Airbnb Q1 Profit Jumps to $264M, Warns of Q2 Slowdown

Key Takeaway

• Airbnb's Q1 net income soared to $264 million, surpassing expectations due to early Easter and cost discipline.
• Q2 revenue growth forecasted at 8-10%, below analyst expectations, attributed to early Easter and currency headwinds.
• Despite a projected slowdown, strategic expansions and the highest number of active listings signal long-term growth optimism.

Strong First Quarter Performance

Airbnb reported a significant increase in its profits for the first quarter, with net income more than doubling to $264 million from $117 million in the same period the previous year. This performance exceeded analysts' expectations, which had forecasted a net income of $152 million. The company's revenue also surpassed forecasts, reaching $2.14 billion against an anticipated $2.06 billion. The growth in earnings was attributed to sales growth, aided by the early Easter holiday on March 31 and the company's focus on "cost discipline."

Forecasting a Slowdown

Despite the strong performance in the first quarter, Airbnb has projected a slowdown in revenue growth for the second quarter, estimating an increase of only 8% to 10% year on year. This forecast is a deceleration from the high teens growth rates seen in recent quarters and falls below analyst expectations of $2.74 billion, with Airbnb's guidance ranging from $2.68 billion to $2.74 billion. The company attributes this anticipated slowdown to the early timing of Easter, the leap year, and currency headwinds. However, Airbnb remains optimistic about growth resuming in the middle of the year, bolstered by a "strong backlog" of nights booked for events such as the Paris Olympics.

Strategic Expansions and Listings Growth

Airbnb has been focusing on enhancing its core rentals business and expanding its offerings to drive long-term growth. In the first quarter, the company removed "thousands of low-quality listings" to improve user and host experiences. May saw the launch of the "icons" category, introducing experiences tied to well-known names and brands, indicating Airbnb's ambition to expand beyond its core segment. The company also highlighted the potential for growth in markets not widely served by Airbnb, acknowledging that expansion into these areas would require time and investment. At the end of the first quarter, Airbnb reported its highest number of active listings and noted "double-digit supply increases across all regions."

Adjusted Earnings and Stock Repurchase

For the second quarter, Airbnb anticipates adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) to be roughly unchanged from the previous year, at about $819 million. This projection is lower than analyst forecasts of approximately $917 million. Additionally, Airbnb announced it had repurchased $750 million of stock during the period and still has $6 billion remaining in its buyback program.

Management Quotes

• Airbnb:

  "Earnings were fuelled by sales growth helped by the timing of Easter, which occurred on March 31, as well as 'cost discipline'." "However, revenue growth in the second quarter is likely to slow markedly to between 8 per cent and 10 per cent year on year... It attributed the slowdown largely to the early timing of Easter, the leap year and currency headwinds." "Airbnb said it expected growth to pick up again in the middle of the year, with a 'strong backlog' of nights booked, including for summer events such as the Paris Olympics." "During the first quarter Airbnb said it had removed what it called 'thousands of low-quality listings'." "It said on Wednesday that there was ample scope for growth, with most countries not widely served by Airbnb. Expanding into those markets would 'take time and investment'." "Airbnb ended the first quarter with its highest number of active listings and said it continued to see 'double-digit supply increases across all regions'." "Airbnb said it had repurchased $750mn of stock in the period and had $6bn left in its buyback programme."