Beat, Raised Twice, and Quietly Trading Float for Volume: Ex-FX Bookings Growth Held at 13% While Free Cash Flow Fell

Results vs. Consensus

Q1 2026 Scorecard

Year-Over-Year Comparisons

Quality of the Print

Revenue: The 17.9% headline is the fastest growth rate since Q1 2024 and the composition needs three separate adjustments before it can be compared with anything. First, currency: ex-FX revenue growth was 15%, so roughly three points came from translation, which management flagged in advance. Second, product: the CFO sized the combined contribution of Reserve Now, Pay Later, the revised cancellation policies and the single-fee migration at roughly 3 points of nights growth and roughly 4 points of GBV growth. Third, the conflict in the Middle East cost roughly 100 basis points of nights growth through elevated cancellations in EMEA and Asia Pacific. Netting them, underlying demand growth is running in the mid-to-high single digits on volume, which is roughly where it was in Q4 and roughly where it has been for two years. The reported acceleration is real money and it is not organic demand inflecting.

Margins: The best line in the release and the one that justifies the guide raise. Operating margin expanded 154 basis points and the components sum cleanly: sales and marketing added 326 basis points of cost-ratio pressure, and every other line gave back more than that in aggregate, with general and administrative down 189 basis points, product development down 118, operations and support down 116, and cost of revenue down 58. The operations and support line is the one to watch: it grew 7.6% against 17.9% revenue growth, which is the AI customer-support leverage we expected in the November note, went missing in Q4, and has now returned with a number attached. Adjusted EBITDA margin of 19.4% against 18.4% is the first year-over-year expansion in our coverage of this name.

Free cash flow: The one line that got worse, and the reason requires care rather than alarm. Free cash flow of $1,704M fell 4.3% on 17.9% revenue growth, and the trailing-twelve-month margin slipped to 35.9% from 37.7% at year-end. Management was explicit that the cause is Reserve Now, Pay Later, which defers guest payments from booking date toward stay date, and stated that absent it both unearned fees and free cash flow would have grown year-over-year. Unearned fees of $2,733M were essentially flat against $2,723M a year earlier despite GBV growing 19.2%. That gap is the float, and it is being deliberately given up in exchange for booking volume. It is the right trade for the business and the wrong assumption for anyone valuing this company purely on free cash flow, which is what we were doing.

Key Business Metrics

Regional Performance

Asia Pacific and North America — the two genuine accelerations

Asia Pacific moved from mid-teens to high-teens nights growth and North America from mid-single to high-single digit, and both are more interesting than the headline suggests. In Asia Pacific the driver is a cohort that is two years behind Brazil on the same playbook: India origin nights grew roughly 50% for a second consecutive quarter and first-time bookers there accelerated past 75%. In North America the acceleration comes with a caveat, since this is the region where Reserve Now, Pay Later has been live longest and where the product attribution is concentrated.

Assessment: Asia Pacific is the cleanest growth signal in the release because none of the three quantified product features is Asia-specific and the region carries no meaningful Olympics or conflict distortion. India first-time booker growth above 75% is a two-to-three-year leading indicator on the Brazil template, which means the revenue contribution lands in 2028 and beyond. North America's improvement is real but should be discounted for the feature lift, and it is also where the H2 lapping risk concentrates.

EMEA — the conflict shows up here

EMEA decelerated from high-single to mid-single-digit nights growth, reversing the Q4 improvement that we called the quarter's genuine regional surprise. The cause is specific and disclosed: a strong start to the quarter followed by elevated cancellations tied to the conflict in the Middle East. Working the other way, the region hosted the Milan Cortina Winter Olympics, where Airbnb served nearly 200,000 guests with supply in host markets growing approximately 30% and GBV in those markets more than tripling.

Assessment: The Olympics benefit and the conflict drag both landed in EMEA in the same quarter and roughly offset in direction if not in magnitude, which makes the underlying regional rate hard to read. The forward-looking point is that management has assumed a further 100 basis point conflict headwind in the Q2 nights guide, so this is a live and quantified risk rather than a resolved one. Watch whether the Q2 nights deceleration lands within that 100 basis point allowance or beyond it.

Latin America — Brazil compounding at scale

Latin America held high-teens nights growth. Brazil delivered origin nights growth above 20% for a third consecutive quarter with first-time bookers up 22%, and Mexico continued at double-digit nights growth. Management framed Brazil as having moved from barely inside the top ten of its markets to consistently third, fourth or fifth while still compounding above 20%.

Assessment: The single best proof point for the expansion strategy in the entire story. A market that has become a top-five contributor and is still growing above 20% is the answer to the question of whether the country-by-country playbook produces durable share or a one-time step. It produces durable share. The read-across to Japan and India is what supports our medium-term volume assumptions.

Supply

Active listings again grew roughly in line with nights, with the fastest growth in Latin America and Asia Pacific. The framing shifted this quarter from volume to precision: management described the supply strategy as seeking the right homes in the right place at the right time, concentrating acquisition where demand already exists and pushing existing hosts to open more calendar availability. On the events channel, more than 100,000 homes across the 16 World Cup host cities have listed for the first time since outreach began in October, and management disclosed that more than half of the Paris Olympics host cohort was still listed six months after those Games.

Assessment: The retention datapoint is the useful one, because it converts the events strategy from a marketing claim into an economic one. If roughly half of event-recruited hosts persist, the World Cup cohort is worth on the order of 50,000 durable listings acquired at close to zero marginal cost, in exactly the North American markets where supply density most constrains conversion. That is a better use of the sales and marketing line than performance bidding.

