Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Airbnb Inc (ABNB, Financial) reported a strong Q2 with 125 million nights and experiences booked, and an 11% year-over-year revenue increase to $2.75 billion.
- Net income was $555 million, representing a net income margin of 20%, and the company generated $1 billion of free cash flow.
- Airbnb Inc (ABNB) surpassed 8 million active listings, driven by growth across all regions and market types.
- The company has made significant progress in improving the quality of listings, removing over 200,000 low-quality listings since April of last year.
- Airbnb Inc (ABNB) is expanding beyond its core business, with new initiatives like Airbnb icons and a co-hosting marketplace set to launch in October.
Negative Points
- The company is experiencing shorter booking lead times, particularly in North America, which could impact future revenue.
- There are signs of slowing demand from U.S. guests, which has been factored into the Q3 outlook.
- Regulatory changes in California have created headwinds for the business, particularly affecting the California market.
- Long-term stays have grown more slowly than short-term stays, which has been a drag on overall growth, especially in North America.
- Despite the strong performance, there are concerns about the sustainability of ADR (Average Daily Rate) growth, especially as the company expands into lower ADR regions like Latin America and Asia-Pacific.
Q & A Highlights
Q: Brian, just with your last comments on slowing lead times and whatnot in North America, can you talk a little bit more about that when you saw those trends sort of first hit and then how it all sets the strength from Olympics and UEFA and everything else? That's question one. And maybe a bigger question when we think about extending beyond the core and perfecting the core service. Post summer release, post winter release, we've seen a lot of key improvement across Airbnb with guest favorites, with icons, and the list goes on. How does -- when we think about the coming winter release and throughout '25 and everything else, how are these newer services helping to influence, call the Airbnb of tomorrow? Thank you.
A: Yeah, why don't, Ellie, you take the first one about slowing lead times and when we started seeing these trends. And I'll take the second one.
Elinor Mertz - Airbnb Inc - Chief Financial Officer: So, let me double click a little bit in terms of the trends for lead time since the beginning of the year. In both Q1 and Q2, what we saw was that lead times were basically equivalent with what we had seen in 2023. So, there wasn't really any timing shift of behavior in terms of when guests were booking. What we've seen more recently, in particular in July is a shrinking of the lead times. And in particular, what we've seen is that there continues to be very strong growth of the shorter lead times. So anything from same day to next week to a couple of weeks from now. But what we're not seeing the same level of strength is in those longer lead times, so two months from now, you know, what you're booking for Thanksgiving, what you're booking for Christmas. And so, it's that, I would say, softness in terms of longer lead times that is a big factor, in terms of the outlook that we've provided. What I would say additionally is that, over the last couple of years, as we emerged from COVID, there were several periods where we saw, some volatility in terms of overall lead times and, in particular, some hesitancy for consumers to book those longer lead time trips. I suspect that's what we're seeing right now. And the -- I would say, the silver lining with regard to the trends that we're see right now is not that consumers are not necessarily going to book that trip for Thanksgiving or Christmas, it just appears that they have not booked it yet. So, we're closely following all of the trends on lead times, but it is a factor that informs the outlook that was provided for Q3.
Brian Chesky - Airbnb Inc - Chairman of the Board, Chief Executive Officer, Co-Founder, Head of Community: So, Ron, to answer your question about expanding beyond the core business, where we are is -- we spent 16 years building a business that's approaching $80 billion in gross booking value. That's basically one category, which we call Airbnb, which is short-term accommodation. It's been pretty amazing how far this single product has gone. And we haven't really charged other than like essentially travel insurance, we haven't really ever really expanded beyond our core business, and we do have long-term stays, which are 70% a night. But we haven't done very much. We began before the pandemic preparing to expand Airbnb. And then, when the pandemic hit, you know, we cut back a lot of our resources. We got focused, went back to our roots, and really focused on rebuilding our platform, becoming lean, becoming a functional organization. And we now have essentially the same amount of employees as before the pandemic and double the revenue. And that explains why we have 41% free cash flow margin, one of the most profitable companies in tech. We're now beginning to prepare the next chapter of Airbnb and I want Airbnb to be one of the most important companies in our generation. And to do that, we're going to need to do more than one thing. We're going to have to do multiple new things. We're going to have to have multiple new products and multiple new services. This fall, this October, we're going to be launching a new host service, which is really important. It's essentially a co-hosting marketplace. So, there are people that have homes, but they don't have time. There are other people in the world that have time, but they don't have a home. And so, there's a [venn] diagram of people today who have both and can host. But what if we can match those two people together? That would unlock a lot more inventory. That's what we're going to be launching later in October. Then, next year, we're going to begin to expand Airbnb truly beyond a core business. And we're going to be launching -- we're going to re-launch experiences. I've been asked about experiences probably every earnings call since it's in public, rightly so, cause it's very exciting. We've learned a lot of lessons from experiences. They need to be more affordable. They need to be more unique to Airbnb. We need things you can only find in Airbnb. They should be merchandised as videos not photos. They should be discoverable in the app, and we should market them. If we think we do the five things, we think we'll have a hit on our hands and we're working on that. We also have new guest services and new host services that we're launching next year that we're working on. And then, every year, starting next year, we're going to launch new products and services. You know, I look at Apple, I look at Amazon. Apple at one point, was selling iMacs, Amazon was only selling books. We've gotten bigger than either of those companies just selling short-term rentals. But we're ready to go beyond short-term rentals. So, the new Airbnb, to answer your question Ron, will be about a lot more than short-term rentals. It's going to be about long-term stays. It's going to be our guest services, host services, and many new offerings. And you'll begin to see that next year.
Q: Ellie, just to follow up on, I know you talked about the shorter booking window. Are you seeing any change in activity around pricing or class of property? And is there anything to call out across cohorts or income levels? And then, Brian, just circling back on expanding beyond the core, are there any expansion markets in particular that you would call out where you're seeing particularly strong traction? Thanks.
A: Yeah. So, why don't, Ellie, take the first? I'll take the second.
Elinor Mertz - Airbnb Inc - Chief Financial Officer: Yeah. So, let's talk a little bit generally about ADR. The question of like, you know, what are people actually purchasing on the platform? I would say, generally, so far this year, what you've seen is a little bit of ADR appreciation globally. In particular, obviously, though more recently in North America. And what we see there is a big driver of the ADR appreciation is mixed shift, which you can assume
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
