Airbnb runs an online marketplace connecting hosts and guests for stays, experiences and services in over 220 countries and regions. Its revenue is the service fee it keeps on each booking, net of incentives and refunds, presented net because the company does not control the right to use the properties. Two features of the model shape every number that follows: fees are collected before they are earned, so the balance sheet carries $1,743 million of unearned fees and cash arrives before income; and Airbnb holds guests' money for hosts between booking and check-in, $6,959 million at year end, booked as an asset against an identical liability. That money is not the company's, but the interest earned on it is.
The business in one page
Revenue was $12,241 million, up 10.26%, on gross booking value up 11.60% and 8.33% more nights and seats booked. The gross margin has held at 82.83%, 83.08% and 82.96% over three years. Free cash flow was $4,613 million, 1.84 times net income, and net cash was $8,743 million against a single $1,999 million note repaid in March 2026. Diluted shares fell 3.41% after 2.57% the year before, on $3,789 million of repurchases. Growth was entirely organic and, at constant currency, equal to reported growth.
Three things sit against that. Operating income stopped growing — $2,544 million against $2,553 million — because total costs rose 13.43% against revenue at 10.26%: sales and marketing grew 20.48%, with field operations and policy up 43.29%, and product development 14.49% on payroll. The share of bookings the company keeps slipped from 13.575% to 13.411%, and to 12.89% in North America, of which hedging losses of $64 million explain less than half while the October 2025 move to a host-only fee is not quantified. And stock compensation of $1,592 million, 13.01% of revenue and growing faster than revenue in both years shown, turns $4.6 billion of free cash flow into about $3.0 billion for the shareholder.
Figures for 3 fiscal years, taken from the Key Metrics tables of each annual report. When a later filing restates a figure, we use the figure reported for that year's own filing.
Key metrics
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $9.92B | $11.1B | $12.2B |
| Gross margin | 82.8% | 83.1% | 83.0% |
| Operating margin | 15.3% | 23.0% | 20.8% |
| Net margin (GAAP) | 48.3% | 23.9% | 20.5% |
| Operating cash flow | $3.88B | $4.52B | $4.65B |
| Capex | – | $0.03B | $0.03B |
| Free cash flow | – | $4.48B | $4.61B |
| Stock-based compensation | $1.12B | $1.41B | $1.59B |
| Dividends + buybacks | $2.25B | $3.43B | $3.79B |
| Net cash | – | $8.32B | $8.74B |
| Total debt | – | $2.29B | $2.27B |
| Shareholders’ equity | – | $8.41B | $8.20B |
| Effective tax rate | -128.0% | 20.5% | 20.0% |
How Airbnb makes money
Competitive advantage
The document names the competition — Booking Holdings, Expedia, Trip.com, search engines, hotel chains, property managers, Viator, GetYourGuide, Klook — and adds that hosts often cross-list.
The evidence of an advantage in the numbers is limited to three facts: a gross margin held at 82.83%, 83.08% and 82.96%; supply spread so widely that no single city exceeds 2% of revenue; and the company's own statement that its brand has allowed lower reliance on paid marketing channels, which is a statement rather than a measured fact.
No retention or repeat-booking rate is disclosed, and one year of key metrics cannot show direction.
Whether the advantage is widening or narrowing cannot be established from this filing.
Pricing power
Airbnb's price is its fee, and the fee can be read against the value it is charged on: revenue was 13.575% of gross booking value in FY2024 and 13.411% in FY2025. The ratio is not published by the company and mixes two timings, since bookings are recorded at booking and revenue at check-in, so it is an approximation.
At the FY2024 ratio, FY2025 revenue would have been about $12,390 million instead of $12,241 million. Of that $149 million shortfall the document explains $64 million of hedging losses reclassified into revenue.
The move from a split fee to a host-only fee, begun in October 2025, is not quantified anywhere in the filing.
The hosts' price did rise — gross booking value per night up 3.01%, consistent with the stated 3% increase in average daily rate — but that is the hosts' price, not Airbnb's.
Transparency of growth
All FY2024 and FY2025 growth is organic: no business combination appears in the cash flow or equity statements, and the only acquisition in the period was $53 million of stock issued in FY2023.
Constant-currency growth was 10%, equal to reported growth, so currency did not flatter the year.
