Airbnb, Inc. Q3 FY2024 earnings call

• Making hosting mainstream: Over 8 million active listings, introduced Co-Host Network with 10,000 co-hosts in 10 countries, received over 20,000 interest in three weeks.
• Prospecting core service: Launched over 535 features in three years, 2024 winter release had over 50 upgrades for guests, removed over 300,000 listings failing guest expectations, Guest Favorites had over 200 million nights booked.
• Expanding beyond core: Expansion markets saw nights booked growth more than double core markets, preparing for next chapter beyond accommodations, reimagining experiences launching next May.

Airbnb had a strong third quarter with revenue growing 10% year-over-year to $3.7 billion. Net income was $1.4 billion, representing a net income margin of about 37%. Nights and experiences booked were $123 million. The company generated $1.1 billion of free cash flow, and the trailing 12-month free cash flow was $4.1 billion. Revenue contribution from different segments wasn't explicitly broken down by product segment, but overall financials were highlighted.

• Q4 nights booked expected to accelerate relative to Q3.
• 4Q EBITDA margin implied around 27-28%, driven by product development and marketing investments.
• 2025 will invest in core optimizations, global market expansions, new products, with details to be provided in next call.

• Forward-looking statements involve risks and uncertainties, actual results may differ from forward-looking statements.
• Supply quality and market competition risks.

Q: Good afternoon. Thanks for taking my questions. Just a question on supply. It looks like you stopped sort of giving us the year-on-year supply growth I guess because of the removals. I guess,, any color on what’s happening to maybe gross supply growth. And whether the removals you are doing and additions you are doing and seeing any meaningful shift towards professional hosts as you guys do that process or co-listed supply. And then maybe any color on whether this co-hosting is unlocking supply here. You talked about adding co-hosts, but are you getting additional supply due to the co-hosting initiatives?

A: Yes, thanks, Richard. Let me talk a little bit about what we've seen on supply. As you probably noted, our initiatives around supply have really morphed over the last 12 months. We can continue to focus on growing our overall supply base. But we incrementally are focused on making sure that we are delivering very high quality levels of supply across the world to our guests. And the two important features that we've done to drive quality are obviously introduction of Guest Favorites a year ago, and then ,second the removals that you called out over the last 12 months. And the interesting thing is, we’ve seen what we hope to have seen from these quality initiatives, in particular, what we see is that, based on encouraging our guests to use Guest Favorites and taking down those listings that we believe do not meet our quality expectations or those of our guests. What we see is that the average rating of our stays goes up. The incident rates go down and customer service contacts go down as well. So, we're seeing the intended impact of those quality efforts, which we believe, one, it improves the guest experience, second, allows for improvements of rebooking rates over time; and third, more broadly increases booking confidence around Airbnb. To the specific questions in terms of what has happened to the supply growth? It continues to be strong and in Q3, we continue to see Supply growth exceed demand by a couple of points. So it continues to be the very healthy, but again the focus more recently has been on incrementally raising the quality bar on Airbnb, not just adding more supply to the platform. Brian, do you want to talk about co-hosting or actually take that as well?

Q: Hey, thanks. Two questions please. You talked about this acceleration or improvement in. room nights as you kind of went through the quarter. Did that come from any particular geographic areas? We'd heard that Europe was one a market that was recovering maybe faster than others. Was that your experience, as well? And then, just back on the co-hosting experience, you had this out in a series of markets for a while. Is it how long do we see materiality come through it? Like have you seen these in relatively small markets where you’ve rolled it out this will become material to the growth rate in those markets already in the 6 to 12 month, period or is this take a just more of like a 12 to 24 month process? Thank you..

A: Thanks, Mark. Let me first answer your first question with regard to the acceleration of the business. What we shared in the letter was that for your line to where we were back at the time of the last earnings call, we called out that there was a bit of softness globally related to lead times is specifically what we shared with that. We were seeing continued strength of last minute bookings, but relative softness in terms of the longer lead times. And what we saw over the course of the quarter, specific to both the regions that you called out, but globally was that lead times over the course of July, August and September normalized and came back almost in line to where we were in ‘23. I think you saw that most notably in EMEA and I think probably some of the, long lead time softness that we were seeing in EMEA was certainly related to some distraction around the Olympics because we certainly saw the bookibgs pick up after the Olympics pass, but more broadly that acceleration was seen across all four major regions. And then, on the co-hosting, Brian gave you, I think a broad answer in terms of the expectations there. One of the reasons that we had confidence in terms of launching the Co-host Network more broadly is, the pilots that we've had over the last several years, in particular, in France, what we've seen is that, the co-host themselves are very incremental in terms of going out and attracting high quality listings themselves. Obviously, it will take time for us to scale co-hosting to a level that is, meaningful relative to the scale of our current business. But what we've seen from those pilots is extremely encouraging and we'll continue to build out the network from here on.