Airbnb’s Q1 Earnings: Navigating Growth Amid FX Headwinds and Strategic Investments

Airbnb (NASDAQ: ABNB) is set to report its Q1 2025 earnings on May 1, 2025, offering investors a critical update on its performance amid persistent macroeconomic challenges and strategic pivots. While the company has weathered recent headwinds such as currency fluctuations and regulatory pressures, its Q4 2024 results demonstrated resilience with strong revenue and free cash flow. Here’s what to watch for in Q1.

Revenue and EPS Outlook: Growth vs. Currency Pressures

Airbnb’s Q1 revenue is expected to land between $2.23 billion and $2.27 billion, marking a 4-6% year-over-year (YoY) increase. Excluding foreign exchange (FX) impacts, growth accelerates to 7-9%, reflecting organic demand. However, the company faces a stark EPS decline: the consensus estimate of $0.25 represents a 39% drop from Q1 2024’s $0.41, driven by FX headwinds and one-time costs.

This EPS contraction is a critical test for management, as investors will scrutinize whether the company can offset currency pressures through operational leverage. The Earnings ESP of +7.39% suggests optimism about beating EPS expectations, though the Zacks Rank #3 (Hold) underscores lingering concerns about near-term profitability.

Operational Strengths and Weaknesses

1. Booking Momentum: Nights and Experiences Booked grew stably YoY, fueled by emerging markets like Asia Pacific and Latin America. The Co-Host Network—now covering nearly 100,000 listings—continues to drive value, with cohost-managed listings earning twice as much as non-cohost options.
2. ADR Trends: While ADR is expected to decline YoY due to FX, underlying pricing power remains intact. Excluding currency impacts, ADR shows a modest increase, signaling demand resilience.
3. Cost Management: Adjusted EBITDA margins are projected to dip in Q1 due to one-time calendar factors, but management insists margins will remain flat YoY once these items are excluded. This stability hints at long-term cost discipline.

Stock Performance and Analyst Sentiment

Airbnb’s shares have struggled in recent quarters, falling 24.9% over 12 months, underperforming the S&P 500 (+9.4%) and the consumer discretionary sector (+13.3%). Despite this, analysts maintain a cautiously optimistic outlook, with a mean price target of $151.41—23.6% above current levels. The post-Q4 earnings surge—shares jumped 14.5% on strong free cash flow and revenue—suggests investors could reward positive surprises in Q1.

Long-Term Strategy and Risks

Airbnb’s 2025 targets include an adjusted EPS of $4.23 (+2.9% YoY) and a 34.5%+ adjusted EBITDA margin, supported by $200–250 million in new venture investments. The Co-Host Network and product upgrades (e.g., Guest Favourites and improved search) are key growth levers.

However, risks loom large. Regulatory crackdowns in urban markets—such as short-term rental bans in cities like Paris—could dampen demand. Additionally, Q1’s seasonal softness and lingering FX pressures may limit near-term upside.

Conclusion: A Turning Point for Airbnb?

Airbnb’s Q1 results will hinge on its ability to balance growth with margin management. While the $0.25 EPS estimate is achievable, investors will prioritize signs of sustainable demand—such as stable ADR trends and Co-Host Network expansion—over short-term volatility.

The company’s $4.5 billion free cash flow in 2024 and $3.3 billion remaining buyback authorization provide a safety net, while its product innovations (535+ features launched in recent years) underscore operational momentum.

If Airbnb delivers on revenue guidance and demonstrates margin stability beyond one-time costs, its stock could regain investor confidence. However, with regulatory risks and FX pressures still unresolved, the path to profitability remains narrow. For now, Airbnb’s Q1 results will serve as a litmus test for its long-term growth narrative.