ABNB Airbnb Inc

By Preetika Rana 

Airbnb Inc. posted a steep fourth-quarter loss in its first earnings as a public company, as costs tied to its market debut capped a year in which the coronavirus pandemic ravaged the travel industry.

The home-sharing company reported a $3.9 billion loss in the three months through December, which included a charge of $2.8 billion for stock compensation tied to its initial public offering during the quarter. That compared with a loss of $351 million in the same period a year earlier. The latest loss brought the company's full-year deficit to $4.6 billion, more than its losses in the previous four years combined. The loss exceeded the average forecast of analysts surveyed by FactSet.

Revenue exceeded Wall Street's expectations. Airbnb saw revenue evaporate in the early months of the health crisis, but that started to change as scores of people used the platform to plan nearby trips in the summer. Fourth-quarter revenue fell 22% year-over-year to $859 million. Full-year revenue fell 30% to $3.3 billion. Analysts polled by FactSet had expected fourth-quarter revenue to decline 33% and full-year revenue to drop 32%.

Airbnb has been the outlier in an otherwise battered travel industry. Chief Executive Brian Chesky successfully pivoted the company's strategy to focus on rural stays while hotels in big cities suffered. At the same time, he cut a quarter of staff, paused noncore operations and slashed the company's hefty marketing budget to keep expenses down.

The uptick in revenue, combined with deep cost cuts, helped Airbnb turn a third-quarter profit, boosting investor confidence ahead of its IPO in December. Airbnb shares have climbed nearly twofold from their IPO price. The company's market capitalization of more than $100 billion makes it more valuable than Marriott International Inc., Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp. combined.

Airbnb's full-year expenses rose 31% to $6.97 billion on the back of stock IPO-related expenses in the fourth quarter. But expenses in each category -- ranging from product development to operations and support -- were lower before accounting for stock compensation. For example, Airbnb's sales and marketing costs declined 66% in 2020 compared with the year earlier excluding stock-based compensation for employees in that division. They climbed 44% including those costs.

Companies often point to an adjusted metric that strips the business of such costs. Airbnb's adjusted loss before interest, taxes, depreciation and amortization narrowed to $251 million from $253 million in the previous year. Its fourth-quarter loss on that basis narrowed to $21 million from a loss of $276 million a year earlier.

While the third quarter is the busiest for Airbnb -- the company has turned a profit in that period since 2018, including during the pandemic -- the first quarter is the slowest. Airbnb said it expects bookings in the three months through March to be better than in the same period last year, when the health crisis first struck, but below 2019 levels.

The company said it expects to spend more on marketing and product development as a percentage of revenue in the first half of this year than in the second half, but intends to keep costs from soaring to pre-pandemic levels.

Airbnb's rapid growth has come with its share of challenges. Homeowners from Arizona to Florida and Massachusetts are campaigning for laws to govern short-term rentals amid concerns about noise, crime and plummeting property values.

Write to Preetika Rana at preetika.rana@wsj.com

(END) Dow Jones Newswires

February 25, 2021 17:22 ET (22:22 GMT)

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