Proactive Investors - Airbnb Inc (NASDAQ:ABNB) is expected to continue to benefit from the post-pandemic rebound in the travel industry when it hands down its third quarter financial results after the closing bell on Wednesday, November 1, with the accommodation platform expected to report increased revenues and profits.
Airbnb has projected revenue of $3.3 billion to $3.4 billion for 3Q, representing year-over-year growth between 14% and 18% from $2.9 billion in the year-ago quarter.
Wall Street analysts peg revenue at about the midpoint of this guidance at $3.36 billion and earnings per share of $2.08, up 16.2% from EPS in the year-ago quarter of $1.79.
The company expects to report a “modest” sequential increase in the growth of Nights and Experiences (nights) booked from the second quarter’s 115.1 million.
It also projected record-high 3Q adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which was a record $1.5 billion in the year-ago quarter, and an improved adjusted EBITDA margin over the same period in 2022 when it recorded an adjusted EBITDA margin of 51%.
Third-party data suggests strong 3Q bookings
Analysts at the Bank of America (NYSE:BAC) (BoA) noted that broader sentiment around online travel agencies has turned more cautious heading into 3Q earnings season.
However, they pointed to evidence from third-party data platform AirDNA which suggests that 3Q growth in bookings for Alternative Accommodation, which includes Airbnb, was “solid” when compared to estimates.
They expect Airbnb to report nights booked at 114 million, in line with the Street consensus, and total bookings of $18.2 billion, up from their prior estimate of $17.9 billion.
They also highlighted that during the quarter the Alternative Accommodation industry was the focus of new regulations in New York and, as such, expect Airbnb’s management to focus on long-term bookings on the platform.
“CEO Brian Chesky has suggested new long-term rental initiatives will be announced as part of Airbnb’s winter product update,” they wrote in a note to clients.
They pointed to insights on Airbnb’s long-term rentals strategy and other initiatives in the pipeline such as sponsored listing as a potential positive from the earnings report as this would raise optimism on nights growth or take rates for 2024.
Looking ahead to the fourth quarter, the BoA analysts said they were lowering their quarterly room nights estimate from $101.4 million to $100.5 million, compared to the Street estimate of $101.2 million, as they expect “modest” pressure on travel during the quarter due to conflict in the Middle East.
“Our bookings estimate is lower by less than 1% on FX changes, now at $15.5 billion (15% year-over-year) in line with Street,” they wrote.
“We reduce our 2024 gross booking value and revenue growth to 14% year-over-year from 16% due to recent FX headwinds and a slightly lower room night forecast.”
Due to their lower 2024 forecasts, the analysts lowered their price target on the stock from US$155 to US$150 but reiterated their ‘Neutral’ rating.
“We have been surprised at the resiliency of average daily rates (ADRs) despite a shift back to hotels, still, U.S. growth has slowed year-over-year and we still see potential for Europe slow next year,” they wrote.
Shares of Airbnb traded slightly lower ahead of its results, down 0.2% at US$118.12 at noon on Wednesday.
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