Q1 2025 Earnings Summary
- International Expansion Opportunity: Airbnb’s focus on localized product and marketing initiatives in high-growth expansion markets (especially Latin America and Asia) is expected to drive double-digit growth, as these regions are growing much faster than core markets.
- Resilient U.S. Domestic Demand: Despite short-term macro uncertainties, Airbnb continues to gain U.S. market share and sees strong conversion in domestic travel—with improvements like total price transparency and an enhanced app experience boosting reliability for higher-income travelers.
- Diversification into New Offerings: The company’s expansion beyond traditional accommodations—evident in initiatives like HotelTonight and the upcoming new product launch on May 13—creates additional revenue streams while reinforcing network effects and overall market penetration.
- U.S. domestic travel headwinds: There are indications of softness in longer lead time bookings and overall muted demand in U.S. markets, which might signal a delay in travel decisions and volume decline in a core market.
- Margin pressure from investments: Heavy investments in international expansion and new product initiatives, along with increased marketing expenses, could compress margins in the near term if expected revenue growth does not materialize as planned.
- Continued FX uncertainty: Despite some easing, foreign exchange volatility—especially in key international markets like Latin America—poses a risk that may offset underlying price appreciation and adversely impact margins.
| Metric | YoY Change | Reason |
|---|---|---|
Revenue | +6% (6% growth to $2.3B) | Revenue increased from $2.1B in Q1 2024 to $2.3B in Q1 2025, reflecting a 6% YoY growth; however, calendar factors (timing of Easter and Leap Day in Q1 2024) imposed a three percentage point headwind and FX contributed roughly a two percentage point headwind, meaning that excluding these factors, revenue would have risen by 11%. |
Net Income | Declined from $264M to $154M | Net Income dropped by $110M YoY (from $264M to $154M), driven by higher stock-based compensation expenses due to increased headcount, write-downs of investments in privately-held companies, and lower interest income which compressed the net income margin from 12% to 7%. |
Adjusted EBITDA | Dropped from $424M to $417M | Adjusted EBITDA fell slightly by $7M YoY (from $424M to $417M); this modest decline is mainly attributed to the revenue benefits from favorable calendar factors in Q1 2024 and strategic investments in product development in Q1 2025. |
Free Cash Flow | Decreased from $1.9B to $1.8B | Free Cash Flow declined by $100M YoY (from $1.9B to $1.8B), primarily as a consequence of the lower net income in Q1 2025. |
Gross Booking Value | +7% (7% increase to $24.5B) | GBV grew by 7% YoY to $24.5B, or 9% when FX effects are excluded; growth was fueled by an increase in Nights and Experiences Booked, though this was partially offset by a slight decline in the Average Daily Rate (ADR) due to FX headwinds. |
Share Repurchases | Reduction in share count from 677M to 660M | The company repurchased $807M of its Class A common stock in Q1 2025, reducing the fully diluted share count from 677 million to 660 million, which is a strategic move to enhance shareholder value. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q2 2025 | no prior guidance | $2.99 billion–$3.05 billion; 9%–11% year-over-year growth (benefit ~2 ppt due to Easter) | no prior guidance |
Nights and Experiences Booked | Q2 2025 | no prior guidance | Year-over-year growth expected to moderate relative to Q1 2025 | no prior guidance |
Adjusted EBITDA Margin | Q2 2025 | no prior guidance | Flat to slightly down compared to Q2 2024 | no prior guidance |
Adjusted EBITDA Margin | FY 2025 | at least 34.5% | at least 34.5% | no change |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
International Expansion | Featured consistently across Q2, Q3, and Q4 with a detailed expansion framework, significant investments, and strong results in markets like Brazil. | Q1 2025 continued to emphasize accelerated international growth with robust performance in expansion markets and a more localized approach. | Consistent focus with accelerated growth and deeper localization efforts. |
Localized | A core component of strategy in Q2–Q4 earnings, with tailored product adjustments and payment options in various markets to drive penetration. | Maintained in Q1 2025 with continued adjustments to booking flows and payment methods to suit local markets. | Steady emphasis with evolving execution to meet specific market needs. |
Domestic | Q2 and Q4 detailed U.S. travel demand trends, including varying lead-time bookings and shifts in consumer behavior ; Q3 briefly mentioned global lead-time normalization affecting domestic segments. | Q1 2025 highlighted U.S. domestic travel with strong short lead-time growth and noted softness in longer lead times, reflecting a balanced but cautious tone. | Stable focus; consistent performance with a nuanced view on longer-term booking trends. |
Diversification | Discussed across Q2–Q4 with plans for new host services, reimagined Experiences, and adjacent product launches to transform the core business. | Q1 2025 reinforced diversification with plans for a summer release, a potential membership program, and continued investments in new business lines. | Growing emphasis on expanding beyond core accommodations as the company charts its next chapter. |
Regulatory | Addressed in Q2, Q3, and Q4 with focus on challenges in key markets (California, New York, Paris) and evolving relationships with cities. | Not mentioned in Q1 2025 earnings call. | Dropped from Q1, possibly indicating regulatory issues have eased or are being deprioritized. |
Margin | Q2, Q3, and Q4 discussed margin compression due to increased spending on product development and marketing while still maintaining broad profitability targets. | Q1 2025 reiterated margin pressures due to significant investments, while reaffirming an adjusted EBITDA margin target and strategic capital allocation for growth. | Continued concern with disciplined investments; cautious yet optimistic about long-term gains. |
Bookings | Consistent discussion across Q2–Q4 about growth in Nights and Experiences Booked, improvements in app conversion rates, and regional performance variations. | Q1 2025 reported 143 million Nights and Experiences Booked with differentiated regional growth and solid performance metrics. | Sustained and solid growth; reinforcing the platform's market strength across periods. |
