ABNB - NASDAQ

Good afternoon, and thank you for joining Airbnb, Inc.'s earnings conference call for the fourth quarter of 2024. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb, Inc.'s website following this call. I will now hand the call over to Angela Yang, Director of Investor Relations. Please go ahead.

Good afternoon, and welcome to Airbnb, Inc.'s fourth quarter of 2024 earnings call. Thank you for joining us today. On the call today, we have Airbnb, Inc.'s co-founder and CEO, Brian Chesky, and our Chief Financial Officer, Ellie Mertz. Earlier today, we issued a shareholder letter with our financial results and commentary for our fourth quarter of 2024. These items were also posted on the Investor Relations section of Airbnb, Inc.'s website. During the call, we will make brief opening remarks and then spend the remainder of time on Q&A. Before I turn it over to Brian, I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our shareholder letter and in our most recent filings with the Securities and Exchange Commission. We urge you to consider these factors and remind you that we undertake no obligation to update information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of performance. Also during the call, we will discuss some non-GAAP financial measures. We provide a reconciliation to the most directly comparable GAAP financial measures in the shareholder letter posted to our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. With that, I'll pass the call to Brian.

Alright. Well, thank you very much. And hey, everyone. Thanks for joining me today. 2024 Airbnb, Inc. outpaced the travel industry's growth. We ended the year with Q4 revenue. Now before we get into the results, nights booked, and GBV all accelerating from Q3. I want to just quickly touch on some of the work that got us here. You know, over the past several years, we've been preparing for Airbnb, Inc.'s next chapter and we wanted to make sure that guests and hosts love our core service before we introduce something new. So we listened to their feedback and we rolled out more than 535 features and upgrades to improve the experience. These upgrades include major reliability efforts, like guest favorites. Guest favorites make it easier for guests to find the best listings in Airbnb, Inc. We've also made it easier to host by launching the Toast network. It's a really simple way to find the best local host to manage your Airbnb. Now in just four months, the cohost network has grown to almost 100,000 listings. At the same time, we've been driving growth in a number of product optimizations. We made it easier for guests to find the perfect stay with enhanced search functionality and better merchandising. And this includes things like suggested destinations, more detailed maps, and a new welcome guide for guests. We also introduced flexible payment options in local payment methods in nearly two dozen countries, making it easier for people around the world to use Airbnb, Inc. And we're in the process of rolling out a completely redesigned checkout experience that makes it even simpler to book at Airbnb, Inc. As a result, we've seen a higher conversion rate, and we expect these improvements to continue delivering growth in 2025. By optimizing key parts of our product, like search, merchandising, and payments, we're seeing strong near-term results, and we're building a foundation to support the introduction of new offerings. Finally, we've rebuilt our platform from the ground up with a new technology stack. This includes new listing management tools for hosts, and these tools make it easier for hosts to list and manage their homes while giving them the ability to eventually offer more services. We've also upgraded our messaging system into a single unified platform, making communication between guests and hosts smoother and more reliable. Now with this new tech platform, we are able to innovate faster and expand beyond short-term rentals into becoming an extensible platform with a range of new offerings, and 2025 marks the start of Airbnb, Inc.'s next chapter. No. Today, our service is better than ever, and our platform is ready for the support with next. In 2025, we will continue building on this momentum. We're executing on a multiyear growth strategy to perfect our core service, accelerate growth in global markets, and launch and scale new offerings. Now we've talked a lot on previous calls about how we're preparing to expand beyond our core business. In this year, you'll see the beginning of a new Airbnb, Inc. So now I'm gonna turn it over to Ellie to give you a financial update. Ellie?

Thank you, Brian, and good afternoon. I'll start with a review of our financial results and then provide our current outlook for Q1 2025. As Brian mentioned, we ended last year on a strong note. Nights and experiences booked accelerated in Q4 to 12%, making it the highest year-over-year growth quarter of 2024. Revenue also grew 12% year-over-year to $2.5 billion in Q4. Net income was $461 million and adjusted EBITDA was $765 million. For the full year, adjusted EBITDA totaled $4 billion, representing an adjusted EBITDA margin of 36%. Since 2020, we've delivered over 4,000 basis points of EBITDA margin expansion. Next, I'll turn to the balance sheet and cash flow. During Q4, we generated $458 million of free cash flow. And for the full year, we generated $4.5 billion, representing a free cash flow margin of 40%. At the end of the year, we had $10.6 billion of corporate cash and investments, as well as $5.9 billion of funds held on behalf of our guests. Our strong balance sheet allowed us to repurchase $838 million of our Class A common stock during Q4 and $3.4 billion for the full year. At the end of Q4, we had $3.3 billion remaining on our repurchase authorization. Now let's shift to our Q1 2025 outlook. After closing out 2024 with our highest quarter of nights and bookings growth, we're excited about the strong demand we continue to see early in 2025. For Q1, we expect to deliver revenue between $2.23 billion and $2.27 billion, representing 4% to 6% year-over-year growth, or 7% to 9% when excluding FX headwinds. As we mentioned last quarter, revenue in Q1 2024 benefited from both the timing of Easter and the extra day from leap year, creating a hard year-over-year comparison. Without these calendar impacts and FX headwinds, our revenue growth would be about 6 percentage points higher, or 10% to 12%, which is relatively stable compared to Q4. For nights and experiences booked, we expect year-over-year growth in Q1 2025 to be relatively in line with Q1 2024 once you exclude leap day, which contributed about one percentage point of growth last year. On profitability, we expect adjusted EBITDA and adjusted EBITDA margin to decline compared to Q1 2024, driven by the same factors impacting revenue. That said, if you exclude the calendar and FX headwinds, adjusted EBITDA margin in Q1 would remain relatively flat year-over-year. As we look ahead to 2025, we're focused on executing our multiyear growth strategy. Our strategy is designed to drive long-term growth and deliver market share gains through three levers: one, perfecting our core service; two, accelerating growth in global markets; and three, launching and scaling new offerings. We're focused on strengthening the economics of our core business and generating strong free cash flow while also investing in growth opportunities. This year, we plan to invest $200 million to $250 million towards launching and scaling new businesses, which we'll introduce in May. Even with these investments, we expect to maintain strong profitability, delivering a full-year adjusted EBITDA margin of at least 34.5%. Because these investments will roll out throughout the year, their impact on our quarterly adjusted EBITDA margin will be the most pronounced in the first nine months of 2025. As these new businesses scale over the coming years, we expect them to make a significant contribution to revenue growth. And so each year, we'll layer in new offerings where we see long-term revenue growth opportunities. And at the same time, we'll focus on delivering strong profitability and world-class free cash flow for our core business. And now with that, I'll open it up to Q&A.

