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Airbnb, Inc. (Nasdaq: ABNB Equity) Q1CY22 Earnings Review

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30-May-22 Current Price: $120
Wisdom Global: ABNB : 1QCY22 result review
USD Mn 1QCY22 YoY QoQ Remarks
Revenue 1,509 70.1% -1.5% driven primarily by rebound in travel, higher average daily rates (up 5% YoY) & slightly higher take rate (+ 20 bps YoY)
Gross profit 1,146 81.3% -7.3% positive operating leverage from flat fixed costs;
EBIT -5 N/A N/A positive operating leverage as all expenses grew at a slower rate compared to revenues
Net profit -19 N/A N/A lower interest expense and other expense
Gross Margin 76.0% 470 bps (470) bps flat fixed costs
EBIT margin N/A N/A N/A N/A
Major Segments Rev. (USD Mn) 1QCY22 YoY % of Total Remarks
US Revenues 772 51.2% 51.2% driven by long term stays. 48% of stays were longer than 7 nights and 21% longer than 28 days.  Mix shift has been towards entire homes, and non-urban destinations
International Revenues 737 95.9% 48.8% primarily driven by nights booked from pent-up demand for travel post pandemic
– Revenues: In second half of the year, we expect volumes to return in the cross border APAC market as well as Europe which has been negatively impacted due to lockdowns over the last couple of years. The mix of volume is also likely to shift more towards the Urban markets. We don’t expect much improvements in average daily rates ( ADRs ) from Q1CY22 levels and so volume will drive revenues for the rest of the year. We expect 30% CAGR in revenues for CY21-23.
– EBIT: Most travel sites spend a significant percentage of their revenues on customer acquisition with sites such as google, FB etc. Customer acquisition is the largest cost for online travel agencies while ABNB doesn’t spend on digital properties to acquire customers. Ninety percent of traffic on ABNB is unpaid or direct. Unlike other covid beneficiary companies, ABNB has not increased head count even though their revenues have continued to grow throughout the last two years. ABNB had 16% fewer employees in Q1CY22 compared to Q1CY20. We expect slightly higher EBIT margins in CY22 compared to CY21 and CY22 is the first year ever that ABNB will be net profit positive. We expect 124% CAGR in EBIT for CY21-23.
– EPS: CY22 is the first positive EPS year for ABNB and we expect $2.14 in CY22 and 27% YoY growth in CY23.
– TAM: Most OTAs offer travel booking services but ABNB with its “I’m flexible” features goes a little bit upstream and allows a user to plan a vacation rather than just book a particular date and location. The company is working on Experiences which travelers in the future may be able to book on ABNB’s website instead of just rooms.
– ABNB trades at 44.5x CY23 PE multiple and so does seem expensive. However, ABNB is a cash generating machine. Currently, with $76.7B in mkt. cap it has $9.3B of cash on the Balance sheet.