![]() And if Airbnb's revenues were to slow down, then we should similarly expect Airbnb's free cash flows to also slow down.Īirbnb declares that it should see some bumpiness in its EBITDA margin profile throughout 2023, as its marketing spend moves into Q2 rather than Q3 as in 2022. That being said, this free cash flow can only grow alongside the growth in revenues. Its unearned fees is derived from bookings Airbnb collects upfront and then pays out to hosts at the time of guest check-in, which means that Airbnb's free cash flows always look very strong relative to underlying profitability. Airbnb operates with negative working capital. Now, allow me to highlight an important element of Airbnb's business model. This implies that Airbnb is likely this year to see around $4.5 billion of free cash flow. Considering that Airbnb is likely to be in building some level of conservatism, we are likely to see this translate into approximately $800 million of free cash flow when everything is said and done. Profitability Profile, The Crown JewelĪirbnb guides for approximately similar levels of EBITDA in Q2 2023 as in the prior year. A business that is still growing, but not really gushing growth. What was once perceived to be a high-flying secular growth story is now seen in quite a different light. With its growth rates pointing to mid-single digits, this is the sixth consecutive quarter of decelerating revenue growth rates. Even considering the tough comparables with the prior year, investors wanted to be positively surprised by Airbnb's revenue outlook for Q2. Airbnb's guidance was less than enticing. Next, let's get to the core reason why the share price is down 10% y/y. Note, the revenue growth rates shown above are as-reported, GAAP revenues. Revenue Growth Rates Slow Down, So What's Next? ![]() Investors' enthusiasm for the asset-light and rapidly diversifying hosting platform has been reset lower. ![]() We are now twice the size as we were before the pandemic on both a GBV and revenue basis-and with considerably higher profitability and cash flow.Īnd yet, when all is said and done, today's share price is down at least 50% from its peak. Why Airbnb? Why Now?Īirbnb kicks off the meaty part of its shareholder letter reminding investors that, I make the contrarian call that this is not the time to throw in the towel. What's more, Airbnb today is substantially more diversified than at any point in its history, not only geographically, but in serving both guests and hosts. ![]() But underneath 6 consecutive quarters of decelerating growth rates, there's a business that prints free cash flows. Airbnb's ( NASDAQ: ABNB) Q2 outlook didn't quite ooze excitement for new investors. ![]()
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