Airbnb (Minutes): Facing a tougher comparison base in the second half of the year

The following are the minutes of Airbnb's Q2 2025 earnings call. For an analysis of the earnings report, please refer to Airbnb: The Earnings Look Good, But Weakening Operating Data is Key.

I. Review of Core Financial Information

1. Review of Performance Metrics

• The number of nights and experiences booked reached 134 million, a year-over-year increase of 7%. Notably, the growth rates in May and June exceeded those of the first quarter. It is important to note that "nights and experiences booked" is a new metric that includes the total number of nights booked for accommodations as well as seats booked for services and experiences.

• Growth rates of nights and experiences booked by region: Latin America saw high double-digit growth, Asia-Pacific experienced mid-double-digit growth, EMEA (Europe, Middle East, and Africa) saw mid-single-digit growth, and North America experienced low single-digit growth.

• Balance Sheet Status: As of the end of the second quarter, the company held $11.4 billion in corporate cash and investments, and $11.1 billion in funds held on behalf of guests.

• Stock Repurchase: The company repurchased $1 billion of common stock this quarter. As of the end of the second quarter, there was still $1.5 billion in authorized stock repurchase capacity. The company announced a new stock repurchase program authorizing the purchase of up to an additional $6 billion of Class A common stock. Since the stock repurchase program was launched in 2022, fully diluted shares have decreased by 8%.

2. Outlook for Q3 2025

• Revenue is expected to be between $4.02 billion and $4.1 billion, representing a year-over-year increase of 8% to 10%. This forecast considers hedging, with minimal adverse impact from foreign exchange.

• The growth rate of nights and experiences booked is expected to be roughly in line with Q2 2025.

• The average daily rate (ADR) is expected to grow moderately year-over-year, primarily due to foreign exchange impacts.

• Adjusted EBITDA is expected to exceed $2 billion.

• The adjusted EBITDA margin is expected to be lower than Q3 2024, mainly due to investments in new business and policy initiatives. A similar year-over-year decline in adjusted EBITDA margin is expected in Q4 2025, due to growth investments and more challenging year-over-year revenue comparisons.

3. Full-Year 2025 Guidance

• The company plans to invest approximately $200 million in launching and expanding new businesses in 2025.

• Despite these investments, the full-year adjusted EBITDA margin is still expected to reach at least 34.5%.

• The company sees significant opportunities in new businesses and is building with a multi-year perspective. Although new businesses are not expected to generate significant revenue in the short term, they are expected to contribute significantly to revenue growth as they scale over the coming years.

II. Detailed Content of the Earnings Call

2.1 Key Information from Executive Statements

1. Business Advancement Pace:

Enhancing Core Services: Improvements were made to checkout, messaging, product display, and payment options. In the U.S., a new AI customer service agent was expanded, reducing the need for hosts and guests to contact human agents by 15%.

Accelerating Global Market Growth: Booked nights in emerging markets have grown at twice the rate of core markets for six consecutive quarters. Domestic travel and first-time bookers in the Japanese market grew by 15% year-over-year.

Strategic Partnerships: Announced global live music collaborations with the Tour de France and Lollapalooza, and a three-year partnership with the International Olympic Committee (IOC), FIFA, and the World Cup.

Expanding Beyond Core Business: As part of the summer 2025 launch, the company introduced Airbnb Services and completely reimagined Airbnb Experiences, along with a brand-new app. This launch garnered over 13,000 media reports and nearly 660 million social media impressions.

Market Feedback on New Business: Since launch, the average customer rating for services is 4.93 stars (out of 5), higher than the average 4.8 stars for accommodations during the same period. Since the launch, over 60,000 applications have been submitted to become service or experience hosts.

Financial Status and Future Investment Strategy: The company's strong financial position enables it to invest in the future and create long-term value for investors. The focus is on driving core business growth with urgency and focus, while scaling services and experiences.

2.2 Q&A Session

Q: What have you observed about Airbnb Experiences? How do you define its success, such as penetration rate? Are there other companies or industries that serve as benchmarks or targets for core product penetration?

A: We are very pleased with the awareness of Airbnb Experiences. The biggest issue in the past was that users were unaware of this product, but this launch brought over 13,000 articles and 660 million social media impressions, significantly increasing awareness. The newly designed homepage also increased product exposure, and guests rated Experiences significantly higher than accommodation products.

