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    ABNB
    Earnings call· Sep 2025(Q3 FY25)

    Airbnb, Inc. ABNB

    Nov 6, 2025 Source

    Executive summary

    Airbnb Q3 FY25 — Record Adjusted EBITDA and Strong Growth Across Key Metrics

    Airbnb delivered a robust Q3 FY25, driven by strong growth in GBV and nights booked, particularly in the U.S. The company achieved record adjusted EBITDA and is focused on strategic initiatives like global expansion, new offerings such as Hotels on Airbnb and Experiences, and extensive AI integration to enhance user experience and drive future growth. Management anticipates continued momentum into Q4, balancing investment in these growth areas with strong margin maintenance.

    Highlights

    5

    • Revenue increased 10% year-over-year, reaching $4.1 billion, landing at the high end of guidance.

    • Adjusted EBITDA was over $2 billion, marking the highest in any quarter ever, with a 50% margin.

    • Gross booking value (GBV) increased 14% year-over-year to $22.9 billion.

    • Nights and seats booked rose by 9% year-over-year, accelerating 2 points sequentially from Q2 and exceeding expectations.

    • First-time bookers were up over 20% in Japan and nearly 50% in India year-over-year.

    Concerns

    2

    • Net income was impacted by a one-time $213 million valuation allowance related to corporate alternative minimum tax credits.

    • Reserve now Pay Later offering, while driving bookings, resulted in increased cancellations, though the net impact remains positive.

    Guidance & targets

    6
    CategoryTargetConfidence
    Revenue
    $2.66 billion to $2.72 billion
    high materiality
    High
    Revenue Growth
    7% to 10% year-over-year
    high materiality
    High
    Gross Merchandise Value (GMV) Growth
    low double digits year-over-year
    medium materiality
    High
    Nights and Seats Booked Growth
    mid-single-digit range year-over-year
    medium materiality
    High
    Adjusted EBITDA Margin
    approximately 35%
    high materiality
    High
    Effective Tax Rate
    reduced
    medium materiality
    High

    Operational metrics

    30
    Revenue
    $4.1 billionup 10% year-over-year
    Q3 FY25

    Landed at the high end of guidance.

    Adjusted EBITDA
    $2.1 billion
    Q3 FY25

    Highest in any quarter ever.

    Net Income
    $1.4 billiongrowing 4% year-over-year
    Q3 FY25

    Impacted by a one-time $213 million valuation allowance.

    EPS
    $2.21growing 4% year-over-year
    Q3 FY25

    Impacted by a one-time $213 million valuation allowance.

    Cash and Investments Balance
    $11.7 billion
    End of Q3 FY25

    Corporate cash and investments.

    Funds Held on Behalf of Guests
    $7.2 billion
    End of Q3 FY25

    Balance of funds held on behalf of guests.

    Stock Repurchased
    $857 million
    Q3 FY25

    Repurchased common stock during the quarter.

    Stock Repurchased
    $3.5 billion
    Trailing 12 months

    Repurchased common stock, using approximately 3/4 of free cash flow.

    Share Repurchase Authorization Remaining
    $6.6 billion
    End of Q3 FY25

    Remaining on repurchase authorization.

    Fully Diluted Share Count Reduction
    8%
    Since 2022

    Reduced since the introduction of the share repurchase program.

    Net Income Valuation Allowance
    $213 million
    Q3 FY25

    One-time valuation allowance related to corporate alternative minimum tax credits.

    Product Improvements
    65
    Since May

    Major improvements made to the platform since May.

    Experiences Average Rating
    4.3 out of 5 stars
    Q3 FY25

    Average rating for Service experiences.

    Core Business Average Rating
    4.8 out of 5 stars
    Q3 FY25

    Average rating for the core business.

    Experience Host Applications
    110,000almost doubled last quarter
    Q3 FY25

    Applications from potential hosts for Service experiences.

    AI Customer Support Human Agent Contact Reduction
    15%
    Q3 FY25

    Reduced people's need to contact a human agent in the U.S. due to AI assistant.

    Nights and Seats Booked Growth
    low 20sYoY
    Q3 FY25

    Growth in nights booked across major regions.

    Nights and Seats Booked Growth
    mid-teensYoY
    Q3 FY25

    Growth in nights booked across major regions.

    Nights and Seats Booked Growth
    mid-single digitsYoY
    Q3 FY25

    Growth in nights booked across major regions, with meaningful acceleration in the U.S.

    Nights and Seats Booked Growth
    mid-single digitsYoY
    Q3 FY25

    Growth in nights booked across major regions.

    Reserve now Pay Later Adoption Rate
    70%
    Q3 FY25

    Percentage of eligible customers who take up the Reserve now Pay Later offering.

    Devices Accessing Airbnb
    1.6 billion
    Annually

    Number of devices accessing Airbnb each year.

    Payments Platform Transaction Volume
    1 in every $1,100-$1,200 spent
    Global

    Represents the proportion of global spending that goes through Airbnb's payments platform.

    Airbnb Originals Local Booking Rate
    70%
    Q3 FY25

    Percentage of Airbnb Originals booked by locals in Paris.

    Verified Identities
    200 million
    Q3 FY25

    Number of verified identities on the platform, exceeding U.S. passports in circulation.

    First-Time Bookers Growth
    over 20%YoY
    YoY

    Growth in first-time bookers in Japan.

    First-Time Bookers Growth
    nearly 50%YoY
    YoY

    Growth in first-time bookers in India.

    Expansion Markets Nights Booked Growth
    double the ratevs. core markets
    Past 12 months

    Average nights booked in expansion markets grew at double the rate of core markets.

