Airbnb, Inc.

Good afternoon, and thank you for joining Airbnb's earnings conference call for the second quarter of 2022. 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. On the hand, the call over to Ellie Mertz, VP of Finance. Please go ahead.

Good afternoon, and welcome to Airbnb's second quarter of 2022 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 second quarter of 2022. These items were 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 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 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've provided reconciliations 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 substitutes for our GAAP results. And with that, I will pass the call to Brian.

All right. Thank you, Ellie, and good afternoon, everyone. Thanks for joining. Our Q2 results demonstrate that Airbnb has achieved growth and profitability at scale. From a growth perspective, we exceeded 103 million nights in experiences booked. Now, this was our largest quarterly number ever. Revenue? was $2.1 billion, up 58% from last year, or 64% excluding foreign exchange. Gross booking value was $17 billion, up 27% from last year, or 34% if you exclude foreign exchange. Now, both revenue and GBV were 73% higher than Q2 2019, significantly outperforming the travel industry. Now, from a profitability perspective, we had our most profitable Q2 ever. Net income of $379 million was a nearly $700 million improvement from Q2 2019. Adjusted EBITDA was $711 million. Now, this represents a 34% adjusted EBITDA margin, which is significantly up from the 16% margin in Q2 2021 and negative 4% in Q2 2019. Finally, we generated $795 million of free cash flow. Now, this is a $1.1 billion improvement from the nearly $300 million cash burn two years ago at the depth of the pandemic. Over the last 12 months, Airbnb generated $3 billion in free cash flow, nearly $3 billion, and ended the quarter with nearly $10 billion in cash. So what explains this transformation in our business? Well, first, our business model is adaptable. We have nearly every type of space in nearly every location, so however travel changes, we can adapt. And regardless of the economic environment, our guests come to Airbnb because they can find great value, and our hosts can earn extra income. Second, we've relentlessly innovated while all still staying focused and disciplined. When the pandemic began in 2020, we made some incredibly difficult decisions. We significantly reduced spending, making us a leaner and more focused company. And we've kept this discipline ever since, allowing us to keep the hiring and investment plans made in the beginning of the year. And Airbnb is well positioned for whatever lies ahead. In fact, we're so confident in our long-term growth and profitability that today we're announcing a $2 billion share repurchase program. And this is culminating only a year and a half after our IPO. Now, returning to our Q2 results. our strong financial performance is driven by a number of positive business trends. First, guest demand on Airbnb is as high as ever. In Q2, we surpassed 103 million nights and experiences booked, marking our highest quarterly number ever. Now, despite broader macroeconomic concerns, we still saw a 25% increase in nights and experiences booked compared to the quarter of 2021. Now, early in Q2, strong guest demand exceeded our expectations. This is because guests in Europe and North America booked earlier than they have historically. Now, given this earlier booking, growth rates compared to last year decelerated in May and June. And since the end of Q2, what we've seen is growth and nice book reaccelerate from June to July as we enter peak travel season. Second, guests continue to return to cities and cross borders. In previous quarters, we've talked about how we saw significant growth driven by surges in domestic travel, as well as travel to rural destinations. Now these trends continue, but we're also seeing guests returning to cities and crossing borders above pre-pandemic levels. Third, guests continue to stay longer in Airbnb. They're not just traveling Airbnb, they're now living on Airbnb. We saw long-term stays of 28 days or more remain our fastest growing category by trip length compared to 2019, And long-term stays has increased nearly 25% from a year ago. And actually, long-term stays have increased almost 90% since Q2 2019. Fourth, guest demand is driving growth of our host community. We continue to see the strongest supply increases in areas of greatest demand, with non-urban active listings up 50% compared to Q2 2019. But as demand is returning to cities, we're also seeing an increase in total urban supply. And we believe the upgrades we introduced last year, including our new host onboarding flow and air cover are supporting this growth, but we're not stopping there. So you're going to see some exciting new product features to recruit the next generation of hosts later this year. Finally, I'd like to share a few highlights from the 2022 summer release. In May, we introduced Airbnb categories. Since launch, Listings in Airbnb categories have been viewed more than 180 million times. Through categories, we are distributing guest discovery across more destinations and dates. Now, we also introduced air cover for guests. Since launch, the net promoter score for guests that had an issue with their stay has already improved. In the rare instance where a host cancels, air cover has led to 10% more rebookings. So to recap, we achieved significant milestones this quarter with our results. Nights and experiences booked were our highest ever. Revenue and adjusted EBITDA were records for Q2. And free cash flow was $795 million. In the last 12 months, we've generated nearly $3 billion in free cash flow. Now, before I go to questions, I want to talk about an update on my co-founder, Joe Gebbia. Last month, Joe announced that he'll be stepping back from his full-time operating role. Joe will continue to serve on the board of directors of both Airbnb and Airbnb.org. Airbnb is a founder-led company, so he's going to continue to take a role at Airbnb, and this will be as an advisor to Nate and me on future concepts and creative culture. You know, since the beginning, Joe has always been focused on big ideas to help others. These are uncompromising true north, so it will be fun to be able to spend more time with him on dreaming up new ideas, just like the early days. And as I reflect back on the last 14 years together, I just can't believe how lucky Joe, Nate, and I have been. You know, if anything had just gone a few degrees in a different direction, I wouldn't be doing this call with you right now. That's how fragile ideas are. And it's what gives me gratitude to know Joe and Nate. And what I'm most thankful for is that we're still together, still meeting every Sunday, 14 years after we started. We built a dream together, and now we're After all these years, we still continue to train. So thank you, Joe. And with that, Dave and I look forward to answering your questions.