---
title: "Airbnb: Investment to increase slightly next year"
description: "Below is the summary of the conference call for Airbnb 4Q22. For the financial report review of the quarter, please refer to &#34;Airbnb keeps going up in fun and activities, taking a &#34;leap&#34; i"
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/3971612.md"
published_at: "2023-02-15T12:51:57.000Z"
author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)"
---

# Airbnb: Investment to increase slightly next year

**Summary of Airbnb's 4Q22 Conference Call Minutes. For the earnings review of this quarter, please see [Dine, Drink, Play, and No Pause, Airbnb "Leaps" Forward](https://longportapp.com/topics/3969609)**.

**I. Remarks from Management:**

**1\. Year in Review**

Revenue for the year was $8.4 billion, a 40% YoY growth. Excluding FX impact, revenue growth for the year was 46%. 2022 marks the first year we achieved profitability under GAAP. Free cash flow for this year was $3.4 billion, representing over 40% free cash flow margin.

We were able to start buybacks last year, and repurchased $1.5 billion in stock over the past five months. At the height of the pandemic, we cut expenses and became a leaner, more focused company. For the past two years, our workforce has only slightly increased. **Compared to 2019, our workforce actually decreased by 5%.**

**2\. Business Performance**

Demand for Airbnb from guests remained strong. In the fourth quarter, the number of active bookers reached an all-time high. We see the trend of guests booking further in advance, supporting order growth in the first quarter.

More and more guests are returning to cities and traveling across borders, which were Airbnb's core business before the pandemic. These two areas continue to recover at an accelerated pace. Cross-border bookings grew 49% YoY, and bookings of high-density urban areas grew 22% YoY.

Guests are continuing to book longer stays on Airbnb. In the fourth quarter, long stays accounted for 21% of total nights booked, roughly the same as last year.

**3\. Supply of Listings**

The supply side of Airbnb continued to grow. As of 2022, we have 6.6 million active listings, not including the Chinese market we exited in July. Supply increased by 900,000 listings, a 16% YoY increase relative to last year and continued to accelerate relative to Q3. We believe there may be two factors driving this accelerated growth:

Firstly, demand drives supply. Hosts are motivated by the extra income they can earn on Airbnb. Secondly, our product improvements are working. The number of new active hosts we recruited increased by over 20%.

**4\. Strategic Focus**

Empowering hosts to take a leading role: Continuing to increase awareness of becoming a host and making it easier for people to become hosts while providing them with better tools (to accomplish this).

Improving our core services: Including improving customer service, making it easier for them to find suitable accommodations. In the coming months, there will be more features released.

Expansion beyond our core products: This year, we will lay the foundation for future products and services, providing incremental growth for the future.

**II. Q&A from Analysts:**

Q1: How is the supply side developing within cities? A1: **Previously, guests were the primary source of landlords. In Q4, 36% of landlords had previously experienced (Airbnb) guests.** Our supply and demand growth are among the fastest in the industry. Our network has a self-growth trend.

In addition, we have always focused on making it easier to become a landlord. Our landlord login page traffic is twice as much as before (learn about becoming a landlord login page).

We are also simplifying landlord retention. In November last year, a new plan called Airbnb-friendly apartments was announced. It can release a large amount of inventory of multi-family residences in urban areas. We also work with Grey Star and other major real estate developers in the United States. We have 175 buildings in Phoenix, Jacksonville, Houston, and other cities, and landlords have reacted positively.

Q2: Regarding the number of employees, can you talk about the situation of attracting technology talents to execute the plans you just mentioned?

A2: In 2020, we made very difficult layoff decisions. Became a leaner, more focused, and more profitable company. **We are currently one of the few technology companies that do not lay off, and we have not reduced investment. In fact, we are stepping on the accelerator**.

We believe that face-to-face cooperation is very important. Randomly coming to the office during the week is not very effective, but this is a policy that respects employees and helps attract talent.