We will now begin the question and answer session.

Thank you. So I think in the past, in terms of the global sort of localization effort, you've talked about Brazil and I think in the shareholder letter, you were showing your localization effort for Japan. So just wondering how long it typically takes for one of these efforts to localize in any given country you know, it takes to come together. If you have you guys have mentioned Argentina, Germany, South Korea, and other places. Ellie, I guess, the $200 to $250 million of investment that you're planning to incur I guess, in the, you know, the front half of this year for the most part. What is that primarily gonna be geared to? Is it gonna be marketing? Is gonna be engineering, staff up, or any color there would be helpful. Thank you.

Great. Thank you, Stephen. Let me start just giving a little bit of color in terms of our global market strategy. As backdrop in terms of context on this strategy, we've shared over the last year that Airbnb, Inc. is a very global brand. However, our business is concentrated in our top five core markets. So that's the US, UK, Canada, France, and Australia. Those five markets comprise about 70% of our gross booking value. And so as a growth lever that we've been investing in, we've been targeting markets outside of that top five. Where we think that there's a sizable opportunity for us to invest and both gain penetration in the markets and also provide a tailwind to our global growth rates. I think what you've seen over the last not just the Q4 results, but over 2024 as well is that those investments and that targeting of new geos has had a meaningful impact on our growth. In particular, what we shared in Q4 was that those markets that we've targeted are growing about double the rate of our core markets. And to your question in terms of, you know, how long does it take, I would say it depends on the specific market. I think Brazil is a huge success case, and that's a market that we've been focused on in particular with adding brand marketing over the last two years, and we've been able to materially increase the scale of our business in that country in particular. I think there's other markets that maybe the duration for building scale will take longer. A country that I would put in that category would be Japan, which is a market that we just commenced our brand marketing in Q4. And we're starting at a lower base of domestic awareness. So each of our targeted markets, you know, we have to factor in where the market is, the level of awareness and consideration we have among local travelers and the level of product optimizations we need to make to make sure that we are appropriately addressing the local audience. So your second question is around our investments in scaling launching and scaling the new businesses. As the letter details, we're planning to spend approximately $200 to $250 million this year. And you should see the bulk of that investment hit both our marketing line and our product development line items. Just to give a little bit more color here. In terms of marketing, we will obviously be spending to build out the teams to drive the supply operations around those new offerings. We will also be investing behind awareness of the new products and demand generation. And then on the product side, we will be slightly increasing our pace of count growth across our development organization. So that we can move more quickly across our road map and support these new businesses.

Our next question comes from the line of Richard Clarke with Bernstein. Please go ahead.

Hi. Thanks for taking my questions. I just want to ask about the launch we've seen of AI. I think Airbnb, Inc. avoided some of the volatility that some of your peers had. But are you leaning into those operators? Are you or are you confident you can kind of control the AI flow through the Airbnb, Inc. platform?

Hey, Richard. Yeah. Here's what I think about AI. I think it's still really early. It's probably similar to, like, the mid to late nineties for the Internet. So I think it's gonna have a profound impact on travel. But I don't think, you know, it's yet fundamentally changed for any of the large travel platforms. And so you know, we want to be the leading company for, you know, AI-enabled traveling and eventually living. I'll just talk about a little bit about how we're gonna do that. So most companies, what they're actually doing is they're doing integrations with these other platforms on trip planning. But the trip planning, it's still early. I don't think it's quite ready for prime time. We're actually choosing a totally different approach which is we're actually starting with customer service. So later this year, we're gonna be rolling out, as part of our summer release, AI-powered customer support. You know, as you imagine, we get millions of contacts every year, AI can do an incredible job of customer service. It's gonna speak every language 24/7. They can read a corpus of thousands of pages of documents. And so we're starting with customer support. Over the coming years, what we're gonna do is we're gonna take the AI-powered customer service agent and we're gonna bring it into essentially, Airbnb, Inc. search to eventually graduate to be a travel living concierge. I think it's a really exciting time in the space because you've seen, like, with Deepseek and more competition with models, these models are getting cheaper or nearly free. They're getting faster, and they're getting more intelligent. And for all of this, it's starting to get commoditized. What I think that means is a lot of value is gonna accrue to the platform. And, ultimately, I think the best platforms, the best applications are gonna be the ones that, like, most accrue the value from AI, and I think we're gonna be the one to do that with traveling and living.

Our next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question. Maybe just one quick follow-up, Brian, and then I could ask a follow-up. With respect to the AI, I appreciate your answer with respect to outward-looking and how it might change the landscape. Where do you think the potential is internally to apply AI for efficiencies inside the company and create an additional layer of potential margin efficiency and or free cash flow conversion in the years ahead? And then in terms of the way you guys framed the year with exiting it up higher margin trajectory post some of the investments you called out, will there be any change or thought about how your capital allocation process might evolve as you move through 2025? Thanks so much.

