Airbnb Inc. on Tuesday reported its “biggest and most profitable quarter ever” and beat Wall Street’s profit and revenue expectations, but shares sank after hours.
shares fell more than 5% after hours, after rising 2% in the regular session to close at $109.05, as the company guided for some softness in the current quarter because of seasonality.
In a letter to shareholders, the lodging-booking company attributed its third-quarter results — which it said would have been even better were it not for the strong dollar — to the continued travel recovery and strong demand.
“We continue to thrive despite macroeconomic uncertainties,” Chief Executive Brian Chesky said during the earnings call.
The company saw an increase in nights and experiences booked across all regions as cross-border travel rose, along with a return to urban travel. In the Asia Pacific region, where the recovery had lagged that of other areas, that number surged 65% year over year as coronavirus pandemic restrictions eased.
Airbnb also cited growth in supply, or the number of Airbnb listings, as a strength. Active listings rose about 15% in the third quarter compared to a year ago, the company reported. That has led to some grumbling among hosts who saw occupancy decline earlier this year — but Airbnb’s performance hasn’t been affected.
The company said in its shareholder letter that “just like during the Great Recession in 2008 when Airbnb started, people are especially interested in earning extra income through hosting.”
On the call, Chesky said some hosts’ concerns about occupancy could be due to the company’s search algorithms prioritizing listings that offer the “best value.”
Third-quarter gross bookings rose to $15.6 billion, up 31% year over year and beating analysts’ expectation of $15.37 billion. Nights and experiences booked climbed to 99.7 million, up 25% year over year, but shy of the 100.68 million expected by analysts. The average daily rate was $156, up 5% year over year and higher than the $153.20 analysts expected.
Guests have also been grumbling about prices. Chesky said Airbnb is working on updates to give guests a clearer picture of total pricing for listings. “We heard from guests loud and clear that they want more transparency,” he said on the call, adding that the changes will also help hosts when pricing their listings.
Airbnb reported net income of $1.2 billion, or $1.79 a share, compared with $834 million, or $1.22 a share, in the year-ago quarter. Revenue rose to $2.88 billion from $2.24 billion in the year-ago period. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) was $1.5 billion, a record high for the company. Free cash flow was $960 million, up 80% year over year.
Analysts surveyed by FactSet had forecast earnings of $1.47 a share on revenue of $ 2.85 billion. They had also forecast $1.39 billion in Ebitda and $1.1 billion in free cash flow.
Airbnb expects fourth-quarter revenue of $1.8 billion to $1.88 billion, which is in line with analysts’ expectation of $1.87 billion. “We expect our revenue as a share of [gross bookings value] to decrease in Q4 2022 relative to Q3 2022, consistent with historical seasonality,” the company said in its shareholder letter, adding that it expects year-over-year growth in nights and experiences booked in the fourth quarter to “moderate slightly” relative to the third quarter.
“Any of the deceleration in revenue growth between Q3 and Q4 is largely due to the uniqueness of the 2021 timing of growth between delta and omicron,” said Dave Stephenson, the company’s chief financial officer, on the call. He was referring to the effect of the COVID-19 variants on last year’s third quarter.
Shares of Airbnb have fallen about 36% so far this year, while the S&P 500 index
has declined about 19% year to date.