Q3: What can the company share about the overall pattern of competition and opportunities? Are there potential competitors or potential opportunities brought by artificial intelligence, etc.?

A3: We have many competitors and many different categories. We have a global market, not just vacation and rental companies. 90% of our traffic is free direct traffic-because most of our listings are exclusive as an example of public relations measures, there were 600,000 articles about Airbnb last year. Airbnb often appears on social media.

As for the constantly changing technology landscape, we are **very excited about the possibilities of artificial intelligence.** Supply and demand matching on Airbnb is relatively difficult. Unlike hotels, every one of the 6.6 million listings we have is unique. Guests left more than 100 million comments last year, and analyzing these comments is very laborious. Artificial intelligence helps us analyze big data and make better matches.

Q4: Does the company have any initiatives to share about take rate?

A4: We haven't done anything special about take rate. The commission we extract from each order is very stable. So most of the revenue changes caused by any take rate are seasonal.

Q5: What can be shared about investments and expansions outside the core areas in 2023?

A5: We will invest this year, but it will not have a substantial impact on the profit and loss statement. We will incubate new opportunities, products, and services with relatively low investment. From an innovative perspective, on the landlord side, we will provide more value for landlord members' fees. On the landlord side, we have a take rate of 3%. We have already given away many free products such as Aircove. However, we believe that landlords may be willing to pay for some opportunities in the ecosystem.

On the guest side, we have launched travel insurance and achieved success. I think there will be more opportunities to create new service levels and provide the right experience for people.

Q6: What is your opinion on the impact of exiting the Chinese market and whether you intend to return to the Chinese market?

A6: We expect the recovery in China to be quite slow. We believe that China's focus is on outbound business. There will be hundreds of millions of people who want to travel outside of China. Airbnb will be an important way for people to travel, especially for the Z generation. But even before the epidemic, China only accounted for a low single-digit percentage of our GBV.

Q7: What is your outlook for new customer growth in 2023?

A7: We do not disclose the exact number of new customer growth. But since the outbreak of the new crown epidemic, we have introduced Airbnb to millions of new customers, and their booking rates are similar or even stronger than historical customers.

Q8: Are there any quantifiable indicators regarding the balance between supply and demand?

A8: Since the epidemic, we have seen permanent changes in some travel booking behaviors on Airbnb. One of the most obvious changes may be that the epidemic has increased people's flexibility. More and more people are searching for more locations and using more flexible functions. People enter many different variables when searching, and we are just responding to this natural phenomenon.

One of our major strategies is to direct demand to where we have available supply.

Q9: What evidence supports the statement that ADR is difficult to grow in 2023?

A9: In Q4, ADR grew by 5% year-on-year, excluding the impact of foreign exchange. When considering the impact of the pound sterling or the euro, it was -1%. Our forecast for ADR in the future is a slight decline, which is largely driven by combinations. People returning to the city are accelerating more cross-border travel to areas with lower ADR.

At the same time, even if ADR may only decline slightly, we will still strictly ensure reasonable cost structures to hedge against declining ADR. Therefore, we expect the full-year EBITDA profit margin to be roughly the same as 2022.

Q10: Are there any factors to consider regarding the supply side of landlords that make them willing or reluctant to enter this platform?

A10: It is very important to strive to establish a balanced market. If the supply increases too fast, landlords may not get enough bookings. If there is enough supply, guests will not be able to get the desired properties.

Since 2019, our supply has grown by 26%, but our order volume has only grown by 24%. There is a good balance in this regard. I am very proud that by the end of 2022, we will have more than 6.6 million active listings, an increase of 900,000 this year. Q11: Could you talk about the strategic considerations and objectives behind the introduction of new pricing and discount tools that may affect ADR?

A11: There are three things we want to do: the first thing is transparent pricing. In Europe and many countries around the world, we show the total price directly. However, in the United States, the practice of travel companies is to show a low base rate, and then there are additional fees when you check out.

