Q3 2023 Airbnb Inc Earnings Call

Okay.

Good afternoon, and thank you for joining Airbnb earnings conference call for the third quarter of 2023.

As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb website. Following this call.

I will now hand, the call over to Ali Mertz VP of Finance. Please go ahead.

Thank you good afternoon, and welcome to Airbnb is third quarter of 2023 earnings call. Thank you for joining us today on.

On the call today, we have <unk> co founder and CEO, Brian <unk>, and our Chief Financial Officer, Dave Stevenson.

Earlier today, we issued a shareholder letter with our financial results and commentary for our third quarter of 2023.

Items were also posted on the Investor Relations section of Airbnb website.

Turning 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.

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 a substitute for our GAAP results with that I'd like to pass the call to Brian.

Alright, well, thank you Ali and good afternoon, everyone. Thanks for joining I'm excited to share our results with you.

Q3 was another strong quarter for Airbnb we.

We had over 113 million nights and experiences booked revenue of $3 4 billion grew 18% year over year net income was $4 4 billion yes.

This includes a onetime income tax benefit from the release of a valuation allowance of $2 8 billion.

But even excluding this tax benefit adjusted net income was $1 6 billion, our highest ever represented adjusted net income margin up 47%.

Free cash flow for the quarter was $1 3 billion.

In fact on a trailing 12 month basis.

Our free cash flow was $4 2 billion.

Which is also our highest ever and because of our strong cash flow and balance sheet, we repurchased over $500 million of our stock.

Now during the quarter, we saw a number of positive business business highlights.

We have added nearly 1 billion active listings this year.

Supply grew 19% in Q3 compared to a year ago.

We once again saw double digit supply growth across all regions with the highest growth in regions with the highest demand.

Urban and not urban supply increased at nearly the same rate we saw relatively similar supply growth among individual professionals with the majority of new listings exclusive to Airbnb.

Second.

Q3 was a record travel season on Airbnb nights.

<unk> and experiences booked grew 14% in Q3 compared to a year ago.

We saw an acceleration nice growth across all geographies.

And we were particularly encouraged by the growth the first time bookers during Q3.

More than ever booked in the Airbnb app with 53% of gross nights booked in the app compared to 48% in the same period last year.

And finally international expansion markets are gaining momentum.

Cross border nights booked increased 17% in Q3 compared to a year ago in Asia Pacific Our business has fully recovered to pre pandemic levels.

And we're seeing significant growth in Asia Pacific markets, such as Taiwan, Thailand, Indonesia, Indonesia, all experiencing year very nice growth above 30% on an origin basis.

Now we've been able to achieve these results by continually making progress on our three strategic priorities.

First we're making hosting mainstream.

We've been focused on making hosting as popular as traveling and our Q3 results show that our approach is working we ended the quarter with our highest number of active listings and we saw strong active listings growth across all regions and market types.

And host you're benefiting during Q3 alone.

The host more than $19 billion.

We will continue growing supply by raising awareness around hosting making it easier to get started and improving the overall experience for host.

Second we're protecting our core service.

We have collected millions of pieces of feedback on how to improve airbnb and two years ago. We started doing twice a year product releases to address this feedback and since then we've launched more than 350, new features and upgrades across our entire service and in the past year alone. This has included things such as improved customer service total.

Display and new tools to help us set more competitive prices.

These upgrades are paying off in both gas and host for example.

We redesigned our tools and we made it easier for host to add discounts and promotions.

And now <unk>.

Almost two thirds of the host after a weekly or monthly discounts.

Also added a new feature called similar listings now less Oc listing prices in the area. So they know what to charge and since we launched the similar listings tool nearly 1 million hosts have used this feature.

And this September.

Shared progress we've made to help lower cleaning fees reduced prices and improved search and reliability.

Haven't even more improvements coming as part of our November 8th Winter release next Wednesday.

<unk> introduced dozens of new features aimed at making airbnb more reliable.

And finally our.

Our third strategic priority is.

Expand airbnb beyond their core.

That we made significant progress over the past few years in building, a strong and profitable business and in addition to laying the foundation.

For new services and offerings, we have.

<unk> focused on international expansion.

We are investing in Underpenetrated international markets, and we're seeing great results.

Following the success, we've seen in recent quarters in Germany, and Brazil Korea has now become one of our fastest growing countries compared to 2019 with gross nights booked 54% higher than they were in Q3 2019 on the origin of basis as.

As international travel continues to recover we're building greater momentum for Airbnb in under penetrated markets.

So those are results for Q3 with that David and I look forward to answering your questions.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. If you would like to remove yourself from the queue Press Star one again.

We will take our first question from Mark Mahaney at Evercore ISI.

Thanks. So two questions can you talk about some of these improvements you've seen in markets like Germany, Brazil, and Korea could you just spend a little bit more time on that opportunity going forwards.

The expectation now that Germany, and Brazil are already optimized you just kept keep optimizing other ones or is this a take a while to Adam to monetize those and then secondly in terms of future services that you could offer to sellers any update on.

When we could see those particularly things like sponsored listings for sellers. Thank you for for for hosts I mean, thank you.

Okay.

Yeah, Hey, Mark this is Brian I'll take it.

Let's first talk about international expansion.

It's a great question and.

As I'm going to call is probably aware everybody's in 220 countries in the region. So on the one hand, we're one of the most global companies and all travel we're a truly global travel network at the same time, Mark what we've seen is that our penetration nice states is significantly higher than our penetration in many other countries and we think theres a huge amount of growth if we.

Just get out Airbnb to even a fraction of the percentage of penetration that we have the United States. So last year, we decided to rollout. This updated playbook, we rolled it out in Germany, and Brazil, it's kind of a full like a four pronged approach and about some product optimizations PR local marketing and just general optimizations on the ground.

In these regions and what we've seen this Brazil is now double the size as it was pre pandemic, we rolled that same playbook out to Korea is now 54% higher than it was before but what I would say is we've just scratched the surface of what we can do in Germany, Brazil, and Korea I think those markets are on a good trajectory they can be significantly larger and we are.

Now looking at Japan and.

India, China around Asia Pacific, we have some optimizations in southeast Asia.

Continued growth in Mexico, Theres, a number of other countries. In addition to a number of areas in Europe, where we think we can see a lot more growth. So I think the next 24, we're going to see a major acceleration in our penetration and a lot of these market theres about a dozen doesn't have markets around the world as you know have large tourism opportunities and we're really focused on that.

It can be one of our biggest near term expansion opportunities with regards to future services to sellers.

We don't have anything to announce right now, but what we've been doing is we've been building the foundation of our systems. So that we can have these new tools and services, including sponsored listings and we also not recently, we've been rolling out a pilot for co hosting co hosting as a service where rematch host that don't have.

So they have extra time with homeowners to have space, but they are they don't have they don't have time to host and we've been doing in these pilots in France, we've rolled it out in parts of United States and this is turning into a popular service that we think kind of lock a lot more supply. So we're going to over the next couple of years I think youre going to see a number of new services rollout for host.

Yeah.

Okay. Thank you Brian.

Okay.

We'll go next to Eric Sheridan at Goldman Sachs.

Thanks, so much for taking the question I just have one Brian in a number of interviews in the quarter, you talked about potential for product roadmap over the longer term.

Different products that could probably expand elements of the platform car rentals, maybe even long term apartment rentals. How do you think about product evolution, that's being offered to the consumers on the platform and thinking about investing behind those initiatives. Thanks.

Okay.

Yeah, Hey, Eric.

Just to step back.

The last few years I think we've really really benefited by being focused.

Operator: Good afternoon, and thank you for joining Airbnb's earnings conference call for the third quarter of 2023. 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.

When the pandemic occurred we felt like we had to hunker down get really mean get really focused and we went from basically a breakeven company to now a company doing obviously cash flow margins of around 44% of revenue. So we've really benefited from this and really benefited from focusing on our core business.

Elinor Mertz: I will now hand the call over to Ellie, Mertz, VP of Finance. Please go ahead. Thank you.

To your point, Eric I think we are now getting ready to re expand <unk> beyond its core it was always our attention to do much more than just short term housing for travelers is always intended to do more of that so we're working on making <unk> more of an extensible platform and I think ultimately there are actually quite literally dozens of services.

Elinor Mertz: Good afternoon and welcome to Airbnb's third quarter of 2023 earnings call. Thank you for joining us today.

Operator: On the call today, we have Airbnb's co-founder and CEO, Brian Chesky, and our chief financial officer, Dave Stephenson.

Elinor Mertz: Earlier today, we should shareholder letter with our financial results and commentary for our third quarter of 2023. The items were also posted on the Investor Relations section of Airbnb's website.

Guests and hosts that we could build on top of the <unk> system.

I think a lot of it comes down to making the platform extensible. So we can offer these services I think at the end of the day, we're really thinking about are a couple of big ideas.

Elinor Mertz: 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'll be making forward looking statements on this call that involve a number of risks and uncertainties. Actual results made different 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 security and exchange commission.

Elinor Mertz: We urge you to consider these factors to remind you that we undertake no obligations 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.

First I think that we are thinking about generative AI as an opportunity to re imagine much of our product category and product catalog. So if you think about how you can sell a lot of different types of products and new offerings generally I could be really really powerful. It can match you in a way that you've never seen before so imagine airbnb bill being almost like the ultimate travel.

<unk> as an App, we think this can unlock opportunities that we've never seen.

Additionally to that there is a lot of opportunities on both the gas side and the host side and so we're going to be thinking through a lot of that so you will see hopefully some updates in the coming years.

Elinor Mertz: Also during the call, we will discuss some non-gap financial measures. We've provided 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 gap results.

Thank you.

Okay.

We'll move to our next question from Brian Nowak at Morgan Stanley.

Great. Thanks for taking my question.

Two first one.

Maybe.

On the guide a little bit I know, there's a lot of moving pieces between the revenue comments in the ADR comments of the take rate just sort of walk.

Brian Chesky: With that, I'd like to pass the call to Brian. All right. Well, thank you, Oli.

Brian Chesky: In good afternoon, everyone. Thanks for joining. I'm excited to share results with you. Q3 was another strong quarter for Airbnb. We had over 113 million nights and experiences booked. Revenue a $3.4 billion through 18% year-to-year. Net income was $4.4 billion. Now, this includes a one-time income tax benefit from the release of a valuation allowance of $2.8 billion. But even excluding this tax benefit, adjusted net income was $1.6 billion, or highest ever, represented an adjusted net income margin of 47%.

Wanted to confirm are you guys sort of.

Looking at the guide room night growth in sort of the high single low double digit range in <unk> is that the right way, we should be thinking about with take rate and things and then the second one Brian I know you gave a lot of innovation you had 350 features and upgrades et cetera can you just sort of give us one or two of them that you think could be most impactful.

