The world seems to be undergoing a major structural shift in the way we live and work! The newfound flexibility trend will only accelerate fostering a major change in travel and flexible working trends. We take a look at the Airbnb Q3 2021 Earnings Report!
Airbnb Q3 2021 Earnings Report – Headline Results
The Airbnb Q3 2021 earnings report could not have been easier to read with the following key headline results:
- Gross Booking Value (GBV) up 48% Y/Y to $11.9billion
- Q3 Revenue up 67% YoY to $2.2billion this was also up 36% on Q3 2019
- Net Income up 280% YoY to $834million
- Adjusted EBITDA of $1.1 billion which is up 120% Year over Year.
The group mentioned that in the quarter that adjusted EBITDA was a record result mainly driven by their highest ever revenue result for the quarter.
An interesting takeaway from the earnings call was that the company mentioned that people are not just using Airbnb’s for travel. People are not looking at and “living” in Airbnb’s around the world. The group reported that Longer-Term stays > 28 days or more remained their fastest-growing category by trip length.
The groups marketing spend remains low due to the fact that many people directly open the Airbnb App or website. This seems to signal strong levels of brand loyalty and consumers are aware of the value that ABNB offers.
In our opinion, this shows that confidence is returning to the travel sector and more and more people are looking to travel once again. We anticipate a travel explosion over the medium term as people will tend to utilise the additional savings they were able to accrue during the pandemic.
ABNB Q3 2021 Earnings Financials
The group reported $2.2billion in revenue for the quarter, this means that the company is likely on track for a record year. It is readily observed just how strongly the group is recovering from the COVID pandemic.
The group also reported record free cash flows of over $1.6billion. This seems to be significantly accelerating since 2019 (excl. COVID). For a company generating revenues of $2.2billion, this equates to over a 70% conversion from revenue to free cash flow.
ABNB Q3 2021 Earnings - Stock Price
Prophet Invest first started its position in AirBNB after identifying a strong re-opening thematic and severely undervalued appreciation from other investors in regards to the disruptive business model.
Prophet entered the stock at an average price of $143 per share. The stock is up around 24% over the past year to trade at a stock price of $178.45 and a market capitalisation of $112.5billion.
ABNB Stock has a 52-week range of $121.5 - $219.45. We expect with the record results this quarter the price may continue to march towards the higher end of this due to the companies strong ABNB Q3 2021 Earnings
ABNB Q3 2021 Earnings - Prophets Take
Whilst the company appears overvalued compared to traditional peers in the marketplace we believe the group will continue to add hosts and customers into the platform and there is still significant room for the top line to expand here. This is a disruptive business model which has regained significant traction at a much faster rate than other travel companies in the post lockdown world.
In the Should I Buy Airbnb Stock article, we outlined a number of significant metrics that we would monitor the stock for. There are outlined below
- Increasing EPS and improving sales - Acheived
- Increased booking through the platfrom - Acheived
- Reducing current debt load to lower the debt to equity ratio
- Re-opening of the world to pre-pandemic levels - In Progress, The group mention that the pace of the urban recovery from COVID will continue. ABNB also mentioned that due to the structural change in WFH and flexible working, this may actually increase ABNB stays.
- Confidence returning in the travel space - As Above
- Decreasing sales and marketing and product development expenses as a percentage of the groups revenue - Acheived, the group mentioned that marketing spend will likely reduce back to 2018 levels as key data gathered during the marketing spending reduction highlighted that many customers directly head straight to AirBNB website or app without any form of click form advertising.
Prophet will continue to add ABNB stock to the portfolio. The ABNB Q3 2021 earnings report has verified our original investment thesis and we will continue to monitor any future results against the above KPI's.