Airbnb, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements and Schedule Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 65 Consolidated Financial Statements Consolidated Balance Sheets 67 Consolidated Statements of Operations 68 Consolidated Statements of Comprehensive Income (Loss) 69 Consolidated Statements of Stockholders’ Equity 70 Consolidated Statements of Cash Flows 71 Notes to Consolidated Financial Statements 72 Financial Statement Schedule Schedule II—Valuation and Qualifying Accounts 101 64 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Airbnb, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Airbnb, Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity, and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the accompanying index for each of the three years in the period ended December 31, 2023 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 65 Table of Contents Uncertain Tax Positions As described in Notes 2 and 14 to the consolidated financial statements, the Company has recorded gross unrecognized tax benefits of $780 million relating to uncertain tax positions as of December 31, 2023. Management evaluates and accounts for uncertain tax positions using a two-step approach. Recognition, step one, occurs when management concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement, step two, determines the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. The Company is in various stages of examination in connection with its ongoing tax audits globally and management believes that an adequate provision has been recorded for any adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, management may be required to record an adjustment to the provision for (benefit from) income taxes in the period such resolution occurs. The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are (i) the significant judgment by management when determining uncertain tax positions, including a high degree of estimation uncertainty relative to the technical merits and the measurement of the tax positions based on interpretations of tax laws and legal rulings; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to management's recognition and measurement of uncertain tax positions; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition and measurement of the liability for uncertain tax positions and controls addressing completeness of the uncertain tax positions. These procedures also included, among others, (i) testing the completeness of management's assessment of the identification of uncertain tax positions; (ii) testing the recognition and measurement of the liability for uncertain tax positions, including management's assessment of the technical merits of the tax positions and the amount of tax benefit expected to be sustained; (iii) testing the information used in the calculation of the liability for uncertain tax positions, including intercompany agreements, international, federal, and state filing positions, and the related final tax returns; (iv) evaluating the status and results of income tax audits with the relevant tax authorities; and (v) evaluating third party income tax documentation obtained by the Company. Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company's uncertain tax positions, including evaluating the reasonableness of management's assessment of whether tax positions are more-likely-than-not of being sustained and the amount of potential benefit to be realized, the application of relevant tax laws, and estimated interest and penalties. /s/ PricewaterhouseCoopers LLP San Francisco, California February 16, 2024 We have served as the Company's auditor since 2011. 66 Table of Contents Airbnb, Inc. Consolidated Balance Sheets (in millions, except par value) December 31, 2022 2023 Assets Current assets: Cash and cash equivalents $ 7,378 $ 6,874 Short-term investments (including assets reported at fair value of $ 2,224 and $ 2,507 , respectively) 2,244 3,197 Funds receivable and amounts held on behalf of customers 4,783 5,869 Prepaids and other current assets (including customer receivables of $ 200 and $ 249 and allowances of $ 39 and $ 44 , respectively) 456 569 Total current assets 14,861 16,509 Deferred tax assets 16 2,881 Goodwill and intangible assets, net 684 792 Other assets, noncurrent 477 463 Total assets $ 16,038 $ 20,645 Liabilities and Stockholders’ Equity Current liabilities: Accrued expenses, accounts payable, and other current liabilities $ 2,013 $ 2,654 Funds payable and amounts payable to customers 4,783 5,869 Unearned fees 1,182 1,427 Total current liabilities 7,978 9,950 Long-term debt 1,987 1,991 Operating lease liabilities, noncurrent 295 252 Other liabilities, noncurrent 218 287 Total liabilities 10,478 12,480 Commitments and contingencies (Note 13) Stockholders’ equity: Common stock, $ 0.0001 par value: Class A - authorized 2,000 shares; 408 and 438 shares issued & outstanding, respectively; Class B - authorized 710 shares; 223 and 200 shares issued & outstanding, respectively; Class C - authorized 2,000 shares; zero shares issued & outstanding, respectively; Class H - authorized 26 shares; 9 shares issued and zero shares outstanding, respectively — — Additional paid-in capital 11,557 11,639 Accumulated other comprehensive loss ( 32 ) ( 49 ) Accumulated deficit ( 5,965 ) ( 3,425 ) Total stockholders’ equity 5,560 8,165 Total liabilities and stockholders’ equity $ 16,038 $ 20,645 The accompanying notes are an integral part of these consolidated financial statements. 67 Table of Contents Airbnb, Inc. Consolidated Statements of Operations (in millions, except per share amounts) Year Ended December 31, 2021 2022 2023 Revenue $ 5,992 $ 8,399 $ 9,917 Costs and expenses: Cost of revenue 1,156 1,499 1,703 Operations and support 847 1,041 1,186 Product development 1,425 1,502 1,722 Sales and marketing 1,186 1,516 1,763 General and administrative 836 950 2,025 Restructuring charges 113 89 — Total costs and expenses 5,563 6,597 8,399 Income from operations 429 1,802 1,518 Interest income 13 186 721 Interest expense ( 438 ) ( 24 ) ( 83 ) Other income (expense), net ( 304 ) 25 ( 54 ) Income (loss) before income taxes ( 300 ) 1,989 2,102 Provision for (benefit from) income taxes 52 96 ( 2,690 ) Net income (loss) $ ( 352 ) $ 1,893 $ 4,792 Net income (loss) per share attributable to Class A and Class B common stockholders: Basic $ ( 0.57 ) $ 2.97 $ 7.52 Diluted $ ( 0.57 ) $ 2.79 $ 7.24 Weighted-average shares used in computing net income (loss) per share attributable to Class A and Class B common stockholders: Basic 616 637 637 Diluted 616 680 662 The accompanying notes are an integral part of these consolidated financial statements. 68 Table of Contents Airbnb, Inc. Consolidated Statements of Comprehensive Income (Loss) (in millions) Year Ended December 31, 2021 2022 2023 Net income (loss) $ ( 352 ) $ 1,893 $ 4,792 Other comprehensive loss: Net unrealized gain (loss) on available-for-sale marketable securities, net of tax ( 4 ) ( 15 ) 6 Net unrealized loss on cash flow hedges, net of tax — — ( 31 ) Foreign currency translation adjustments ( 6 ) ( 10 ) 8 Other comprehensive loss ( 10 ) ( 25 ) ( 17 ) Comprehensive income (loss) $ ( 362 ) $ 1,868 $ 4,775 The accompanying notes are an integral part of these consolidated financial statements. 69 Table of Contents Airbnb, Inc. Consolidated Statements of Stockholders’ Equity (in millions) Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balances as of December 31, 2020 599 $ — * $ 8,904 $ 3 $ ( 6,006 ) $ 2,901 Net loss — — — — ( 352 ) ( 352 ) Other comprehensive loss — — — ( 10 ) — ( 10 ) Exercise of common stock options, net of shares withheld for taxes 18 — * 138 — — 138 Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes 16 — * ( 44 ) — — ( 44 ) Reclassification of derivative warrant liability to equity — — 1,277 — — 1,277 Purchase of capped calls — — ( 100 ) — — ( 100 ) Issuance of common stock under employee stock purchase plan, net of shares withheld 1 — * 51 — — 51 Stock-based compensation — — 914 — — 914 Balances as of December 31, 2021 634 — * 11,140 ( 7 ) ( 6,358 ) 4,775 Net income — — — — 1,893 1,893 Other comprehensive loss — — — ( 25 ) — ( 25 ) Exercise of common stock options, net of shares withheld for taxes 3 — * 40 — — 40 Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes 8 — * ( 612 ) — — ( 612 ) Issuance of common stock under employee stock purchase plan, net of shares withheld for taxes — — * 48 — — 48 Stock-based compensation — — 941 — — 941 Repurchases of common stock ( 14 ) — — — ( 1,500 ) ( 1,500 ) Balances as of December 31, 2022 631 — * 11,557 ( 32 ) ( 5,965 ) 5,560 Net income — — — — 4,792 4,792 Other comprehensive loss — — — ( 17 ) — ( 17 ) Exercise of common stock options, net of shares withheld for taxes 9 — * ( 521 ) — — ( 521 ) Shares issued upon net settlement of warrants exercised 6 — — — — — Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes 8 — * ( 660 ) — — ( 660 ) Issuance of common stock under employee stock purchase plan, net of shares withheld for taxes 1 — * 64 — — 64 Stock-based compensation — — 1,146 — — 1,146 Repurchases of common stock ( 18 ) — * — — ( 2,252 ) ( 2,252 ) Issuance of common stock for acquisition of business 1 — * 53 — — 53 Balances as of December 31, 2023 638 $ — * $ 11,639 $ ( 49 ) $ ( 3,425 ) $ 8,165 * Amounts round to zero and do not change rounded totals. The accompanying notes are an integral part of these consolidated financial statements. 70 Table of Contents Airbnb, Inc. Consolidated Statements of Cash Flows (in millions) Year Ended December 31, 2021 2022 2023 Cash flows from operating activities: Net income (loss) $ ( 352 ) $ 1,893 $ 4,792 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 138 81 44 Stock-based compensation expense 899 930 1,120 Deferred income taxes 11 ( 1 ) ( 2,875 ) Loss on warrants, net 292 — — Impairment of long-lived assets 113 91 — Loss from extinguishment of debt 377 — — Other, net 74 117 83 Changes in operating assets and liabilities, net of acquisitions: Prepaids and other assets ( 29 ) ( 185 ) ( 102 ) Accrued expenses and other liabilities 294 224 580 Unearned fees 496 280 242 Net cash provided by operating activities 2,313 3,430 3,884 Cash flows from investing activities: Purchases of short-term investments ( 4,938 ) ( 4,072 ) ( 3,308 ) Sales and maturities of short-term investments 3,611 4,071 2,380 Other investing activities, net ( 25 ) ( 27 ) ( 114 ) Net cash used in investing activities ( 1,352 ) ( 28 ) ( 1,042 ) Cash flows from financing activities: Taxes paid related to net share settlement of equity awards ( 177 ) ( 607 ) ( 1,224 ) Principal repayment of long-term debt ( 1,995 ) — — Prepayment penalty on long-term debt ( 213 ) — — Proceeds from issuance of convertible senior notes, net of issuance costs 1,979 — — Purchases of capped calls related to convertible senior notes ( 100 ) — — Proceeds from exercise of equity awards and employee stock purchase plan 189 88 110 Repurchase of common stock — ( 1,500 ) ( 2,252 ) Change in funds payable and amounts payable to customers 1,625 1,330 936 Net cash provided by (used in) financing activities 1,308 ( 689 ) ( 2,430 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 210 ) ( 337 ) 152 Net increase in cash, cash equivalents, and restricted cash 2,059 2,376 564 Cash, cash equivalents, and restricted cash, beginning of year 7,668 9,727 12,103 Cash, cash equivalents, and restricted cash, end of year $ 9,727 $ 12,103 $ 12,667 The accompanying notes are an integral part of these consolidated financial statements. 71 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Note 1. Description of Business Airbnb, Inc. (the “Company” or “Airbnb”) was incorporated in Delaware in June 2008 and is headquartered in San Francisco, California. The Company operates a global platform for unique stays and experiences. The Company’s marketplace model connects Hosts and guests (collectively referred to as “customers”) online or through mobile devices to book spaces and experiences around the world. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and variable interest entities (“VIE”) in which the Company is the primary beneficiary in accordance with consolidation accounting guidance. All intercompany transactions have been eliminated in consolidation. The Company determines, at the inception of each arrangement, whether an entity in which it has made an investment or in which it has other variable interest in is considered a VIE. The Company consolidates a VIE when it is deemed to be the primary beneficiary. The primary beneficiary of a VIE is the party that meets both of the following criteria: (i) has the power to direct the activities that most significantly affect the economic performance of the VIE; and (ii) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. Periodically, the Company determines whether any changes in its interest or relationship with the entity impact the determination of whether the entity is still a VIE and, if so, whether the Company is the primary beneficiary. If the Company is not deemed to be the primary beneficiary in a VIE, the Company accounts for the investment or other variable interest in a VIE in accordance with applicable U.S. GAAP. As of December 31, 2022 and 2023, the Company’s consolidated VIEs were not material to the consolidated financial statements. