Airbnb sets disappointing guidance as travelers pull back on future bookings

Airbnb (NASDAQ:ABNB) shares are sinking in after-hours trading as the company’s weak outlook underscored consumers’ reluctance to book lodging in advance amid a softening economic environment.

In Q3, the company forecast revenue to increase 8%-10% to $3.67B-$3.7B, below expectations of $3.84B due to a sequential moderation in the year-over-year growth of Nights and Experiences Booked relative to Q2. Latin America and Asia Pacific continue to be the fastest growing regions, but the company notes there are signs of shorter booking lead times globally and slowing demand from U.S. guests. The Average Daily Rate, or ADR, is expected to increase only modestly on a year-over-year basis in Q3.

Adjusted EBITDA is expected to approximate Q3 2023 on a nominal basis, but adjusted EBITDA margin will likely decline relative to Q3 2023.

In the current quarter, the company earned a profit of $0.86, down from $0.98 and below the consensus estimate of $0.91 per share. Total revenue of $2.75B increased 11% year-over-year, driven by 9% growth in Nights and Experiences Booked and a modest 2% increase in ADR, and was in line with expectations. Adjusted EBITDA of $894M was the highest Q2 on record, up from $819M in the same quarter last year and above the $862.3M estimate,

Gross Bookings Value increased 11% to $21.2B, in line with expectations of $21.22B in GBV. GBV per night, however, increased by 3.5% to $169.53, beating the $168 estimate.

For the three months ended June 30. Airbnb (ABNB) had $1B in free cash flow versus $788M estimates.

Shares are down 13.5% in after hours trading, dragging down shares of Expedia (EXPE) in sympathy. Booking (BKNG) shares are unchanged.