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Airbnb files to go public

Airbnb files to go public

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3 years ago

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Airbnb filed to go public today, bringing the well-known unicorn one step closer to being a public company.

The financial results show a company on the rebound, but smaller than it was. Its more granular financial results also make clear how hard the pandemic was on the travel-reliant unicorn. Regarding Airbnb’s worth, investors will have to balance how they value recovery and recent profits over the company’s disrupted historical growth arc.

How did we get here?

The home-sharing startup had a tumultuous year, with the COVID-19 pandemic harming its business in the first and second quarters of the year, and Airbnb later recovering on the strength of more local bookings.

Its filing comes mere days after fellow unicorns DoorDash and C3.ai themselves filed to go public in what could be a rush to the public markets by richly valued startups.

Airbnb’s S-1 filing was expected to come last week, but was delayed due to purported election concerns, a concept that TechCrunch staff did not find entirely convincing.

We’ve scraped together quite a lot about Airbnb’s recent financial performance, but its S-1 is the real treasure trove. What follows is a dive into the company’s high-level numbers. From there, TechCrunch will dig into the company’s financial nuances and ownership stakes.

Airbnb’s financial performance

What we want to know is how the pandemic impacted Airbnb’s business; its year-to-date results, and what we can suss out from its quarterly trends.

Up top in Airbnb’s S-1 is a chart that shows monthly bookings on its platform. The implication is somewhat simple; namely that Airbnb knows what we want to know and wanted to share. Here are those numbers:

As expected, Airbnb took a huge hit in March. But by May things were back to year-over-year growth, where they stayed.

Now, the company has seen precious little bookings growth since June — indeed it has seen bookings fall in the months since. And, worse, the company’s gross bookings after removing cancellations are down on a year-over-year basis. (Update: We misread this table at first, and have updated our notes on it.)

So, what does all of that look like in more traditional accounting figures? Here’s Airbnb’s reported income statement:

As expected, Airbnb’s year has not been tremendous. Indeed, the company is on track to match its 2018 size, if we have our math correct.

What changed from the first three quarters of 2019 to the first three quarters of 2020? The biggest thing, apart from expected lowers revenue costs — less revenue costs less — is the huge decline in sales and marketing spend at the company. Airbnb slashed S&M outlays from $1.18 billion in the first three quarters of 2019 to just $545.5 million in the same period of 2020.

So, where will Airbnb wind up in 2020 once it’s all done? We’ll need to peek at its quarterly results for that. Here they are:

Airbnb’s growth continues in year-over-year terms right until the March 31, 2020 quarter, when it was effectively flat compared to Q1 2019. Or, the company would have grown sans COVID-19. In the June 30, 2020 quarter we see the real damage, with Airbnb’s revenue falling from $1.2 billion in the year-ago quarter to just $334.8 million. That’s a shocking decline.

But, looking ahead to Q3 2020 and we see a large return to form. Yes, Airbnb’s third quarter was smaller than its Q3 2019, with $1.34 billion in top line instead of $1.65 billion in 2019, but the company effectively quadrupled from its preceding quarter. If the company manages another Q3 worth of revenue in Q4, it would be larger than it was in 2018 by a few hundred million.

Critically, Airbnb managed to swing from a number of unprofitable quarters to a profit in Q3, akin to its 2019 Q3 when it was also in the black. Of course, Airbnb’s $219.3 million in GAAP net income during the third quarter pales compared to its losses tallied earlier in the year. The company will not break even in 2020.

Airbnb also reported adjusted profit metrics. Its adjusted EBITDA results are based on the following definition:

Adjusted EBITDA is defined as net income or loss adjusted for (i) provision for income taxes; (ii) interest income, interest expense, and other income (expense), net; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) net changes to the reserves for lodging taxes for which we may be held jointly liable with hosts for collecting and remitting such taxes; and (vi) restructuring charges.

