Q2 2025 Airbnb Inc Earnings Call
Good afternoon and thank you for joining airbnbs earnings conference. Call for the second quarter of 2025. As a reminder, this conference call is being recorded and will be available for replay from the investor relations section of airbnb's website. Following this call, I will now hand the call over to Angela Yang director of investor relations. Please go ahead.
Financial Officer Olly Murs.
Earlier today, we issued a shareholder letter with our financial results and commentary for a second quarter of 2025.
These items were also posted on the investor relations section of arabi's website. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A before I turn it over to Brian. I would like to remind everyone that we will be making 4 looking statements on the call and involve a number of risks and uncertainties.
After results May differ materially from those expressions or implied in the 4 to a variety of factors.
These factors are described under 4 looking statements, in our shareholder letter and in the most recent filings with the Securities and Exchange Commission, we are you to consider these factors and remind you that we undertake no obligation to update information and contained on this call to reflect subsequent events or circumstances.
If you 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 provide a Reconciliation to the most directly comparable, gaap Financial measures in the shareholder letter posted to our investor relations website.
These non-gaap measures are not intended to be a substitute for a gap results.
With that, I'll pass the call to Brian.
All right, thanks Angela and good afternoon, everyone. Thanks for joining. Um,
Airbnb. Had a strong Q2.
We exceeded expectations across key metrics, including bookings, revenue, and margins.
and while the caller started with some global economic uncertainty,
Travel demand picked up a nice book, an Airbnb accelerated from April to July.
We also made meaningful progress across our 3, strategic priorities.
First, we can continue to perfect our core service.
In Q2 we made improvements to checkout. Messaging merchandising, and more flexible payment options, all of which helped us increase Revenue.
We also expand our new AI customer service agent in the US, reducing the percentage of Hosting guests who need to contact the human agent by 15%.
Second, we accelerated growth in global markets.
Nights booked on An Origin basis in our expansion markets. Have now grown at twice, the rate of our core markets for 6 consecutive quarters.
And what this shows is that we're achieving product Market fit increasing brand awareness and driving trafficking key countries outside the United States.
so, take Japan for example,
Late. Last year, we launched a brand campaign to raise awareness among Japanese Travelers. You might want to take a trip within Japan.
And the early results are really encouraging.
In Q2, Japanese travelers booked more nights on Airbnb than they did in Q1, driven by more domestic travel, resulting in a 15% year-over-year increase in first-time bookers.
We also announced several major Partnerships to help accelerate growth in key, markets, including a 3 year partnership with a tour of France. A global life partnership music partnership with la la PLA and our continued partnership. The ioc for the upcoming Winter, Olympics, in Milan,
And we just announced a 3-year partnership with FIFA and the World Cup, which is the largest event in the world.
Large events have been a part of Airbnb's story from the very beginning. They helped us build brand awareness and grow supply and key markets. And while many of these partnerships are high-profile, the events themselves are often very local.
And that's what makes them so powerful.
They highlight our ability to disperse travel beyond popular city centers and help strengthen relationships with local governments and communities.
finally, our third strategic priority is to expand our business Beyond stays
And the Q2 we did that in a big way.
As part of our 2025 summer release in may, we launched Airbnb services and completely reimagined Airbnb experiences.
We also introduced an all new app making it easier to book homes service and experiences All In 1 place.
Now this is our biggest launch to date and it generated more than 13,000. Press stories in nearly 600 660 million social media impressions,
After the launch, I travel around the world to amplify the news and key markets.
And over the next 3 weeks, I visited 6 countries and met with over 600 members of the press policy makers, and be partners and Airbnb. Hosts, and so far the response to our summer. Release has been great.
Guests. It's easier to discover new list offerings on our homepage and find good looking for
And when they book a service or experience, the feedback has been incredibly positive.
The average guest rating for a service and experience since launch.
Is 4.93 stars out of 5 stars.
8, average rating for homes during the same period.
And we're also seeing strong interest from potential host.
Since launched over 60,000 people have submitted applications to host a service or experience.
We are really excited by the momentum. It's still early, but we believe that Services experiences can become sizable businesses for Airbnb. Now, with that, I'll turn it over to Ellie for a financial update.
Thanks, Brian and good afternoon everyone. I'll start with a review of our Q2 Financial results and then I'll walk through our outlook for Q3
as Brian mentioned, Q2 marked another strong quarter for us.
We had 134 million nights and seats booked up 7% year-over-year.
We also saw an acceleration in year-over-year, nights and seats. Booked with growth rates for May and June both outpacing q1.
Looking at the growth rates by region Latin America. Grew in the High, Teens asia-pacific, grew in the mid-, teens Amia in the middle. Single just middle single digits, and North America in the low single digits. It is worth highlighting that nights and seats booked is a new metric that now includes the number of nights booked for stays as well as the total number of seats booked for both services and experiences.
Now, turning to our Q2 financials.
Revenue for the quarter was 3.1 billion up, 13% year-over-year.
in terms of profitability, we generated 1 billion of adjusted, IBA representing a 34% margin
Up from 32.5% last year.
And finally, net income of 642 million, and EPS of a dollar and 3 cents crew 16% and 20% respectively.
Next, I'll turn to our balance sheet and cash flow.
We can continue to generate significant cash in Q2, delivering 1 billion of free cash flow.
Over the past 12 months, we've generated 4.3 billion representing a free cash flow margin of 37%.
At the end of Q2, we had 11.4 billion of corporate cash and Investments, as well as 11.1 billion of funds held on behalf of guests.
Our strong balance sheet allowed us to repurchase 1 billion of our common stock during the quarter.
And we ended Q2 with 1.5 billion remaining on our repurchase authorization. And today, we're announcing a new share repurchase program with authorization to purchase up to an additional 6 billion of our class a common stock.
Now, since introducing our share repurchase program in 2022, we've reduced our fully diluted share count by 8%.
Now, let me shift to our Q3 and full year 2025 Outlook.
