# How Airbnb makes money

CXProWealth Business Lens · Airbnb (ABNB) · Q2 FY2026

Read from the 10-Q for the period 2026-04-01 to 2026-06-30, filed 2026-08-06 with the SEC (accession 0001559720-26-000027): https://www.sec.gov/Archives/edgar/data/1559720/000155972026000027/

Business Lens explains how a company earns, spends and keeps its money, from its own filings. It is insight and context, never a view on the shares, a target, or advice. Figures are raw units as filed; percentages are percentage points.

## Headline figures

- Revenue: $3.6B (+58.8% on the year)
- Operating income: $758.0M (operating margin 21.0%)
- Net income: $816.0M (net margin 22.6%)
- Gross margin: 82.5%
- Free cash flow: —
- Cash conversion (operating cash flow / net income): 1.56x
- Capital expenditure: — of revenue

## Where the money goes (Q2 FY2026)

- North America → Revenue: $1.6B
- Europe, the Middle East, and Africa → Revenue: $1.4B
- Latin America → Revenue: $291.0M
- Asia Pacific → Revenue: $298.0M
- Revenue → Total costs and expenses: $2.9B
- Total costs and expenses → Product development: $672.0M
- Total costs and expenses → Cost of revenue: $633.0M
- Total costs and expenses → Sales and marketing: $875.0M
- Total costs and expenses → Operations and support: $361.0M
- Total costs and expenses → General and administrative: $309.0M
- Revenue → Income from operations: $758.0M
- Income from operations → Interest expense: $37.0M
- Income from operations → Other income (expense), net: $7.0M
- Income from operations → Income before income taxes: $714.0M
- Interest income → Income before income taxes: $183.0M
- Income before income taxes → Provision for income taxes: $81.0M
- Income before income taxes → Net income: $816.0M

## Where the revenue comes from

### Regions (Supplemental Financial Statement Information - Schedule of Revenue Disaggregated by Listing Location (Details))

| Member | Value | Share |
|---|---:|---:|
| North America | $1.6B | 44.2% |
| Europe, the Middle East, and Africa | $1.4B | 39.5% |
| Asia Pacific | $298.0M | 8.3% |
| Latin America | $291.0M | 8.1% |

The members sum to total revenue.

## Income statement, as filed

| Line | Q2 FY2026 | Of revenue |
|---|---:|---:|
| Revenue | $3.6B | 100% |
| Cost of revenue | $633.0M | 17.5% |
| Operations and support | $361.0M | 10.0% |
| Product development | $672.0M | 18.6% |
| Sales and marketing | $875.0M | 24.3% |
| General and administrative | $309.0M | 8.6% |
| **Total costs and expenses** | $2.9B | 79.0% |
| **Income from operations** | $758.0M | 21.0% |
| Interest income | $183.0M | 5.1% |
| Interest expense | -$37.0M | 1.0% |
| Other income (expense), net | -$7.0M | 0.2% |
| **Income before income taxes** | $897.0M | 24.9% |
| Provision for income taxes | $81.0M | 2.2% |
| **Net income** | $816.0M | 22.6% |
| Basic (in USD per share) | $1 | 0.0% |
| Diluted (in USD per share) | $1 | 0.0% |
| Basic (in shares) | 592,000,000 |  |
| Diluted (in shares) | 597,000,000 |  |

## History

| Period | Revenue | Operating income | Net income | Operating cash flow | Capital expenditure | Free cash flow |
|---|---:|---:|---:|---:|---:|---:|
| FY2019 | $4.8B | -$501.5M | -$674.3M | $222.7M | $125.5M | $97.3M |
| FY2020 | $3.4B | -$3.6B | -$4.6B | -$740.0M | $37.0M | -$777.0M |
| FY2021 | $6.0B | $429.0M | -$352.0M | $2.3B | $25.0M | $2.3B |
| FY2022 | $8.4B | $1.8B | $1.9B | $3.4B | $25.0M | $3.4B |
| FY2023 | $9.9B | $1.5B | $4.8B | $3.9B | — | — |
| FY2024 | $11.1B | $2.6B | $2.6B | $4.5B | — | — |
| FY2025 | $12.2B | $2.5B | $2.5B | $4.6B | — | — |

Latest trend (the newest full year against the year before; a reading, not a forecast):