Key Topics & Management Commentary

Overall Management Tone: The most assured call of the four we have covered, and the most forthcoming with numbers that cut against the company. Management raised both halves of the annual guide, quantified the product contribution to growth for a second consecutive quarter and at a higher level than before, disclosed that Reserve Now, Pay Later carries a very elevated level of cancellations, and explained without prompting that free cash flow fell because the same product is shrinking the float. Where the tone runs ahead of the evidence is on AI search, where a long and confident answer about competitors not having solved travel discovery sits alongside an admission that Airbnb has not solved it either and is still in research mode.

1. Both Halves of the Guide Raised, One Quarter After They Were Set

In February management guided FY26 revenue growth to at least low double digits and adjusted EBITDA margin to be stable year-over-year. Twelve weeks later both went up: revenue growth to low-to-mid teens, margin to a floor of at least 35%.

"We're raising our guidance for 2026 and now expect year-over-year revenue growth to accelerate to low to mid-teens, and we anticipate our adjusted EBITDA margin to be at least 35%." — Brian Chesky, Co-Founder & CEO

The CFO decomposed the revenue raise into three components and was careful to note that the margin language change was deliberate rather than incidental.

"I would say we have more confidence in our underlying nights book forecast for the year. We have more confidence in terms of the durability of slightly higher ADRs over the course of the year. And third, as we called out in the letter, we're starting to see the benefit from some of our monetization efforts. And so you should see a slightly higher implied take rate in the back half of the year." — Ellie Mertz, CFO

Assessment: A raise this early in the year, on a guide set only one quarter earlier, is the strongest possible confirmation of the February thesis and it is the reason the rating holds. Note the honest reading of the margin change though: management framed it as upside on the top line being partly reinvested rather than dropped through, naming high-ROI marketing channels, expansion markets, policy work and a ramping internal AI expense. The floor moved up; the operating leverage was not handed to shareholders in full.

2. The Product Attribution Rose Again, and It Is Now Four Points of GBV

For a second consecutive quarter the CFO sized the growth contribution of the same three initiatives, and the number went up. In Q4 the estimate was more than 200 basis points of nights growth and roughly 300 basis points of GBV growth. This quarter it is roughly 3 points and roughly 4 points respectively, against reported growth of 9.2% and 19.2%.

The mechanism is now broader than it was. Reserve Now, Pay Later reached most of the rest of the world during the quarter and accounted for roughly 20% of global GBV. More than a quarter of active listings are now on the single service fee, with testing under way to extend it further.

"In every market that we have launched Reserve Now, Pay Later, there is a material lift to gross bookings. And in all cases, we tested extensively to ensure that the net lift to bookings was positive. So certainly, with the offering, there's a very elevated level of cancellations that come with the program. But across all regions, what we see is that the net impact is positive to the business." — Ellie Mertz, CFO

Assessment: Two readings, both correct. The bullish one is that the lever scales: it worked in the US, it works everywhere it has been launched, and the contribution rose as the footprint widened. The cautious one is arithmetic. If features supplied 4 points of a 19.2% GBV print, and currency supplied 6 more, then underlying unassisted GBV growth is closer to 9%. That is a perfectly good number for this business, and it is not the number the reported line advertises. Note also the phrase "a very elevated level of cancellations," which is a firmer characterization than the roughly one percentage point of platform cancellation rate disclosed in February, and it deserves monitoring as the base widens.

3. Free Cash Flow Fell, and the Reason Changes How This Company Should Be Valued

Free cash flow of $1,704M declined 4.3% year-over-year against 17.9% revenue growth, and unearned fees of $2,733M were essentially unchanged from $2,723M a year earlier despite GBV growing 19.2%. Management addressed it directly rather than leaving it to be discovered.

"Absent the impact of Reserve Now, Pay Later bookings, which defer guest payments from the time of booking closer to the date of stay, we expect that earned fees and free cash flow would have both grown year-over-year in Q1. Specifically, Reserve Now, Pay Later results in lower unearned fees in Q1 and Q2 and higher unearned fees in Q3." — Ellie Mertz, CFO

Assessment: The most important analytical development of the quarter and one that has not been widely absorbed. Airbnb's free cash flow has always exceeded its net income by a wide margin because guests pay at booking and hosts are paid at stay, generating a float that grows with GBV. Reserve Now, Pay Later deliberately narrows that gap in exchange for higher conversion. Management is right to make the trade and right that some of it is intra-year timing. But the structural direction is one-way: as the feature scales toward and beyond 20% of GBV, free cash flow margin converges toward the underlying earnings margin. The trailing-twelve-month figure has already moved from 40.4% at the end of FY24 to 37.7% at FY25 to 35.9% here. We are therefore moving our primary valuation anchor from enterprise value to free cash flow toward enterprise value to adjusted EBITDA, and we treat any free cash flow multiple on this name as requiring a float adjustment from here.

4. Margin Inflection: Adjusted EBITDA Margin Expanded Year-Over-Year

Adjusted EBITDA of $519M grew 24.5% on 17.9% revenue growth, taking the margin to 19.4% from 18.4%. Every operating line except sales and marketing improved as a share of revenue, and the largest single improvement in dollar terms came from customer support.

"We've seen the cost per booking decrease about 10% year-over-year in Q1, and we expect to see more of this as we improve AI customer support this year." — Brian Chesky, Co-Founder & CEO

Operations and support grew 7.6% against 17.9% revenue growth, worth 116 basis points of margin. General and administrative was essentially flat in dollars, worth another 189 basis points. Product development grew 12.3%, worth 118. Against all of that, sales and marketing grew 33.4% and cost 326 basis points.

