Airbnb (NASDAQ: ABNB) delivered a solid performance in the first quarter of 2025, posting 6% revenue growth and demonstrating resilience amid a challenging global economic environment.
However, despite these headline gains, the company’s outlook and regional performance reveal a more nuanced story as it navigates persistent headwinds, particularly in North America.
Q1 2025: Growth Highlights and Financial Strength
Airbnb’s Q1 revenue climbed to $2.3 billion, up 6% year-over-year, with nights and experiences booked rising 8% to 143 million. The company generated $1.8 billion in free cash flow for the quarter, underscoring its robust financial position, and ended March with $11.5 billion in cash and investments.
Adjusted EBITDA stood at $417 million, representing an 18% margin, while net income fell to $154 million, down from $264 million a year earlier, primarily due to higher stock-based compensation and investment write-downs.
Globally, demand remained strong, with guests spending nearly $25 billion on the platform in Q1. Excluding currency and calendar effects, revenue growth would have reached 11%, highlighting solid underlying momentum.
Regional Performance: U.S. Softness, International Strength
While Airbnb saw double-digit growth in emerging markets, especially Latin America, North America lagged behind. Nights and experiences booked outside North America grew 11%, with Latin America emerging as the fastest-growing region.
In contrast, the U.S. market experienced softer results, attributed to broader economic uncertainties and a decline in foreign travelers visiting the country. Domestic U.S. travel outperformed cross-border bookings, but overall growth in North America was modest.
Canadian travelers to Mexico surged by 27% in March, and Easter travel from Latin America drove strong demand, but these gains could moderate in the coming quarters as travel patterns normalize.
Margin Pressures and Q2 Outlook
Despite the top-line growth, Airbnb faces pressure on profitability. The company’s Q2 guidance was slightly below analyst expectations, projecting revenue of $2.99–$3.05 billion and cautioning that adjusted EBITDA margins may remain flat or dip slightly due to increased marketing expenses and investments in new ventures.
Management has earmarked $200–$250 million for growth initiatives this year, targeting a full-year adjusted EBITDA margin of at least 34.5%.
The company also removed 450,000 listings since 2023 to improve host quality and regulatory compliance, a move expected to enhance trust but potentially limit near-term supply growth.
Strategic Initiatives and Future Outlook
Looking ahead, Airbnb is preparing to launch new features and expand its platform beyond accommodations, with a major app update expected on May 13, 2025. This innovation pipeline is designed to deepen user engagement and diversify revenue streams.
Investors remain divided: the company’s strong cash generation and international growth support a bullish outlook, but margin pressures and U.S. market stagnation temper enthusiasm. At $124 per share, ABNB trades at a notable discount from its 52-week high, reflecting market caution.