Reuters: Global Markets: OpenTable sacrifices profit to bump up marketing efforts

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OpenTable sacrifices profit to bump up marketing efforts Aug 1st 2013, 23:27 By Chandni Doulatramani Thu Aug 1, 2013 7:27pm EDT (Reuters) - Online restaurant booking service provider OpenTable Inc (OPEN.O) forecast a third-quarter profit below analysts' estimates as it plans to spend more on marketing and software development in the face of increasing competition. The stock fell 7 percent in extended trading after the company said it would spend about $2.5-$3 million on marketing in the second half of 2013 and hire an undefined number of new staff. OpenTable has not spent much on marketing in the United States in the past but wants to attract more diners and increase the pace at which it rolls out new features, RBC Capital analyst Andre Sequin told Reuters. Competition is increasing as OpenTable's erstwhile partner, Yelp Inc (YELP.N), has bought another reservations company, SeatMe. OpenTable plans to add up to another 2,000 restaurants to its network after it buys Rezbook, a rival booking service, from Urbanspoon. The Rezbook acquisition will not have a material impact on the revenue forecast, OpenTable said. The company expects third-quarter adjusted earnings of 38-42 cents per share, on revenue of $45-$46.3 million. Analysts were looking for adjusted earnings of 48 cents per share, on revenue of $46.5 million, according to Thomson Reuters I/B/E/S. The company posted a better-than-expected second quarter profit as the number of diners using the company's service jumped 26 percent. Its net income rose to $8.3 million, or 35 cents per share, in the second quarter, from $5.7 million, or 25 cents per share, a year earlier. Revenue rose 15 percent to $45.6 million. Number of seated diners rose to 38.2 million in the quarter ended June. Number of seated diners in North America increased 25 percent while that in international markets rose 46 percent. Excluding items, the company earned 50 cents per share. Analysts had expected adjusted earnings of 47 cents per share, on revenue of $46 million. OpenTable shares closed at $69.40 on the Nasdaq on Thursday. (Editing by Saumyadeb Chakrabarty and Rodney Joyce) Link this Share this Digg this Email Reprints

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