Assessment: This resolves the open question we carried out of Q4, when operations and support grew faster than revenue and we attributed the lost leverage to the cost of expanding the AI assistant across geographies. The leverage has returned with a metric attached. The structural point is that Airbnb is funding a 33% increase in sales and marketing entirely out of efficiency elsewhere, and still expanding the margin. That is a healthier construction than the FY25 pattern, where growth investment came out of the margin.

5. The Middle East Conflict Is a Quantified, Recurring Headwind

Nights growth of 9.2% was struck after roughly 100 basis points of drag from conflict-related cancellations concentrated in EMEA and Asia Pacific. Management stated that absent the conflict, nights growth would have been approximately 10%, which would have been an acceleration against Q1 2025. The Q2 guide assumes the same 100 basis point headwind repeats.

"During the quarter, we saw nights growth accelerated from January to February. However, we saw a slight deceleration in March, largely due to conflict-related cancellations across EMEA and APAC." — Ellie Mertz, CFO

The CEO used the episode to make a durability argument, drawing a parallel to the prior year's tariff-driven decline in inbound US travel.

"When tariff uncertainty led to fewer people traveling to the U.S. last year, they came to Airbnb and found somewhere else to go. And we're seeing a similar dynamic now. We have millions of homes everywhere in the world at nearly every price point." — Brian Chesky, Co-Founder & CEO

Assessment: The substitution argument is genuinely strong and is the most underrated structural feature of this business model. A hotel operator with fixed assets in a disrupted region loses the revenue; a marketplace with inventory in 220 countries reroutes the guest. That is why Airbnb's geographic disruptions historically show up as a modest drag rather than a hole. The honest caveat is that rerouting is not free: substituted trips can carry lower ADR and the cancellations themselves are booked as reversals of already-counted nights. A quantified 100 basis point headwind repeating in Q2 is the right way to model it, and we would treat a Q2 nights print below 8% as evidence the drag is running larger than allowed for.

6. Adjacency Flywheels, Finally With Numbers

Two conversion metrics were disclosed for the first time and both address the central question of whether the adjacencies feed the core. On experiences: nearly a quarter of guests new to Airbnb who book an experience go on to book a stay or a service, and roughly one in three experience bookers books a stay within 90 days. On hotels: approximately 55% of guests who book a hotel on Airbnb come back to book a home.

"we believe having hotels on the platform is a nice onboarding ramp for those global travelers who have not yet tried Airbnb. We believe we can bring in new guests to the Airbnb ecosystem and one, start them on hotels and over time, migrate them to homes as well." — Ellie Mertz, CFO

Assessment: These are the numbers we said in November were unanswerable until roughly mid-2026, and they arrived on schedule and favourably. A 90-day stay-attach rate of one in three on experience bookers is a real acquisition funnel, not a rounding error, and it retrospectively justifies the roughly $200M of 2025 investment that we treated as an unpriced option. The 55% hotel-to-home figure is the more commercially significant of the two, because hotel supply is cheap to acquire and the guest arriving through it is being acquired at someone else's customer-acquisition cost. We now model the adjacencies as a contributor to core nights rather than as standalone revenue.

7. Hotels: Growing at More Than Twice the Platform, Still Single-Digit Share

Hotels remain a single-digit percentage of total nights booked, but management upgraded the growth characterization from Q4's roughly double the platform rate.

"over the last couple of quarters, what we've seen is that all the top line metrics for hotels are growing more than double that of the entire business. So we're seeing really nice scaling both on the supply side as well as bookings" — Ellie Mertz, CFO

The strategic case was sharpened materially. The CEO framed hotels as a conversion-rate arbitrage on traffic Airbnb already owns rather than a new demand-generation business.

"hotels could be a multibillion-dollar revenue business without anyone intending to ever come to Airbnb to book a hotel. I think we have so much traffic and our conversion rate is significantly lower than, say, Booking.com." — Brian Chesky, Co-Founder & CEO

Supply-side recruitment continues to be helped by structural pressure on independents, who pay higher commissions than chains, cannot negotiate rates down with the incumbent agencies, and lack loyalty programs of their own.

Assessment: The conversion-arbitrage framing is the correct one and it makes hotels the highest-return adjacency by a distance. Airbnb pays nothing incremental to acquire the visit; the only cost is product and supply-onboarding engineering. Management named execution speed rather than any structural barrier as the constraint, which is a claim that becomes checkable at the May 20 Summer Release and in the Q2 print. The risk we would flag is that a lowest-price guarantee against Booking and Expedia, which the CEO explicitly said Airbnb wants, is an expensive commitment in a channel where the incumbents have two decades of rate-parity contracting practice.

8. AI: Real Cost Leverage, and an Honest Admission on Search

The operating metrics improved on every front disclosed in February. More than 40% of issues raised through the AI assistant are now resolved without a human agent, up from about a third in Q4. Nearly 60% of the code Airbnb engineers produce is coauthored with AI, which management estimates is roughly twice the industry average. Cost per booking fell about 10% year-over-year.

On AI search, the CEO gave the longest answer of the call and its most useful content was a concession. He described four structural reasons a chat interface fails for travel commerce: it is text-forward where the category is photo-forward, it lacks direct manipulation, it cannot support comparison across large inventories, and it is single-player where most Airbnb bookings involve multiple travellers. He also noted that OpenAI shut down its third-party apps project in March.