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly evaluates its estimates, including those related to bad debt reserves, fair value of investments, useful lives of long-lived assets and intangible assets, valuation of goodwill and intangible assets from acquisitions, contingent liabilities, insurance reserves, revenue recognition, valuation of common stock, stock-based compensation, income taxes, and reserves for transient occupancy taxes and tax withholding obligations, among others. Actual results could differ materially from these estimates. As the impact of the uncertain macroeconomic conditions, including inflation and rising interest rates, continues to evolve, estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require increased judgment. These estimates and assumptions may change in future periods and will be recognized in the consolidated financial statements as new events occur and additional information becomes known. To the extent the Company’s actual results differ materially from those estimates and assumptions, the Company’s future consolidated financial statements could be affected. Segment Information Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is its Chief Executive Officer. The Company has determined it has one operating and reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Cash and Cash Equivalents Cash and cash equivalents are held in checking and interest-bearing accounts and consist of cash and highly-liquid securities with an original maturity of 90 days or less. Short-term Investments The Company considers all highly-liquid investments with original maturities of greater than 90 days to be short-term investments. Short-term investments include time deposits, which are accounted for at amortized cost, and available-for-sale debt securities that consist of corporate debt securities, commercial paper, certificates of deposit, U.S. government and government agency debt securities (“government bonds”), and mortgage-backed and asset-backed securities. The Company determines the appropriate classification of its investments at the time of purchase. The Company determines realized gains or losses on the sale of equity and debt securities on a specific identification method. Unrealized gains and non-credit related losses on available-for-sale debt securities are reported as a component of accumulated other comprehensive income (loss) (“AOCI”) in stockholders’ equity. Realized gains and losses and impairments are reported within other income 72 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements (expense), net on the consolidated statements of operations. The assessment for impairment takes into account the severity and duration of the decline in value, adverse changes in the market or industry of the investee, the Company’s intent to sell the security, and whether it is more likely than not that it will be required to sell the security before recovery of the amortized cost basis. The Company’s equity investments with readily determinable fair values are measured at fair value on a recurring basis with changes in fair value recognized within other income (expense), net on the consolidated statements of operations. The Company records an impairment of its available-for-sale debt securities if the amortized cost basis exceeds its fair value and if the Company has the intention to sell the security or if it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis. If the Company does not have the intention to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis and the Company determines that the unrealized loss is entirely or partially due to credit-related factors, the credit loss is measured and recognized as an allowance in the consolidated balance sheets with a corresponding charge in the consolidated statements of operations. The allowance is measured as the amount by which the debt security’s amortized cost basis exceeds the Company’s best estimate of the present value of cash flows expected to be collected. Any remaining decline in fair value that is non-credit related is recognized in other comprehensive income (loss). Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Non-Marketable Investments Non-marketable investments consist of debt and equity investments in privately-held companies, which are classified as other assets, noncurrent on the consolidated balance sheets. The Company classifies its non-marketable investments that meet the definition of a debt security as available-for-sale. The accounting policy for debt securities classified as available-for-sale is described above. The Company’s non-marketable equity investments are accounted for using either the equity method of accounting or as equity investments without readily determinable fair values under the measurement alternative. The Company uses the equity method if it has the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. For investments accounted for using the equity method, the Company’s proportionate share of its equity interest in the net income (loss) and other comprehensive income (loss) of these companies is recorded in the consolidated statements of operations within other income (expense), net. The carrying amount of the investment in equity interests is adjusted to reflect the Company’s interest in the investee’s net income or loss and any impairments and is classified in other assets, noncurrent on the consolidated balance sheets. Equity investments for which the Company is not able to exercise significant influence over the investee and for which fair value is not readily determinable are accounted for using the measurement alternative. Such investments are carried at cost, less any impairments, and are adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. This election is reassessed each reporting period to determine whether non-marketable equity securities have a readily determinable fair value, in which case they would no longer be eligible for this election. Changes in the basis of the equity investment are recognized in other income (expense), net on the consolidated statements of operations. The Company reviews its non-marketable debt and equity investments for impairment at the end of each reporting period or whenever events or circumstances indicate that the carrying value may not be fully recoverable. Impairment indicators might include negative changes in industry and market conditions, financial performance, business prospects, and other relevant events and factors. Upon determining that an impairment exists, the Company recognizes as an impairment in other income (expense), net on the consolidated statements of operations the amount by which the carrying value exceeds the fair value of the investment. Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements. The authoritative guidance on fair value measurements establishes a hierarchical disclosure framework, which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. This hierarchy requires the Company to use observable market data when available and to minimize the use of unobservable inputs when determining fair value. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and disclosed at fair value are classified and disclosed based on the observability of inputs used in the determination of fair value as follows: Level 1: Observable inputs such as quoted prices in active markets. Level 2: Observable inputs other than Level 1 prices, such as quoted prices in less active markets or model-derived valuations that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data that are significant to the fair value of the assets or liabilities. The carrying amount of the Company’s financial instruments, including cash equivalents, funds receivable and amounts held on behalf of customers, accounts payable, accrued liabilities, funds payable and amounts payable to customers, and unearned fees approximate their respective fair values because of their short maturities. 73 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Level 2 Valuation Techniques Financial instruments classified as Level 2 within the Company’s fair value hierarchy are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. Prices of these securities are obtained through independent, third-party pricing services and include market quotations that may include both observable and unobservable inputs. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices and market transactions in comparable investments, and various relationships between investments. The Company’s foreign exchange derivative instruments are valued using pricing models that take into account the contract terms, as well as multiple inputs where applicable, such as interest rate yield curves and currency rates. Level 3 Valuation Techniques Financial instruments classified as Level 3 within the Company’s fair value hierarchy consist primarily of a derivative warrant liability relating to the warrants issued in conjunction with the second lien loan discussed in Note 10, Debt . Valuation techniques for the derivative warrant liability include the Black-Scholes option-pricing model with key assumptions such as stock price volatility, expected term, and risk-free interest rates. Foreign Currency The Company’s reporting currency is the U.S. dollar. The Company determines the functional currency for each of its foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments. Assets and liabilities for foreign subsidiaries with functional currency other than U.S. dollar are translated into U.S. dollars at the rate of exchange existing at the balance sheet date. Statements of operations amounts are translated at average exchange rates for the period. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. No material amounts were reclassified from accumulated other comprehensive income (loss) for the years ended December 31, 2021, 2022 and 2023. Remeasurement gains and losses are included in other income (expense), net on the consolidated statements of operations. Monetary assets and liabilities are remeasured at the exchange rate on the balance sheet date and nonmonetary assets and liabilities are measured at historical exchange rates. As of December 31, 2022 and 2023, the Company had a cumulative translation gain of $ 13 million and $ 5 million , respectively. Total net realized and unrealized gains (losses) on foreign currency transactions and balances totaled $( 5 ) million, $ 29 million and $( 48 ) million for the years ended December 31, 2021, 2022 and 2023, respectively. Derivative Instruments and Hedging The Company’s primary objective for holding derivative instruments is to manage foreign currency exchange rate risk. The Company enters into master netting arrangements to mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. All derivative instruments are recorded in the consolidated balance sheets at fair value. The accounting treatment for derivative gains and losses is based on intended use and hedge designation. Gains and losses arising from amounts that are included in the assessment of cash flow hedge effectiveness are initially deferred in AOCI and subsequently reclassified into earnings when the hedged transaction affects earnings and in the same line item within the consolidated statement of operations. The Company does not exclude any components in the assessment of hedge effectiveness for forwards and options. If it is no longer probable that a forecasted hedged transaction will occur in the initially identified time period, hedge accounting is discontinued and the Company accounts for the associated derivatives as undesignated derivative instruments. Gains and losses associated with derivatives no longer designated as hedging instruments in AOCI are recognized immediately in other income (expense), net, if it is probable that the forecasted hedged transaction will not occur by the end of the initially identified time period or within an additional two month period thereafter. In rare circumstances, the additional period of time may exceed two months due to extenuating circumstances related to the nature of the forecasted transaction that are outside the control or influence of the Company. Gains and losses arising from changes in the fair value of derivative instruments that are not designated as accounting hedges are recognized in the consolidated statement of operations in other income (expense), net. The Company presents derivative assets and liabilities at their gross fair values in the consolidated balance sheets, even if they are subject to master netting arrangements with the counterparties. The Company classifies cash flows related to derivative instruments as operating activities in the consolidated statement of cash flows. Internal-Use Software The Company capitalizes certain costs in connection with obtaining or developing software for internal use. Amortization of such costs begins when the project is substantially complete and ready for its intended use. Capitalized software development costs are classified as property and equipment, net on the consolidated balance sheets and are amortized using the straight-line method over the estimated useful life of the applicable software. