Airbnb, Inc.

Good afternoon and thank you for joining AirBnB'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'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's fourth quarter of 2024 earnings call. Thank you for joining us today. On the call today, we have AirBnB's co-founder and CEO, Brian Treskey, and our Chief Financial Officer, Ellie Merckx. 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'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 the call, we will discuss some non-GAP financial measures. We provide a reconciliation to the most directly comparable GAP financial measures in the shareholder letter posted to our investor relations website. These non-GAP measures are not intended to be a substitute for our GAP results. With that, I'll pass the call to Brian.

All right. Well, thank you very much. And hey, everyone, thanks for joining me today. 2024, Airbnb outpaced the travel industry's growth. We ended the year with Q4 revenue, NYC booked, and GBV all accelerating from Q3. Now before we get into the results, 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'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. We've also made it easier to host by launching the Co-host Network, which is a really simple way to find the best local host to manage Airbnb. Now in just four months, the Co-host Network has grown to almost 100,000 listings. At the same time, we've been driving growth in 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 and local payment methods in nearly two dozen countries, making it easier for people around the world to use Airbnb. And we're in the process of rolling out a completely redesigned checkout experience that makes it even simpler to book in Airbnb. Now as a result, we've seen higher conversion rates, 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 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's next chapter. Now, 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 multi-year 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. So now I'm going to 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. Knights and Experiences both accelerated in Q4 to 12%, making it the highest year of 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, an 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 Knights 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% -over-year growth, or 7% to 9% when excluding FFX 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 -over-year comparison. Without these calendar impacts and FFX headwinds, our revenue growth would be about 6 percentage points higher, or 10 to 12%, which is relatively stable compared to Q4. For Knights and Experiences books, we expect -over-year growth in Q1 2025 to be relatively in line with Q1 24 once you excluded leap day, which contributed about 1 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 FFX headwinds, adjusted EBITDA margin in Q1 would remain relatively flat -over-year. As we look ahead to 2025, we're focused on executing our multi-year 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 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. If you'd like to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit your questions to one. We'll take our first question from the line up, Stephen Ju with UBS. Please go ahead.

Okay. Thank you. So I think in the past, in terms of the global sort of the localization effort, you've talked about Brazil and I think in the shareholder letter, you were showing your localization effort for Japan. So I was wondering how long it typically takes for one of these efforts to localize in any given country, you know, it takes to come together. You guys have mentioned Argentina, Germany, South Korea, and other places. And Ellie, I guess the $200 to $250 million of investments that you're planning to incur, I guess in the, you know, on half of the share for the most part, what is that primarily going to be geared to? Is it going to be marketing? Is it going to be engineering staff offer? 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 a backdrop in terms of context on this strategy, we've shared over the last year that Airbnb 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 24 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 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. 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, 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 launching and scaling the new businesses. As the letter details, we're planning to spend approximately $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 headcount growth across our development organization, such that we can move more quickly across our roadmap and support these new businesses.

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

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

Hey, Richard. Yeah, I am. Here's what I think about AI. I think it's still really early. It's probably similar to the mid to late 90s for the internet. So I think it's going to have a profound impact on travel. But I don't think it's yet fundamentally changed for any of the large travel platforms. And so we want to be the leading company for AI-enabled traveling and eventually living. And I'll just talk a little bit about how we're going to do that. So most companies, what they're actually doing is they're doing integrations of 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 going to be rolling out as part of our summer release, AI-powered customer support. As you imagine, we get millions of contacts every year. AI can do an incredible job at customer service. It's going to speak every language 24-7. It can read a corpus of thousands of pages of documents. And so we're starting with customer support. And over the coming years, what we're going to do is we're going to take that AI-powered customer service agent and we're going to bring it into essentially Airbnb Search to eventually graduate to be a travel and living concierge. I think it's a really exciting time in the space because you've seen like with DeepStake and more competition with models is models are getting cheaper or nearly free. They're getting faster and they're getting more intelligent. And there are, for all different purposes, starting to get commoditized. What I think that means is a lot of value is going to accrue to the platform. And ultimately, I think the best platform, the best applications are going to be the ones that most accrue the value from AI. And I think we're going to be the ones to do that with traveling and living.

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

Thanks so much for taking the question. Maybe just one quick follow-up, Ryan, and then I thought 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. What 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 at a 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.

