ABNB 3Q25 Business Update
New AI Chatbot Risk as Growth Reaccelerates
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3Q25 Update.
Airbnb reported 3Q25 results and the stock was down -2% the next day, however it is now flat since reporting. Shares are -6% YTD and -12% since IPOing at the end of 2020.
Revenues grew +10% y/y, which marked a deceleration from last quarter. However, GBV continued reaccelerated in 3Q to +14% y/y, driven by growth in both nights booked and average daily rates. Adjusting for FX, GBV was +12% y/y, which is a 300bps improvement from last quarter. While revenue growth lagged GBV, it is important to note that GBV tends to be a leading indicator as revenue is recognized after the trip is commenced, whereas the bookings are recognized when a stay is booked.
Brian Chesky noted on the call that they are focused on 4 key areas: 1) making the service better, 2) bringing Airbnb to more parts of the world, 3) expanding the Airbnb offering, and 4) integrating AI across Airbnb.
Nights Booked also accelerated, rising +9% y/y, up 200bps sequentially. On the call, they noted that the acceleration was largely due to strength in the U.S. Notably, the new pricing feature of Reserve Now Pay Later (more on this later) helped drive booking growth in the U.S. for 3Q. To put that in perspective, peers Expedia and Booking Holdings also saw nights booked grow in 3Q. Expedia saw a +11% y/y, while Booking saw a +8% y/y respectively.
EBIT margins fell slightly to 39.7%, a 120bps decrease y/y, driven by an increase in G&A and a slight increase in R&D.
LTM free cash flow grew to $2.3bn, which they have continued to deploy into stock buybacks. In 3Q alone they repurchased $857mn shares. Since they introduced their share repurchase plan, they have bought back ~8% of shares outstanding. They still have $6.6bn remaining in their latest share buyback program.
Business Commentary.
Airbnb’s “Expansion Markets” continue to grow at double the rate of their core markets, a trend that has now continued for 7 consecutive quarters. Overall, nights booked remained steady in 3Q. Breaking it down by geography, LATAM grew in the low-20s, driven by Brazil which grew nights booked by over 20% and first-time bookers in Brazil by +17% y/y. Their recently launched interest-free installment payment plan option in Brazil saw usage more than double in the period, which helped drive bookings in 3Q.
In Asia Pacific, they saw mid-teens growth in nights booked. Japan growing strong for them as nights booked for domestic travel increased +27% y/y, marking the third consecutive quarter of acceleration. In addition, they noted that they are seeing progress in first-time bookers in Japan and India. Japan saw first-time bookers grow +20% y/y, a 5 point increase from last quarter, and India saw +50% y/y in first-time bookers. EMEA grew mid-single digits with a tougher comp due to the Paris Summer Olympics.
Lastly, North America grew mid-single digits, representing a sequential acceleration. The growth acceleration in North America was due to strong domestic travel, which was helped by their new payment offering of Reserve Now Pay Later. This allows the traveler to book a stay without being charged for it immediately. While this does increase cancellations a bit, Airbnb notes that it is net additive with more total completed bookings as it reduces friction for the initial booking because guests feel lower commitment.
Despite, launching this feature in the middle of the quarter, they are already seeing an impact on booking growth. They mentioned that they saw meaningful acceleration from 2Q to 3Q in nights booked in the U.S. because of this pricing offering. CFO Ellie Mertz on the call, stated that roughly 70% of the guests utilized the feature when offered.
Seeing North America reaccelerate was a positive as it has been a struggle for them in recent quarters. In our last update, we mentioned that there were three main levers in which Airbnb could reaccelerate growth 1) improving affordability via total price transparency and pricing tools, 2) expanding payment options to attract a wider demographic, and 3) targeting underpenetrated segments such as the U.S. Hispanic population and Heartland states. This quarter’s results suggest early progress on the first two, with affordability and payment flexibility driving higher bookings.
Another key development was Airbnb’s...
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