Volume supplied 8.33 points of the growth and the remainder came from price.
Growth is uneven by region: nights rose 2.60% in North America against 18.42% in Latin America and 14.75% in Asia Pacific, and the United States share of revenue is shrinking.
Scalability
Scalability reversed in FY2025: total costs and expenses rose 13.43% against revenue at 10.26%, after rising 1.79% against revenue at 11.95% in FY2024.
The FY2024 comparison was flattered by non-income taxes falling from $894 million to $237 million. Taking them out of both years, operating income rose 15.67% in FY2024 and 2.11% in FY2025, so the slowdown is real.
The increase is concentrated in people and new activities: field operations and policy up 43.29%, salaries and benefits up 19.16%, product development up 14.49% primarily on a $293 million increase in payroll.
The costs that scale with volume behaved: operations and support grew 3.51% and merchant fees fell slightly as a share of bookings.
Catalysts identified in the filing
- Repayment of the only debt
$2.0 billion of notes repaid from cash in March 2026, leaving no financial debt and an undrawn $1.0 billion facility.
- Repurchase authorisation still open
$5.6 billion remains under the August 2025 programme, 6.78% of the market value at the year-end price. The previous $6.0 billion programme was completed as authorised.
- Services and experiences
Launched in May 2025, with the company stating it plans to continue to expand beyond travel accommodations. The costs are already in the FY2025 income statement; the revenue is not disclosed.
- The technology rebuild is finished
The company states it substantially completed a rebuild of its technology stack in 2025. Amortisation of capitalised software was $61 million against a net balance of $33 million left to amortise.
- Immediate expensing of domestic R&D
The new tax law may reduce cash taxes; the document does not quantify it. The deferred tax asset for capitalised research and development stands at $1,049 million.
Financial analysis
Click any line to chart it.
| Income statement · $ millions | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Revenue | 9,917 | 11,102 | 12,241 | IS, Revenue |
| % change year on year | – | 11.9% | 10.3% | computed |
| Cost of revenue | 1,703 | 1,878 | 2,086 | IS |
| Gross profit (revenue − cost of revenue) | 8,214 | 9,224 | 10,155 | calculated |
| % gross margin | 82.8% | 83.1% | 83.0% | computed |
| Operations and support | 1,186 | 1,282 | 1,327 | IS |
| Product development | 1,722 | 2,056 | 2,354 | IS |
| Sales and marketing | 1,763 | 2,148 | 2,588 | IS |
| General and administrative | 2,025 | 1,185 | 1,342 | IS |
| Total costs and expenses | 8,399 | 8,549 | 9,697 | IS |
| Income from operations | 1,518 | 2,553 | 2,544 | IS |
| % operating margin | 15.3% | 23.0% | 20.8% | computed |
| Interest income | 721 | 818 | 705 | IS |
| Other expense, net | (137) | (40) | (112) | IS |
| Income before income taxes | 2,102 | 3,331 | 3,137 | IS |
| Provision for (benefit from) income taxes | (2,690) | 683 | 626 | IS |
| Net income (no minority interests) | 4,792 | 2,648 | 2,511 | IS |
| % net margin | 48.3% | 23.9% | 20.5% | computed |
| EPS basic (US$) | 8 | 4 | 4 | IS; N15 |
| EPS diluted (US$) | 7 | 4 | 4 | IS; N15 |
| Weighted-average shares, basic (mn) | 637 | 632 | 613 | IS; N15 |
| Weighted-average shares, diluted (mn) | 662 | 645 | 623 | IS; N15 |
| Net income for diluted EPS (adds convertible notes interest, net of tax) | 4,795 | 2,652 | 2,514 | N15 |
| Stock-based compensation expense | 1,120 | 1,407 | 1,592 | CF; N12 |
| D&A (as used in Adjusted EBITDA reconciliation) | not available | 65 | 91 | MD&A, Adjusted EBITDA reconciliation |
| Advertising expense | 953 | "$1.1 billion" | 843 | N2, Sales and Marketing |
| Employees at 31/12 | not available | not available | ~8,200 | Item 1, Human Capital |
| Third-party community-support workers at 31/12 | not available | not available | ~13,000 | Item 1, Human Capital |
| Balance sheet · $ millions | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|
| Cash and cash equivalents | 6,864 | 6,560 | BS |