All right. Hey, Eric. All into the efficiency. I'll only take the second part. So yeah, there's like a couple efficiencies that you could imagine Airbnb. One is obviously customer service. I think that's like one of the biggest ones. I've kind of already covered that, but I think that's like a massive change for Airbnb. The other, I assume you refer to as essentially engineering productivity. We are seeing some productivity gains. I've talked to a lot of other tech CEOs. 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, beyond that, I mean, I think it could be like a order of magnitude more productivity because that's going to be like down the road. And I think that's going to be something that almost all companies benefit from. I think the kind of younger, more innovative startup like companies might benefit a little bit more because they'll have engineers are more likely to adopt the tools. That's probably pretty important. But 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 meaningful change in terms of strategy. What we've stated consistently over the last two years is that the capital allocation strategy includes one, obviously, investing in our cooperation. Second, evaluating M&A where there's relevant opportunities and three, returning capital 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 25 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 should look at the volume of repurchase activity in 24 as a guide with regards to the magnitude in 25. I would expect us to be slightly price sensitive and to dial up the quarterly repurchasing based on the annual end stock price.

Our next question comes from the line of Jess and Patterson at KeyBank. Please go ahead.

Great. Thank you very much. Brian, if you could see 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. Some periods where you saw friction points on the prior tech stack and how you think this new tech stack really positions you to execute on those growth initiatives you outlined 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 most of the work is now complete. And you're going to see this year almost every part of the application is going to be essentially rebuilt from the ground up. What you've seen is 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 going to be significantly larger than past ones. And I expect the ones after that will be larger. So basically what it's going to lead to is fewer engineers being able to basically shift features faster. And so there's a pretty, pretty huge gain here. So I think what you should expect is this year we're going to launch significantly more upgrades than last year. And every year it should increase.

Our next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

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

Yeah. Hey, Brian. And are you asking, just to clarify the first, this is specifically friction points for new products and services, not product optimization, correct?

That's right. Yeah, so the 200 to 250 million new businesses you want to...

Yeah, yeah. So let me just kind of back up and just give you a little bit of our philosophy. So we spent the last four or five years really trying to get to this moment where we could prepare for the next chapter of Airbnb. What we did, as I said, is we built the tech stack from the ground up. We listened to a guest and host feedback, made over 500 upgrades. We built this new business organization that Dave is now leading. We've become, obviously, went from breakeven to quite profitable. And so I think we're now ready for this next platform, next chapter to expand beyond our core where Airbnb is just a place to stay. And to do that, here's a couple of philosophies, a couple of principles we have in our philosophy I'll share and also tell you a little bit about the friction. Number one, I think we can do this quite efficiently because we are not going to launch separate apps or separate brands. We're going to have one app, one brand, the Airbnb app. One Airbnb app, kind of 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. I think that each business could take three to five years 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 one or a couple of businesses to launch every single year for the next five years. We're going to start initially with things very closely adjacent to travel. So when people book an Airbnb, there's a lot of 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 going to keep expanding. And we're going to expand out to more host services to enable them to become better hosts. And then eventually we'll move further and further away from our core. I think 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, I don't know, maybe toys and other things. And eventually they ended up at fashion. And pretty soon they were doing things pretty far adjacent from media and books. So we're going to probably follow that path. So we're going to really, really start adjacent to travel. And part of the reason why is a traveler booking a home, what else would they want to book? And the other great thing is we offer these other experiences and services that could potentially bring in new guests that then book more homes than Airbnb. And I think one of the ultimate goals is Airbnb is used by I think 1.6 billion devices a year. So it's got a pretty big volume of users. But we're not a very frequently used app. People typically use this once or twice 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. 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 $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 exit rate of Q4. But more broadly, I think 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 -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, Q1 EBITDA margins would actually be relatively flat.

