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Airbnb (NASDAQ:ABNB) shares have drifting into negative territory as the company’s second quarter top- and bottom-line beat was blunted by more conservative expectations for the third quarter.
As the company considers its performance in the current quarter, it expects a “tougher year-over-year comparison towards the end of the quarter…as this dynamic will continue into Q4, putting pressure on growth rates later in the year.”
The company is expecting revenue growth of 8% to 10% to a range of $4.02B to $4.10B, straddling the $4.05B consensus estimate, but signaling a slower pace of growth from +13% in the second quarter.
Adjusted EBITDA is expected to be over $2B with a lower adjusted EBITDA margin compared to Q3 2024, primarily a result of investments in new growth and policy initiatives. The company also expects a similar year-over-year decline in Q4. FY25 adjusted EBITDA margin is expected at 34.5%.
Nights and seats booking in Q3 are expected to remain “relatively stable” compared to Q2.
“While we have seen an acceleration of nights booked growth in July, particularly in North America, we are mindful of the tougher year-over-year comparison towards the end of the quarter,” the company said.
Second quarter results, however, were better than Wall Street expected, beginning with a profit of $1.03 per share, up from $0.86 in the same quarter last year and 9 cents better than anticipated. Adjusted EBITDA improved 17% to $1.04B, beating $970.7M estimates, while adjusted EBITDA margin of 34% widened 100 basis points year-over-year and topped estimates of 32%.
Nights and seats booked increased 7% to 134.4M versus 133.5M estimates, while gross booking value was up 11% from a year ago to $23.5B.
On the balance sheet, the company reported $1.0B of net cash provided by operating activities and $1.0B of free cash flow at the end of the quarter. For the months ending in June, Airbnb (NASDAQ:ABNB) had $11.4B of cash and cash equivalents.
As a result of the company’s strong cash flow position, Airbnb (NASDAQ:ABNB) increased its share repurchase program by another $6B.