By
Godfrey Benjamin
October 4th, 2023
Airbnb had a good Q3 2022 outing, but considers that prevalent macroeconomic headwinds may impact its Q4 performance.
Shares of Airbnb (NASDAQ: ABNB) plunged more than 13% on Wednesday following the company’s Q3 2022 earnings report release. Although Airbnb’s figures beat Wall Street’s estimates for the period, the company’s performance fell short on fourth-quarter guidance.
Airbnb stock is currently trading at just over $94 a share. Over the last six months, Airbnb stock has fallen 26%, and 33% year-over-year (YoY).
Airbnb Q3 2022 by the Numbers
For Q3 2022, Airbnb surpassed expectations on its top and bottom lines, raking in revenue of $2.9 billion. This represents a 29% YoY increase for the company and its strongest quarter ever. Furthermore, the $2.9 billion earned by the short-term lodging facilitator topped analysts’ estimates of $2.8 billion, according to Refinitiv. Airbnb’s revenue increase for the third quarter was spurred by a combination of operational factors. These include stable growth in the Nights and Experiences booked ($99.7 million), as well as elevated average daily rates. The company also reported that its Gross Booking Value (GBV) came in at $15.6 billion, representing a 31% increase YoY.
Furthermore, Airbnb benefited from booming travel demand and saw an increase in the number of new hosts on its platform. The company reported a net income of $1.2 billion earned during its most profitable quarter. This sum represents a nearly $400 million improvement from last year’s third quarter and a 46% increase YoY. Additionally, free cash flow generated for the latest quarterly outing amounts to around $960 million, facilitated by activities in the third quarter.
Q4 Guidance
Despite its commendable third-quarter financial statement, Airbnb expects lower revenue for Q4, delivering between $1.80 billion and $1.88 billion. In its earnings report, the company stated:
“We expect another strong quarter of revenue growth, delivering between $1.80 billion and $1.88 billion in Q4 2022. This represents year-over-year growth of between 17% and 23%, and a 62% to 70% increase relative to Q4 2019. On an FX-neutral basis, we anticipate year-over-year revenue growth between 23% and 29%. We expect our revenue as a share of GBV to decrease in Q4 2022 relative to Q3 2022, consistent with historical seasonality.”
This fourth-quarter guidance comes below the midpoint of the $1.85 billion analysts were expecting for the same period. Airbnb expects a “continued, albeit choppy, recovery of cross-border travel to be a further tailwind to future results”. The San Francisco-based company’s forecast takes into account the fact that countries around the world continue to recover from Covid lockdowns. Also, just as importantly, Airbnb provided guidance considering the present macroeconomic situation regarding inflation and rising interest rates.
According to Airbnb, the dollar’s current strength will lower its international average daily rate. Reacting to this development, analysts at Evercore ISI describe this as the “key negative” in the online marketplace company’s report. Although Evercore ISI maintained its “outperform” rating on Airbnb’s stock, the global independent investment banking advisory firm reportedly removed Airbnb from its TAP Outperform list.