As we look to Q3, we’re observing current demand trends, specifically the acceleration of nights booked from April through July.
We've seen this momentum globally with a specially strong growth in the US.
That said, we do expect year-over-year comparisons to get tougher toward the end of the quarter, and that this dynamic will continue into Q4, putting pressure on growth rates later in the year.
Specifically for Q3 we expect to generate 4.02 billion to 4.1 billion.
Representing year-over-year growth of 8 to 10%.
This includes minimal impact for foreign exchange after factoring in our hedges.
We expect nights and seats booked to grow at a similar rate to Q2 2025 and for ADR to increase modestly. Year-over-year primary primarily driven by FX
On profitability, we expect adjusted evida in Q3 to exceed 2 billion.
And we anticipate that adjusted Eva down margin will be lower than in Q3 2024. Primarily due to investments in New Growth and policy initiatives.
And we expect a similar year-over-year, decline of adjusted. Eva margin in Q4 25 due to growth Investments and a tougher year-over-year Topline comparison.
For the full year, we continue to expect an adjusted EVA margin of at least 34.5%.
This includes approximately 200 million dollars of investment towards new businesses in 2025.
While we don't expect meaningful revenue for our new businesses in the near term. We expect or excuse me, we believe the opportunity is significant and our building with a multi-year view.
To wrap up our Q2 results, reflects strong execution across our strategic priorities. Perfecting the core accelerating growth in in global markets, and expanding Beyond The Core.
We are acting with urgency and focus to drive growth of our Core Business and to scale services and experiences.
And with our strong financial position, we are well equipped to invest in the future in order to create long-term value for our investors.
With that, I will open it up to Q&A.
If you'd like to ask a question, press star, then the number 1 on your telephone keypad. We ask that you please limit your questions to 1. Our first question will come from the line of Mark Haney with Evercore. Isi, please go ahead.
Okay. Thanks, I think I'll just like to ask about Airbnb experiences. Um, and Brian. What have you seen so far? What what do you think would be success in terms of? I don't know, an attached rate. Like, what's the, what what do you are? There are their proxies or Bogies out there that you've seen other companies or other Industries, with kind of the attach rate to a core offering that, you think? Yeah, that's where Airbnb should be. It seems to me like it's a natural, you know, cross sell or, you know, add-on. But what what's the goal? And how long do you think it'll take to get there? Thank you very much.
Yeah. Hey, Mark. Um, maybe I'll just like zoom out and just talk about experiences and what we've seen so far. Um.
We're very, very impressed and satisfied. First of all, the awareness of Airbnb. Experiences, the biggest problem we've had historically, even with the tax rate, people didn't know, you even had Airbnb experiences, the launch Journey over 13,000 articles, 660 million social media Impressions. Um, we've also seen um, increased um, oh visibility of our product through our newly redesigned homepage. Um, and guests really love Airbnb experiences. Um, we've talked about obviously that they're significantly rated uh, more highly than homes on Airbnb. Um, there's a few things, I mean attached, right? You were absolutely looking on looking at. Um, we don't have any numbers to share as far as what we see for potential tax rate, but we think that attach rate could be significantly higher for the completed reimagined Urban experience. This thing,
The prior iteration of the product. Um and the way we're going to do that is number 1. We need to make sure that we have resonant Supply Supply that people really really like. So we're making sure that we have great listings, this includes Airbnb Originals. Um, that are the very best experience on Airbnb. The next thing we want to do is make sure we have significantly greater entry points for the product so we've really integrated experiences into the core flow. And the third thing is we're raising awareness about every experiences and we think this not only sells experiences but sells more bookings, a couple of other things. I'll just share about Urban be experiences. Um, you know, we've had a huge amount of people wanting to list experiences on Airbnb, submit applications. And the other thing I was, I'll just point out Airbnb Originals, 40% of bookings for Airbnb. The originals are from locals for people, in the kind of local area um uh where where the where the booking occurs. So what we're seeing with their experiences is even though they're designed for travelers, we also do expect to start to see more local demand. So I think what we're going to see is over the next
Year you're going to see us really focusing on honing in on the tax rate in key cities right now. Like 1 of these things are really focused on is Paris it's a really popular corridor from the United States and we're really trying to see what we can do on a tax rate in Paris and a few other cities like that. Once you get that attached rate up, that will give us a better integration of what's possible globally. But I'm very, very bullish. I think a large percent of Travelers on Airbnb. Would love to use Airbnb experiences.
Thank you, Brian.
Our next question comes from the line of Richard Clark with Bernstein. Please go ahead.
Hi, good afternoon. Thanks for taking my question, just want to um unpick maybe a little bit of the the the guidance. What is the size of the headwind? You're Expecting in Q3 maybe from the events, the Paris Olympics. And you talked about that, maybe continuing to Q4. So should we expect Q4 to, to be slower than Q3? And maybe in addition to that you you you've called Out 3 of your growth markets and now a alive and kicking sort of Brazil, Japan. And, and Germany, any, any thoughts, what? You think, the, the sort of write mid-term growth rate is now for Airbnb. Uh, given this sort of success, in these new, uh, newer geographies.
Sure, Richard let me, let me talk a little bit about the trends for both Q3 and Q4 and then we can turn to Global markets. Excuse me.
Just to remind you um the comps that were referring to from last year. You'll probably recall that at this time last year we and others were seeing quite uh depressed bookings in July. Um and so right now we're we're kind of comping a, a softer period from 2024 but over the course of Q3. Last year, we saw a nice acceleration and exited Q3 at a at a much stronger rate than we entered. And so that's the pattern that we are. We are copying directly right now. It was, it was a couple points acceleration over the course of the quarter. What I'll call your attention to is the Excel.
Ize comp for 25. And so when we look at that year-over-2-year comp specifically, to 23, what it implies is that the hard comp, uh, that we will face on a year-over-year basis in Q4, could, uh, could result in a bit of delay from Q3 to Q4 on a year-over-year basis, and we just wanted to highlight that, um, heading into the back half of the year.