Regarding penetration rate, we are closely monitoring it and expect the reimagined Airbnb Experiences to have a significantly higher penetration rate than the old version. The key to achieving high penetration is threefold: ensuring attractive, high-quality products (including Airbnb Originals); increasing product entry points and deeply integrating them into core processes; and raising awareness to drive bookings.

Notably, 40% of Airbnb Originals bookings come from local users. We plan to focus on increasing attachment rates in key cities like Paris over the next year, and once successful, we will have a better understanding of global potential. We are very confident that most Airbnb travelers will enjoy using Experiences.

Q: How long do you think it will take to reach your goals?

A: Regarding the timeline for reaching our goals, we currently do not have any specific data on potential penetration rates to share. However, our strategy is to focus on increasing penetration in key cities over the next year. For example, one city we are currently focusing on is Paris. It is a very popular corridor city from the U.S. We are working on how to increase penetration in Paris and a few other cities. Once we increase penetration in these markets, it will give us a better understanding of the global potential of this business, but I am very, very optimistic. We believe that most Airbnb travelers will enjoy using Airbnb Experiences.

Q: How significant do you expect the headwinds from events like the Paris Olympics to be in Q3, and could they persist into Q4? Should we expect Q4 to grow slower than Q3?

A: Regarding Q3 and Q4 trends, last July's bookings were relatively weak, so we are comparing against a weaker period in 2024. The growth rate at the end of last year's Q3 was much higher than at the beginning of the quarter, and it accelerated by more than 4 percentage points in Q4, reaching over 12%. Compared to this, the year-over-year growth rate in the second half of this year may slow slightly. 2023 is a more "normal" comparison year compared to 2025, which means the second half will face difficult year-over-year comparisons, potentially leading to a slight slowdown in the year-over-year growth rate from Q3 to Q4.

Q: Considering the success in growth markets like Brazil, Japan, and Germany, what is Airbnb's appropriate mid-term growth rate?

A: We have not provided specific mid-term growth rate targets. However, in terms of expansion markets, we have achieved significant success in Brazil, Japan, Germany, and India. Although our business has long been concentrated in core markets, the high growth in these expansion markets has begun to reduce the global business's over-reliance on North America. For example, the accelerated growth in Latin America has gained about 200 basis points of business share from North America within Airbnb, contributing more meaningfully to overall growth. Our strategy is to continue investing and gaining market share in these markets, and as their share of the overall business increases, their contribution to growth will also increase accordingly.

Q: From a marketing perspective, what are the key learnings regarding the intensity of marketing investment needed to drive global brand repositioning and new growth markets like services and experiences?

A: We believe the best way to market services and experiences in the future is to market Airbnb's overall product. Initially, we launched specific ads, but this fall, we will launch bundled ads marketing accommodations, services, and experiences. The key principle is that only Airbnb can offer all these products in one app. Therefore, we believe the intensity of marketing itself does not need to increase, as integrated marketing can bring higher returns on investment and is more logical, as users booking accommodations are likely to also need services or experiences, allowing us to market all three simultaneously.

Q: Looking beyond 2025, in the medium to long term, how might these marketing investment channels evolve to bring the platform closer to consumers?

A: As travel shifts from desktop to mobile and from Google search to social media, marketing channel strategies are also evolving. Travel is becoming more inspiration-based rather than high-intent search-based, and Airbnb is well-suited for social media audiences. Therefore, we are shifting more advertising from TV or search to social media. The advantage of social media is precise targeting, allowing us to better understand customers and even link them directly to inventory and into the app while watching ads, which is considered very effective. The $200 million investment in Experiences and Services in 2025 is not for increased programmatic marketing but focuses on live operations, marketing campaigns, and supply acquisition, aiming to invest in a single brand.

Q: Regarding the inventory building method for Experiences, how do you balance building high-quality supply consistent with Airbnb's differentiated accommodation products with building more commoditized supply that may be easier to build and scale?

