Airbnb (ABNB) Misses Q1 EPS by 76c, Revenue Beats

Airbnb (NASDAQ: ABNB) reported Q1 EPS of ($1.95), $0.76 worse than the analyst estimate of ($1.19). Revenue for the quarter came in at $887 million versus the consensus estimate of $714.41 million.

Outlook:

We are proud of our strong recent performance, driven by our ability to adapt to the ways people have been traveling during the pandemic, including to rural markets, domestic travel, and long-term stays. As we look forward, Airbnb is well positioned for the coming travel rebound. When guests return to cities and cross-border travel re-opens, our Hosts will be ready.

In the near term, we anticipate that year-over-year comparisons for Nights and Experiences Booked and GBV will continue to be volatile and unreliable measures of the steady-state growth of our business. This is due to the significant increase in cancellations that we experienced in Q2 2020 and changes in the historically more predictable booking patterns.

For Nights and Experiences Booked, we expect Q2 2021 will be significantly higher than the highly depressed levels of Q2 2020, but below that of Q2 2019. We expect GBV in Q2 2021 to be higher than that of Q2 2019, given the increase in ADR we have experienced since the pandemic began. For April, we have seen improving trends relative to March in both Nights and Experiences Booked and GBV.

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We expect revenue in Q2 2021 to be significantly higher than that of Q2 2020, given the impact of COVID-19 on the prior year period, and to be at a similar level to that of Q2 2019. In Q2 2021, we expect the positive momentum of recovery experienced in Q1 2021 to be partially offset by the continued uncertainty of travel restrictions and lockdowns in EMEA.

The overall pace of the early stages of the travel recovery, and the improvement it has driven in our business, have been relatively rapid. In fact, the pace of recovery in Q1 and in Q2 to date has exceeded our internal expectations from when we entered 2021.

However, it remains too early to predict if the recovery will continue at the same pace in the second half of 2021. Although we have seen booking lead times start to lengthen when compared with Q4 2020, we continue to have limited visibility for growth trends in the second half of 2021. With the increased availability of vaccines and the easing of some travel restrictions, there has been greater willingness by guests to search for and book travel later in the year. Offsetting this is the difficulty in predicting factors such as future COVID-19 outbreaks or travel restrictions globally, which impact the actual rate at which guests complete their stays (at which point we recognize revenue). Given the continued resiliency of the North American market, this uncertainty is higher outside of this region.

Our GBV, revenue, and Adjusted EBITDA have benefited from an increase in ADR during the pandemic, driven by the mix of business in segments with higher ADR. These include strength in areas such as the U.S., non-urban listings and larger properties. If our business mix changes as travel recovers, we may see a decline in our ADR in the future, which may impact our revenue and margins. For instance, an increase in cross-border travel and less relative travel in the U.S. would likely lead to lower overall ADR.

With regard to expenses, we are focused on making continued progress in expanding our Adjusted EBITDA margin as we scale. During the rest of 2021, we plan to continue to improve our variable costs, materially increase our marketing efficiency and tightly manage our fixed expenses.

As we noted last quarter, we expect our Adjusted EBITDA margins to be lower in the first half of 2021 than the second half, both due to seasonality and to investments we are making in certain areas. In Q2 2021, we expect that our Adjusted EBITDA margin will be at breakeven, to slightly positive.

Consistent with last quarter, we expect that sales and marketing expenses as a percentage of revenue in the first half of 2021 will be higher than that of the second half. This is partially due to the marketing campaign that we are running in the first half of 2021 in advance of the summer travel season.

Similarly, we expect that operations and support as a percentage of revenue in the first half of 2021 will be higher than that of the second half. We plan to invest in our community support and trust platforms in the first half of 2021, ensuring that we are ready for the rebound in travel when it comes.

Finally, we continue to expect capital expenditures in 2021 will be higher than that of 2020, but significantly lower than 2019.

For earnings history and earnings-related data on Airbnb (ABNB) click here.

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