Airbnb Inc (NASDAQ:ABNB, ETR:6Z1) shares climbed almost 6% following the company’s third quarter 2025 earnings release, with higher-than-expected bookings and revenue, though earnings per share fell short of estimates.
The company reported revenue of $4.1 billion, up 10% year-over-year and slightly ahead of analyst expectations of about $4.08 billion.
Nights and Experiences Booked totaled 133.6 million, rising 9% from the same period last year and surpassing forecasts of roughly 131.9 million.
Gross Booking Value (GBV) reached $22.9 billion, a 14% year-over-year increase, reflecting continued demand across key markets and higher average daily rates.
Earnings per share (EPS) were $2.21, below the consensus of $2.31.
Adjusted EBITDA came in at approximately $2.05 billion, representing a 50% margin, while net income totaled $1.4 billion, a 34% margin.
The company also reported free cash flow of $1.3 billion, or a 33% margin, supported by strong profitability and disciplined expense management.
Airbnb said the slight earnings miss was primarily driven by ongoing investments in strategic growth areas, including international expansion, AI integration, and new services and experiences, initiatives that are expected to strengthen its long-term competitiveness but weigh on short-term margins.
For the fourth quarter, Airbnb guided revenue between $2.66 billion and $2.72 billion, representing 7% to 10% growth year-over-year and coming in slightly above Street expectations.
The company expects GBV to increase at a low double-digit rate, supported by modest price appreciation and steady demand, while Nights and Experiences Booked are projected to grow in the mid-single-digit range.
Investment strategy becomes clear
Following the report, Wedbush analysts highlighted that investor concerns over Airbnb’s spending on new initiatives have eased as the company’s investment strategy becomes clearer.
“Q3 was the first full quarter to capture the impact of the company's newer experiences & services product, and management commentary around initial feedback was encouraging,” they wrote.
The firm highlighted early progress in Airbnb’s newer experiences and services offerings, noting that about half of experiences bookings in the quarter were not tied to an accommodation, signaling potential to attract new users and cross-sell additional products.
The firm also pointed to Airbnb’s ongoing technology upgrades and new features such as “Reserve Now, Pay Later,” which allows guests to book with no upfront payment and contributed to an acceleration in bookings during the quarter.
Recent AI-driven support tools have reduced customer reliance on human agents by roughly 15%, the firm noted.
Wedbush maintained a ‘Neutral’ rating and $130 price target, noting that Airbnb’s shares trade at a significant premium to the online travel group.
“While we remain sidelined, we acknowledge the potential for Airbnb to drive more sustainable growth over the intermediate-term with an ongoing mix shift to higher-growth expansion markets and scaling beyond the core with the relaunch of experiences,” the analysts concluded.