Airbnb (NASDAQ:ABNB) Q3 Sales Beat Estimates But Quarterly Guidance Underwhelms

Petr Huřťák /
2022/11/01 4:36 pm EDT

Online accommodations platform Airbnb (NASDAQ: ABNB) beat analyst expectations in Q3 FY2022 quarter, with revenue up 28.9% year on year to $2.88 billion. However, guidance for the next quarter was less impressive, coming in at $1.84 billion at the midpoint, being 1.11% below analyst estimates. Airbnb made a GAAP profit of $1.21 billion, improving on its profit of $833.8 million, in the same quarter last year.

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Airbnb (ABNB) Q3 FY2022 Highlights:

  • Revenue: $2.88 billion vs analyst estimates of $2.84 billion (1.25% beat)
  • Revenue guidance for Q4 2022 is $1.84 billion at the midpoint, below analyst estimates of $1.86 billion
  • Free cash flow of $960 million, up 20.8% from previous quarter
  • Gross Margin (GAAP): 86%, in line with same quarter last year
  • Nights and Experiences Booked: 99.7 million, up 20 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 incredible, averaging 62.7% annually. The initial impact of the pandemic was positive for Airbnb's revenue, but growth rates subsequently normalized.

Airbnb Total Revenue

This quarter, Airbnb reported solid 28.9% year on year revenue growth, in line with analysts' expectations.

Guidance for the next quarter indicates Airbnb is expecting revenue to grow 20% year on year to $1.84 billion, slowing down from the 78.3% 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 15.2% 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 buyers using the platform and how much each of those buyers spends.

Over the last two years the number of Airbnb's nights booked, a key usage metric for the company, grew 39.1% annually to 99.7 million users. 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 Q3 the company added 20 million nights booked, translating to a 25% growth year on year.

Key Takeaways from Airbnb's Q3 Results

With a market capitalization of $68.3 billion, more than $9.62 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

We enjoyed seeing Airbnb’s strong user growth this quarter. And we were also glad to see good revenue growth. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 3.21% on the results and currently trades at $105.54 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.