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. 74 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives indicated below: Asset Category Period Computer equipment 5 years Computer software and capitalized internal-use software 1.5 to 3 years Office furniture and equipment 5 years Buildings 25 to 40 years Leasehold improvements Lesser of estimated useful life or remaining lease term Costs of maintenance and repairs that do not improve or extend the useful lives of assets are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation are removed from the consolidated balance sheets and the resulting gain or loss is reflected in the consolidated statements of operations. Leases The Company determines whether an arrangement is or contains a lease at inception. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease ROU assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has real estate and equipment lease agreements that contain lease and non-lease components, which are accounted for as a single lease component. The Company’s leases often contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives, primarily used to fund leasehold improvements, are recognized when earned and reduce the Company’s ROU asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s lease agreements may contain variable costs such as common area maintenance, operating expenses, or other costs. Variable lease costs are expensed as incurred in the consolidated statements of operations. The Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. For substantially all leases with an initial non-cancelable lease term of less than one year and no option to purchase, the Company elected not to recognize the lease on its consolidated balance sheets and instead recognize rent payments on a straight-line basis over the lease term within operating expense on its consolidated statements of operations. Goodwill Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company has one reporting unit. The Company tests goodwill for impairment at least annually in the fourth quarter, or whenever events or changes in circumstances indicate that goodwill might be impaired. The Company uses a two-step process to assess the realizability of goodwill. The first step, Step 0, is a qualitative assessment that analyzes current economic indicators associated with a particular reporting unit. For example, the Company analyzes changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would be a significant decline to the fair value of a reporting unit. A qualitative assessment also includes analyzing the excess fair value of a reporting unit over its carrying value from impairment assessments performed in previous years. If the qualitative assessment indicates a stable or improved fair value, no further testing is required. If a qualitative assessment indicates that a significant decline to fair value of a reporting unit is more likely than not, or if a reporting unit’s fair value has historically been closer to its carrying value, the Company will proceed to Step 1 testing where the Company calculates the fair value of a reporting unit. If Step 1 indicates that the carrying value of a reporting unit is in excess of its fair value, the Company will record an impairment equal to the amount by which a reporting unit’s carrying value exceeds its fair value. There were no impairment charges in any of the periods presented in the consolidated financial statements. Intangible Assets Intangible assets are amortized on a straight-line basis over the estimated useful lives ranging from one to ten years . The Company reviews intangible assets for impairment under the long-lived asset model described below. There were no impairment charges in any of the periods presented in the consolidated financial statements. Impairment of Long-Lived Assets Long-lived assets that are held and used by the Company are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The determination of the recoverability of long-lived assets is based on an estimate of the undiscounted cash flows resulting from the use of the asset and its eventual disposition. If the carrying value of the long- 75 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary. Any impairments to ROU assets, leasehold improvements, or other assets as a result of a sublease, abandonment, or other similar factors are recorded as an operating expense. Similar to other long-lived assets, management tests ROU assets for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. For ROU assets, such circumstances may include subleases that do not fully recover the costs of the associated leases or a decision to abandon the use of all or part of an asset. For the year ended December 31, 2021, the Company recorded $ 113 million of long-lived asset impairment charges within restructuring charges on the consolidated statement of operations. For the year ended December 31, 2022, the Company recorded $ 91 million of long-lived asset impairment, of which $ 89 million was recorded within restructuring charges and the remainder within general and administrative, on the consolidated statements of operations. For the year ended December 31, 2023, the Company did not record any restructuring charges. Revenue Recognition The Company generates substantially all of its revenue from facilitating guest stays at accommodations offered by Hosts on the Company’s platform. The Company considers both Hosts and guests to be its customers. The customers agree to the Company’s Terms of Service (“ToS”) to use the Company’s platform. Upon confirmation of a booking made by a guest, the Host agrees to provide the use of the property. At such time, the Host and guest also agree upon the applicable booking value as well as Host fees and guest fees (collectively “service fees”). The Company charges service fees in exchange for certain activities, including the use of the Company’s platform, customer support, and payment processing activities. These activities are not distinct from each other and are not separate performance obligations. As a result, the Company’s single performance obligation is to facilitate a stay, which occurs upon the completion of a check-in event (a “check-in”). The Company recognizes revenue upon check-in as its performance obligation is satisfied upon check-in and the Company has the right to receive payment for the fulfillment of the performance obligation. The Company charges service fees to its customers as a percentage of the value of the booking, excluding taxes. The Company collects both the booking value from the guest on behalf of the Host and the applicable guest fees owed to the Company using the guest’s pre-authorized payment method. After check-in, the Company disburses the booking value to the Host, less the fees due from the Host to the Company. The Company’s ToS stipulates that a Host may cancel a confirmed booking at any time up to check-in. Therefore, the Company determined that for accounting purposes, each booking is a separate contract with the Host and guest, and the contracts are not enforceable until check-in. Since an enforceable contract for accounting purposes is not established until check-in, there were no partially satisfied or unsatisfied performance obligations as of December 31, 2022 and 2023. The service fees collected from customers prior to check-in are recorded as unearned fees. Unearned fees are not considered contract balances because they are subject to refund in the event of a cancellation. Guest stays of at least 28 nights are considered long-term stays. The Company charges service fees to facilitate long-term stays on a monthly basis. Such stays are generally cancelable with 30 days advance notice for no significant penalty. Accordingly, long-term stays are treated as month-to-month contracts; each month is a separate contract with the Host and guest, and the contracts are not enforceable until check-in for the initial month as well as subsequent monthly extensions. The Company’s performance obligation for long-term stays is the same as that for short-term stays. The Company recognizes revenue for the first month upon check-in, similar to short-term stays, and recognizes revenue for any subsequent months upon each month’s anniversary from initial check-in date. The Company evaluates the presentation of revenue on a gross versus net basis based on whether or not it is the principal (gross) or the agent (net) in the transaction. As part of the evaluation, the Company considers whether it controls the right to use the property before control is transferred. Indicators of control that the Company considers include whether the Company is primarily responsible for fulfilling the promise associated with the rental of the property, whether it has inventory risk associated with the property, and whether it has discretion in establishing the prices for the property. The Company determined that it does not control the right to use the properties either before or after completion of its service. Accordingly, the Company has concluded that it is acting in an agent capacity and revenue is presented net reflecting the service fees received from customers to facilitate a stay. The Company has elected to recognize the incremental costs of obtaining a contract, including the costs of certain referrer fees, as an expense when incurred as the amortization period of the asset that the Company otherwise would have recognized is one year or less. The Company has no significant financing components in its contracts with customers. The Company has elected to exclude from revenue, taxes assessed by a governmental authority that are both imposed on and are concurrent with specific revenue producing transactions. Accordingly, such amounts are not included as a component of revenue or cost of revenue. Payments to Customers The Company makes payments to customers as part of its referral programs and marketing promotions, collectively referred to as the Company’s incentive programs, and refund activities. The payments are generally in the form of coupon credits to be applied toward future bookings or as cash refunds. Incentive Programs The Company encourages the use of its platform and attracts new customers through its incentive programs. Under the Company’s referral program, the referring party (the “referrer”) earns a coupon when the new guest or Host (the “referee”) completes their first stay on the 76 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Company’s platform. Incentives earned by customers for referring new customers are paid in exchange for a distinct service and are accounted for as customer acquisition costs. The Company records the incentive as a liability at the time the incentive is earned by the referrer with the corresponding charge recorded to sales and marketing expense in the same way the Company accounts for other marketing services from third-party vendors. Any amounts paid in excess of the fair value of the referral service received are recorded as a reduction of revenue. Fair value of the service is established using amounts paid to vendors for similar services. Customer referral coupon credits generally expire within one year from issuance and the Company estimates the redemption rates using its historical experience. As of December 31, 2022 and 2023, the referral coupon liability was not material. Through marketing promotions, the Company issues customer coupon credits to encourage the use of its platform. After a customer redeems such incentives, the Company records a reduction to revenue at the date it records the corresponding revenue transaction, as the Company does not receive a distinct good or service in exchange for the customer incentive payment. Refunds In certain instances, the Company issues refunds to customers as part of its customer support activities in the form of cash or credits to be applied toward a future booking. There is no legal obligation to issue such refunds to Hosts or guests on behalf of its customers. The Company accounts for refunds, net of any recoveries, as variable consideration, which results in a reduction to revenue. The Company reduces the transaction price by the estimated amount of the payments by applying the most likely outcome method based on known facts and circumstances and historical experience. The estimate for variable consideration was not material as of December 31, 2022 and 2023. The Company evaluates whether the cumulative amount of payments made to customers that are not in exchange for a distinct good or service received from customers exceeds the cumulative revenue earned since inception of the customer relationships. Any cumulative payments in excess of cumulative revenue are presented within operations and support or sales and marketing on the consolidated statements of operations based on the nature of the payments made to customers. Funds Receivable and Funds Payable Funds receivable and amounts held on behalf of