Airbnb: Looks good? Withered again

Leading homestay platform Airbnb$Airbnb(ABNB.US), announced its Q2 FY2025 financial results after the U.S. stock market closed on August 7. Overall, the quarterly performance appears decent, with key financial metrics generally exceeding modest expectations, but underlying operational indicators still show a weakening trend. Key points are as follows:

1. Operational indicators remain weak: The most critical operational indicator, this quarter's Gross Booking Value (GBV) was $23.4 billion, a nominal growth of 10.6%. Although it outperformed market expectations and showed a significant acceleration compared to the previous quarter, this was entirely due to favorable exchange rates. Excluding exchange rate factors, both this quarter and the previous quarter's year-on-year growth rates were 9%, showing no improvement.

In terms of price and volume factors, it is also evident that this quarter's total nights booked increased by only 7.1% year-on-year, slowing down by 0.9 percentage points compared to the previous quarter, indicating that the demand the company faces appears to be further weakening. Conversely, with favorable exchange rates, the average guest spending reversed from a 0.9% year-on-year decline last quarter to a 3.2% increase, thereby driving the nominal growth rate of order value to accelerate quarter-on-quarter, slightly exceeding expectations.

2. Traditional regions remain weak, emerging markets hold up: By region, the largest market—North America saw only low single-digit growth in nights booked this quarter, still very weak. The second-largest market, Europe, also saw only mid-single-digit growth in nights booked, similarly lackluster, with a 9% year-on-year increase in average guest spending due to favorable exchange rates.

Fortunately, growth in two emerging market continents remains significantly stronger, with South America and Asia-Pacific regions seeing high teens and mid-teens growth in nights booked, respectively, although Latin America's growth compared to the previous quarter slowed by 20%.

3. Monetization rises, revenue growth accelerates significantly: In terms of revenue and monetization, this quarter's monetization rate increased by 0.25 percentage points year-on-year, marking the highest quarterly increase since 1Q24, although the market seemed to have anticipated this, slightly below sell-side expectations. According to the company, service fees and foreign exchange transaction fees were the main factors driving the overall increase in monetization rate.

With the nominal growth rate of GBV accelerating quarter-on-quarter and the monetization rate slightly rising, this quarter's confirmed revenue was nearly $3.1 billion, with a year-on-year growth rate rising to about 12.7%, significantly accelerating quarter-on-quarter. Even excluding favorable exchange rates, revenue growth also accelerated by about 5 percentage points quarter-on-quarter. It is evident that the increase in monetization rate has a tangible positive impact on revenue.

Due to the increase in monetization rate, both gross margin and operating margin rose significantly quarter-on-quarter, reaching 82.4%, higher than the expected 82%. Gross profit was $2.55 billion, slightly higher than expected by 2.7%.

4. Investment indeed increased, but fee rates are still passively shrinking: In terms of expenses, on an SBC-adjusted basis, this quarter's overall operating expenses increased by about 11% year-on-year, accelerating from 8% in the previous quarter. Management expenses and operational support expenses both declined year-on-year, but marketing expenses and product development expenses increased significantly by 21% and 18% year-on-year. It is evident that the promotion of new products has significantly increased expense investment.

However, despite this, the total expense growth rate is still slightly lower than revenue growth, so the company's profit margin still rose slightly. On an adj. EBITDA basis, this quarter's profit margin was 33.7%, up 1.2 percentage points year-on-year. The final profit was about 7% higher than expected.

5. Guidance for the next quarter: For the next quarter, the company guides for a midpoint revenue of $4.06 billion, roughly in line with market expectations, implying a year-on-year revenue growth rate of 8.8%, indicating growth will slow slightly compared to this quarter. Part of the reason is the expectation that next quarter's monetization rate will remain roughly flat year-on-year.

On more critical operational indicators, the company expects 2Q25's nights booked growth to be roughly the same as this quarter, still hovering at low levels. Average guest spending is expected to continue to grow slightly year-on-year, benefiting from favorable exchange rates.

On the profit side, the company expects next quarter's adj. EBITDA to be over $2 billion, but expects the profit margin to narrow year-on-year (i.e., the expense rate is likely to rise). Since last year's profit was $1.96 billion, year-on-year growth is likely to narrow compared to this quarter.

For the full year 2025, the company maintains its target of at least 34.5%, implying a narrowing of 1.9 percentage points compared to last year.

Dolphin Research's View:

Overall, looking at Airbnb's quarterly performance indicators alone, they are not bad. With the help of a significantly higher monetization rate, revenue, gross profit, and adj. EBITDA profit all exceeded expectations, and the trend of year-on-year growth also accelerated. However, the problem is that the company's financial indicators this quarter actually reflect more of the actual delivery situation of earlier bookings, which are lagging indicators.

More real-time and critical operational indicators remain in a rather weak state and are further marginally slowing down. This exacerbates the market's concern this quarter that in the context of macroeconomic weakening, entertainment and travel spending are generally directly impacted, and the guidance for the next quarter does not dispel this concern.

In addition to concerns about weak growth, the market's other major concern about the company is that due to investment in new businesses, the company's expense spending will return to an expansion trend. This quarter's performance and guidance for a year-on-year narrowing of profit margins next quarter also confirm this issue.

According to Wall Street research, even in the world's largest cities, Airbnb's supply of Experiences products is still very limited. Therefore, if supply is to be rapidly increased in the future, expense investment will inevitably increase significantly.

In terms of high-frequency data, whether it's Airbnb's app or its web user growth, both have shown a clear slowdown in recent quarters. The company's demand outlook is indeed not very optimistic.

From a valuation perspective, because the company's stock price has recently seen a significant pullback, the market value before the performance corresponds to a 27x PE for 2026 net profit. Although still not cheap, it has entered a range that can be explained and accepted. If the valuation further retreats due to poor short-term performance, then as a vertical leader in the brand and category, Dolphin believes that at a reasonable valuation, Airbnb still has investment value.

Below are key charts:

I. Core Operational Indicators