Airbnb, the popular short-term rental platform, recently reported a fourth-quarter loss of $349 million due to an income tax settlement with Italy. Despite this setback, the company experienced growth in bookings and revenue, while also expressing confidence in the continued demand for its services.
Looking ahead to the first quarter, Airbnb expects its revenue to meet or exceed the expectations of Wall Street analysts. However, the company anticipates a slight moderation in the rate of bookings growth compared to the previous quarter. Additionally, the timing of Easter, which falls early this year, may impact growth in the second quarter.
CEO Brian Chesky highlighted Airbnb's efforts to improve and refine its business. The company aims to make pricing more transparent, tackle excessive cleaning fees, and reduce host cancellations. In addition, Airbnb plans to expand its rental platform into countries where it is not as strong as the United States.
Chesky mentioned that this expansion is already underway in Germany, Brazil, and South Korea, with upcoming trials in Switzerland, Belgium, and the Netherlands. However, he provided few details regarding the broader strategy, only promising news by the end of this year. Competitors such as Vrbo parent Booking Holdings and Expedia Group generate revenue from flight and rental-car listings, suggesting a potential avenue for growth for Airbnb.
The fourth-quarter loss of $349 million represents a significant decline compared to the $319 million profit reported during the same period the previous year. The recent results were primarily affected by $1 billion in one-time tax withholding expenses and lodging tax reserves. Airbnb faced an income tax settlement of 576 million euros ($621 million at the time) with Italy's tax agency due to withholding from property hosts in the country. The company maintains that it has no similar liability in other nations and did not admit any wrongdoing.
Excluding these special expenses, Airbnb claimed it would have earned $489 million. The company's revenue saw a 17% increase to $2.22 billion, surpassing analysts' forecast of $2.17 billion. Bookings also rose by 12%, while the average daily rate experienced a 3% gain.
For the first quarter of this year, Airbnb projects revenue ranging between $2.03 billion and $2.07 billion, aligning closely with analysts' expectations of $2.03 billion. The company emphasized that demand remains strong, particularly among new users. Bookings grew by 12% compared to the previous year, bouncing back after a period of volatility in October 2020 caused by economic uncertainty and conflict in Israeli-occupied Gaza.
Airbnb is witnessing growth in less mature and under-penetrated markets, such as Brazil, where domestic bookings have nearly doubled since late 2019. The company's gross bookings reached $15.5 billion, slightly exceeding the forecast of $15.2 billion among analysts.
Throughout last year, Airbnb added nearly 1.2 million listings, bringing its total to over 7.7 million listings worldwide. The company experienced the highest growth rates in Asia Pacific and Latin America. Reflecting confidence in its future, Airbnb's board approved a share-repurchase program of up to $6 billion.
Following the release of these financial results, Airbnb's shares initially rose in after-hours trading but later declined 5% two hours after regular trading had ended. The market's response suggests a mixed reaction to the company's performance.
Although Airbnb faced significant tax-related challenges in the fourth quarter, the company has remained resilient and experienced growth in bookings and revenue. Its focus on refining its services, expanding into new markets, and potential diversification beyond accommodations demonstrate its determination to continue evolving as a leading player in the travel industry.