"while ChatGPT is -- traffic converts higher than Google traffic when it's sent to Airbnb, we think the design of a chatbot fundamentally as its currently constructed today does not work for travel e-commerce." — Brian Chesky, Co-Founder & CEO

Assessment: The cost side is now proven and quantified, and a 10% reduction in cost per booking on rising volume is worth more to this P&L than any plausible near-term AI search revenue. On the demand side, the four-problem framing is the most substantive analysis of AI travel discovery we have heard from an operator, and the fact that the largest assistant platform retired its app layer in March materially reduces the disintermediation risk we flagged in November. But the same answer concedes that Airbnb is in research and exploration mode on its own AI search. Management is arguing that nobody has solved this, which is a reason not to fear the competition and not a reason to credit Airbnb with the solution. We continue to model no revenue contribution from AI search, consistent with management's own statement that nothing is baked into the outlook.

9. The Balance Sheet Went Investment Grade

Airbnb received inaugural ratings of A- from S&P Global Ratings and Baa1 from Moody's, then issued $2.5B of senior unsecured notes, using part of the proceeds to fully repay the $2.0B of convertible senior notes that matured in March. That retires the current-debt item we flagged as unaddressed in both prior notes. The company repurchased $1.1B of stock in the quarter, leaving $4.5B of authorization, and ended March with $12.1B of cash, short-term investments and restricted cash.

"We believe establishing a presence in the corporate bond market expands our access to financing, diversifies our investor base and supports long-term optimization of our cost of capital." — Ellie Mertz, CFO

Assessment: Sensible and slightly overdue. Converting a maturing convertible into investment-grade unsecured debt at scale removes the equity-dilution optionality embedded in the old instrument and establishes a curve the company can borrow along in future. At $2.5B of gross debt against $12.1B of liquid assets, leverage is immaterial. The item we would watch is what the capacity gets used for: an investment-grade balance sheet with $4.5B of buyback authorization and a stated capital-allocation preference for organic growth first and acquisitions second is a company that has just given itself the ability to buy something.

10. Category Expansion: Delta, Instacart, and the Amazon Analogy

The Delta Air Lines partnership expanded so travellers earn miles on qualifying experiences and services in addition to homes. Grocery delivery is being piloted with a third party. Management framed the whole programme through an explicit analogy.

"every subsequent offering we offer is less work than the prior offering because once you solve one service, the next service is only 20% different. And once you solve that service, the next service is only 10% different. So every new service gets more and more efficient." — Brian Chesky, Co-Founder & CEO

Both loyalty and flights were described as on the table without any announcement attached, for at least the fourth consecutive call in the case of loyalty. The CFO confirmed the Delta arrangement is a revenue share and stated it should not be read as a drag on take rate this year.

Assessment: The declining-marginal-cost argument for category expansion is theoretically sound and empirically untested at this company, since only one adjacency wave has been launched. What is testable is the take-rate claim, and management was specific: the migration to a single fee structure and the insurance programme are expected to lift the full-year take rate, more than absorbing the Delta revenue share. Guest travel insurance revenue grew 45% year-over-year in the quarter, which is the fastest-growing disclosed revenue line in the business and is almost entirely margin. That is the monetization lever investors should be watching, not the loyalty programme that has now been discussed for a year without a launch window.

11. Events: The Olympics Delivered, the World Cup Is the Larger Test

The Milan Cortina Winter Olympics served nearly 200,000 guests with supply in host markets growing about 30% and GBV in those markets more than tripling, alongside roughly a billion marketing impressions and dozens of engagements with Italian government and community leaders. For the World Cup, more than 100,000 homes across the 16 host cities have listed for the first time since October, and management expects to host more guests than at any event in the company's history.

"what we saw with Paris was that, say, 6 months after the games, we have retained in excess of half of the listings that had come on specifically for the games." — Ellie Mertz, CFO

Management also flagged that event bookings concentrate close to the event, so the World Cup contribution will land in Q2 and Q3 rather than being visible in advance.

Assessment: The Paris retention figure is the disclosure that makes this strategy underwritable. Half of 100,000 listings persisting is roughly 50,000 durable North American listings acquired through a partnership rather than through host-acquisition spend, concentrated in the urban markets where Airbnb's supply density is weakest. The revenue in the event window is the smaller prize. Investors should expect the World Cup to show up as a Q2 and Q3 nights and GBV contribution and then as a 2027 supply base, and should not model it as a step change in the growth rate.

Guidance & Outlook

Testing the FY26 raise: Q1 actual of $2,678M plus the Q2 guide midpoint of $3,570M gives first-half revenue of $6,248M against $5,368M a year earlier, or +16.4%. For the full year to land at +14%, or roughly $13.95B, the second half needs about $7.70B against $6,873M, or +12.0%. That is a deliberate deceleration and it is consistent with what management said: the FX tailwind fades through the year, and the back half comps against the Reserve Now, Pay Later rollout. The raise is therefore not an extrapolation of the first half; it embeds the slowdown. That makes it more credible, not less.

Where the take rate comes from: management named two specific levers rather than leaving it to timing. The migration to a single service fee now covers more than a quarter of active listings and is being tested for wider extension, and the insurance programme grew revenue 45% year-over-year in the quarter. Both are structural rather than seasonal. Set against them, the Delta partnership is a revenue share that management said should not be read as a take-rate drag this year. This is the first quarter in our coverage where the take-rate direction is being driven by disclosed product decisions rather than by currency and booking-to-stay timing.

The margin language matters more than it looks: February's commitment to hold the adjusted EBITDA margin stable year-over-year became a guide of "at least 35%," which converts a relative commitment into an absolute floor. But the CFO was explicit that the top-line upside is being partly reinvested into marketing, expansion markets, policy work, and a ramping internal AI expense, so investors should not extrapolate Q1's 103 basis points of expansion across the year. A floor of 35% on revenue of roughly $13.95B implies adjusted EBITDA of at least $4.88B against FY25's $4,297M, or roughly 14% growth in line with revenue.

