Airbnb Q3 earnings smashes estimates

Airbnb (NASDAQ: ABNB) released its third-quarter earnings for FY21 on November 4, 2021 after the market closed. It’s an American company operating an online marketplace for lodging and renting vacation homes. The key points of the latest disclosure are discussed here.

  • Revenue: $2.2 billion vs $2.06 billion expected
  • EPS: $1.22 adjusted vs $0.84 expected
  • Net Income: $834 million
Financial Highlights
  • Q3 revenue of $2.2 billion was their highest ever—36% higher than Q3 2019. It also exceeded Q3 2020 revenue of $1.3 billion by nearly 70% year-over-year. More significantly, year-over-two-year revenue growth more than tripled from 10% in Q2 2021 to 36% in Q3 2021. The sequential acceleration reflects continued strength in North America, EMEA and Latin America, as well as high ADRs. Q3 is typically their largest quarter due to summer travel peak.
  • Q3 net income of $834 million was their most profitable quarter ever, nearly 4x larger than a year ago. Net income in Q3 2021 improved $615 million (280%) compared to Q3 2020 and $567 million (213%) compared to Q3 2019 due to our significant revenue recovery and their continued expense discipline.
  • Q3 Adjusted EBITDA exceeded $1 billion for the first time ever. Adjusted EBITDA in Q3 2021of $1.1 billion was also their highest ever, doubling from $501 million in Q3 2020 and more than tripling from $314 million in Q3 2019. Adjusted EBITDA margin was 49% for Q3 2021, by far their best margin ever, an increase of 30% (or 3,000 bps) compared to Q3 2019. This substantial improvement in Adjusted EBITDA demonstrates the strength of their business, as well as a significantly improved cost structure.

Analysts Estimates

The Zacks Consensus Estimate for earnings per share (EPS) was pegged at $0.84. It indicated a whopping 863% growth from previous year’s reported loss per share of $0.11.

The estimated revenue was pinned at $2.06 billion. It suggested an increase of 53.7% year-over-year. However, the analysts didn’t expect Airbnb to meet the estimates. The Earnings Surprise Percentage (ESP) was -11.80%.

Earnings History

The company’s reported earnings and revenue of the second quarter for FY21 had surpassed the estimates. The loss per share was $0.11, much less than the expected loss of $0.43. In addition, the revenue was $1.34 billion beating the estimate by $64.79 billion. It showed a skyrocketed growth of 300% year-over-year.

Airbnb’s key financial highlights of the second quarter-

  • As of March 31, 2021, the fair value of foreign exchange derivative assets and liabilities totaled $25.3 million and $5.3 million, respectively, with the aggregate notional amount totaling $1.3 billion.
  • The Company recorded total net realized losses of $7.8 million and $15.4 million for the three months ended March 31, 2020 and 2021, respectively, related to foreign exchange derivative assets and liabilities.
  • The Company recorded total net unrealized gains of $10.2 million and $39.9 million for the three months ended March 31, 2020 and 2021, respectively, related to foreign exchange derivative assets and liabilities. 
  • As of March 31, 2021, the potential effect of these rights of set-off associated with the Company’s derivative contracts would be a reduction to both assets and liabilities of $5.3 million, resulting in net derivative assets of $20.0 million.

Airbnb reported the first quarter earnings of FY21 that missed the estimates. It reported a loss per share of $1.95 against an estimated loss of $1.16. It failed to meet the estimates by 68.10%. However, it did beat the revenue estimates. The revenue was $886.94 million surpassing the estimate by $171.68 million.

Future Forecast

The Zacks Consensus estimate for loss per share for the fourth quarter of FY21 is $0.4. It indicates an increase of 99.63% year-over-year. The estimated revenue is $1.43 billion. This suggests an increase of 66.89% than the previous year.

The Annual Forecast estimates the loss per share for the year to be $1.30. This suggests a growth of 91.63% than last year. The estimated total revenue is $5.74 billion. It indicates a growth of 70% year-over-year.

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