Airbnb experienced its highest first quarter ever with 133 million Nights and Experiences Booked.
Revenue grew 18% year-over-year to $2.1 billion, driven by strong travel demand and the timing of Easter.
Net income reached $264 million, with a net income margin of 12%.
Free cash flow for Q1 was a record $1.9 billion, with trailing twelve months free cash flow at $4.2 billion, or a 41% margin.
$750 million of shares were repurchased in the quarter, with $6 billion remaining in the repurchase authorization.
Strategic Initiatives Progress
Focused on making hosting mainstream, perfecting core service, and expanding beyond core offerings.
Active listings for accommodations grew 17% year-over-year, excluding removed listings that failed to meet guest expectations.
Introduced Guest Favorites, significantly improving service with over 430 new features and upgrades.
Launched Icons, a new category for extraordinary experiences, highlighting Airbnb’s expansion beyond accommodations.
Icons generated over 8,100 pieces of global media coverage and 371 million social media impressions in one week.
Business Performance and Growth
Mobile downloads and app bookings have significantly increased, with app downloads up 60% in the U.S. from the previous year.
Special events like the solar eclipse and upcoming Olympics and Euro Cup are driving significant bookings and showcasing Airbnb’s unique value proposition.
Despite removing non-compliant listings, active listings for accommodations saw a 17% year-over-year growth.
Supply growth has been strong across both urban and non-urban areas and among both individual and professional hosts.
Question and Answer
Airbnb’s Growth in Less Mature Markets
Question
Can you provide more details on the doubling of growth rate in expansion markets compared to core markets and specify which countries are included?
Answer
Airbnb is focusing on markets with high potential TAM (total addressable market) such as Mexico, Brazil, Germany, Italy, Spain, Switzerland, Netherlands, Japan, Korea, China, and eventually India.
The company is seeing significant potential in these markets due to lower penetration levels and the appeal of the Airbnb brand to a younger travel population.
Factors Driving U.S. App Downloads Growth
Question
What were the key drivers behind the 60% year-over-year increase in U.S. app downloads, and how did the company achieve this growth?
Answer
The growth in U.S. app downloads was primarily attributed to a focus on app optimization and user experience, rather than paid advertising.
The company’s efforts included improving touch points, encouraging app downloads at the right moments, and highlighting the benefits of using the app over the mobile website.
Airbnb’s success in driving app downloads reflects its ability to effectively focus on and improve specific metrics when needed.
The app download initiative is part of a broader strategy to perfect the core business and enhance the overall user experience.
Q2 Room Night Growth and Margin Guidance
Question
Why is Q2 room night growth expected to be flat, and does the guidance include the impact of growth investments?
Answer
The Q2 guidance reflects a more stable trend in leisure travel demand compared to the previous year, with relatively consistent growth since January.
The company has observed lower volatility in booking lead times and a more stable booking pattern, contributing to the Q2 outlook.
Factors impacting Q2 margins include the timing of Easter, with the holiday benefiting Q1 and presenting a headwind in Q2, as well as one-time credits in payment processing and a shift in marketing spend timing.
The margin guidance does not fully account for growth investments, which are expected to have a more significant impact in the second half of the year.
ADR Trends and Supply Growth
Question
Can you provide an update on the company’s value initiatives and their impact on average daily rates (ADRs)? Additionally, how should we think about the convergence of supply and night growth rates?
Answer
Airbnb has implemented several value initiatives, including total price display, weekly and monthly discounts, and the compare listing tool, to address concerns about rising prices and provide a better value proposition compared to hotels.
These initiatives have contributed to a year-over-year decline in Airbnb ADRs, while hotel ADRs have increased, further strengthening Airbnb’s value proposition.
The company acknowledges that the law of supply and demand plays a role in pricing, and the faster growth of supply compared to demand is helping to alleviate pricing pressure.
Airbnb expects supply and demand growth to align over the long term, with supply growth providing benefits in terms of affordability, quality, and differentiation.
Search and Inventory Quality
Question
How has search and conversion rates improved following the launch of Guest Favorites, and how do you ensure the quality of listings on the platform?
Answer
The company has made significant progress in optimizing the search experience, with improvements in mobile app downloads, search flow, filters, and location suggestions leading to higher conversion rates.
Airbnb has a comprehensive roadmap for improving inventory quality, including initiatives such as Guest Favorites, quality highlights, and ongoing quality control measures.
Guest Favorites have been well-received by both guests and hosts, with lower contact rates, higher rebooking rates, and a positive impact on host behavior.
Quality highlights provide further classification and visibility into the top listings, and the company is exploring additional features such as percentile rankings and enhanced quality feedback for hosts.
Airbnb takes a proactive approach to ensuring quality by conducting regular audits, removing low-quality listings, providing warnings and feedback to hosts, and investing in host education.
