Airbnb (ABNB, Financial) reported first-quarter 2025 results that slightly surpassed expectations for both EPS and revenue. The company saw a 7.9% increase in Nights and Experiences Booked, reaching 143.1 million. Strong demand in Asia Pacific and Latin America, along with a 17% rise in mobile app bookings, contributed to these positive results. However, Airbnb's Q2 revenue guidance of $2.99-$3.05 billion aligns with analysts' estimates, and the company warned of potential flat-to-down growth in Nights and Experiences Booked, a notable decline from Q1. Executives attributed this cautious outlook to shorter booking lead times and broader economic uncertainties.

This conservative guidance, along with weakening U.S. demand due to trade-driven consumer caution, is affecting the stock's performance today.

• Gross Booking Value (GBV) grew by 7% to $24.5 billion, driven by strong nights booked growth and a slight 1% increase in Average Daily Rate (ADR) to $158, supported by price appreciation and enhanced guest experiences.
• Adjusted EBITDA rose to $417 million, exceeding expectations, fueled by revenue growth, disciplined cost management, and a favorable shift in marketing spend to Q2.
• For the rest of FY25, Airbnb's growth strategy focuses on expanding its core business and introducing new offerings, with significant investments in underpenetrated overseas markets such as Asia Pacific and the Middle East. Nights Booked growth in these regions outpaced growth in core markets like the U.S., UK, France, Canada, and Australia by over twofold.
• The company is upgrading its technology stack with over 535 platform enhancements over the past year and plans to relaunch its Experiences business in 2025 to capture premium, event-driven demand. Last summer's Paris Olympics, for instance, led to a fivefold increase in bookings. However, these initiatives will incur costs.
• With over $250 million allocated for investments in 2025, Airbnb's margins may face pressure. The company maintains its adjusted EBITDA margin expectation of at least 34.5% for FY25, a 150-basis-point year-over-year decline. However, if travel demand weakens, the adjusted EBITDA margin could drop below this threshold. Further softening in the U.S. market could lead to lower ADR and reduced booking volumes, exacerbating margin compression.

While Airbnb's Q1 performance was strong, driven by growth in Nights and Experiences Booked and effective cost management, it was tempered by U.S. demand softness and currency headwinds. The cautious Q2 guidance, along with substantial investments in overseas expansion and technology, may impact short-term profitability. Nonetheless, these investments are expected to support Airbnb's long-term growth prospects.