Analysis of the Form 10-K | Fiscal year ended December 31, 2025
FY2025, ended 31/12/2025. All amounts are in US$ million unless stated otherwise. The source is the Form 10-K filed on February 12, 2026; the comparative columns cover FY2024 and FY2023 for flows and 31/12/2024 for the balance sheet. Market data are the closing price of $135.72 at 31/12/2025 and 608,713,958 shares at 31/01/2026, both supplied with the request.
What does Airbnb sell, and how does the money arrive? The company runs an online marketplace that connects 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. The guest pays the booking amount to Airbnb, in full at booking or, under the Pay Less Upfront program, in instalments with the balance due before the stay; Airbnb holds it, recognizes its fee only at check-in, and pays the host after check-in. Revenue is presented net, as an agent, because the company "does not control the right to use the properties". Substantially all revenue still comes from stays: services and redesigned experiences launched only in May 2025, and the document does not give their revenue.
Two features of the model shape every number that follows. First, fees are collected before they are earned, so the balance sheet carries $1,743 million of unearned fees and the cash flow statement benefits from booking growth before the income statement does. Second, Airbnb holds guests' money for hosts between booking and check-in: $6,959 million at year-end, booked as an asset and matched by an identical liability. That money is not the company's, but the interest earned on it is.
The company reports one operating and one reportable segment, assessed by the CEO on consolidated net income. Geography is the only disaggregation available.
| Revenue by region (listing location) | FY2025 | % of total | FY2024 | FY2023 | YoY FY2025 |
|---|---|---|---|---|---|
| North America | 5,196 | 42.45% | 5,006 | 4,638 | 3.80% |
| Europe, Middle East and Africa | 4,729 | 38.63% | 4,135 | 3,615 | 14.37% |
| Latin America | 1,160 | 9.48% | 969 | 824 | 19.71% |
| Asia Pacific | 1,156 | 9.44% | 992 | 840 | 16.53% |
| Total | 12,241 | 100.00% | 11,102 | 9,917 | 10.26% |
On the alternative split in the segment note, the United States contributed $4,814 million, up 3.75%. The rest of the world grew 14.93% and made up 60.67% of revenue, with no single foreign country reaching 10%. No split by product exists.
The company had about 8,200 employees at 31/12/2025, plus about 13,000 third-party workers handling the majority of community-support contacts. The document gives no prior-year headcount. The document reports no change among the officers who sign it.
The profile that emerges is a fee-based intermediary that is paid before it delivers, holds other people's money in between, and still earns its largest single-country share of revenue in the United States, a share that is shrinking.
Which kind of company is this, and which questions decide the case?
Airbnb is classified as a solid company (stalwart). Revenue grew 10.26% in FY2025 and 11.95% in FY2024, growth in the low double digits, and the balance sheet holds $8,743 million of cash and short-term investments net of all debt and leases. It is not a fast grower: the capital it reinvests through the balance sheet is close to nil, and in FY2025 repurchases and the taxes paid on withheld employee shares absorbed 94.3% of its free cash flow. It is not an asset play either, even though net cash equals 10.58% of the market value: the value lies in the fee stream, not in identifiable assets. Nor is it cyclical in the capital-cycle sense: demand depends on travel, but the company owns almost no capacity (property and equipment of $107 million), so a reading built on capacity added or withdrawn has nothing to hold on to.
For a solid company the question is what the price is paying for and how durable the margin behind it is. Three questions decide this case.
Several standard measures are mute for this company and are not computed as if they meant something. Return on invested capital is not meaningful because invested capital is negative: equity plus debt minus cash was −$544 million at 31/12/2025 and $95 million a year earlier. For the same reason the incremental return on capital and the implied growth rate are not calculable. Interest coverage is not meaningful because the company earns $705 million of interest income and pays almost none. Inventory days do not exist. Capex against depreciation says nothing about capacity in a business whose investment runs through expensed product development and marketing.
The sections that carry the case are 2 (scalability and the fee rate), 3-quater and 3-quinquies (cash, stock compensation and per-share value) and 3-bis (taxes). The others state what is needed and stop.
What does the document show about the strength of the business, beyond the growth rate?
The document names its competitors: online travel agencies including Booking Holdings, Expedia Group and Trip.com Group; search engines such as Google; hotel chains including Marriott, Hilton, Accor and Wyndham; property managers; and experience platforms such as Viator, GetYourGuide and Klook. It adds that hosts "often cross-list". Against this, the evidence of an advantage in the numbers is limited to three facts. Gross profit has held at 82.83%, 83.08% and 82.96% of revenue over the three years. The company states that its brand "has allowed us to maintain lower reliance on paid marketing channels"; that is a company statement, not a measured fact. And no single city exceeds 2% of revenue, so supply is spread widely.
The rest is not established by the document. Whether the advantage is widening or narrowing cannot be stated from one year of key metrics, and the document gives no retention or repeat-booking rate.
The company'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. This ratio is not published by the company and mixes two timings, since GBV is recorded at booking and revenue at check-in, so it is an approximation. Revenue grew 10.26% against GBV growth of 11.60%; at the FY2024 ratio, FY2025 revenue would have been about $12,390 million instead of $12,241 million.
The notes identify two causes for the gap and rule out a third. Hedging losses of $64 million were reclassified from AOCI into revenue in FY2025, against immaterial amounts in FY2024; they are worth about 0.07 points of GBV, less than half of the slippage. In October 2025 the company began moving from a split fee, charged to both host and guest, to a single fee charged only to the host, and the document does not quantify the effect of this change on revenue or on the fee rate. Payments to customers deducted from revenue rose from $455 million to $484 million but fell as a share of GBV, so they narrowed the gap rather than widening it. Of the $149 million shortfall against the FY2024 ratio, the document explains $64 million. The hosts' price rose (GBV per night up 3.01%, consistent with the 3% ADR increase), but that is not Airbnb's price.
