Airbnb Posts Record Q4, Lands First Yearly Profit

Airbnb beat out expert predictions to produce its highest fourth quarter in its history. Boardroom breaks down the company’s earnings report.

For the first time in its 15-year existence, Airbnb posted its first yearly profit per its fourth-quarter earnings report. The company, currently valued at $74.7 billion, beat out expert predictions and boasts its highest Q4 ever. There are several factors worth considering here, particularly the sole fact that people are traveling more after the COVID-19 pandemic in 2020 and 2021 scared off travelers all around the globe.

Here’s a quick overview of the Airbnb earnings report:

Shares: Airbnb jumped 9% in extended trading after the released fourth-quarter earnings.
Earnings/Share: 48 cents. Analysts projected 25 cents, per Refinitiv.
Revenue: $1.90 billion. Analysts projected $1.86 billion, according to Refinitiv.

Q4 Overview:

Revenue: up 24% year-over-year.
Net Income: $319 million for the quarter — up from $55 million last year ($432 million expected).

In its letter to shareholders, the company said it expects revenue to be somewhere between $1.75 and $1.82 billion — also above the $1.69 expected by analysts. They cut spending during the pandemic but headcount increased since 2020, emphasizing that they’re going to “continue hiring at a judicious pace in 2023.” Its gross booking value — or host earnings, service fees, and taxes — totaled $13.5 billion in Q4 for a reported 88.2 million nights/experiences booked, also a 20% increase year-over-year.

It’s relatively simple: Travelers are returning to major cities which means Airbnb’s strongest areas of business are capitalizing. Domestic and short-distance travel were strong but saw “further improvement” in cross-border travel, namely in Latin America, Asia Pacific, and European travelers.

Cheaper Rates

With Airbnb’s recent success comes cheaper rates to book a night/experience.

“Starting this year, we will provide new and improved pricing and discounting tools to help hosts understand the final price guests pay and how to set competitive prices,” executives wrote in a letter to shareholders. “We expect these changes will drive greater affordability and value for guests, support bookings growth and therefore also help hosts be more successful.”

Per the company, the average daily rate was $152.81 in Q4 — 35.7% higher than the average daily rate in the same quarter of 2019. “For the remainder of the year, we expect ADR will face increasing downward pressure from mix shift, as well as new and improved pricing and discounting tools,” they wrote in the letter.

Airbnb’s Chief Executive Brian Chesky also acknowledged the 5% decrease in headcount from layoffs early in the pandemic — despite growing revenue by 75%.

“We’re still in heavy growth mode, I am not in profit-maximization mode,” he said. “I have a long list of things that we can invest in to drive further profitability, but I know that I can also afford, with our headcount, gross profitability improvements that can offset the ADR declines. And that’s what we’ll be investing in this year.”