Airbnb Kicks Off 2024 With Record Earnings — Stock Falls
Airbnb, a dominant force in the travel and experiences sector, has launched into 2024 with its most profitable Q1 ever, which beat expectations. Revenue also beat expectations. Nonetheless, the stock is down in after-hours trading, as the company’s revenue guidance for Q2 was below expectations. Let’s take a look at its Q1-2024 earnings.
Q1-2024 Highlights
Revenue Surge: The company reported a remarkable revenue of $2.14 billion in Q1, up 18% year-over-year and ahead of the expected $2.06 billion. This growth was primarily driven by robust travel demand and the timely shift of Easter into the first quarter.
High Profitability: Airbnb experienced its most profitable first quarter ever, with earnings per share (EPS) reaching $0.41, significantly exceeding the anticipated $0.23.
Net Income and Margin Expansion: Net income soared to $264 million, more than doubling from the previous year, boosting the net income margin to 12%, up from 6%.
Operational Efficiency: Adjusted EBITDA was $424 million, showing a 62% increase from the prior year, reflecting strong operational efficiency and cost management.
Strong Cash Flow: The company generated $1.9 billion in free cash flow, maintaining a robust 41% margin, indicative of its formidable cash generation capabilities. However, its FCF margin was 44% in the same quarter last year. See below.
Its free cash flow still came in at record levels, though, as you can see here.
Stock-Based Compensation (SBC) Set to Rise: Looking ahead, Airbnb anticipates a 20% rise in SBC expenses for 2024, primarily due to changes in the accounting for RSU awards. Post-2024, these expenses are expected to align more closely with headcount growth. This is important to know because SBC dilutes shareholders as more shares are issued.
Liquidity and Cash Flows: With $11.1 billion in liquidity and significant increases in cash provided by operating activities, Airbnb maintains a strong financial position.
Buybacks: Following a $750 million stock repurchase in Q1, Airbnb can still buy back up to $6 billion of its Class A common stock under its current plan, demonstrating confidence in its financial health and future prospects. It bought back $2.5B worth in the past year, which has offset the share dilution from SBC, as you can see below.
Source: ABNB’s Q1 Shareholder Letter
Business and Market Expansion:
Growth in Bookings: Nights and Experiences Booked grew by 9.5% across all regions, fueled by a 60% increase in U.S. app downloads. Mobile bookings now account for 54% of total nights booked.
Special Events Impact: The company leveraged special events like the total solar eclipse and anticipates further boosts from the Summer Olympic Games in Paris and the Euro Cup, showing its unique capacity to cater to diverse guest needs.
Supply and Listings: Active listings increased by 15% year-over-year, with Airbnb actively managing quality by removing lower-quality listings, resulting in a net growth of 17% for quality listings.
Airbnb’s Outlook
Q2 Revenue Projections: Airbnb expects revenues between $2.68 billion and $2.74 billion for Q2 2024, with anticipated challenges from the timing of Easter and FX rate impacts. This was lower than the $2.74B consensus estimate.
Adjusted EBITDA Outlook: The company forecasts Q2 Adjusted EBITDA to be flat to slightly up nominally but faces potential margin pressures. For the full year, Airbnb targets an Adjusted EBITDA Margin of at least 35%.
Anticipated Summer Demand: With strong bookings for upcoming international events, Airbnb is well-positioned to accelerate revenue growth in Q3 2024.
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