What is still not guided: no full-year nights or GBV growth figure, no revenue disclosure for hotels, experiences or services, no quantification of the second-half replacement levers, and nothing at all baked in for AI search. The May 20 Summer Release is the next scheduled disclosure and management referenced it four separate times on the call, which is unusually heavy pre-promotion for a product event.

Analyst Q&A Highlights

What Is Driving App Nights Growth, and How AI Is Changing Team Structure

The opening question paired a specific metric with an organizational one: what product changes produced 22% app nights growth with the app now at roughly two-thirds of bookings, and how is the company rethinking team structure in an AI world. The answer on the app was deliberately unglamorous, and the answer on organization was a view about management layers rather than about headcount.

Q: "First, on just the app room nights more booked through the app, the 22% growth and the 2/3 coming. Brian, talk to us about the changes in the app that you've made that's driving that. And then maybe a larger, bigger picture question. I think recently, you had some comments on the podcast just about rebuilding or rethinking how teams are structured given the world of AI."
— Ron Josey, Citi

A: "we've been more aggressive over the last year, 1.5 years in pushing people that open Airbnb on a mobile website to download the app… I don't think there's a silver bullet here… I do not think there's going to be as much of a role for pure people managers. Said differently, 30,000 feet hands-off managers. I think everyone is going to have to be much more hands-on."
— Brian Chesky, Co-Founder & CEO

Assessment: The app answer is more valuable than it sounds because it is honest about there being no single mechanism, which is consistent with the product-velocity framing that has run through all four calls we have covered. The organizational answer is worth noting for what it implies about the cost base: a company that believes middle management is being disintermediated by AI tooling, and where nearly 60% of code is already AI-coauthored, has a headcount trajectory that supports the margin floor. Management has already committed that 2026 headcount and stock-based compensation growth will run below 2025's, and this answer explains the mechanism behind that commitment.

Whether the Delta Partnership Costs Take Rate, and What It Means for Owned Loyalty and Flights

A layered question asked whether the newly announced airline partnership carries an economic cost that shows up in take rate, whether more such deals are available, and whether embedding into another company's loyalty currency forecloses Airbnb's own loyalty and air ambitions. The answer split cleanly between the two executives and was specific on the economics.

Q: "I guess you talked about expanding take rate. I assume that this partnership comes at a bit of a cost. Is it just small enough that it doesn't affect your take rate trajectory? Are there more partnerships like this you can do? And I guess, embedding yourself into another airline partnership, how should we think about your own ambitions to do loyalty or your own ambitions to sell air tickets going forward?"
— Richard Clarke, Bernstein

A: "In terms of economics, it is a rev share program. You shouldn't anticipate that it has a negative impact on our take rate this year. Instead, as we called out in the letter, you should see modest upside to our take rate from both the migration to the single fee structure as well as our insurance program."
— Ellie Mertz, CFO

Assessment: The useful content is the ranking of take-rate drivers, not the partnership itself. Management is telling investors that fee simplification and insurance are large enough to absorb a revenue share with a major airline and still lift the full-year take rate. Insurance is the line to watch here: revenue from guest travel insurance grew 45% year-over-year, it is available in only 12 countries, and management has begun piloting additional insurance products. That is a high-margin attach revenue stream with obvious geographic runway, and it is materially under-discussed relative to the loyalty programme, which was again described as on the table with nothing to announce.

How Hotel Room Nights Are Trending in the Test Markets

A question noted a visible improvement in the New York hotel product and asked for room-night trends in the pilot markets. The answer sized the growth rate against the platform, explained the three strategic rationales, and disclosed the hotel-to-home conversion rate.

Q: "Just have noticed an improvement in sort of the hotel product in New York City. Can you give us an update just how room nights are trending in some of your hotel test markets?"
— Jed Kelly, Oppenheimer

A: "It's a single-digit percentage number of nights. But over the last couple of quarters, what we've seen is that all the top line metrics for hotels are growing more than double that of the entire business… What we noted is over 55% of people who book a hotel on the platform come back to book a home. So we're already seeing that onboarding ramp."
— Ellie Mertz, CFO

Assessment: The 55% figure reframes hotels from a supply-gap product into a customer-acquisition channel, and that is a much better business. A guest acquired through a hotel booking arrives with no Airbnb-funded marketing spend attached, transacts, and then converts to the higher-take-rate homes product more than half the time. Growth at more than twice the platform rate off a single-digit base is not yet financially material, but the compounding maths on a two-times relative growth rate means it becomes material inside three years if it holds. This is now the adjacency we would underwrite first.

How Hotels Will Be Merchandised, and What AI Search Has Taught Them

A two-part question asked whether the hotel experience will comingle inventory in the manner of the incumbent agencies or separate it into tabs, and what has been learned from expanding the AI search test. The answer rejected the framing of the first question and produced the most substantive competitive analysis of the call on the second.