Uh your second question was around um, expansion markets. Um, you know, obviously we called out uh the the real success we're having in Brazil, in Japan, in Germany. Um, you know, other places that I would call out that we didn't know in the lender in the letter, um, India is doing quite well, rest of Latin America also doing quite well, um, what we've called out, for some time with regard to expansion Market strategy, is that the composition of our business? Historically has been so concentrated in the core markets that it will take a period of, you know, aggregated, um business mix shift for the uh elevated level of growth in the expansion markets to be a meaningful contributor to the overall Consolidated. Totals, I think the good news is that the success that we have had in these expansion markets has already started to move the needle in terms of diversifying, our Global business away from North America. I would say, just if you look on a year-over-year basis, the the acceleration
You know, the the strength of growth that we've seen in Latin America has allowed Latin America to take about 200 basis points of business share, within Airbnb from North America and therefore contribute more meaningfully to growth. So, you know, the intent of our strategy is to continue to invest in these markets continue to gain market, share in them, and as they grow as a percent of our overall business, the contribution to growth will, uh, commence early growth, well,
Our next question will come from the line of Eric Sheridan, with Goldman Sachs. Please go ahead.
Thanks so much for taking the questions. Um, I, I'm curious about from a marketing perspective, as you continue to sort of, reposition or position, uh, Airbnb as a brand globally, and move into these areas such as services and experiences and New Growth markets. What are some of the key learnings about the intensity of marketing? Spend that that's needed uh to put these uh, Dynamics into the market and grow and scale them? And how might sort of the channels of those marketing Investments continue to evolve when you think about uh, looking out just beyond 2025 and more of a medium to longer term view about how you bring the platform. Um, closer to Consumers. Thanks so much.
Yeah here I can start um we we think that um probably going forward the best way to Market services and experiences is to actually Market the entire offering of Airbnb. So immediately upon um the launch we did launch some Airbnb uh experiences um specific ads. But this fall we're going to be launching ads that market home services and experiences, the bundle offering and we think this is a really, really key principle that only Airbnb offers all of this in 1. And so we don't think that the marketing intensity per se has to increase because we think we can get a lot more for our Dollar by marketing, all of our offerings and it makes more sense, right? Airbnb in a sense is these aren't disparate offerings if you book a home you're very likely to want a service or experience so we can mark it all 3. Um the second thing is channels so that's just the strategy we think that the channels for service and experiences and homes is increasing in the shift to social. Now, why is this
Going to be the case. Well, 1 of the things we're noticing. Obviously in the whole world seeing is that a lot of travel is switching from desktop to mobile and from Google search, the social media. And so, increasingly people are spending time on social media, and social media is gradually taking over as the number 1 place for travel. Search from Google, and travel is becoming more of an inspiration based in a high-intensity search space, um, destination platform. So, you know, Airbnb, we think is really Prime for social media.
Media, you know, we are probably the most relevant brand for young American Travelers, that is the kind of heart and soul of kind of the social media audience. And I think that, you know, you're going to see a lot more social media native advertising. So we're shifting a lot of our advertising from TV to Social and we are. And the great thing about social is we can Target. We know a lot more about the customers. We know, if they're going to be customers, we can actually, when they watch an ad, we can link it to inventory and get them to go directly to the app. So it's, it's actually we think very, very informative. So this is um, this is what we're going to be doing with marketing.
Right? If I could just add
Is for 2025. It is not an increase. In programmatic marketing, our overall programmatic marketing for the year is relatively stable from a percent of Revenue basis. Instead the increase in sales and marketing, that you see associated with, uh, services and experiences is focused. In particular, on our field operations are go to market activities and Supply acquisition. It is not spending more to uh effectively advertise multiple Brands. Instead to Brian's point, we are spending behind a single brand.
Our next question comes from the line of John Colony with Jeffrey's. Please go ahead.
Great. Uh, thanks for taking my questions. Uh, I wanted to ask 1 about experiences, I'm I'm curious to get your perspective on the approach that you're taking to building inventory and experiences. There's a lot of variability in the quality across the experiences industry. So I'm curious how you're approaching balancing Building Supply. That's consistent with the differentiation of airbnb's accommodations offering versus building more commoditized Supply, that's maybe easier to build scale around thanks.
Yeah, John actually. Um we actually are managing the quality of experience in even more than managing the quality of homes. I think the um, evidence of that is 2 things, the input is that we actually, UM, Vet every single experience on Airbnb. Before it comes on the platform, we do not vet every home the way. We vet every experience on Airbnb. The result of that is that the average home
Is got a 4.8 rating. The average experience has a greater than 4.93 rating. So we think this is working. Um, now as far as scale, um, we actually think we can do this like, quite effectively. Um, we are working with a lot of third-party vendors. We built a fairly sophisticated operation, um, to do vetting. Um, you know, we that um, through the first thing we do is event their profile. Make sure everyone's got a verified identity, we've got their credentials, there's number of third-party sites. We can do use for that and we also make sure they have right certifications and licenses, which I think is really really important for all these Nason different Industries. But we think we can be very, very efficient with this vetting approach. And we ultimately think that, um, this could actually make the market more effective because quality is critical to customer satisfaction and building trust and people really trying something new on Airbnb.
Our next question comes from the line of Jed Kelly with Oppenheimer. Please go ahead.
Hey uh great, thanks for taking my question. Just just um an overall company strategy. How do you think about potentially implementing a strategy or acquiring a company that potentially could react or react your revenue or excelerate your Knights versus building organically? Thank you.