Alright. Hey, Eric. I'll answer the efficiency deal. I'll wait for the second part. So yeah. There's, like, a couple of efficiencies that you could imagine. Airbnb, Inc., one is obviously customer service. I think that's, like, one of the biggest ones. I've kinda already covered that, but I think that's, like, a massive change for Airbnb, Inc. Other I assume you refer to is essentially engineering productivity. We are seeing some productivity gains. I've talked to a lot of other tech CEOs who and here's what I've heard talking to other, like, tech CEOs. Most of them haven't seen a material, like, change in engineering productivity. Most of the engineers are using AI tools. They're seeing some productivity, I don't think it's flowing to, like, a fundamental step change in productivity yet. I think a lot of us believe in some kind of medium term of a few years, you could easily see, like, a 30% increase in technology and engineering productivity. And then, of course, you know, beyond that, I mean, I think it could be, like, an order of magnitude more productivity because it but but that's that's gonna be, like, down the road. And I think that's gonna be something that almost all companies benefit from. I think the kinda younger, more innovative startup-like companies might benefit a little bit more because they'll have engineers who are more likely to adopt the tool. That's probably pretty important. But I think I think this is what I'm hearing from other people and we're pretty much having the same experience.

Eric, to answer your question with regards to the capital allocation strategy, I would say, no, no meaningful change in terms of strategy. What we've stated consistently over the last two years is that our capital allocation strategy includes, one, obviously, investing in our core operation, valuing M&A where there's relevant opportunities, and three, returning capital to shareholders. Obviously, given the strength of our balance sheet as well as our world-class free cash flow margins, we have the capital to do all three. You can see from our 2025 guidance that we are leaning in through the P&L in terms of investing slightly more in terms of the core operations and in particular new businesses. And then from a returning capital to shareholders, you know, you should look at the volume of repurchase activity in 2024 as a guide with regard to the magnitude in 2025. I would expect us to, you know, be slightly price sensitive and to dial up the quarterly repurchasing based on the underlying stock price.

Our next question comes from the line of Justin Patterson at KeyBanc. Please go ahead.

Great. Thank you very much. Brian, could you see how how you're thinking about the pace of product innovation versus the past? It sounds like this new tech stack should be beneficial to product velocity. So I'm curious where you saw friction points on the prior tech stack and how you think this new new tech stack really positions you to to execute on those growth initiatives you outlined at at the start? Thank you.

Yeah. Hey, Justin. I mean, this tech stack probably like, this project probably started, frankly, six years ago, if I'm not mistaken. So this has been a very, very long thing. We've been doing it for quite a long time. I think the big milestone is that, like, you know, most of the work is now complete. And you're gonna see this year, like, almost every part of the application is gonna be essentially rebuilt from the ground up. What you've seen is, like, we've done 535 upgrades. The vast majority of those upgrades have actually been in the last two years. So every year, we are increasing the throughput of features and upgrades. This summer release is gonna be significantly larger than past ones, and I expect the ones after that will be larger. So it's gonna just basically, what it's gonna lead to is the, fewer engineers being able to basically, ship features faster. And so, you know, there's a pretty, pretty huge gain here. So I think I think what you should expect is this year, we're gonna launch significantly more upgrades than last year, and every year, it should increase.

Next question comes from the line of Brian Nowak with Morgan Stanley. Go ahead.

Great. Thanks for taking my questions. Good good guide, guys. Just two questions. One, so, Brian, as you're as you're thinking about sort of the the new products and new use cases to come from the some of the growth opportunities, launching in May. Can you just talk us through some of the the larger points of friction or opportunities high level that you see from a a guest and a host perspective you're looking to address with some of these products? And then the second one, Ellie, on the on the full year margin guide, the at least 34%, can you just sort of walk us through how you're thinking thinking about the the contribution from the invest sort of growth throughout the throughout the year and as you kind of tumble through the comps for the margin guide?

Yeah. Hey, Brian. I will and are you asking just to clarify the first this is specifically, friction point for new products and services, not product optimizations. Correct? That's right. Yeah. So the, you know, the $200 to $250 million. Yeah. The new new business is running. Yep. Yep. So let me just kinda back up and just give you a little bit of our philosophy. So you know, we spent the last, like, four to you know, four or five years really trying to get to this moment where we could prepare for the next chapter of Airbnb, Inc. What we did, as I said, is we built a tech stack from the ground up. We listened to guest and host feedback made over 500 upgrades, we built this new business organization that Dave is now leading. Become obviously, went from breakeven to quite profitable. So I think we're now ready for this next platform, next next chapter expand beyond our core where Airbnb, Inc. is you know, just a place to stay. And to do that, here's a couple of philosophies a couple principles we have in our philosophy I'll share and I'll just tell you a little bit about the friction. Number one, I think we can do this quite efficiently because we are not gonna launch separate apps or separate brands. We're gonna have one app, one brand, the Airbnb, Inc. app. We want the Airbnb, Inc. app kinda similar to Amazon to be one place to go for all of your traveling and living needs. A place to stay is just really, frankly, a very small part of the overall equation. Every new business we launch, we'd like to be strong enough. It could stand alone, but it makes the core business stronger. You know, I think that each business could take three to five years to to scale. A great business could get to a billion dollars of revenue. It doesn't mean all of them will. And you should be able to expect, like, you know, one or a couple businesses to launch every single year for the next five years. We're gonna start initially with things very closely adjacent to travel. So, you know, when people book an Airbnb, Inc., there's a lot of, like, you know, experiences and services and other things that would make their stay more special. And it would even include things they wouldn't think to search for. And from there, we're just gonna keep expanding, and we're gonna expand out to more host services to enable them to become better hosts. And then eventually, we'll move it, you know, further and further away from our core. I think, like, maybe the analogy of Amazon is a really good one, which is to say, they started with books, the nearest adjacency to books was DVDs and CDs back when people bought physical media, and then they went to, like, I don't know, maybe toys and other things. And eventually, they ended up with fashion, and pretty soon, they were doing things pretty far adjacent from, you know, media and books. So we're gonna probably follow that path. So we're gonna really, really start adjacent to travel, and part of the reason why is a traveler booking a home, what else would they wanna book? And the other great thing is like, we offer these other experiences and services that could potentially bring a new guest that then book more homes in Airbnb, Inc. And I think one of the ultimate goals is you know, Airbnb, Inc. is used by, like, I think, 1.6 billion devices a year. So it's got a pretty big volume of users. But we're not very we're not a very frequently used app. People typically use us once it's right a year. And I would love for it to be one day for people to use this once or twice a week. And so that's kind of one of the goals over the long term.

