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Airbnb stock jumps after record earnings, first profitable year and a strong forecast

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Airbnb Inc. on Tuesday reported record fourth-quarter revenue and profit to achieve its first profitable year, and executives provided a first-quarter forecast that exceeded Wall Street estimates despite plans for price cuts.

shares rose more than 9% in after-hours trading following the release of the results, after rising 3.8% in the regular session to close at $120.87. 

The alternative-accommodations booking company reported record revenue and net income for the fourth quarter despite falling short of analysts’ expectations for gross bookings, as well as nights and experiences booked. Executives cited strong demand throughout the year and strong supply.

“All regions saw material growth in 2022 as guests increasingly crossed borders and returned to cities on Airbnb,” executives wrote to shareholders in a letter Tuesday.

Read: Airbnb stock surges after analysts say online-travel demand is still strong

Airbnb reported fourth-quarter gross bookings of $13.5 billion, compared with analysts’ expectation of $13.6 billion. Nights and experiences booked were 88.2 million, the highest fourth-quarter total ever, with a rebound in Asia-Pacific leading the way, though analysts had expected 89.7 million. The average daily rate was $152.81, higher than the $151.40 analysts expected.

Net income for the quarter was $319 million, or 48 cents a share, compared with $55 million, or 8 cents a share, in the year-ago period. Revenue rose to $1.9 billion from $1.53 billion in the year-ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) was $506 million, a record high for the fourth quarter.

Analysts surveyed by FactSet had forecast earnings of 26 cents a share on revenue of $1.86 billion, and Ebitda of $434 million.

Last quarter’s results: Airbnb stock drops despite ‘biggest and most profitable quarter ever’

For the full year, Airbnb reported net income of $1.89 billion, or $2.79 a share, on revenue of $8.4 billion. Analysts expected net income of $1.74 billion, or $2.59 a share, on $8.36 billion in revenue.

Adjusted Ebitda for the year was $2.9 billion, exceeding the $2.83 billion analysts were expecting. Free cash flow was $3.4 billion, an increase of 49% year over year. The company ended the year with 6.6 million active listings, which it said is its highest yet.

Airbnb expects first-quarter revenue of $1.75 billion to $1.82 billion, while analysts had forecast revenue of $1.68 billion. The optimistic revenue forecast is based partly on European guests booking summer travel earlier this year, according to the company.

It also comes despite the company’s expectation that average daily rates will fall in the first quarter and the rest of the year, which executives attributed to a couple of factors: the mix of rental supply across different regions, and its effort to address affordability.

Airbnb said in its shareholder letter that it expects “new and improved pricing and discounting tools” that it’s introducing this year to “drive greater affordability and value for guests, support bookings growth, and therefore also help hosts be
more successful.”

For more: Airbnb executives want average prices to come down after years of increases

In a conference call with analysts, Chief Executive Brian Chesky said that the company can reduce average rates while maintaining profit margins because it has stayed “lean” during the pandemic. Chesky said Airbnb’s total headcount is still 5% lower than it was before massive layoffs early in 2020, while revenue has grown by 75%.

“We’re one of the few tech companies that isn’t doing layoffs, we’re not cutting, we’re not freezing,” Chesky said. “We’re actually stepping on the gas, but in our mind, stepping on the gas doesn’t mean adding a huge amount of people. We’re going to continue to stay really lean, but we’re really focused on just really hiring in key positions.”

Shares of Airbnb have risen 41.4% so far in 2023, but are down about 28.8% in the past 12 months. The S&P 500 index
has increased 7.8% year to date and is off 6% over the past 12 months.

See also: Airbnb hosts say bookings ‘fell off a cliff’ amid influx of new vacation rentals and rising prices


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