Airbnb (NASDAQ:ABNB) Q1: Beats On Revenue But Stock Drops

Jabin Bastian /
2023/05/09 4:18 pm EDT

Online accommodations platform Airbnb (NASDAQ: ABNB) reported Q1 FY2023 results beating Wall St's expectations, with revenue up 20.5% year on year to $1.82 billion. The company expects that next quarter's revenue would be around $2.4 billion, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Airbnb made a GAAP profit of $117 million, improving on its loss of $18.8 million, in the same quarter last year.

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Airbnb (ABNB) Q1 FY2023 Highlights:

  • Revenue: $1.82 billion vs analyst estimates of $1.79 billion (1.72% beat)
  • EPS: $0.18 vs analyst estimates of $0.10 ($0.08 beat)
  • Revenue guidance for Q2 2023 is $2.4 billion at the midpoint, below analyst estimates of $2.42 billion
  • Free cash flow of $1.58 billion, up from $455 million in previous quarter
  • Gross Margin (GAAP): 76.5%, in line with same quarter last year
  • Nights and Experiences Booked: 121.1 million, up 19 million year on year

Founded by Joe Gebbia and Brian Chesky by renting out a blowup bed on the floor of their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.

Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission paying sellers, generating flywheel scale effects which feed back into further customer acquisition.

Sales Growth

Airbnb's revenue growth over the last three years has been exceptional, averaging 55.4% annually. This quarter, Airbnb reported a decent 20.5% year on year revenue growth, roughly in line with what analysts expected.

Airbnb Total Revenue

Guidance for the next quarter indicates Airbnb is expecting revenue to grow 14.1% year on year to $2.4 billion, slowing down from the 57.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 13.7% over the next twelve months.

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Usage Growth

As a online marketplace, Airbnb generates revenue growth both by growing the number of bookings on the platform and the average booking size in dollars.

Over the last two years the number of Airbnb's nights booked, a key usage metric for the company, grew 33.5% annually to 121.1 million. This is among the fastest growth of any consumer internet company, indicating that users are excited about the offering.

Airbnb Nights and Experiences Booked

In Q1 the company added 19 million nights booked, translating to a 18.6% growth year on year.

Key Takeaways from Airbnb's Q1 Results

Sporting a market capitalization of $79.2 billion, more than $10.6 billion in cash and with positive free cash flow over the last twelve months, we're confident that Airbnb has the resources it needs to pursue a high growth business strategy.

It was great to see that Airbnb’s user base is growing. And we were also happy to see it topped analysts’ revenue expectations, even if just narrowly. On the other hand, it was unfortunate to see that both revenue and adj. EBITDA guidance for the next quarter missed analysts' expectations, the latter partly due to "changes in the expected timing of our marketing spend relative to the prior year". Additionally full year 2023 EBITDA margin will be similar to 2022, which is slightly below expectations and showing that the company will not be getting operating leverage on expenses this year. Overall, this quarter's results were not the best we've seen from Airbnb. The company is down 9.06% on the results and currently trades at $115.5 per share.

Should you invest in Airbnb right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.