The regional ratio adds a signal that the consolidated one hides. North America revenue rose 3.80% against GBV up 6.56%, so the ratio there fell from 13.24% to 12.89%. In the other three regions the ratio was almost unchanged.
All FY2024 and FY2025 growth is organic. The cash flow statement and the equity statement show no business combination in either year; the only acquisition in the period is $53 million of stock issued for acquisitions in FY2023. Constant-currency growth was 10%, equal to reported growth. Volume grew 8.33% and the remainder came from price. Growth is uneven by region: nights rose 2.60% in North America, 6.97% in EMEA, 18.42% in Latin America and 14.75% in Asia Pacific.
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 figure was flattered by the fall in non-income taxes from $894 million to $237 million; FY2023 was the year of the Italian settlement for 2017–2021, worth $621 million, although the document does not say how much of it was charged in that year. Taking non-income taxes out of both years, operating income rose 15.67% in FY2024 and 2.11% in FY2025: the slowdown is real, not a base effect.
The cost lines show where it came from. Sales and marketing grew 20.48%, and within it field operations and policy grew 43.29% to $993 million, while brand and performance marketing grew 9.62%. Product development grew 14.49%, "primarily due to a $293 million increase in payroll-related expenses driven by an increase in headcount". Salaries and benefits in the segment table rose 19.16%. Operations and support, by contrast, grew 3.51%, and merchant fees fell slightly as a share of GBV, from 1.844% to 1.825%.
One inconsistency deserves mention. The accounting-policy note reports advertising expense of $843 million in FY2025 against "$1.1 billion" in FY2024, a fall of about 23%. Over the same year the MD&A reports brand and performance marketing rising 9.62%, and the segment table reports marketing rising 12.55%. The document does not reconcile the three definitions, so it is not possible to say from it whether paid advertising rose or fell.
Taken together, the business shows stable gross margin and transaction costs that scale with volume, while the fee rate on bookings slipped and the people-intensive costs of new activities grew faster than revenue, sales and marketing twice as fast.
What do the three statements show over the three years available?
| Item | FY2023 | FY2024 | FY2025 | YoY FY2024 | YoY FY2025 |
|---|---|---|---|---|---|
| Revenue | 9,917 | 11,102 | 12,241 | 11.95% | 10.26% |
| Cost of revenue | 1,703 | 1,878 | 2,086 | 10.28% | 11.08% |
| Gross profit | 8,214 | 9,224 | 10,155 | ||
| Operations and support | 1,186 | 1,282 | 1,327 | 8.09% | 3.51% |
| Product development | 1,722 | 2,056 | 2,354 | 19.40% | 14.49% |
| Sales and marketing | 1,763 | 2,148 | 2,588 | 21.84% | 20.48% |
| General and administrative | 2,025 | 1,185 | 1,342 | −41.48% | 13.25% |
| Income from operations | 1,518 | 2,553 | 2,544 | 68.18% | −0.35% |
| Interest income | 721 | 818 | 705 | 13.45% | −13.81% |
| Other expense, net | (137) | (40) | (112) | ||
| Income before income taxes | 2,102 | 3,331 | 3,137 | 58.47% | −5.82% |
| Income taxes | (2,690) | 683 | 626 | ||
| Net income | 4,792 | 2,648 | 2,511 | −44.74% | −5.17% |
| EPS diluted ($) | 7.24 | 4.11 | 4.03 | ||
| Diluted shares (mn) | 662 | 645 | 623 | −2.57% | −3.41% |
FY2023 net income is not comparable with the later years. The tax line includes a benefit from releasing the valuation allowance on deferred tax assets, which the rate reconciliation puts at 136.6 points of the pre-tax income, about $2,871 million; without it FY2023 net income would have been about $1,921 million. The fall in net income from FY2023 to FY2024 is therefore an accounting artifact, while the 5.17% fall in FY2025 comes entirely from pre-tax income: flat operating income, $113 million less interest income and $72 million more other expense. The tax provision fell and cushioned it (3-bis).
Interest income is a large part of pre-tax profit: 22.47% in FY2025 and 24.56% in FY2024. It fell "due to lower interest rates, partially offset by higher investment balances", and it is earned on corporate cash and on the funds held for customers alike.
| Item | 31/12/2024 | 31/12/2025 |
|---|---|---|
| Cash and cash equivalents | 6,864 | 6,560 |
| Short-term investments | 3,747 | 4,454 |
| Cash and short-term investments | 10,611 | 11,014 |
| 0% Convertible Notes due March 2026 | 1,995 | 1,999 |
| Operating lease liabilities | 299 | 272 |
| Gross debt including leases | 2,294 | 2,271 |
| Net cash (cash and investments − gross debt) | 8,317 | 8,743 |
| Funds receivable / funds payable to customers | 5,931 / 5,931 | 6,959 / 6,959 |
| Stockholders' equity | 8,412 | 8,199 |
The net cash figure excludes the funds held on behalf of customers, which are offset by an equal liability, and the $35 million of restricted cash. It includes the $2.3 billion of cash held by foreign subsidiaries, which the document says can be repatriated "subject to certain limitations" and possibly with additional tax. Leases are included in gross debt throughout. There are no minority interests.