A: We have stricter quality management for Experiences than for accommodations. On the input side, every Experience on Airbnb must be reviewed before going live, and not all submissions can go live. As a result, the average rating for regular Experiences is 4.93 stars, higher than the 4.8 stars for regular accommodations. We believe this model is very effective and scalable. We work with many third-party suppliers and have established a comprehensive operational review mechanism, including profile reviews, identity verification, certificate checks, and ensuring the correct certifications and licenses. We believe this rigorous review approach is efficient and makes the market more effective, as quality is crucial for customer satisfaction, building trust, and encouraging users to try new things on Airbnb.

Q: Regarding the overall company strategy, how do you view implementing a strategy or acquiring a company to potentially accelerate revenue or nights booked, rather than relying solely on organic growth?

A: We are always open to acquiring companies and have successfully acquired Hotel Tonight in the past. Although we have historically focused primarily on organic growth, we would absolutely consider acquisition opportunities. We are currently in a better position to consider acquisitions because we have rebuilt the technology platform from scratch and developed a new expansion strategy that focuses not only on travel but also on living. This provides us with potential acquisition opportunities. We always ensure that any acquisition must be one of the most valuable opportunities, and the integration cost does not exceed the revenue gains it brings. We are opportunistic and more prepared than ever to make acquisitions.

Q: Regarding the impact or observations on accommodations or nights booked on the redesigned app, can you provide more information?

A: We have observed very exciting patterns in accommodations, with a significant increase in the number of users booking accommodations from the Airbnb homepage. This is a major behavioral shift in Airbnb's 17-year history. The traditional OTA model typically starts with a search box, while we are achieving more users entering browse and discovery mode. This is strategically significant because when users interact with the homepage rather than directly entering a destination, we can more broadly guide travelers to areas with available supply, thereby improving traffic conversion rates. Additionally, we see more users using the new "Trips" tab, i.e., the itinerary feature, with significantly increased engagement. This feature is crucial because it keeps users engaged with the app during their trip, providing opportunities for cross-selling other products. We find that many users enjoy booking services and experiences on the fly.

Q: Can you confirm that the booking lead time has now returned to normal levels, unlike what you saw earlier this quarter?

A: Yes, we can confirm that the booking lead time has returned to normal. You may recall that in April, the lead time was severely compressed, down about 7% year-over-year. But throughout the quarter, as booking confidence improved and booking volume accelerated, the lead time returned to normal, and entering Q3, it even extended compared to the same period last year, indicating good booking confidence and overall customer demand.

Q: Can you explain why the U.S. growth rate is in single digits, how supply is growing, and how you might accelerate growth, considering you believe there is still significant growth potential in the U.S.?

A: The U.S. is our largest market, but there is still significant growth potential, especially in hotel-dominated markets. The short-term rental penetration rate in the U.S. is lower than in other markets, and structurally, there is still significant potential. We will drive incremental growth by enhancing the core business, such as improving price affordability, including total price display and better pricing techniques. We are also targeting specific under-penetrated demographics, such as the U.S. Hispanic population and residents of "heartland states."

Additionally, increasing availability and exploring more diverse payment options will also promote growth in the U.S. market. In terms of supply, we currently have about 10 million listings, with a target of tens of millions. Addressing the "heavy workload" issue, we have successfully managed 100,000 listings through the co-host program, hosting 10 million nights, and expect to unlock millions of new listings. Investing more in trust and safety, such as verifying over 200 million identities. By focusing on supply-constrained markets, improving quality, reliability, and affordability, we believe there is significant growth potential in the U.S. core business, far from saturation, with the goal of accelerating overall company growth.

Q: Regarding the launch of Services, are you currently more focused on building supply and demand, or the overall product?

A: The Services business is earlier-stage than Experiences and essentially comprises 10 different business categories. Our current focus is on making breakthroughs in a few key markets (such as Los Angeles), building the catalog of these services, and increasing penetration. We find that about 10% of service bookings come from locals or nearby people, i.e., local demand, which presents a huge opportunity. Customer satisfaction with services is very high, with a rating of about 4.93, higher than the 4.8 for accommodations, showing good progress.

Although the services business is still in its early stages, we believe it may have greater opportunities than the experiences business because the 10 categories currently launched are just the beginning, and it can expand to a more diverse service catalog in the future. We will focus on successfully operating these 10 services in a few markets.

Q: How do these major events help increase bookings while enhancing brand and product awareness?