Hey, Chad, um, we're always. We're always open to buying companies, we've purchased uh, a few companies in the past. Um, are you know hotel tonight? It's been, you know, a successful um application that we acquired a number of years ago before the pandemic. Um, we've historically, primarily focused on building organically, but you know, we absolutely are open to Acquisitions and we are going to be looking at it. And I think that we are now, um, in a better place to consider Acquisitions. Now that we've rebuilt our Tech platform from the ground up. And we have this new expanded strategy where we're focused not just on all aspects of traveling, but also living. Um, and so I think there's absolutely Acquisitions on the table that we could be looking at. We always want to make sure that if we do an acquisition is 1 of the most perishable opportunities that the integration costs don't outweigh the like the benefit of the revenue that we get. Um, but we are absolutely opportunistic when it comes to Acquisitions. I think we're more prepared to do them now than before.
The next question comes from the line of calling Sebastian with beard. Please go ahead.
Great. Good afternoon.
Um Brian you touched on this a little bit but curious if you have any more color on the impact, um, or observations on, on the way homes or nights or booked from the app following the redesign. And and just 1 point of clarification um from the release, it sounds like booking lead times are now back to a normal level versus what you were seeing earlier in the quarter if you can just confirm that. Thank you.
And they enter dates, and then they get a bunch of search results. And this is how everyone searched for travel over the last 20, 25 years.
Um, the Holy Grail is to get more and more people to be in browsing discovery mode, almost like on Netflix or say DoorDash. DoorDash was very search driven; they're now more of a browsing discovery application, and it's been a really hard nut to crack within travel. But we think we've done it because we've seen that increasingly more and more guests are engaging, not just with the surface experience from a homepage, but with homes now. This is very strategic. Why is this strategic for us? The reason why is if people can engage with our homepage rather than typing in a destination, then we can divert travel more broadly to where we have available supply, thereby increasing the conversion rate of our traffic, if this makes sense. So the more intent-based our traffic is, people have a very specific destination, very specific dates, and if they're only going based on high intent, you're going to lose the people that are either lower intent or people where you might have a home, but it's a little bit outside their search radius or a little bit outside their dates that they're looking for. So this is one of the things that we've seen. We
Also seen um, a lot more in people, engage with the new trip table. Our trip table is essentially our itinerary and um, we are seeing a lot more engagement on the itinerary and this itinerary is really important because this is the application that you use. When you're on your trip, this is critical because if we can get people to use the application on trip and we can get co-travelers to use it on trip.
Then what we're really saying is we have this point of sale during the trip to cross sell other things. So, for example, 1 of the things we've seen with experiences and services, is a lot of people like to book service experiences, last minute, including people often like to book service experiences when they're on a trip.
And so, you know, if we can get more people to open our app during a trip, and go to the homepage and browse discover, then this goes to um, 1 of the kind of questions that asked earlier, about how we cross sell for a mark and get more people to book Services experiences. So there's been many other things that I could call out about the launch, but that would be the key thing people are engaging on their app while on trip and they're engaged with their homepage. This is really, really critical to booking more homes. But also to cross-selling Services experiences and I just want to wrap by saying these are 2 things, I don't think OTAs have cracked. I don't think OTAs have cracked how to get anyone to scroll on their homepage. I don't think OTAs have cracked how to get people to use their app during the trip. So I think that these are distinctly things that Airbnb has started to open the door for
Our next question comes from.
oh, and I think there was a Ellie
Colin, just your second question was about lead times. Um, the question, you know, have they normalized compared to earlier in Q2? The answer is yes. Um, as you'll recall, back in April, lead times were heavily compressed; they were down about 7% year-over-year. Over the course of the quarter, as you know, booking confidence rose and bookings accelerated. We saw lead times normalize and then, heading into Q3, they've actually lengthened a little bit compared to last year, which is a great sign in terms of booking confidence and overall guest demand.
Our next question will come from the line of Justin post with B of A please go ahead.
Great a couple of questions but I'm sure you would, you would say there's still a lot of room to grow in the US. So maybe help us understand why the growth rate is in the, in the single digits house supplies growing and, and how you might be able to accelerate that. And then on on events and experiences. Any thoughts on what the, what you're hoping for or targeting for long term. Attach rates on on a per trip basis. Thank you.
Yeah, Ellie. Don't tickets.
Pricing affordability, we've we've made some, I would say great progress there in terms of total price display, um, better pricing tips, but there's I would say a lot more work to do to make sure that we are always, you know, the greatest value um, and are attracting a wide variety of uh, us uh, demographics. Um, second, you know, another strategy that we've talked about for some time that we are seeing good results from is targeting specific. Um uh demos that we are under penetrated in the 2 that we've called out and, and have made progress against our 1, the US, Hispanic population. Um, and second, uh, what we call the Heartland States, um, you know, states in the middle of the country that we have historically had, uh, lower levels of penetration, um, and then I would say more broadly. There's a series of things coming in terms of increasing usability. Uh, exploring more, diversity of payment options that we think will be also incrementally creative to the US.
Yeah, maybe. Um, I can just add on a little bit. Um,
you know, we think we're just scratching uh just to kind of kind of follow up on what we always said. I think um we're just completely scratching the surface of the scale of Home, Sharing and Airbnb.
Um, why do I think this is the case? Well, let's look at Supply and let's look at Demand on the supply side, we have around 10 million homes. I think we can have tens of millions, more on Airbnb. When you ask people, why don't you put your home in Airbnb? The 2, most common reasons are it's too much work and I was like, AKA I don't have the time or I don't want people, I don't know in my home.
Regarding it's too much work. Um, you know we found a lot of success with co-hosting co-hosting. Just to remind you is a marketplace where we connect the best host and Airbnb with people who have homes that don't have time to host. We now have, um, a 100,000 listings, managed by co-hosts and they've hosted 10 million nights. I think this could lead to millions and millions, more homes on Airbnb. It's a very very successful program and we're prepared to scale this in the coming years. So this should unlock a lot more Supply regarding um, people just being nervous about guests being in their home. You know, we're the only company that has a 3 million dollar um guarantee called are cover the protects you against theft and property damage. Um, but we're also investing a lot more in trust and safety, you know, we have more than 200 million verified identities on Airbnb, more than almost any other platform of any kind on the internet. And we're going to be investing a lot more on Airbnb. You know, I think on a lot of other platforms, you don't really know who the guests are. Oftentimes, they don't even have accounts on our platforms. They're going to have Rich profiles. They're going to know a lot more about them. So I think if we
Do these two things. And then, if we focus on getting more homes in our top markets where we're supply constrained, we focus on quality, reliability, and continue to make progress on affordability. Then, I think we're going to look back and say that we're just scratching the surface of the growth of our core business in the U.S. I think the other thing I’ll just say on growth, generally, is the following.
