Opentable IPO

A quick trip to Sardinia to lie on the sand and swim in transparent seas, and I almost missed the Opentable furore. I have to admit to having followed this intently - as soon as Silicon Valley grinch Sarah Lacey poured scorn that it would never float let alone fly. And has it flown...

Here's VentureBeat's summary:

Online restaurant reservation site OpenTable (trading as OPEN) has stunned the market with the best IPO performance of any company since 2007 (Orion Energy Systems), reaping a 59 percent gain with share prices closing at $31.89 on the Nasdaq — a staggering upsell from its anticipated $20.

The stock spiraled as high as $35.50, a 78 percent gain, as market analysts watched, both concerned that it was overstepping its bounds and positing that the small size of the offering was buttressing its price. Only 3 million shares were sold. In its success, OpenTable defied the economic downturn — not only the recently frozen IPO market, but also a dip in business from its core customerbase: restaurants.

So far, the San Francisco company seems relatively untouched by its reported 10 to 15 percent drop in reservations between 2007 and 2008. The recession has eaten into consumers’ dining budgets and restaurants are clearly feeling the pinch. As mentioned in previous articles, the main reason OpenTable was even poised for an IPO is its consistent revenue stream from restaurants, which pay for the installation of its software system and monthly subscription fees. But the downturn cuts both ways. The site says more restaurants are actually signing up these days, viewing the service as a convenience that could lure more customers. Overall, OpenTable’s revenue rose 36 percent in 2008 (despite a net loss), and 21 percent in the first quarter of 2009 (bringing it back to black).

It's tempting to equate the UK's toptable with OpenTable, but that would be to overlook some substantial differences in the two companies' business models. Toptable has concentrated its efforts beyond the convenient and transactional to providing a much richer consumer experience for its user base. There's very clever personalisation going on behind the scenes - even more so since the launch of its bigger, multi-lingual site some weeks ago. The proof is in its revenue streams that include a healthy slice of third party advertising on top of restaurant booking fees and marketing. If toptable can break across borders to capture audiences in Europe, as it has set out to do, it will be a very serious force to be reckoned with.