Airbnb, Inc. 2024 First-Quarter Form 10-Q Summary
Business Context and Reporting Period
Airbnb operates a global marketplace connecting hosts and guests for stays and experiences. This unaudited Form 10-Q covers the three months ended March 31, 2024, with comparisons to the three months ended March 31, 2023. Results are subject to seasonal travel patterns; the timing of Easter benefited first-quarter 2024 results.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $2.142 billion | $1.818 billion | 18% |
| Income from operations | $101 million | $(5) million | Improved |
| Net income | $264 million | $117 million | 126% |
| Diluted EPS | $0.41 | $0.18 | Increased |
| Adjusted EBITDA | $424 million | $262 million | 62% |
| Adjusted EBITDA margin | 20% | 14% | Up 6 percentage points |
| Operating cash flow | $1.923 billion | $1.587 billion | 21% |
| Free cash flow | $1.909 billion | $1.581 billion | 21% |
| Operating cash flow margin | 90% | 87% | Up 3 percentage points |
| Free cash flow margin | 89% | 87% | Up 2 percentage points |
Revenue growth reflected a 9.5% increase in Nights and Experiences Booked to 132.6 million, a 12% increase in Gross Booking Value to $22.9 billion, modest ADR growth, and the Easter timing benefit. Growth was strongest in Asia Pacific and Latin America.
Total costs and expenses increased 12% to $2.041 billion, below the rate of revenue growth. Cost of revenue was $480 million, product development was $475 million, sales and marketing was $514 million, and general and administrative expense was $287 million. Stock-based compensation increased to $295 million from $240 million.
Cash, Liquidity, Debt, and Capital Allocation
- Cash and cash equivalents were $7.829 billion at March 31, 2024, compared with $6.874 billion at December 31, 2023.
- Short-term investments were $3.264 billion, resulting in $11.1 billion of cash, cash equivalents, and short-term investments.
- Airbnb held $8.737 billion of funds receivable and customer amounts, with a corresponding $8.737 billion liability; these amounts relate to customer bookings and are distinct from corporate liquidity.
- Total debt was approximately $2.0 billion, consisting of 0% convertible senior notes due in 2026. No amounts were drawn under the $1.0 billion revolving credit facility; letters of credit totaled $25 million.
- Airbnb repurchased 4.7 million Class A shares for $750 million during the quarter. The May 2023 authorization was completed, and $6.0 billion remained available under the February 2024 repurchase authorization.
- Operating cash flow was supported by $1.008 billion of higher unearned fees and $325 million of higher accrued expenses and other liabilities. Free cash flow is affected by collecting service fees before stays and experiences occur.
Material Changes Versus the Prior Comparable Period
- Revenue increased 18%, while net income more than doubled, reflecting higher revenue, increased interest income, and cost discipline.
- Interest income increased 38% to $202 million because of higher cash and investment balances and higher interest rates.
- Product development expense rose 13%, primarily from higher headcount and compensation costs.
- Sales and marketing expense rose 14%, primarily from increased marketing campaigns and search-engine marketing.
- General and administrative expense rose 18%, partly due to higher non-income taxes and non-recurring employee taxes.
- Income tax expense increased to $29 million from $13 million. The company anticipates paying a material amount of additional federal tax in 2024 under the Corporate Alternative Minimum Tax, with expected future tax credits.
- Cash flow from financing activities was $2.134 billion, primarily reflecting a $2.993 billion change in funds payable and amounts payable to customers, partially offset by share repurchases and taxes paid on equity awards.
Outlook, Commentary, Risks, and Unusual Items
Management characterized travel demand as strong and cited continued international growth, modest ADR increases, and disciplined cost management. The filing does not provide a clear quantified full-year or second-quarter revenue, EBITDA, or free-cash-flow guidance in the supplied text.
- Key operating risks include macroeconomic conditions, inflation, interest rates, foreign exchange movements, travel demand, competition, host and guest retention, supply constraints, seasonality, safety and reputational matters, and ongoing changes to short-term-rental regulation.
- Airbnb collects and remits lodging taxes in approximately 33,000 jurisdictions. Lodging taxes collected and payable were $508 million at March 31, 2024. Accrued estimated lodging-tax obligations, including penalties and interest, were $124 million; reasonably possible additional losses were estimated at $38 million to $48 million in certain matters.
- Accrued liabilities related to host withholding-tax obligations were $428 million. Reasonably possible additional losses were estimated at $95 million to $115 million, excluding matters for which the company cannot estimate a range.
- Reasonably possible losses related to certain transactional and business taxes, in excess of accrued amounts, were estimated at $320 million to $340 million.
- Airbnb settled Italian withholding-tax matters for 2017–2021 for €576 million, or approximately $621 million. The company expects settlement discussions with Italian tax authorities regarding 2022 and 2023 matters to begin in the second quarter of 2024.
- An IRS dispute concerning the valuation of international intellectual property could result in approximately $1.3 billion of additional tax, plus penalties and interest, exceeding the company’s current reserve by more than $1.0 billion. Airbnb disputes the proposed adjustment and expects to pursue available remedies.
- Airbnb reports no material changes to previously disclosed risk factors, no material changes in market risk, and effective disclosure controls as of March 31, 2024.
Important Facts for Investors to Verify
- Whether booking growth, GBV, ADR, and international expansion continue after the Easter-related timing benefit.
- The sustainability of unusually high cash-flow conversion, given the impact of unearned fees and customer funds.
- The effect of stock-based compensation, which reached $295 million in the quarter, on underlying profitability and share dilution.
- Progress and ultimate exposure related to lodging taxes, host withholding taxes, transactional taxes, the Italian tax matters, and the IRS dispute.
- The pace and valuation impact of the newly authorized $6.0 billion share-repurchase program.
- The company’s ability to refinance or settle the $2.0 billion of convertible notes due in 2026 and maintain compliance with its credit facility.
- Any future quantified guidance, because the supplied filing text does not provide clear formal revenue or earnings guidance.