Supply | Q2 and Q3 emphasized expanding total listings, supply quality improvements through removals and initiatives like the Cohost network ; Q2 mentioned over 200,000 removals, and Q3 noted over 300,000 removals. | Q1 2025 highlighted supply adaptability with rigorous quality management, reporting the removal of 450,000 listings. | Enhanced focus on supply quality with increased removals to boost reliability and guest satisfaction. |
FX | Q4 addressed FX headwinds and introduced an FX service fee affecting growth metrics, while Q2 and Q3 provided little detail on FX uncertainty. | Q1 2025 discussed FX impacting revenue growth (6% reported vs. 11% excluding FX) and signaled improvement expected in Q2, alongside regional nuances like persistent headwinds in Latin America. | Re-emerging as a concern; detailed discussion indicates close monitoring with an expectation of easing in upcoming quarters. |
Events | Q2 and Q3 detailed leveraging major events (e.g., Olympics in Paris, July 4th peak, Euro Cup) to drive demand and supply growth, with cities actively collaborating with Airbnb. | Q1 2025 did not touch on major events, though calendar factors were mentioned; no specific event-driven strategy was highlighted. | Dropped in Q1, suggesting a potential shift in focus or a temporary de-emphasis on event-driven growth. |
Product | Q2 through Q4 emphasized ongoing platform upgrades, new features (e.g., total price transparency, upgraded messaging, app enhancements) and initiatives like the Cohost network and AI-powered customer service. | Q1 2025 continued to stress product enhancements including a rebuilt app on a new tech stack, total price transparency, and AI-powered customer service improvements, driving superior user experience. | Consistent innovation with a deepened focus on technology-driven user experience improvements. |
Quality | In Q2 and Q3, supply quality management was a key theme with the removal of low-quality listings (200K–300K removals) aimed at improving guest satisfaction. | Q1 2025 reported a significant increase in listing removals (450K) as part of a drive to further elevate host quality and reduce guest service issues. | Intensified focus on quality control, signaling a proactive approach to maintain high service standards. |
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Growth Priorities
Q: What drives long-term gross bookings?
A: Management stressed that core service enhancements and global network expansion remain the key growth levers for driving volume and long-term monetization, emphasizing a relentless focus on customer feedback and international market opportunities. -
FX Impact
Q: Why isn’t FX headwind improving margins?
A: Despite a softer FX environment, offsetting factors—such as persistent Latin American headwinds and deliberate revenue hedging—mean margin guidance remains stable, with no material tailwind translating through. -
Core Growth Drivers
Q: How will you reaccelerate nights and experiences?
A: Management highlighted advancing their core service by making the platform easier, more affordable, and more reliable, alongside an aggressive international expansion to fuel double-digit growth. -
ADRs Drivers
Q: How do geo mix and FX affect Q2 ADRs?
A: Management explained that real price appreciation, reduced FX headwinds, and a shift toward lower ADR international markets together moderate Q2 ADRs, reflecting a mixed pricing environment. -
Expansion Profit
Q: How profitable are international expansion markets?
A: Investment in localized product enhancements and targeted marketing in expansion markets is yielding robust unit economics, with attractive contribution profits even at varied ADR levels. -
New Products & Affordability
Q: What’s the impact of new products and affordability?
A: The imminent launch on May 13 is expected to contribute modestly this quarter while affordability initiatives—like total price transparency—are designed to drive volume by offering better value to cost-sensitive travelers. -
Travel Corridors
Q: How are travel corridor changes affecting bookings?
A: Although inbound U.S. bookings from foreign travelers have declined, this segment comprises only 2–3% of the business, with many guests simply choosing alternative destinations, leaving domestic market share intact. -
U.S. Guest Behavior
Q: What U.S. booking behaviors are observed?
A: Management noted a clear shift: shorter lead times are growing, particularly among higher-income travelers, while longer lead bookings have softened, indicative of a wait-and-see approach without rate trading down. -
Pricing Flexibility
Q: Are hosts adjusting pricing amid softness?
A: There has been no significant host-driven price reset yet; however, management sees an opportunity to encourage more competitive pricing using enhanced host tools if needed. -
Loyalty Programs
Q: Any plans for subscription or loyalty programs?
A: Management is actively exploring a paid membership concept aimed at deepening guest engagement and share-of-wallet, while preserving the strong built-in loyalty already on the platform. -
User Experience
Q: How will user experience evolve with new offerings?
A: The focus remains on a seamless, instant-book experience driven by refined design and AI-enhanced customer service, ensuring new products integrate without added friction. -
Marketing Leverage
Q: How is marketing adapting to slower markets?
A: The team is continuously reallocating marketing spend across channels to maximize efficiency, shifting investments toward high-performing markets even amid overall slowing trends. -
Booking Channels
Q: How do app and web bookings differ?
A: The Airbnb app outperforms the web in user experience and conversion rates, driving a growing share of bookings as the platform pushes for a uniform, improved digital interface. -
Hotels & Margins
Q: Are hotels part of the future strategy?
A: Management sees hotels as a significant growth opportunity, leveraging tactics like HotelTonight promotions, while maintaining a steady margin outlook by balancing new investments and core revenue. -
Growth Trends
Q: What was the quarterly growth trajectory?
A: Growth was robust in January, dipped in February due to softer sentiment, and rebounded in March, with expansion markets—especially in Latin America—outperforming as anticipated.