| Item | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Cash from operations | 3,884 | 4,518 | 4,646 |
| Capex (purchases of property and equipment) | not available | 34 | 33 |
| Free cash flow (company definition) | not available | 4,484 | 4,613 |
| Stock-based compensation | 1,120 | 1,407 | 1,592 |
| Free cash flow after stock-based compensation | not available | 3,077 | 3,021 |
| Share repurchases (cash) | 2,252 | 3,430 | 3,789 |
| Taxes paid on net share settlement | 1,224 | 630 | 561 |
| Dividends | 0 | 0 | 0 |
| Cash taxes paid | 132 | 350 | 232 |
Free cash flow rose 2.88% while stock compensation rose 13.15%, so free cash flow after stock compensation fell from $3,077 million to $3,021 million. Owner earnings are not a figure the company reports. They are built here as net income plus non-cash items other than stock compensation (deferred taxes and "other, net"), minus capex, minus the working capital absorbed in the year. The result is $3,021 million including working capital and $3,127 million excluding it; the judgment rests on the figure including working capital. They are below free cash flow by exactly the stock compensation, which the company's measure adds back and this one treats as a cost.
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Gross margin | 82.83% | 83.08% | 82.96% |
| Operating margin | 15.31% | 23.00% | 20.78% |
| Net margin | 48.32% | 23.85% | 20.51% |
| SBC / revenue | 11.29% | 12.67% | 13.01% |
| FCF / net income | not available | 1.69x | 1.84x |
| Gross debt / EBITDA (operating income + D&A) | not available | 0.88x | 0.86x |
| Net debt / EBITDA | not available | net cash | net cash |
| Return on average equity | not available | 31.95% | 30.23% |
| ROIC | not meaningful | not meaningful | not meaningful |
| Interest coverage | not meaningful | not meaningful | not meaningful |
The only financial debt is the $1,999 million note, which equals 0.80 years of FY2025 net income and 18.15% of cash and short-term investments; financial charges are immaterial against operating income. The market multiples are calculated on the closing price of $135.72 at 31/12/2025, the fiscal year-end, so that price and earnings share the same date; the price is never updated to the reading date. On that basis the market value is $82,615 million and enterprise value is $73,872 million. The price equals 32.90 times net income, 17.91 times free cash flow and 27.35 times free cash flow after stock compensation. The free cash flow yield is 5.58%, or 3.66% after stock compensation. Enterprise value is 28.03 times EBITDA (operating income plus D&A) and 17.19 times the company's Adjusted EBITDA, which excludes stock compensation. The share count supplied includes the 9.2 million Class H shares held by a wholly-owned subsidiary, which the balance sheet treats as not outstanding; excluding them the market value would be $81,366 million.
The distance between 17.91 times free cash flow and 27.35 times free cash flow after stock compensation measures how much of the valuation rests on adding share-based pay back to cash.
Which notes carry management judgment that can move the numbers?
Uncertain tax positions (the only Critical Audit Matter). The auditor's single Critical Audit Matter concerns gross unrecognized tax benefits of $835 million, equal to 26.62% of pre-tax income. The discretion lies in two steps: whether a position is "more-likely-than-not to be sustained", and how much benefit is "greater than 50% likely to be realized". The balance fell from $869 million after a $105 million decrease related to prior-year positions; $693 million would affect the tax rate if recognized, and accrued interest and penalties are $100 million. What would move it is the IRS case on the 2013 transfer of international intellectual property to a subsidiary: the Statutory Notice of Deficiency claims $1.3 billion of tax plus penalties and interest, the amount already proposed in the 2020 notice, which the company says exceeds its reserve "by more than $1.0 billion"; the case is before the Tax Court. The claim equals 51.8% of FY2025 net income and 11.8% of cash and short-term investments. The document gives no sensitivity and does not disclose the reserve for this case alone.
Deferred tax assets and the valuation allowance. Net deferred tax assets are $2,102 million, 9.47% of total assets. Capitalized research and development ($1,049 million) and tax credits ($806 million) make up most of the gross balance. The valuation allowance rose from $395 million to $626 million. The judgment is stated plainly: after the OBBBA "management concluded it is no longer more-likely-than-not" that the CAMT credits can be used, and booked a $213 million allowance. Without that charge FY2025 net income would have been $2,724 million, 2.87% above FY2024. The same year also carried a one-off in the other direction, the $105 million reduction in prior-year uncertain tax positions that the MD&A names among the reasons the provision fell. Removing both discrete items gives net income of $2,619 million, 1.10% below FY2024, and a tax rate of 16.51% instead of 20.0%. The rate reconciliation shows a valuation allowance line of $221 million and Schedule II shows $231 million charged; $213 million is the amount the document attributes to the CAMT decision. The allowance "may be adjusted in future quarters if estimates of future taxable income change", so it can reverse into income.
Taxes paid against taxes booked. Of the $626 million tax charge, $376 million is deferred; cash taxes were $232 million, 37.1% of the charge. Most of the deferred charge is the CAMT allowance itself, which consumes no tax attribute and costs no cash. The rest reflects loss carryforwards and credits being used, partly offset by growth in the capitalized R&D asset. The OBBBA allows immediate expensing of domestic R&D; the document does not quantify the cash effect.
