Airbnb Lost $100 Million in Q2

Airbnb lost about $100 million before interest and taxes in the second quarter this year, a big swing from the profit of $10 million it made in the year-earlier period, according to financial information viewed by The Information. The loss, driven by higher marketing and administrative expenses, is the latest sign that Airbnb is investing heavily in growth ahead of its planned public market debut next year.

In the first quarter, Airbnb’s loss more than doubled to $306 million, The Information previously reported, due to a big increase in marketing expenses. While Airbnb has been profitable—it made $18 million before interest, taxes, depreciation and amortization last year—the first half losses may complicate its ability to portray itself to investors as a tech company that makes money. News of the second quarter results came the same day that COO Belinda Johnson said she would step down.

The Takeaway

Data available to The Information shows that Airbnb lost money in the second quarter, as marketing and administrative expenses rose sharply, following a similar pattern in the first quarter. The results could mar Airbnb’s ability to portray itself to public market investors as a tech company that makes money, which could be an issue given the company’s plans to go public next year.

Airbnb declined to comment.

Airbnb can point to continued growth. Revenue in the second quarter was up 34% to $1.2 billion, bringing first half growth to 33%.

But 47% growth in expenses in the first half outstripped the revenue increase. The company has increased spending heavily on marketing to attract more people to rent their homes on Airbnb, as well as headcount to add more software engineers and beat back regulatory challenges, people familiar with the matter said. The Information reported in April that the company told investors it expected the engineering work to overhaul its website infrastructure would cut into profitability.

In the second quarter, general and administrative spending rose 67% to nearly $170 million. But the biggest expense was sales and marketing, which rose 47% to nearly $390 million.

To be sure, despite the big loss, Airbnb’s second half could change the bottom line picture for all of 2019. Last year, for instance, the company lost about $135 million in the first half of the year but made enough money in the second half to eke out a small profit. That feat may be harder to replicate this year, however, as the first half loss amounted to nearly $400 million.

In an interview on CNBC earlier this week, Airbnb CEO Brian Chesky talked about the company’s plans to go public and said, “When we put out our numbers, hopefully people will feel good about what we built with what we raised and what we spent.”

He added that the company doesn’t need to raise more money. “We have more money in the bank than we’ve raised. That’s a really important thing,” he said.

Meanwhile, Johnson doesn’t depart as COO until next spring, which means she could be there for the public debut. She has an important role for Airbnb as it prepares to go public, with oversight of the company’s legal, policy, communications, customer service, trust and payments teams. Johnson wrote to employees Friday that she wants to spend more time with her children, who are 14 and 17 years old. She will join Airbnb’s board of directors.

Cory Weinberg is deputy bureau chief responsible for finance coverage at The Information. He covers the business of AI, defense and space, and is based in Los Angeles. He has an MBA from Columbia Business School. He can be found on X @coryweinberg. You can reach him on Signal at +1 (561) 818 3915.