customers represent cash received or in-transit from guests via third-party credit card processors and other payment methods, which the Company remits for payment to the Hosts following check-in. This cash and related receivable represent the total amount due to Hosts, and as such, a liability for the same amount is recorded to funds payable and amounts payable to customers. The Company records guest payments, net of service fees, as funds receivable and amounts held on behalf of customers with a corresponding amount in funds payable and amounts payable to customers when cash is received in advance of check-in. Host and guest fees are recorded as cash with a corresponding amount in unearned fees. For certain bookings, a guest may opt to pay a percentage of the total amount due when the booking is confirmed, with the remaining balance due prior to the stay occurring (the “Pay Less Upfront Program”). Under the Pay Less Upfront Program, when the Company receives the first installment payment from the guest upon confirmation of the booking, the Company records the first installment payment as funds receivable and amounts held on behalf of customers with a corresponding amount in funds payable and amounts payable to customers, net of the Host and guest fees. The full value of the service fees is recorded as cash and cash equivalents and unearned fees upon receipt of the first installment payment to represent what the Company expects to be recognized as revenue if the underlying booking is not canceled. Upon receipt of the second installment, such payment amounts are also recorded as funds receivable and amounts held on behalf of customers with a corresponding amount in funds payable and amounts payable to customers. Following check-in, the Company remits funds due to Hosts and recognizes unearned fees as revenue as its performance obligation is satisfied. Bad Debt The Company generally collects funds related to bookings from guests on behalf of Hosts prior to check-in. However, in limited circumstances the Company disburses funds to a Host or a guest on behalf of a counterparty guest or Host prior to collecting such amounts from the counterparty. Such uncollected balances generally arise from the timing of payments and collections related to a dispute resolution between the guest and Host or certain alterations to stays and are included in prepaids and other current assets on the consolidated balance sheets. The Company records a customer receivable allowance for credit losses for funds that may never be collected. The Company estimated its exposure to balances deemed to be uncollectible based on factors including known facts and circumstances, historical experience, reasonable and supportable forecasts of economic conditions, and the age of the uncollected balances. The Company writes off the asset when it is determined to be uncollectible. Bad debt expense was $ 27 million, $ 49 million and $ 60 million for the years ended December 31, 2021, 2022 and 2023, respectively. Cost of Revenue Cost of revenue primarily consists of payment processing charges, including merchant fees and chargebacks, costs associated with third-party data centers used to host the Company’s platform, and amortization of internally developed software and acquired technology. Operations and Support Operations and support costs primarily consist of personnel-related expenses and third-party service provider fees associated with customer support provided via phone, email, and chat to customers, customer relations costs, which include refunds and credits related to customer satisfaction and expenses associated with the Company’s Host protection programs, and allocated costs for facilities and information technology. These costs are expensed as incurred. 77 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Product Development Product development costs primarily consist of personnel-related expenses and third-party service provider fees incurred in connection with the development of the Company’s platform and new products as well as the improvement of existing products, and allocated costs for facilities and information technology. These costs are expensed as incurred. Sales and Marketing Sales and marketing costs primarily consist of performance and brand marketing, personnel-related expenses, including those related to field operations, portions of referral incentives and coupons, policy and communications, and allocated costs for facilities and information technology. These costs are expensed as incurred. Advertising expenses were $ 542 million, $ 786 million and $ 953 million for the years ended December 31, 2021, 2022 and 2023, respectively. General and Administrative General and administrative costs primarily consist of personnel-related expenses for executive management and administrative functions, including finance and accounting, legal, and human resources, as well as general corporate and director and officer insurance. General and administrative costs also include certain professional services fees, allocated costs for facilities and information technology expenses, indirect taxes including lodging taxes where the Company may be held jointly liable with Hosts for collecting and remitting such taxes, withholding taxes, and bad debt expense. These costs are expensed as incurred. Restructuring Charges Costs and liabilities associated with management-approved restructuring activities are recognized when they are incurred. One-time employee termination costs are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing employee termination benefits are recognized as a liability when it is probable that a liability exists and the amount is reasonably estimable. Restructuring charges are recognized as an operating expense within the consolidated statements of operations and related liabilities are recorded within accrued expenses, accounts payable, and other liabilities on the consolidated balance sheets. The Company periodically evaluates and, if necessary, adjusts its estimates based on currently available information. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax law in effect for the years in which the temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Accrued interest and penalties related to unrecognized tax benefits are recognized in the provision for (benefit from) income taxes. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that its deferred tax assets are recoverable. The Company regularly assesses all available evidence, including cumulative historic losses, forecasted earnings, if carryback is permitted under the law, carryforward periods, and prudent and feasible tax planning strategies. The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition, step one, occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination. Measurement, step two, determines the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained. Share Repurchase Share repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, or accelerated share repurchase transactions, or by any combination of such methods. Share repurchases are recorded at settlement date. When shares are retired, the value of repurchased shares is deducted from stockholders’ equity through capital with the excess over par value recorded to accumulated deficit. 78 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Stock-Based Compensation Stock-based compensation expense primarily relates to restricted stock units (“RSUs”), restricted stock awards (“RSAs”), stock options, and the Employee Stock Purchase Plan (“ESPP”). RSUs, RSAs, stock options and warrants are measured at the fair market value of the underlying stock at the grant date and the expense is recognized over the requisite service period. The fair value of stock options and ESPP shares are estimated on the date of grant using the Black-Scholes option pricing model to determine the fair value of stock options on the date of grant. The Company estimates the expected term of stock options granted based on the simplified method and estimates the volatility of its common stock on the date of grant based on the average historical stock price volatility of comparable publicly-traded companies. The simplified method calculates the expected term as the mid-point between the weighted-average time to vesting and the contractual maturity. The simplified method is used as the Company does not have sufficient historical data regarding stock option exercises. The contractual term of the Company’s stock options is ten years . The Company accounts for forfeitures as they occur. The benefits of tax deductions in excess of recognized compensation costs are recognized in the income statement as a discrete item when an option exercise or a vesting and release of shares occurs. Net Income (Loss) Per Share Attributable to Common Stockholders The Company applies the two-class method when computing net income (loss) per share attributable to common stockholders when shares are issued that meet the definition of a participating security. The two-class method determines net income (loss) per share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. The Company’s previously outstanding redeemable convertible preferred stock was a participating security as the holders of such shares participated in dividends but did not contractually participate in the Company’s losses. Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding during the period, less weighted-average shares subject to repurchase. The diluted net income (loss) per share is computed by giving effect to all potentially dilutive securities outstanding for the period, including RSUs, RSAs, stock options, and warrants using the treasury stock method, and convertible notes, using the if-converted method. For periods in which the Company reports net losses, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, because potentially dilutive common shares are anti-dilutive. Comprehensive Income (Loss) Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) reflects gains and losses that are recorded as a component of stockholders’ equity and are excluded from net income (loss). Other comprehensive income (loss) consists of unrealized gains (losses) on derivative instruments designated as cash flow hedges, net of tax, foreign currency translation adjustments related to consolidation of foreign entities and unrealized gains (losses), net of tax, on securities classified as available-for-sale. Contingencies The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company accrues for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Recently Adopted Accounting Standards In March 2022, the Financial Accounting Standards (“FASB”) issued Accounting Standards Update (“ASU”) 2022-01, Derivatives and Hedging (Topic 815) , which clarifies the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The standard is effective for public entities in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU 2017-12. The Company adopted the standard during the first quarter of 2023, which did not have an impact on the Company's consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which expands income tax disclosure requirements to include disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is effective for public companies in fiscal years beginning after December 15, 2024, and will be applied prospectively with the option to apply the standard retrospectively. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements other than the expanded footnote disclosure. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of segment expenses. The standard is effective for public entities in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the consolidated financial statements. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements other than the expanded footnote disclosure. 79 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the guidance of equity securities that are subject to a contractual sale restriction as well as includes specific disclosure requirements for such equity securities. The standard is effective for public entities in fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and will be applied prospectively. