(Adds details from conference call)
By Chandni Doulatramani
Feb 6 OpenTable Inc, an online
restaurant booking service provider, forecast a
weaker-than-expected profit for the current quarter as it hires
more employees and increases investment on marketing.
The company, whose shares fell as much as 10 percent in
extended trading, said hiring-related costs would rise by about
$8 million in 2014 due to its expansion in the UK, Germany and
OpenTable said marketing costs would also increase by about
$9 million as it accelerates investments on online marketing.
"OPEN has been under-investing in marketing and technology
for a number of years now and so this increased investment in
many respects is a 'catch-up'," PAA Research analyst Bradley
Safalow told Reuters.
The company's total costs for 2013 were $143.6 million.
OpenTable forecast an adjusted profit of 39-43 cents for the
first quarter, way below the average analyst estimate of 54
cents, according to Thomson Reuters I/B/E/S.
The company said it expects revenue of $53.3-$54.9 million,
compared with analysts' average estimate of $54.3 million.
OpenTable said it would buy a provider of mobile
personalized restaurant recommendations, Ness Computing Inc, for
about $17.2 million as part of efforts to boost revenue from
Safalow said OpenTable's recent acquisitions of companies
such as QuickCue, Ness, and Foodspotting are examples of
underinvestment and that these are features that OpenTable
should have developed in-house.
"In other words, growth is slowing and will continue to
slow...", he said.
The company said the number of diners who used its services
rose to 44 million in the fourth quarter.
Application downloads on smartphones, tablets, and other
mobile computing devices will jump to 187 billion in 2017 from
87.8 billion in 2013, IDC forecast in June. (link.reuters.com/myg79t)
OpenTable said in November it was working on allowing
patrons to pay for a meal via their mobile phones and that it
planned to launch the service in San Francisco.
If a diner makes a reservation at a restaurant through the
OpenTable website or its app, the restaurant gets charged $1 per
diner. If a diner makes a reservation on the restaurant's
website and is directed to the OpenTable system, the restaurant
is charged only 25 cents per diner.
Net income rose to $10.3 million, or 43 cents per share, in
the fourth quarter, from $7.5 million, or 32 cents per share, a
Revenue rose about 22 percent to $52.3 million.
Excluding items, the company earned 59 cents per share.
Analysts on average had expected earnings 52 cents per share
on revenue of $51.5 million.
OpenTable shares were down at $69.50 in extended-trading.
They closed at $75.41 on the Nasdaq on Thursday.
(Reporting by Chandni Doulatramani in Bangalore; Editing by
Sriraj Kalluvila and Don Sebastian)