    Hotel Price Appreciation
    fastervs. Airbnb
    Last 2 years

    Hotel prices have appreciated faster than Airbnb over the last two years.

    Traffic Source
    90%
    Q3 FY25

    Percentage of traffic that is direct or unpaid.

    Industry KPIs

    1
    MetricValueDetails
    Gross bookings value room nights$22.9 billionUSD

    Product announcements

    7
    ProductTypeDetails
    Reserve now Pay Laterlaunch
    Improved Mapsupdate
    Updated Cancellation Policyupdate
    Airbnb Services and Experienceslaunch
    Hotels on Airbnblaunch
    Smarter and Faster AI Customer Supportlaunch
    AI-Powered Searchroadmap

    Risks & headwinds

    5
    One-time valuation allowance impacting net incomeQ3 FY25

    $213 million

    Mitigation: Anticipated material reduction in effective tax rate starting 2026 due to the One Big Beautiful Bill Act.

    Increased cancellations from Reserve now Pay LaterQ3 FY25

    Increased cancellations

    Mitigation: Product was extensively tested to ensure the net impact of the offering is a lift to bookings, despite higher cancellations.

    Tougher year-over-year compsQ4 FY25

    Tougher comp

    Mitigation: Q4 guidance for nights and seats booked growth takes this into consideration, with anticipated sequential acceleration on a year-over-2-year basis.

    Policy constraints in certain marketsOngoing

    Constrained from a regulatory standpoint

    Mitigation: Supplementing supply with hotel partnerships in markets like New York City and Madrid where regulatory constraints limit home listings.

    Quality control and consistency of experience compared to hotelsOngoing

    9 people stay in a hotel for every 1 in Airbnb

    Mitigation: Investing heavily in quality improvements, pricing tools, and building a supply machine to recruit more homes and make them more competitive.

    What to watch in Q4 FY25

    5

    Reserve now Pay Later broader rollout

    Next year
    CurrentLaunched in US, 70% adoption by eligible customers
    TargetBroader rollout to more countries/regions

    Why it matters

    Successful expansion of this payment option could significantly boost bookings and user acquisition in new markets.

    So we introduced Reserve now Pay Later in the United States. And not unexpectedly, this helped drive licenses booked in Q3. So we're going to continue to roll it out more broadly next year.

    Q&A highlights

    6

    What percentage of U.S. acceleration came from Reserve now Pay Later? What are the cancellation rates like, and are there other payment tools planned?

    Reserve now Pay Later, launched in Q3 for U.S. domestic travel with flexible cancellation policies, is vastly popular, with 70% of eligible customers adopting it. While it leads to increased cancellations, the net impact is a positive lift to bookings. The company plans to continue offering more payment flexibility, citing success with installments in Brazil.

    “So about 70% of people that we offer Reserve Now, Pay later take us up on that offering. Now to your question of cancellations, we obviously tested this product pretty extensively before launching it in the U.S. to ensure that the benefit of the incremental lift in bookings from the payment offering was not more than offset by increased cancellations.”

    asked by Richard Clarke · answered by Ellie Mertz

    2 min read6 chapters

    Detailed Narrative

    01

    Product Innovation and User Experience

    Airbnb implemented 65 major improvements in Q3, focusing on enhancing the hosting and guest experience. Key updates include the introduction of 'Reserve now Pay Later' in the U.S., which boosted Q3 bookings, and significant enhancements to in-app maps with added context like landmarks and transit. The company also updated its cancellation policy to offer more flexibility for hosts and guests, aiming to reduce customer service cases and increase annualized bookings.

    02

    Global Expansion Strategy

    International expansion remains a multi-year strategic priority. Over the past 12 months, average nights booked in expansion markets grew at double the rate of core markets. Airbnb is attracting new users, with first-time bookers up over 20% in Japan and nearly 50% in India year-over-year, demonstrating successful localization efforts and consistent investment in these regions.

    03

    Expansion into Services, Experiences, and Hotels

    Airbnb is expanding its offerings beyond traditional stays. The relaunched Airbnb Services and Experiences are receiving high ratings (4.3/5 stars) and attracting new users, with almost half of experience bookers not having an associated Airbnb stay. The company also launched a hotel pilot in LA, NYC, and Madrid, partnering with boutique and independent hotels to fill supply gaps in urban markets, leveraging existing demand without significant incremental investment.

    04

    Extensive AI Integration

    Airbnb is integrating AI across its platform to create a more intelligent and personalized experience. In Q3, smarter AI customer support was rolled out in the U.S., reducing the need for human agents by 15%, with plans for expansion to over 50 languages next year. The company is also testing AI-powered conversational search, expected to roll out next year, aiming to make trip planning more intuitive and personalized.

    05

    Capital Allocation and Shareholder Returns

    Airbnb continues to generate significant free cash flow, with $1.3 billion in Q3 and $4.5 billion over the past 12 months, representing a 38% margin. The company repurchased $857 million of common stock in Q3 and over $3.5 billion in the trailing 12 months, utilizing approximately three-quarters of its free cash flow. A substantial $6.6 billion remains on the repurchase authorization, and the fully diluted share count has been reduced by 8% since 2022.

    06

    Long-Term Vision and Market Opportunity

    Management believes the core homes business is far from mature, citing that for every person staying in an Airbnb, nine stay in a hotel. They see significant opportunity to reaccelerate growth by addressing affordability, quality, and supply gaps, particularly in the top 300 markets. The company's AI strategy is unique, aiming to use AI to connect people to real-world experiences, leveraging its unique capabilities in travel specialization, design, verified identities, and payments.

    AI-generated summary of the company’s earnings call. Not investment advice.