To accelerate that room night growth as we go into 'twenty, four and 'twenty five.

And Brian Sorry are you, referring to things you've already shipped or things that we're working on that we haven't yet.

Well either way you want to go if you have one as I've already shipped that'd be great. If you have other ones you want to tell us about next week that'd be that'd be good too.

Linda.

Brian Chesky: And free cash flow for the quarter was $1.3 billion. In fact, on a trailing 12-month basis, our free cash flow was $4.2 billion, which is also our highest ever. And because of our strong cash flow and balance sheet, we repurchased over $500 million of our stock.

Yes.

So yes, so let me why don't I answer the innovation and David you can talk about the guide for <unk>.

Going forward. So maybe let me talk about some things that we've already done and I can give you a little bit of sense of how we're thinking about next week and beyond so yes. We did over 50 upgrades last may it was based on the idea that millions of customers have given us feedback actually both guests and hosts on how to prevent D&B listen and if I were to just call out three.

Brian Chesky: Now, during the quarter, we saw a number of positive business highlights. First, we have added nearly 1 million active listings this year. Our supply grew 19% in Q3 compared to a year ago. We once again saw double digit supply growth across all regions, with the highest growth in regions with the highest demand. Urban and not urban supply increased at nearly the same rate. And we saw relatively similar supply growth among individual professional hosts, with the majority of new listings exclusive to Airbnb.

Thanks, Bryan I would just call out three things would be total price display.

Pricing tools for hope and monthly stays so let me just go through three and what happen on total price display we rolled out total price display before taxes. This is based on popular demand. We are now the only travel app are kind to actually does this since you rolled this out 260000 listings have room.

Remove or reduce their cleaning fees and we now have 3 million listings in everything you do not have a cleaning fee. So we think this is working we also think people are now.

Brian Chesky: Second, Q3, what's the record travel season on Airbnb? Nights and Experiences books grew 14% in Q3 compared to a year ago. We saw an acceleration nights growth across all geographies, and we were particularly encouraged by the growth of first-time bookers during Q3. And we saw more nights than ever booked in the Airbnb app with 53% of gross nights book in the app compared to 48% and the same period last year.

Being steered towards better total value on a total price inclusive of all cost basis there.

Second our pricing tool.

Since we rolled out new pricing tool about half of new listings are now offering a monthly discount.

We also have this new tool called similar listings, where you can see where other people are charging around you and this we find has been the best way to make sure. Our host have competitive prices cause hosts are usually the price discover so listings that get most bookings around them offer a better value and it's always really hard to know what your home is worth and what you charged. So the best thing you can do is give people transparent data.

Brian Chesky: And finally, in national expansion markets are gaining momentum. Cross-border nights book increased 17% in Q3 compared to a year ago. In Asia Pacific, our business has fully recovered at pre-pandemic levels. And we're seeing significant growth in Asia-Pacific markets such as Taiwan, Thailand, and Indonesia, all experiencing year-ever nights growth above 30% on an origin basis.

Well 1 million people, who use these tools and probably the thing I would point to as well this time year over year and September data hotel prices are up 10%.

Prices globally are only up 1%.

So we are definitely moving in the right direction now in North America on a mix shift and FX neutral basis, our price was actually down 3% in North America, while hotels are up towards double digits. I think so the last thing I'd say is monthly states.

Brian Chesky: Now, we've been able to achieve these results by continually making progress on our three strategic priorities. First, we're making hosting mainstream. We've been focused on making hosting as popular as traveling and our Q3 results show that our approach is working. We ended a quarter with our highest number of active listings, and we saw strong active listings growth across all regions of Marketice. And hosts are benefiting during Q3 alone. Airbnb hosts earn more than $19 billion. We'll continue growing to private raising awareness around hosting, making easier yet started, and improving the overall experience for hosts.

Obviously announced a much a updates on monthly stays including you can pay by bank, we lowered fees. After three months, we have the whole new relic interface.

And stays for what three months or longer are now growing nearly 20% year over year. So those are just three things we've seen I think what we've learned is like as we listen to customers. We adapt quickly we can drive incremental growth as far as what's next.

We don't talk about too much before it will release I will say, though next Wednesday.

Brian Chesky: Second, we're perfecting our course service. We've collected millions of pieces of feedback on how to improve Airbnb. And two years ago, we started doing twice a year product releases to address this feedback. And since then, we've launched more than 350 new features and upgrades across our entire service. And in the past year alone, this has included things such as improved customer service, total price display, and new tools to help host that more competitive prices.

We're focused on some pretty big opportunities around reliability. So.

This is the last thing I'll say about this.

If you think about how big Airbnb is for every person who stays and Airbnb approximately 90 people every night stay in a hotel or about nine bookings. The hotels are about an order of magnitude bigger than.

And when you ask people why do you book, a hotel or not Airbnb. The number one reason they come up with is usually reliability that they know what theyre going to get before they book.

Brian Chesky: These upgrades are paying off of both guest and host. For example, we redesigned our tools, and we made it easier for hosts to add discounts and promotions. And now, almost two-third the host, author weekly or monthly discount. We also added a new feature called similar listings that let's host sea listing prices in the area so they know what to charge. And since we launched a similar listings tool, nearly one million hosts have used this feature. In September, we shared progress we've made to help lower cleaning fees, reduce prices, and improve search and reliability.

It kind of speaks to the strength or weakness of Airbnb that on the one hand, it's one of a kind other hand that one of a kind offers daily ability that not every person wants and so next week, we're going to have some new new new offerings that I think will make a pretty big <unk>. So that's what I can say I think I'm pretty optimistic about what Youll see next week and of course, we're already.

Working on stuff for <unk> next October releases as well, so hopefully stay tuned.

Brian Chesky: We have been even more improvement coming as part of our November ace winter release next Wednesday, where we'll introduce dozens of new features aimed at making Airbnb more reliable.

Brian Chesky: And finally, our third strategic priority is the expanded Airbnb beyond our core. That we've made significant progress in the past few years in building a strong and profitable business. And in addition to laying the foundation for new services and offerings, we've been focused on international expansion. We are investing in under penetrated international markets and we're seeing great results. Following the success we've seen in recent quarters in Germany and Brazil, Korea has now become one of our fastest-growing countries compared to 2019, with Gross Knight's book, 54% higher than they were in Q3, 2019, on an origin basis. As international travel continues to recover, we're building greater momentum for Airbnb and under penetrated markets.

Brian Chesky: To those are results for Q3, with that, Dave and I look forward to answering your questions. Thank you.

It should be thinking about it holistically <unk>, how you guys think about how 'bout occupancy or utilization may <unk> next year, and then maybe no just one high level. One you know thinking beyond the current cycle. We've seen a lot of other all my travel models sorta hit this low teens to high single digit growth rate and.

Operator: At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. If you would like to remove yourself from the Q, press star one again.

Mark Mahaney: We'll take our first question from Mark Mahaney at Evercore ISI. Thanks, and I throw two questions in. You talk about some of these improvements you've seen in markets like Germany, Brazil, and Korea. Could you just spend a little bit more time on that opportunity going forward?

Decelerate from there or not be able to reaccelerate uhm their business in a meaningful like can you. Maybe you know take a step back and help us better understand how you think that you know, maybe airbnb, maybe a little bit different than private or issues that we've seen and can perhaps <unk> sort of that double digit revenue cadence over a longer period of time than what we're used to in the market.

Mark Mahaney: Is it the expectation now that Germany and Brazil are already optimized? You just keep optimizing other ones. There's a take a while to monetize those.

Thanks, so much.

Mark Mahaney: Secondly, in terms of future services that you could offer to sellers, any update on when we could see those, particularly things like sponsored listings for sellers. Thank you for hosting. Thank you.

I don't.

Really oh, yeah, Yeah, you start with I can see and I'll take that as a question.

Great.

Yeah in terms of occupancy, we've actually seem to be pretty stable in terms of kind of on a global basis. I mean, if you actually step back you Gotta remember that the vast majority of our hosts an airbnb or individual house, they're not looking to drive 100 per cent occupancy of all their their listings and what they want to do is.

Brian Chesky: Hey, Mark. This is Brian. I'll take it.

Brian Chesky: Let's first talk about international expansion. So it's a great question. As everyone calls, probably aware, airmenies in 220 countries in region. So in the one hand, we're one of the most global companies in all travel. We're a truly global travel network. At the same time, Mark, what we've seen is that our penetration in the United States is significantly higher than our penetration in many other countries. And we think there's a huge amount of growth. If we could just get our Airbnb to even a fraction of the percentage of penetration that we have in the United States.

And enough money to it usually hit a certain amount of financial goals. So as we continue to grow our inventory. We're continuing to see you know strong occupancy levels. You know overall clearly we grew our inventory, 19%, which is a head kind of revenue growth in the current period, but if you actually step back and look over like a four.

<unk> your period go back all the way to 2019 the growth in our overall listings has actually been relatively similar to our overall growth and nightstand that occupancy over an extended time period tends to be fairly stable. While in any short term time period. It can have a little bit more volatility, but overall again, we don't focus on an occupant.

Brian Chesky: So last year, we decided to roll out this updated playbook. We rolled it out in Germany, Brazil. It's kind of a full, like a full, full, full, full-pronged approach. It involves some product optimizations, PR, local marketing, and just general optimizations on the ground in these regions. And what we see in this Brazil is now double the size as it was pre-pandemic. We rolled that at the same playbook after Korea. It's now 54% higher than it was before. But what I would say is we've just scratched a surface of what we can do in Germany, Brazil, and Korea. I think those markets are on a good trajectory. They could be significantly larger.

C. As in primary driver, we monitor it locale by locale because it really matters is that we have great available listings in a specific market on a specific date.

[laughter].

Haley I'll take your second question, Yeah, I think that you know <unk> as I said before.

Brian Chesky: And we're now looking at Japan and India, China around Asia Pacific. We have some optimizations with Southeast Asia, you know, continual growth in Mexico. There's a number of other countries in addition to a number of areas in Europe where we think we can see a lot more growth. So I think the next 24 months, we're going to see a major acceleration in our penetration and a lot of these markets. There's about a dozen, doesn't have markets around the world as, you know, have large tourism opportunities. And we're really focused on that.

We're only scratching the surface of helping this company becomes and I, absolutely think that we can get to you know really solid doubleday.

Brian Chesky: And that's going to be one of our biggest near-term expansion opportunities.

Double digit revenue growth for many many years to come.

There's three things that I'd point out the.

The first is a core business I think our core business can be significantly larger than it is today, even if we didn't do anything new.

The reason I believe this is the following.

I believe that almost every single person who stays in a hotel could stay in an airbnb if number one they knew about all the benefits of air Bnb and number two we made sure that our service was sufficiently reliable to be an alternative.

