SAN FRANCISCO – Airbnb announced robust second-quarter earnings and revenue that surpassed Wall Street expectations, fueled by strong travel demand and a record-breaking profit. However, the company’s stock fell in after-hours trading as investors reacted to plans for increased spending that will impact future profit margins.
The vacation rental giant reported a profit of $642 million, or $1.03 per share, for the quarter ending June 30. This marks a significant increase from the $555 million, or 86 cents per share, posted in the same period a year earlier and comfortably beat analysts’ forecasts of 94 cents per share.
Revenue climbed 13% to $3.1 billion, also exceeding FactSet analyst predictions of $3.03 billion. The company attributed the strong sales to a growth in nights stayed, a slight increase in average daily rates, and favorable timing of the Easter holiday. Gross bookings reached $23.5 billion, well ahead of the $22.67 billion that Wall Street had anticipated, signaling that consumer appetite for travel remains high despite economic uncertainty.
Despite the positive results, Airbnb shares fell 6.5% to $121.95 in after-hours trading. The drop was largely a response to the company’s forward-looking guidance. Airbnb projects that its adjusted profit margins will be lower in the third and fourth quarters compared to the previous year. This is primarily due to strategic investments in new growth areas.
Chief Financial Officer Ellie Mertz confirmed that Airbnb plans to spend approximately $200 million on its “Experiences and Services” businesses, which include classes and tours for travelers. Mertz cautioned that the company does not expect these segments to generate meaningful revenue in the near term.
“We are acting with urgency and focus to drive growth of our core business and to scale services and experiences,” Mertz told analysts, framing the spending as a key part of the company’s long-term strategy.
Looking ahead to the third quarter, Airbnb projects revenue to be between $4.02 billion and $4.10 billion, aligning with analyst estimates of $4.05 billion. The company noted that demand in North America improved each month during the second quarter, largely driven by domestic travel, a trend it finds encouraging for the current quarter.