| — of which held by foreign subsidiaries | not available | ~2,300 | MD&A, Liquidity |
| Short-term investments | 3,747 | 4,454 | BS; N4 |
| Funds receivable and amounts held on behalf of customers | 5,931 | 6,959 | BS |
| Prepaids and other current assets | 638 | 824 | BS; N3 |
| Total current assets | 17,180 | 18,797 | BS |
| Deferred income tax assets | 2,439 | 2,102 | BS |
| Goodwill and intangible assets, net | 777 | 770 | BS; N7 |
| Other assets, noncurrent | 563 | 539 | BS; N3 |
| Total assets | 20,959 | 22,208 | BS |
| Accrued expenses, accounts payable, and other current liabilities | 2,614 | 2,948 | BS; N3 |
| Funds payable and amounts payable to customers | 5,931 | 6,959 | BS |
| Current portion of long-term debt | – | 1,999 | BS |
| Unearned fees | 1,616 | 1,743 | BS |
| Total current liabilities | 10,161 | 13,649 | BS |
| Long-term debt | 1,995 | – | BS |
| Other liabilities, noncurrent | 391 | 360 | BS; N3 |
| Total liabilities | 12,547 | 14,009 | BS |
| Additional paid-in capital | 12,602 | 13,763 | BS |
| Accumulated other comprehensive income (loss) | 35 | (62) | BS |
| Accumulated deficit | (4,225) | (5,502) | BS |
| Total stockholders' equity | 8,412 | 8,199 | BS |
| Minority interests | not applicable | not applicable | N2: wholly-owned subsidiaries |
| Shares issued and outstanding, Class A + Class B (mn) | 434 + 189 = 623 | 426 + 176 = 602 | BS; SE |
| Class H shares (mn) | 9 issued | 9 issued, zero outstanding | BS |
| Stockholders' equity, 31/12/2023 | 8,165 | – | SE |
| Cash flow statement · $ millions | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Net income | 4,792 | 2,648 | 2,511 | CF |
| Stock-based compensation | 1,120 | 1,407 | 1,592 | CF |
| Deferred income taxes | (2,875) | 433 | 376 | CF |
| Other, net | 127 | 97 | 273 | CF |
| Prepaids and other assets | (102) | (163) | (346) | CF |
| Accrued expenses and other liabilities | 580 | (104) | 118 | CF |
| Unearned fees | 242 | 200 | 122 | CF |
| Total change in operating assets and liabilities | 720 | (67) | (106) | sum |
| Net cash provided by operating activities | 3,884 | 4,518 | 4,646 | CF |
| Purchases of property and equipment (capex) | not available | (34) | (33) | MD&A, FCF reconciliation |
| Free cash flow (company definition: OCF − capex) | not available | 4,484 | 4,613 | MD&A |
| Purchases of short-term investments | (3,308) | (3,146) | (3,438) | CF |
| Sales and maturities of short-term investments | 2,380 | 2,605 | 2,736 | CF |
| Other investing activities, net (includes capex) | (114) | (75) | (46) | CF |
| Net cash used in investing | (1,042) | (616) | (748) | CF |
| Share repurchases | (2,252) | (3,430) | (3,789) | CF |
| Taxes paid related to tax on equity awards | (1,224) | (630) | (561) | CF |
| Change in funds payable and amounts payable to customers | 936 | 320 | 401 | CF |
| Proceeds from exercise of equity awards and ESPP | 110 | 168 | 122 | CF |
| Net cash used in financing | (2,430) | (3,572) | (3,827) | CF |
| Effect of exchange rates | 152 | (237) | 655 | CF |
| Net increase in cash, cash equivalents and restricted cash | 564 | 93 | 726 | CF |
| Cash, equivalents and restricted cash, end of year | 12,667 | 12,760 | 13,486 | CF; N3 |
| Dividends paid | 0 | 0 | 0 | Item 5: no dividends |
| Debt issued / repaid | 0 / 0 | 0 / 0 | 0 / 0 | CF (no lines) |
| Acquisitions, net of cash acquired | not separately disclosed | not separately disclosed | not separately disclosed | CF; SE shows 53 of stock issued for acquisitions in 2023 |
| Cash paid for income taxes, net of refunds | 132 | 350 | 232 | N3 |
| Cash paid for interest | 55 | 2 | 2 | N3 |
| Cash paid for operating leases | 84 | 89 | 87 | N3 |
| Per share · $ per diluted share | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Revenue | 14.98 | 17.21 | 19.65 | computed |
| Net income | 7.24 | 4.11 | 4.03 | computed |
| Free cash flow | – | 6.95 | 7.40 | computed |
| Shareholders' equity | – | 13.04 | 13.16 | computed |
Computed on the weighted average diluted share count the filing reports (623 in FY2025, 645 in FY2024, 662 in FY2023, in millions), checked against the diluted earnings per share printed in the filing.