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

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

Yeah. Hey, Ron, I'll take the first. So yeah, when you think about the here and now, we called this out in our letter really around product optimizations and run. I'll kind of just let this start like three parts. Step one, people come to Airbnb. It's really we have a huge amount of traffic. We have nearly five billion visitors, unique five billion visitors a year. And so it's really important that like when people come to me, they they are able to find the right Airbnb for them. So we've done a lot around, you know, like we introduced a personalized welcome tour. Again, people use their me only a couple of 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 we think you're going to 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. And so we've been pushing to get more people to download our mobile app. And now in Q4 mobile bookings represented 60 percent of our overall bookings up from, I think, 55 percent the year before. You know, our checkout page, it sounds like a simple thing, but the checkout page, the page to pay, not to check out Airbnb, the page to pay. It was really, really long. And we found that if you make it shorter, simpler, that leads to a massive increase in conversion. Now, I'm just giving you a couple of examples. There's really a long list of dozens and dozens of things. And again, you know, a hundred basis point increase on a GBV of 80 billion dollars, you know, you're going to be soon approaching like 100 million dollar optimization, just one at a time for some of these really, really big efforts. So once you once you find an Airbnb, it's important that that Airbnb 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. 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 Airbnb more affordable. And it's working because during 2024 hotel prices were up year over year while comparable Airbnb listings were down year over year in price. So we're making progress. And the last thing is if you find the Airbnb is a good price, it's still really important that it's of high quality for every person who books an Airbnb about nine people book a hotel. And so if we do around 500 million a year and we got the extra hotel grass to use Airbnb, we 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 our hosts. So the way to do that is elevate the best and cut the bottom. So 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, cancels are down. So it's really great. We also, since April 2023, we instituted a new host quality system and removed 400,000 listings that don't meet our guest expectations. So Ron, those are essentially 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 hundreds of updates over the past few years on these, but these are just a couple call-outs.

And Ron, to ask your question in terms of quantifying the Q4 demand, I would say, 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, gross rate for our business was lifted by a couple hundred basis points due to those improvements. We see it through improvements in our booking conversion.

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

Great. Thanks for taking my questions. I'm sorry I joined the call a little bit late, so I apologize. 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 and any indication that you can give us on the confidence of successful launch this time? Secondly, I just want to double click on Brian's commentary on Beyond the Court. Do you think 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 handle this. Hey, James. So, friction is what you want to resolve with experiences. Let's ask, what were some of the challenges the first time around? Well, the first time around, I don't think we integrated experiences really well into 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 of social media. I think social media is a great distribution channel. And fourth, I think we are completely rethinking the kind of supply we're going to have. I think it's going to be really, really compelling. And then fifth, we didn't really market it that much. And I think this time we're going to be a bit more aggressive in marketing them because we're really proud of the quality of product we have. Confidence of how successful the launch is going to be, I want to be measured in my response because this is a second shot at it. I am extremely confident that this product is going to be incredibly, incredibly compelling though. And so I think if people give it a shot, I think they're going to be really in love with the product because people really do actually like the current Airbnb experiences. And I think this one's going to be significantly better. I probably won't say much more. Tune in in May and we're going to like, you know, I'll walk you through the entire product and the 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 listen, remember like, you know, 17, 18% of our nights booked are longer term stays of more than 30 days. And that's going to become an even greater share of our business, I think, down the road. And so if you think about what all the servers 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 part to prioritize, to pick the most differentiated services, guests want the most that are, you know, most compelling the opportunities from this standpoint and to start from there. So we're not, I'm not going to 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 you and potentially partnering with some larger companies that might be able to provide these enhanced services? And then just circling back to North America, I mean, how do you view that market opportunity? I know room nights accelerated this single digits, but I'm sure you want it to grow faster. So just how should we view the North American market? Thank you.

Yeah, well, why don't I start with partners? I imagine eventually, like Airbnb, first of all, we haven't done a lot of partnerships. 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 is much more of an open ecosystem. And if you think about the really large tech platforms, they're kind of ecosystem essentially, and their ecosystems that partner with other companies and developers to build on their platform. And Airbnb is the kind of company where there are quite literally thousands of companies, like cleaning companies, key exchange, like grocery companies, like there's all sorts of companies built on top of Airbnb, especially local businesses. So I think that Airbnb, there is a play to be 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 kind of first party before we go to third party. But third party integrations is incredibly compelling because why not like allow the world to build Airbnb? We don't need to build a future by ourselves.

I just want 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 the state of play in North America is we believe we can go grow faster than we are growing today. 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 fraction of the overall lodging industry. And 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 mentioned this in prior calls. We look across the states and identify that there's several demos that 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 work to drive penetration and increase consideration.

Our next question will come from the line of Doug Enmouth with JP Morgan. 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 co-host network work best? 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.