You know, we are looking to be accelerate the growth of Airbnb. We are not satisfied with the company growing approximately 10% year-over-year. We want the company to accelerate. We think we have a great plan to be accelerate the streets strategic priorities. We have perfecting our core expanding Global markets and these new products and services. They're all essentially starting from a small base but going to be scaling, you know, and they're going to all pay off in different times. But we're we have a lot of bets that are growing. We have Services, we experiences. We have hotels and Airbnb that are starting to scale. We've got about 8 countries globally that, you know, obviously, Brazil has been a huge success story but also Japan, we call that in the letter. We started marketing. Japan late December, November December. We're starting to see real big growth in Japan. So we're going to see a lot of these areas really pay off. I think around the same time. And this is why I, I do feel very confident that this company can react it. And I do not think we're coming close to reaching any type of saturation in any market around Home Sharing. There's a huge amount of homes that aren't listed.
That could be if you make hosting easier and safer and I think that, you know, 1 in 9 people, um, you know, stay or 1 to 10, people stay in an Airbnb. If that was too intense, that would double our business.
Our next question comes from the line of Doug and myth with JP Morgan. Please go ahead.
Okay, the questions, um, Brian, I have 2, uh, there's been a lot of discussion on experiences was just hoping you could, um, talk a little bit about the launch of services and just where you're most focused, there are across Supply and building demand or just overall product. And then, um, you talked about the opportunities and Partnerships around major events, um, how did these help in terms of incremental, bookings? But then also on brand and and product awareness. Thanks.
Basically, reimagined IT services is essentially 10 different businesses. I mean, every category of services is kind of like a different business. You know, photography is different than chefs. It's different than masseuses. So we essentially launched 10 categories, 10 different businesses services; we launched them around the world.
What we're really focused on doing right now is trying to crack it in a few key markets Los Angeles. For example is a market that we've been spending a lot of time on. We think it's a really great Market to test services in and we're really trying to do is build out the catalog of these services and really increase the attach rate. Um, 1 of the things I'm really excited about with Services is about 10% of bookings. For services, are actually from locals or people that are nearby essentially locals are people booking them in their own City and I think there could be a huge opportunity for demand of locals booking Services. You know, think about all the people that would love to shift come to their home, um, that aren't traveling so people that want to massage to come to their home. They aren't traveling. So I think there's a huge opportunity here. So we're going to be looking at a tax rate, in key markets and also that the amount of locals that are booking as well. What we are seeing is that the satisfaction rate of services is similar to the satisfaction rate of homes from guests and it's higher than, uh, sorry similar to experience at higher than homes. So it's around 4.
0.93 for services versus 4.8 for home. So we're seeing a lot of promising but it's incredibly early and its earlier for services than experiences. So we expect this bet to play out over a longer time Horizon. I do think
Um, that Services is probably a significantly larger opportunity than experiences because the 10 categories, they launched are just the beginning. There are dozens and dozens of categories of experience, you can book imagine getting to Airbnb and there's a catalog of services, anything you can imagine. I think this could be where we could take this product, but we're going to focus on, getting these 10 to work in a few markets.
Our next question comes from the line of Trevor young with barley. Please. Go ahead. Sorry, sorry. Sorry, sorry. Sorry, I did not answer the question about events. Can I just do that real quick?
Please go ahead. Um, so yeah. Yeah, sorry about that. Um,
With regards to the second part of the question about events. Um, you know, first of all large events have been part of our history, we launched her um, you know, during a design conference in 2007 then we launched a Democratic National Convention in 2008 and what we've seen with events is a couple things number 1. It's a great way to build Supply and Airbnb. We have more than a 50% increase in amount of homes in Paris on Airbnb because we hosted um for the Olympics, we were a sponsor for the Olympics and they need housing for events. So we think this is really really strategic to getting Supply in cities and a lot of people that have no intention to become long-term host.
Become hosts just once for an event and we'll be seeing is events are a great hook to get people that have no intention to becoming long-term hosts to try it. And then a bunch of people actually continue hosting because they said, actually, that was a great experience. So events are kind of like a low commitment. High urgency way to get people to try hosting and what we found is a number of people continue to host. In fact, this is the entire premise of how the company got started. So that's the first thing is, is a great way to build Supply. The second thing is, the great way to build relationships with policymakers regulators and increased trust in the brand. Um, for example, Italy is a very strategic market for Airbnb. We've certainly had some regulatory challenges in the past to Italy, but Italy, Milan is hosting quartino or hosting the Olympics. Next year, we were able to make a lot of progress. So it's how it's Balian policy makers because we're partnering with them on the Olympics. We're a title sponsor. We're providing housing in Milan. They don't have enough housing. They certainly don't have enough housing in quartino so we're able to
Support them FIFA World. Cup is going to be the probably 1 of the largest, if not, the largest event in human history. If you think about it, the World Cup is the largest event in the world. This might be the largest world cup ever and we're all these people going to say. So we're now working with cities all over the United States us uh you know, Canada and Mexico and this I think has been a gateway to open relationships with Regulators. The final thing is, I think it just increases uh our our trust in our brand by associating with the Olympics, the tour to France.
Thing I'll just say is now that we have home services and experiences, the partners have served more efficient because we have more things to cross promote.
Our next question comes from the line of Trevor Young with Barclays. Please go ahead.