Brian Chesky: With regards to future services to sellers, we don't have anything to announce right now. But what we've been doing is we've been building the foundation of our systems so that we can have these new tools and services, including sponsor listings. And we also, not recently, we've been rolling out a pilot for co-hosting. Co-hosting is a service where we match hosts that don't have homes, but they have extra time with homeowners that have space, but they don't have time to host.

So let me start with let me start with those two.

We've done recently, a new marketing campaign, that's called Air B M. B, a and it basically contrast, the benefits of the Arab in Beaver His hotel and based on our research one of the things. We've noticed is that a lot of people stay in hotels don't understand some of the unique benefits are staying an airbnb and why it is better for certain types of trips and one type of trip that or maybe it's almost always better.

Brian Chesky: We've been doing a pilot in France. We rolled it out in parts of the United States. And this is turning into a popular service that we think can unlock a lot more supply. So we're going to, over the next couple of years, I think you're going to see a number of new services roll out for hosts. Okay, thank you, Brian.

As in your childhood with three or more people.

[noise] tried with a family you're traveling with a group why do you want to stay in different rooms verse at different.

Different room separated we're having to stay the same so I'll go to the at the same time and then the only place you can meet in these crowded lobbies when you can get a whole home all to yourself. So this is we've been running these digital campaign.

Eric Sheridan: We'll go next to Eric Sheridan at Goldman Sachs. Thanks so much for taking the question. I just have one.

The highest performing digital can't believe I've ever done and this is going to be the basis for a new major new marketing campaign next year.

Brian Chesky: Brian, in a number of interviews in the quarter, you talked about potential for product roadmap over the longer term, different products that could probably expand elements of the platform, car rentals, maybe even long-term apartment rentals. How do you think about product evolution? That's being offered to the consumers on the platform and thinking about investing behind those initiatives. Thanks.

<unk> to that as I mentioned before if we just keep focusing on reliability, making sure that you know when you book, you know, where you're gonna get and if there's ever a problem you have an excellent customer service that is nearly as good as a front desk, where it's good to the front desk than I think there could be in the years to come a tipping point, where many people could choose airbnb. So that's just start.

Brian Chesky: Hey, Eric, I mean, just a step back. The last few years, I think we've really, really benefited by being focused. You know, when the pandemic occurred, we felt like we had to hunker down, get really mean, get really focused. And we went from basically a breakeven company to now a company doing obviously Casual margins of around 44% of revenue. So we've really benefited from this focus and really benefited from focusing on our core business.

<unk> business next is international even though we're in 220 countries and regions. There's only a couple of countries, where we even have penetration that rivals the United States in those countries or Canada, Australia, and France. After that Oh, you pay a little bit it really starts to tip down and so we have like massive massive opportunity.

Just by bringing Airbnb playbook to these other countries, obviously, Germany, but not just Germany like actually the entirety of northern Europe, Eastern Europe, and even Italy, and Spain, basically every country, but France and UK. There's there are at a step change lower penetration Latin America is a completely new market for us emerging.

Brian Chesky: To your point, Eric, I think we are now getting ready to re-expand Airbnb beyond its core. It was always our attention to do much more than just short-term housing for travelers as always intention to do more of that. So we're working on making Airbnb more of an extensible platform. And I think ultimately there are actually quite literally dozens of services for guest and host that we could build on top of the Airbnb system. I think a lot of it comes down to making the platform extensible so we can offer these services.

Asia Pacific I would argue is a completely new market you know we can be adding huge amounts of growth just by your expansion playbook and then finally mmm, yeah I mean.

I would say just a new products and services, though we're not disclosing anything that we're doing new right now here's what I'd say I think the biggest strength I have is a C. E O is not driving profitability, even though we've done a really good job I think it is literally inventing new products and services. That's why we've hired so many and great technologist designers and.

Brian Chesky: I think at the end of the day, we're really thinking about our couple big ideas. First, I think that we are thinking about generative AI as an opportunity to reimagine much of our product category and product catalog to be thinking about how you can sell a lot of different types of products and new offerings. Generative AI could be really, really powerful. It can match you in a way that you've never seen before.

You know I think I think this is going to be a sweet spot for us. We're obviously not going to talk about new things before we ship them, but twice a year every may and every November October November we're going to be hoping putting out feeling for new ideas that I hope really increase the addressable market for Airbnb and I think that we can do much more than just short term housing but again.

Brian Chesky: So imagine Airbnb being almost like the ultimate travel agent as an app. We think this can unlock opportunities that we've never seen. Additionally to that, there's a lot of opportunities on both the guest side and the host side. And so we're going to be thinking through a lot of this.

Brian Chesky: So you'll see hopefully some updates in the coming years. Thank you.

In the short term housing is still a huge opportunity for us.

Brian Novak: We'll move to our next question from Brian Novak at Morgan Stanley. Great. Interesting in my question.

We'll go to our next question from Dec M at J P. Morgan.

Brian Novak: I have two. First one, maybe on the guide a little bit. I know there's a lot of moving pieces between the revenue comments and the ADR comments and the take rate. Right. This sort of wanted to confirm are you guys sort of looking to guide room night growth and sort of the high single low double digit range in four cues that the right way we should be thinking about was take rate and things.

Thanks for taking questions.

First you caught up the greater volatility in early for two just curious if you have any view of whether that's more macro driven or geopolitical and then curious if you have a sense of kind of visibility in any kind of bookings into 2024, and perhaps maybe how that visibility compares now versus a year ago.

Brian Novak: Then the second one, Brian, I know you give a lot of innovation, you have 350 features and upgrades, etc. Can you just sort of give us one or two of them that you think could be most impactful to accelerate that room night growth as we go into 24 and 25. And Brian, sorry, are you referring to things you've already shipped or things that we're working on that we haven't shipped? Well, either way you want to go. Yeah, yeah, if you have ones that already shipped, that'd be great. If you have other ones you want to tell us about next week, that'd be good to.

Thanks.

Yeah. It's hearts are completely pinned down the root cause of any kind of softness or volatility I think it is just broadly what we're seeing is a little bit of softness in our overall kind of demand relative to Q3, we call out kind of the macroeconomic and geopolitical just because that is what I think driving and volatility it's out there.

As early I think I <unk> I am calling confident about our revenue growth for queue for being 12 to 14 per cent growth and in fact that that remains stable with Q3 I think is really promising in our early visibility into 20th 24 is it again, it's too early to tell I think I'm feeling great about our overall playbook and plans is.

Brian Chesky: Yeah, so yeah, so let me why don't I answer the innovation and days you can talk about the guide for for going forward. So maybe let me talk about some things that we've already done. I can give you a little bit of sense of how we're thinking about next week and beyond. So, you know, we did over 50 upgrades last May, it was based on the idea that millions of customers have given us feedback actually both guest and host on how to improve it and we've listened.

Bryan is mentioned I think I am most excited about the additional efforts were making to get greater penetration or international markets and overall I'm seeing you know solid demand for Airbnb. It's like people are still prioritizing travel over buying things. So I'm I'm very bullish on the longterm.

Brian Chesky: If I were to just call out three things, Brian, I would just call out three things would be total price display pricing tools for host and monthly stays. So let me just go through three and what happened on total price display, we rolled out total price display before taxes. This is based on popular demand. We are now the only travel app of our kind that actually does this. Since you rolled this out, 260,000 listings have removed or reduced their cleaning fees.

Thank you.

Next I'll go to Chad Kelly at Oppenheimer and company.

A great. Thanks for taking my question.

Can you just give us further update on the regulations you talked about in the shareholder letter and then Google announced a new update to their vacation rentals, where they're you know, they're essentially letting property manager shoulder price. So can you talk about how how you're seeing some of the changes Google is making thank you.

Brian Chesky: We now have three million listings that need to do not have a cleaning fee. So we think this is working. We also think people are now being steered towards that are total value on a total price, inclusive, raw cost based. The second are pricing tools. Since you're old out new pricing tools, about half of new listings are now offering a monthly discount. We also have this new tool called similar listings where you can see where other people are charging around you.

[laughter].

I'll take regulations so.

Yeah, I would generally say over the last decade, we've been really really encouraged by the general trajectory of regulation here a couple of staff currently today.

80 per cent of our top to enter markets already have regulations on the books and these regulations, though they're very generally have found workable solutions for home sharing for us to continue to grow and thrive and I point out like the country. France has passed national legislation that is very very favorable and workable, we've had cities near us like Seattle or San Diego.

Brian Chesky: And this we find has been the best way to make sure our hosts have competitive prices because hosts are usually surprised to discover the listings that get most bookings around them offer a better value. And it's always really hard to know what your home is worth and what you charge. So the best thing you can do is get people transparent data when 1 million people have used these tools. And probably the thing I'd point to is while this time, year by year, in September data, hotel prices are up 10%.

<unk> <unk>.

Really favorable legislation I will probably conscious that to New York City, which is completely gone a different direction and Unfortunately, you know I felt when we started airbnb that we can develop a model legislation. It definitely can make any new York, we can make it anywhere and that other cities adopted legislation that new York's adopted it.

Brian Chesky: Airbnb prices globally are only up 1%. So we're definitely moving in the right direction. Now, in North America, on a mixed shift in effects neutral basis, our price is actually down 3% in North America. While hotels are up, you know, towards double digits, I think. So the last thing I'd say is monthly stays. We obviously announced a bunch of updates on monthly stays, including, you know, you can pay by bank. We lowered fees after 3 months. We have this whole new really cool interface. And stays for 3 months or longer are now growing nearly 20% year by year.

It turns out that's actually not the case in fact, Newark has gone a different direction and I think it's gonna turn into a cautionary tale because what we're already seeing his hotel prices in New York are now up 8% year over year, you know a one bedroom or a studio in York seemed to be about $500, a lotta people can't even afford to go there anymore, we are seeing more bookings.

<unk> Jersey City, and the Perimeters around New York City, and I do anticipate more and more activity will probably go onto ground, which is probably not the intention that people even pass a lot. So generally speaking we're seeing the trend line to be generally really really constructive we built this city portal, which is a one stop shop for cities to be.

Brian Chesky: So those are just 3 things we've seen. I think what we've learned is like as we listen to customers, we adapt quickly. We can drive incremental growth.

Brian Chesky: But as far as what's next, obviously, you know, we don't talk about too much before it will release. I will say though next Wednesday, we are focused on some pretty big opportunities around reliability. So this is the last thing I'll say about this. If you think about how big Airbnb is, for every person who stays in Airbnb, approximately 9 people every night stay in a hotel or about 9 booking, the hotels are about to order Mountain 2 bigger.

