What happened
Shares of short-term rental platform Airbnb (ABNB -1.12%) soared on Wednesday after the company reported financial results for the fourth quarter of 2022. Financial results outperformed guidance from management and surpassed Wall Street's expectations. And that's why Airbnb stock was up 13% as of 12:45 p.m. ET, jumping to a six-month high.
So what
For Q4, Airbnb's management had guided for revenue of up to $1.88 billion. However, financial results were better than this, with Q4 revenue of $1.9 billion. Moreover, management had guided for about a 22% margin for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). But its adjusted EBITDA margin of almost 27% far exceeded this.
Another highlight for Airbnb in 2022 was its profitability -- specifically, net income according to generally accepted accounting principles (GAAP). The company had $1.9 billion in full-year net income, compared to a net loss of $352 million in 2021.
To succinctly explain the sudden jump, management is being very disciplined with spending. For example, since 2019, the number of Airbnb employees has gone down 5%. But revenue is up 75% during this time, dropping profits to the bottom line. And that's exciting for investors.
Now what
Looking ahead, Airbnb's growth looks strong. Management is guiding for between 16% and 21% year-over-year revenue growth in the first quarter of 2023. And it also expects to maintain its current adjusted EBITDA margin, which means that profits should be up in 2023 compared to 2022.
Airbnb's management is also looking for ways to use its impressive cash haul. For now, it seems content to boost shareholder value by repurchasing shares. In 2022, it used $1.5 billion on shares repurchases and is now authorized to use $2 billion more at its discretion.
It was a great year for Airbnb, and the future looks bright. The market's positive reaction to these results is certainly understandable.