Great. Thank you first, 1 on the 200 million investment, baked into the full year. EA guide, was there a change in expected? Spend there? I think the last quarter you said it was 200 to 250 for the new 25 business launches. And now you're saying 200, just for services and experience is so just wondering, should we interpret that to mean? There are no other launches this year or is there 50 year mark for something maybe to be announced and then second question uh just on the change in definition on nights and seats. Booked can you just level set? How much of that today is actually like experiences and seats versus stays. Is it 1%? Is it essentially zero investors always ask, you know what's kind of the breakout of that mix
Yes, of course. Let me, let me come in on the 200 million dollar investment. So, at the beginning of the year, we gave a range of 200 to 250 million dollars for our new businesses. We have launched those new businesses, it was uh the reimagined experiences and services where obviously more than halfway through the year. And so we've just refined the estimate in terms of the, the total investment. There's, there's no change to strategy. Um, or you know, a a incremental business that is that is truly focused on, uh, experiences. And
Services. We wanted to give you an updated number. Uh, now that we have more visibility,
In terms of nights and seats booked. Um, we have not historically broken out, um, nights booked versus, uh, experiences booked. Um, we we were not going to do that. Uh, today, what I can tell you is that, um, the seeds book today are indeed immaterial. Um, the intent obviously with the launch and our investments here is to scale those businesses, such as they are a material contributor to the total.
Our next question will come from the line of Brian. Noak with Morgan Stanley. Please go ahead.
My question. Um, I wanted to come back to the US room night growth and I I also got a Emmy a little bit. So I guess if we, if we look at the US growth on room nights, excluding services and experiences, Ryan can you just sort of talk us through the 1 or 2 key priorities in your mind to sort of accelerate that growth um, into into 26? And the same question that Emmy? You know, I think you're growing slower than even your, your more scaled competitor in me at this point. How do you think about sort of the keys to driving faster growth in Mia, as you go into 2026?
All right. So, um, sorry the question was uh, the first question was about us, uh, our core Market.
That's right. Yeah.
Yeah.
Yeah. Um, I think that there's
Like really a few pillars, so 1 that we've seen a lot of traction on is making Airbnb easier to use. We've made hundreds improvements. We highlighted a bunch of them, um, on the most recent release and um, that is
Led to hundreds of millions of dollars incremental Revenue. So we've made a lot of traction, a lot of progress around, making it be easier to use, I think pricing and affordability is the next 1. Um, we are seeing a huge opportunity around increasing competitiveness of pricing on Airbnb. Um, you might notice that we moved to, um, total price display that's been very successful. We're now exploring um, you know, different ways to present pricing moving towards a host-only fee. Um we're doing a lot around giving hosts more tools to make their listings more competitive. We announced. Uh, we we announced a new calendar. Um, on the May launch that has better price suggestions. We're seeing host adopt that when host adopt that they have more competitiveness and they have more competitive, they earn more money that's creative to our business. So I think pricing is going to be a huge opportunity for us and then I think increasing Supply, you know, and the way we're going to increase Supply is we're not going to be looking at just the overall Topline Supply globally. We're focusing on our most Supply, constrained markets and really targeting adding Supply in those markets. Additionally
You know people looking for homes, if we don't get that home we want to be able to have a place for them to stay. So we're also going to be increasing the onboarding of hotels especially in Supply constrained top markets as well. So I think these are some of the things you're going to see that are going to absolutely be able to help accelerate growth in the United States.
Our next question comes from the line of Justin Patterson with KeyBank. Please go ahead.
Scaling up. Do you feel like you have the right number of people in place right now to keep stealing experiences and services? Or is that something that's going to kind of keep adding to to bring on more Supply? And then just from the, the marketing standpoint, you know, would love to hear about how you're thinking about using, uh, Performance Marketing, a bit more, perhaps search to augment some of the broader brand campaigns, uh, for the overall business. Thank you.
Yes. So just an
200 million. Yes, indeed. It is, um, uh, a good portion of it is headcount. Uh, split across both product development, as well as, uh, our field operations team as well as some investments in terms of vendors, helping us curate, an onboard, the new Supply. Um, when we think about, you know, scaling, the investment over time. Um, I'm not going to, I'm not going to give it, you know, particular figure for next year. But what you should assume is that we will continue to invest in 26 Behind These businesses in order to scale them. And some of the you know, Investments this year will carry into next year as you know, fixed headcount that we've brought on to support these businesses.
Um, in terms of the second question, Brian, let me know if you want to jump in here. Um, you know, we continue to use Performance Marketing as a, I would say surgical topper to the majority of our sin being in brand. Um, you know, we've talked about this quite a bit over time our strategy in terms of the marketing channel mixes, obviously quite a bit different from
Others in that were able to benefit from our the strength of our brand and the singularity of our brand to put money uh in a hard, a larger allocation of our marketing spend behind brand versus performance. Um, that being said, we do continue to use performance uh surgically across the world to, you know, get good Returns on those incremental nights. And I would say the the overall intensity, um, you know, as compared to competitors remains relatively low in that um, you know, the metric that we've shared over the years, 90% of our traffic coming from direct. And, uh, unpaid sources continues to be the, the, the state of the business. Um, which allows us obviously to spend a lot less on Performance Marketing than others.
Our next question comes from the line of Ron Josie with City. Please go ahead.
Great. Thanks for taking the question. I wanted to follow back up on, on the experiences side, Brian. And and ask about the merchandising given the Airbnb knows who's traveling when you're traveling the age of the people, traveling, Etc. And you talked a little bit about the test and learn of experiences in cities like Paris, so help us understand as you
she just applications continue to balloon for uh for experiences, how you can um scale the learnings in Paris to better merchandise overall
And and then just as a follow-up, uh, you know, we've been talking about loyalty programs for some time and how the goal is for Airbnb to launch 1. That's differentiated not just a points program. Any any updated thoughts on? This would be helpful. Thank you.