Lodging and non-income taxes (a critical accounting estimate). Management estimates liabilities where it is "probable" the company can be held liable, and records changes in general and administrative expense. At 31/12/2025 the accruals are $114 million for lodging taxes and $199 million for host withholding taxes, the latter down from $227 million. The transactional tax accrual fell from $55 million to nil. The reasonably possible losses above the accruals total $200–230 million, of which $150–160 million relates to withholding. For other jurisdictions the company "is unable to determine an estimate". The risk is not theoretical: Italy settled at €576 million for 2017–2021, €139 million for 2022 and €179 million for 2023. The dollar amounts given for the 2023 settlement do not add up ($148 million plus $66 million is $214 million, against a stated total of $186 million), while the euro amounts do.
Stock-based compensation. Of the FY2025 charge (section 3), 64% sits in product development. The note discloses $114 million of unrecognized cost for stock options, over 2.9 years, but no unrecognized cost for restricted stock units, which make up 32 million of the 37 million outstanding awards. The future dilution already contracted is therefore not measurable from the document. Outstanding awards equal 6.15% of the 602 million shares outstanding, and 9.6 million market-condition RSUs sit outside the diluted count.
Revenue and unearned fees. Revenue is recognized at check-in as a single performance obligation; because hosts may cancel until check-in, there are "no partially satisfied or unsatisfied performance obligations", so no RPO exists. Unearned fees rose 7.86% to $1,743 million, slower than GBV at 11.60% and revenue at 10.26%. The document gives no reason; the October fee change is one possible cause, but the document does not link the two. A slower balance means a smaller cash advance from bookings.
Debt. The $2.0 billion of 0% notes are unsecured and mature on March 15, 2026. They convert at about $288.64 per share, 2.13 times the year-end price, and at year-end their if-converted value did not exceed principal; the company may settle in cash, shares or both. The revolving facility of $1.0 billion is undrawn, with covenants on leverage and fixed-charge coverage whose parameters are not disclosed.
Goodwill, fair value, contingencies. Goodwill of $754 million sits in one reporting unit, tested qualitatively with no headroom disclosed. Financial assets at fair value are all Level 1 or Level 2. Private investments total $58 million: $47 million under the equity method and $11 million carried without a readily determinable fair value, the latter after cumulative impairments and downward adjustments of $108 million. The only retirement plan the document describes is a 401(k) defined-contribution plan. Related-party transactions are in the proxy statement, not attached.
These notes put the judgment of this balance sheet almost entirely in one place: taxes, income and non-income, where the amounts claimed are several times the amounts reserved.
What lies inside the large lines? Eight lines exceed 5% of total assets of $22,208 million.
| Line above 5% of total assets | 31/12/2025 | % of total assets |
|---|---|---|
| Funds receivable and amounts held on behalf of customers | 6,959 | 31.34% |
| Cash and cash equivalents | 6,560 | 29.54% |
| Short-term investments | 4,454 | 20.06% |
| Deferred income tax assets | 2,102 | 9.47% |
| Funds payable and amounts payable to customers | 6,959 | 31.34% |
| Accrued expenses, accounts payable and other current liabilities | 2,948 | 13.27% |
| Current portion of long-term debt | 1,999 | 9.00% |
| Unearned fees | 1,743 | 7.85% |
| Stockholders' equity (for reference) | 8,199 | 36.92% |
Funds receivable and funds payable are the same money seen from two sides: $6,891 million of the asset is cash, and money-market funds of $2,164 million are measured at Level 1. Some jurisdictions require these funds to be safeguarded in bankruptcy-remote accounts or held in eligible liquid assets of at least 100% of the amounts owed. Cash and short-term investments of $11,014 million are the company's own liquidity; time deposits rose from $702 million to $1,132 million and AFS securities due after five years are only $97 million, so duration is short. A 100 basis-point rise in rates would reduce the portfolio's value by $30 million.
Note 3 breaks down accrued liabilities. The largest item is indirect taxes payable and estimated lodging and withholding tax liabilities of $1,132 million, which includes $387 million of lodging taxes collected and owed to authorities. Compensation accounts for $593 million and accounts payable for $232 million. The "other" item of $923 million, 4.16% of total assets, is described only as insurance, advertising and other, and is not broken down further.
The debt is a single note, reclassified to current because it matures in March 2026; the effect of its repayment is set out in 5-bis.
Intangibles are small. Goodwill of $754 million comes from past business combinations; the only acquired business the document names is HotelTonight, without allocating goodwill to it. Intangible assets are $16 million. Capitalized internal-use software is not in intangibles but in property and equipment, with a net value that fell from $69 million to $33 million while its amortization rose from $34 million to $61 million. The company capitalizes certain internal-use software development costs and expenses everything else in product development; it plans to early-adopt ASU 2025-06 on software capitalization from January 1, 2026, and expects no material impact.
Working capital in days is short and there is no inventory. Customer receivables were 6.7 days of revenue (5.8 in FY2024); payables were 40.6 days of cost of revenue (27.6). Both movements are discussed in 3-sexies.
Equity of $8,199 million has no minority interests and no treasury stock: repurchased shares are retired, with the excess over par charged to the accumulated deficit. That treatment explains why the deficit widened by $1,277 million in FY2025 despite net income of $2,511 million: repurchases of $3,788 million were charged to it. Reading retained earnings as a measure of value creation would be misleading here, because a company that distributes everything shows a flat or falling balance without being worse.
The same treatment inflates return on equity. Return on average equity was 30.23%. Adding back to each year-end balance the repurchases recorded since the start of FY2023 ($5,700 million by 31/12/2024 and $9,488 million by 31/12/2025), the return on the same average basis falls to 15.79%. Repurchases before FY2023 are not in the document and are not added. Both figures are built here; the first is the conventional ratio, the second shows how much of it comes from shrinking the denominator.