Great, Brian. Let me talk a little bit about margins over the course of the year. So to restate, or just reiterate the guidance that we provide for the full year, we're going to invest $200 and $250 million in terms of launching and scaling the new businesses. We anticipate that the negative impact to margin from those investments will be heavily weighted in Q1 through Q3. Whereas the revenue obviously won't pick up until we've launched those new products. At the end of Q2. And so we would assume that the benefit from that lift would really be concentrated in terms of our x rate of Q4. But more broadly, I think the, you know, the takeaway from our guide is that even with that investment level, we're obviously maintaining extremely strong healthy margins for our core business. And obviously, the global floor on EBITDA gets you to that number. I think in terms of the general question of comps, I think the most notable comp, I would say, noise is what we described in the letter with regard to Q1. It's obviously in the letter, but just to restate it here. Q1 revenue will be heavily impacted by both the FX headwinds as well as the calendar changes vis a vis or relative to 2024. That will impact not just revenue, but also Q1 EBITDA. We've called that out in the letter just to highlight that. Absent those pieces, the Q1 EBITDA margins would actually be relatively flat.

Our next question will come from the line of Ron Josie at Citi.

Thanks for taking the question. Brian, I wanted to ask a little bit more on the here now. You in the letter, you talked about recent product enhancements around search and better merchandising. Love to hear your thoughts on what what you're finding, what you're seeing with search and merchandising and learnings there to help inform these newer experiences and products that are come down the pike. And then next question is just on nights and experiences both to the acceleration this quarter. Talk to us about the contribution between just the broader travel market being relatively healthy and and these newer products that are launching, the ex like, co-hosting or experiences or the next nine. Thank you.

Yeah. Hey, Ron. I'll take the first. Yeah, when you think about the here and now, you know, when we call this out in our letter really around product optimizations. And, Ron, I'll kinda just let's just start, like, three parts. Step one, people come to Airbnb, Inc. It's really we have a huge amount of traffic. We have nearly 5 billion visitor unique 5 billion visitors a year. It's really important that, like, when people come to Airbnb, Inc., they are able to find the right Airbnb, Inc. for them. We've done a lot around, you know, like, we've introduced a personalized welcome tour. Again, people use Airbnb, Inc. only a couple times a year, so it's really important to orient them. So we've got this welcome tour that's personalized to every person. Based on your past searches, we suggest destinations that you we think you're gonna be interested in. Based on past filters, we offer up those filters as essentially, like, quick filters to apply. We've also found that, you know, this is probably obvious, but, our mobile app converts significantly higher than our mobile website. So we've been pushing to get more people to download our mobile app, and now in Q4, mobile bookings represented 60% of our overall bookings up from, I think, 55% the year before. You know, our checkout page, it this sounds like a simple thing, but the checkout page like, the page to to pay, not the checkout Airbnb, Inc., the page to pay, was really, really long, and we found that if you make it shorter, simpler, that leads to a massive increase in conversion. I'm just giving you a couple examples. There's really a long list of dozens and dozens of things again, you know, a hundred basis point increase on a GBV of $80 billion, you know, you're gonna be soon approaching like, $100 million optimizations just one at a time for some of these really, really big efforts. So once you find an Airbnb, Inc., it's important that that Airbnb, Inc. is affordable. And affordability is in our DNA. So we've made a lot of improvements around affordability that have also increased optimization. Like showing the total price display. When guests toggle on total price display, that includes all fees including cleaning fees, we see that people are booking higher value Airbnb, Inc.s. We've also created a lot of tools for hosts. Whether it's monthly and weekly monthly discounts, price tips, search tips, all these things are essentially efforts to make everything more affordable, and it's working. Because during 2024, hotel prices were up year to year while comparable Airbnb, Inc. listings were down year over year in price. So we're making progress. And the last thing is if you find the Airbnb, Inc. is a good price, it's still really important that it's of high quality. For every person who books in Airbnb, Inc., about 90 people book a hotel. And so if we do, you know, around a 500 million IT year and we got the extra hotel grass to use Airbnb, Inc., go from 500 million nights to a billion room nights. So that's a really, really big opportunity. And we think the number one way to do that is to improve the reliability and quality of our service especially your host. So the way to do that is elevate the best and cut the bottom. We introduced guest favorites in October 2023, it's now gotten 250 million nights booked. If you book a guest favorite, customer service rates are down. Trip issues are down, guest net promoter is up, cancellations are down, so it's really great. We also since April 2023, we introduced a new host quality system and removed 400,000 listings that don't meet our or don't meet our guest expectation. Ron, those are essentially the three levers. We have usability, making it easier for people to find the listing by increasing conversion. Affordability, getting prices to be better and more competitive, and then reliability and quality of the service. So again, we've made know, hundreds of updates over the past few years on these, but these are just a couple callouts.

