How Seasonality Drives Airbnb’s Volatile Earnings: Skift Research Analysis

When Airbnb’s initial public registration statement hit the tape on Monday night, many were quick to point out a shocking fact — the homesharing giant had managed to turn a profit in the third quarter. But do not be fooled by this quarterly performance. It is a bit of an accounting illusion. We still expect that over the course of the full year, Airbnb will spill plenty of red ink. Summer Love Airbnb reported adjusted third quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), a measure of operating profitability, of $501 million. What’s more, that was a margin of 37 percent, impressive by any standards, and outright spectacular in the midst of the worst crisis in the history of the travel industry. But looking at that figure in isolation ignores Airbnb’s historical seasonality. For all intents and purposes, Airbnb generates its full year of profits in the third quarter alone as guests travel during the peak summer months. In pretty much every other quarter, Airbnb loses money. This also means that any margin analysis done in just a single quarter will lead one astray. Because all the profit falls in just one period, the margins look spectacular for that one period, but falter in others. In the third quarter of 2018, for instance, Airbnb earned a 28 percent adjusted EBITDA margin. Impressive! But that huge gain had to tide Airbnb over into the l