Digging Into Airbnb's Q4 and Fiscal Year Results

Airbnb (ABNB) just reported its Q4 and fiscal year 2023 results.

Headline results were good. Revenue rose 24% year-over-year for the quarter, and 40% for the year. Nights and Experiences booked were up 20%/31% (quarter/year), and gross booking value tracked similarly at 20%/35%. The company noted a continued return to pre-COVID travel patterns, with a sharp rise in cross-border bookings (+49%) and city travel (+22%), though both still remain below 2019 share of revenue. Booking results were also strong across all geographies, particularly in Asia where COVID restrictions are (finally) being lifted. Bookings grew 40% there.

One priority for management this year is to continue making hosting much easier and more mainstream in order to grow supply on the platform. There have been some early wins here, with 16% growth in global active listings over last year. Airbnb now lists 6.6 million properties.

I continue to be impressed with how efficiently this company is run. Airbnb delivered an outstanding 40% free cash flow margin for the year, carries 5 times more cash than debt on the balance sheet, and is so capital efficient that its cash ROI is almost unbelievable (I calculate it at over 250%). This is a firm that made nearly $8.5 billion in revenue but spent only $25 million total on capital expenditures! Remarkable. Another interesting tidbit that shows Airbnb's efficiency: in 2023, the firm's headcount was down 5% from 2019, but revenue was up 75%.

Airbnb still profiles as a world class company, but the stock has appreciated quite a bit since we added it (up 28%, beating the market by 23%). Given its continued good performance, share buybacks, and solid guidance, I'm hiking the fair value price up to $143 (from $130). Still, the stock is a little out of buy range and will remain on the Hold List.