<unk> are you able to get data and monitor the type of activity happening there city, we have 400 cities on the city portal and generally what we're seeing is that a lot of cities and a pandemic of postman Demick era have reached out to us wanting to make sure that you know they get they they are able to benefit from economic dollars go into the city and we paid nine <unk>.

Brian Chesky: And when you ask people, why do you book a hotel and not a Airbnb, the number and reason they come up with is usually reliability that they know what they're going to get before they book. You know, it kind of speaks to the strength of weakness of Airbnb that on the one hand, it's one of a kind, other hand, that one of a kind that offers availability that not every person wants. And so next week, we're going to have some new new new offerings that I think we'll make a pretty big dent in this.

And hotel back so.

Generally it's gone fairly well it is gonna be notable that if you just read the news you're always gonna theme to be reading about a city something happening in Europe, because we're in 100000 cities and nearly all regulations happen at the municipal level. So it's kind of a long slog to be able to work with these cities because there's so many of them and there's not a lot of standardization.

Brian Chesky: So that's what I can say. I think I'm pretty optimistic about what you'll see next week. And of course, we're already working on stuff for next May and next October releases as well.

But generally speaking you know notwithstanding York, we are seeing a lot of positive developments.

David Stephenson: So hopefully stations. And then in terms of the guidance of Brian for the fourth quarter, we have our revenue guidance between 2.13 billion and 2.17 billion dollars. So that's revenue growth between 12 and 14%. And remember that and Q3 are revenue growth, excluding the impact of foreign exchanges, about 14%. So and we're not anticipating the same level of effects impact on the fourth quarter. So broadly, our revenue growth is a relatively comparable between Q4 and Q3.

And then on the Google question.

Yeah I can take this I mean, you know, we're not going to respond directly to any kind of specific thing that Google is doing I think if you do step back, though and remember that the vast majority of hosts on air B B. Your individual house, you know approximately 90 per cent of them that the majority of those listings are unique to Airbnb and you can only get them here.

I think that that is one of the larger kind of defensible notes that we have which is if you want to have an amazing day do you want to have the unique listings you come directly to us and we're really not seeing the impact of the competition, taking additional share from us in fact, we continued to take her inquiries.

David Stephenson: In terms of the night's guide, we're just seeing some variability in our night's demand here early in the quarter. And so we're just being cautious with that guide. And so we're not being specific on it, but anticipate nights to be a few points below nights growth to be a few points below Q3.

Relative share of listings.

Operator: Thank you both.

Listings in the market.

Continually and and this is why we continue to grow at faster than the overall kind of travel market. So uhm.

Lee Horowitz: We'll move to our next question from Lee Horowitz and Deutsche Bank. Thanks so much. Can you really help us think about how you guys are tracking towards expectations on occupancy or utilization moving forward. As you guys extend beyond the core into newer markets, do those markets come with occupancy or utilization headwinds that we should be thinking about and holistically, how you guys think about how occupancy or utilization may track next year.

Not much more to say beyond that.

Yeah, maybe maybe the only other thing I'd say, maybe the only other things that I'd say is we're just seeing a lot of strength and <unk> you can take a mobile buckings essentially like direct it's not people not going to Google 53% of our gross nights book the last quarter were on native mobile apps, essentially I O S and Android and that is up from.

Lee Horowitz: And then maybe, you know, just one high level one, you know, thinking beyond the current cycle, we've seen a lot of other, how much travel models sort of hit this, you know, low teams, the high single digit growth rate and, you know, decelerate from there or not be able to reaccelerate their business is meaningful. Like, can you maybe, you know, take a step back and help us better understand how you think that, you know, maybe Airbnb, maybe a little bit different than priorititions that we've seen and can perhaps sustain sort of that double digit revenue cadence.

Your earlier, which was was less than 50 per cent and again I'll just say 90 per cent of our traffic is director I'm paid. So do you think that the strength of the brand of strength over app the strength of people coming director of M. B as key and the reason it's direct is because the inventory to Nick it's not commodities. The majority of hosts don't list anywhere else we feel cut.

Tools for them. So that's a general theory to build unique inventory that allow people to come to wreck Airbnb and I don't see that changing.

Lee Horowitz: Over a longer period of time than what we're used to in the market. Thanks so much. So, what do we have here? Yeah, you start with I can see and I'll take the second question. Great. Yeah, in terms of occupancy, we've actually seen it be pretty stable in terms of kind of on a global basis. I mean, if you actually step back, you gotta remember that the vast majority of our hosts on Airbnb are individual hosts.

[laughter].

Oh. This is next to Nick Jones J M P Securities.

Great. Thanks for taking my questions.

Brian you've talked about air B N b as pricing, maybe not increasing or as it's dowell hotels are up I mean, how do you feel about the average price of an air Bnb today is there still room to kind of.

If you get those lower and and I guess, you know as you talk about some of the marketing and advertising campaigns.

Lee Horowitz: They're not looking to drive 100% occupancy of all their listings. And what they want to do is earn enough money. To usually hit on certain amount of financial goals. So as we continue to grow our inventory, we're continue to see, you know, strong occupancy levels, you know, overall, clearly we grew our inventory at 19%, which is ahead of kind of revenue growth in the current period. But if you actually step back and look over like a four year period, go back all the way to 2019, the growth in our overall listings has actually been relatively similar to our overall growth in night.

Do you think kind of travelers or or consumers view airbnb as a premium offering a discount offering is the reliability kind of the the trade off I guess can you kind of.

Maybe the picture a little bit more is that kind of what you feel consumers hesitation is maybe.

Book, an airbnb and and how much pricing plays a role in that.

Yeah, Hey, Nick let me start with pricing then I'll talk about the general offering uhm.

When we started Airbnb our original tagline was a cheap affordable alternative to a hotel and the primary reason people chosen at me in the early days was price.

Lee Horowitz: So that occupancy over an extended time period tends to be fairly stable while in any short-term time period, it can have a little bit more volatility. But overall, again, we don't focus on occupancy as on primary drivers when we monitor it on locale by locale because what really matters is that we have great available listings in the specific market on a specific date.

Now once they used it we used the same money at the hook with the experienced as a reason to keep coming back because it also turns out when you stay an airbnb <unk> typically in a real neighborhood not at Hotel District, you have this really cool space you can make a meal you have a lot more much.

Much more equipped home yeah, sometimes there's a local connection to the community. If that's what you're looking for but affordability has always been one of the most important benefits that we have an air Bnb <unk>.

Brian Chesky: Hey, Lee, I'll take your second question. Yes, I think that, you know, as I said before, I think we're only scratching the surface of helping this company becomes, and I absolutely think that we can get to, you know, really solid, you know, double digit revenue growth for many, many years to come. And there's three things that I'd point out.

I do feel like we still have opportunity for prices to be even more competitive does it really interesting thing we discovered within reason generally when hosts lower the prices they tend to make more money.

This is typically not sure of hotels right. Because if you are running at 80 per cent occupancy and you lower your prices per night, you typically don't have a lot more room to make up the lower prices with higher occupancy unseal typically lose money, but many of our host run it low enough I can see and they always have that'd be lower the prices just a bit they can sell more ninth and so we think there's a win win.

Brian Chesky: The first is our core business. I think our core business could be significantly larger than it is today, even if we didn't do anything new. And the reason I believe this is the following. I believe that almost every single person who stays in the hotel could stay in an Airbnb. If number one, they knew about all the benefit of Airbnb. And number two, we made sure that our service was sufficiently reliable to be an alternative.

<unk>, if we continue to encourage host to offer more competitive pricing. It's a win for gas, but it's also win for many of the house and I would also just point out that.

In addition to pricing tools, you know you need to have ample supply supply I just want a highlight again just growing 19% year over year. This was a huge question by the 18 months ago could air maybe reaccelerate nearly 20 per cent supply growth and we are approaching 20 per cent supply growth and I think that is really really key so to answer your question Uhm, we've made huge progress and last year, but <unk>.

Brian Chesky: So let me start with, let me start with those two. We've done recently a new marketing campaign that's called Airbnb, and it basically contrasts the benefits of the Airbnb versus the hotel. And based on our research, one of the things we've noticed is that a lot of people stay in hotels don't understand some of the unique benefits of staying in Airbnb and why it is better for certain types of trips. And one type of trip that Airbnb is almost always better is when you're traveling with three or more people.

Mrs are quite significantly from pre pandemic for air Bnb Aunt Hotel, we're both up a lot and my hope is whether or not prices come down on air Bnb further in the next year or two I hope his wall hotels will almost undoubtedly keep increasing your a year are prices will continue to be a little bit more there'll be more.

Brian Chesky: If you're traveling with a family or traveling to the group, why do you want to stay in different rooms versus different different rooms separated, we're having to stay in the same, you have to all go to the same time. And then the only place you can meet in these crowded lobbies, when you can get a hall home all to yourself. So this is, we've been running these digital campaigns. It's the highest performing digital campaign we've ever done, and this is going to be the basis for a new major new marketing campaign next year.

Moderated and that goes to the next question we.

We actually think there's there's a very high high correlation a relationship between a D. R <unk> and the higher the ADR typically the lower the Knights Grove and the lower the ADR typically the higher the nightclub. So there's a tradeoff there and so we think that you know as we continue to be more affordable will continue to.

Brian Chesky: Additional to that, as I mentioned before, is we just keep focusing on reliability, making sure that, you know, when you book, you know what you're going to get, and this is ever a problem, you have an excellent customer service that is nearly as good as a front desk or as good as a front desk. Then I think there could be in the years to come a tipping point where many people could choose Airbnb.

They might more demand.

Now the interesting give an airbnb is that we're not really one type of offering right southwest it's a bunch of friends.

Brian Chesky: So that's just our core business. Next is international, even though we're in 220 countries and regions, there's only a couple of countries where we even have penetration that rivals the United States. And those countries are Canada, Australia and France. After that, you know, you pay a little bit, it really starts to tip down. And so we have like massive massive opportunity, and just by bringing Airbnb's playbook to these other countries, obviously Germany, but not just Germany, like actually the entirety of Northern Europe, Eastern Europe, and even in Italy and Spain, basically every country, but France and UK, there's our at a step change, lower penetration. Latin America is a completely new market for us, emerging Asia Pacific, I would argue, is a completely new market. You know, we can be adding huge amounts of growth just by our expansion playbook.

<unk> is a luxury brand Apple, it's kind of like a luxury brand for like a lot of different people, but they do have like premium prices Airbnb offering <unk>.

Really is one of the most unique Brazilian model I mean, we're one of the most popular brands for people under 30 and travel probably the most popular band for people under 30, but we're also very much a family travel brand because homes accommodate families much better than you know typically hotel, we're not just in urban brand where rural brand new vacation.

Bran, we're not just north American brand or a global brand. So what are the things we highly when when public is that we literally literally have something for everyone, but as we continued to get more affordable I think that's gonna continue to drive a lot for us.

