Published: Monday, 16 August 2021 09:23
While you have to toss out Covid-ravaged 2020 as any kind of a barometer for a company’s trajectory, during the last two-and-a-half years, Airbnb has only made a profit during its third quarters. If remote working becomes entrenched in coming years, then that can indeed help with Airbnb’s seasonality issues. — Dennis Schaal
Looking back over the last two-and-a-half years, third quarter financial reporting periods, which include the peak summer travel months of July, August and September, have been the company’s only profitable ones — and Airbnb expects a blockbuster third quarter of 2021.
Since 2019, Airbnb has posted net losses every quarter with the exception of the third quarter of 2019, when it recorded net income of $267 million, and the third quarter of 2020, when the company was $219 million in the black on the basis of generally accepted accounting principles, or GAAP.
While recording net losses of $1.2 billion in 2021’s first quarter, which was impacted by paying off debt and a warrants adjustment, and coming out $68 million in the red during the quarter that just ended in June, Airbnb stated in its shareholder letter published Thursday that it expects the current third quarter to establish records in revenue, adjusted earnings, and margins.
Strongest Despite Delta Variant
“While the Covid-19 pandemic creates ongoing uncertainty for our future results, we expect Q3 2021 revenue to be our strongest quarterly revenue on record and to deliver the highest Adjusted EBITDA dollars and margin ever,” the shareholder letter stated.
During its earnings call with financial analysts Thursday, Airbnb Chief Financial Officer Dave Stephenson said the company saw strong bookings heading into the current quarter based on pent-up demand, and is seeing some deceleration although it was “not substantial.”
“Always identified in the outlook is that our nights and experiences booked in Q3 will be lower than in Q2, given just the extreme strength that we saw in the business in Q2, but we continue to be very bullish on the business,” Stephenson said. “As I said, the revenue that we’re going to have in Q3 will be the highest ever, while the profits are going to be the highest ever. And so the business remains very strong.”
Those boasts come despite the fact that the company noted in its shareholder letter that Covid-19 and the onset of the Delta variant will make comparing its nights and experiences booked and gross booking value with their performance in prior periods “more volatile and non-linear.”
Future of Travel Could Resolve Seasonality Issue?
CEO Brian Chesky weighed in several times during the analyst call about how the future of travel is changing, arguing that Airbnb is best-positioned to take advantage.
Unlike in the early days of Airbnb, when hardly anyone booked a place for a month or more, stays of 28 days or longer were the fastest-growing trip-length category in the second quarter as the company argued that the manner in which people choose to live and travel are changing. Nearly half of all gross nights booked in the second quarter were for stays of at least a week.
Chesky said he believes Zoom — and thereby remote working — is “here to stay.”
“And if we believe that Zoom is here to stay, we believe that flexibility in remote living is here to stay,” Chesky said. “And therefore, it’s pretty obvious that what would happen is that we are going to continue to see more and more longer-term stays. And I think this is going to help us smooth out our seasonality over the coming years to come.”
Ah yes, smoothing out the company’s seasonality issue would appear to be a priority.
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