Of total assets, $17,973 million (80.93%) is cash, short-term investments and funds held for customers, valued at observable prices or at par; $2,930 million (13.19%) rests on management estimates, chiefly deferred tax assets, goodwill and private investments.
Where does the cash flow come from, and how much of it is the company's?
Operating cash flow of $4,646 million starts from net income of $2,511 million. Non-cash items add $2,241 million, of which stock compensation is $1,592 million, and working capital subtracts $106 million. Within working capital, prepaids and other assets absorbed $346 million; the "other" prepaids, which include web hosting prepayments and payment processor receivables, rose 29.94%. Accrued liabilities and unearned fees provided $118 million and $122 million. Stock compensation alone explains 34.27% of operating cash flow.
Money held for others. The inflows from unearned fees and accrued liabilities total $240 million, 5.20% of free cash flow. That is the part of operating cash flow that is temporary in nature. The larger float, the $6,959 million owed to hosts, does not pass through operating cash flow at all: its change of $401 million is booked in financing. Its effect on results is indirect, through interest income, which the document does not split between corporate cash and customer funds.
Taxes paid against taxes booked. Cash taxes fell $394 million short of the provision, almost all of it the deferred charge, which is mostly the CAMT allowance rather than tax attributes being used up (3-bis). Cash taxes were $350 million in FY2024, so the FY2025 figure is not a stable base.
Does capex cover investment? Capex of $33 million, 0.27% of revenue, covers only equipment and capitalized software. Other capacity sits elsewhere. Purchase obligations total $1,749 million, mostly the data-hosting agreement that commits at least $1.7 billion through 2031. Of the total, $219 million falls due within a year and $930 million in years one to three. They are operating costs, but capacity already promised. The investment that drives growth, product development and sales and marketing, is expensed and together equals 40.37% of revenue.
Working capital did not contribute to the growth in free cash flow. Free cash flow rose by $129 million, and working capital absorbed $39 million more than in FY2024. The cash flow is of high quality in the sense that it is not borrowed from customers or suppliers; its limit is that a third of it is the add-back of a cost paid in shares.
What does the shareholder get per share, and how much of the earnings can the company reinvest?
| Per diluted share ($) | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | 14.98 | 17.21 | 19.65 |
| Net income (diluted EPS) | 7.24 | 4.11 | 4.03 |
| Free cash flow | not available | 6.95 | 7.40 |
| Equity | 12.33 | 13.04 | 13.16 |
Per share, the shareholder did better than the company: revenue per share rose 14.15% against revenue at 10.26%, and free cash flow per share rose 6.51% against free cash flow at 2.88%. The diluted share count fell 3.41%. This is the reverse of growth paid with dilution: here repurchases add about three to four points a year to per-share growth. The per-share gain in FY2025 came mainly from fewer shares, not from more profit.
Incremental return on capital, reinvestment rate and implied growth. None of the three is calculable, for the reason given in 1-bis: invested capital changed sign during the year. Measured on the income statement instead, incremental operating income was 87.3% of incremental revenue in FY2024 and −0.8% in FY2025. The FY2024 figure is lifted by the Italian non-income tax charge in the FY2023 base.
What can the company actually reinvest? Reinvestment through the balance sheet in FY2025 was $48 million, 2.36% of operating profit after tax: capex below D&A, some working capital absorbed, no acquisitions. The balance-sheet capital is distributed. Repurchases and share withholding absorbed almost all of FY2025 free cash flow (1-bis) and 91.1% of operating cash flow over three years. A business that earns its cash on negative capital and returns almost all of it does not compound that cash inside the company; it pays it out, and the shareholder's return depends on the price at which the shares are bought back.
What would remain if growth stopped. The document does not separate maintenance from growth spending. On the balance sheet the maintenance need is small. Capex was 0.52 times D&A in FY2024 and 0.36 times in FY2025, and cumulative capex over the two years was 1.30% of cumulative net income; in this model that reflects a negligible asset base (gross property and equipment of $310 million) rather than shrinking capacity. The growth spending sits in sales and marketing and product development, and nothing in the document says how much of it could stop without losing revenue. Calling Airbnb capital-light on the basis of capex would therefore miss the point: its reinvestment is about $4.9 billion a year, expensed.
Self-financing. Over FY2024 and FY2025 the company issued no debt and repaid none. Net equity flows, repurchases and withholding taxes less option proceeds, were −$8,120 million, equal to 89.3% of cumulative free cash flow. The company finances itself entirely internally and returns the surplus.
Operating return on enterprise value. Operating income of $2,544 million on enterprise value of $73,872 million gives 3.44%. The price-to-earnings-growth ratio is omitted: diluted EPS fell 1.95% in FY2025 and the FY2023 base is distorted by the tax release, so no growth rate can be computed that means anything.
Research productivity. Product development spending totalled $6,132 million over the three years, against revenue added of $2,324 million between FY2023 and FY2025. The spending is almost entirely expensed.
The per-share arithmetic is the core of the case: the shareholder's gain depends less on the company growing than on its buying back shares with cash that is earned on no capital.