Brian Chesky: And then finally, yeah, I mean, I would say just a new product and services, though we're not disclosing anything that we're doing new right now. Here's what I'd say, I think the biggest strength I have is the CEO is not driving profitability, even though we've done a really good job. I think it is literally inventing new products and services. It's why we've hired so many great technologists, designers, and you know, I think I think this is going to be a sweet spot for us.

[laughter].

And next door got around Jessie at city.

Great. Thanks for taking the question, but I wanted to ask a little bit about your comments on first time bookers and just trying to understand a little bit more of the drivers are attracting these new brokers are they are they doing this directly through the brand airbnb through the App and just trying to understand a little bit more as you're expanding the pie and getting more supply how users are coming to this.

Brian Chesky: We're obviously not going to talk about new things before we ship them, but twice a year every May and every November, October, November, we're going to be hoping putting out going forward new ideas that I hope really, you know, increased the adjustable market for Airbnb. And I think that we can do much more than just short term housing, but again, I think short term housing is still a huge opportunity.

Point number one and second question just on progress with experiences as any update their thank you.

Yeah, I mean, David could feel free to jump in on this but at the highest level. We generally are seeing that the vast majority of first time bookers still come direct airbnb.

So you know.

I'll just kind of step at the.

Operator: Laura.

The number one way reason people come to Airbnb, because a friend or a family member told them by air Bnb, and so we primarily grow through word of mouth.

Doug Anmuth: We'll go to our next question from Doug Ann McAJP Morgan. Thanks for taking the questions.

David Stephenson: First, you've caught up with a greater volatility in early 4Q, just curious if you've been in view of whether that's more macro driven or geopolitical. And then, curious if you have a sense of kind of visibility and any kind of bookings into 2024 and perhaps maybe how that visibility compares now versus a year ago. Thanks. Yeah, it's hard to completely pin down the root cause of any kind of softness or volatility.

After that then we have a lot of earned media. We have five 600000 press articles a year I mean, the share of voice of Airbnb compared to most travel companies is overwhelming we have a greater share voice that almost all the other major travel brands combine we also have a huge amount of presence on social media you might've heard a few months ago about the Barbie house rent an airbnb.

Or the trek out and so we get a lotta earned media and then beyond that we do these pretty big brand campaign.

You know the vast majority of our marketing spend that we do spend an advertising is not performance marketing it's brand marketing, it's really marketing education around our unique product offering. So we do do performance marketing, but we think unlike other travel company does not necessarily way to fight customers, it's little literally more like a laser that we used to hone in on.

David Stephenson: I think it is just broadly what we're seeing is a little bit of softness in our overall kind of demand relative to Q3. We call out kind of the macro economic and geopolitical just because that is what I think driving it involved to the market is out there. It's early. I think I'm feeling confident about our revenue growth for Q4 being 12 to 14% growth. And the fact that that remains stable with Q3 I think is really promising.

Balancing supply demand and we really can use it to optimize certain markets. So a lot of it remains track again 90 per cent of our traffic is director on paid I think that's been pretty consistent.

David Stephenson: Our early visibility into 2024 is, again, it's too early to tell. I think I'm feeling great about our overall playbook and plans as kind of Brian has mentioned. I think I am most excited about the additional efforts we're making to get greater penetration in our international markets and overall I'm seeing solid demand for Airbnb's like people are still prioritizing travel over buying things. So I'm very bullish on the long term. Thank you.

On experiences again, I don't have anything new to up to share now I'll just say the following we are actively working on updates this product as much as people love homes, I think 84 per cent of people, who lead Rebecca Airbnb Libra review leave a five star we even have a higher customer satisfaction experiences 94 per cent of people.

<unk>. So you know we haven't updated this product yet because we've just had our hands full really trying to focus on the most perishable opportunities, which was recovering from the pandemic improving request service and addressing.

Jed Kelly: Next we'll go to Ted Kelly at Oppenheimer and company. Hey, great. Thanks for taking my question.

Ted Kelly: Can you just give us further update on the regulations you talked about in the shareholder letter? And then Google announced a new update to their vacation rentals where they're essentially letting property managers show their price. So can you talk about how you're seeing some of the changes that Google is making? Thank you.

The needs of customers, but we should have some updates coming in the coming obviously coming next year and beyond on this product and so you'll you'll see where we're continually investing in this product.

[laughter].

We'll go next to Kevin Koppelman at T D Cowan.

Thanks, a lot could you touch on your vision for building more of a travel community an airbnb, maybe that's the timeline you extra for rolling out some of the community features that you've talked about it a little bit.

Brian Chesky: Hey, Ted. I'll take regulations. So, yeah, I would generally say over the last decade we've been really really encouraged by the general trajectory of regulation.

Brian Chesky: Here are a couple of steps. Currently today, 80% of our top Q&R markets already have regulations on the books. And these regulations, though they vary, generally have found workable solutions for home sharing for us to continue to grow and thrive. And I point out like the country of France has passed national legislation that is very, very favorable and workable. We've had cities near us like Seattle or San Diego that have passed really favorable legislation.

Yeah, Hey, Kevin Yeah.

Yeah I think.

Let me just explain what I mean by a travel community to I think one of the biggest divisions that we have at the company isn't just to be a marketplace to become but to build literally quite literally a global travel community, where you can get homes and experiences in a variety of other services. All one place. So we can provide a lot of offerings for gas and house and that we can use in emerging technologies.

Like generative a I like take the G. P two or four model, where the M. B app it could be like the ultimate travel agent.

Brian Chesky: I will probably contrast that to New York City, which has completely gone a different direction. And unfortunately, I thought when we started Airbnb that we could develop model legislation in New York. That we can make it in New York. We can make it anywhere and that other cities adopted legislation that New York adopted. It turns out that's actually not the case.

So to do this there's a number of things that we've been investing in the first thing is identity and account structure. So and most travel companies you can book as a guest and they don't even have account information and you know you can sign up with an account, but you can also check out with the gas and they don't have the same robust account information that we do an air B N B 100 per cent of the bookers and 100 per Sir.

Brian Chesky: In fact, New York has gone a different direction. And I think it's going to turn it to a cautionary pale because what we're already seeing is hotel price in New York are now up 8% year by year. You know, a one bedroom or a studio in New York seems to be about $500. A lot of people can't even afford to go there anymore. We are seeing more bookings in Jersey City and the primators around New York City.

Brian Chesky: And I do anticipate more and more activity will probably go underground, which is probably not the intention of the people to even pass the law.

<unk> have to have it verified I D. On you know have to associate it to their account they have a robust profiles about 70 per cent of people on the guest and host side leave reviews to other people. So this really does demonstrate how are meat a little bit of a different community. We think that if we continue to invest in the profile.

And we can continue to invest in our system of Trust then as we learn more about guest and host. We can then match them for more types of offerings, an air Bnb and so this is I think really what we're starting to see and the reason the a I S. So powerful is I'll just cover two opportunities.

Brian Chesky: So generally speaking, we're seeing the trend line to be generally really, really constructive.

Brian Chesky: We built this city portal with the one stop shop for cities to be able to sell, or be able to get data and monitor the type of activity happening in their city. We have 400 cities on the city portal. And generally what we're seeing is that a lot of cities and a pandemic or post pandemic era have reached out to us wanting to make sure that they are able to benefit from economic dollars going into the city. And we've paid $9 billion in hotel tax. Generally, it's gone fairly well.

Number one.

I think that it's gonna affect this is an obvious statement I think digital businesses more than brick and mortar businesses. So airbnb an O T. As are probably gonna benefit more quickly from AI than say a hotel will just because airbnb an auteur some more digital and so the transformation will happen at the digital surface sooner one of the areas that were specifically in the benefit is.

Brian Chesky: It is going to be notable that if you just read the news, you're always going to seem to be reading about A-Cities, something happening in New York because we're in a hundred thousand cities and nearly all regulations happen at the municipal level. So it's kind of a long slot to be able to work with these cities because there's so many of them and there's not a lot of standardization. But generally speaking, you know, not wasting in New York, we are seeing a lot of positive developments.

Customer service right now customer service can be it's really really hard, especially compared to a hotel. The problem is imagine you have a Japanese house booking with a <unk> with a <unk> hosting a German gas and there's a problem and yet. These two people speaking different languages, calling customer service, there's a myriad of issues. There's no front desk. We can't go on premise, we don't understand the inventory.

Brian Chesky: And then on the Google question, yeah, I can take this. I mean, you know, we're not going to respond directly to any kind of specific thing that Google is doing. I think if you do step back though and remember that the vast majority of hosts on Airbnb or individual hosts, you know, approximately 90% of them that the majority of those listings are unique to Airbnb and you can only jump in here.

And we need to try to adjudicate an issue based on 70 different policies that can be up to 100 paid tomorrow, a I can literally.

Start to solve these problems were agents can supervise a model that can in seconds come up with a better resolution to provide front desk level support nearly every committee in the world, but probably more importantly.

Kevin is what we can do by re imagining the search experience you know travel search has not really changed much in 25 years since really expedia hotels dot com, it's pretty much the same it's been an airbnb, we fit that paradigm. There's a search box you enter your date location you refine your results in your book something and it really hasn't changed much for a couple of days.

Brian Chesky: I think that that is one of the larger kind of defensible notes that we have, which is if you want to have an amazing stay. If you want to have unique listings, you come directly to us and we're really not seeing the impact of the competition, taking additional share from us. In fact, we continue to take or increase our relative share of listings in the market, you know, continually. And this is why we're continuing to grow at faster than the overall kind of travel market.

I think now with AI, there can be entirely different boogie models and I think this is like a cambrian moment for like the internet or mobile for travel where suddenly an app could actually learn more about you could ask you a question and they can offer you a significantly greater personalized service before the internet or travel agents and.

Brian Chesky: So, don't have much more to say beyond that. Yeah, maybe the only other thing I'd say, maybe the only other thing that I'd say is we're just seeing a lot of strength and mobile bookings. You can dig a mobile bookings essentially like direct. It's not people not going to Google 53% of our gross night's book on the last quarter. We're on native mobile apps, essentially iOS and Android. And that is us from a year earlier, which was less than 50%.

I actually used to learn about U and then traveled got unbundled. It became self service and it became all about price, but we do think that there's a way that travel could could change and a I could lead the way with that so these are some of the things we're thinking about and I think it's really really exciting and we're just the beginning for this.

Brian Chesky: And again, I'll just say 90% of our traffic is direct or unpaid. So, we think the strength of a brand, the strength of our app, the strength of people coming direct Airbnb is key. And the reason it's direct is because our inventory is unique. It's not commodities. The majority of hosts don't list anywhere else. We've built custom tools for them. So that's our general theory to build unique inventory that allow people to come direct to Airbnb.