So last December, we launched a total pricing plan. Including all pre-tax costs. In the short term, this is neutral for our bookings. Users can turn this feature on or off. However, we believe that the long-term impact on long-term booking volumes will be very positive.

The second thing is that we now prioritize listings with better value in search results.

The third thing is that we are building new tools to provide hosts with pricing tools so that they can understand the final price they are showing to guests. Previously, hosts did not always know the final price guests would pay. If they knew, there might be some fee adjustments.

In the short term, these tools may have a moderate impact on ADR, but in the long run, I believe this will drive more demand.

Q12: Can you provide any related comments on the advance booking time?

A12: We are satisfied with the advance booking time in Europe. Europeans tend to book summer trips early in the year, which I think shows their optimistic attitude towards traveling this summer. We see that Airbnb's advance booking time is slightly longer than it used to be, which I think shows a good optimistic attitude for those who have confidence to book flights for the summer travel season.

Q13: How do you view the business prospects in the Asia-Pacific region, including China?

A13: I think the Asia-Pacific region is a huge growth area for us in the future, but its recovery rate is a bit slow. I think the reason is that Asia is more like a cross-border market in history. Many Asians are basically traveling across borders. Most countries do not have such a large domestic market, so there is only a slow recovery.

Q14: What are the specific guidelines for ADR in Q1 2023? Any details to share?

A14: If overall pricing is stronger but the mix is different than expected, it will flatten out to be better. For example, urban accommodation may not be as strong, or cross-border may not be as strong, and Latin America and Asia may not perform as strongly.

Our ADR forecast for the first quarter mainly comes from the expected continued growth in the combination of cities, cross-border and regions. That's why we predict it will only decrease slightly compared to the same period last year. As for the inference of take rate, it should be roughly the same direction as last year. It may not be exactly the same, but I think reviewing the level of 2022 will guide your take rate well.

Q15: How should we consider hotels when discussing expansion opportunities? Should we consider more expansion opportunities related to core business and experience?

A15: I think hotels are an important part of solving our portfolio gap. People choose us because we have some unique listings. But we also have a lot of traffic, so we hope that users can find suitable products on the platform. First of all, we will continue to drive growth in our core business. Next, we will introduce more new features to increase the length of stay and selection space for consumers. Finally, there will obviously be new products and services in the future.

Q16: What is the company's view on capital allocation and share repurchases? Do you think there is a possibility for share repurchases to surpass stock compensation?

A16: I am really satisfied with our cash situation. As of the end of this year, there is $9.6 billion in cash on our balance sheet. This is after repurchasing 1.5 billion shares of stock. We have $500 million in remaining approved share repurchases. We expect this to be executed earlier this year. But obviously, we are still in growth mode, just as we use this balance sheet to ensure that we can invest in future business growth. Clearly, retaining enough cash can retain potential corporate merger opportunities. Then, if we can return stock cash to shareholders through share repurchases, this will be our main tool. You expect that this year, we will have about $1 billion in stock-based compensation that can be offset by share repurchases.

Other than that, I have nothing more to say now. But we will continue to evaluate how much appropriate cash should be retained and how much cash should be returned to shareholders. But remember, we are still aggressively growing, but we hope to invest in the long-term growth of the business.

Q17: Regarding the performance of new landlords after joining Airbnb, have you observed any changes or trends?

A17: The overall trend we see is that most landlords who come to Airbnb are "casual landlords" and randomly receive visitors during certain periods. Subsequently, landlords usually increase the available days, and as the number of times the house is booked and reviews increase, landlords will be willing to provide more nights for booking, and the ADR will usually rise.

Q18: Regarding comments on EBITDA profits in 2023, you talked about using variable cost efficiency to maintain profit margins to offset lower ADRs. So how should we consider marketing expenses?

A18: We will moderately increase investment. Our employee growth will be around 2%-4%. We will maintain good fixed cost discipline.