Do the comparisons that usually move before revenue show anything?
| Comparison | Growth 1 | Growth 2 | Gap (points) |
|---|---|---|---|
| Inventory vs revenue | not applicable | 10.26% | not applicable |
| Customer receivables vs revenue | 28.57% | 10.26% | 18.31 |
| Receivables reserve vs gross receivables | 39.29% | 28.57% | 10.72 |
| Accounts payable vs cost of revenue | 63.38% | 11.08% | 52.30 |
| Capitalized software vs product development | not available | 14.49% | not calculable |
| Revenue vs operating cash flow | 10.26% | 2.83% | 7.43 |
Four gaps exceed 5 points. Customer receivables grew 28.57% to $225 million against revenue at 10.26%. In this model the guest pays Airbnb before check-in, so receivables come from payment programs and other arrangements that the document does not detail; at 6.7 days of revenue the balance is small. The reserve grew faster than the receivables (39.29%), so it is not thinning: it rose from 16.00% to 17.33% of gross receivables, which is the opposite of borrowing profit from the future.
Accounts payable grew 63.38% to $232 million against cost of revenue at 11.08%. Payables relate to the whole cost base, which grew 13.43%, so the comparison with cost of revenue exaggerates the gap, but the gap remains large. The document gives no explanation, and the effect on cash flow is modest.
The cost-capitalization comparison cannot be made because the document does not disclose the amount capitalized in the year. What it does show runs against aggressive capitalization: net capitalized software fell 52.2% while amortization rose 79.4%.
Revenue and operating cash flow diverged by 7.43 points. Operating cash flow grew 2.83%, held back by the prepaids outflow and the slower growth in unearned fees described in 3-quater. In FY2024 the gap ran the other way (cash flow up 16.32% against revenue up 11.95%). One year of divergence after a year in the opposite direction is a signal to follow, not a trend, and it goes into the weaknesses in section 9.
Which metrics fit an online travel marketplace, and which do not?
Airbnb is a technology marketplace for travel. The metrics that fit are the volume and price metrics the document itself uses, plus the fee rate on bookings.
| Metric | FY2024 | FY2025 | Change |
|---|---|---|---|
| Nights and Seats Booked (mn) | 492 | 533 | 8.33% |
| Gross Booking Value | 81,784 | 91,273 | 11.60% |
| GBV per night ($) | 166.23 | 171.24 | 3.01% |
| Revenue per night ($) | 22.57 | 22.97 | 1.77% |
| Revenue as a share of GBV | 13.575% | 13.411% | −0.16 points |
| Average nights per booking | 3.8 | 3.7 | |
| Payments to customers deducted from revenue, % of revenue | 4.10% | 3.95% | |
| Revenue / GBV, North America | 13.24% | 12.89% | |
| Revenue / GBV, EMEA | 13.90% | 13.84% | |
| Revenue / GBV, Latin America | 13.66% | 13.58% | |
| Revenue / GBV, Asia Pacific | 13.92% | 13.97% |
GBV per night, revenue per night and revenue as a share of GBV are built from the document's figures; the company does not publish them. Only North America shows a fall in the ratio of more than a tenth of a point. GBV grew fastest in Latin America (20.45%) and slowest in North America (6.56%). Revenue per employee was about $1.49 million on the 8,200 headcount; there is no prior-year figure.
Excluded as not meaningful here: remaining performance obligations (none exist by construction), recurring revenue share and renewal rates (bookings are individual transactions), gross margin by product line (only one segment and no product split), inventory turnover, ROIC and interest coverage. The document does not give active listings, active bookers or ADR in dollars, although it defines the terms.
The sector reading confirms the price side of section 2: nights are growing, the hosts' price per night is rising, and the share Airbnb keeps of each booking is slipping, most of all in its largest region.
Which risks, as the document reports them, could change the value of the business?
The ranking puts taxes first because they are the only risks whose amounts are both large and already quantified by the document.
Which risk factors were added or removed compared with the prior year? The comparison is not possible. The document does not declare its changes against the previous year's risk factors, and the FY2024 10-K is not attached. The items the document itself dates to 2025 or 2026 (the Spanish fine, the EU Short-Term Rental Regulation from May 2026, AI customer support and the OBBBA) cannot be classified as new without the prior document.
Who controls the company, and what does the document say about how?
Class A shares carry one vote, Class B shares twenty, Class C and Class H none. At 31/01/2026 there were 423.6 million Class A shares, 175.9 million Class B and 9.2 million Class H. The founders "collectively hold a majority of the voting power" and are party to a Voting Agreement and a Nominating Agreement that keep each of them on the slate for the board. Class B converts automatically on the twentieth anniversary of the IPO or by an 80% Class B vote. Class H shares are held by the wholly-owned Host Endowment Fund subsidiary and convert into Class A when sold outside the group.
The 10-K is signed by Brian Chesky (Chief Executive Officer and director), Elinor Mertz (Chief Financial Officer) and David Bernstein (Chief Accounting Officer), and by directors Angela Ahrendts, Amrita Ahuja, Nathan Blecharczyk, Kenneth Chenault, Joseph Gebbia, Jeffrey Jordan, Alfred Lin and James Manyika. Employment agreements with Brian Chesky, Nathan Blecharczyk, Aristotle Balogh and Elinor Mertz are listed among the exhibits. The company says its attention to five stakeholders "may conflict with short- or medium-term financial interests".
PricewaterhouseCoopers has been the auditor since 2011 and gave an unqualified opinion on the financial statements and on internal control. No officer or director adopted or terminated a trading plan in the fourth quarter. Remuneration, insider ownership and related-party transactions are incorporated by reference to the 2026 proxy statement, which is not attached; how many shares the directors own, and whether they bought or received them, is therefore not available.
Control rests with the founders by contract and by share class, and the shareholder buying Class A shares buys economic exposure without a say in that control.
What did management do with the capital, and what did it produce?
