How Has Airbnb Fared in 2021?

If you haven't been keeping track of Airbnb's (ABNB 1.17%) financial results in 2021, it's been a fantastic year for the company. Despite a nearly 30% drop in revenue in 2020, the past few quarters have showcased the company's ability to rebound in a challenging travel environment and the appeal of its business model in the age of flex and remote work.

In this segment of Backstage Pass, recorded on Nov. 15, Fool contributor Rachel Warren, Jason Hall, and Danny Vena discuss Airbnb's growth story over the past year.

Rachel Warren: I will briefly look at how has Airbnb been doing financially. I have been really encouraged by the company's rebound. I have said this before. I categorize myself as a medium-risk tolerance investor. It's no secret that investing in recently public companies can be a little bit risky.

But I think Airbnb stands in a class of its own, and I think it has done remarkably well considering the travel environment we're dealing with still. Just looking as a little backdrop to the most recent quarter or so in the first half of this year, the company has really recovered in an astonishing place from its pandemic lows.

Just very slim year-over-year revenue growth of 5% in the first quarter of this year, then that jumped to 300% year-over-year revenue growth in the second quarter of 2021. But I think the really interesting number to note is that, in the second quarter of 2021, its revenue was up 10% from two years ago, the second quarter of 2019, so up 10% from long before the pandemic was ever [LAUGHTER] in any of our minds.

The thing to note here, the company reported a net loss in both quarters, $782 million in the first quarter, $68 million in the second quarter, so definitely narrowing those losses.

The company recently reported its results for the third quarter of 2021, and it honestly just blew me away on all fronts. I know I'm espousing great things about this company, but I do, it was its highest quarterly revenue on record.

Airbnb reported revenue of $2.2 billion, which represented a 70% jump from the year-ago quarter and a 36% jump from the third quarter of 2019, so up 36% compared to the fall of 2019 before the pandemic began.

Danny Vena: That sounds like a lot of pent-up demand to me.

Warren: For sure. People are itching to get out and travel again. Most profitable quarter on record as well.

Whereas it had these steep net losses, not surprising in the first two quarters of the year, it actually reported $834 million in net income, which was again pent-up demand 280% jump year-over-year, and a 213% jump from the same quarter in 2019.

This was really interesting as well. Following up on that whole long-term stay discussion, the company's said, "Long-term stays at 28 days or more remained our fastest-growing category by trip length accounted for 20% of gross nights booked in the third quarter of 2021.

Jason Hall: It blows my mind.

Warren: I know.

Hall: That's my favorite, I'm telling you. I race to find that stat every quarter.

Warren: I was very happy to see that number. I think it just tells you people are ready to travel again, but people are also booking these for much longer periods, which is creating a durable revenue for the company.

Over 40% of gross nights booked in the third quarter were within 300 miles of home, up from 32%, while gross nights booked to world destinations increased more than 40% from two years ago.

I think, again, that's interesting because I think people are taking some of these longer trips, but then also maybe people that are having more flexible work options when they decide, "I want to go out of the city. I want to go somewhere quiet, or by the beach, or your family wherever that might be", and they have the option to do that.

Then just a final note here, they ended the quarter with cash of about $8 billion, so way above the total current liabilities due within the next 12 months. I think from a top and bottom-line perspective, awesome. Doing well in terms of liquidity and just a really strong recovery. What do you guys think?

Vena: This is one that I have watched. When I saw it double on the first day of its IPO, I thought that's a little bit frothy, and just watching it. But as more time goes by, I become more intrigued, and I'm watching it a little more closely, thinking that, at some point, I may just have to bite the bullet and invest in this company.

Warren: [laughs] I really like the stock.

Hall: I bought some back in January, and I wish I had bought more. But I've done a lot of time talking about it. I just wanted to share this just for context. There is a massive amount of growth that's priced into this business, $132 billion, and you compare it to traditional hotels. But I think this also doesn't really do it really fair justice too.

But even if you look at revenues, it's already bigger than some of the big hotels, Marriott (MAR 1.82%), of course, being a giant there. But this is what I wanted to show. This is a software-as-a-service. That's really what this is, guys. [LAUGHTER]

This is huge margins, and those margins are going to likely just maintain and be very strong. Then if you start valuing it based on the cash generation, all of a sudden it's the upper middle of the pack. Those aren't definitive ways to value this company, but I just think they're helpful context.

Warren: For sure.