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Airbnb turns quarterly profit ahead of £2.26bn IPO

written by Bella Palmer
airbnb

The startup benefitted from cost-cutting measures during the pandemic

Airbnb has turned a quarterly profit ahead of its estimated £2.26bn (US$3bn) stock market debut in December despite the COVID-19 hit on its core home rental business.

The online bookings platform posted an IPO registration late on Monday where it reported a net profit of £165.14mln (US$219mln) despite revenue sliding 18% to £0.98bn (US$1.3bn) in the three months to September 30.

The recovery in the second and third quarters of 2020 is attributable to the renewed ability and willingness for guests to travel, the resilience of our hosts, and relative strength of our business model, Airbnb said.

Domestic travel, short-distance trips and long-term stays were the most resilient during the period.

The startup, which has never made an annual profit since its inception in 2008, benefitted from cost-cutting measures implemented during the pandemic.

The firm laid off a quarter of its staff in May and suspended marketing initiatives, while chief executive and co-founder Brian Chesky agreed to cut his base salary to £0.75 from £82,949 (US$1 from US$110,000).

It also issued a £1.51bn (US$2bn) cash call to its investors, including Silver Lake and Sixth Street Partners, following a rash of cancellations and refunds amid global lockdowns.

The fundraise valued it at £13.57bn (US$18bn), although its flotation is expected to push the market capitalisation up to over £22.62bn (US$30bn), according to a Reuters reports last month.

The Monday filing reports an IPO of £0.75bn (US$1bn) but it is estimated to change since it is a placeholder amount.

The Nasdaq listing is one of the most eagerly awaited after the tech firm gained ‘unicorn’ status in 2011, having expanded to over 180 countries after only three years of operations.

The document also revealed a £0.98bn (US$1.3bn) tax bill required by the US Internal Revenue Service regarding the sale of international intellectual property to a subsidiary in 2013, which Airbnb said will contest “vigorously”.

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