Online accommodations platform Airbnb (NASDAQ:ABNB) reported results in line with analysts' expectations in Q3 FY2023, with revenue up 17.8% year on year to $3.4 billion. However, next quarter's revenue guidance of $2.15 billion was less impressive, coming in 1.32% below analysts' estimates. Turning to EPS, Airbnb made a GAAP profit of $6.63 per share, improving from its profit of $1.79 per share in the same quarter last year.
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Airbnb (ABNB) Q3 FY2023 Highlights:
- Revenue: $3.4 billion vs analyst estimates of $3.37 billion (0.84% beat)
- EPS: $6.63 vs analyst estimates of $2.10 (216% beat but not comparable due to one-time tax benefit)
- Revenue Guidance for Q4 2023 is $2.15 billion at the midpoint, below analyst estimates of $2.18 billion
- Free Cash Flow of $1.31 billion, up 45.6% from the previous quarter
- Gross Margin (GAAP): 86.5%, in line with the same quarter last year
- Nights and Experiences Booked: 113.2 million, up 13.5 million year on year (slight miss)
Online MarketplaceMarketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales GrowthAirbnb's revenue growth over the last three years has been exceptional, averaging 55.3% annually. This quarter, Airbnb reported 17.8% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Airbnb is expecting revenue to grow 13.1% year on year to $2.15 billion, slowing down from the 24.1% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results, analysts covering the company were projecting sales to grow 12.8% over the next 12 months.
Usage Growth As an online marketplace, Airbnb generates revenue growth by increasing both the number of bookings on its platform and the average order size in dollars.
Over the last two years, Airbnb's nights booked, a key performance metric for the company, grew 28.8% annually to 113.2 million. This is among the fastest growth rates of any consumer internet company, indicating that users are excited about its offerings.
In Q3, Airbnb added 13.5 million nights booked, translating into 13.5% year-on-year growth.
Key Takeaways from Airbnb's Q3 Results Sporting a market capitalization of $75.5 billion, more than $11 billion in cash on hand, and positive free cash flow over the last 12 months, we believe that Airbnb is attractively positioned to invest in growth.
Nights and Experiences Booked (key measure of volumes) grew but missed expectations slightly. However, revenue beat by a bit. On the other hand, its revenue guidance for next quarter underwhelmed. Overall, the results could have been better. The company is down 3.4% on the results and currently trades at $115.24 per share.
The author has no position in any of the stocks mentioned in this report.