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements. There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable, and the Company does not believe any of these accounting pronouncements have had, or will have, a material impact on its consolidated financial statements or disclosures. Prior Period Reclassifications Certain immaterial amounts in prior periods have been reclassified to conform with current period presentation. Revision of Previously Issued Consolidated Financial Statements The consolidated statements of cash flows for year ended December 31, 2021, has been revised to correct for errors identified by management during the preparation of the consolidated financial statements for the three months ended March 31, 2022. The errors understated cash flows from operating activities by $ 123 million and overstated the cash flows from financing activities by $ 123 million for the year ended December 31, 2021. Management has determined that these errors did not result in the previously issued consolidated financial statements being materially misstated. These errors primarily related to the timing of tax payments from the net settlement of equity awards at the initial public offering in December 2020. In particular, in 2020, the Company reported $ 1.7 billion of cash used in financing activities to cover taxes paid related to the net share settlement of its equity awards that vested upon the initial public offering. However, approximately $ 123 million of this amount was actually remitted to taxing authorities in foreign jurisdictions during 2021. This had no impact on the Company’s consolidated financial statements outside of the presentation in the consolidated statements of cash flow and did not affect the consolidated balance sheets, consolidated statements of operations, or consolidated statements of stockholders’ equity. Note 3. Supplemental Financial Statement Information Cash, Cash Equivalents, and Restricted Cash The following table reconciles cash, cash equivalents, and restricted cash reported on the Company’s consolidated balance sheets to the total amount presented in the consolidated statements of cash flows (in millions): December 31, 2022 2023 Cash and cash equivalents $ 7,378 $ 6,874 Cash and cash equivalents included in funds receivable and amounts held on behalf of customers 4,708 5,769 Restricted cash included in prepaids and other current assets 17 24 Total cash, cash equivalents, and restricted cash presented on the consolidated statements of cash flows $ 12,103 $ 12,667 Supplemental Disclosures of Cash Flow Information Supplemental cash flow information consisted of the following (in millions): Year Ended December 31, 2021 2022 2023 Cash paid for: Income taxes, net of refunds $ 17 $ 68 $ 132 Interest $ 50 $ 8 $ 55 Operating leases $ 92 $ 102 $ 84 Noncash investing and financing activities: Net impact of non-cash changes to right-of-use assets related to modifications and reassessments of operating leases $ 18 $ ( 5 ) $ 20 Net settlement of cashless warrants exercised $ — $ — $ 202 Net settlement of cashless stock options exercised $ — $ — $ 36 80 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Supplemental disclosures of balance sheet information Supplemental balance sheet information consisted of the following (in millions): December 31, 2022 2023 Other assets, noncurrent: Property and equipment, net $ 121 $ 160 Operating lease right-of-use assets 138 119 Other 218 184 Other assets, noncurrent $ 477 $ 463 Accrued expenses, accounts payable, and other current liabilities: Indirect taxes payable and withholding tax reserves $ 624 $ 1,119 Compensation and employee benefits 380 436 Accounts payable 137 141 Operating lease liabilities, current 59 61 Other 813 897 Accrued expenses, accounts payable, and other current liabilities $ 2,013 $ 2,654 Payments to Customers The Company makes payments to customers as part of its incentive programs (composed of referral programs and marketing promotions) and refund activities. The payments are generally in the form of coupon credits to be applied toward future bookings or as cash refunds. The following table summarizes total payments made to customers (in millions): Year Ended December 31, 2021 2022 2023 Reductions to revenue $ 156 $ 284 $ 360 Charges to operations and support 69 88 96 Charges to sales and marketing expense 47 60 61 Total payments made to customers $ 272 $ 432 $ 517 Revenue Disaggregated by Geographic Region The following table presents revenue disaggregated by listing location (in millions): Year Ended December 31, 2021 2022 2023 North America $ 3,201 $ 4,210 $ 4,638 Europe, the Middle East, and Africa 1,931 2,924 3,615 Latin America 431 643 824 Asia Pacific 429 622 840 Total revenue disaggregated by geographic region $ 5,992 $ 8,399 $ 9,917 81 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Note 4. Investments The following tables summarize the Company’s investments by major security type (in millions): December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Total Estimated Fair Value Short-term investments Debt securities: Certificates of deposit $ 573 $ — $ — $ 573 Government bonds 83 — — 83 Commercial paper 574 — — 574 Corporate debt securities 965 1 ( 7 ) 959 Mortgage-backed and asset-backed securities 37 — ( 3 ) 34 Total debt securities 2,232 1 ( 10 ) 2,223 Time deposits 20 — — 20 Equity investments (1) 1 — — 1 Total short-term investments $ 2,253 $ 1 $ ( 10 ) $ 2,244 Long-term investments (2) Debt securities: Corporate debt securities $ 13 $ — $ ( 9 ) $ 4 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Total Estimated Fair Value Short-term investments Debt securities: Certificates of deposit $ 172 $ — $ — $ 172 Government bonds 332 1 — 333 Commercial paper 366 — — 366 Corporate debt securities 1,490 4 ( 3 ) 1,491 Mortgage-backed and asset-backed securities 148 1 ( 4 ) 145 Total debt securities 2,508 6 ( 7 ) 2,507 Time deposits 690 — — 690 Total short-term investments $ 3,198 $ 6 $ ( 7 ) $ 3,197 Long-term investments (2) Debt securities: Corporate debt securities $ 13 $ — $ ( 9 ) $ 4 (1) Unrealized gains (losses) on equity investments were not material for the years ended December 31, 2022 and 2023. (2) Classified within other assets, noncurrent on the consolidated balance sheets. As of December 31, 2022 and December 31, 2023, the Company did no t have any available-for-sale debt securities for which the Company recorded credit-related losses. Unrealized gains and losses, net of tax before reclassifications from AOCI to other income (expense), net were not material for the years ended December 31, 2021, 2022 and 2023. Realized gains and losses reclassified from AOCI to other income (expense), net were not material for the years ended December 31, 2021, 2022 and 2023. Debt securities in an unrealized loss position had an estimated fair value of $ 748 million and $ 777 million , and unrealized losses of $ 19 million and $ 16 million as of December 31, 2022 and 2023, respectively. A total of $ 92 million and $ 283 million of these securities, with unrealized losses of $ 13 million and $ 14 million , were in a continuous unrealized loss position for more than twelve months as of December 31, 2022 and December 31, 2023, respectively. 82 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements The following table summarizes the contractual maturities of the Company’s available-for-sale debt securities (in millions): December 31, 2023 Amortized Cost Estimated Fair Value Due within one year $ 1,406 $ 1,406 Due within one to five years 1,027 1,020 Due beyond five years 88 85 Total $ 2,521 $ 2,511 Equity Investments Gains and Losses on Marketable Equity Investments During the year ended December 31, 2021, the Company sold all of its marketable equity investments and recognized a realized net loss of $ 13 million. The realized and unrealized gains and losses on marketable equity investments were recorded in other income (expense), net on the consolidated statements of operations. Equity Investments Without Readily Determinable Fair Values The Company holds investments in privately-held companies in the form of equity securities without readily determinable fair values and in which the Company does not have a controlling interest or significant influence. These investments had a net carrying value of $ 75 million and $ 83 million as of December 31, 2022 and December 31, 2023, respectively, and are classified within other assets, noncurrent on the consolidated balance sheets. The Company recorded impairment charges of $ 3 million for the year ended December 31, 2021, and did not have any impairment charges nor downward adjustments for observable price changes during the years ended December 31, 2022 and 2023. The Company recorded upward adjustments of $ 4 million during the year ended December 31, 2023 , and did not have any upward adjustments for observable price changes during the years ended December 31, 2021 and 2022. As of December 31, 2023, the cumulative impairment and downward adjustments for observable price changes were $ 56 million. Investments Accounted for Under the Equity Method As of December 31, 2022 and December 31, 2023, the carrying values of the Company’s equity method investments were $ 14 million and $ 8 million , respectively. For the years ended December 31, 2021, 2022 and 2023, the Company recorded losses of $ 4 million, $ 5 million and $ 6 million , respectively, within other income (expense), net on the consolidated statements of operations, representing its proportionate share of net income or loss based on the investee’s financial results. There were no impairment charges for the years ended December 31, 2021, 2022 and 2023. 83 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Note 5. Fair Value Measurements and Financial Instruments The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis (in millions): December 31, 2022 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 2,326 $ — $ — $ 2,326 Certificates of deposit 26 — — 26 Government bonds — 32 — 32 Commercial paper — 327 — 327 Corporate debt securities — 68 — 68 Total cash equivalents at fair value 2,352 427 — 2,779 Short-term investments: Certificates of deposit 573 — — 573 Government bonds — 83 — 83 Commercial paper — 574 — 574 Corporate debt securities — 959 — 959 Mortgage-backed and asset-backed securities — 34 — 34 Equity investments 1 — — 1 Total short-term investments at fair value 574 1,650 — 2,224 Funds receivable and amounts held on behalf of customers: Money market funds 501 — — 501 Prepaids and other current assets: Foreign exchange derivative assets — 14 — 14 Other assets, noncurrent: Corporate debt securities — — 4 4 Total assets at fair value $ 3,427 $ 2,091 $ 4 $ 5,522 Liabilities Accrued expenses, accounts payable, and other current liabilities: Foreign exchange derivative liabilities $ — $ 31 $ — $ 31 Total liabilities at fair value $ — $ 31 $ — $ 31 84 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements December 31, 2023 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Money market funds $ 2,018 $ — $ — $ 2,018 Certificates of deposit — 1 — 1 Government bonds — 115 — 115 Commercial paper — 223 — 223 Corporate debt securities — 12 — 12 Total cash equivalents at fair value 2,018 351 — 2,369 Short-term investments: Certificates of deposit — 172 — 172 Government bonds — 333 — 333 Commercial paper — 366 — 366 Corporate debt securities — 1,491 — 1,491 Mortgage-backed and asset-backed securities — 145 — 145 Total short-term investments at fair value — 2,507 — 2,507 Funds receivable and amounts held on behalf of customers: Money market funds 1,360 — — 1,360 Prepaids and other current assets: Foreign exchange derivative assets — 27 — 27 Other assets, noncurrent: Corporate debt securities — — 4 4 Total assets at fair value $ 3,378 $ 2,885 $ 4 $ 6,267 Liabilities Accrued expenses, accounts payable, and other current liabilities: Foreign exchange derivative liabilities $ — $ 55 $ — $ 55 Other liabilities, noncurrent: Foreign exchange derivative liabilities — 5 — 5 Total liabilities at fair value $ — $ 60 $ — $ 60 There were no transfers of financial instruments between valuation levels during the years ended December 31, 2022 and 2023. There were no material changes in unrealized losses included in other comprehensive income relating to investments measured at fair value for which the Company has utilized Level 3 inputs to determine fair value during the years ended December 31, 2021, 2022 and 2023. Note 6 . Derivative Instruments and Hedging The Company has a portion of its business denominated and transacted in foreign currencies, which subjects the Company to foreign exchange risk, and uses derivative instruments to manage financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for trading or speculative purposes. The Company may elect to designate certain derivatives to partially offset its business exposure to foreign exchange risk. However, the Company may choose not to hedge certain exposures for a variety of reasons including accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. Foreign Exchange Risk To protect revenue from fluctuations in foreign currency exchange rates, the Company may enter into forward contracts, option contracts, or other instruments, and may designate these instruments as cash flow hedges. The Company generally hedges portions of its forecasted foreign currency exposure associated with revenue, typically for up to 18 months. In the first quarter of 2023, the Company initiated a foreign exchange cash flow hedging program to minimize the effects of foreign currency fluctuations on future revenue. The Company may also enter into derivative instruments that are not designated as accounting hedges to offset a portion of the foreign currency exchange gains and losses generated by the remeasurement of certain assets and liabilities denominated in non-functional currencies. 