Airbnb, Inc. (NASDAQ:ABNB) Q4 2022 Earnings Call Transcript February 14, 2023
Operator: Good afternoon, and thank you for joining Airbnb's earnings conference call. for the fourth quarter of 2022. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb's website following this call. I will now hand the call over to Ellie Mertz, VP of Finance. Please go ahead.
Ellie Mertz: Thank you. Good afternoon, and welcome to Airbnb's Fourth Quarter of 2022 Earnings Call. Thank you for joining us today. On the call today, we have Arrium's Co-Founder and CEO, Brian Chesky, and our Chief Financial Officer, Dave Stephenson. Earlier today, we issued a shareholder letter with our financial results and commentary for our fourth quarter of 2022. These items were also posted on the Investor Relations section of Airbnb's website. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A. Before I turn it over to Brian, I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.
These factors are described under forward-looking statements in our shareholder letter and in our most recent filings with the Securities and Exchange Commission. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also during this call, we will discuss some non-GAAP financial measures. We provided reconciliations to the most directly comparable GAAP financial measures in the shareholder letter posted to our IR website. These non-GAAP measures are not intended to be a substitute for our GAAP results.
And with that, I will pass the call to Brian.
Brian Chesky: All right. Well, thank you very much, Elie, and good afternoon, everyone. Thanks for joining. Before I share our results, I want to tell a quick personal story. As you may have seen, I've started hosting again. Last November, I listed my guest room on Airbnb. My listing is called Beyond the Airbed. And the run guests is a histologically themed around the early years of Airbnb. There's memorabilia in the walls. From the receipt for the original airbed to old photos and me hacking boxes of Obama Os and Cat McCain breakfast cereal. When guests arrive, I have welcome basket waiting for them. And the first night we make dinner together, followed by desert. We bake Chip, chocolate chip cookies from my cherished family recipe that I got off Google.
The next day, we tour the airbnb office with my golden retriever, Seltenova, and I tell the story of building Airbnb. Now why am I doing this? Well, because I love hosting. Joe and I were the first host on Airbnb 15 years ago. And having guests staying at your home with you is the original idea behind Airbnb. It's been an amazing way to connect with people. But I also believe that companies that makes the best products make products for themselves. And Airbnb will only be as successful as our host. And the best way to understand our host is to be one. Since I've resumed hosting, I've got new first-hand insights that have informed some of the new products we'll be releasing, including some exciting updates this May as part of our 2023 summer release.
Now before we get into our quarterly results, I want to recap the full year of 2022. While we're 3 years out from the start of pandemic, we are still living with this impact. We've also seen high inflation, recessionary fears and the war in Ukraine, all of which we're still dealing with in 2023. And yet, through all this, people continue to travel, and 2022 was a record year for Airbnb. Revenue of $8.4 billion grew 40% year-over-year. And when you exclude foreign exchange, our revenue increased by 46% year-over-year. Net income was $1.9 billion, which marks 2022 as our first profitable year -- full year on a GAAP basis. And finally, free cash flow was $3.4 billion. And this $3.4 billion of free cash flow represented a free cash flow margin of over 40%.
And because of our strong balance sheet, we are able to begin buying back stock last year, and we repurchased $1.5 billion in shares in just the past 5 months. Now during the height of the pandemic, we made some very difficult choices to reduce our spending making us a leaner and more focused company, and we've kept this discipline ever since. In over each of the past 2 years, we've only modestly increased our headcount. In fact, compared to 2019, our headcount is actually down 5%, while our revenue is up 75%. In every single quarter in 2022 outperformed past comparable periods. In Q4, net income was $319 million. Now this is $264 million higher than a year ago. Adjusted EBITDA was $506 million, which is 52% higher than Q4 of 2021. And we generated $455 million of free cash flow, and this is 20% higher than Q4 2021.
During the quarter, we saw a number of positive business trends. First, guest demand at Airbnb remains strong. Nights and experiences booked increased 20% in Q4. We had our highest number of active bookers ever in Q4, demonstrating guest excitement of travel on Airbnb despite evolving economic uncertainties. During the quarter, we also continued to see guest booking trips further advance supporting a strong backlog for Q1. Second, guests are increasingly returning to cities and crossing border. And this is the bread-and-butter before the pandemic. Now both segments continue to accelerate while non-urban and domestic travel remains strong. Cross-border growth nights booked increased 49% compared to last year. High density urban nights grew 22%.
And globally, we saw cross-border travel to all regions increased despite continued foreign currency volatility. Third, the guests continue to book longer stays on Airbnb. During Q4, long-term stays remained stable from a year ago at 21% of total gross nights booked in Airbnb. And finally, we saw tremendous growth in our supply on Airbnb. We ended 2022 with 6.6 million active listings. Now excluding all the Mainland China listings we removed in July, we grew supply by 900,000 listings, or 16% compared to a year ago, representing an acceleration in growth in listings relative to Q3. Now why are listings accelerating in growth? We believe there's probably 2 factors that drove this growth. First, demand to drive supply. Post or attracted the supplemental income that they can earn an Airbnb, which is often critical during tough times.
Second, our product improvements are working. Over the past 2 years, we've made it more attractive and easier to become a host. Just this past November, we introduced Airbnb set up where prospective host can connect with Super Host for free one-to-one guidance all the way through their first reservation. The number of new active hosts recruited with the help of our super House increased by more than 20% compared to prelaunch. But we are not stopping there. In 2023, we're focused on 3 strategic priorities. First, we want to make posting mainstream. If you're listening to this call, you've likely travel on Airbnb or you know someone who have. We want hosting on Airbnb to be just as popular and to achieve this, we'll continue to raise awareness around hosting, make it easier to get started and provide even better tools for hosts.
Second, we are perfecting our core service. We want people who love our service. And that means obsessing over every single detail, and we've listened to our hosting guests and based on their feedback, we're making a large number of upgrades to our service this year, including improving customer service, making it easier to find the right home and delivering greater value and much, much more. And you'll see more of this in the forthcoming in the coming months, especially our release. And finally, third, we're expanding beyond the core. We have some pretty big ideas for where to take Airbnb next. And this year, we're going to build the foundation for future products and services that will provide incremental growth for many years to come. So with that, Dave and I look forward to answering your questions.
