%
100%
100%
100%
Operations(1)
35%
30%
31%
30%
22-24%
S&M(1)
28%
26%
25%
22%
18-20%
Technology(1)
15%
14%
16%
14%
10-12%
G&A(1)
20%
25%
20%
18%
13-15%
2%
5%
8%
17%
30-35%
10%
13%
16%
24%
35-40%
Revenue
Operating Margin(1) EBITDA Margin(1)
(1) Excludes stock-based compensation expense. CONFIDENTIAL
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Financial Highlights
Strong financial track record and steady revenue growth
Predictable, profitable revenues Expanding operating margins
Cash flow positive
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