ABNB Q1 Earnings Call: Management Focuses on International Growth and Product Expansion Amid Mixed Regional Trends

Yahoo

05-05-2025

Online accommodations platform Airbnb (NASDAQ:ABNB) reported Q1 CY2025 results beating Wall Street's revenue expectations , with sales up 6.1% year on year to $2.27 billion. The company expects next quarter's revenue to be around $3.02 billion, close to analysts' estimates. Its non-GAAP profit of $0.24 per share was in line with analysts' consensus estimates.
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Revenue: $2.27 billion vs analyst estimates of $2.26 billion (6.1% year-on-year growth, 0.6% beat)
Adjusted EPS: $0.24 vs analyst estimates of $0.24 (in line)
Adjusted EBITDA: $417 million vs analyst estimates of $363.2 million (18.4% margin, 14.8% beat)
Revenue Guidance for Q2 CY2025 is $3.02 billion at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 1.7%, down from 4.7% in the same quarter last year
Free Cash Flow Margin: 78.4%, up from 18.5% in the previous quarter
Nights and Experiences Booked: 143.1 million, up 10.5 million year on year
Market Capitalization: $77.08 billion
Airbnb's first quarter results were shaped by ongoing product upgrades and regional divergence in guest demand. Management highlighted strong momentum in expansion markets, particularly in Latin America and Asia Pacific, offset by slower growth in North America. CEO Brian Chesky emphasized that improvements such as the Guest Favorites feature and global rollout of total price display have enhanced the platform's reliability and affordability for both guests and hosts. CFO Ellie Mertz noted that short-lead bookings remained robust, while longer-lead bookings in the U.S. exhibited softness due to economic uncertainty.
Looking ahead, Airbnb expects international markets to remain a key growth engine, with the company investing in both localized marketing and product features to build market share outside its core geographies. The upcoming May product launch is expected to initiate new revenue streams, though management cautioned that its impact will be modest in the near term. Mertz reiterated that investments in new offerings will compress margins in the back half of the year, but are intended to drive long-term revenue growth as these initiatives scale.
Management's remarks on the call centered on product enhancements, regional performance, and preparations for expansion beyond the core home rental business. The quarter's outcomes reflected a combination of targeted product improvements and shifting travel patterns in different markets.
International market momentum: Expansion markets, especially in Latin America and Asia Pacific, outpaced the core regions in growth. Management attributed this to localized product and marketing strategies, with Brazil highlighted for accelerating both origin nights and first-time bookers.
Product upgrades drive conversion: Continued enhancements—such as the Guest Favorites listing, total price display, and streamlined checkout—were cited as key drivers for higher customer satisfaction and increased booking conversion. Over 350 million nights have been booked via Guest Favorites since launch.
US travel softness and booking trends: In North America, Airbnb saw slower growth, with management attributing this to broader economic uncertainty and a shift toward shorter booking lead times. Higher-income travelers remained resilient, but bookings for further-out dates softened.
Affordability and pricing transparency: The global rollout of total price display and new host pricing tools were intended to reinforce Airbnb's affordability advantage. Management noted that hosts have more flexibility to adjust prices, which could support bookings if consumer spending weakens.
App rebuild for future offerings: Airbnb completed a rebuild of its app on a new technology stack, enabling faster updates and the planned addition of services beyond accommodations. This lays the groundwork for the May 2025 product release, which will introduce new business lines.
Management's outlook for the upcoming quarter and year centers on expanding into new markets, continued investment in product improvements, and scaling new business lines, with international growth expected to offset North American softness.
Expansion market investments: Airbnb is prioritizing localized product features and marketing in underpenetrated regions, with management expecting these efforts to deliver above-average growth rates and help diversify revenue.
Scaling new product offerings: The upcoming launch of new business lines will increase expenses in the short term, compressing margins, but management believes these initiatives will support revenue growth over multiple years as they scale.
Macro and consumer demand risks: Ongoing geopolitical and economic uncertainty, especially in North America, remains a risk to booking trends and pricing power, with management closely monitoring shifts in consumer behavior and adjusting marketing tactics accordingly.
Justin Post (Bank of America): Asked about the decline in inbound foreign travel to the U.S. Ellie Mertz clarified that this corridor represents only 2-3% of Airbnb's business and that the slowdown reflects shifting destination choices, not overall demand loss.
Richard Clarke (Bernstein): Inquired about specific U.S. guest behaviors contributing to slower growth. Mertz responded that short-lead bookings are strong while longer-term bookings have softened, with no significant evidence of guests trading down to lower-priced options.
Mark Mahaney (Evercore ISI): Queried which initiatives could most accelerate nights booked growth. Brian Chesky pointed to core service improvements, international market expansion, and usability upgrades as the primary levers for re-accelerating growth.
Jed Kelly (Oppenheimer): Asked about the potential for expanding hotel offerings and margin guidance stability. Chesky highlighted plans to increase hotel inventory, and Mertz reiterated no material changes to annual margin guidance despite investment in new initiatives.
Ron Josey (Citi): Sought details on the impact of the May product launch and how affordability initiatives might influence bookings. Mertz explained the immediate top-line impact will be modest, but affordability measures should help capture demand, especially for nearby or lower-cost stays.
Looking to the next few quarters, the StockStory team will be monitoring (1) the performance of Airbnb's newly launched business lines and their adoption rates among guests and hosts, (2) sustained growth in expansion markets, particularly in Latin America and Asia Pacific, and (3) the impact of affordability and pricing transparency initiatives on booking volumes in North America, where demand has been more volatile. The effectiveness of marketing investments and continued product enhancements will also be important indicators of execution.
Airbnb currently trades at a forward EV/EBITDA ratio of 18.5×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
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