Online accommodations platform Airbnb (NASDAQ:ABNB) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 9.9% year on year to $3.73 billion. On the other hand, next quarter’s revenue guidance of $2.40 billion was less impressive, coming in 1.2% below analysts’ estimates. Its GAAP profit of $2.13 per share was also in line with analysts’ consensus estimates.

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Airbnb (ABNB) Q3 CY2024 Highlights:

• Revenue: $3.73 billion vs analyst estimates of $3.72 billion (in line)

• EPS (GAAP): $2.13 vs analyst expectations of $2.15 (in line)

• EBITDA: $1.96 billion vs analyst estimates of $1.86 billion (5.4% beat)

• Revenue Guidance for Q4 CY2024 is $2.40 billion at the midpoint, below analyst estimates of $2.42 billion

• Gross Margin (GAAP): 87.5%, up from 86.5% in the same quarter last year

• Operating Margin: 40.9%, down from 44% in the same quarter last year

• EBITDA Margin: 52.5%, down from 54% in the same quarter last year

• Free Cash Flow Margin: 28.8%, down from 38% in the previous quarter

• Nights and Experiences Booked: 122.8 million, up 9.6 million year on year

• Market Capitalization: $89.11 billion

Company Overview

Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world’s largest online marketplace for lodging, primarily homestays.

Online Travel

Because of the enormous number of flights, hotels, and accommodations available, travel is a natural fit for marketplaces that aggregate suppliers, simplifying the shopping process for consumers. Online travel platforms today make up over 50% of the industry’s bookings, a percentage that has been rising for 20 years, and will likely continue in the years ahead.

Sales Growth

A company’s long-term performance can indicate its business quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last three years, Airbnb grew its sales at an exceptional 26.8% compounded annual growth rate. This is a great starting point for our analysis because it shows Airbnb’s offerings resonate with customers.

This quarter, Airbnb grew its revenue by 9.9% year on year, and its $3.73 billion of revenue was in line with Wall Street’s estimates. Management is currently guiding for a 8% year-on-year increase next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 9.9% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and shows the market believes its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.