Investment Priorities and AI
Question
Can you categorize the top investment priorities for 2024 and beyond, and how is the company leveraging AI to reduce friction and enhance the user experience?
Answer
Airbnb’s investment priorities are categorized into three main areas: core business, international expansion, and expanding beyond the core business.
The core business remains the primary focus, with investments in quality, affordability, and usability to drive immediate returns and enhance the user experience.
International expansion involves localizing the product and implementing a global marketing strategy, with a focus on accelerating growth in key markets such as China, Japan, and Korea.
Expanding beyond the core business is a longer-term initiative to transform the company into a multi-vertical platform, with a focus on experiences and other travel-related services.
Airbnb has been using AI for various purposes, including host support, quick replies, and reservation screening.
The company is increasingly focusing on generative AI, with the potential to have a significant impact on customer service by providing AI-powered concierge services and handling complex, multilingual interactions.
Q2 Room Night Growth and Pricing Trends
Question
Given the easier comps in the back half of the year, what are the micro-level innovations or potential factors that could drive stability in room night growth, and how should we think about the relative pricing trends compared to hotels?
Answer
The company remains optimistic about the back half of the year, with a focus on core optimization, international investments, and growth initiatives to drive in-year growth.
The Q3 outlook is supported by a strong backlog of bookings, providing confidence in revenue acceleration.
Airbnb’s ADR trends are based on global comparisons of one-bedroom listings and hotel rooms.
The observed ADR increases are partly influenced by a mix shift towards larger group travel, with 81% of trips now involving two or more guests.
Supply and Demand Dynamics in the Gig Economy
Question
Given the potential oversupply in the market, should we expect a similar trend to other gig economy segments where increased supply drives down prices and stimulates demand?
Answer
While supply growth is generally beneficial for the platform by offering more options to guests, the impact on pricing and demand may vary by market and time period.
Airbnb’s business model, with lower frequency of transactions and longer lead times compared to ridesharing or food delivery, may result in a different dynamic in terms of supply-demand equilibrium and pricing.
Icons as a Brand Positioning Strategy and Impact of Special Events
Question
Is the Icons initiative a leading indicator of Airbnb’s strategy to revitalize and expand its experiences offerings, and how might special events like the Olympics and Euro Cup contribute to the company’s growth?
Answer
Icons represents a significant step in Airbnb’s evolution from a home-sharing platform to a broader experiences marketplace, expanding the brand’s positioning and increasing its appeal to a wider audience.
While Icons has a limited business impact due to its small scale, it serves as a brand investment and a way to introduce users to the concept of extraordinary experiences.
Special events like the Olympics and Euro Cup have historically been positive for Airbnb, driving supply growth and showcasing the platform’s benefits to cities and potential hosts.
EBITDA Margin Guide and Investment Levers
Question
How are you thinking about the investment levers that provide flexibility to achieve the 35%+ EBITDA margin guide for the full year, and can we expect these levers to be utilized more throughout the year?
Answer
The 35%+ EBITDA margin target reflects the company’s confidence in its business model and profitability, while also recognizing the opportunity for further growth and investment.
Investment levers that may be utilized to drive growth include marketing spend, particularly in international markets, and product development resources to accelerate the roadmap.
User Profiles and Community Features
Question
Are the recent additions to user profiles, such as photos and travel stamps, a first step towards building out new community features, and where does this initiative stand in your priority list?
Answer
The enhancements to user profiles, including photos and travel stamps, are part of a broader strategy to strengthen trust and improve matching on the platform.
Airbnb is investing in profile features and capabilities, recognizing the importance of trust in unlocking new opportunities and enhancing the user experience.
In the future, the profile is expected to play a central role in the Airbnb ecosystem, with the home becoming just one of many categories orbiting around the profile.
Quality Control and Host Behavior
Question
Can you provide more details on the percentage of low-quality supply that has been removed over time and the impact of these actions on host behavior and platform quality?
Answer
The removal of low-quality supply has not had a significant impact on global bookings, as the removed listings were often less popular and had lower conversion rates.
Many hosts are receptive to feedback and coaching, leading to improvements in their listings and behavior.
Airbnb’s quality control program incorporates warnings, education, and ongoing monitoring to ensure a high standard of quality on the platform.
Performance Marketing and Extenuating Circumstances Policy
Question
Can you elaborate on the strong ROI observed in performance marketing channels and whether there were any effects from the DMA rollout or changes to Google Search algorithms? Additionally, what led to the recent changes in the extenuating circumstances policy?
Answer
The strong ROI in performance marketing is attributed to ongoing testing and optimization, including expanded target audiences, keyword coverage, and landing page improvements.
The DMA rollout and changes to Google Search algorithms have not had a significant impact on Airbnb’s traffic or marketing performance.
The changes to the extenuating circumstances policy were aimed at clarifying and ensuring fairness for both guests and hosts, with no material impact on the business.
