After-hours drop of more than 16%! Airbnb's Q2 revenue exceeds expectations but cannot hide the net profit decline, the market is increasingly concerned about weak consumer spending

According to the financial news app Zhitong Finance, on the morning of August 7th Beijing time, Airbnb (ABNB.US) released its performance report for the second quarter of 2024. The financial report shows that the company's revenue in the second quarter reached $2.75 billion, an 11% increase from the same period last year, exceeding market expectations. However, the net profit was $555 million (or $0.86 per share), a 15% decrease compared to $650 million (or $0.98 per share) in the same period last year. Previously, according to FactSet data, analysts generally expected the company's earnings per share to be $0.91 and revenue to be $2.7 billion. Despite revenue exceeding expectations, the net profit did not meet analyst expectations. In addition, the management's warning of a slowdown in demand from U.S. customers has exacerbated the soft consumer spending narrative held by many investors, leading to a 16% decline in Airbnb's stock price in after-hours trading.

Airbnb expects revenue for the third quarter to be between $3.67 billion and $3.73 billion, but also warns investors that the year-on-year growth of its core "accommodation and experiences" business is expected to slow down. The company also pointed out that "global booking lead times are shortening, and there are signs of a slowdown in demand from U.S. customers."

It is understood that the lead time for bookings is a key indicator in the travel industry, referring to the number of days between the booking date and actual check-in. A shorter booking lead time may indicate that consumers tend to book at the last minute, which may reflect increased uncertainty and more cautious consumer behavior.

In the second quarter, Airbnb's booking growth rate continued to slow down. The total value of all bookings completed through the Airbnb platform in the quarter increased by 11% year-on-year to $21.2 billion, but this growth rate was lower than the 12% in the first quarter, 15% in the last quarter of 2023, and 17% in the third quarter of 2023.

Airbnb stated that users booked 125.1 million nights of accommodation and experiences in the second quarter, a 9% year-on-year increase, setting a record high for the company in the second quarter. In its letter to shareholders, Airbnb mentioned, "Compared to the second quarter of 2023, we achieved continued growth in all regions, with particularly significant growth in the Asia-Pacific and Latin America regions."

The company also announced that since launching the "Quality System" over a year ago, it has removed over 200,000 pieces of low-quality property information.

Airbnb's Average Daily Rate (ADR) rose by about 2% in this quarter to $169.53, and the ADR for the third quarter is expected to continue to increase slightly. The net profit margin, which is the profit the company generates for every dollar of revenue, decreased to 20% in the second quarter, down from 26% in the same period last year.

As Airbnb released its performance outlook, it coincided with the disappointing U.S. jobs report, sparking concerns in the market about an economic slowdown. RBC analyst Brad Erickson pointed out in a client report that Airbnb's comments "may only further exacerbate the soft consumer narrative held by many market participants."

In 2022 and 2023, Airbnb, Booking (BKNG.US), and Expedia Group (EXPE.US) benefited from the rebound in the travel industry, largely due to the travel restrictions imposed by the COVID-19 pandemic in 2020 and 2021 The so-called "revenge travel" has driven strong sales growth for these companies. However, the market situation seems to be changing.

Last week, Booking reported that room night reservations growth was below expectations, and pointed out that the performance of the European tourism industry was weak. Expedia will release its performance report this Thursday, and the market is closely watching its performance