Yeah, absolutely. Um, with experiences, you know, we are doing a lot around testing Carousel. If you open the app and, uh, right now you go to the experiences tab, you'll see, um, that we merchandise totally differently, these smaller cards, the different carousels, and the carousels are going to get more and more personalized. So as we know more about you, we might know where you're coming from, what kind of price homes. You're searching for Which experiences, you recently viewed. And the basic idea is to show you a high density amount of experiences that you're very, very interested in potentially booking. And I think also increasing the touch points. So, we're going to have the homepage, we're going to open right to the homepage. If you're on trip or post booking on Holmes, we're going to have other entry points, um, through the trips table where we're merchandising highlighting and we're really just, you know, we're going to be doing a lot around making sure that we can continue to pull hooks in to get people to see the right type of experience on Airbnb. And you know, we're we're obviously if we figure something out in 1 City, we can immediately roll it out.
Out to every city globally that we have the product in. So we think we can do quite a, quite a, um, rapid iteration. We have a team in Paris right now I sent a team of product, uh, development, uh, leaders. Uh, designers Engineers into the city, um, to really do really, really tight feedback loop and to figure out, um, the kind of Supply that people really want. And we're really doing a lot with testing, ranking to figure out how to make sure that the right people see the right Supply and look at
Um, I think that was the first question. The second question was I think around loyalty. Um,
To the best loyalty. Of course, is to have a product. People love that being said, I do think we're sometimes at a competitive disadvantage. These are the OTAs and hotels because they have a lot of programs we don't. So, I think there's a lot of upside. If we were to have a program, um, if we were to do something, I don't think it would be, um, a traditional points program. I think it would be something much more interesting and novel, but I absolutely think you should see something from us in the future, not imminently, but in the future,
Our next question comes from the line of Stephen Jew with UBS. Please go ahead.
Thank you. So Brian, uh, wanted to follow up on your commentary on the trips table because yeah I mean from a design perspective since it is an itinerary
Uh, The Optimist in me uh, wants to believe that Airbnb will be and should be taking a greater role in the aggregated. Door-to-door travel experience. So, you know, Are We Wrong to think that the expanded travel agent opportunity here? Um, I mean, I I realized that, you know, you just launched experiences, so asking you what's next. You know, probably sounds a little bit demanding but sort of the bigger picture of what the itinerary can evolve into. Uh, we'll be interesting and secondarily. Um, there was a commentary in the letter regarding the new payment methods in Brazil. Uh, do you think the experience that you've picked up from doing this initial bet?
Patch of extension countries will help you speed up the product development at the Cadence of updates for, you know, what majority be the next batch of the market. Thank you.
Yeah, I mean I I think I can answer both and maybe I'll start with the second because this kind of tactical. Um, you know, we are massively wrapped um, ramping up the development of a product development pace and Airbnb. You know, we do these typically by annual releases, but we are now iterating, very, very quick, even between these releases. So you're going to see uh, in. I think the Brazil installments is been a huge example of something that's been really, really, really, um, really powerful. Um, pay zero upfront is starting is is been very, very successful. We have an updated cancellation policy, that's rolling out. That's going to be successful. We think it's going to be a creative to grow. So we have a real, a huge amount of momentum around a lot of optimizations, I think we got a great flywheel, um, with regards to trips table, the itinerary product development. Um, maybe this is an opportunity to talk a little bit more about the long-term product vision and where we're going and you we couldn't talk about long-term product Vision without talking about AI. Um, I haven't been asked about it, but, um, I might as well talk about it because I think you can't do travel.
Planning without AI going forward. We've chosen a very specific way to approach AI. A lot of companies have chosen, what I would say is the lower Stakes part of travel, which is travel planning. Inspiration for AI. We actually started with the hardest problem, which is customer service, customer service, hardest problem. Because the stakes are high. You need answers quickly and the risk of Hallucination is um, very, very high. And you cannot have a high hallucination rate. And when people are locked out, they want to cancel reservation, they need help. You need to be accurate. And so what we've done is we built a custom model or we we we built a custom agent built on 13, different models that have been tuned off of tens of thousands of conversations. We build this out throughout the United States and English. And this is reduced, as I mentioned, in the opening remarks, um, 15% of the people needing to contact human agent when they interact instead with this, um, AI agent.
We're going to now over the course of this year bring this to more languages. And throughout next year it's going to become more personalized and more agentic. So, what this means is that when you reach out to an agent, the AI agent, it will not only tell you how to cancel your reservation, it will know which reservation you want to cancel, it can cancel it for you, and it can be agentic as in it, can start to search and help you plan and book your next trip. Next year we're going to bring AI into travel search so all this
Brings us back to the question. You asked about travel planning over the next couple years. I think we're going to see is Airbnb, becoming an AI first application. And this leads to the bigger question around AI over the last Almost 3 years. Um, since chat gbt's been out, if you look at the top 50 apps in the App Store,
almost none of them are AI apps.
Number 1 app in the app store I think as if as we speak it's Chachi BT and if you go through 2 through 50 maybe only 1 or 2 others are AI native applications so you've got basically AI apps and kind of non AI. Native apps and Airbnb would be a non AI native application.
Over the next couple years, I believe that every 1 of those top 50 slots will be AI apps.
We are going through that process right now of transitioning, from a create gender of AI app to an AI native app. We're starting a customer service. We're bringing into travel planning so
It's really setting the stage.
Our next question will come from the line of Kevin copelan with TD Cowen. Please go ahead.
Thanks, uh, appreciate it. I wanted to ask. Uh, could you give us your first thinking on the and and this is a bit of a follow-up. Perhaps on the 1 to 2, major product launches that you're thinking about for 2026 key, Focus areas is the AI travel search. You just mentioned 1 of those major product launches and how are you planning to manage, um, overall company margins? Next year next,
This is the on repeat. We've had some
We've had some audio issues. Sorry. Yeah, we sorry.
Yeah, we just got dropped in the call. Um, so I don't, I don't, I don't think I was able to finish, um,
My answer but should we just go right to the next question?
Sure. Okay, sorry. So can you ask the question again? We're really sorry we both got dropped. Yeah, yeah, yeah, no worries. Can you hear me, okay?