And and Ron, to answer your question in terms of quantifying the Q4 demand. I would say, you know, obviously, we benefited from organic tailwinds across the industry. But in addition to that, all of the product optimizations that Brian shared from our testing of those improvements, we estimate the exit rate growth rate for our business was lifted by a couple hundred basis points due to those improvements. And we see it through improvements in our booking conversion.

Our next question will come from the line of James Lee at Mizuho. Please go ahead.

Great. Thanks for taking my questions. I'm sorry I joined the call a little bit late, so I apologize if my question has been repeated. Two questions here. One on experiences. Can you guys talk about maybe some of the friction you're able to resolve in the upcoming launch? Any indication that you can give us on the confidence of a successful launch this time? And secondly, I just want to double click on you know, Brian's commentary on Beyond the Core. Are you thinking about maybe some sort of concierge service, meaning, like grocery shopping, access to spa, to gym, maybe some kind of access to recreation. Is that what we should think about when we think about adjacency to travel? Thanks.

Yeah. I can I can handle this? Hey, James. So frictions do you wanna resolve with experiences? Let's ask, though, what were the were some of the challenges the first time around? Well, the first time around, I don't think we integrated the experiences really well. The products. If you go to airbnb.com or app right now, it's pretty hard to find them. The second thing is that when you find the experiences, I don't think they were merchandised as compellingly as they could. Third, there weren't really a lot of integrations with social media. I think social media is a great distribution. And fourth, I think we are completely rethinking the kind of supply we're gonna have. I think it's gonna be really, really compelling. And then fifth, we didn't really market it that much, and I think this we're gonna be a bit more aggressive in marketing then because we're really proud of the quality of product we have. Confidence of how successful the launch is gonna be. You know, I wanna be measured in my response because know, you know, this is a this is a second shot at it. I am extremely confident that this product can be incredibly, incredibly compelling, though. So I think if people give it a shot, I think they're gonna be really in love with the product because people really do actually like the current Airbnb, Inc. experiences, and I think this one's gonna be significantly better. I probably won't say much more, tune in in May, and we're gonna, like, you know, I'll walk you through the entire product and product launch. As far as adjacencies, yeah. I mean, there are you know, dozens and dozens I mean, if you got really granular, hundreds of opportunities. Endless. We could spend many, many years picking all the adjacencies to be able to travel somewhere and list somewhere. Number like, you know, 17, 18% of our nights booked are longer-term stays of more than 30 days. And that's gonna become an even greater share of our business. I think down the road, and so if you think about what all the service need to travel or live somewhere, there's a lot of opportunities. Now the key is not to do them obviously all at once, to be to prioritize, to pick the most differentiated services guests want the most that are, you know, the most compelling, opportunities from a business standpoint and just start from there. We're not we're not gonna go into too many more details, but stay tuned.

Our next question will come from the line of Jed Kelly at Oppenheimer. Please go ahead.

Hey. Great. Thanks for taking my questions. Just first, can you talk about as you kind of increase your reliability, where are where are you in potentially partnering with some you know, larger companies that might be able to provide these enhanced services. And then just just circling back to North America. I mean, how do you view that market opportunity? I know room nights accelerated mid-single digits, but I'm sure you want it to grow faster. So so just how should we view the North American market? Thank you.

Yeah. Why don't I start in with partners? I imagine eventual like, Airbnb, Inc., first of all, we haven't done a lot of partnership. We historically have not had a robust business development or partnerships function. So most of our platform, we feel as kind of a little bit more of a closed ecosystem. I imagine this next chapter of Airbnb, Inc. is much more of an open ecosystem. If you think about the really large tech platforms, they're kinda ecosystem ecosystems, essentially, and they're ecosystems that partner with other companies and developers to build on their platform. And Airbnb, Inc. is the kind of company where there are quite literally thousands of companies like cleaning companies, key exchange, like grocery companies, there's all sorts of companies built on top of Airbnb, Inc., especially local businesses. So I think that Airbnb, Inc., there is a play to the ecosystem where we could partner with local companies and global brands. So we are absolutely thinking about that. It's not the first thing we would do. We'd probably start with kinda first party before we go to third party, but third party integrations is incredibly compelling because why not, like, allow the world to build an Airbnb, Inc.? We don't need to build future by ourselves.

K. Just to talk a little bit about North America. So one to just call it the trends that we saw in the back half of the year. North America, like all other regions, accelerated from Q3 to Q4. What I would say about you know, the the state of play in North America is we believe we can grow faster than we are growing today. And and why is that? I would say one is that North America, despite the scale that we've been able to achieve in North America, is still a market dominated by hotels. Our business continues to be a a fraction of the overall lodging industry, and, you know, there's there's plenty of room to grow. Short-term rental in particular, our business relative to hotels as compared to what it looks like in other regions. I would say second, we've we've mentioned this in prior calls. We look across the states and identify that there's there's several demos that we we just frankly don't do as well as we do in other demos. The ones that we've called out in particular would be the Latino population, the kind of crossover heartland states outside of the coast, and those are areas that we continue to, you know, work to drive penetration and, increase consideration.

Our next question will come from the line of Doug Anmuth with JPMorgan. Please go ahead.

Thanks for taking the questions. Brian, can you just talk about in what markets or for what kind of listings you're seeing the cohost network work best and what's really driving them to earn twice as much as other listings. And then, Ellie, I'm just curious where you might be finding the most traction in managing the cost structure to make room for some of these new investments coming up. Thanks.

