Airbnb (ABNB) delivered solid revenue growth in Q1 2025, with revenue rising 6% year-over-year to $2.27 billion, or 8% on a constant-currency basis, fueled by strong international demand and an 8% increase in Nights and Experiences Booked. The company saw broad-based growth across regions, with Latin America and Asia Pacific emerging as standout performers. However, this topline momentum was overshadowed by a notable 42% decline in net income to $154 million, impacted by rising expenses, including higher payroll and stock-based compensation, as well as impairment losses and softer interest income amid declining rates.

Profitability metrics reflected the growing cost burden. Adjusted EBITDA slipped to $417 million, with the margin narrowing to 18% from 20% a year ago, largely due to increased spending on product development and marketing ahead of future launches. Income from operations also fell sharply to $38 million, down from $101 million, underscoring the operational margin pressures.

On the user side, Airbnb continued to see healthy engagement, with 143 million bookings—a rise of 8% YoY—driving Gross Booking Value up 7% to $24.52 billion. Despite a slight dip in Average Daily Rates, elevated booking volumes helped offset the revenue impact.

Cash flow remained strong, though slightly lower year-over-year. Free Cash Flow totaled $1.78 billion, with a 78% margin, down from $1.91 billion and 89% respectively in the prior year. The company repurchased 6.1 million Class A shares for $807 million, part of its ongoing $2.5 billion authorization, and reported $1.79 billion in operating cash flow, affirming continued financial flexibility.

Airbnb’s total operating expenses grew to $2.23 billion, up from $2.04 billion, led by increases in salaries and benefits ($507 million), stock-based compensation ($358 million), and marketing spend ($382 million). The overall sales and marketing expense climbed 10% to $563 million, accounting for 25% of revenue, reflecting a strategic push into international markets and brand visibility.

Management emphasized that while Q1 typically delivers strong cash flow due to booking patterns, profitability was impacted by deliberate investments in future growth. They noted that macroeconomic and geopolitical risks have not yet had a material impact, though they remain watchful. Liquidity remains ample, supported by robust cash flows and access to capital markets.

In summary, Airbnb’s Q1 2025 results underscore the company’s continued global expansion and strong platform engagement, though rising costs and seasonality weighed on margins. The business remains cash-generative and committed to returning value to shareholders, even as it navigates investment-heavy quarters in pursuit of long-term growth.