Q: "Could you talk a little bit about your -- what you expect the customer -- the user experience to look like? Will it look more like Booking where you're searching for lodging and there will be both homes and hotels all co-mingled? Or do you expect kind of separate tabs and separate experiences and separate entry points for users?… can you talk about early learnings from the AI search experience?"
— Kenneth Gawrelski, Wells Fargo

A: "I think the ultimate, like, paradigm is not this tab versus co-mingle inventory. I believe that's a pre-AI paradigm… I just want to remind everyone listening that 100% of people who booked have an account, and they have to have a verified ID. You cannot book as a guest… So the best answer to all of this and the best answer is not necessarily tabs… in the age of AI, we know about you, we know your intent and we give you exactly what you're looking for."
— Brian Chesky, Co-Founder & CEO

Assessment: The personalization argument does real work here, because it resolves the tension between opening the inventory aperture and preserving the brand's distinctiveness. If the merchandising is personalized rather than universal, adding hotels does not dilute the experience of a guest who only wants homes. The identity point is the underpinning: a marketplace where every booker is authenticated has a personalization data asset that an anonymous-checkout competitor does not. This is the most credible articulation yet of why the adjacency strategy does not damage the core, and it also makes the May 20 release the moment the claim becomes testable.

World Cup Booking Patterns and What Happens to Supply Afterward

A question probed whether World Cup bookings are largely complete or still ahead, and what happens to the incremental supply once the event ends. The answer explained the late-booking dynamic for tournaments and, more usefully, produced the first retention figure the company has given for event-recruited hosts.

Q: "Can you kind of talk about booking patterns? Do you feel kind of a lot of the bookings are done so far? How should we think about the shape of that?… And then can you also speak to what happens to the supply after the event? You added, I think you said 100,000. Do those stick around?"
— Nicholas Jones, BNP Paribas

A: "what we've seen in terms of past events, both previous World Cup as well as both most recent Olympics, is that a lot of the booking activity happens close to the actual games… what we saw with Paris was that, say, 6 months after the games, we have retained in excess of half of the listings that had come on specifically for the games."
— Ellie Mertz, CFO

Assessment: The retention disclosure converts the events programme from brand marketing into a measurable supply-acquisition channel, and it is the most model-relevant new datapoint of the quarter after the free cash flow explanation. It also carries a warning for anyone modelling Q2: if tournament bookings concentrate close to the games, and the group stage runs through June, then a meaningful share of World Cup GBV books in Q2 but is recognised as revenue in Q2 and Q3 as guests actually stay. Investors should not read a soft early-Q2 booking pace as a failed event.

How Reserve Now, Pay Later Is Performing Outside the United States

A question asked how consumer adoption and awareness have evolved as the payments feature rolled out beyond the US, and whether cancellation and conversion behaviour differs by geography. The answer traced the three-stage rollout, confirmed the lift is universal, and characterized the cancellation cost in stronger language than the company has used before.

Q: "On the expansion of the Reserve Now, Pay Later offering, maybe you could talk about how consumer adoption and awareness has evolved since rolling the product out to more markets? And any notable observations around cancellations or conversion improvements compared to the U.S. market?"
— John Colantuoni, Jefferies

A: "Over the course of Q4, we began merchandising up funnel so that there was broader awareness to the consumer before they got to checkout. We saw that, that was incremental to Lyft as well. And then most recently in Q1, we rolled out RNPL to most of the rest of the world… In terms of relative adoption, the U.S., we are seeing the highest level of adoption, but the other markets are not far behind."
— Ellie Mertz, CFO

Assessment: The three-stage sequence is worth noting because each stage was separately incremental: launch in the US, then merchandise it higher in the funnel so guests know about it before checkout, then extend geographically. That means the lever has not been fully harvested even in markets where it is live, and the CEO separately said the feature is still not merchandised much and has yet to come to desktop. Against that, the phrase "a very elevated level of cancellations" is firmer than February's characterization of roughly one percentage point on a 16% platform base, and as adoption approaches and passes 20% of GBV the aggregate cancellation drag scales with it. We would want an updated platform cancellation rate at the next print.

What Underpins the Confidence in Raising Both the Revenue and Margin Guides

The question that goes to the heart of the print asked for the specific basis of the higher revenue outlook and the changed margin language, and separately whether there are further payment innovations beyond the current feature. The revenue answer was a clean three-part decomposition; the margin answer explained where the upside is going.

Q: "Ellie, can you just help us understand the confidence in the higher revenue growth for the year and then also the slight uptick in view on EBITDA margin? And then, Brian, just given the Reserve Now, Pay Later penetration, curious if you think there are other payment innovations or services that you could see as an opportunity on the platform."
— Douglas Anmuth, JPMorgan

A: "What we're seeing right now is, obviously, relative to a quarter ago, there is upside on the top line. And with that upside, we are actively looking to reinvest to drive growth… marketing channels where we see high ROI. Expansion markets where we see opportunities to lean in and capture more growth. And also things like policy opportunities where we see an opportunity to be more aggressive in a particular city to get a better outcome in our favor, we will do that."
— Ellie Mertz, CFO

Assessment: This is the answer that keeps the rating at Outperform rather than pushing it higher. Management has more top-line confidence and is choosing to spend most of the incremental margin rather than drop it through, and it said so plainly. That is the correct decision for a business trying to convert a reacceleration into durable share, and it means investors should model a 35% margin floor rather than the 19.4% Q1 expansion rate annualized. The inclusion of policy spend as a named reinvestment bucket is new and is worth watching: regulatory outcomes in constrained urban markets are the single largest lever on Airbnb's addressable supply, and paying to influence them has a far longer payback than performance marketing.

