Airbnb (ABNB) Q2 Revenue Jumps 13%

Key Points

• Airbnb’s GAAP revenue of $3.10 billion in Q2 2025 topped analyst estimates and Revenue of $3.10 billion grew 13% from the prior year.

• Net income (GAAP) rose 16% year over year. Net income margin improved from 20% to 21%, while Free cash flow (non-GAAP) declined approximately 7.8%.

• Guidance calls for slower growth and margin compression in the second half of FY2025, due to increased investment.

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Airbnb (NASDAQ:ABNB), the global travel marketplace connecting hosts and guests for short-term stays and experiences, reported results for Q2 2025 on August 6, 2025. The spotlight was GAAP revenue of $3.10 billion, outperforming consensus estimates of $3.03 billion by $70 million, and GAAP diluted earnings per share (EPS) of $1.03, topping the $0.94 estimate. The quarter showed double-digit year-over-year growth in bookings (Gross Booking Value), revenue (GAAP), and profitability (net income and Adjusted EBITDA) compared to the previous year. However, management signaled that the upcoming quarters will see slower revenue growth and lower Adjusted EBITDA margins as the company increases investment in new businesses. Overall, the quarter delivered above-market expectations, showing continued momentum internationally and robust operational improvements.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Success Factors

Airbnb’s core business is a digital platform where people can list, discover, and book unique accommodation and experiences around the world. Its technology handles everything from secure payments to review systems, helping hosts and guests connect across more than 200 countries.

Recently, Airbnb has focused on making its platform more scalable and trustworthy by investing in artificial intelligence (AI), removing low-quality listings, and launching new product types. Business success depends on growing bookings, attracting a steady supply of quality hosts, and navigating complex regional regulations governing short-term rentals and online marketplaces.

Quarter in Detail: Financials, Products, and Geographic Trends

GAAP revenue exceeded analyst estimates. Revenue (GAAP) rose 13% to $3.10 billion, beating expectations. Net income (GAAP) reached $642 million, up 16% from the prior year, with improved net income margin. Adjusted EBITDA, which is earnings before interest, taxes, depreciation, and amortization, climbed 17% to $1.0 billion. Free cash flow (non-GAAP) declined to $1.0 billion, attributed mostly to working capital swings, not fundamental weakness.

Bookings metrics provided insight into user demand. Nights and seats booked climbed 7% year-over-year to 134.4 million. Gross booking value, reflecting the total dollar amount of all bookings on the platform, rose 11% to $23.5 billion. The average daily rate (ADR) was $174.48, up 3% from the prior year, assisted by currency effects and pricing changes. App-driven bookings increased 17% year-over-year, now comprising 59% of total nights, showing stronger engagement through Airbnb’s mobile platform.

Regionally, growth was fastest in Latin America, with high-teens percentage growth in bookings. and Asia Pacific saw mid-teens growth in Nights and Seats Booked. The Europe, Middle East, and Africa segment saw mid-single digit growth for nights booked and a strong ADR boost from currency. North America, which contributed approximately 30% of Nights and Experiences Booked, saw low-single digit growth, showing some softness offset by international expansion. Bookings in Airbnb’s fastest-growing “expansion markets” continued to outpace core markets by a factor of two for the sixth straight quarter.

On the product side, Airbnb pushed ahead on its strategy to diversify beyond accommodation alone. The company now offers Airbnb Services (in-home offerings like trainers or chefs) and Experiences (local activities and excursions) as part of a new integrated app. the company reported more than 60,000 applications from potential new service and experiences hosts since launching in May 2025 and very favorable initial ratings, with an average of over 4.9 out of 5 stars since launch. Significant AI-driven upgrades, such as automated customer service for US users, reduced the percentage of hosts and guests needing to contact a human agent by 15%.

Airbnb removed more than 500,000 listings deemed low quality since 2023 to maintain platform trust. “Superhost” managed listings, which benefit from high guest ratings and reliability, saw nights booked climb 12% year-over-year. Investment in partnerships and brand campaigns, like those with the International Olympic Committee and FIFA, targeted host and demand growth in key expansion regions.

The company continued investing in compliance and local market adaptation, but management highlighted ongoing work to tailor the product, payment options, and brand for local markets. This included custom campaigns in Japan and specialized payment offerings in Brazil.

Seasonal and economic factors influenced the period. The timing of Easter and relatively favorable currency movements helped boost results. Management noted that North America’s growth rate was hampered by lower cross-border demand, while Latin America and Asia Pacific compensated with higher volume growth.

In terms of capital returns, Airbnb repurchased $1.0 billion in shares, bringing total repurchases over the trailing twelve months to $3.7 billion and shrinking its outstanding share count. A new $6 billion authorization for further repurchases was approved, and the company ended the period with $11.4 billion in cash and cash equivalents, short-term investments, and restricted cash. The company does not currently pay a dividend.

Looking Ahead: Management Guidance and Key Themes

For the third quarter, Airbnb guided to revenue between $4.02 billion and $4.10 billion for Q3 2025, representing 8% to 10% growth over the prior year -- a step down from the previous quarter’s growth pace. Management forecast a stable trend in nights booked and a modest increase in average daily rate, mostly related to currency effects. Adjusted EBITDA is expected to exceed $2.0 billion, but Adjusted EBITDA margin is expected to fall below last year’s figure because of increased spending on new offerings and policy efforts.

For full fiscal 2025, management reiterated an adjusted EBITDA margin target of at least 34.5% for the full year, in line with previous guidance. However, margin pressure is expected in the second half as the company invests approximately $200 million in new Services and Experiences lines. No formal revenue or EPS guidance was provided for the full year beyond these comments.

Investors will want to monitor signs of slowing growth, especially in North America, and the effects of seasonality and foreign currency movements. The impact of ongoing investments on profit margins, particularly Adjusted EBITDA Margin, is a central watchpoint for the back half of the year, as management expects Adjusted EBITDA Margin to be lower in the next two quarters due to growth and policy initiatives. Key success factors also include successful growth in expansion markets, continued improvements in digital engagement (notably app bookings and AI), and uptake of new product initiatives designed to increase engagement and wallet share per user.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Airbnb. The Motley Fool has a disclosure policy.