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Travelers and locals alike who make restaurant reservations using OpenTable almost as a matter of habit will take note that its first quarter setback is the most disturbing signal from the restaurant reservations platform in the last five years. OpenTable’s results were skewed by a too-ample helping of marketing spend to thwart slowing restaurant sign-ups.
OpenTable Inc, operator of restaurant booking website OpenTable.com, posted its first quarterly loss in five years due to higher marketing costs aimed at stemming the slide in the number of restaurants signing up for its services.
OpenTable’s shares slumped as much as 10 percent in extended trading after the San Francisco-based company’s revenue rose less than expected in the first quarter as it lost more customer than it added in international markets.
“It’s their single worst quarter from the restaurant addition perspective as a public company,” said PAA Research analyst Bradley Safalow.
OpenTable, which competes with Yelp Inc among others, has been spending more on marketing and technology to combat the slowing growth in restaurant customer additions.
The company’s count of north American restaurant customers rose 19 percent to 23,862 in the quarter ended March 31, but the growth was slower than in the previous two quarters.
OpenTable’s count of international restaurant customers fell 1.3 percent to 7,721 in the quarter.
Still, the number of diners that the company seated through its services rose 25 percent to 46.7 million, with international growth far outstripping growth in North America.
That helped revenue rise 18.2 percent to $53.8 million in the first quarter. But the rise was not enough to meet analysts’ expectations of $54.4 million, according to Thomson Reuters I/B/E/S.
OpenTable gets $1 if a diner reserves a table through the company’s website or its app. The fee is 25 cents if the diner is directed to OpenTable.com from the restaurant’s website.
The company reported a net loss of $3.6 million, or 16 cents per share, for the first quarter compared with a profit of $7.1 million, or 30 cents per share, a year earlier.
OpenTable’s adjusted profit of 45 cents per share beat analysts’ average estimate of 42 cents.
The company forecast adjusted earnings of 43-48 cents per share and revenue of $54.7-$56.3 million for the quarter ending June.
Analysts on average were expecting a profit of 46 cents per share on revenue of $55.4 million.
OpenTable’s shares fell to as low as $61.53 in extended trading after closing at $68.27 on the Nasdaq on Thursday.
(Editing by Kirti Pandey and Savio D’Souza)