Yep, now we can.
Okay, great. Yeah, so I I wanted to ask and it may be a follow-up to what you just. You were just talking about but your first thinking on the 1 to 2 major product launches uh for 2026 key Focus areas is the AI travel search. You just mentioned uh, 1 of those major product launches and um how are you planning to manage overall company margins? Uh, next year, taking into account, the new launches and also the continued investment in experiences and services. Thanks,
Yeah we we you know generally we don't talk about or preview what we're going to launch um when so um but we are bringing AI more into the app next year so we can confirm that um but we're not going to be able to preview what will be and what's launched. Um so I'll let Ellie though, talk about the second part
Yeah, on margins. Um I'm not going to guide right now to 26. What you can assume is that we are 1 continuing to invest in our new businesses and to continue to drive efficiencies Across The Core Business. Um, we'll give you color, um, in upcoming quarters in terms of, you know, how that Nets out with regard to sequential margins.
Okay. Understood maybe just a quick follow-up. When you talked about an accelerated, um, development Pace, uh, is the new tech stack that you rolled in May out in May playing a part in that. And, uh, you know, are you seeing also benefits to customer conversion rates from, um, what you, what this new tech stack has enabled, thanks?
With a yes um absolutely. The new tech stack. Uh, we are seeing benefits from that. I would say more. Broadly, the Investments we've made across our infrastructure over the last couple of years.
Has really improved the development, uh, environment for our team, allowing them to do more and to do more quickly. Obviously, that is increasingly aided by AI as well. Um, and so we hope to see, you know, an increased velocity across our product development roadmap in coming quarters.
Our next question comes from the line of Ken gowski with Wells Fargo. Please go ahead.
Yes. Thank you. Uh 2. If I may please. Oh, and, and you build on come to some of the other questions. First, uh, Brian on the AI side. Um, do you anticipate? Uh, there there's it looks seems like there's going to be need to be a choice made whether to be open to agents and kind of agent, agentic traffic and who will own that relationship versus being more of a closed platform. And and giving that you have much of your traffic today is direct uh and that you have a lot of exclusive Supply.
Um, you you probably have have your choice in the matter. Um, so I I love if you could talk a little bit about that and then second maybe again bigger picture on, on strategy, you you're you're operating against a 90 billion booking space.
And it it seems to me that, um, as you go into things like experiences and services, it's tough to move the needle. I can understand the ancillary benefits, but it's tough to move the needle. Guess the question is, why you don't go really double down on a combination in the hotel space in at least in your core 5 markets where you know, 70% or so of your bookings are. Thank you very much.
And we're going to be going significantly more aggressively into hotels. Um,
You know, we've we spent a lot of time looking at, um, hotels at the business, we think it's really compelling and we think that there's going to be a lot more to do with hotels on Airbnb. Um, our take rate is very, very competitive. We spoken with hotels around the world, especially independent boutiques in the bed and breakfast, a huge percent of hotels. In Europe are Independents and 1 of the things they said, is they really want incremental travel Wars, they didn't know that they have another booking Channel. They would love to have high income, American young Travelers. We're probably the biggest travel brand in the United States. So I think we're really, really compelling. And you know, when we have, you know, I think homes and accommodations are homes will be the heart and soul of Airbnb.
But that being said, in our top markets, top top top markets, um, especially during High season, people often don't find a home. We think hotels would be a great supplement and so I think there's a huge amount of growth there.
Um long term stays you know um a large percent of our nights booked are for stays the longer than 30 days. We think there's a huge Market there as well.
Regarding back to service experiences, you know, I think each of these could easily be a multi-billion dollar business on. And then the holy grail for services is if we could tap into local demand, if we can tap into the local demand, then it's not an ancillary service, it's a standalone service. Um and there is no Amazon for services, not to say, we will become that but there's a lot of opportunity there. So it's an and not an or um what we're trying to do is build a platform a platform that has homes Services experiences hotels,
Of course, and much more. And we're going to try to be, uh, expanding this platform and continue to launch a new businesses, um, over and over again.
Um, I think the other question was, sorry, what was the other question?
On AI, the whether it's closed.
Um, yeah, I think we're still kind of feeling out the space. Um,
I um,
I think I I, the thing I want to caution is I don't think that AI agents. I don't think we should think of chat Bots like Google. I don't think we should think of them as the new Google, um, yet. Um, and the reason why is like is an incredibly compelling product, but we also have to remember that the model powering chat should be. T is not
Proprietary. It's not exclusive to chatbot, we Airbnb. Can also use the API and there are other models that we can use. So as I said in the coming years you're going to have a situation where these large AI models can take more and more a lot more and more things will start there and people won't often go to 1 chatbot to do more and more things.
At the same time you're going to also have startups that are going to be custom built to do specific application, and you're going to have incumbents that make the shift to AI.
You know 1 of the things we've noticed is it's not enough to just have. Um it's not enough to just have um like the best model you have to be able to tune the model and be able to custom interface for the right application and I think that's the key. And the the models are not proprietary. I mean very few. Every company that makes a model is selling the model or open sourcing the model in addition to using it themselves. And so I think that the key thing is going to be for us to lead and become the first place for people to book travel on Airbnb as far as whether or not we integrate with AI agents. I think that's something that we're certainly open to remember that to book an Airbnb. You need to have an account. You need to have a verified identity, almost everyone who books uses their messaging platform. So I don't think that we're going to be the kind of thing where you just have an agent or operator book your Airbnb before you because we're not a commodity, but I do think it could potentially be very interesting lead generation for Airbnb. So I think it could be really interesting but I don't think it's like a commodity, like booking a flight.
I think that's it. I think we're over time, so
Yes, I'll turn it back to you. Brian for closing remarks.
All right. Well, thank you everyone very much. Um, for joining us today, I'm incredibly proud of her results and momentum. We built the launch of service experiences really marks just the beginning of a new chapter for Airbnb and what excites me most is that we are just getting started.
Running and see you next quarter.
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