Capital allocation. The three years of cash flow in the document can be laid out as sources and uses.
| FY2023–FY2025, cumulative | Amount |
|---|---|
| Operating cash flow | 13,048 |
| Growth in funds payable to customers (financing) | 1,657 |
| Currency effect on cash | 570 |
| Proceeds from options and ESPP | 400 |
| Share repurchases | (9,471) |
| Taxes paid on share withholding | (2,415) |
| Net purchases of short-term investments | (2,171) |
| Other investing, including capex | (235) |
| Increase in cash, equivalents and restricted cash | 1,383 |
The total ties to the cash flow statement. No dividend was paid and no debt was raised or repaid; the only acquisition in the period was paid in stock ($53 million in FY2023). One use dominates, the company's own shares, bought in two forms: on the market and by withholding shares at vesting.
Repurchases. In FY2025 the company bought 29.7 million shares for $3,788 million, an average of $127.54. That is 6.03% below the year-end close; in the fourth quarter it paid $122.37. In FY2024 it bought 24.5 million at $140.73. Cash paid and cost recorded in equity differ by $1 million in FY2025 and by $18 million in FY2024, a gap the document does not explain; prices here use the equity cost, the sources-and-uses table the cash figure. Measured against what each share earned, the company paid 17.22 times FY2025 free cash flow per share, against 20.24 times in FY2024; the inverse is 5.81% and 4.94%. Spending rose as the multiple fell. These multiples are built here and say nothing about the intrinsic value of the shares, which the document does not provide.
Net dilution. Awards added 9 million shares net of withholding and repurchases retired 30 million, so shares outstanding fell 3.37% to 602 million. The repurchases did more than plug dilution. But the cost of plugging it was large. Offsetting the new shares at the average repurchase price cost about $1,148 million, and withholding shares for employees' taxes another $561 million. Together that is $1,709 million, more than the stock compensation charged in the income statement. This construction is ours.
Accounting aggressiveness. Adjusted EBITDA excludes stock compensation, acquisition-related items, lodging and withholding tax charges and IPO-related stock settlement obligations. Over the two years reconciled in the document, those exclusions total $3,085 million, 122.9% of FY2025 net income. Two of them recur in both years: stock compensation ($1,407 million and $1,592 million) and lodging and withholding tax charges ($23 million and $74 million). A tax charge labelled as subject to "significant uncertainty" that appears every year is a recurring cost.
Governance signals in the document. Internal control is effective, there are no restatements, no change of auditor, and no material weakness.
The decisions of the year, read together. In FY2025 the company launched services and redesigned experiences (May), raised field operations and policy spending by $300 million and product development payroll by $293 million, moved the fee to the host only (October) and committed at least $1.7 billion to a data-hosting provider through 2031. It also approved a second $6.0 billion repurchase program (August) after completing the first, and kept the $2.0 billion note to maturity rather than refinancing it, stating that operating cash flow will cover repayment. Read together, these choices put more of the cost base into people and new lines, move the whole fee to the host side, and fund all of it, plus repurchases at about 82% of free cash flow, from internal cash. The effect on next year's balance sheet is mechanical: repaying the note will reduce cash and short-term investments to about $9.0 billion before other flows, and leave the company with no financial debt. The effect on the income statement depends on revenue from the new lines, which the document does not yet report.
Does the document admit errors, reversals or missed goals?
It does, in a limited and factual way. The MD&A states that "net income decreased by 5%... primarily due to an increase in compensation expense and marketing spend, as well as lower interest income". On taxes, it writes that management "concluded it is no longer more-likely-than-not" that the CAMT credits can be used, a reversal of an earlier judgment. It reports that with the IRS "an acceptable outcome was not reached", and that private investments have accumulated $108 million of impairments. It describes New York's rules as a "de facto ban" and records the Spanish fine.
The document does not admit any setback in the new offerings or in the fee change, but for those it gives no data either way. Adverse facts are reported where accounting forces them to be recorded, and explained in a sentence.
Which accounting choices move earnings, and how far apart are the company's measures from GAAP?
The move to a host-only fee from October 2025 changes who pays but not when revenue is recognized (3-bis). Incentives without a distinct service, refunds and part of referral payments are deducted from revenue ($484 million); payments above cumulative revenue are booked in operating costs. Lodging and other non-income taxes are recorded in general and administrative expense when "probable". ASU 2023-09 was adopted prospectively, so the FY2025 rate reconciliation uses a different format from the prior years; ASU 2025-06 on software will be adopted early from January 2026. No restatement occurred.
The gap between GAAP and the company's measures is large. Adjusted EBITDA of $4,297 million is 1.69 times operating income of $2,544 million, and the difference is mostly stock compensation. Free cash flow exceeds net income (section 3) mostly for the same reason.
The effective tax rate of 20.0% is close to the 21% statutory rate only because opposite effects offset: foreign-derived intangible income (−5.3 points) and R&D credits (−3.9 points) against the valuation allowance (+7.0 points). Net of the two discrete items it would have been lower (3-bis). Over the three years the rate went from −128.0% to 20.5% and 20.0%, so it is not a stable figure for this company.
A search of the accounts for the usual ways of moving profit between years finds no trace of them: no change of recognition timing, no bill-and-hold, no vendor financing, no acquisitions, no capitalization rising faster than its amortization, no reserve thinning, and no restructuring charges. The judgment sits in taxes, where the document is explicit about what is estimated.
What does the document state that could raise future results?
Each catalyst rests on a fact the document states; none of them yet shows up in revenue.
What had the company said it would do, and did it?