Yeah. Hey, Doug. Co Host Network, just to give people a little bit of background on the Co Host Network, you know, we did a bunch of surveys, and we talked to a lot of prospective hosts. And here's the status surprised us. More than 40% of people we surveyed say they would be interested in sharing their home on Airbnb, Inc., but the biggest obstacle to them doing that was that felt like it was a lot of work. We also noticed there were a lot of people that were hosting Airbnb, Inc. that would like to expand, but they don't have another home to put in Airbnb, Inc. And so we thought, what if we created a marketplace to match people with extra time with people to have home? And that is the Co Host network. The reason why the Co Host listings are so much productive they make about twice as much revenues listings matched by Co Host than other listings. It's because we only invited top hosts on Airbnb, Inc. to become a cohost. So the average rating for a host in Airbnb, Inc. is significantly higher. The majority of listings managed by Co Host, I believe, are guest 85% help manage a guest favorite, 75% of Co Hosts are actually Superhosts. We launched in ten countries with 10,000 cohosts. Those countries where I think it was Australia, Brazil, Canada, France, Germany, Italy, Mexico, Spain, UK, and US. So it was those ten countries, and that's it. You know? And since we've and the average cohost has an exceptional rating of 4.87. That's a really, really good rating. But I was, like, four months ago, five months ago. Today, went from 10,000 cohosts to 15,000 cohosts. We now have 100,000 listings under management. The next plan is to expand to Asia. So the two countries we're focused on are Japan and Korea. And, we'll give you updates as that progresses.

Great. And, Doug, to talk about margins in terms of where there's opportunity for incremental efficiencies? Just to restate our our margin guide every year, we will be looking to invest in new growth opportunities while also finding incremental efficiencies in our core business. In terms of 2025 and and the outlook there, I would say incremental opportunities across our variable costs. So areas like payment processing and customer service opportunities to just be frankly a little bit more efficient and to deliver some margin expansion there. Similarly, we continue to be extremely disciplined with our G&A expenses and headcount growth, allowing for some margin expansion there as well. And then on the marketing line item, in 2024, we did increase our overall marketing intensity over the course of the year because we saw opportunities to lean into. Our current plan for 2025 plans for a flat percent of revenue for the core business on marketing.

Our next question will come from the line of Lee Horowitz at Deutsche Bank. Please go ahead.

Great. Thanks for thanks for taking the question. Maybe just on some of the growth markets. You guys highlighted some really healthy growth rates in these expansion regions. And obviously put up nice numbers in the 4Q. But as we look after to the first quarter, nice growth is sort of reverting back to what you did for March of 2024. So can you maybe help us unpack why the success you are seeing in some of these regions is not necessarily pulling up the overall growth rate in the first quarter? And then maybe relatedly to the marketing comments, you just made in terms of it being sort of flat year on year. I guess, how how do we maybe, you know, put together the pieces of, you know, marketing intensity perhaps flat year on year, with a number of different growth regions still out there, that are are probably not quite as large as you want at this point. Like, do you no longer really have to invest in them, or have you reached investment sort of threshold on those? Are you gonna start to get leverage on the investments that you've made in those regions? How come they they don't necessarily need more marketing dollars to deleverage next year? Thanks so much.

Sure. Let me let me start with the latter question. So if you think about how we've been managing our overall marketing dollars, the majority of the spend is on brand marketing. And the way to think about brand marketing is that it is effectively a fixed amount of spend for each market in terms of the minimum amount that you need to spend for that market to be efficient. And so it is not necessarily a one for one, like, performance marketing in terms of how you need to scale it up. And so what we've done over the last couple of years is keep the the growth of spending against our core markets relatively modest while adding on these incremental new markets and the incremental brand marketing dollars that requires. And so as we look forward to 2025, the way that we're able to maintain strong growth in the core markets, but also incrementally invest in a higher level of marketing intensity for the expansion market is not to grow the core market marketing spend faster than revenue. And and that the the way we're able to do that is our lack of of strong reliance on performance marketing which would be entirely variable. Instead, in a market like the US, we have a base fixed amount that is dedicated to brand. On top of which we we surgically add performance marketing. And so the the broad takeaway should be that in particular, in our core markets because they are so heavily reliant on brand, we are not adding dollar for dollar as revenue increases, and therefore, the marketing budget's allowed to expand and be more heavily dedicated to expansion markets.

Our next question will come from the line of Justin Post at B of A. Please go ahead.

Great. Thanks. A couple questions. Looks like you know, we've already covered it. US accelerated. Looking back, what what might have pressured the the growth rates and and on a macro level? And do you see those those pressures changing this year? And then, maybe Ellie, you could talk a little about the take rates contemplated in your outlook. What are some of the the positives and and negatives for for take rates? Thank you.

Yeah. Certainly. So let's talk a little bit about North America in terms of what, you know, what 2024 looks like. You'll recall this past summer, North America in particular, we saw at the beginning of the summer peak that there was a pretty material contract in terms of lead times, which made bookings growth in Q3 relatively muted. I think the question at the time was, is this a signal of weakening demand or is this a signal of simply a little bit of a volatility in terms of consumer behavior? When people book their next trip. What we found at the end of Q3 and consistent with our Q3 results that that played through with Q4 is that that volatility and kind of usage bookings growth we saw over the summer was somewhat temporal. And those folks who were, you know, somewhat on the sidelines in terms of making their future bookings in the summer came back to us in the fall and did indeed make bookings. I think subsequent to that, we've certainly seen that past the initial uncertainty leading into the election. The consumer and in particular the North American consumer has been strong and in particular has been been strong in terms of of contemplating future travel. In terms of take rates, if we play back the if we play back last year, let's talk about the puts and takes for last year and how they impact the take rate for 2025. So as you'll recall, we introduced an FX service fee mid-2024. That service fee is approximately 100 basis points applied to 20% of our GBV. So on an annualized basis, you would assume that it would list the implied take rate by about 20 basis points. It did that. However, in Q3, we had some offsets and in Q4, we also had some offsets. So specifically, in Q3, we had elevated made goods, which come in as a contra revenue and offset the the lift we received from the FX service fees. And then fast forward to the last quarter, the offset was a hard comp from some benefits we got to revenue in Q4 of 2023. Associated with breakage of gift cards. So fast forward to 2025, we don't anticipate any of those similar one-offs that will offset the the benefit we get from the FX service fee. And so instead for full year 2025, you should assume that, the implied take rate gets the full benefit of 20 basis points increase on a year-over-year basis. As compared to 2024.