- Revenue: +10.3% (year before +11.9%): steady
- Operating income: -0.4% (year before +68.2%): slowing
- Net income: -5.2% (year before -44.7%): accelerating
- Free cash flow: +48.8% (year before -194.5%): accelerating

## Operating figures stated in the filing

- Hosts: 5,500,000 hosts (as of 2026-06-30). "Airbnb was founded in 2007 when two hosts welcomed three guests to their San Francisco home, and has since grown into a global community of over 5.5 million hosts who have welcomed over 2.5 billion guest arrivals in almost every country and region across the globe." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Guest arrivals since founding: 2,500,000,000 arrivals (as of 2026-06-30). "Airbnb was founded in 2007 when two hosts welcomed three guests to their San Francisco home, and has since grown into a global community of over 5.5 million hosts who have welcomed over 2.5 billion guest arrivals in almost every country and region across the globe." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Countries and regions: 220 countries (as of 2026-06-30). "We operate a global marketplace connecting guests with these offerings, collectively in over 220 countries and regions." (Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations)
- Jurisdictions where Airbnb remits lodging taxes: 37,000 jurisdictions (as of 2026-06-30). "As of June 30, 2026, the Company collected and remitted Lodging Taxes in approximately 37,000 jurisdictions around the world on behalf of its hosts." (Item 1. Condensed Consolidated Financial Statements)

## Key insights

### Marketing outgrew revenue, and the margin still widened

Sales and marketing rose 26.6% against revenue's 16.5%, yet operating margin gained 1.24 points to 21.0% because every other cost line grew slower.

Sales and marketing was $875M against $691M a year earlier, 24.3% of revenue and up 1.93 points. The filing ties the increase mainly to "higher paid growth marketing initiatives in emerging markets and partnerships" and to higher headcount. It was the only major cost line to grow faster than revenue's 16.5%. _(from the filing)_
The other lines made room for it. Product development grew 10.2%, operations and support 8.7% and general and administrative 0.65%, giving up 1.08, 0.72 and 1.35 points of revenue share. The filing credits lower agent contact volume from "increased use of artificial intelligence" in community support, and lower non-income taxes for the flat administrative line. Total costs and expenses grew 14.7%, so operating income rose 23.9% to $758M. _(from the filing)_
Marketing is now the largest cost line and larger than operating profit itself: sales and marketing of $875M equals 115.4% of operating income of $758M, against 112.9% a year earlier ($691M against $612M). _(from the filing)_
This is analysis. The margin gain came from restraint elsewhere, not from marketing becoming cheaper per dollar of revenue. The filing says headcount is still rising in product development and support, so their slower growth holds only while the platform keeps handling more nights per employee. _(analysis)_

### Below operating profit, a lower tax rate did the lifting

Pre-tax income grew 15.2%, slower than revenue, and net income reached 27.1% growth only because the effective tax rate fell to 9.0% from 17.6%.

Operating income rose 23.9%, but income before income taxes rose only 15.2% to $897M. Interest income fell 3.7% to $183M, which the filing attributes to "lower interest earned on our investment portfolio, driven by lower interest rates", and interest expense rose to $37M from $6M, "primarily due to interest on our new long-term notes". Interest income still equals 24.1% of operating income, down from 31.0% a year earlier. _(from the filing)_
The tax provision then fell 40.9% to $81M, an effective rate of 9.0% of pre-tax income against 17.6% a year earlier. The filing attributes the drop primarily to a benefit "related to recently published guidance impacting prior year taxes". That is how net income of $816M grew 27.1%, faster than operating income. _(from the filing)_
Per share the gap widens again. Diluted earnings per share were $1.37 against $1.03 a year earlier, while the diluted share count fell to 597 million from 626 million as the filing reports continued repurchases. _(from the filing)_
This is analysis. A benefit tied to prior years' taxes says nothing about current operations, and interest on the new notes is now a standing cost, so operating income is the cleaner read of this quarter. At last year's effective rate, net income would have grown at about the pace of pre-tax income, below revenue growth. _(analysis)_

### The margin gain follows a year of flat operating profit

Operating income was $2.54B in FY2025 against $2.55B a year before, despite revenue reaching $12.24B, so costs absorbed all of that year's revenue growth.

