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Airbnb Misses Q3 Earnings Estimates: How Should You Play the Stock?
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Airbnb (ABNB - Free Report) reported third-quarter 2024 adjusted earnings of $2.13 per share, missing the Zacks Consensus Estimate by 1.84%.
The latest lag follows the second-quarter 2024’s miss of 6.52%. ABNB’s earnings beat the Zacks Consensus Estimate in the remaining two of the trailing four quarters, the earnings surprise being 20.83%, on average.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $3.73 billion increased 10% year over year, both on a reported and FX-neutral basis. The top line beat the Zacks Consensus Estimate by 0.26%. The year-over-year increase was driven by the growth of nights stayed on the platform.
ABNB Shares Fall Post Q3 Earnings
ABNB shares were down 4.56% in after-hours trading following the results due to sluggish near-term guidance. Higher marketing and product development expenses are expected to hurt the adjusted EBITDA margin in the fourth quarter of 2024.
Airbnb shares have returned 6.5% year to date (YTD), underperforming the broader Zacks Consumer Discretionary sector’s appreciation of 7.4% and the Zacks Leisure and Recreation Services industry’s return of 18.4%.
Over the same timeframe, ABNB has also underperformed its nearest competitors, Booking Holdings (BKNG - Free Report) , Expedia (EXPE - Free Report) and Trip.com Group (TCOM - Free Report) .
Booking Holdings, Expedia and Trip.com Group shares have appreciated 38.7%, 14.7% and 90% YTD, respectively.
Before diving into ABNB’s investment prospects, let’s take a glance at its quarterly numbers.
ABNB Benefits From New Feature Additions
ABNB’s third-quarter results reflected growing demand for its services. Airbnb’s focus on improving user experience through a plethora of feature additions (more than 535 over the past three years) is noteworthy.
Third-quarter 2024 Gross Booking Value was $20.1 billion, up 10% year over year. This was driven by strong Nights and Experiences Booked and a modest increase in Average Daily Rates (ADR).
Nights and Experiences Booked were 122.8 million, up 8% year over year. The metric was driven by strong performances in all regions, especially the Asia Pacific and Latin America.
ADR (Gross Booking Value per Night and Experience Booked) was $164, up 1% on a year-over-year basis. Excluding FX, ADR grew 2% and was flat to up across all regions, primarily due to price appreciation and mix shifts.
In addition, nights booked on the app during the reported quarter increased 18% year over year and comprised 58% of total nights booked (up from 53% in the year-ago quarter). Airbnb saw continued growth of first-time bookers, particularly the youngest travelers.
Airbnb’s Operating Results
Adjusted EBITDA was $2 billion, up 7% on a reported basis and 8% on a FX-neutral basis year over year. Adjusted EBITDA margin was 52%, down 200 basis points year over year.
Operations and support costs, product development expenses, and sales and marketing expenses were $369 million, $524 million and $514 million, respectively, increasing 16.8%, 25% and 27.5% year over year. General and administrative expenses were $315 million, up 10.2% year over year.
Airbnb reported a third-quarter 2024 operating income of $1.53 billion, up 1.9% year over year.
ABNB’s Balance Sheet & Cash Flow Remain Strong
As of Sept. 30, 2024, cash and cash equivalents and short-term investments amounted to $11.3 billion, unchanged sequentially. ABNB had $6.6 billion of funds held on behalf of guests.
Long-term debt, as of Sept. 30, 2024, was $1.994 billion compared with $1.993 billion as of June 30, 2024.
Net cash provided by operating activities was $1.1 billion for the third quarter of 2024, unchanged sequentially but down $1.3 billion reported in the year-ago quarter. ABNB paid $163 million to the IRS, which negatively impacted cash flow.
Airbnb generated a free cash flow of $1.1 billion in the third quarter of 2024 and $4.1 billion over the trailing 12 months.
ABNB repurchased shares worth $1.1 billion in the reported quarter. As of Sept. 30, it still has $4.2 billion under current share repurchase authorization.
