AIRBNB $ABNB

Shares of Airbnb fell about 3% in after-hours trading Wednesday, despite reporting better-than-expected revenue for the quarter. The decline came after the company reported a weaker-than-expected outlook for the upcoming fiscal period.

According to data from LSEG, formerly known as Refinitiv, Airbnb reported earnings of $6.63 per share in the recently ended quarter, a figure significantly higher than the $2.10 per share expected by analysts. Revenue came in at $3.40 billion, beating expectations of $3.37 billion.

One of the significant factors contributing to Airbnb's net income for the quarter was a one-time tax benefit. After factoring in this one-time benefit, the company's net profit was $4.37 billion. Excluding this factor, however, Airbnb's reported quarterly net profit was $1.61 billion. This still represents an increase from the $1.21 billion recorded in the same quarter of the previous year.

However, Airbnb is now projecting revenue in the range of $2.13 billion to $2.17 billion for the fourth quarter, citing potential issues such as geopolitical conflicts and economic trends that could affect travel demand in its letter to shareholders. That represents year-over-year growth of between 12% and 14% and is less than the $2.18 billion that LSEG analysts had forecast.

Following the announcement, CFO Dave Stephenson clarified the uncertainty about travel trends in the coming quarter, stating during the conference call, "It's just a little early to tell how much volatility we're going to see." Airbnb stressed that these declines in certain regions that are contributing to volatility are not specific to any one region and are instead across the board.

Despite the recent controversy in New York, Airbnb CEO and co-founder Brian Chesky has maintained the company's positive relationships with cities around the world. "For every headline you read, you think of cities that have very workable solutions," Chesky said.

Additionally, Airbnb saw a 26% year-over-year increase in adjusted EBITDA to $1.83 billion, while its free cash flow increased 37% to $1.31 billion, significantly higher than last year's equivalent of $958 million.

Moving forward, Airbnb unveiled its new strategy to reduce customer service costs. With almost universal price increases across the industry, Airbnb managed to achieve minimal increases. The average price for a one-bedroom rental on Airbnb was $120 in September, up just 1% from 2020, the company disclosed in its letter to shareholders.

The company will also roll out expanded verification of listings in the U.S. and four other countries in an effort to strengthen the quality of its service and build further customer trust. The development is seen as part of Airbnb's overarching strategy to sustain growth and create a safer space for hosts and guests as it recovers from the COVID-19 pandemic.