Almost next to Justin posted bank of America.

Brian Chesky: And I don't see that changing.

Great. Thanks, taking my question Uhm supplies of 19% how do you think about that as a as a leading indicator for <unk> growth and and how do you maybe accelerate nightclub to capture that and then the second question is on <unk> is that supply coming in higher lower similar a D r's and I Dunno, David you can give us.

Any thoughts on positive or negative drivers for for <unk> next year. Thank you.

Nick Jones: We'll move next to Nick Jones at JMP Securities. Great. Thanks for taking the questions. You know, Brian, you've talked about Airbnb pricing, maybe not increasing or it's down while hotels are up. I mean, how do you feel about the average prices on Airbnb today? Is there still room to kind of maybe get those lower? And I guess, you know, as you talk about some of the marketing and advertising campaigns. Do you think kind of travelers or consumers view Airbnb as a premium offering, a discount offering, is the reliability kind of the trade off?

Sure Yeah, I'll start with <unk> it'll go back to Uhm gross I mean on the ADR side it varies a little bit by market, we have seen depending on the market. The 80 hours a new listings coming in.

A little bit higher than they were <unk> average current ones, but what actually ended up happening is people are booking lower ADR places and so that's kind of the offset is it depends on what's available and versus what's book and it does vary a little bit by region between North America and Europe on on what the prices are in North America, we're seeing more the prices come down.

And I think that's been a good indicator of strength for us going forward and in Europe. The 80 hours have been a little bit more elevated and we're hoping that with some more of the work we've done to improve hosts tools and give greater visibility hosting how their pricing will continue to be able to kind of moderate avr's in.

Nick Jones: I guess, can you kind of maybe paint the picture a little bit more as to kind of what you feel consumers hesitation is, maybe book an Airbnb and how much pricing plays a role in that. Thanks. Yeah, Nick, let me start with pricing and then I'll talk about the general offering. You know, when we started Airbnb, our original tagline was a cheap affordable alternative to a hotel. And the primary reason people chose to mean the early days was price.

Your coin for too so that's on the leading indicator I do think that the strength of 19% listings growth is a great leading indicator of what we're capable of growing over time as I said earlier you know.

Nick Jones: Now, once they used it, we used to say money is the hook, but the experience is the reason you keep coming back because it also turns out when you stay in Airbnb, you're often typically in a real neighborhood, not a hotel district. You have this really cool space. You can make a meal. You have a lot more, much more quick home, you know, sometimes there's a local connection to the community if that's you're looking for.

The overall growth of Airbnb since 2019 nights growth has been actually relatively minor with a poodle on growth of supply and I'm really bullish that we can get more supply coming on which will have more quality supply coming in which will also can drive down actually the prices becomes the more supply that comes on board maybe.

Nick Jones: But affordability has always been one of the most important benefits that we have on Airbnb. And I do feel like we still have opportunities for a price to be even more competitive. There's a really interesting thing we discovered. Within reason, generally when hosts lower the prices, they tend to make more money. And this is typically not true of hotels, right? Because if you're running at 80% occupancy and you lower your prices per night, you typically don't have a lot more room to make up the lower prices of higher occupancy and feel typically lose money.

Back to your first question than the more likelihood that we can actually bring prices down in the market or at least moderate them. So they don't grow as fast as competing supply so uhm I'm really.

Bullish on our wall broken since it's been great to see the strength of our listings grew up this year.

And maybe just <unk> I'll, just say that like.

This is my intuition, having done this for almost 16 years of my life I think that's supply is even more important than it seems on the surface. Ultimately you know when your tiny and no one ever hears about your one of the big levers is awareness, but once your brand like air Bnb, that's known as <unk> really anon number of used all over the world.

Nick Jones: But many of our hosts run at low enough occupancy and they always have that if they lower the prices a bit, they can sell more ninth. And so we think there's a win win where if we continue to encourage hosts to offer more competitive pricing, it's a win for guests, but it's also a win for many of the hosts. And I would also just point out that in addition to pricing tools, you know, you need to have ample supply.

So a pipe supply growth becomes a very important like longterm leaning indicator and so long as we make sure we have healthy supply growth and then we continue to improve reliability and promote M. B globally around the World. Then that is a very very healthy longterm indicator, we'd love for that number to be higher.

Nick Jones: Supply I just want to highlight again is growing 19% year-to-year. This is a huge question by the way, a few months ago. Could Airbnb be reaccelling to nearly 20% supply growth? And we are approaching 20% supply growth. I think that is really, really key. So to answer your question, we've made huge progress in last year, but prices are up quite significantly from pre-pandemic for Airbnb and hotel. We're both up a lot.

We'll go next to James Lee <unk>.

Nick Jones: And my hope is whether or not prices come down on Airbnb further in the next year or two. My hope is while hotels were almost undoubtedly keep increasing year to year, our prices will continue to be a little bit more moderated. And that goes to the next question. We actually think there's a very high correlation relationship between ADR and NICE growth, and the higher the ADR, typically the lower the NICE growth, and the lower the ADR, typically the higher the NICE growth, so there's a trade-off there.

Uhm.

And change your line is may be muted.

Great. Thanks for taking my question two questions here, Dave I remember at the beginning of the year you know when you are guiding.

80 yard down about mid single digits, you were talking about leverage and like variable expenses like payment. The cloud I was just wondering what you wanted that process how much to unlock on four and secondarily on sales and marketing it looks like supplies growing demand right now it's a favorite soon with shifting <unk>.

Nick Jones: And so we think that, you know, as we continue to be more affordable, we'll continue to stimulate more demand. Now the interesting thing about Airbnb is that we're not really one type of offering, right? Southwest is a bunch of brands. Louis Vuitton is a luxury brand, Apple's kind of like a luxury brand for like a lot of different people, but they do have like premium prices. Airbnb's offering really is one of the most unique in Brazilian models.

Nick Jones: I mean, we are one of the most popular brands for people under 30 and travel, probably the most popular brand for people under 30, but we're also very much a family travel brand because homes accommodate families much better than, you know, typically hotels. We're not just an urban brand. We're a rural brand, a vacation brand. We're not just in North American brand, we're a global brand.

Sigh advertising you know going forward and can you talk about the implications here. Thanks.

Okay.

No. It will show a sales and marketing we're not actually shifting more of a two demand-side marketing I think what we're seeing is exactly the success that Brian talked about earlier on the call. You know we the vast majority of our traffic is director on paid the the first reason why people come to Airbnb is that they're referred to my family and friends that come.

Directly to us the brand marketing certainly kind of helps talk about all the features and benefits of Airbnb and we use our search engine marketing is kind of a laser to focus on areas, where maybe we have less demand and we have supply one specific area. You know specific countries, where we want to focus and and kind of grow.

Brian Chesky: So one of the things we highlight when we're in public is that we literally, literally have something for everyone, but as we continue to get more affordable, I think that's going to continue to drive a lot more for us.

The overall kind of pie for us. So it is not the primary driver of it but this overall strategy, leading with brand and then following with surgical on our search engine marketing continues to work really well for us.

Ryan Nowak: And next, we'll go to Ryan to see that city. Great. Thanks for taking the question, Brian. I wanted to ask a little bit about your comments on first time bookers and to try and understand a little bit more of the drivers are attracting these new bookers. Are they are they doing this directly through the brand Airbnb to the app and just trying to understand a little bit more as you're expanding the pie and getting more supply.

And then in terms of the 80 or you know I think that the unlock of.

The variable expense improvements we've been making.

You know just continued to enable us to drive profitable growth right. We have are fixed cost growth discipline has been excellent I'm probably draw <unk> head count this year approximately four per cent. So withdrawing her head count and fixed expenses less than revenue will continue to make great strides of improvement in our operations and support.

Ryan Nowak: How users are coming to the site point number one and second question just on privacy with experiences. There's any update there. Thank you. Yeah, I mean, David can feel free to jump in on this, but at the highest level, we generally are seeing that the vast majority of first time bookers still come direct to Airbnb.

And Brian talked about a lot of opportunities we have going forward in customer service.

Brian Chesky: So, you know, I'll just kind of step back. The number one way reason people come to Airbnb is because a friend or a family member told them about Airbnb. And so we primarily grow through word amount. After that, then we have a lot of earned media. You know, we have five, six hundred thousand press or equal to the year. I mean, the share of voice of Airbnb compared to most travel companies is overwhelming.

And then were you know continue to make good strides and cost of payments are infrastructure costs et cetera, that's not our primary driver like our primary focus is still on growth growth of the business, making hosting mainstream perfect and of course service and expanding down the core and the fact that I can do all of those things and do it while still doing it profitably in actually.

Expanding our wal-mart since this here is something I'm, just very proud of.

Brian Chesky: We have a greater share of voice than almost all the other major travel brands combined. We also have a huge amount of presence in social media. You might have heard a few months ago about the Barbie house friends in Airbnb or the Shrek house. So we get a lot of earned media. And then beyond that, we do these pretty big brand campaign. And, you know, the vast majority of our marketing spend that we do spend advertising is not performance marketing.

Okay. Let me try next question from <unk> U V S.

Thanks. My question you know you guys have been talking a lot about innovating on them search experiencing working on 10, a I the community side things I've co hosting the.

Brian Chesky: It's brand marketing. It's really marketing education around our unique product offering. So, we do do performance marketing, but we think unlike other travel companies, it's not to show you way to buy customers. It's literally more like a laser that we use to hone in on balancing supplies demand. And we really can use it to optimize certain markets. So, a lot of it remains to wreck. And again, 90% of our traffic is director on page.

Do you see a path where some of these features over the longer term like community and searched drive enough differentiation that you could bring on more traditional supply things like boutique hotels in in such a way that you kind of expand your addressable market and revenue per user while still sort of preserving.

Enough that unique about air B N. B is that is that sort of makes sense or or is that just too too far out there.

Brian Chesky: I think that's been pretty consistent on experiences. Again, I don't have anything new to up to share now. I'll just say the following. We are actively working on updates to this product. As much as people love homes, I think 84% of people who leave the book of Airbnb and leave review leave a five star. We even have a higher customer satisfaction experience is 94% of people leave five star reviews. So, you know, we haven't updated this product yet because we just had our hands full really trying to focus in the most perishable opportunities, which was recovering for the pandemic.

No Lloyd that absolutely makes sense and I think that's inevitability just to back up for a second we're very much supportive having hotel inventory on air Bnb N B acquired hotel Tonight for the pandemic because we believe so much in this over the last few years, you know we had to make some decisions, especially when our business initially contracted.

And we made some decisions. He said well you have to really just get focused on our core in a corner where individual people renting homes sharing homes that is the most differentiate thing is inventory you can't find anywhere else. It's a thing that is most defensible is the thing that attracts all the <unk> the direct traffic that being said.