Airbnb’s Guidance Implies Near-Term Weakness
For the fourth quarter of 2024, ABNB expects revenues between $2.39 billion and $2.44 billion. Airbnb anticipates take rate in the fourth quarter will be slightly lower on a year-over-year basis, due to one-time benefits recognized from unused gift cards in the year-ago quarter.
Excluding these one-time benefits related to gift cards in the fourth quarter of 2023, revenue growth in the fourth quarter of 2024 is expected to be approximately 2%.
The Zacks Consensus Estimate is pegged at $2.42 billion, indicating 9.26% growth from the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at 75 cents, unchanged over the past 30 days, suggesting a 1.32% year-over-year decline.
For 2024, ABNB expects an adjusted EBITDA margin of roughly 35.5%. The free cash flow margin is expected to be several points above ABNB’s adjusted EBITDA margin for the full year.
Airbnb currently expects first-quarter 2025 revenues to decline on a year-over-year basis due to tough comparisons with the year-ago quarter.
ABNB Shares – Buy, Sell or Hold Post Q3 Earnings?
Airbnb’s focus on improving user experience bodes well for investors. Its 2024 Winter Release included more than 50 upgrades for guests that make the app more personalized. ABNB is striving to improve listing quality and has removed more than 300K listings that failed to meet guest expectations.
Hosting is gaining traction, with more than 8 million active listings currently. ABNB witnessed growth across all regions and market types in the reported quarter. Features like Co-Host Network are expected to make hosting much easier.
Expansion into new markets like Japan presents a significant growth opportunity for ABNB. In the third quarter, the average growth rate of nights booked in expansion markets was more than double that of Airbnb’s core markets. Growing demand for its services and the availability of more payment options in expansion markets is a long-term driver for ABNB.
However, sluggish near-term guidance due to tough year-over-year comparison and higher expenses is a headwind. Higher marketing expenses as the company continues to invest in underpenetrated markets are expected to hurt profitability.
Airbnb shares are also currently overvalued, as suggested by a Value Score of D.
Image: Bigstock
Airbnb Misses Q3 Earnings Estimates: How Should You Play the Stock?
Airbnb (ABNB - Free Report) reported third-quarter 2024 adjusted earnings of $2.13 per share, missing the Zacks Consensus Estimate by 1.84%.
The latest lag follows the second-quarter 2024’s miss of 6.52%. ABNB’s earnings beat the Zacks Consensus Estimate in the remaining two of the trailing four quarters, the earnings surprise being 20.83%, on average.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $3.73 billion increased 10% year over year, both on a reported and FX-neutral basis. The top line beat the Zacks Consensus Estimate by 0.26%. The year-over-year increase was driven by the growth of nights stayed on the platform.
ABNB Shares Fall Post Q3 Earnings
ABNB shares were down 4.56% in after-hours trading following the results due to sluggish near-term guidance. Higher marketing and product development expenses are expected to hurt the adjusted EBITDA margin in the fourth quarter of 2024.
Airbnb, Inc. Price, Consensus and EPS Surprise
Airbnb, Inc. price-consensus-eps-surprise-chart | Airbnb, Inc. Quote
Airbnb shares have returned 6.5% year to date (YTD), underperforming the broader Zacks Consumer Discretionary sector’s appreciation of 7.4% and the Zacks Leisure and Recreation Services industry’s return of 18.4%.
Over the same timeframe, ABNB has also underperformed its nearest competitors, Booking Holdings (BKNG - Free Report) , Expedia (EXPE - Free Report) and Trip.com Group (TCOM - Free Report) .
Booking Holdings, Expedia and Trip.com Group shares have appreciated 38.7%, 14.7% and 90% YTD, respectively.
Before diving into ABNB’s investment prospects, let’s take a glance at its quarterly numbers.
ABNB Benefits From New Feature Additions
ABNB’s third-quarter results reflected growing demand for its services. Airbnb’s focus on improving user experience through a plethora of feature additions (more than 535 over the past three years) is noteworthy.
Third-quarter 2024 Gross Booking Value was $20.1 billion, up 10% year over year. This was driven by strong Nights and Experiences Booked and a modest increase in Average Daily Rates (ADR).