A: Major events are strategically important to us. First, they are an effective way to build supply. For example, the Paris Olympics increased non-home accommodations on Airbnb by over 50%, attracting many hosts who were not initially interested in long-term rentals to try it, many of whom will continue hosting. Second, events are a good way to build relationships with policymakers and regulators and increase brand trust, such as partnerships with the Milan Olympics in Italy and the FIFA World Cup. Finally, associating with events like the Olympics, Tour de France, and World Cup enhances Airbnb's brand trust, linking it with beloved brands and passionate interests. Airbnb is an ideal partner for these events because many events could not be held on the same scale without Airbnb. Events are an important part of our strategy, and we will continue to deepen them in the future, using the combination of accommodations, services, and experiences to improve collaboration efficiency and cross-promotion.

Q: Regarding the $200 million investment included in the full-year EBITDA guidance, is there any change in expected spending? Previously, it was mentioned that $200 million to $250 million would be used for the 2025 new business launch, but now it only says $200 million for services and experiences. Does this mean there are no other launches this year?

A: Yes, the $200 million investment is mostly personnel costs, allocated to product development, on-site operations teams, and some supplier investments to help curate and launch new supply. When considering future expansion investments, although we cannot provide specific numbers for next year, it can be assumed that investments in these businesses will continue to expand their scale in 2026. Some of this year's investments will be fixed personnel costs that will carry over into next year. Regarding "whether there are other launches," there is nothing to disclose at this time.

Q: Regarding the growth of nights booked in the U.S., excluding services and experiences, what are one or two key priorities you see for accelerating this growth in 2026?

A: There are several pillars for accelerating growth in the U.S. market. One key development is making Airbnb easier to use, and we have made hundreds of improvements, resulting in hundreds of millions of dollars in additional revenue. The next focus is pricing and affordability, and we have shifted to total price display, exploring pricing methods that only charge host fees, while providing hosts with more tools to make their listings more competitive, such as new calendar price suggestions. The third focus is increasing supply, and we are targeting the most supply-constrained markets and plan to increase hotel listings as a supplement. These measures will help accelerate growth in the U.S. market.

Q: Regarding the $200 million investment you mentioned, part of it sounds like this year's personnel costs. How should we view the potential increase in these costs as we enter 2026? Do you think there are enough personnel now to continue developing Experiences and Services, or will this continue to increase to bring more supply?

A: Yes, a large part of the $200 million investment is personnel costs, allocated to product development, on-site operations teams, and supplier investments to help curate and launch new supply. Although we cannot provide specific numbers for next year, it should be assumed that investments in these businesses will continue to expand their scale in 2026. Some of this year's investments will be fixed personnel costs that will carry over into next year. As for whether there are enough personnel or whether it will continue to increase to bring more supply, the CFO stated that this part of the investment will continue as fixed personnel costs.

Q: From a marketing perspective, how do you consider using more performance marketing, perhaps search, to supplement broader brand promotional activities for the overall business?

A: We continue to use performance marketing as a "precise supplement" to most brand spending. Our marketing channel mix strategy is unique because the brand's strength and uniqueness allow us to allocate a larger proportion of marketing spending to brand building rather than performance marketing. Nevertheless, we will still use performance marketing globally to achieve good returns on incremental nights booked. Compared to competitors, the overall intensity is still relatively low because 90% of our traffic comes from direct and unpaid sources, which means our spending on performance marketing is much lower than other companies.

Q: Considering Airbnb's knowledge of travelers, you mentioned testing and learning Experiences in cities like Paris. If the application for Experiences continues to surge, how will you expand the experience gained in Paris to better conduct overall product display?

A: For Experiences, we are conducting extensive carousel personalization testing. The basic idea is to show users highly interesting and potentially bookable Experiences based on their source, price preferences, and recent browsing history. We will also increase product touchpoints, such as opening directly from the homepage or providing other entry points for product display in the "Trips" tab. We have a team in Paris, including product development leaders, designers, and engineers, conducting very tight feedback loops to determine the types of supply users really want and extensively testing rankings to ensure the right users see the right supply and make bookings. Once a solution is found in one city, it can be immediately rolled out to all global cities offering the product, enabling rapid iteration.

