Shares of Airbnb stumbled in premarket trading in New York on Thursday after the home rental company beat earnings expectations for the first quarter but provided weaker-than-expected guidance. This comes after Bank of America analysts identified other travel companies missing earnings, leaving them with new fears that a consumer travel spending downturn nears.
Here's how the company reported in the first quarter, compared with consensus expectations from Bloomberg:
Revenue $2.14 billion, +18% y/y, estimate $2.06 billion
Gross booking value $22.9 billion, +12% y/y, estimate $22.32 billion
Adjusted Ebitda $424 million, +62% y/y, estimate $326.3 million
Adjusted Ebitda margin 20% vs. 33% q/q, estimate 15.9%
EPS 41c vs. 18c y/y, estimate 30c
Nights and experiences booked 132.6 million, +9.5% y/y, estimate 131.81 million
Gross booking value per nights and experiences booked $172.88, +2.6% y/y, estimate $169.38
Free cash flow $1.91 billion, +21% y/y, estimate $1.07 billion
Despite the revenue beat in the quarter, nights and experiences booked, a key metric in the industry, posted 9.5%, falling short of expectations of a 12% increase. "It also represents the slowest rate of growth since 2020, suggesting that overall demand has normalized after an initial post-pandemic travel boom," Bloomberg said.
Wall Street analysts were more focused on Airbnb's second-quarter guidance. The company now expects revenue for the quarter ending in June to be between $2.68 billion and $2.74 billion, down from $2.74 billion.
- Sees revenue $2.68 billion to $2.74 billion, estimate $2.74 billion (Bloomberg Consensus)
In a statement, Airbnb noted that the Easter holiday and currency headwinds were some factors in the travel spending slowdown - ahead of the peak travel season in July.
Wall Street analysts were focused on the "underwhelming" room nights metric and weak quarter-two guidance that overshadowed better-than-expected first-quarter earnings (list courtesy of Bloomberg):
Bloomberg Intelligence analyst Mandeep Singh
- "Airbnb's expectations of 8-10% top-line growth for 2Q suggests a further deceleration in room-night growth, with average daily rates likely to remain a slight tailwind"
RBC Capital Markets analyst Brad Erickson (sector perform, PT $150)
- "The Q2 revenue guide was slightly below consensus, and importantly, the shareholder letter called for Nights & Experiences y/y growth similar to Q1's 9% vs. consensus looking for 12%"
Morgan Stanley analyst Brian Nowak (underweight, PT $120)
- While Airbnb is a unique travel platform, room nights continue to underwhelm
- Expect "stable-to-slowing room night growth" and more use of marketing to drive growth "weighing on the multiple investors are willing to pay"
JPMorgan analyst Doug Anmuth (neutral, PT $145 from $140)
- Airbnb reported a solid 1Q, expect 2Q to be stable and acceleration in 3Q
- "ABNB's work on making hosting mainstream & perfecting the core service continued in 1Q"
Citi analyst Ronald Josey (buy, PT to $167 from $170)
- The results are better than expected, but the outlook is below the consensus
Evercore ISI analyst Mark Mahaney (in line, PT $140)
- Revenue and adjusted Ebitda are highlights of the report, but the revenue forecast "bracketed the Street"
Airbnb shares are puking in premarket trading, down 9.3% to $143 handle.
The slowdown in travel spending has hit other companies in the industry.
Last week, Booking Holdings posted worse-than-expected guidance, and Expedia Group reported disappointing results.
On Wednesday, this led Bank of America's trading desk to ask: "Theme Alert? Consumer Travel Spending easing?"
They pointed out a list of disappointing earnings across the travel industry:
$EXPE miss/guide
$TRIP miss
$CMCSA parks commentary
$DIS parks' moderation' or normalization
$UBER slight bookings miss
Taking a deeper dive into markets, the Dow Jones US Travel & Leisure Index peaked in late March and fell 7.5%. The index is up against heavy resistance.
Also, during earnings calls, McDonald's, Starbucks, and Tyson Foods have recently warned about mounting headwinds hitting low-income consumers amid the failure of Bidenomics, which has left the economy plagued with elevated inflation.
To sum up, revenge travel originating from the end of the pandemic could fade here.
