• 9M23 revenue/adj. PATMI exceeded expectations at 79%/91% of our FY23e forecasts. In 3Q23, revenue grew 18% YoY driven by a 14% YoY surge in booking volumes due to record travel demand over the summer season. Adj. PATMI spiked 32% YoY to US$1.6bn driven by higher operating leverage.
• For 4Q23e, Airbnb expects revenue to rise 13% YoY to US$2.15bn. Management also expects booking volumes growth rate to decelerate sequentially due to macroeconomic factors and geopolitical tension in the Middle East.
• We upgrade to BUY from ACCUMULATE recommendation after the recent fall in its stock price. We nudge our DCF target price to US$157.00 (prev. US$152.00) with a WACC of 7% and terminal growth of 4%. We increase our FY23e revenue/PATMI by 2%/116% to account for higher average daily rates and one-time income tax benefit. Airbnb benefits from the shift towards alternative accommodations as it offers record levels of active listings on its platform, benefits from travelers looking for long-term stays, and is more family and group travel-friendly.

The Positives

+ Booking volumes continued to accelerate. 3Q23 revenue grew 18% YoY to US$3.4bn, in line with the top end of US$3.4bn company guidance. Revenue was driven by 14% YoY growth in booking volumes to 113mn, 3% YoY improvement in the average daily rates to US$161, and a 4% FX tailwind. Cross-border booking volumes grew 17% YoY (strength in APAC regions), while urban nights booked increased by 15% YoY. Meanwhile, stays of 28 days or more accounted for 18% of total gross nights booked led by the flexibility granted by remote work environment.

+ Strong listings growth. Airbnb added about 1mn active listings this year. In 3Q23, active listings on the Airbnb platform grew by 19% YoY to more than 7mn. Active listings increased across all market types (urban and non-urban) and regions, with highest growth in APAC and Latin America regions. We believe strong supply growth was led by continued product enhancements (Airbnb Rooms, Monthly Stays, and pricing tools) and marketing to attract new hosts.

The Negative

– Cautious 4Q23e outlook. Airbnb guided 4Q23e revenue to be in the range of US$2.13bn-2.17bn (12%-14% YoY growth), representing a decline in topline growth. Management expects travel demand to slow down due to increased volatility led by geopolitical events in the Middle East and macroeconomic factors. As a result, Airbnb expects booking volumes growth rate to moderate sequentially based on QTD trends.