What They're NOT Saying

1. An updated platform cancellation rate: in February management disclosed roughly one percentage point of increase on a 16% base. This quarter, with Reserve Now, Pay Later at roughly 20% of global GBV and rolled out worldwide, the characterization was "a very elevated level of cancellations" with no number. The aggregate drag scales with adoption and is now unquantified.
2. How much free cash flow the float trade costs in a full year: management explained the mechanism and said Q3 unearned fees will be higher, but gave no estimate of the steady-state free cash flow margin once Reserve Now, Pay Later matures. The trailing-twelve-month figure has fallen from 40.4% to 37.7% to 35.9% across five quarters.
3. The second-half replacement levers, again: flagged as unquantified in February and still unquantified. The company acknowledges tougher comps against the Reserve Now, Pay Later rollout and names no sized offset.
4. Any revenue for hotels, experiences or services: a fourth consecutive quarter of conversion metrics, growth-rate ratios and nights-share bands with no dollars attached to any of the three.
5. What the Delta revenue share actually is: confirmed as a revenue share, asserted to be small enough not to dent the take rate this year, with no rate, no expected volume, and no term.
6. The economics of the lowest-price guarantee on hotels: the CEO said Airbnb wants to have the lowest price guarantee against the incumbent agencies. What that costs, who funds the differential, and how it interacts with rate parity was not addressed.
7. How much the internal AI expense ramps: named as a reinvestment bucket that will grow over the course of the year, with no figure, at the same time as the CEO maintains AI will not be visible in the P&L. Those two statements are in tension and neither was reconciled.
8. Anything at all about the May 20 Summer Release: referenced four times as the place where hotel strategy, services expansion and mid-funnel AI features will be explained. That is a lot of forward-referencing for a call that raised guidance.
9. Loyalty, for a fourth consecutive call: confirmed as on the table alongside flights, with no launch window and no framework. At some point the repeated non-announcement becomes information.

Market Reaction

• Pre-print setup: ABNB closed at $140.46 on May 7, up 3.5% year-to-date against the S&P 500's +7.2%, up 14.1% over the trailing twelve months, and up 12.4% over the trailing thirty days. The stock entered the print within 3% of the top of its $111.54 to $144.18 52-week closing range, a complete reversal of the depressed setup at the February print.
• After-hours move: shares fell roughly 1.8% in extended trading as the GAAP EPS miss led the wire coverage.
• Next-day session (May 8): opened at $138.13, a 1.7% gap below the prior close, then traded a $137.25 to $146.97 range, and closed at $141.49, up 0.7% or $1.03. The intraday high cleared the pre-print 52-week closing-range top.
• Volume: 7.8M shares against a 3.3M thirty-day average, or 2.4x normal.
• Benchmark: the S&P 500 rose 0.8% on the session, so ABNB modestly lagged the index on the day despite the reversal.

The shape of this session is the inverse of February's. In February the print read as a miss and the call read as a raise, and the stock gapped up 9.1% at the next open. Here the same sequence produced a gap down and an intraday recovery, and the difference is entirely the starting point: this stock came into February down 17.2% over thirty days and came into May up 12.4%.

The EPS line led and was wrong again. For the third consecutive quarter the headline GAAP number was distorted by a one-time tax item, this time a roughly $70 million deferred-tax adjustment tied to Corporate Alternative Minimum Tax changes. The wire-service framing was a miss; the underlying quarter had adjusted EBITDA up 24.5% with margin expansion. A market that has now seen this three times running should be discounting the headline faster than it is.

The reversal to a $146.97 intraday high is where the guide got priced. Clearing the 52-week closing-range top intraday, on 2.4x volume, on a double guide raise, is the market acknowledging the February thesis played out. Fading back to a 0.7% close is the same market acknowledging that a stock already up 12.4% in thirty days had a good deal of it in the price.

Lagging a +0.8% tape is the honest summary. This was a genuinely strong quarter that produced a modest relative underperformance on the day, which tells you the print was roughly what a re-rated stock needed to deliver rather than a positive surprise. That is a different setup from February and it is the reason our conviction narrows even as the rating holds.

Street Perspective

Debate: Is the Reported Acceleration Real, or Is It Currency and Product Credits?

Bull view: Revenue grew 18% and cleared the company's own guide ceiling by two full points, GBV has accelerated for four straight quarters, first-time booker growth hit its highest rate since early 2022, and management was confident enough to raise both halves of the annual guide one quarter after setting them. The product features that supply part of the growth are a durable capability, not a one-off: they have worked in every market launched, they are still not fully merchandised, and Reserve Now, Pay Later has not yet reached desktop.

Bear view: Ex-FX GBV growth was 13% in Q4 and 13% again in Q1, so the entire reported sequential acceleration is translation. Management sized the product contribution at roughly 4 points of GBV growth, up from roughly 3. Net of currency and features, underlying growth is around 9% and drifting down, not up. Nights grew 9.2% against 9.8% in Q4, and the Q2 guide is for a further deceleration.

Our take: The bear has the arithmetic and the bull has the business. Both adjustments are correct and neither is disqualifying, because a product capability that reliably adds three to four points of growth is a real asset even if it is not organic demand. What the decomposition should change is the extrapolation: nobody should model the reported 19% GBV line forward. We model FY26 revenue at $13.8–14.1B, consistent with the guide, and treat the H2 comp against the Reserve Now, Pay Later rollout as the decisive test, exactly as we did in February.

Debate: Does the Free Cash Flow Decline Break the Valuation Case?

Bull view: Free cash flow fell for one reason and management explained it unprompted: guests are paying later, which is precisely what makes them book more. Part of the effect is intra-year timing that reverses in Q3. The underlying cash economics are unchanged, adjusted EBITDA grew 24.5% with margin expansion, the balance sheet just went investment grade, and $1.1B of stock was retired in the quarter. Valuing a business on a float that management is deliberately converting into volume was always the wrong anchor.

