| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3548 Registered: 05-2011 Posted From: 65.35.45.47 Rating: N/A |
ABNB Airbnb is traveling higher as strong Q1 report highlights company's competitive advantages (139.87 +4.12) The mixed 1Q21 headline numbers for Airbnb (ABNB), which included a larger-than-expected GAAP net loss of $(1.95)/share, may look a bit unremarkable on the surface. The totality of the report, though, tells a more bullish story, reflecting the company's competitive advantages in a recovering travel industry. Not only did ABNB blow out analysts' revenue expectations ($887 mln vs. $718 mln), but the company also crushed its competitors during Q1. Revenue was up 5% compared to a 50% plunge for Booking Holdings (BKNG), and a 44% dive for VRBO-owner Expedia (EXPE). Equally impressive is that Gross Booking Value (GBV) actually increased by 3% compared to 2Q19 levels, despite a travel industry that still hasn't found its footing in the aftermath of the pandemic. The company's outperformance can be tied to a few key factors. At the top of the list is ABNB's compatibility with the work-from-anywhere (WFA) shift that has elevated the desirability of staying in alternative accommodations -- especially for nearby destinations. This favorable positioning in the lodging industry is illustrated by a stunning metric. During Q1, nearly a quarter of ABNB's nights booked were for long-term stays, defined as stays of 28 days or more. That is up from 14% in 2019, demonstrating that an increasing number of people are combining work with vacation time. Another advantage in ABNB's corner is the wide variety of accommodations available on its platform. For instance, entire homes and options in rural areas where lodging is scarce are steering more people to ABNB, including those who may have been hesitant to venture away from traditional hotels. In addition to expanding its customer base, the availability of these types of homes on ABNB's platform is driving Average Daily Rates (ADR) higher. In Q1, ADR averaged $160, up 35% yr/yr, bolstering the company's top-line. Regarding the GAAP net loss, we aren't overly concerned because it included a few one-time items that aren't tied to its day-to-day operations. In particular, ABNB took a $377 mln hit related to the repayment of term loans, and a $292 loss from a mark-to-market adjustment for warrants associated to a term loan. Adjusted EBITDA is a better gauge for ABNB's bottom-line performance, which significantly improved to $(59) mln from $(334) in the year-ago quarter. Higher ADR, a reduction in cancellations, and variable cost improvements, including better marketing efficiency, all contributed to the narrower Adjusted EBITDA loss. Looking ahead, ABNB is anticipating a resurgence in the travel industry due to pent-up demand and the easing of travel restrictions and lockdowns. However, the pace of the rebound will vary across global markets, mirroring vaccination rates across countries. For Q2, ABNB provided an encouraging outlook, forecasting revenue to be at a similar level to that of 2Q19. This can be construed as upside revenue guidance of ~$1.2 bln vs. the $985 mln consensus estimate. Additionally, the company expects Adjusted EBITDA margin will be breakeven to slightly positive. ABNB's report wasn't pristine and business certainly isn't booming yet, but that's too be expected as the company emerges from the pandemic-induced downturn. In our view, the main takeaway is that the recovery is progressing quickly for ABNB and that it's key competitive advantages position it for more market share gains and a strong summer season. |