While high-profile Internet IPOs once dominated the headlines, today’s market is decidedly less friendly to companies going public. Just six companies achieved venture-backed IPOs in the entire year of 2008, and only three this year have filed for offerings.
But online reservation service OpenTable
is hoping to buck those trends, filing for a $40 million IPO just last week. The website, in operation since 1999, allows diners to book, modify, and cancel reservations at more than ten thousand restaurants across America and the world, from Le Bernadin in New York to Morton’s Steakhouse in Columbus, Ohio. OpenTable charges participating restaurants a monthly fee and a per-diner rate for reservations made online. In turn, diners can book a table months in advance, search by desired time or desired restaurant, easily change reservations without the need for a phone call, and make special requests known to the restaurant—whether to ask for a highchair for a young child or request a particular table.
OpenTable has grown tremendously over the last few years. Revenues have soared from $16.7 million in 2005 to $41.1 million in 2007, an annual growth rate of 57%. With operations in all fifty states and fifteen other nations, OpenTable feels its business is strong enough to merit a public launch.
That said, with an unpredictable market and a less reliable dining public, the timing for an IPO is anything but ideal. OpenTable acknowledges as much in its filing, citing risk factors such as a dramatic recent downturn in restaurant bookings, the low likelihood of maintaining recent growth rates, and the fluctuations of the global economy.
Filing for an IPO is no guarantee that the company will, in fact, go public. But OpenTable has flouted the current market by taking the first step.