Airbnb’s (ABNB) first-quarter earnings came in ahead of expectations, but markets responded with skepticism.
Shares fell nearly 2% on Thursday after the company cautioned about weakening demand, especially in the U.S., where economic uncertainty is changing how people travel. The stock rebounded on Friday, rising 1.7% at the time of writing.
The short-term rental giant reported Q1 revenue of $2.27 billion, a 6% year-over-year increase, narrowly beating analyst estimates. The platform saw 143.1 million nights and experiences booked, up 8% from the same period last year. Yet despite these healthy numbers, the San Francisco-based company issued a muted forecast for the second quarter, projecting revenue between $2.99 billion and $3.05 billion — a midpoint just under Wall Street expectations.
Net income dropped sharply, down 42% to $154 million, weighed by higher staffing costs, write-downs in private investments, and reduced interest income.
Softer U.S. Demand Weighs on Growth Prospects
While global bookings grew, Airbnb flagged that North America — which contributes about 30% of its booked nights — is showing signs of a slowdown. CFO Ellie Mertz noted a clear trend: guests are waiting longer to book, and longer-lead reservations, such as summer vacations, are lagging. This shortening booking window reflects caution among U.S. consumers facing inflation pressures and political instability.
"Some U.S. consumers are waiting and seeing before they book their summer travel,” said Mertz. But she also pointed to a bright spot: travelers aren't downgrading to cheaper options or trimming trip lengths — they’re just hesitating.
The company also cited a notable drop in foreign tourists visiting the U.S., particularly Canadians, many of whom are now opting for destinations like Mexico and Brazil. Still, Airbnb downplayed the impact, estimating that foreign visitors to the U.S. make up just 2% to 3% of its business.
International Expansion and New Features Aim to Reignite Growth
Looking ahead, Airbnb CEO Brian Chesky is betting on international markets to restore double-digit growth. Expansion regions like Asia-Pacific and Latin America outpaced core markets (U.S., UK, France, Canada, and Australia) by more than twofold in Q1. Chesky pointed to countries like Spain, India, Japan, and Mexico as major opportunities, with Airbnb planning to "step on the gas" in those regions.
The company is also doubling down on product improvements. In the past year, Airbnb implemented over 535 platform upgrades, removed 450,000 underperforming listings, and rolled out global total price displays to improve transparency. Meanwhile, its “Guest Favorites” feature is designed to highlight top-tier stays and improve booking conversion.
Airbnb is also re-entering the hotel space, reviving its HotelTonight acquisition with new promotions and integrations. Chesky believes hotel listings can become a major distribution channel — part of a broader push to expand beyond private homes.
Despite the investments and international push, Airbnb warned that margins may come under pressure. With $250 million earmarked for new initiatives in 2025, adjusted EBITDA margins are expected to be flat or down slightly in Q2 and settle at no less than 34.5% for the full year.
Bottom Line
Airbnb delivered a solid first quarter but faces a cloudier outlook. Softer U.S. demand, shorter booking windows, and macroeconomic uncertainty are tempering momentum just as peak travel season approaches. The company’s bet on global expansion and a revitalized core platform could pay off longer term — but for now, investors are bracing for turbulence.
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