We have also seen significant improvements in variable cost reductions. Community support costs, payment costs, infrastructure costs, all of these areas are important and sustained efforts to drive profitability improvement. We are still in high-speed growth mode and not in profit maximization mode. There are many factors that can further drive profit growth.

In terms of marketing, marketing costs in 2023 will be roughly the same as in 2022 as a percentage of annual revenue. The company will market earlier this year to ensure that the platform is conveyed to guests around the world to meet the peak summer travel season.

Q19: What is your specific view on Airbnb-friendly apartments and cooperation with real estate for this competition?

A19: We are starting to get a lot of customers from real estate developers. We are thinking about making buildings Airbnb-friendly and making homes more attractive. We started working with more than 10 other companies, including GrayStar Equity Residences, and we have 175 buildings in Houston, Phoenix, Jacksonville, and other areas. They are usually composed of one bedroom and one studio. I think this will bring considerable demand.

Many REITs and developers are partnering with Airbnb. We believe that we can provide them with a lot of traffic, so I think this is a project that will continue to grow.

Q20: Can we maintain a flat profit margin if ADR pricing returns are lower than expected? How to estimate the impact of foreign exchange on EBITDA margin?

A20: As you said, our forecast for the slowdown in ADR is largely due to the structural transformation of the portfolio. Obviously, we want to ensure that the tools we provide can effectively reflect prices, so we have tremendous value. Time will tell us how much we can see these overall changes from ADR. As I said, we do have quite a bit of leverage, and over time, we can use these levers to continue to improve cost efficiency. If ADR falls further, I may need to use more leverage, but I am confident that in the face of any headwinds we see from ADR this year, our EBITDA margin will remain neutral.

As for how much impact foreign exchange will have on this year's profit margin, we may be able to follow up offline. What I mean is that this is a material data, probably in the billions of dollars, and specific calculations may be done offline.

Q22: Can you share any trends regarding space utilization/occupancy? Does the product plan change in search experience from 2022 help to increase utilization or occupancy on the platform? What does your product plan look like in 2023?

A22: For long-term rentals, the first quarter of 2019 accounted for about 13%, the end of 2019 may be 16%, and last year was about 19%-20%. It was about 21% in the fourth quarter. So this number has increased and is quite stable.

What we are seeing in the first quarter of this year is that we will continue to see strong growth in short-term rentals.

**Past Research:**

November 2, 2022 Phone Conference Call "[Airbnb's View on the Future of Travel (3Q22 Phone Conference Summary)](https://longbridgeapp.com/en/topics/3604110?invite-code=EZND0I&channel=t3586604)"

November 2, 2022 Financial Report Review "[No Good News is Bad News, So How Much Appeal Does Airbnb Have Left?](https://longbridgeapp.com/en/topics/3603492?invite-code=EZND0I&channel=t3586604)"

August 3, 2022 Phone Conference Call "[Airbnb Management's View on the Second Half of the Year Strategy (2Q22 Phone Conference Summary)](https://longbridgeapp.com/topics/3240197)" On August 3, 2022, Analysis of Financial Statements: "High Valuation Guilty? Good Performance Can't Help Airbnb"

Telephone Meeting on May 4, 2022: "Shared Rides Industry Recovery (Summary of Airbnb's Telephone Meeting)"

Analysis of Financial Statements on May 4, 2022: "The Return of the Airbnb King as the Coronavirus Recedes"

Depth on June 1, 2022: "Airbnb: Growing Momentum, but Low Valuation for Price"

On June 1, 2022: "After the Epidemic, Airbnb and Disneyland Finally Made It"

On April 6, 2022: "Airbnb: A Different Type Under the Epidemic, Why Can Others Fall Behind While It Bounces Back?"

On April 7, 2022: "Airbnb: Crown Too Heavy, Valuation Runs Too Fast"

**Risk Disclosure and Statement in this Article:** [Dolphin Analyst Disclaimer and General Disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer)

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.