Brian Chesky: Improving our core service and addressing the demand, the needs of customers, but we should have some updates coming in the coming obviously coming next year and beyond on this product. And so, you'll see we're continually investing in this product.

Let's just take New York for example, we still have a lot of traffic people searching for New York and we now have a lot less immature you used to have so there's a real opportunity for us to supplement what used to be homes with matico tell if they're already on hotel Tonight, and others and we can certainly put those in New York and I generally think for sure as Airbnb becomes a little more.

Kevin Kopelman: We'll go next to Kevin Kopelman at TD Cowan. Thanks a lot.

Brian Chesky: Could you touch on your vision for building more of a travel community on Airbnb and maybe the timeline you're exploring on some of the new community features that you've talked about a little bit? Thanks. Hey, Kevin. Yeah, I think let me just explain what I even mean by a travel community. I think one of the biggest visions that we have as a company isn't just to be a marketplace to book home, but to build literally, quite literally a global travel community where you can get homes and experiences and a variety of other services all one place so we can provide a lot of offerings for guest and host and that we can use in emerging technologies like Generative AI, like take the GPT-24 model where the Airbnb app could be like the ultimate travel agent.

More of a you know so called like a I travel agent, which is what I think I'll travel apps will trend towards to some extent I think there's opportunities for us to do things in a differentiated way, even with slightly less differentiate inventory I think our bread and butter for accommodations are always gonna be home I think that's where our heart and soul is I can also think that's where the biggest growth off.

It should be is but are you should not think of our total supply addressable market of supply is only homes there'll be we've had hotel. We've just been prioritising homes, because we wanted to be really focused.

[laughter].

Brian Chesky: So to do this, there's a number of things that we've been investing in. The first thing is identity and account structure. So on most travel companies, you can book as a guest and they don't even have account information and you know, you can sign up with an account, but you can also check out as a guest and they don't have the same robust account information that we do. On Airbnb, 100% of the bookers and 100% of the hosts have to have a verified ID on, you know, associated to their account.

Next one minute to Kenneth for ASCII at Wells Fargo.

Alright. Thank you so much appreciate it two questions. If I may 1st I want to go back to supply I know you've talked a lot about it the the room nights up 19 with double digit growth and all territories. Yet every week, we read about new <unk> regulations at least in North America could you help us records.

File this this kind of.

Brian Chesky: They have robust profiles about 70% of people on the guest and host side leave reviews to the other people. So this really does demonstrate how it meets a little bit of a different community. We think that if we continue to invest in the profile and we can continue to invest in our system of trust, then as we learn more about guest and host, we can then match them for more types of offerings on Airbnb.

This contrast for the financial markets like what what are we missing as investors here, where where is that supply growth really happening, especially in and they kind of western <unk> and then my second question to be a bit more specific I I know you <unk> you called up the volatility in a room nights and on the demand side and four Q.

Are there any specific regions that you would call out or is it more broad based and just on the timing standpoint did this start in October or did you see some of the small <unk> start and and three Q. Thank you.

Brian Chesky: And so this is I think really what we're starting to see. And the reason the AI is so powerful is I'll just cover two opportunities. Number one, I think that AI is going to affect, this is an obvious statement. I think digital businesses more than brick and mortar businesses. So Airbnb and OTAs are probably going to benefit more quickly from AI than say a hotel will, just because Airbnb and OTAs are more digital.

Yeah, maybe maybe I'll <unk> I'll go for days.

Well I'll just start with the ball to the <unk> and <unk>, there's not a specific region, where we're seeing uhm I think that maybe the.

Brian Chesky: And so the transformation will happen at the digital surface sooner. One of the areas that works specifically in the benefit is customer service. Right now customer service in these really, really hard, especially compared to OTAs. The problem is imagine you have a Japanese host looking with hosting a German guest and there's a problem and you have these two people seeking different languages calling customer service. There's a myriad of issues. There's no front-ass.

The biggest thing we've seen is that it's more broad based on a global basis right now, which is why we've come a cold out in the macroeconomic and potential geopolitical issues as potential driver to it you know we saw it maybe some of it just late September and it's kind of been early October and again, it's just a little too early to tell how much of all to see.

Going through the rest of the quarter. That's why we continue to highlight the revenue growth. We're still expecting this year between 12 and 14 per cent growth overall.

Brian Chesky: We can't go on premise. We don't understand the inventory and we need to try to adjudicate an issue based on 70 different policies that can be up to 100 pages long. AI can literally start to solve these problems where agents can supervise a model that can in seconds come up with a better resolution and provide front-ass level support in nearly every community in the world. But probably more importantly, Kevin is what we can do by reimagining the search experience.

And then on the regulation side <unk>, it's a lot of O'brien said earlier that 80% of our top to the market's already have regulation I think the headlines they tend to make good headlines. When you know when people are highlighting kind of issues with short term regulation, but in many ways outside of New York City I've never been felt better about our overall regulatory.

Manscape on a global basis, we we have really good friendships with many cities around the world and things like our city put a lot of things you know has made us continue to collaborate extremely well with the vast majority of cities. So I think those are outliers, but Brian.

Brian Chesky: You know, travel search has not really changed much in 25 years. Since really it's speedy hotel.com. It's pretty much the same as been in Airbnb. We fit that paradigm. There's a search box. You enter a date location. You refine your results and you book something and it really hasn't changed much for a couple of decades. I think now with AI, there can be entirely different booking models. And I think this is like a Cambrian moment for like the internet or mobile for travel where suddenly an app could actually learn more about you.

Yeah, and I, just say like again, we're not we're.

We're like 100000 cities around the World and you know you know.

For every headline you read their cities to actually have very workable solutions is not all that activity bracketing.

Brian Chesky: It could ask you questions and it could offer you a significantly greater personalized service before the internet. There were travel agents and they actually used to learn about you and then travel got unbundled. It became self-service and it became all about price. But we do think that there's a way that travel could change and AI could lead the way with that.

Growth and supply across all types of markets not just big cities, where you're seeing headlines and I think vacation rental destinations in fact, there's a U S census report to be looked at but I think said that two thirds of markets, where airbnb as exists there aren't even hotel.

So if you just think about that way, there's a lot of markets with the aren't even hotels, especially the vacation rental manada urban areas. So the way I'd reconcile it is just to say that like while you read headlines about a few city they actually represent a very small percentage of the overall market concentration we have.

Brian Chesky: So these are some of the things we're thinking about and I think it's really, really exciting and we're just the beginning.

Justin Post: We'll move next to Justin Post at Bank of America. Great. Thanks for hearing my question.

[laughter].

David Stephenson: Supplies of 19%, how do you think about that as a leading indicator for night growth? And how do you maybe accelerate night growth to capture that? And then second question is on ADRs. Is that supply coming in higher, lower, similar ADRs? And I don't know, David, you can give us any thoughts on positive and negative drivers for ADRs next year. Thank you.

We'll take our next question Cunningham Malleus research.

Hi, everyone. Thank you just on the the the two thirds of the husband are using these need the pricing policies.

Today Uhm, what as you add new supply art, you mentioned that the D. R. As a new supplies at a higher rate, but are those people more likely to use the discounting tools that you kind of mentioned not after they pushed him before and then maybe on the implications for for take right when you're when you're moving to international markets you tracking towards.

David Stephenson: Sure, you'll start with ADR and we'll go back to growth. I mean, on the ADR side, you know, it varies a little bit by market. We have seen, depending on the market, the ADRs and new listings coming in, you know, a little bit higher than they were average current ones. But what actually ends up happening is people are booking lower ADR places. And so that's kind of the offset. That is that depends on what's available and versus what's booked.

Over 50 per cent of your rooms that are kind of aren't gonna be there is <unk>. Eventually just kind of <unk> is that is not expand just just curious on your thinking about about that overall. Thank you.

Yeah, I can take the the first one corner on tools.

David Stephenson: And it does vary a little bit by region between North America and Europe on on what the prices are in North America. We're seeing more of the prices come down. And I think that's been a good, you know, indicator of strength for us going forward. And in Europe, the ADRs have been a little bit more elevated. And we're hoping that with some more of the work that we've done to improve host tools and give, you know, great visibility to host and how they're pricing.

Generally new host adopt new tools at a higher raised an existing host and the reason why is like.

When you sign up like you know we have this really great onboarding and.

You're immediately presented.

With all the tools now we do have a percentage of our hosts maybe like call. It a million house that are highly how you engage and they're gonna be you were really engaged in a lot of these tool that every new house as far as they're concerned every tool is like it is exactly how you're supposed to use air bnb, whereas an older House, there's an adoption where you have to get them onto the neutral.

David Stephenson: So we'll continue to be able to kind of moderate ADRs in Europe going forward to so that's on the leading indicator. I do think that the strength of 19% listings growth is a great leading indicator of what we're capable of growing over time. As I said earlier, you know, the overall growth of Airbnb since 2019 night's growth has been actually relatively in line with the total growth of supply. And I'm really bullish that we can get more supply coming on, which will have more quality supply coming in, which will also can drive down actually the prices because the more supply that comes on board, maybe back to your first question, then the more likelihood that we can actually bring prices down in the market. Or at least moderate them so they don't grow as fast as competing supply. So I'm really bullish on our overall growth. It's been great to see the strength of our listings growth this year.

And they're used to hosting a certain way. So we generally saying that new house would probably adopt new tools at a faster rate than existing house that being said you know the ADR related in your house might also be related to the mix shift you know, we're getting a lot of inventory and not urban areas, they're larger homes. So there's a lot of different reasons that can explain that.

Dave I can hand over to you.

[noise], Yeah and give me the second question again, it was to create an international house.

Yeah, just as as you expand internationally is there gonna be a natural production and take right. Overall is that kind of tracks on 50 per cent of your program. So at some point. Thank you.

No actually I think over time the way, we think about our take right is that it's been very stable. We've actually made no underlying kind of change the recent changes to our absolute take right and what we want to be able to do is as we add more services and capabilities that would be the way to further kinda monetize airbnb. So.

Brian Chesky: And maybe Justin, I'll just say that like this is my intuition having done this for almost 16 years in my life. I think that supply is even more important than it seems on the surface. Ultimately, you know, when you're tiny and no one never hears about you, one of the big levers is awareness. But once you're a brand like Airbnb that's known as really a number of views to all over the world.

What are we done things like adding guest travel insurance has been a nice AD for kind of incremental monetization. It's small, but it's it's growing nicely and then as Brian said, they're actually kind of expand young poor and add more services for hosting gas that'd be the way to kind of increasing so.

Brian Chesky: So a pie to pie growth becomes a very important like long term leading indicator. And so long as we make sure we have healthy supply growth, and then we continue to improve reliability and promote the global around the world, then that is a very, very healthy, you know, long term indicator. And we love for that number to be higher.