In FY2025 revenue rose to $12.24B from $11.10B, yet operating income was $2.54B against $2.55B in FY2024. Operating margin fell to 20.8% from 23.0%: costs grew faster than revenue over the full year. _(from the filing)_
This quarter runs the other way. Operating margin was 21.0% against 19.8% in the same quarter a year earlier ($612M on $3.10B), with total costs and expenses at 79.0% of revenue, 1.24 points lower. _(from the filing)_
This is analysis. One quarter does not reverse a year, and Airbnb's quarters differ sharply by season, so the fair test is each quarter against the same quarter a year earlier. What the next filings show is whether the emerging-market marketing push keeps total costs growing faster than revenue over a full year, as in FY2025, or below it, as in this quarter. _(analysis)_

### Competitive edge

- **Guests pay first, so cash runs ahead of profit** Operating cash flow of $1.27B was 1.56 times net income of $816M, helped by service fees that guests pay at booking, before they stay.
- **Hosts own the rooms, leaving an 82.5% gross margin** Cost of revenue was 17.5% of revenue, mostly merchant fees, chargebacks and servers, because over 5.5 million hosts supply the property.

### What to watch

- **Tax and rule disputes sit outside this quarter's costs** Airbnb remits lodging taxes in about 37,000 jurisdictions, some localities claim joint liability with hosts, and an IRS dispute and a Spanish fine remain contested.
- **Pay-later bookings loosen the cash advantage** Reserve now, pay later moves payment closer to the stay, and the filing says those bookings cancel more often than bookings paid at booking.
- **Fixed costs make profit swing far more than revenue** Operating margin was 39.7% in the Q3 FY2025 peak and 9.7% in Q4 FY2025, so a travel shock would hit profit much harder than sales.

## Investor view

**Sales and marketing grew 26.6%, faster than revenue, and Airbnb still widened its operating margin because other costs grew more slowly**

### How it makes money

Airbnb does not own the homes on its platform. Over 5.5 million hosts list stays, experiences and services, and Airbnb runs the marketplace that matches them with guests in over 220 countries and regions: "We operate a global marketplace connecting guests with these offerings." It earns service fees on each booking, and "Revenue is recognized upon check-in", so a booking made in one quarter can become revenue in a later one. _(from the filing)_
Running the marketplace itself is cheap relative to what it brings in. Cost of revenue was $633M, 17.5% of $3.61B in revenue, and the filing names merchant fees, chargebacks and server costs as its main parts. That leaves a gross margin of 82.5%. The large costs sit further down: sales and marketing at $875M (24.3% of revenue) and product development at $672M (18.6%) are each larger than cost of revenue. _(from the filing)_
Guests pay before they travel. The filing says "we generally collect our service fees at booking, which typically occurs before a stay, experience, or service", and it keeps the funds for hosts until guests check in. That is why operating cash flow of $1.27B ran at 1.56 times net income of $816M this quarter, and why interest income of $183M, part of it earned on funds held for customers, equalled 20.4% of income before income taxes of $897M. _(from the filing)_
Revenue is reported by where the listing is, and two regions carry most of it. North America brought in $1.59B, 44.2% of the total, and Europe, the Middle East and Africa $1.43B, 39.5%. Latin America ($291M, 8.1%) and Asia Pacific ($298M, 8.3%) are the smaller regions where the filing says growth is being led, "as we continue to focus on international expansion". _(from the filing)_

### What shifted

Growth came from volume more than price. The filing attributes the revenue increase to more check-ins on nights and seats booked and "a modest increase in our Average Daily Rate". It also reports constant currency growth below reported growth, so exchange rates added part of the increase. By region, Latin America grew fastest at 26.0% to $291M, gaining 0.6 points of revenue share, while North America (15.8%) and Europe, the Middle East and Africa (15.6%) each lost about 0.3 points. _(from the filing)_
Marketing took a larger slice. Sales and marketing rose 26.6% to $875M from $691M, up 1.93 points to 24.3% of revenue. The filing ties the rise mainly to "higher paid growth marketing initiatives in emerging markets and partnerships", plus higher headcount. It was the only major cost line that grew faster than revenue's 16.5%. _(from the filing)_
Every other cost line grew more slowly, and that is where the margin came from. Product development rose 10.2%, operations and support 8.7% and general and administrative 0.65%, losing 1.08, 0.72 and 1.35 points of revenue share. The filing credits part of the support saving to "lower agent contact volume resulting from increased use of artificial intelligence" and the flat general and administrative line to lower non-income taxes. Total costs and expenses grew 14.7%, below revenue. _(from the filing)_
Net income grew faster than the business did. Income before income taxes rose 15.2% to $897M, slower than revenue, because interest income fell 3.7% to $183M on lower rates and interest expense rose to $37M from $6M, the result of "interest on our new long-term notes". The tax provision then fell 40.9% to $81M, an effective rate of 9.0% against 17.6% a year earlier, which the filing attributes to a benefit from "recently published guidance impacting prior year taxes". _(from the filing)_
Per-share results grew faster still. Diluted earnings per share were $1.37 against $1.03 a year earlier, while the diluted share count fell to 597 million from 626 million. The filing reports continued repurchases of Class A shares during the quarter under the program its board approved. _(from the filing)_

