Airbnb Q4 Results Impress In A Tough Environment

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Thomas Barwick

This article and Q4 2022 net reappraisal is simply a continuation of my previous article connected Airbnb (NASDAQ:ABNB), wherever I discussed why I judge ABNB banal will outperform nan marketplace successful nan agelong run. The intent of this article is to reappraisal nan company's net study and measure whether it supports nan erstwhile thesis. The attraction will beryllium connected nan cardinal metrics that lend to gross growth, including:

  1. Increasing nan number of nights booked connected nan ABNB platform
  2. Increasing nan GBV (Gross Booking Value) per nighttime booked (ADR), which yet increases nan wide GBV
  3. Gradually expanding nan return complaint complete time
  4. Expanding its offerings done nan preamble and maturation of ABNB Experiences.

Additionally, I will analyse ABNB's imaginable to prolong and turn its profit margins, arsenic good arsenic its competitory opinionated successful comparison to its rivals.

1. Increasing nan number of nights booked connected nan ABNB platform

In nan quarter, nan number of nights and experiences booked accrued by 20%. Moreover, nan tract witnessed a grounds number of progressive bookers (site traffic), indicating a affirmative outlook for early bookings. Of adjacent significance, ABNB's big proviso grew by 16% YoY, representing 900k further listings that will assistance successful accommodating nan increasing number of guests. ABNB has managed to onslaught a harmonious equilibrium betwixt increasing nan proviso of hosts and gathering nan request of guests, pinch some segments increasing astatine rates of 26% and 24%, respectively since 2019 (pre-COVID).

2. Increasing nan GBV per nighttime booked (ADR), and frankincense nan wide GBV

ADR decreased by 1% YOY, though it accrued by 5% YOY erstwhile FX impacts are excluded. Management anticipates a further diminution successful ADR owed to changes successful nan booking mix, resulting successful much bookings successful regions pinch little ADR specified arsenic cities and cross-border travel. However, pinch ADR presently 36% higher than successful 2019, I do not see this to beryllium a origin for concern. In nan short term, arsenic world recreation approaches its pre-COVID equilibrium, Airbnb is expected to attraction connected maintaining ADR earlier gradually resuming its semipermanent upward trend.

Chart illustrating nan ADR

Author Created (Capital IQ Data )

3. Gradually expanding nan return complaint complete time

ABNB's return complaint has remained comparatively steady, search its seasonal inclination astatine astir 13.3% ('LTM') and 14% for nan quarter. It appears that guidance has nary contiguous plans to summation nan return complaint and is alternatively prioritising delivering much worth to hosts. ABNB presently charges a 3% return complaint connected nan big broadside and provides respective complimentary products, specified arsenic AirCover, which has resulted successful a important betterment to nan platform’s NPS and personification experience. As bookings proceed to rise, immoderate imaginable description of nan return complaint successful nan early tin beryllium gradual and aligned pinch improvements successful merchandise offerings. I judge nan description of nan return complaint represents a imaginable maturation lever that tin beryllium utilised astatine a later time.

Chart illustrating nan return complaint of ABNB

Author Created (Capital IQ Data)

4. Expanding Experiences division

Management's attraction connected nan Experiences section remains steadfast, pinch expectations of important traction successful nan years to come. Although specifications connected nan section were not extensively provided, maturation initiatives look to beryllium centered astir connecting guests pinch personalised experiences. The booking process now includes tailored section Experiences, which are presented to guests aft a booking is made. If ABNB tin create an effective algorithm, this section could connection sizeable maturation potential, fixed that Experiences are higher separator pinch a return complaint of astir 20%.

Improving Margins

In a challenging economical situation wherever galore competitors and tech companies are struggling pinch shrinking profit margins, Airbnb has shown singular resilience and profitability. In Q4 2022, Airbnb reported nett income of US$319 million, representing a nett separator of 17%. This marks nan culmination of its first profitable almanac year, pinch a nett separator of 23%:

Summary array of gross and profit growth

Author Created (Capital IQ Data)

The truth that 47% of ABNB's gross is derived from non-USD countries (FX impacted), makes their profitability impressive, fixed that astir of their expenses are successful USD. This is simply a testament to management’s expertise to negociate its costs efficaciously and grow its business successful a sustainable manner. As a result, Airbnb is well-positioned to proceed delivering worth to its shareholders and investors complete nan agelong term.

Chart illustrating nan gross profit separator and operating margin

Author Created (Capital IQ Data)

During nan net call, a noteworthy constituent made by Chesky (CEO) was his accent connected maintaining Airbnb arsenic a thin statement by keeping nan headcount low. Despite a 5% simplification successful headcount since 2019, Airbnb's gross has accrued by an awesome 75%, starring to gross per worker of astir US$1.2 million, which is nan precocious quartile successful nan tech industry. This strategical attraction connected thin operations will thief to offset nan effect of declining Average Daily Rates (ADR) and lend to Airbnb's semipermanent profitability.


Airbnb continues to seizure marketplace stock from larger competitors. While (BKNG) is yet to study earnings, Expedia Group (Vrbo) (EXPE) serves arsenic nan champion comparable company. As nan array beneath illustrates, Airbnb is outpacing Expedia Group successful gross and GBV growth, contempt having importantly higher profitability. It is important to statement that while Trip Advisor is importantly smaller than Airbnb and not yet profitable, it is increasing astatine a accelerated gait and should beryllium monitored moving forward. That being said, Trip Advisor's business exemplary is not wholly comparable to that of Airbnb. ABNB's exceptional maturation successful operating income, surpassing 200%, is simply a awesome item of nan quarter, particularly erstwhile compared to Expedia, a cardinal competitor, which knowledgeable a diminution successful operating income:

Comps floor plan of ABNB vs Expedia and Trip Advisor

Author Created (Capital IQ Data)


Since my past article connected Nov-22, ABNB's stock value has risen by astir 47%, making its existent valuation little attractive. In my view, nan existent levels do not coming a awesome buying opportunity, and I would alternatively hold for a banal value pullback earlier considering adding to my position.

ChartData by YCharts


In summary, nan net study of ABNB successful nan 4th afloat supports nan thesis that ABNB will outperform nan marketplace owed to gross maturation and separator description . Even successful a challenging economical climate, ABNB has delivered awesome net that instill assurance successful some their early maturation imaginable and nan accomplishment of their activity founders.

This article was written by

Tom Cunningham floor plan picture

I look to find fantabulous business that will outperform nan marketplace complete nan long-term. I look past short-term fluctuations and attraction connected nan underlying fundamentals of nan company. I besides (less frequently):- Cover stocks that I judge person a catalyst for short-to-medium word outperformance.- Provide study of commodities aliases industries pinch cyclical tailwinds.I presently activity arsenic a financial expert astatine an alternate costs head pinch complete US$50b successful AUM. I person a Master’s grade successful Finance and a beardown passion for investing. I dream to thief others scope their investing goals.

Disclosure: I/we person a beneficial agelong position successful nan shares of ABNB either done banal ownership, options, aliases different derivatives. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

Editor: Naga

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