Travel's Seasonal Symphony: Airbnb's Profitable Four-Part Harmony

Airbnb's business experiences seasonal fluctuations, mirroring typical travel patterns throughout the year. Typically, the first three quarters, particularly the third quarter, see higher volumes of Nights and Experience bookings compared to the fourth quarter. This is because travelers tend to plan trips during the peak travel season, which falls in the third quarter for regions like North America and Europe, the Middle East, and Africa (EMEA).

key performance indicators, such as Gross Booking Value (GBV) and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), can also be influenced by holiday timings and other events. Our GBV's seasonality aligns with booking patterns, with revenue and Adjusted EBITDA historically peaking in the third quarter when the majority of check-ins – and thus, revenue recognition – occur.

Seasonal variations in GBV affect quarterly Free Cash Flow. A significant part of our costs remains relatively stable or varies in line with transaction volumes. Historically,recordthe highest GBV in the first two quarters despite fewer check-ins, leading to an accumulation of unearned fees and, consequently, the highest Free Cash Flow and Free Cash Flow as a percentage of revenue in these periods.

The third quarter witnesses a slight dip in GBV and a surge in check-ins, reducing unearned fees, resulting in a lesser sequential decrease in Free Cash Flow. However, the GBV decline is more pronounced in the fourth quarter, where Free Cash Flow is usually at its lowest, reflecting the natural downturn in travel activity post-peak season.