Updates for Airbnb and Clear Secure

A few more portfolio stocks reported earnings this past week. Let's take a look at the results for Airbnb (ABNB) and Clear Secure (YOU).

Airbnb (ABNB)

Airbnb's reported Q1 results were pretty much in-line with expectations. Revenues were up 20% (24% discounting currency effects), nights and experiences booked were up 19% to just over 120 million, and bookings backlog is up 25% over the end of Q1 last year.

Management outlined 3 priorities for the business going forward. One was to make hosting more mainstream - basically make it easier and more attractive for anyone to host on Airbnb. Active listings were up 18% this quarter. Maybe the most interesting addition is Airbnb Rooms, where renters learn about their hosts and rent a single room to stay with them. That sounds to me like a build-out of the original promise of Airbnb, and a great option for folks that want to experience a location with a local.

The other 2 priorities were perfecting the current experience and expanding the idea into new markets. On the first, the company rolled out its big summer update to the app, with a number of features like transparent pricing, pricing tools for hosts, checkout instructions, and more. On the final, management was somewhat mum on "big new features for 2024", but did highlight the momentum the company is seeing in relatively new markets like Germany and Brazil.

Financially things look strong. Free cash conversion was 87%, which is pretty remarkable - Q1 is a high converting quarter, but that's 8 percentage points higher than last year! Airbnb remains one of the most efficient companies from a free cash return on invested capital standpoint I've ever seen.

That said, we are seeing forward growth estimates moderating. Q2 guidance was for 12-15% growth, which is a bit below our modeling. While this is offset a bit by a new announced $2.5 billion share buyback, I do think it is prudent to temper growth expectations a bit near-term. As a result, I'm lowering the fair value price a few bucks to $137 (from $141). Nevertheless, Airbnb still looks like a good buy at present.

Clear Secure (YOU)

Clear Secure's Q1 results looked pretty good - no major concerns here. Revenue grew 46% year-over-year, and total bookings were $150 million, up 39% (but down a touch from $151 million in Q4). User metrics like total platform users (including free users) grew 48.1% to 141.1 million, and paid enrollments were up 37% to 16.2 million. The company added 12 new airports in the quarter - a record - and expanded 4 other locations. Clear Secure is still exhibiting strong growth metrics.

I talked a lot about the "optionality" in this platform in the original write-up, and this continues to prove out. The company announced a new partnership with LinkedIn, where any of its 200 million users can earn a "verified" badge through using the Clear Secure platform. While there may not be much revenue that comes out of this, it is a nice way to add platform users, which can then be converted down the line.

Management continues to impress. The firm repurchased 282k shares in the quarter at a price just under $23. That looks like a solid buyback at prices close to 50% below a reasonable fair value. The company also announced a special, one time $0.20/share dividend to be paid in June (roughly a 1% yield). Some may see these as a lack of opportunity for the firm's cash... I see it as a shareholder friendly way to distribute excess earnings instead of stupid, large acquisitions that derail a business (looking at you Twilio, and Okta, and several others).

Even after some tweaks to the valuation model, the $41 price target still looks good at this time.