Airbnb outlines Q4 revenue target of $2.66B–$2.72B as AI integration and hotel expansion accelerate

Earnings Call Insights: Airbnb (ABNB) Q3 2025

MANAGEMENT VIEW

* Brian Chesky, Co-Founder, CEO, Head of Community & Chairman of the Board, stated that "Airbnb had another strong quarter. Revenue increased 10% year-over-year, landing at the high end of our guidance. Adjusted EBITDA was over $2 billion, and this is our highest in any quarter ever." He highlighted that gross booking value grew 14% year-over-year, and nights and seats booked rose by 9%, both exceeding expectations and driven by U.S. market strength and ADR.
* Chesky described four key growth levers: improving Airbnb’s service, global expansion, expanding offerings (notably services and experiences), and integrating AI throughout the app. "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."
* The company is piloting a new hotels business in L.A., New York City, and Madrid, with direct partnerships with boutique and independent hotels and new features tailored to hotel stays.
* Chesky emphasized the extensive integration of AI across the app, stating, "We now have more than a dozen AI work streams underway... focused on really creating a more personal experience for guests and hosts and making it easier to discover what we offer."
* Ellie Mertz, Chief Financial Officer, said, "Gross booking value grew 14% year-over-year to $22.9 billion, driven by strong growth in both bookings and price. Nights and seats booked increased 9% year-over-year, representing a 2-point sequential acceleration from Q2, primarily due to the strength in the U.S."
* Mertz also reported, "Revenue for the quarter was $4.1 billion, up 10% year-over-year. In terms of profitability, we generated $2.1 billion of adjusted EBITDA, representing a 50% EBITDA margin. And finally, net income was $1.4 billion, while EPS was $2.21, growing 4% year-over-year."

OUTLOOK

* Mertz stated, "In Q4, we expect to generate revenue of $2.66 billion to $2.72 billion, representing year-over-year growth of 7% to 10%." She added, "We expect our GMV to grow low double digits year-over-year, benefiting from a small -- or excuse me, from a modest increase in ADR due to price appreciation and FX as well as continued growth in nights and seats booked."
* The company anticipates full year adjusted EBITDA margin of approximately 35%, up from the previously shared 34.5% floor.
* Longer lead time bookings and the continued roll-out of Reserve now Pay Later are expected to support momentum into Q4.

FINANCIAL RESULTS

* Airbnb reported $4.1 billion in Q3 revenue and $2.1 billion in adjusted EBITDA with a 50% margin. Net income was $1.4 billion, and EPS reached $2.21, increasing 4% year-over-year.
* Gross booking value was $22.9 billion. Nights and seats booked saw a 9% increase year-over-year, a 2-point acceleration from Q2.
* Q3 free cash flow was $1.3 billion, with $4.5 billion generated over the past 12 months, representing a 38% free cash flow margin.
* The company repurchased $857 million of common stock in Q3 and has over $6.6 billion remaining on its repurchase authorization.
* Mertz noted a one-time $213 million valuation allowance related to the One Big Beautiful Bill Act, but expects a lower effective tax rate beginning in 2026.

Q&A

* Richard Clarke, Sanford C. Bernstein: Asked about the impact of Reserve now Pay Later. Mertz responded that 70% of eligible U.S. guests use it and, "the net impact of the product is a lift to the net bookings."
* Eric Sheridan, Goldman Sachs: Inquired about international expansion. Mertz explained each market requires a different timeline, citing Brazil as a leading example and noting, "we've been able to achieve not only significant market share in that market, but we continue to see incremental meaningful market share gains every year."
* Justin Post, BofA Securities: Asked about events and experiences. Chesky indicated half of experience bookers did not have an Airbnb stay, and 10% were new to Airbnb. He stated, "it's going to take 3 to 5 years...for service experiences to become a material part of our business."
* Jed Kelly, Oppenheimer: Asked about the hotel strategy. Chesky said, "hotels will be a huge supplement for our supply, especially in supply-constrained markets."
* Lloyd Walmsley, Mizuho: Queried about long-term hotel ambitions. Chesky stated, "I imagine Airbnb in the future is going to be the best one-stop shop for travel."

SENTIMENT ANALYSIS

* Analysts adopted a probing but constructive tone, seeking clarity on new product impacts, international expansion, and the pace of new business scaling. There was particular interest in the measurable effects of Reserve now Pay Later, experiences, and the hotel pilot.
* Management maintained a confident and optimistic stance throughout both prepared remarks and Q&A, emphasizing product innovation, disciplined investment, and strong growth levers. Chesky’s statements on AI and product development were assertive and ambitious, while Mertz provided clarity on financial guidance and margins.
* Compared to the previous quarter, management appeared more confident in international growth and product expansion, while analysts’ tone remained consistent, with recurring focus on execution and market opportunities.

QUARTER-OVER-QUARTER COMPARISON

* Revenue grew from $3.1 billion in Q2 to $4.1 billion in Q3, while adjusted EBITDA increased from $1 billion to $2.1 billion. EPS rose from $1.03 to $2.21.
* Nights and seats booked accelerated from 7% year-over-year in Q2 to 9% in Q3.
* Guidance for Q4 2025 revenue is $2.66 billion to $2.72 billion, compared to Q3 guidance of $4.02 billion to $4.1 billion given in Q2.
* Management increased its full year adjusted EBITDA margin expectation to approximately 35% from the earlier floor of 34.5%.
* Strategic focus expanded from improving the core and launching services/experiences to piloting hotels and deepening AI integration.

RISKS AND CONCERNS

* Mertz highlighted that Q4 year-over-year comps will be more difficult, potentially moderating growth rates despite underlying momentum.
* There is ongoing investment in new business lines such as hotels and experiences, with management indicating that meaningful revenue from these is still several years away.
* The CFO noted a one-time $213 million valuation allowance related to new tax legislation.
* Management acknowledged that increased cancellations are associated with Reserve now Pay Later, but considers the net effect positive for bookings.

FINAL TAKEAWAY

Airbnb’s leadership underscored robust Q3 performance, driven by U.S. market strength, successful product innovation, and strategic expansion into hotels and AI-driven personalization. Management expects continued growth in Q4, supported by expanded payment offerings and global market momentum, while reiterating disciplined capital returns and a focus on maintaining strong margins as the company invests in new business verticals.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/abnb/earnings/transcripts]

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