85 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements The following table summarizes the effect of derivative instruments on the Company’s consolidated balance sheets (in millions): Derivative Assets (1) Fair value as of December 31, Location 2022 2023 Derivatives designated as hedging instruments: Foreign exchange contracts (current) Prepaids and other current assets $ — $ 4 Derivatives not designated as hedging instruments: Foreign exchange contracts (current) Prepaids and other current assets $ 14 $ 23 Derivative Liabilities (1) Fair value as of December 31, Location 2022 2023 Derivatives designated as hedging instruments: Foreign exchange contracts (current) Accrued expenses, accounts payable, and other current liabilities $ — $ 25 Foreign exchange contracts (noncurrent) Other liabilities, noncurrent — 5 Total derivatives designated as hedging instruments $ — $ 30 Derivatives not designated as hedging instruments: Foreign exchange contracts (current) Accrued expenses, accounts payable, and other current liabilities $ 31 $ 30 (1) Derivative assets and derivatives liabilities are measured using Level 2 inputs. To limit credit risk, the Company generally enters into master netting arrangements with the respective counterparties to the Company’s derivative contracts, under which the Company is allowed to settle transactions with a single net amount payable by one party to the other. As of December 31, 2023, the potential effect of these rights of off-set associated with the Company’s derivative contracts would be a reduction to both derivative assets and liabilities of $ 26 million, resulting in net derivative assets of $ 1 million and net derivative liabilities of $ 34 million. The effect of derivative instruments designated as hedging instruments on the consolidated statements of operations was not material for the year ended December 31, 2023. Effect of Derivative Instruments Designated as Hedging Instruments on AOCI The following table summarizes the activity of derivative instruments designated as cash flow hedges before reclassifications from AOCI to revenue and the impact of these derivative contracts on AOCI, net of tax (in millions): Year Ended December 31, 2023 Derivatives designated as cash flow hedges: Foreign exchange contracts (1) $ ( 30 ) (1) Loss recognized in other comprehensive income (loss). As of December 31, 2023, cumulative unrealized losses recorded in AOCI, net of tax, related to derivative instruments designated as hedging instruments were $ 31 million. 86 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Effect of Derivative Instruments not Designated as Hedging Instruments on the Consolidated Statements of Operations The following table presents the activity of derivative instruments not designated as hedging instruments and the impact of these derivative contracts on the consolidated statements of operations (in millions): Realized Gain (Loss) on Derivatives Unrealized Gain (Loss) on Derivatives Year Ended December 31, Year Ended December 31, 2021 2022 2023 2021 2022 2023 Derivatives not designated as hedging instruments: Foreign exchange contracts $ 19 $ 92 $ ( 43 ) $ 35 $ ( 33 ) $ 10 Cash Flow Hedges The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was $ 2.0 billion as of December 31, 2023. As of December 31, 2023, approximately $ 11 million of deferred net losses on both outstanding and matured derivatives in AOCI are expected to be reclassified to revenue during the next 12 months concurrent with the underlying hedged transactions which will be recorded in revenue. Actual amounts ultimately reclassified to revenue are dependent on the exchange rates in effect when derivative contracts currently outstanding mature. Derivatives not Designated as Hedging Instruments As of both December 31, 2022 and December 31, 2023, the total notional amount of outstanding derivatives not designated as hedging instruments was $ 2.4 billion. Note 7. Goodwill and Intangible Assets In November 2023, the Company completed an acquisition, which increased goodwill and intangible assets. The acquisition was not material to the Company’s financial results. Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2023 were as follows (in millions): Amount Balance as of December 31, 2021 $ 653 Foreign currency translation adjustments ( 3 ) Balance as of December 31, 2022 650 Acquisition 101 Foreign currency translation adjustments 1 Balance as of December 31, 2023 $ 752 Intangible Assets As of December 31, 2022 and 2023, intangible assets, net was $ 34 million and $ 40 million, respectively, and primarily consisted of listing relationships, technology and trade names. Amortization expense related to intangible assets for the years ended December 31, 2021, 2022 and 2023 was $ 24 million, $ 19 million and $ 13 million, respectively. The accumulated amortization related to intangible assets as of December 31, 2022 and 2023, was $ 43 million and $ 55 million, respectively. 87 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Estimated future amortization expense for intangible assets as of December 31, 2023 was as follows (in millions): Year Ending December 31, Amount 2024 $ 12 2025 11 2026 8 2027 4 2028 4 Thereafter 1 Total future amortization expense $ 40 Note 8. Property and Equipment, Net Property and equipment, net, consisted of the following (in millions): December 31, 2022 2023 Leasehold improvements $ 152 $ 90 Computer software and capitalized internal-use software 164 51 Computer equipment 32 22 Buildings and land 17 17 Office furniture and equipment 23 8 Construction in progress 45 82 Total property and equipment, gross 433 270 Less: Accumulated depreciation and amortization ( 312 ) ( 110 ) Total property and equipment, net $ 121 $ 160 Depreciation expense related to property and equipment for the years ended December 31, 2021, 2022 and 2023 was $ 86 million, $ 43 million and $ 18 million , respectively. During the years ended December 31, 2021, 2022 and 2023, amortization of capitalized internal-use software costs was $ 66 million, $ 28 million and $ 13 million , respectively. The net carrying value of capitalized internal-use software as of December 31, 2022 and 2023 was $ 9 million and $ 27 million , respectively. Note 9. Leases The Company’s material operating leases consist of office space. The Company’s leases generally have remaining terms of one to 15 years, some of which include one or more options to extend the leases up to 10 years. Additionally, some lease contracts include termination options. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods. The components of lease cost were as follows (in millions): Year Ended December 31, 2021 2022 2023 Operating lease cost (1) $ 83 $ 77 $ 58 Short-term lease cost (1) 3 2 6 Variable lease cost (1) 14 17 16 Lease cost, net (2) $ 100 $ 96 $ 80 (1) Classified within operations and support, product development, sales and marketing, and general and administrative expenses on the consolidated statements of operations. (2) Lease costs do not include lease impairments due to restructuring. Refer to Note 18, Restructuring , for additional information. Lease term and discount rate were as follows: December 31, 2022 2023 Weighted-average remaining lease term (years) 6.0 5.3 Weighted-average discount rate 7.0 % 7.2 % 88 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Maturities of lease liabilities (excluding short-term leases) were as follows as of December 31, 2023 (in millions): Year Ending December 31, Amount 2024 $ 81 2025 75 2026 79 2027 31 2028 28 Thereafter 102 Total lease payments 396 Less: Imputed interest ( 83 ) Present value of lease liabilities 313 Less: Current portion of lease liabilities ( 61 ) Total long-term lease liabilities $ 252 Note 10 . Debt Convertible Senior Notes On March 8, 2021, the Company issued $ 2.0 billion aggregate principal amount of 0 % convertible senior notes due 2026 (the "2026 Notes") pursuant to an indenture, dated March 8, 2021 (the "Indenture"), between the Company and U.S. Bank National Association, as trustee. The 2026 Notes were offered and sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. As of both December 31, 2022 and December 31, 2023, total outstanding debt, net of unamortized debt discount and debt issuance costs, was $ 2.0 billion and the effective interest rate was 0.2 %. Debt issuance costs related to the 2026 Notes totaled $ 21 million and were comprised of commissions payable to the initial purchasers and third-party offering costs and are amortized to interest expense using the effective interest method over the contractual term. The Company recorded interest expense of $ 3 million for the year ended December 31, 2021 and $ 4 million for both the years ended December 31, 2022 and 2023, representing amortization of debt discount and debt issuance costs. The 2026 Notes are senior unsecured obligations of the Company and will not bear regular interest. The 2026 Notes mature on March 15, 2026, unless earlier converted, redeemed, or repurchased. The proceeds received in 2021, net of debt issuance costs, were $ 1,979 million. The initial conversion rate for the 2026 Notes is 3.4645 shares of the Company's Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $ 288.64 per share of the Class A common stock. The conversion rate and conversion price are subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture. The 2026 Notes will be convertible at the option of the holders before December 15, 2025 only upon the occurrence of certain events, and from and after December 15, 2025, at any time at their election until the close of business on the second scheduled trading day immediately preceding March 15, 2026, only under certain circumstances. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as applicable, cash, shares of the Company’s Class A common stock, or a combination of cash and shares of the Company’s Class A common stock, at the Company’s election, based on the applicable conversion rate. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. Additionally, in the event of a corporate event constituting a fundamental change (as defined in the Indenture), holders of the 2026 Notes may require the Company to repurchase all or a portion of their 2026 Notes at a repurchase price equal to 100 % of the principal amount of the Notes being repurchased, plus accrued and unpaid special interest or additional interest, if any, to, but excluding, the date of the fundamental change repurchase. As of December 31, 2023, the if-converted value of the 2026 Notes did not exceed the outstanding principal amount. As of December 31, 2023 the total estimated fair value of the 2026 Notes was $ 1.8 billion and was determined based on a market approach using actual bids and offers of the 2026 Notes in an over-the-counter market on the last trading day of the period, or Level 2 inputs. Capped Calls On March 3, 2021, in connection with the pricing of the 2026 Notes, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers and other financial institutions (the "option counterparties") at a cost of $ 100 million. The Capped Calls cover, subject to customary adjustments, the number of shares of Class A common stock initially underlying the 2026 Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its Class A common stock (or, in the event a conversion of the 2026 Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the 2026 Notes its common stock price exceeds the conversion price of the 2026 Notes. The cap price of the Capped Calls was $ 360.80 per share of Class A common stock, which represented a premium of 100 % over the last reported sale price of the Class A common stock of $ 180.40 per share on March 3, 2021, subject to certain customary adjustments under the terms of the Capped Calls. The Capped Calls meet the criteria for classification in equity, are not remeasured each reporting period, and are included as a reduction to additional paid-in-capital within stockholders’ equity. 89 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Term Loans In 2020, the Company entered into a $ 1.0 billion First Lien Credit and Guaranty Agreement (the “First Lien Credit Agreement,” and the loans thereunder, the “First Lien Loan”), resulting in proceeds of $ 961 million, net of debt discount and debt issuance costs of $ 39 million. In 2020, the Company entered into a $ 1.0 billion Second Lien Credit and Guaranty Agreement (the “Second Lien Credit Agreement,” and the loans thereunder, the “Second Lien Loan”), resulting in net proceeds of $ 968 million, net of debt discount and debt issuance costs of $ 33 million. In 2021, the Company repaid the principal amount outstanding of $ 2.0 billion under the First Lien Loan and Second Lien Loan, which resulted in a loss of extinguishment of debt of $ 377 million, including early redemption premiums of $ 213 million and a write-off of $ 164 million of unamortized debt discount and debt issuance costs. The loss on extinguishment of debt was included in interest expense on the consolidated statements of operations. In 2021, the Company fully amortized the debt discount and debt issuance costs of $ 41 million to interest expense using the effective interest rate method. In connection with the Second Lien Loan, the Company issued warrants to purchase 7.9 million shares of Class A common stock with an initial exercise price of $ 28.355 per share, subject to adjustment upon the occurrence of certain specified events, to the Second Lien Loan lenders. The warrants expire on April 17, 2030 and the exercise price can be paid in cash or in net shares at the holder’s option. The fair value of the warrants at issuance was $ 117 million and was recorded as a liability in accrued expenses, accounts payable, and other current liabilities on the consolidated balance sheets with a corresponding debt discount recorded against the Second Lien Loan. The warrant liability was remeasured to fair value at each reporting date for as long as the warrants remained outstanding and unexercised with changes in fair value recorded in other income (expense), net on the consolidated statements of operations. As of December 31, 2020, the fair value of the warrant totaled $ 985 million. On March 30, 2021, the Company amended the anti-dilution feature in the warrant agreements, which resulted in a change in classification from liability to equity. Accordingly, during the first quarter of 2021, the Company recorded $ 292 million in other income (expense), net on the consolidated statements of operations. The liability balance of $ 1.3 billion was then reclassified to equity as the amended warrants met the requirements for equity classification. 