Our next question will come from the line of Ken Gawrelski with Wells Fargo. Please go ahead.

Thank you. Two, if I may. First, just on the expense side, maybe, Ellie, you talk a little bit going looking beyond 2025. How do you think about the fixed investments you've made to prepare for the product launches in 2025? How should we think about that fixed versus variable component in 2026 and beyond? And then and then second maybe for Brian, you you talked about how you there's still opportunity in North America and the the the bookings of alternative accommodations relative to hotels and still it's very heavily weighted to to hotels. Could you talk about some of the elements you think that that could change that kind of price to value equation for consumers, especially in maybe in urban markets. Where where alternative accommodations had tougher time gaining share versus vacation markets where where you picked up a ton of share? Thank you.

So let me, let me talk about the product investments. Brian has shared that in in the letter we shared that we've sent the the last couple of years effectively rebuilding the tech stack. And so I would say, you know, while that work is not fully complete, a lot of it is behind us. So think from investor standpoint, you should be excited that most of the hard work has been done in terms of rebuilding the tech stack and and frankly modernizing our app that sets us up well to now turn our product road map towards supporting these these new services as well as continuing to perfecting the the core service. So what that means from an expense perspective is that on the go forward, we can increasingly dedicate our product resources to those consumer-facing growth additive features that, you know, obviously, the the consumer benefits.

Hey, Ken. Just on your question, couple of things. So with regards let's focus on North American urban markets. That are very heavily dominated by hotels. The vast majority of people going to city in North America are staying in a hotel. Which is good for us and so far that there's so much room to grow. So what are the what are the what's the value equation? It's really four things. Why do people book hotels? Well, the first reason they book hotel is because it's pretty frictionless to book. Why we've been working on all those product optimizations, especially usability, to make it easier to book an Airbnb, Inc. The second is they know what they're gonna get. Whether hotels whether you like the hotel or not, you kinda know what to expect. And so that's why we've been focused a lot on reliability. We're gonna do a lot more on reliability and quality. And third, hotels offer a suite of services on premise. But we think there's obviously endless service that could be offered on Airbnb, Inc. And then finally, think affordability is a reason you'd book Airbnb, Inc. In fact, we have a we have a campaign we've been running. Some trips are better than Airbnb, Inc. And it's been incredibly successful. It highlights different between Airbnb, Inc. and hotels, and it basically says, we're not saying we're better in Airbnb, Inc. hotels for every trip. But if you're traveling with other people, it's almost always better and almost always significantly more affordable on Airbnb, Inc. So just tend to, like, back to zoom out. I believe I don't know when this will happen. But I do believe there's probably a tipping point where a whole bunch of guests that don't consider Airbnb, Inc. or use it only for maybe non-urban markets or for really large group family travel, but don't use it for business travel or urban markets. There's a tipping point where if we keep making the service more reliable, we add more service we make it more affordable, even more frictionless, eventually, there's a tipping point I think a lot of hotel travelers will come to Airbnb, Inc. Or use us for more of their share of wallet. So I think I can't possibly predict when this will happen, you know, but I what I can't predict is how much faster our service improve, and that's gonna happen over the coming years pretty quickly.

Our next question comes from the line of Kevin Kopelman with TD Cowen. Please go ahead.

Thanks. Could you give us an update on how you're thinking about advertising services in your priority list as you're rolling on new businesses? Thanks.

Hey, Kevin. I think it it's, like, almost every marketplace that's successful has done this. We've looked at this. We definitely think this is easily a billion-dollar revenue opportunity. It's not a matter of if, it's a matter of when. It's not the most perishable opportunity, so it's not something we'll be doing this year. It's definitely something, you know, on the horizon.

Our next question comes from the line of Naved Khan at B. Riley Securities. Please go ahead.

Okay. Thanks. Maybe just on the know, the urban demand, Brian, and you talked about how a lot of people just book hotel? Can you maybe touch on regulation and do you think do you see movement there in terms of how that might become more favorable, especially the other cities like New York might start to open up? Give us some thoughts there. And then if I have to think about regulation, maybe at a at a bigger scale, so I think Europe has been pretty pretty heavy on regulation. Especially on the on the larger platforms. Any anything in terms of either becoming a deemed gatekeeper or I'm not just any faster would be helpful. Thank you.