Nights and Experiences Booked were 122.8 million, up 8% year over year. The metric was driven by strong performances in all regions, especially the Asia Pacific and Latin America.
ADR (Gross Booking Value per Night and Experience Booked) was $164, up 1% on a year-over-year basis. Excluding FX, ADR grew 2% and was flat to up across all regions, primarily due to price appreciation and mix shifts.
In addition, nights booked on the app during the reported quarter increased 18% year over year and comprised 58% of total nights booked (up from 53% in the year-ago quarter). Airbnb saw continued growth of first-time bookers, particularly the youngest travelers.
Airbnb’s Operating Results
Adjusted EBITDA was $2 billion, up 7% on a reported basis and 8% on a FX-neutral basis year over year. Adjusted EBITDA margin was 52%, down 200 basis points year over year.
Operations and support costs, product development expenses, and sales and marketing expenses were $369 million, $524 million and $514 million, respectively, increasing 16.8%, 25% and 27.5% year over year. General and administrative expenses were $315 million, up 10.2% year over year.
Airbnb reported a third-quarter 2024 operating income of $1.53 billion, up 1.9% year over year.
ABNB’s Balance Sheet & Cash Flow Remain Strong
As of Sept. 30, 2024, cash and cash equivalents and short-term investments amounted to $11.3 billion, unchanged sequentially. ABNB had $6.6 billion of funds held on behalf of guests.
Long-term debt, as of Sept. 30, 2024, was $1.994 billion compared with $1.993 billion as of June 30, 2024.
Net cash provided by operating activities was $1.1 billion for the third quarter of 2024, unchanged sequentially but down $1.3 billion reported in the year-ago quarter. ABNB paid $163 million to the IRS, which negatively impacted cash flow.
Airbnb generated a free cash flow of $1.1 billion in the third quarter of 2024 and $4.1 billion over the trailing 12 months.
ABNB repurchased shares worth $1.1 billion in the reported quarter. As of Sept. 30, it still has $4.2 billion under current share repurchase authorization.
Airbnb’s Guidance Implies Near-Term Weakness
For the fourth quarter of 2024, ABNB expects revenues between $2.39 billion and $2.44 billion. Airbnb anticipates take rate in the fourth quarter will be slightly lower on a year-over-year basis, due to one-time benefits recognized from unused gift cards in the year-ago quarter.
Excluding these one-time benefits related to gift cards in the fourth quarter of 2023, revenue growth in the fourth quarter of 2024 is expected to be approximately 2%.
The Zacks Consensus Estimate is pegged at $2.42 billion, indicating 9.26% growth from the figure reported in the year-ago quarter. The consensus mark for earnings is pegged at 75 cents, unchanged over the past 30 days, suggesting a 1.32% year-over-year decline.
For 2024, ABNB expects an adjusted EBITDA margin of roughly 35.5%. The free cash flow margin is expected to be several points above ABNB’s adjusted EBITDA margin for the full year.
Airbnb currently expects first-quarter 2025 revenues to decline on a year-over-year basis due to tough comparisons with the year-ago quarter.
ABNB Shares – Buy, Sell or Hold Post Q3 Earnings?
Airbnb’s focus on improving user experience bodes well for investors. Its 2024 Winter Release included more than 50 upgrades for guests that make the app more personalized. ABNB is striving to improve listing quality and has removed more than 300K listings that failed to meet guest expectations.
Hosting is gaining traction, with more than 8 million active listings currently. ABNB witnessed growth across all regions and market types in the reported quarter. Features like Co-Host Network are expected to make hosting much easier.
Expansion into new markets like Japan presents a significant growth opportunity for ABNB. In the third quarter, the average growth rate of nights booked in expansion markets was more than double that of Airbnb’s core markets. Growing demand for its services and the availability of more payment options in expansion markets is a long-term driver for ABNB.
However, sluggish near-term guidance due to tough year-over-year comparison and higher expenses is a headwind. Higher marketing expenses as the company continues to invest in underpenetrated markets are expected to hurt profitability.
Airbnb shares are also currently overvalued, as suggested by a Value Score of D.
ABNB currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a favorable entry point to accumulate the stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.