Online accommodations platform Airbnb (NASDAQ:ABNB) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 9.9% year on year to $3.73 billion. On the other hand, next quarter’s revenue guidance of $2.40 billion was less impressive, coming in 1.2% below analysts’ estimates. Its GAAP profit of $2.13 per share was also in line with analysts’ consensus estimates.
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Airbnb (ABNB) Q3 CY2024 Highlights:
- Revenue: $3.73 billion vs analyst estimates of $3.72 billion (in line)
- EPS (GAAP): $2.13 vs analyst expectations of $2.15 (in line)
- EBITDA: $1.96 billion vs analyst estimates of $1.86 billion (5.4% beat)
- Revenue Guidance for Q4 CY2024 is $2.40 billion at the midpoint, below analyst estimates of $2.42 billion
- Gross Margin (GAAP): 87.5%, up from 86.5% in the same quarter last year
- Operating Margin: 40.9%, down from 44% in the same quarter last year
- EBITDA Margin: 52.5%, down from 54% in the same quarter last year
- Free Cash Flow Margin: 28.8%, down from 38% in the previous quarter
- Nights and Experiences Booked: 122.8 million, up 9.6 million year on year
- Market Capitalization: $89.11 billion
Company Overview
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
Online Travel
Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.
Sales Growth
A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Airbnb grew its sales at an exceptional 26.8% compounded annual growth rate. This is a great starting point for our analysis because it shows Airbnb’s offerings resonate with customers.
This quarter, Airbnb grew its revenue by 9.9% year on year, and its $3.73 billion of revenue was in line with Wall Street’s estimates. Management is currently guiding for a 8% year-on-year increase next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.9% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and shows the market believes its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Nights And Experiences Booked
Booking Growth
As an online travel company, Airbnb generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.
Over the last two years, Airbnb’s nights and experiences booked, a key performance metric for the company, increased by 12.7% annually to 122.8 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings. 
In Q3, Airbnb added 9.6 million nights and experiences booked, leading to 8.5% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating booking growth just yet.
Revenue Per Booking
Average revenue per booking (ARPB) is a critical metric to track for consumer internet businesses like Airbnb because it not only measures how much users book on its platform but also the commission that Airbnb can charge.
Airbnb’s ARPB growth has been mediocre over the last two years, averaging 3.7%. This isn’t great, but the increase in nights and experiences booked is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Airbnb tries boosting ARPB by taking a more aggressive approach to monetization, it’s unclear whether bookings can continue growing at the current pace. 
This quarter, Airbnb’s ARPB clocked in at $30.39. It grew 1.3% year on year, slower than its booking growth.
Key Takeaways from Airbnb’s Q3 Results
We enjoyed seeing Airbnb exceed analysts’ EBITDA expectations this quarter. We were also glad its bookings outperformed Wall Street’s estimates - this beat seemed to make up for its softer quarterly revenue guidance. Overall, this was a decent quarter. The stock traded up 5.4% to $155.41 immediately following the results.
Big picture, is Airbnb a buy here and now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.
