Airbnb Posts Strong Q3 Results, Q4 Guidance Slightly Below Expectations

Airbnb released its third-quarter financial results, surpassing expectations, although its fourth-quarter guidance fell slightly short of Street estimates. These results provide an early glimpse into the state of the travel industry as we await reports from other players such as Expedia and Booking.com.

Q3 Financial Highlights

• Airbnb (ticker: ABNB) reported revenue of $3.4 billion for the quarter, marking an 18% increase from the previous year. This figure exceeds the Street consensus forecast of $3.34 billion, as tracked by FactSet.

• Gross bookings amounted to $18.3 billion, rising 17% from a year ago, and surpassing market expectations at $17.9 billion.

• The number of nights and experiences booked reached 113.2 million, slightly above the consensus of 112.9 million.

• Net income surged to $4.4 billion, compared to $1.2 billion last year. This growth was primarily driven by a noncash gain of $2.8 billion resulting from a valuation allowance on certain deferred tax assets. Excluding this gain, the net income would stand at $1.6 billion.

• Reported EPS, including the gain, stood at $6.63 per share, outperforming the Street consensus of $2.13.

• Adjusted net income margin rose to 47%, up from 42% in the previous year.

• Free cash flow for the quarter amounted to $1.3 billion, exceeding consensus expectations of $1.2 billion. This represents a 37% increase compared to the same period last year.

• The adjusted EBITDA for the quarter reached $1.8 billion, higher than the consensus estimate of $1.74 billion, reflecting a 26% increase from the year-ago quarter.

• Airbnb also repurchased $500 million of its stock during the quarter.

Q4 Outlook

Looking ahead to the fourth quarter, Airbnb projects revenue between $2.13 billion and $2.17 billion, which falls slightly below the Street consensus of $2.18 billion. The company anticipates a growth rate of 12% to 14%. Additionally, Airbnb expects to achieve a “record high” adjusted EBITDA in Q4, with a full-year adjusted EBITDA margin that is 150 basis points higher than in 2022.