Yeah. Sure. I'll take the first part, and I'll let you know it take a second. You know, with regards to regulation, let's just let's just frame it. So our top 200 market take comprise the vast majority of revenue. 80% of those jurisdictions have regulations on the books for Airbnb, Inc., regulations as in they recognize us. And we've now collected and remitted around $13 billion in hotel occupancy tax, and we have a, you know, really a great history of partnering with cities. I think the trajectory for cities is increasingly, I think, they're go when we first started, cities didn't really know what to make of us. This is, like, ten, fifteen years ago. I think some people thought Airbnb, Inc. was a problem. And I think increasingly cities are thinking of us as partners, and they're thinking of us as a solution to their problems. Just give a couple examples. Last summer, you know, parents had a really big problem. I hope many like, millions of people were coming to Paris, and they didn't have hotels to put them in. So Airbnb, Inc., we went from 100,000 to about 150,000 homes. Partnering with the IOC loan debt committee and the city of Paris. The French government, we have great support. And we were able to house 700,000 guests. In Paris during the Olympics. Imagine that. That's, like, more than ten Olympic stadiums where the guests were staying in Airbnb, Inc. I think that Paris Olympics was so successful that the city of Milan and the city of LA now looking at how we can be a solution for their challenges with you know, compression nights during the Olympics. And I think cities all over the world are looking at Airbnb, Inc. as a solution to be able to accommodate guests for large events. Where the money goes into local communities, and it, like, you know, limits hotels' ability to essentially create surge pricing. Another solution we've been is during times of disaster. You know, there was a devastating LA fire that I'm sure you're all aware of, about a month ago. And, you know, a large number of people were displaced. Well, Airbnb, Inc. and working with Airbnb.org has housed more than 19,000 residents. Los Angeles that were displaced because of the fire. And so I think generally, the conclusion here is that I think we're developing some really great momentum. I think cities are seeing us as a partner. I think that New York City remains an outlier. They banned the majority of our business. One year later, sorry. One year know, as of, I think, like, last September, the last data I saw, rents, they they they basically banned Airbnb, Inc. with the idea that rents would go down. What we've seen is rents aren't down year over year. In fact, rents are up, I think, 3% year over year. There hasn't been meaningful supply housing stock going back in the market, and guess what happened to hotel prices? They're actually up 7% year over year. So I think New York's a cautionary tale, and I do not think cities are gonna follow it. I think they're gonna, like, see us much more as a solution to a problem.

And then just on your second question, related to DMA, no no real change here. From from last quarter. It it doesn't really apply to us.

Our next question comes from the line of Colin at Baird.

Thanks, and and good afternoon. I guess two quick ones for me. First off, I guess from a competitive standpoint, Brian and Ellie, the tone of the letter comes across, I think, is quite a bit stronger in terms of leading the industry. So I'm curious if that's more of the result of your performance to date or is that more about what's to come in in terms of putting more distance between Airbnb, Inc. and and competitors? And then secondly, on experience, I know we don't have the formal relaunch yet, although I enjoyed a nice food tour recently, purchased the platform. But just curious on the progress you're seeing in repopulating the marketplace or ingesting more and higher quality experiences before the relaunch. Thank you.

Great. Thanks, Colin. Just just giving a little bit of update in terms of the competitive competitive environment. What I would say is that, you know, our results in Q4 and 2024 support that. We continue to gain market share on a year-over-year basis, both globally as well as at a regional level. This is true both from a traffic share as well as a night stay perspective. And what we've seen of late is predominantly market share gains coming from hotels. I think all the product improvements that Brian has shared throughout this call as well as the increases we've seen in terms of brand consideration have really been attracting more frankly classic hotel users to try our product. And has allowed us to continue to to gain market share. I think one of the underlying questions I'm sure people have is vis a vis Vrbo and their strong performance in Q4. What I would say there is that, you know, Vrbo obviously had a very soft comp in terms of their business contracting in the US. Or globally in Q4 of 2023. And in the last quarter, what we see is that the markets that we tend to compete against them in, in particular, non-urban US markets. Was actually one of our fastest growing segments in the US. So even in that comparison point, we feel like we're doing quite well. The other point I would make on the competitive is that we continue to see that on the supply side, we're number one, leading in terms of total supply growth. And number two, in terms of the new listings coming online, the majority come to Airbnb, Inc. and the majority are exclusive. So further extending our differentiation with regard to both the breadth but also the differentiation of the supply that is key to to the brand and key to the the guest value proposition for Airbnb, Inc.

Our next question will come from the line of John Colantuoni with Jefferies. Go ahead.

Thanks so much for my questions. First one on conversion. When when you look at how travelers interact with your booking experience and begin to think about how best to layer in new services over time. Talk about how you're planning to evolve search and discovery to help balance gearing users to your new services while simultaneously maintaining conversion on accommodations. And second, I'd be curious to get your perspective on the opportunity to use new services to create some flywheel effects by which maybe you're acquiring new customers through new products or driving more multiproduct bookings to help increase customer lifetime value. Thanks.

Yeah. So let's talk a little bit. You asked about the conversion funnel and how we think about adding in new products. And and I think the question is really, how do you how do you launch and merchandise new products while not creating some risk to your your core offering? And I think this goes to one of our key learnings in terms of the experiences product that we've had historically versus what we want to put into market in coming months. And one of the insights there is that the the kind of classic generalized traveler does not come to our site or any other site to book their entire trip. Instead, they, you know, tend to book their airline. They tend to book their accommodations. Once they get through that, they're very relieved that that is behind them. And they kind of sit on the sidelines for weeks or months in advance of the trip until they start thinking about what do I need to book to fill out my itinerary. And so when we think about how to launch these new offerings, we want to be very mindful of the guest journey and to be very thoughtful with regard to both personalization and timing around what type of products are we merchandising to the customer at what point? So that we can obviously have the the best conversion impact by merchandising the the right thing. In terms of the flywheel, I think as we have been considering what, you know, both near-term and long-term future offerings will be, we're very focused on adding things to the platform that not only will be solid businesses in and of themselves, but also make the core offering better. So so that is part of our our criteria in terms of selecting new offerings is what if added to the platform would actually know, likely cause people to, one, book more frequently in terms of accommodations. But also come back to the app or or or the service on a more frequent basis than they do today because we have a a variety of offerings that may work not just on their trip, but also when they are in their home markets.

And that will conclude our Q&A session. I'll turn the call back over to Brian for any closing remarks.

Alright. Well, thanks everyone for joining us today. Just to recap, we ended 2024 with nice growth accelerating in incredible momentum heading out of 2025. Free cash flow was $4.5 billion for the year. Representing a free cash flow margin of 40% and our strong balance sheet enabled us to repurchase $3.4 billion of common stock. I'm really proud of what we accomplished, but this is just the beginning. 2025 marks the start of Airbnb, Inc.'s next chapter. Alright. Thank you all.