2022 Credit Facility In October 2022, the Company terminated its then existing credit facility and entered into a five-year unsecured Revolving Credit Agreement, which provides for initial commitments by a group of lenders led by Morgan Stanley Senior Funding, Inc. of $ 1.0 billion (“2022 Credit Facility”). The 2022 Credit Facility provides a $ 200 million sub-limit for the issuance of letters of credit. The 2022 Credit Facility has a commitment fee based on ratings and leverage ratios with amounts that range from 0.10 % to 0.20 % per annum on any undrawn amounts, payable quarterly in arrears. Interest on borrowings is based on ratings and leverage ratios with amounts that range from (i) in the case of the Secured Overnight Financing Rate (“SOFR”) borrowings, 1.0 % to 1.5 %, plus SOFR, subject to a floor of 0.0 %, or (ii) in the case of base rate borrowings, 0.0 % to 0.5 %; plus the greatest of (a) the rate of interest in effect for such day by Morgan Stanley Senior Funding, Inc. as its “prime rate”; (b) the federal funds effective rate plus 0.5 %; and (c) SOFR for a one-month period plus 1.0 %. Outstanding balances may be repaid prior to maturity without penalty. The 2022 Credit Facility contains customary events of default, affirmative and negative covenants, including restrictions on the Company’s and certain of its subsidiaries’ ability to incur debt and liens, undergo fundamental changes, as well as certain financial covenants. The Company was in compliance with all financial covenants as of December 31, 2023. As of December 31, 2023, no amounts were drawn under the 2022 Credit Facility and outstanding letters of credit totaled $ 29 million. Note 11. Stockholders’ Equity Common Stock The Company’s restated certificate of incorporation authorizes the Company to issue 2.0 billion shares of Class A common stock and 710.0 million shares of Class B common stock. Both classes of common stock have a par value of $ 0.0001 per share. Class A common stock is entitled to one vote per share and Class B common stock is entitled to 20 votes per share. One share of Class B common stock is convertible into one share of Class A common stock voluntarily at any time by the holder, and will convert automatically into one share of Class A common stock upon the earlier of (a) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least 80 % of the outstanding shares of Class B common stock at the time of such vote or consent voting as a separate series, and (b) the 20 -year anniversary of the closing of the IPO. In addition, with certain exceptions as further described in the Company's restated certificate of incorporation, transfers of one share of Class B common stock will result in the conversion of such share of Class B common stock into one share of Class A common stock. Under the Company’s restated certificate of incorporation, the Company is also authorized to issue 2.0 billion shares of Class C common stock and 26.0 million shares of Class H common stock. Each share of Class C common stock is entitled to no votes and will not be convertible into any other shares of the Company’s capital stock. Each share of Class H common stock is entitled to no votes and will convert into one share of Class A common stock on a share-for-share basis upon the sale of such share of Class H common stock to any person or entity that is not the Company’s subsidiary. Class A Common Stock Warrants As of December 31, 2022 and 2023, the Company had 7.9 million and 0.8 million warrants outstanding, respectively, with an exercise price of $ 28.355 per share, subject to adjustment upon the occurrence of certain specified events. During the year ended December 31, 2023, warrant holders exercised warrants to purchase 7.1 million shares of Class A common stock. The warrants were exercised on a cashless basis resulting in the issuance of 5.6 million shares of Class A common stock. 90 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Share Repurchase Programs On August 2, 2022 and May 9, 2023, the Company announced that its board of directors had approved share repurchase programs to purchase up to $ 2.0 billion and $ 2.5 billion of the Company's Class A common stock, respectively. Share repurchases under these share repurchase programs may be made through a variety of methods, such as open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions or by any combination of such methods. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. These share repurchase programs do not obligate the Company to repurchase any specific number of shares and may be modified, suspended or terminated at any time at the Company’s discretion. During the year ended December 31, 2023, the Company repurchased and subsequently retired 17.9 million shares of Class A common stock for $ 2.3 billion. As of December 31, 2023, the Company completed the repurchases under the August 2, 2022 share repurchase program and had $ 750 million available for repurchase of Class A common stock under the May 9, 2023 share repurchase program. The Inflation Reduction Act imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. For the year ended December 31, 2023, the excise tax on share repurchases was not material. Note 12. Stock-Based Compensation Stock-Based Compensation Expense The following table summarizes total stock-based compensation expense (in millions): Year Ended December 31, 2021 2022 2023 Operations and support $ 49 $ 63 $ 68 Product development 545 548 694 Sales and marketing 100 114 130 General and administrative 205 205 228 Stock-based compensation expense $ 899 $ 930 $ 1,120 The Company recognized an income tax benefit of $ 36 million, $ 19 million and $ 435 million in the consolidated statements of operations for stock-based compensation arrangements in the years ended December 31, 2021, 2022 and 2023, respectively. The income tax benefit related to stock-based compensation expense was $ 227 million for the year ended December 31, 2023. There were no income tax benefits related to stock-based compensation expense for the years ended December 31, 2021 and 2022. Equity Incentive Plans 2018 Equity Incentive Plan In 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”) to replace the 2008 Equity Incentive Plan (the “2008 Plan”). A total of 50.0 million shares of Class B common stock were reserved for issuance under the 2018 Plan and the 13.2 million shares remaining for issuance under the 2008 Plan were added to the number of shares available under the 2018 Plan. The expiration of the 2008 Plan had no impact on the terms of outstanding awards under that plan. All unvested equity canceled under the 2008 Plan was added to the 2018 Plan and made available for future issuance. Assumed Equity Incentive Plan In connection with the acquisition of HotelTonight the Company assumed stock options and RSUs under HotelTonight’s equity incentive plan (the “Assumed Equity Incentive Plan”). As of December 31, 2021, a total of 98,093 shares of the Company’s Class A common stock were issuable upon exercise of outstanding options under the Assumed Equity Incentive Plan, with weighted-average exercise price of $ 22.67 per share. In addition, as of December 31, 2021, a total of 3,512 RSUs were issued and outstanding under the Assumed Equity Incentive Plan. No additional stock options or RSUs may be granted under the Assumed Equity Incentive Plan. 2020 Incentive Award Plan In 2020, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan,” and together with the 2008 Plan, 2018 Plan, and the Assumed Equity Incentive Plan, the “Plans”). Under the 2020 Plan, 62.1 million shares of Class A common stock were initially reserved for issuance. The number of shares initially reserved for issuance pursuant to awards under the 2020 Plan will be increased by (i) the number of shares subject to awards outstanding under the 2008 Plan, Assumed Equity Incentive Plan, and 2018 Plan as of the effective date of the 2020 Plan that subsequently terminate, are exchanged for cash, surrendered or repurchased, or are tendered or withheld to satisfy any exercise price or tax withholding obligations and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (a) 5 % of the shares of all series of the Company’s common stock outstanding on the last day of the immediately preceding year and (b) such smaller number of shares of stock as determined by the Company’s board of directors; provided, however, that no more than 371.2 million shares of stock may be issued upon the exercise of incentive stock options. 91 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Stock Option and Restricted Stock Unit Activity The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option-pricing model using the range of assumptions in the following table: Year Ended December 31, 2021 2022 2023 Expected term (years) 8.0 6.1 1.4 - 6.1 Risk-free interest rate 1.1 % - 1.5 % 0.3 % - 2.2 % 3.6 % - 5.0 % Expected volatility 44.2 % - 44.9 % 48.6 % - 58.4 % 51.3 % - 54.4 % Expected dividend yield — — — A summary of stock option and RSU activity under the Plans was as follows (in millions, except per share amounts): Outstanding Stock Options Outstanding Restricted Stock Units Shares Available for Grant Number of Shares Weighted- Average Exercise Price Number of Shares Weighted- Average Grant Date Fair Value Balances as of December 31, 2021 81 24 $ 19.69 37 $ 61.22 Granted ( 13 ) 1 161.70 12 135.09 Increase in shares available for grant 32 — — — — Exercised/Vested 5 ( 3 ) 14.32 ( 12 ) 83.12 Canceled 3 — 95.93 ( 3 ) 101.58 Balances as of December 31, 2022 108 22 23.41 34 77.07 Granted ( 13 ) 1 115.15 12 122.84 Increase in shares available for grant 32 — — — — Exercised/Vested 5 ( 16 ) 5.37 ( 14 ) 93.25 Canceled 2 — 98.60 ( 2 ) 120.36 Balances as of December 31, 2023 134 7 $ 71.76 30 $ 85.35 Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value Options outstanding as of December 31, 2022 22 $ 23.41 2.78 $ 1,432 Options exercisable as of December 31, 2022 20 17.01 2.27 1,380 Options outstanding as of December 31, 2023 7 71.76 5.77 500 Options exercisable as of December 31, 2023 6 60.89 5.11 448 In May 2023, 11.2 million stock options were exercised in cashless transactions pursuant to which the Company withheld and retired 5.7 million shares of common stock, valued at their fair market value on the exercise date, to cover the related $ 567 million of employee withholding tax and $ 36 million of exercise cost. During the years ended December 31, 2021, 2022 and 2023, the weighted-average fair value of stock options granted under the Plans was $ 96.50 , $ 79.75 and $ 65.22 per share, respectively. During the years ended December 31, 2021, 2022 and 2023, the aggregate intrinsic value of stock options exercised was $ 2,825 million, $ 326 million and $ 1,620 million, respectively, and the total grant-date fair value of stock options that vested was $ 46 million, $ 45 million and $ 44 million, respectively. As of December 31, 2023, there was $ 87 million of total unrecognized compensation cost related to stock option awards granted under the Plans. The unrecognized cost as of December 31, 2023 is expected to be recognized over a weighted-average period of 2.5 years. Restricted Stock Awards The Company has granted RSAs to certain continuing employees, primarily in connection with acquisitions. Vesting of this stock is primarily dependent on a service-based vesting condition that generally becomes satisfied over a period of four years . The Company has the right to repurchase or cancel shares for which the vesting condition is not satisfied. 