The decision to remove restructuring costs raised eyebrows, with Amy Cheetham, an investor at Costanoa Ventures saying that “it feels like leaving out restructuring costs is a little aggressive?” We agree, as it gives the company too much flexibility to count the good in its results, like lower operating costs, while discounting what it took to get those results, like restructuring its business operations.

That’s having your cake and eating it as well and not counting the calories.

Still, who are we to withhold numbers from you? Here is the very adjusted EBITDA that Airbnb claims:

The numbers are still not good even after ripping out so very any costs. Worse, perhaps is the company’s cash burn in the year. That deficit helps explain why Airbnb took on more capital when it did earlier this year.

It’s hard to put a firm grade on this S-1. It contains what we expected, but how investors weigh the company’s year-over-year revenue declines in Q3 2020 against its rapid comeback from Q2 2020 should help decide its eventual value. On the whole Airbnb has managed something incredibly impressive — bouncing back from so low a low.

But, now that it’s going public we can’t merely say good job; it wants to price itself well and trade strongly. So, all eyes on its first IPO range as that should tell us what investors just might be willing to pay for the famous company’s equity.

Understanding Airbnb’s summer recovery

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Shipping company files surprise Chapter 7 bankruptcy, liquidation

While demand for trucking has increased, so have costs and competition, which have forced a number of players to close.

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60 mins ago

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March 8, 2024

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The U.S. economy is built on trucks.

As a nation we have relatively limited train assets, and while in recent years planes have played an expanded role in moving goods, trucks still represent the backbone of how everything — food, gasoline, commodities, and pretty much anything else — moves around the country.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

"Trucks moved 61.1% of the tonnage and 64.9% of the value of these shipments. The average shipment by truck was 63 miles compared to an average of 640 miles by rail," according to the U.S. Bureau of Transportation Statistics 2023 numbers.

But running a trucking company has been tricky because the largest players have economies of scale that smaller operators don't. That puts any trucking company that's not a massive player very sensitive to increases in gas prices or drops in freight rates.

And that in turn has led a number of trucking companies, including Yellow Freight, the third-largest less-than-truckload operator; J.J. & Sons Logistics, Meadow Lark, and Boateng Logistics, to close while freight brokerage Convoy shut down in October.

Aside from Convoy, none of these brands are household names. but with the demand for trucking increasing, every company that goes out of business puts more pressure on those that remain, which contributes to increased prices.

Demand for trucking has continued to increase.

Image source: Shutterstock

Another freight company closes and plans to liquidate

Not every bankruptcy filing explains why a company has gone out of business. In the trucking industry, multiple recent Chapter 7 bankruptcies have been tied to lawsuits that pushed otherwise successful companies into insolvency.

In the case of TBL Logistics, a Virginia-based national freight company, its Feb. 29 bankruptcy filing in U.S. Bankruptcy Court for the Western District of Virginia appears to be death by too much debt.

"In its filing, TBL Logistics listed its assets and liabilities as between $1 million and $10 million. The company stated that it has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees," Freightwaves reported.

The company's owners, Christopher and Melinda Bradner, did not respond to the website's request for comment.

Before it closed, TBL Logistics specialized in refrigerated and oversized loads. The company described its business on its website.

"TBL Logistics is a non-asset-based third-party logistics freight broker company providing reliable and efficient transportation solutions, management, and storage for businesses of all sizes. With our extensive network of carriers and industry expertise, we streamline the shipping process, ensuring your goods reach their destination safely and on time."

The world has a truck-driver shortage

The covid pandemic forced companies to consider their supply chain in ways they never had to before. Increased demand showed the weakness in the trucking industry and drew attention to how difficult life for truck drivers can be.

That was an issue HBO's John Oliver highlighted on his "Last Week Tonight" show in October 2022. In the episode, the host suggested that the U.S. would basically start to starve if the trucking industry shut down for three days.

"Sorry, three days, every produce department in America would go from a fully stocked market to an all-you-can-eat raccoon buffet," he said. "So it’s no wonder trucking’s a huge industry, with more than 3.5 million people in America working as drivers, from port truckers who bring goods off ships to railyards and warehouses, to long-haul truckers who move them across the country, to 'last-mile' drivers, who take care of local delivery." 