The February 2024 repurchase program of $6.0 billion was completed by 31/12/2025 (stated: up to $6.0 billion; done: completed, with a new $6.0 billion program approved in August 2025). The 2026 notes issued in 2021 remain outstanding and the company states that operating cash flow will meet the repayment (stated in this document; not yet verifiable). In Italy the company "commenced withholding on host payments" in 2024 after settling past periods (stated and done). Margin targets, investment plans and booking expectations from the FY2024 10-K are not reported in this document, and that document is not attached, so the main comparison between expectations and results cannot be made.
If this investment had produced a permanent loss of capital three years from now, what would have happened?
Scenario 1 — taxes. The IRS wins the 2013 case and other authorities follow the Italian path. The mechanism is in the document: the IRS claim set out in 3-bis, further IRS years under examination, and non-income tax exposures in jurisdictions the company cannot estimate. Today the measure is the $835 million of gross unrecognized tax benefits. The signal would be a Tax Court ruling, an increase in the reserve, or a new settlement in a large European market.
Scenario 2 — the fee rate erodes while costs stay. The host-only fee, the hedging losses and competitive pressure keep revenue growing slower than bookings, while sales and marketing and product development, now 40.37% of revenue, do not come back down. Operating income was flat in FY2025 on 10.26% revenue growth; two or three more years of that would turn a growing fee stream into a flat one priced at 32.90 times earnings. Today's measure is revenue at 13.411% of GBV, and 12.89% in North America. The signal would be the ratio falling again in FY2026 without disclosed revenue from the new offerings.
Scenario 3 — supply restricted by regulation in Europe. The EU regulation from May 2026 and national rules on the Spanish model reduce listings in EMEA, the region that grew GBV 14.83% and supplies 38.63% of revenue, while North America is already growing nights at 2.60%. Today's measure is EMEA nights of 215 million. The signal would be EMEA nights growing slower than GBV, or listings removed at regulators' request, which the document says has already happened in some disputes.
No probability is assigned to any of the three.
What remains for the shareholder if growth stops?
Tangible equity (equity less goodwill and intangibles) is $7,429 million, $12.20 per share on the supplied share count; excluding deferred tax assets as well, it is $5,327 million, or $8.75 per share. Net working capital is $5,148 million and the current ratio 1.38 times, down from 1.69 because the notes became current. Cash and short-term investments are $18.09 per share, and $14.36 per share after all debt and leases, equal to 10.58% of the year-end price. As shown in 3-ter, 80.93% of total assets is valued at observable prices or at par.
If revenue stopped growing and the operating margin returned to the average of the three years available (19.70%), the net cash per share would protect the shareholder and the deferred tax asset would not, because its value depends on future taxable income. The rest of the price would rest on the fee stream.
The first question was why operating income stopped growing, and the document answers most of it. Transaction costs scaled with volume; the costs driven by headcount and new activities did not (section 2). On the revenue side the share of bookings Airbnb keeps slipped by 0.16 points, of which hedging losses explain less than half and the host-only fee an amount the document does not give. What the document cannot say is whether the spending will produce revenue, because the new offerings' revenue is not disclosed. The reading holds if FY2026 shows the cost lines growing slower than revenue; it fails if the fee ratio falls again and the costs stay.
The second question was how much of the cash flow belongs to the shareholder. Once stock compensation is treated as a cost, about $3.0 billion a year, not $4.6 billion, a yield of 3.66% at the year-end price. Almost all of it goes into repurchases, which lifted free cash flow per share faster than free cash flow (3-quinquies), but the cash cost of keeping the share count down exceeded the income-statement charge for stock compensation (5-bis). The reading holds while repurchases are made at multiples close to FY2025's; it changes if stock compensation keeps growing faster than revenue, as it did in both years shown.
The third question was the size of the tax overhang. The amounts claimed exceed the amounts reserved by more than $1.0 billion at the IRS alone, and Italy has shown that such claims end in payments. Net cash could absorb the IRS claim, which equals 11.8% of cash and short-term investments; the earnings stream would feel it as a one-off. The reading holds as long as the reserves move only with settlements; it fails with an adverse Tax Court ruling or a second large European settlement.
At $135.72 the price rests on the multiples set out in sections 3 and 3-quinquies, paid for a fee stream whose operating income did not grow in FY2025, earned on negative capital and distributed almost entirely.
What revenue did services and experiences produce in FY2025? What is the effect of the host-only fee on revenue and on the fee rate? How large is the reserve for the IRS case alone? What is the unrecognized cost of outstanding RSUs and over how many years will it be recognized? Why do the three marketing figures (advertising, brand and performance marketing, segment marketing) move in different directions? How much of interest income is earned on customer funds?
What the FY2026 financial statements will show
Each of these items is a quantity the next annual report will restate, and the direction in which it moves will answer one of the three questions set out in 1-bis.
Report based on the Form 10-K of Airbnb, Inc. for the fiscal year ended December 31, 2025, filed with the SEC on February 12, 2026. Multiples use the closing price of $135.72 at 31/12/2025 and 608,713,958 shares at 31/01/2026, both supplied with the request. This report is for analytical purposes only and does not constitute investment advice.
1. Company profile
1-bis. Classification
2. Business quality
3. Financial analysis
3-bis. Notes
3-ter. Balance sheet
3-quater. Cash flow quality
3-quinquies. Returns and per-share value
3-sexies. Early signals
3-septies. Sector metrics
4. Risks
5-bis. Management track record
6. Accounting
8-ter. Downside protection
9. Synthesis
The full data table behind this report — every line item with its source in the filing and the arithmetic checks — is published separately: Airbnb, Inc. FY2025 data table.