And you could theoretically you could argue the universe, which is to say the ethics span of new market they might be more interested in new services that we can offer because hosting is nowhere to them. So as it expanded new markets and as we expand to new host services, we want to make sure that new host a new markets are per cent of those opportunities.

James Lee: We'll go next to James Lee at Manzuhu. And James, your line is open. You may be muted. Great. Thanks for taking my question. Two questions here, Dave. I remember at the beginning of the year, you know, when you were guiding ADR down about this single ditches, you were talking about leverage and like variable expenses like payment and cloud. Now, I just wonder where you are in that process, how much up to unlock going forward. And secondarily on self marketing looks like supplies, green demand right now. The fear to assume we're shifting more demand side advertising, you know, going forward and can you talk about the implications there. Thanks.

And there are no further questions at this time I would like to turn the conference back to Brian Cheskey for closing remarks.

Alright, well thanks for joining today, just to recap revenue with $3.4 billion 80 per cent higher than a year ago net income and addressee that a rebel two three records and a swollen I just Wanna Velasquez when a highly is trailing 12 months free cash flow with $4.2 billion. In this represents a free casual margin of 44 per.

<unk> and so I just wanted to call out the real incredible hard work with the teams done over the last three years. So you've been really really discipline to try to make this business of cash generating machine and to be really focused and I think the team has made some great progress next week, we're going to take a leap forward to making <unk> more reliable with some big update that's part of our 2023 whenever release, so I hope you can.

David Stephenson: Yeah, I'll start with sales and marketing. We're not actually shifting more to demand-side marketing. I think what we're seeing is exactly the success that Brian talked about earlier on the call. You know, we the vast majority of our traffic is director unpaid. The first reason why people come to Airbnb is that they're referred to us by family and friends. They come directly to us. The brand marketing certainly kind of helps talk about all the features and benefits of Airbnb.

Tune in next Wednesday November 8th to learn more and I'll see you then.

And this concludes today's conference call. Thank you for your participation you may not disconnect.

Please wait the conference will begin shortly [music].

David Stephenson: And we use our search engine marketing as kind of a laser to focus on areas where maybe we have less demand than we have supply or in specific areas, you know, specific countries where we want to focus and kind of grow the overall kind of pie for us. So it is not the primary driver of it, but this overall strategy of leading with brand and then falling with surgical on our search engine marketing continues to work really well for us.

David Stephenson: And then in terms of the ADR, you know, I think that the, you know, unlock of the variable expense improvements we've been making has, you know, just continued to enable us to drive profitable growth, right. We have our fixed cost growth discipline has been excellent. We probably grow our fixed headcount this year approximately 4%. So we're growing our headcount and fixed expenses less than revenue. We continue to make great strides and improvement in our operations and support and Brian talked about a lot of opportunities we have going forward and customer service.

David Stephenson: And then we're, you know, continue to make good strides and cost of payments, our infrastructure costs, etc. That's our primary driver like our primary focus is still on growth growth of the business. We're making hosting mainstream, protecting the core service and expanding down the core. And the fact that I can do all of those things and do it while still doing it properly and actually expanding all of our margins this year is something that I'm just very proud of.

David Stephenson: And we'll move to our next question from Lloyd Wandsley at UBS. Thanks. My question, you know, you guys have been talking a lot about innovating on the search experience, like working on Genai, the community side, things like co hosting. Do you see a path where some of these features over the longer term, like community and search drive enough differentiation that you could bring on more traditional supply things like boutique hotels. In such a way that you kind of expand your addressable market and revenue per user, while still sort of preserving enough that's unique about Airbnb, is that sort of makes sense or is that just too far out there?

David Stephenson: No, Lloyd, that absolutely makes sense. And I think that's the inevitability. Just to back up for a second, we are very much supportive of having hotel inventory on Airbnb and the acquired hotel tonight for the pandemic because we believe so much in this over the last few years, you know, we had to make some decisions, especially when our business initially contracted. And we made some decisions, we said, well, we have to really just get focused on our core and a core where individual people renting homes, sharing homes.

David Stephenson: That is the most different shared thing. It's inventory. You can't find anywhere else. It's the thing that is most defensible is the thing that attracts all the direct traffic. That being said, I mean, let's just take New York, for example, we still have a lot of traffic of people searching for New York, and we now have a lot less inventory than we used to have. So there's a real opportunity for us to supplement what used to be homes with Petico towels.

David Stephenson: They're already on hotels tonight and others and we can certainly put those in New York. And I generally think for sure, as Airbnb becomes a little more of a, you know, so-called like AI travel agent, which is what I think all travel apps will trend towards to some extent, I think there's opportunities for us to do things in a differentiated way, even with slightly less differentiated inventory. I think our bread and butter for accommodations are always going to be home.

David Stephenson: I think that's where our heart and soul is. I also think that's where the biggest growth opportunity is, but you should not think of our total supply, adjustable market of supply as only homes. We've had hotels. We've just been prioritizing homes because we wanted to be really focused.

Brian Chesky: Next, we'll move to Kenneth Horoski at Wells Fargo. All right. Thank you so much. Appreciate it. Two questions if I may. First, I want to go back to supply. I know you've talked a lot about it. The room nights up 19 with double digit growth in all territories, yet every week we read about new SDR regulations. At least in North America, could you help us reconcile this contrast for the financial market?

Brian Chesky: What are we missing as investors here? Where is that supply growth really happening, especially in the kind of Western markets? And then my second question to be a bit more specific, I know you called up the volatility in room nights and on the demand side in 4Q. Are there any specific regions that you would call out or is it more broad-based? And just on a timing standpoint, did this start in October or did you see some of the small volatility start in 3Q?

Brian Chesky: Thank you. Yeah, maybe I'll go for it, Dave. Well, I'll start with the volatility in room nights and there's not a specific region where we're I think maybe the biggest thing we've seen is that it's more broad-based on a global basis right now, which is why we've called out the macroeconomic and potential geopolitical issues as a potential driver to it. We saw maybe some of it just late September and it's kind of been early October.

Brian Chesky: And again, it's just a little too early to tell how much volatility we was seeing going in through the rest of the quarter. That's why we continue to highlight the revenue growth that was still expecting this year between 12 and 14 percent growth overall. And then on the regulation side, I mean, I think it's a lot of what Brian said earlier that 80 percent of our top Twitter markets already have regulation.

Brian Chesky: I think the headlines, they tend to make good headlines when you know, when people are highlighting kind of issues with short-term regulation, but in many ways outside of New York City, I've never been felt better about our overall regulatory landscape on a global basis. We have really good partnerships with many cities around the world. And things like our city portal, a lot of things, you know, has made us continue to collaborate extremely well with the vast majority of cities.

Brian Chesky: So I think those are outliers, but Brian. Yeah, yeah. And I just say like, again, we're not, you know, we're in like 100,000 cities around the world. And, you know, you know, wherever headline you read, there's cities that actually have very workable solutions, there's not a lot of activity. We're asking growth and supply across all types of markets, not just big cities where you see headlines. And I think vacation rental definitions.

Brian Chesky: In fact, there's a US census report that we looked at. I think said that two thirds of markets where Airbnb's exist, there aren't even hotels. So if you just think about that way, there's a lot of markets where there aren't even hotels, especially the vacation rental and the not urban areas. So the way I'd reconcile it is just to say that like while you read headlines, but a few cities, they actually represent a very small percentage of the overall market concentration that we have.

Kenneth Horoski: And we'll take our next question from Connor Cunningham at Melius Research.

Connor Cunningham: Hi, everyone. Thank you. Just on the two thirds of the house that are using the, the pricing tools that this today, as you add new supply art, you mentioned that ADRs of new supplies at a higher rate, but are those people more likely to use the discounting tools that you kind of mentioned after they've listed before? And then maybe on the implications for take rate when you're moving to international markets and you're tracking towards, you know, over 50% of your rooms that are going to be there, is take rate going to eventually just kind of bleed lower as that expand.

Connor Cunningham: Just curious on your thinking about that overall. Thank you. Yeah, I can take the first one, Conor. On tools, generally new hosts adopt new tools out of higher rate than existing hosts. And the reason why is like, when you sign up, like, you know, we have this really great onboarding, and you're immediately presented with all the tools. Now, we do have a percentage of our hosts, maybe, like, call it a million hosts that are highly, highly engaged, and they're going to be really engaged on a lot of these tools.

Connor Cunningham: But every new host, as far as their concern, every tool is, like, is exactly how you're supposed to use Airbnb, where in older hosts, there's an adoption where you have to get them onto the new tools and they're used to hosting a certain way. So we're generally saying that new hosts would probably adopt new tools at a faster rate than existing hosts. That being said, you know, the ADR-related new hosts might also be related to the mid shift.

Connor Cunningham: You know, we're getting a lot of inventory in non-urban areas. They're larger homes. So there's a lot of different reasons I can explain that data I can handle over to you. Yeah, and give me the second question. Again, it was take rate on international hosts. Yeah, just as you expand internationally, is there going to be a natural reduction in take rate overall, as that kind of tracks on our 50% of your overall rooms?

Connor Cunningham: So at some point, thank you. No, I mean, actually, I think over time, the way we think about our take rate is that it's been very stable. We've actually made no underlying kind of recent changes to our absolute take rate. And what we want to be able to do is as we add more services and capabilities, that would be the way to further kind of monetize Airbnb. So what are we done?

Connor Cunningham: Things like adding guest travel insurance has been a nice ad for kind of incremental monetization. It's small, but it's growing nicely. And then as Brian said, there are as we kind of expand young poor and add more services for hosting guests, that would be the way to kind of increase it. So and you could theoretically you could argue the inverse, which is say that as we expand a new market, they might be more interested in new services that we can offer because hosting is newer to them. So as we expand a new market and as we expand to new host services, we want to make sure that new host and new markets are presented with opportunities.

And there are no further questions at this time.

I would like to turn the conference back to Brian Tessby for closing remarks. All right. Well, thanks everyone for joining today. Just to recap, revenue was $3.4 billion, 18% higher than a year ago. Net income and adjust fee that were both two-three records. And the last thing I want to highlight is our trailing 12-month forecast flow was $4.2 billion. And this represents a free cash flow margin of 44%. And so I just want to call out the real incredible hard work that the team's done over the last three years. We've been really, really disciplined to try to make this business a cash generating machine and to be really focused. And I think the team has made some great progress.

Next week, we're going to take a lead forward in making Airbnb more reliable with some big updates as part of our 2023 winner release. So I hope you can tune in. It's next length thing November 8th to learn more. And I'll see you then.

And this concludes today's conference call. Thank you for your participation. You may not disconnect. Please wait.

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