| Ratios · percent | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Returns and margins | ||||
| Revenue growth | – | 11.9% | 10.3% | computed |
| Gross margin | 82.8% | 83.1% | 83.0% | from the statements |
| Operating margin | 15.3% | 23.0% | 20.8% | from the statements |
| Net margin | 48.3% | 23.9% | 20.5% | from the statements |
| Effective tax rate | -128.0% | 20.5% | 20.0% | from the statements |
| Cash | ||||
| Operating cash flow / revenue | 39.2% | 40.7% | 38.0% | computed |
| Capital expenditure / revenue | – | 0.3% | 0.3% | computed |
| Free cash flow / revenue | – | 40.4% | 37.7% | computed |
| Stock-based compensation / revenue | 11.3% | 12.7% | 13.0% | computed |
| Dividends and buybacks / free cash flow | – | 76.5% | 82.1% | computed |
| Balance sheet | ||||
| Total debt / equity | – | 27.3% | 27.7% | computed |
| Net cash / equity | – | 98.9% | 106.6% | computed |
Every ratio is computed from the figures in the statements on the left; none is a target or a benchmark.
The three statements as the filing presents them, with the note or schedule each line comes from. Percentage rows are computed from the lines above them; nothing is restated. Negative figures are the ones the filing itself signs as negative.
Key risks
The main weaknesses and risks identified in the latest annual report, in the order the report presents them.
- Operating income stopped growing
$2,544 million against $2,553 million, with the operating margin down from 23.00% to 20.78%, as total costs rose 13.43% against revenue at 10.26%. Sales and marketing grew 20.48% — field operations and policy up 43.29% to $993 million — and product development 14.49%. Net of non-income taxes, which distort both base years, operating income rose 2.11% after 15.67%: the slowdown is real, not a base effect.
- The company keeps a smaller share of each booking
Revenue was 13.411% of gross booking value against 13.575%, and 12.89% against 13.24% in North America. Of the $149 million shortfall against the FY2024 ratio the document explains $64 million, hedging losses reclassified into revenue; the October 2025 move from a split fee to a host-only fee is not quantified at all.
- Stock compensation is a third of the cash flow story
$1,592 million, 13.01% of revenue, growing faster than revenue in both years shown, and the unrecognised cost of outstanding awards is not disclosed. Free cash flow of $4,613 million becomes about $3.0 billion once it is treated as a cost: 17.91 times earnings becomes 27.35 times.
- Tax claims above the reserves
The IRS claims about $1.3 billion plus penalties and interest, more than $1.0 billion above what is reserved, against gross unrecognised tax benefits of $835 million. Non-income tax exposures add $200–230 million of estimable risk, and the Italian settlement for 2017–2021 showed that such claims end in payments.
- Operating cash grew far slower than revenue
Operating cash flow rose 2.83% against revenue at 10.26%, a gap of 7.43 points, while interest income — 22.47% of pre-tax income — fell $113 million with rates. Part of the company's profit depends on the yield earned on money it holds for others.
Open questions the filing does not answer
- What revenue did services and redesigned experiences produce in FY2025? Their costs are in the income statement; their revenue is not disclosed.
- What is the effect of the host-only fee, introduced in October 2025, on revenue and on the fee rate?
- How large is the reserve for the IRS case alone, inside $835 million of gross unrecognised tax benefits?
- What is the unrecognised cost of outstanding RSUs, and over how many years will it be recognised?
- Why do the three marketing figures move in different directions — advertising expense down about 23% to $843 million, brand and performance marketing up 9.62%, segment marketing up 12.55%? The document does not reconcile the definitions.