Bear view: Free cash flow is the metric this equity has been valued on for years, and it is now structurally impaired. Trailing-twelve-month FCF margin has fallen from 40.4% to 35.9% across five quarters and there is no reason for it to stop while Reserve Now, Pay Later keeps scaling. Unearned fees were flat on 19% GBV growth. Stock-based compensation of $410M is 15.3% of revenue, so a large share of the buyback is treadmill, and the cash cushion that made the treadmill affordable is thinning.

Our take: The bear is describing something real and the bull is right about why it is happening. Our resolution is to change the anchor rather than the rating: we now value this business primarily on enterprise value to adjusted EBITDA, cross-checked against free cash flow with a float adjustment, and we would treat any FCF multiple quoted on this name without that adjustment as misleading. On that basis the shares carry roughly 16.6x our FY26 adjusted EBITDA estimate, which is defensible for a low-to-mid-teens grower with an expanding margin, and is not the bargain that 14x trailing free cash flow looked like in February.

Debate: Are the Adjacencies Now Worth Something in the Model?

Bull view: The conversion data finally landed and it is good. Roughly one in three experience bookers books a stay within 90 days, nearly a quarter of experience-first new guests go on to book a stay or service, and about 55% of hotel bookers come back for a home. Hotel top-line metrics are growing at more than twice the platform rate. These are customer-acquisition channels that Airbnb is not paying performance-marketing prices for, in a business whose entire growth constraint is new-guest supply.

Bear view: Four quarters after launch there is still not a single revenue dollar disclosed for any of the three. Conversion ratios on small bases are easy to make look impressive. Hotels remain a single-digit percentage of nights against a market where the incumbents have two decades of rate contracting, and the CEO's stated ambition to offer the lowest price guarantee is a margin commitment nobody has priced. The adjacencies still consume marketing and engineering while contributing nothing measurable to the line investors are paid on.

Our take: We are moving these from unpriced option to modelled contributor, but as a driver of core nights rather than as standalone revenue. The 55% hotel-to-home figure is the one that changes the analysis: it means hotel bookings should be valued at the lifetime value of a homes guest, not at the commission on a room night. On that basis the adjacencies are already earning their keep in the funnel even though they earn nothing visible in the P&L. The lowest-price-guarantee concern is legitimate and unquantified, and it is the item we would press management on next.

Model Update & Valuation Framework

Valuation framework: At the $141.49 close and the March 2026 fully diluted share count of 641M, the equity is worth approximately $90.7B. Cash, short-term investments and restricted cash of $12,065M less $2,475M of net long-term debt gives $9,590M of net cash, for an enterprise value of roughly $81.1B. Against trailing twelve-month revenue of $12,647M that is 6.4x sales; against trailing adjusted EBITDA of $4,399M it is 18.4x; against trailing free cash flow of $4,536M it is 17.9x. On our FY26 estimates it is roughly 16.6x adjusted EBITDA and 16.2x free cash flow. Every one of those is higher than at the February print, when the same figures were 15.2x and 14.2x.

Why the anchor moved: we valued this company on free cash flow for two quarters because the float made free cash flow the truest measure of what the business threw off. Reserve Now, Pay Later is deliberately converting that float into booking volume, and the trailing free cash flow margin has fallen 450 basis points across five quarters as a direct result. Continuing to capitalize a shrinking float would understate the business in the short run and overstate it in the long run. Adjusted EBITDA is the cleaner anchor now, with free cash flow retained as a cross-check on a float-adjusted basis.

Why the base case is 17–18x: we paid 16–17x at the February print for a business guided to low-double-digit growth on stable margins. The guide is now low-to-mid teens on an expanding margin with the tax rate falling and the balance sheet investment grade, which supports a point of multiple. Applied to FY27 free cash flow of roughly $5.6B and adding net cash on 641M shares, 17x gives $163 and 18x gives $172. The midpoint of $168 implies roughly 19% upside from $141.49.

Risk-reward: base $168 (+18.7%), bull $208 (+47.0%), bear $122 (−13.8%). The base-to-bear ratio is roughly 1.4 to 1, down from 2.1 to 1 in February, and the bull-to-bear span is roughly 3.4 to 1, down from 4.4 to 1. The deterioration is entirely a function of a 16.6% higher share price against an outlook that improved by less than that. The asymmetry still supports Outperform. It no longer supports the conviction we carried into this print.

Thesis Scorecard Post-Earnings

Overall: Thesis intact and better evidenced, with one pillar degraded and one new risk added. The February call was that management would deliver accelerating revenue on a defended margin; they delivered it and then raised both halves twelve weeks later, with the first year-over-year margin expansion of our coverage and the adjacency conversion metrics we had been waiting for. Against that, the free cash flow pillar has genuinely weakened for a reason that is good for the business and bad for the multiple we were paying, and the underlying growth rate net of currency and product credits is not inflecting.

Action: Maintaining Outperform, with conviction narrowed. None of the three downgrade triggers from February fired: nights held at 9.2% against a 7% threshold, the margin guide was raised rather than cut, and the fee migration is now past a quarter of active listings while contributing positively to the take rate. But the shares have risen 16.6% since that note and the base-to-bear ratio has compressed from 2.1 to 1 to roughly 1.4 to 1. We would downgrade to Hold on any of: Q2 nights growth below 8%, which would mean the conflict drag is running beyond the 100 basis point allowance; an H2 revenue guide that requires the reported line rather than the underlying line to hold; or a share price above roughly $185 without a further estimate revision. We would upgrade conviction on a Q2 print that shows underlying ex-FX, ex-feature GBV growth accelerating rather than holding at 9%.