Airbnb officially filed for an IPO and revealed its finances for the first time on Monday.
The company’s IPO prospectus shows $2.5 billion in revenue through the first nine months of 2020, down 32% year-over-year, with a net loss of nearly $700 million, growing from $322 million in the year-ago period.
Airbnb’s gross monthly bookings fell by 72% in April, a low for 2020, and have recovered through this year but are still trending down compared to 2019. The company did post net income of $219 million in the third quarter.
It’s been a roller coaster year for Airbnb and others including Seattle-based Expedia Group as the pandemic crushes the travel industry amid various restrictions and mandates. Airbnb laid off 25% of its 7,500-person workforce, slashed marketing expenses, and raised $2 billion in debt financing to weather the COVID-19 storm.
From the prospectus:
“In early 2020, as COVID-19 disrupted travel across the world, Airbnb’s business declined significantly. But within two months, our business model started to rebound even with limited international travel, demonstrating its resilience. People wanted to get out of their homes and yearned to travel, but they did not want to go far or to be in crowded hotel lobbies. Domestic travel quickly rebounded on Airbnb around the world as millions of guests took trips closer to home. Stays of longer than a few days started increasing as work-from-home became work-from-any-home on Airbnb. We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere. Our platform has proven adaptable to serve these new ways of traveling.”
Box CEO Aaron Levie called the IPO a “perfect market hedge” given the state of the world amid the pandemic.
Airbnb IPO is the perfect market hedge. If you believe the vaccine is coming quickly, people want to travel again. If you don’t believe it’s coming quickly, people want to work remotely in different locations longer.
— Aaron Levie (@levie) November 16, 2020
Airbnb listed Expedia as a competitor in its IPO filing. Expedia owns vrbo, a short-term rental platform that competes directly with Airbnb.
Speaking at the GeekWire Summit last month, Expedia CEO Peter Kern noted how vacation rentals have been a bright spot for travel businesses as people look for safe ways to go on vacation.
“Definitely, we’ve seen strength in the alternative market for vrbo — and I’m sure our friends at Airbnb are seeing similar strengths,” Kern said.
Asked about potential partnerships with Airbnb, Kern said nothing was imminent but that Expedia is “always open to conversations about how we can help somebody and help ourselves at the same time.”
“We all have our advantages,” Kern said. “[Airbnb] has a great brand; we’ve got the ‘everything of travel’; Bookings.com is good at other things. How we participate in the market and how we expand our breadth will be an interesting question.”
Kern added that Expedia is working on improving how it surfaces alternative accommodation content through its various platforms beyond vrbo. “That’s a big opportunity for us,” he said.
Expedia’s third quarter revenue sunk 58% to $1.5 billion, compared to $3.56 billion the year before. In addition to vrbo, other Expedia Group travel brands include Orbitz, Hotwire, Trivago, Hotels.com, and Egencia in addition to the flagship Expedia.com.
“EXPE’s Q3 results reflect the reality that the travel industry and the world still face a prolonged and bumpy path to recovery, in our view,” RBC Capital wrote in a research note.
Expedia and Airbnb share a common competitor: Google. In its prospectus, Airbnb said its SEO results “have been adversely affected by the launch of Google Travel and Google Vacation Rental Ads, which reduce the prominence of our platform in organic search results for travel-related terms and placement on Google.”
Google’s increasing prominence presents a challenge for Expedia, Airbnb, and others. Google is a rival in online travel, and also a key source of customers through search traffic and paid advertising.
Kern spoke at the GeekWire Summit just after the U.S. government filed an antitrust complaint against Google. He said he hopes the complaint against Google ultimately changes the search giant’s behavior, and creates a fair marketplace.
“I’m very pleased to see the government finally taking some action,” Kern said. “Hopefully, it will create a fair marketplace for us, which is all we want. We have no axe to grind against Google, except that we don’t think the marketplace is equitable.”
Company leaders including Kern and Chairman Barry Diller have been outspoken about the challenges created by Google’s dual role as search platform and competitor. Expedia pointed out in a regulatory filing earlier this year that Google has been building out its online travel offerings while “further prioritizing its own products in search results.”
Airbnb plans to trade under the ticker ABNB on the Nasdaq. The company has raised $6.4 billion. Top Silicon Valley tech investment firm Silver Lake bought big stakes in Expedia, Airbnb, and Portland, Ore.-based vacation rental platform Vacasa earlier this year.
Click below to see Airbnb’s financial and bookings performance.