- How much of the $705 million of interest income is earned on the $6,959 million of customer funds held between booking and check-in?
At $135.72 the market value is $82,615 million and enterprise value $73,872 million: 32.90 times net income, 17.91 times free cash flow and 27.35 times free cash flow after stock compensation, a yield of 5.58% falling to 3.66% once share-based pay is treated as a cost. The distance between those two multiples measures how much of the valuation rests on adding stock compensation back to cash. Almost all of that cash is returned: repurchases and the taxes paid on withheld employee shares absorbed 94.3% of free cash flow, and the cash cost of holding the share count down exceeded the income-statement charge for stock compensation.
The reading holds if FY2026 shows the cost lines growing more slowly than revenue; it fails if the fee ratio falls again and the costs stay. What the document cannot settle is whether the spending will produce revenue, because the revenue of the services and experiences launched in May 2025 is not disclosed while their costs are already in the income statement. Against that sits a tax overhang: the IRS claims $1.3 billion plus penalties and interest, more than $1.0 billion above the reserve, and Italy has already shown that such claims end in payments. Net cash could absorb it — the claim equals 11.8% of cash and short-term investments — and the earnings stream would feel it as a one-off.
Strengths
- A gross margin that does not move
Gross profit was 82.83%, 83.08% and 82.96% of revenue over three years, and merchant fees fell slightly as a share of gross booking value, from 1.844% to 1.825%. The transaction costs scale with volume.
- Net cash of $8.74 billion and one maturing note
Cash and short-term investments of $11,014 million against a single $1,999 million note repaid in March 2026 and $272 million of lease liabilities. The undrawn $1.0 billion facility was never used, and interest income of $705 million dwarfs financial charges.
- Cash that arrives before the revenue
Free cash flow of $4,613 million, 1.84 times net income, with unearned fees of $1,743 million adding $122 million in the year. The company is paid at booking and recognises its fee at check-in, so growth in bookings reaches the cash flow statement before the income statement.
- A share count that is actually falling
Diluted shares fell 3.41% in FY2025 after 2.57% in FY2024, on $3,789 million of repurchases at an average of $127.54, below the year-end close. $5.6 billion of the August 2025 authorisation remains, 6.78% of the market value.
- Volume growth in every region, organic
Nights and seats booked rose 8.33% to 533 million and gross booking value 11.60%, with nights up 2.60% in North America, 6.97% in EMEA, 18.42% in Latin America and 14.75% in Asia Pacific. There was no business combination in either year, and constant-currency growth equalled reported growth.
Last year’s watch-list, checked against this filing
| What we flagged | What happened | Result |
|---|---|---|
| February 2024 share repurchase programme of up to $6.0 billion | Completed by December 31, 2025, with a new $6.0 billion programme approved in August 2025, of which $5.6 billion remains. | DONE - completed as authorised |
| Italian non-income tax position, settled for 2017-2021 | The company commenced withholding on host payments in 2024 after settling the past periods. | DONE - stated and carried out |
| Repayment of the 2026 notes from operating cash flow | Stated in this filing; $1,999 million sits in current liabilities at year end against $11,014 million of cash and short-term investments. | TO BE CHECKED NEXT YEAR |
| Margin targets, investment plans and booking expectations from the FY2024 filing | Not restated in this document, and the prior-year filing was not supplied, so the main comparison between expectations and results cannot be made. | NOT VERIFIABLE - no earlier filing attached |
| Expansion beyond travel accommodations, with services and experiences launched in May 2025 | Stated in this filing. The costs are in the FY2025 income statement; no revenue is disclosed for them. | TO BE CHECKED NEXT YEAR |
What to watch in the next filing
- Revenue as a share of gross booking value, 13.411% in FY2025. The first full year of the host-only fee will show whether the slippage was a transition or a new level.
- Sales and marketing and product development as a share of revenue, 21.14% and 19.23%. They decide whether FY2025 was an investment year or a new cost base.
- Gross unrecognised tax benefits of $835 million and the IRS case. Any ruling will move both the reserve and the cash.
- Stock compensation against revenue growth, 13.15% against 10.26%. It decides whether repurchases keep shrinking the share count or mainly offset grants.
- Cash and short-term investments after the note repayment, $11,014 million before it. The balance will show how much of the repayment the year's cash flow covered.
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