Airbnb Earnings: Solid Sales Growth and Profitability With an Eye to Further Enhance Its Offering

We don’t expect to materially change our $132 fair value estimate for narrow-moat Airbnb ABNB after the company reported slightly better third-quarter results and guided its fourth-quarter sales in line with our forecast.

Airbnb’s booking growth was 17%, slightly ahead of our 15% forecast, with sales lifting 18%, edging our 16% estimate. Revenue was derived from a 14% increase in night volume (in line with our prognosis) and a daily rate rise of 3% (above our 1% expectation). Looking ahead to the fourth quarter, Airbnb guided sales to grow 12%-14%, squaring with our 13% forecast, with rates expected to be up slightly and night growth targeted to decelerate some for the 14% rise in the third quarter.

In the long term, we see ample drivers for the company to achieve the 12% average sales growth we estimate during 2024-32. For one, the platform is adding supply (up 19% in the third quarter) across all segments and regions, which should help drive future booking growth. Additionally, the company’s penetration in most international markets remains below that in the U.S., and as the company looks to optimize product and marketing in these countries, bookings should follow. In this vein, Airbnb’s recent efforts to expand in Germany, Brazil, and Korea have resulted in combined gross nights booked in these countries being 54% ahead of 2019′s level. Also, many markets still have room to recover, with urban and cross-border representing 49% and 45% of total nights, respectively, compared with the prepandemic marks of 58% and 48%. Finally, Airbnb’s platform should continue to be enhanced by new service and product offerings, such as boutique hotels and experiences in the future.

Airbnb’s profitability remains stout, with EBITDA margins at 54%, an improvement from the 51% achieved last quarter. Overall, we still expect EBITDA margins to equal 2022′s 34.6% level in 2023 and expand to the high-30s by 2026, as Airbnb continues to drive cost efficiencies and leverage top-line growth.