Airbnb, Inc.

Good afternoon, and thank you for joining Airbnb's earnings conference call for the first quarter of 2021. As a reminder, this conference call is being recorded and will be available for replay from the investor relations section of Airbnb's website following this call. I will now hand the call over to Ian Lee, Airbnb's head of investor relations. Please go ahead.

Good afternoon and welcome to Airbnb's first quarter of 2021 earnings call. Thank you for joining us today. On the call today, we have Airbnb's co-founder and CEO, Brian Chesky, and our chief financial officer, Dave Stevenson. Earlier today, we issued a shareholder letter with our financial results and commentary for our first quarter of 2021. These items are also posted on the Investor Relations section of Airbnb's website. During the call, we'll make brief opening remarks and then spend the remainder of the time on Q&A. Before I turn it over to Brian, I'd like to remind everyone that we'll 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 Form 10-5 of the SEC on February 26, 2021. We urge you to consider these factors and remind you that we undertake no obligation to update the 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 future performance. Also, during this call, we will discuss some non-GAAP financial measures. We provided reconciliations for 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 GAAP results. And with that, I'll pass the call to Brian.

All right. Thank you very much, Ian, and thank you, everyone, for joining us today. I want to start by acknowledging the state of the pandemic. COVID-19 cases continue to surge in parts of the world, such as India, and our thoughts go out to our hosts, guests, and employees in India during this difficult time. There's much more work to do to limit the spread of the pandemic, and many people are still hurting. And we know how lucky we are to be in the position we're in today. 2020 was a year that none of us will ever forget. It was also a year when travel fundamentally changed forever. Airbnb changed as well. We sharpened our focus on our core business of hosting, and we got back to our roots, back to what is truly special about Airbnb, the everyday people who host their homes and offer experiences. And we emerged as a stronger and more efficient company. Our business rebounded faster than anyone expected. and it showed that as the world changes, we are able to adapt. Now turning to our Q1 results, our business dramatically improved with the rollout of vaccines and the easing of some travel restrictions. While conditions aren't yet normal, they are improving. People's desire to travel, combined with our tightly managed expenses, drove a return to our positive top-line growth and maturely improved adjusted EBITDA. In Q1, Our revenue was $887 million. This was an increase of 5% year-to-year, and it exceeded Q1 2019 levels as well. But here's the most important fact. Our business improved without the recovery of two of our strongest historical segments, urban travel and cross-border travel. We expect the return of urban and cross-border travel to be significant tailwind over the coming quarters. Now, as our top line recovers, we are maintaining our focus and our financial discipline to improve our profitability. Our adjusted EBITDA loss was $59 million. This was approximately $190 million better in the same period in 2019, and it was $275 million better than a year ago. on essentially the same revenue. Now, these results show that we are improving our variable costs. We're being disciplined with our marketing and our fixed costs. Our strong performance also indicates the beginning of the travel rebounds. Just a few hours ago, the director of the Centers for Disease Control said, quote, if you are fully vaccinated, you can start doing the things that you had stopped doing because of the pandemic, end quote. What we think this means is that more people will be comfortable traveling. And it further strengthens our view that we are going to see a significant travel rebound. In fact, we expect this rebound to be unlike anything that we have ever seen before. And we expect travel to be very different than before. People are discovering that they don't have to be tethered to one location to live and work. And what this means is that people are more flexible about where and when they travel. People can now travel anytime. People are also traveling everywhere. They're not just going to the same 20 or 30 cities. They're visiting smaller cities, towns, and rural communities. And when people do travel, they're staying longer. 24% of our nights booked in Q1 were for stays of 28 nights or longer. People are not just traveling in Airbnb, they're now living on Airbnb. And these trends are not going away. The world is never going back to the way it was, and that means that travel is never going back to the way it was either. So let me tell you about what we're doing to prepare for what's ahead. Our single priority in 2021 is to prepare for the coming travel rebound. To do this, we're perfecting the end-to-end experience of our core service. This includes educating the world about hosting, recruiting more hosts, simplifying the guest experience, and delivering a world-class service. Now I'm going to briefly share how we're executing against each of these areas. First, we are educating the world about what makes Airbnb different, hosting. In late February, we launched our first large-scale marketing campaign in five years, made possible by hosts. We're educating guests about the benefits of being hosted, and we're inspiring more people to become hosts. Now, while it's still early, the campaign is being well-received. In markets we're running the campaign, overall traffic is up, first-time bookers are up, traffic from prospective hosts is up, and our brand favorability is up. Second. we are recruiting more hosts and we are setting them up for success. To build on the momentum of our marketing campaign, we launched an accompanying digital campaign that's focused on recruiting new hosts. And we've completely redesigned the end-to-end experience of being a host on Airbnb. We're making it easier for anyone to start hosting. Third, we are simplifying every part of the guest experience. In February, We launched a flexible dates feature. It allows guests to browse options while being flexible on the exact dates of their trip. Now, since the feature launched, there have been more than 90 million flexible dates searches on Airbnb. 90 million searches since just February with flexible dates, this new feature we created. And guests who use this feature have converted at a higher rate than guests who do not. Now, this is just one of many improvements that we are making to the guest experience. And finally, whenever our guests or hosts need us, we must deliver a world-class service. So to prepare for the travel rebound, we're improving our community support products, enhancing our safety protocols, and we're scaling our operations by ramping our third-party support. Now, I want to wrap by highlighting a major announcement that we have coming up in less than two weeks. On May 24th, We will announce the most comprehensive update to the Airbnb service in 12 years. As part of this special announcement, we're going to share insights on how travel is fundamentally changing along with updates we've made to prepare for what's ahead. We're going to unveil a simpler and more inspiring guest experience, and we are going to show you upgrades that make it even easier to be a host on Airbnb. So to watch the announcement, visit Airbnb.com on Monday, May 24th. So to summarize, we're pleased with a strong 2-1 results. We are encouraged by the trends that we're seeing driving these results. And we are executing against our 2021 plan to prepare for the travel rebound. And we think this travel rebound will be like, unlike anything we've seen before. We think this is a travel rebound of the century. So travel is coming back and Airbnb is ready. And with that, Dave and I look forward to answering your questions.