On Monday, Airbnb released its prospectus to go public with the U.S. Securities and Exchange Commission, looking to trade under the symbol “ABNB” on the Nasdaq Stock Exchange.
The platform, which has yet to put a price on its listing, said it had identified a market worth $3.4 trillion, including $1.8 trillion for short-term stays, $210 billion for long-term stays and $1.4 trillion for experiences. The company also said that it intended to use the proceeds of its initial public offering for general corporate purposes and investments, although it has not, at this point, committed to any deals.
The company made $219 million in net income on revenues of $1.34 billion last quarter, down nearly 19 percent from the $1.65 billion it made a year previous.
According to its SEC prospectus summary, the company generated gross booking value—the dollar value of bookings on the platform inclusive of host earnings, service fees, cleaning fees, and taxes, net of cancellations and alterations that occurred during that period—of $38 billion in 2019, representing growth of 29 percent from $29.4 billion in 2018, and revenue of $4.8 billion, representing growth of 32 percent from $3.7 billion in 2018.
During the nine months ended Sept. 30, the business was “materially impacted” by the global COVID-19 pandemic, with GBV of $18 billion, down 39 percent year over year, and revenue of $2.5 billion, down 32 percent year over year. Net cash used in operating activities during the first three quarters of the year reached $490.6 million, a decrease of $909.7 million year over year. Free cash flow was -$520.1 million, a decrease of $839.9 million year over year; the net loss was $696.9 million, a decrease of $374.1 million year over year; and adjusted earnings before interest, taxes, depreciation and amortization were -$230.2 million, a decrease of $253.3 million year over year.
“We have incurred net losses in each year since inception, and we may not be able to achieve profitability,” the summary acknowledged. “We incurred net losses of $70 million, $16.9 million, $674.3 million, and $696.9 million for the years ended Dec. 31, 2017, 2018, and 2019, and nine months ended Sept. 30, 2020, respectively. Our accumulated deficit was $1.4 billion and $2.1 billion as of Dec. 31, 2019, and Sept. 30, 2020, respectively.” Similarly, the company reported outstanding indebtedness with a principal amount of $1.997 billion as of Sept. 30. “Our substantial level of indebtedness could materially adversely affect our financial condition,” the filing noted.
“We expect that COVID-19 will continue to materially adversely impact our bookings, revenue and business operations in future periods,” the summary added. “While we experienced an increase in GBV and revenue in the third quarter of 2020 compared to the second quarter of 2020 as domestic travel rebounded, both were down for the first nine months of 2020 compared to the same period in 2019 by 39 percent and 32 percent, respectively; and both were down for the third quarter of 2020 compared to the third quarter of 2019 by 17 percent and 18 percent, respectively.”
Similar to the impact of the initial COVID-19 wave in March, the company is now seeing a decrease in bookings in the most affected regions, and consequently expects greater year-over-year decline in bookings and gross booking value in the fourth quarter of 2020 than in the third quarter of 2020, and greater year-over-year increases in cancellations and alterations in the fourth quarter of 2020 than in the third quarter of 2020.
Despite the challenges to profitability and the ongoing difficulties surrounding the COVID-19 pandemic, the company sees a “substantial market opportunity” in the growing travel market and experience economy. The pandemic could also drive supply growth, the prospectus noted: “Just as when Airbnb started during the Great Recession of 2008, we believe that people will continue to turn to hosting to earn extra income. We believe that as the world recovers from this pandemic, Airbnb will be a vital source of economic empowerment for millions of people.”
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