The show highlighted how many truck drivers face low pay, difficult working conditions and, in many cases, crushing debt.

"Hundreds of thousands of people become truck drivers every year. But hundreds of thousands also quit. Job turnover for truckers averages over 100%, and at some companies it’s as high as 300%, meaning they’re hiring three people for a single job over the course of a year. And when a field this important has a level of job satisfaction that low, it sure seems like there’s a huge problem," Oliver shared.

The truck-driver shortage is not just a U.S. problem; it's a global issue, according to IRU.org.

"IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7% of total positions, in 36 countries studied," the global transportation trade association reported. 

"With the huge gap between young and old drivers growing, it will get much worse over the next five years without significant action."

Related: Veteran fund manager picks favorite stocks for 2024

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Wendy’s has a new deal for daylight savings time haters

The Daylight Savings Time promotion slashes prices on breakfast.

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March 8, 2024

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Daylight Savings Time, or the practice of advancing clocks an hour in the spring to maximize natural daylight, is a controversial practice because of the way it leaves many feeling off-sync and tired on the second Sunday in March when the change is made and one has one less hour to sleep in.

Despite annual "Abolish Daylight Savings Time" think pieces and online arguments that crop up with unwavering regularity, Daylight Savings in North America begins on March 10 this year.

Related: Coca-Cola has a new soda for Diet Coke fans

Tapping into some people's very vocal dislike of Daylight Savings Time, fast-food chain Wendy's  (WEN)  is launching a daylight savings promotion that is jokingly designed to make losing an hour of sleep less painful and encourage fans to order breakfast anyway.

Wendy's has recently made a big push to expand its breakfast menu.

Image source: Wendy's.

Promotion wants you to compensate for lost sleep with cheaper breakfast

As it is also meant to drive traffic to the Wendy's app, the promotion allows anyone who makes a purchase of $3 or more through the platform to get a free hot coffee, cold coffee or Frosty Cream Cold Brew.

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Available during the Wendy's breakfast hours of 6 a.m. and 10:30 a.m. (which, naturally, will feel even earlier due to Daylight Savings), the deal also allows customers to buy any of its breakfast sandwiches for $3. Items like the Sausage, Egg and Cheese Biscuit, Breakfast Baconator and Maple Bacon Chicken Croissant normally range in price between $4.50 and $7.

The choice of the latter is quite wide since, in the years following the pandemic, Wendy's has made a concerted effort to expand its breakfast menu with a range of new sandwiches with egg in them and sweet items such as the French Toast Sticks. The goal was both to stand out from competitors with a wider breakfast menu and increase traffic to its stores during early-morning hours.

Wendy's deal comes after controversy over 'dynamic pricing'

But last month, the chain known for the square shape of its burger patties ignited controversy after saying that it wanted to introduce "dynamic pricing" in which the cost of many of the items on its menu will vary depending on the time of day. In an earnings call, chief executive Kirk Tanner said that electronic billboards would allow restaurants to display various deals and promotions during slower times in the early morning and late at night.

Outcry was swift and Wendy's ended up walking back its plans with words that they were "misconstrued" as an intent to surge prices during its most popular periods.

While the company issued a statement saying that any changes were meant as "discounts and value offers" during quiet periods rather than raised prices during busy ones, the reputational damage was already done since many saw the clarification as another way to obfuscate its pricing model.

"We said these menuboards would give us more flexibility to change the display of featured items," Wendy's said in its statement. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants."

The Daylight Savings Time promotion, in turn, is also a way to demonstrate the kinds of deals Wendy's wants to promote in its stores without putting up full-sized advertising or posters for what is only relevant for a few days.

Related: Veteran fund manager picks favorite stocks for 2024

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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

Published

2 hours ago

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March 8, 2024

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

Shutterstock

United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

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"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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