Airbnb’s upcoming Q3 earnings report tomorrow will provide investors with direct insight into how the global travel industry is recovering
Airbnb was certainly one of the hottest names to go public back in 2020, yet the share price still hasn’t quite hit the heights that many early investors were hoping for.
The company, which operates an online marketplace for vacation rentals in locations worldwide, upended the travel industry and is one of the more intriguing stories in the growth space at this time.
However, the global pandemic has been a major drag on the entire travel industry and impacted sentiment surrounding travel stocks in a negative way.
As consumers practiced social distancing and protected their health by staying home, companies like Airbnb saw their bookings plummet.
But Airbnb did see a mid-pandemic boost as vacationers decided to book lodgings closer to home or in areas where they could vacation but still work remotely.
The tide could be turning for travel stocks, as travel restrictions are reduced and widespread vaccination efforts are making people more comfortable with the idea of venturing out again.
There’s also the chance that pent-up travel demand will help these companies return to pre-pandemic volumes quickly, which could translate to strong year-over-year growth in the coming quarters.
Airbnb’s upcoming Q3 earnings report will provide investors with direct insight into how the global travel industry is recovering, and the company’s management clearly expects that many of the factors mentioned above will translate to strong financial results.
In Airbnb’s Q2 shareholder letter, the company’s management stated that “we expect Q3 2021 revenue to be our strongest quarterly revenue on record and to deliver the highest Adjusted EBITDA dollars and margin ever.”
The company will announce its Q3 2021 financial results after market close on Thursday, Nov. 4th, and here are a few things that investors should be looking out for:
Focus on Gross Bookings Value
The first number that investors should look at when Airbnb reports this quarter is the company’s Gross Bookings Value, which tells us the dollar value of booking on the Airbnb platform during a given period.
Airbnb generates revenue from service fees charged to both guests and hosts, which is part of what makes it such an attractive business.
Hosts want to supplement their income by renting out their apartments or homes on the platform, while guests are attracted to these types of accommodations as they offer an experience that hotels cannot.
The gross bookings value includes host earnings, service fees, cleaning fees and taxes; net of any cancellations that occurred over the quarter; and is one of the best ways to judge how the company performed over a quarter.
In Q2, Airbnb reported $13.4 billion Gross Booking Value, up 320% year-over-year and a strong indication that the pent-up demand thesis is a factor.
It’s worth noting that Q3 will include the months of July, August and September, which is one of the strongest periods of the year for travel.
All signs point towards another strong GBV figure this quarter, but keep in mind that analysts are likely expecting a big number given all of the potential tailwinds.
Net Loss or Profit?
As with many high-growth companies, Airbnb has yet to report consistent profitability.
That’s why it will be important for investors to note whether the company reports another net loss or if it can turn a profit in Q3.
Airbnb reported a net loss of $1.17 billion in Q1 and a net loss of $68 million in Q2, and any further reduction will likely be viewed as a big plus for the company.
A record revenue figure would certainly help the company take a step in the right direction.
Investors might also want to keep an eye on the sales and marketing expense for Q3, which was up 175% year-over-year last quarter to $315 million.
If Airbnb can report revenue that finishes above Q3 2019 levels, it would confirm tits business is back to pre-pandemic levels.
The consensus analyst estimate for Airbnb’s Q3 EPS is $0.72, which would represent 95.13% year-over-year growth and sets street expectations high.