Airbnb: Is it taking the blame for weak guidance again?

After the US stock market closed on May 8th, Airbnb announced its financial report for the first quarter of the 2024 fiscal year. Despite strong performance for the quarter, the market, already "nervous" due to relatively weak guidance, also chose to take profits. Here are the detailed key points:

Slower Growth but Better Than Expected: In terms of key metrics, Airbnb's total bookings for the quarter were approximately $22.9 billion, with a year-on-year growth rate slowing from 15% in the previous quarter to 12%. However, the actual performance was 3% better than expected.

Improved Conversion Rate Offsets Slower Order Growth: The conversion rate increased by nearly 5% year-on-year, offsetting the slowdown in order amount growth. The actual revenue reached around $2.14 billion, an 18% year-on-year increase, accelerating by 1% compared to expectations.

Return to Normal Expenses, Continued Profit Growth: With expenses returning to normal levels and a 1.1% increase in gross profit margin, the operating profit margin significantly improved. The operating profit for the quarter was $101 million, far exceeding market expectations.

Second Quarter Operating/Revenue Guidance Below Expectations: For the second quarter of 2024, the company's revenue guidance is between $26.8-27.4 billion, with the midpoint lower than the expected $27.4 billion. The guidance for order nights growth rate in 2Q is around 9%, lower than the market's expected 12% growth rate. Overall, the guidance points to a soft outlook.

Dolphin Research Viewpoint:

Overall, Airbnb's performance this quarter is better than expected in terms of order amount, revenue, gross profit, and operating profit. Looking at the performance in this quarter alone, it can be described as good. However, similar to other companies that experienced a significant drop in performance after this earnings season, the issue lies in the guidance for the next quarter.

Due to the less-than-ideal GDP growth in the United States in 1Q at a macro level, and the trend of consumption slowdown shown in the 2Q guidance of many companies so far, the market is quite sensitive to these signals. With Airbnb's high valuation and high expectations (which is quite common among US tech stocks), profit-taking is a standard scenario once delivery falls short of expectations.

Detailed Analysis Below:

I. Growth Slowed Down This Quarter, But Better Than Expected

In the first quarter of 2024, Airbnb achieved a total booking amount of approximately $22.9 billion. Although the year-on-year growth rate slowed down from 15% in the previous quarter to 12%, the actual performance exceeded expectations by 3% compared to the market's expectation of a deeper slowdown.

From a price and volume perspective, this quarter Airbnb's total booked room nights were approximately 133 million, with a 3% decrease in growth rate to 9% compared to the previous quarter, which was slightly better than expected. In terms of price, the average daily rate this quarter reached $157, a nearly 3% year-on-year increase, which is 2% higher than expected. Therefore, the increase in average daily rate due to changes in exchange rates and property types is the main positive factor that led to the total booking amount slightly exceeding expectations this quarter.

Looking at different regions, the company disclosed that the growth rates of room nights in Latin America and the Asia-Pacific region were 19% and 21% respectively, indicating that the recovery and rapid growth in emerging markets are the support for the company to maintain good growth. This is also similar for Uber. As for the order growth rates in North America and Europe, they have not been disclosed yet. Considering the overall room night growth of only 9%, while Latin America and the Asia-Pacific region are growing at around 20%, Dolphin Research reasonably speculates that North America and Europe may experience low single-digit growth, or even possibly negative growth.

Therefore, if emerging markets also start to decline, a true collapse in growth may be imminent.

II. Improved Realization Rate Compensates for the Slowdown in Order Growth From a revenue perspective, because the realization rate increased by nearly 5% year-on-year this quarter, offsetting the slowdown in order amount, achieving revenue of approximately $2.14 billion, with a year-on-year growth of 18%, accelerating by 1 percentage point compared to expectations.

Due to the increase in the realization rate, this quarter's gross profit margin also increased by about 1.1 percentage points year-on-year, ultimately achieving a gross profit of approximately $1.66 billion, nearly 5% higher than expected.

III. Return to Normal Expenses, Steady Increase in Profit Margin

On the expense side, without the impact of one-time tax provision in the previous quarter, various expense expenditures this quarter returned to normal levels. Although the absolute amount of management and marketing expenses has increased significantly, due to the dilution effect of revenue, the expense ratio has decreased. The total expense ratio decreased by 3.9% year-on-year.

Finally, due to the 1.1 percentage point increase in gross profit margin and the total 3.9% decrease in expense ratio, the operating profit margin has significantly improved, achieving an operating profit of $101 million this quarter, significantly exceeding market expectations. This is mainly because the market expected a profit margin of only 0.9%, but the actual figure reached 4.7%.

Dolphin Research's Previous Research on [Airbnb]:

Financial Report Review

November 2, 2023 conference call " Airbnb: Pricing Power & Emerging Markets are the Current Growth Drivers"2023 年 11 月 2 日财报点评"Airbnb: Is 'Little Sweet' also getting 'old and yellow'?"

2023 年 8 月 10 日电话会"Airbnb Minutes: Strengthening cost-effectiveness, optimistic about the continued growth of homestays"

2023 年 8 月 4 日财报点评"Airbnb: The performance of 'small happiness' can no longer hold the market's attention"

2023 年 5 月 10 日财报点评"Airbnb: Winter is coming, is the collapse of global tourism consumption about to begin?"

2023 年 2 月 15 日电话会"Airbnb: Modest increase in investment next year"

2023 年 2 月 15 日财报点评"Indulging in food, drink, and fun without stopping, Airbnb 'upgrades' its run"

2022 年 11 月 2 日电话会"Airbnb's outlook on the future of travel (3Q22 conference call minutes)"

2022 年 11 月 2 日财报点评"No good news means bad news, how much attractiveness does Airbnb have left?"

2022 年 8 月 3 日电话会"Airbnb management's view on the strategic outlook for the second half of the year (2Q22 conference call minutes)"

2022 年 8 月 3 日财报点评"Is high valuation the original sin? Good performance can't help Airbnb either"

In-depth

2023 年 2 月 28 日"Microsoft, Amazon are down, it's Airbnb & Uber's turn to claim the throne?" April 6, 2022 "Airbnb: A different perspective under the epidemic, why can it turn the tables on others?"

April 7, 2022 "Airbnb: The crown is too heavy, the valuation is running too fast"

Risk Disclosure and Statement of this article: Dolphin Investment Research Disclaimer and General Disclosure