### Risks in the filing

Lodging taxes are the most specific exposure the filing describes. Airbnb collects and remits them in about 37,000 jurisdictions on behalf of hosts, and some states and localities are asserting that "the Company is liable or jointly liable with hosts to collect and remit Lodging Taxes". The filing says such taxes "could increase the cost of a guest booking and potentially cause a reduction in the volume of bookings". _(from the filing)_
A long-running federal tax dispute is still open. The IRS has challenged the value Airbnb placed on international intellectual property it sold to a subsidiary, and Airbnb has taken the case to the U.S. Tax Court. The filing says that if the IRS prevails beyond the current reserves, the outcome could require "a significant cash payment". _(from the filing)_
Regulation keeps widening. The filing lists rules on short-term rentals, home sharing, housing, land use, payments, privacy and more, describes past litigation with municipalities, and discloses a contested fine in Spain over listing rules, for which Airbnb has arranged a surety bond while the court case proceeds. It states that global regulatory requirements and challenges continue to increase. _(from the filing)_
Travel demand is exposed to the wider economy and to conflict. The filing names inflation, interest rates, foreign currency, tariffs, wars and weaker consumer spending, and says the conflict in the Middle East "has had and may continue to have an impact on booking trends", while also stating that these conditions have not had a material impact on results to date. _(from the filing)_
The numbers this quarter show these risks only faintly. Europe, the Middle East and Africa was the slowest-growing region, which fits the booking impact the filing names but does not isolate it. General and administrative barely grew partly because non-income taxes fell, a reminder that the tax line moves with disputes and settlements rather than with bookings. The lodging tax and IRS matters are exposures in the notes, not costs in this quarter's income statement. _(analysis)_

## Founder view: mechanisms

### Guests pay before they stay

Airbnb collects money at booking and delivers the service weeks or months later. The customer's prepayment, not a lender or a shareholder, funds the gap between taking the order and delivering it. That turns growth into a source of cash rather than a use of it: the more bookings run ahead of stays, the more cash arrives before the matching revenue and costs. _(analysis)_

### Hosts own the inventory

Airbnb's supply is other people's property. Hosts own, furnish, clean and price the rooms; Airbnb builds the search, payments, trust and support layer and takes a fee. The company carries almost no physical capital, so revenue growth does not require building anything. _(analysis)_

### Margin at home funds growth abroad

Airbnb is spending profit from its established regions to fund growth in newer ones. Paid marketing in emerging markets rises faster than revenue, and slower growth in engineering, support and overhead keeps the overall margin rising while it does. The established business is the funding source; the new markets are where the money goes. _(analysis)_

### Fixed costs, seasonal revenue

Most of Airbnb's costs do not move much with the number of nights in a quarter: engineers, support staff, overhead and brand marketing. Revenue, recognized at check-in, follows the travel calendar. So profit swings far more than revenue does. The peak summer quarter carries the year, and a collapse in travel turns the same cost base into a large loss. _(analysis)_

## Member research

Signed-in members read, on the page: what Airbnb's numbers depend on from here, and the playbook behind each mechanism (what needs scale, what transfers, how to test it, the metric that would show it).

## Sources

- Airbnb 10-Q for the period to 2026-06-30: https://www.sec.gov/Archives/edgar/data/1559720/000155972026000027/ (2026-08-06)

Methodology business-lens-1.0 · schema 1.2.0 · run business-lens-2026-11-01 · as of 2026-11-01