Hey, Doug. Co-host network, just to give people a little bit of background on the co-host network. We did a bunch of surveys and we talked to a lot of prospective hosts. And here's the stats that surprised us. More than 40% of people we surveyed say they would be interested in sharing their home on Airbnb. But the biggest obstacle to them doing that was that they felt like it was a lot of work. We also noticed there were a lot of people that were hosting Airbnb that would like to expand, but they don't have another home to put Airbnb. And so we thought, what if we created a marketplace to match people with extra time with people that have homes? And that is the co-host network. The reason why the coast listings are so much more productive, they make twice as much revenue listing managed by coast and other listings, is because we only invited top hosts on Airbnb to become co-hosts. So the average rating for a coast Airbnb is significantly higher. The majority of listings managed by co-hosts, I believe, 85% help manage a guest's favorite. 75% of co-hosts are actually super hosts. We launched in 10 countries with 10,000 co-hosts. Those countries were, I think, it was Australia, Brazil, Canada, France, Germany, Italy, Mexico, Spain, UK, and US. So it was those 10 countries, and that's it. And since we've, and the average coast has an exceptional rating of 4.87. That's a really, really good rating. So that was like four months ago, five months ago. Today, we went from 10,000 hosts to 15,000 co-hosts. 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 can talk about margins in terms of where there's opportunity for incremental efficiencies. Just to restate our margin guide, every year we will be looking to invest in new opportunities while also finding incremental efficiencies in our core business. In terms of 25 and the outlook there, I would say there's 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 GNA expenses and headcount growth, allowing for some margin expansion there as well. And then on the marketing line item, in 24, we did increase our overall marketing intensity over the course of the year because we saw opportunities to lean into. Our current plan for 25 plans for a flat percent of revenue for the core business focused on marketing.

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

Great. 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 out for the first quarter, nice growth is sort of reverting back to what you did for March of 24. So can you maybe help us unpack why the success you're seeing in some of these regions is not necessarily pulling up the overall growth rate in the first quarter? And then maybe related to the marketing comments you just made in terms of it being sort of flat year on year, I guess, how do we maybe put together the pieces of marketing intensity, perhaps flat year on year with a number of different growth regions still out there that are probably not quite as large as you want at this point? Do you no longer really have to invest in them or have you reached sort of an investment sort of threshold on those? Or are you going to start to get leverage on the investments that you've made in those regions? How come they don't necessarily need more marketing dollars to do leverage next year? Thanks so much.

Sure. 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 in the last couple of years is keep the growth of spending against our core markets relatively modest while adding on these incremental new markets and the incremental brand marketing dollars that it requires. And so as we look forward to 25, 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 expansion markets is not to grow the core marketing spend faster than revenue. And the way we're able to do that is our lack of strong reliance on performance marketing, which would be entirely variable. Instead, in a market like the U.S., we have a base fixed amount that is dedicated to brand, on top of which we surgically add performance marketing. And so 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 is 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 of questions. Looks like we already covered it. U.S. accelerated. Looking back, what might have pressured the growth rates on a macro level? And do you see 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 positives and negatives for take rates? Thank you.

Yeah, certainly. So let's talk a little bit about North America in terms of 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 contraction in terms of lead times, which made bookings growth in Q3 relatively muted. I think the question of 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 played through with Q4 is that that volatility and muted bookings growth we saw over the summer was somewhat temporal. And those folks who were 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 those 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 strong in terms 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 lift 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 make goods, which come in as a contra revenue and offset 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 23 associated with breakage of gift cards. So fast forward to 25, we don't anticipate any of those similar one off that will offset the benefit we get from the FX service fee. And so instead for full year 25, you should assume that the implied take rate gets the benefit of 20 basis points increase on a year of year basis as compared to 24.

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

Thank you, too, if I may. First, just on the expense side, maybe Ellie, could you talk a little bit looking beyond 25? How do you think about the fixed investments you've made to prepare for the product launches in 25? How should we think about that fixed versus variable component in 26 and beyond? And then and then second, maybe for Brian, you talked about how there's still opportunity in North America and the bookings of alternative accommodations relative to hotels and still it's very heavily weighted to hotels. Could you talk about some of the elements you think that could change that kind of price to equation for consumers, especially in maybe in urban markets where alternative accommodations for tougher time gaining share versus vacation markets where you picked up a ton of share? Thank you.

So let me let me talk about the product investments. Brian has shared that and in the letter we shared that we've sent the last couple of years effectively rebuilding the tech stack. And so say, you know, while that work is not fully complete, a lot of it is behind us. So I think from an 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 roadmap towards supporting these new services, as well as continuing to perfecting 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 consumer benefits from.