Q: We have been discussing a loyalty program for some time, with the goal of Airbnb launching a loyalty program that is different and not just a points program. What are the latest thoughts on this?

A: We believe a loyalty or membership program is very attractive to Airbnb. One of the advantages of our business is having loyal customers, with 90% of traffic being direct or unpaid because most bookings come from repeat bookers, without the need to pay to bring them back. The best loyalty is having a product people love. Nevertheless, we acknowledge the disadvantage when competing with OTAs and hotels with points programs. If a program is launched, it will not be a traditional points program but something more unique and innovative. Such a program is expected to be launched in the future, but not soon.

Q: Regarding the "Trips" tab, from a design perspective, optimistically, Airbnb will and should play a more important role in the comprehensive end-to-end travel experience. What could this itinerary evolve into?

A: We are accelerating Airbnb's product development speed on a large scale, releasing every six months, and now iterating very quickly between releases. Regarding the "Trips" tab and itinerary product development, this concerns the long-term product vision, especially with the integration of AI. We believe that in the future, travel planning cannot be done without AI. We started AI deployment from the most challenging area—customer service, and have launched a custom AI agent in the U.S., based on 13 different models, reducing the number of people needing to contact human agents by 15%. Next year, AI will become more personalized and agent-like, helping users cancel bookings and even plan and book their next trip. In the coming years, AI will be introduced into travel search, and Airbnb will become an AI-first application. We believe that in the future, the top 50 apps in the App Store will all be AI applications, and Airbnb is transitioning from a pre-generated app to an AI-native app.

Q: The letter mentioned new payment methods in Brazil. Do you think the experience gained from these initial expansion countries will help you accelerate product development and the update pace for the next batch of new markets?

A: Yes, installment payments (zero down payment) in Brazil are a very successful example, and we are accelerating Airbnb's product development speed on a large scale. We now release every six months, but are iterating very, very quickly between these releases. This shows that the experience and successful product optimization gained from initial expansion countries do help accelerate the development and update pace for future new markets.

Q: Can you first talk about your thoughts on one or two major product releases in 2026? You just mentioned AI travel search as one of the major product releases?

A: We typically do not preview specific future product releases. However, it can be confirmed that more AI will be introduced into the app next year, but we cannot preview specific release content, including whether AI travel search will be one of the major releases.

Q: How do you plan to manage the overall company margin next year, considering new releases and continued investment in Experiences and Services?

A: It is currently inconvenient to provide guidance on margins for 2026. However, it can be assumed that we will continue to invest in new businesses and continue to improve efficiency in the core business. Detailed information on how this will affect sequential margins will be provided in the coming quarters.

Q: Regarding AI, do you expect to make a choice between being open to agents and agent traffic and who owns that relationship, or being more like a closed platform? Considering that most of your current traffic is direct, and you have a lot of exclusive supply, you may have the choice.

A: We do not see this as an either-or choice. AI models are not proprietary, and Airbnb can use multiple models through APIs. The key is to adjust the models and build custom interfaces for specific applications. We want to lead the way and be the first choice for people booking travel on Airbnb. Regarding whether to integrate with AI agents, we are open-minded. Airbnb is not a commoditized product, booking requires an account, identity verification, and almost all bookings go through our messaging platform. Therefore, allowing agents to book directly is not as simple as booking a flight. But this could become a very interesting potential customer generation method for Airbnb.

Q: From a big-picture strategic perspective, you operate at a scale of $90 billion in bookings. In your view, when you enter areas like experiences and services, it is difficult to make a big impact. My question is, why don't you really double down on accommodations and hotels, at least in your core five markets, where they account for about 70% of your bookings?

A: We believe this is not an "either-or" choice, but an "and" relationship. We are increasing investment in the hotel business, believing it is attractive and still has great potential on Airbnb. Especially in popular markets and peak seasons, when people cannot find accommodations, hotels are a great complement. Additionally, long-term stays are also a huge market, with a large portion of our bookings exceeding 30 days. As for services and experiences, we believe each has the potential to become a multi-billion-dollar business, and they can leverage local demand, making them not just ancillary services but standalone. Our goal is to build a platform with accommodations, services, experiences, hotels, and more products, and continuously launch new businesses.

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