Again, just on your question, a couple 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 in 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 you book a hotel is because it's pretty frictionless to book. That's why we've been working on all those product optimization, especially usability to make it easier to book an Airbnb. The second is they know what they're going to get, whether hotels, whether you like the hotel or not, you kind of know what to expect. And so that's why we've been focused a lot on reliability. We're going to do a lot more reliability and quality. And third, hotels offer a suite of services on premise, but we think there's obviously endless services that could be offered on Airbnb. And then finally, I think affordability is a reason you'd book Airbnb. In fact, we have a we have a campaign we've been running. Some trips are better than Airbnb, and it's been incredibly successful. It highlights the difference between Airbnb and hotels. It basically says we're not saying we're better in every hotel for every trip, but if you're traveling with other people, it's almost always better and almost always significantly more affordable on Airbnb. So just tend to like back the 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 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 services, we make it more affordable, even more frictionless. Eventually, there's a tipping point, and I think a lot of hotel travelers will come to Airbnb or use us for more of their share of wallet. So I think I can't possibly predict when this will happen, but what I can predict is how much faster our service can improve, and that's going to happen over the coming years pretty quickly.

Our next question comes from the line of Kevin Kopelman with TD Cowan. 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 out new businesses?

Thanks. Hey, Kevin. I think it's 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, but it's definitely something on the horizon.

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

Thanks. Maybe just on the urban demand, Brian, and you talked about how a lot of people just book hotels. Can you maybe touch on regulation and

the

same, do you see movement there in terms of how that might become more favorable, especially in 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 bigger scale. So I think Europe has been pretty heavy on regulation, especially on the larger platforms. Any, anything in terms of either becoming a deemed gatekeeper or not, just any thoughts that would be helpful? Thank you.

Yeah, sure. I'll take the first part and I'll let you know to take a second. With regards to regulation, let's just frame it. So our top 200 markets take compromised, comprised of a fashion shorter revenue. 80% of those jurisdictions have regulations on the books for Airbnb. Regulations as in they recognize us. And we've now quite remitted around $13 billion in hotel occupancy tax. We have a really great history of partnering with cities. I think the trajectory for cities is increasingly, I think, when we first started, cities didn't really know what to make of us. This is like 10, 15 years ago. I think some people thought Airbnb 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. I'll just give a couple of examples. Last summer, Paris had a really big problem. Well, many, like millions of people were coming to Paris and they didn't have hotels to put them in. So Airbnb, we went from 100,000 to about 100,000, 150,000 homes partnering with the IOC Olympic 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 10 Olympic stadiums where the guests were staying in Airbnb. I think that Paris Olympics was so successful that the city of Milan and the city of LA are now looking at how we can be a solution for their challenges with compression nights during the Olympics. And I think cities all over the world are looking at Airbnb as a solution to be able to accommodate guests for large events where money goes into local communities and it limits hotels' ability to essentially create surge pricing. Another solution we've been is during times of disaster. There was a devastating LA fire that I'm sure you're all aware of about a month ago. And a large number of people were displaced. Well, Airbnb and working with airbnbs.org has housed more than 19,000 residents of 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, you know, as of I think like last September, the last date I saw rent, they basically banned Airbnb with the idea that rents would go down. What we've seen is rents aren't down year over year. In fact, rents were 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 going to follow it. I think they're going to like see us much more of the solution to a problem.

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

Our next question comes from the line of Colin Sebastian at Baird. Please go ahead.

Colin Sebastian, Baird Thanks 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 the result of your performance to date or is that more about what's to come in terms of putting more distance between Airbnb 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 in 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 getting a little bit of update in terms of the competitive environment. What I would say is that our results in Q4 and 2024 support that. We continue to gain market share on a -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 gain market share. I think one of the underlying questions I'm sure people have is -a-vis Verbo and their strong performance in Q4. What I would say there is that Verbo 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, it 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 front is that we continue to see that on the supply side. We are, 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 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 the brand and key to the guest value proposition for Airbnb.

Our next question will come from the line of John 412 with Jeffries. Please go ahead.

Thanks so much for my questions. First one on conversion. 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 steering 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 flywheel effects by which maybe you're acquiring new customers through new products or driving more multi-product bookings to help increase customer lifetime value.

Yeah, so let's talk a little bit. You asked about the conversion funnel and how we think about adding in new products. And I think the question is really how do you launch and merchandise new products while not creating some risk to 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 kind of classic generalized traveler does not come to our site or any other site to book their entire trip. Instead, they 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 best conversion impact by merchandising the right thing. In terms of the flywheel, I think as we have been considering what 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 that's part of our criteria in terms of selecting new offerings is what if added to the platform would actually likely cause people to one, book more frequently in terms of accommodations, but also come back to the app or the service on a more frequent basis than they do today because we have 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.

All right. Well, thanks, everyone, for joining us today. Just to recap, we ended 2024 with nice growth, accelerating an incredible momentum heading into 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's next chapter. All right. Thank you all.

That concludes our call for today. Thank you all for joining. You may now disconnect.