92 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Unvested RSAs as of December 31, 2021, 2022 and 2023 was 0.6 million, 0.4 million and 0.8 million shares, respectively, with weighted-average grant-date fair value of $ 62.32 , $ 62.33 and $ 100.04 per share, respectively. Activities related to the Company’s RSAs were not material for the years ended December 31, 2021, 2022 and 2023. Restricted Stock Units RSUs are measured at the fair market value of the underlying stock at the grant date and the expense is recognized over the requisite service period. The service-based vesting condition for these awards is generally satisfied over four years . Employee Stock Purchase Plan In December 2020, the Company’s board of directors adopted the ESPP. The maximum number of shares of Class A common stock authorized for sale under the ESPP is equal to the sum of (i) 4.0 million shares of Class A common stock and (ii) an annual increase on the first day of each year beginning in 2022 and ending in 2030, equal to the lesser of (a) 1 % of shares of common stock on the last day immediately preceding year and (b) such number of shares of common stock as determined by the board of directors; provided, however, that no more than 89.8 million shares may be issued under the ESPP. As of December 31, 2022 and 2023, the Company had reserved 8.9 million and 14.0 million shares for future issuance under the ESPP. The Company estimates the fair value of shares to be issued under the ESPP based on a combination of options valued using the Black-Scholes option-pricing model. The Company recorded stock-based compensation expense related to the ESPP of $ 33 million and $ 29 million for the years ended December 31, 2022, and 2023, respectively. The following table summarizes transactions under the Company’s ESPP (in millions except per share amounts): Year Ended December 31, 2022 2023 Shares issued 0.5 0.7 Weighted-average price per share $ 95.90 $ 88.81 Cash proceeds $ 48 $ 64 Note 13. Commitments and Contingencies Commitments The Company has commitments including purchase obligations for web-hosting services and other commitments for brand marketing. The following table presents these non-cancelable commitments and obligations as of December 31, 2023 (in millions): Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Purchase obligations $ 934 $ 203 $ 622 $ 109 $ — Other commitments 157 37 59 61 — Total $ 1,091 $ 240 $ 681 $ 170 $ — Purchase commitments include amounts related to the Company’s commercial agreement with a data hosting services provider, pursuant to which the Company committed to spend an aggregate of at least $ 842 million for vendor services through 2027. Lodging Tax Obligations and Other Non-Income Tax Matters Platform Related Taxes and Collection Obligations Some states and localities in the United States and elsewhere in the world impose transient occupancy or lodging accommodations taxes (“Lodging Taxes”) on the use or occupancy of lodging accommodations or other traveler services. As of December 31, 2023, the Company collects and remits Lodging Taxes in approximately 32,000 jurisdictions on behalf of its Hosts. Such Lodging Taxes are generally remitted to tax jurisdictions within a 30 to 90-day period following the end of each month. As of December 31, 2022 and December 31, 2023, the Company had an obligation to remit Lodging Taxes collected from guests on bookings in these jurisdictions totaling $ 251 million and $ 274 million, respectively. These payables were recorded in accrued expenses, accounts payable, and other current liabilities on the consolidated balance sheets. In jurisdictions where the Company does not collect and remit Lodging Taxes, Hosts are primarily responsible for such taxes. The Company has estimated Lodging Tax liabilities in a certain number of jurisdictions with respect to state, city, and local taxes where management believes it is probable that the Company can be held jointly liable with Hosts for taxes and the related amounts can be reasonably estimated. As of December 31, 2022 and December 31, 2023, accrued obligations related to these estimated taxes, including estimated penalties and interest, totaled $ 71 million and $ 114 million, respectively. As of December 31, 2023, the Company estimates that the reasonably possible loss related to certain Lodging Taxes that can be determined in excess of the amounts accrued is between $ 35 million to $ 45 million; however, no assurance can be given as to the outcomes and the Company could be subject to significant additional tax liabilities. With respect to all other jurisdictions’ Lodging Taxes for which a loss is probable or reasonably possible, the Company is unable to determine an estimate of the possible loss or range of loss beyond the amounts already accrued. 93 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements The Company’s potential obligations with respect to Lodging Taxes could be affected by various factors, which include, but are not limited to, whether the Company determines or any tax authority asserts that the Company has a responsibility to collect lodging and related taxes on either historical or future transactions, or by the introduction of new ordinances and taxes that subject the Company’s operations to such taxes. Accordingly, the ultimate resolution of Lodging Taxes may be greater or less than the reserve amounts that the Company has recorded. The Company is currently involved in disputes brought by certain domestic and international states and localities involving the payment of Lodging Taxes. These jurisdictions are asserting that the Company is liable or jointly liable with Hosts to collect and remit Lodging Taxes. These disputes are in various stages and the Company continues to vigorously defend these claims. The Company believes that the statutes at issue impose a Lodging Tax obligation on the person exercising the taxable privilege of providing accommodations, or the Company’s Hosts. The imposition of such taxes on the Company could increase the cost of a guest booking and potentially cause a reduction in the volume of bookings on the Company’s platform, which would adversely impact the Company’s results of operations. The Company will continue to monitor the application and interpretation of lodging and related taxes and ordinances and will adjust accruals based on any new information or further developments. The Company is under audit and inquiry by various domestic and foreign tax authorities with regard to non-income tax matters. The subject matter of these contingent liabilities primarily arises from the Company’s transactions with its customers, as well as the tax treatment of certain employee benefits and related employment taxes. In jurisdictions with disputes connected to transactions with customers, disputes involve the applicability of transactional taxes (such as sales, value-added, and similar taxes) to services provided, as well as the applicability of withholding tax on payments made to such Hosts. As of December 31, 2022 and 2023, the Company accrued a total of $ 135 million and $ 521 million of estimated tax liabilities, including interest and penalties, related to Hosts’ withholding tax obligations, respectively. In the year ended December 31, 2023, based upon new information, and interest expense connected to historic Host withholding reserves, the Company accrued $ 384 million of expense related to foreign and domestic Hosts’ withholding tax obligations. As of December 31, 2023, the Company estimates that the reasonably possible loss related to withholding income taxes that can be determined in excess of the amounts accrued is between $ 90 million to $ 110 million; however, no assurance can be given as to the outcomes and the Company could be subject to significant additional tax liabilities. Due to the inherent complexity and uncertainty of these matters and judicial processes in certain jurisdictions, the final outcomes may exceed the estimated liabilities recorded. The Company has identified reasonably possible exposures related to transactional taxes and business taxes and has not accrued for these amounts since the likelihood of the contingent liability is less than probable. As of December 31, 2023, the Company estimates that the reasonably possible loss related to these matters in excess of the amounts accrued is between $ 290 million and $ 310 million; however, no assurance can be given as to the outcomes and the Company could be subject to significant additional tax liabilities. In 2017, Italy passed a law purporting to require short-term rental platforms that process payments to withhold and remit Host income tax and collect and remit tourist tax, amongst other obligations (“2017 Law”). The Company has challenged this law before the Italian courts and the Court of Justice of the European Union (“CJEU”). In December 2022, the CJEU found that European law does not prohibit member states from passing legislation requiring short-term rental platforms to withhold income taxes from their hosts, however a requirement to appoint a tax representative, on which the 2017 Law and the withholding obligations are based, is contrary to European Union (“EU”) law. In October 2023, the Italian national court upheld the ruling of the CJEU. The Company’s subsidiary in Italy and subsidiary in Ireland continue to be, or could be in the future be, subject to tax audits in Italy, including in relation to permanent establishment, transfer pricing, and withholding obligations. In May 2023, the Guardia di Finanza de Milano issued a Tax Audit Report recommending to the Italian tax authorities a formal tax assessment of 779 million Euro on Airbnb’s subsidiary in Ireland relating to the 2017 Law and associated withholding tax obligations. On December 13, 2023, without admitting any liability, Airbnb Ireland signed an agreement with the Italian Revenue Agency in settlement of the 2017-2021 audit period for an aggregate payment of 576 million Euro ($ 621 million). Such agreement settles a dispute about Airbnb Ireland’s obligations to withhold and remit Host income tax, including taxes, interest, and penalties, for those relevant periods. The 2022-2023 tax periods remain open. With respect to all other withholding tax on payments made to Hosts and transactional taxes for which a loss is probable or reasonably possible, the Company is unable to determine an estimate of the possible loss or range of loss beyond the amounts already accrued. Payroll Taxes The Company is subject to regular payroll tax examinations by various international, state and local jurisdictions. Although management believes its tax withholding remittance practices are appropriate, the Company may be subject to additional tax liabilities, including interest and penalties, if any tax authority disagrees with the Company’s withholding and remittance practices, or if there are changes in laws, regulations, administrative practices, principles or interpretations related to payroll tax withholding in the various international, state and local jurisdictions. In addition, as of December 31, 2022 and 2023, the Company accrued a total of $ 33 million and $ 43 million of estimated tax liabilities related to employment taxes on certain employee benefits, respectively. Refer to Note 14, Income Taxes, for further discussion on other tax matters. Legal and Regulatory Matters The Company has been and is currently a party to various legal and regulatory matters arising in the normal course of business. Such 94 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements proceedings and claims, even if not meritorious, can require significant financial and operational resources, including the diversion of management’s attention from the Company’s business objectives. Regulatory Matters The Company operates in a complex legal and regulatory environment and its operations are subject to various U.S. and foreign laws, rules, and regulations, including those related to: Internet activities; short-term rentals, long-term rentals and home sharing; real estate, property rights, housing and land use; travel and hospitality; privacy and data protection; intellectual property; competition; health and safety; protection of minors; consumer protection; employment; payments, money transmission, economic and trade sanctions, anti-corruption and anti-bribery; taxation; and others. In addition, the nature of the Company’s business exposes it to inquiries and potential claims related to the compliance of the business with applicable law and regulations. In some instances, applicable laws and regulations do not yet exist or are being applied, interpreted or implemented to address aspects of the Company’s business, and such adoption or interpretation could further alter or impact the Company’s business. In certain instances, the Company has been party to litigation with municipalities relating to or arising out of certain regulations. In addition, the implementation and enforcement of regulation can have an impact on the Company’s business. Intellectual Property The Company has been and is currently subject to claims relating to intellectual property, including alleged patent infringement. Adverse results in such lawsuits may include awards of substantial monetary damages, costly royalty or licensing agreements, or orders preventing the Company from offering certain features, functionalities, products, or services, and may also cause the Company to change its business practices or require development of non-infringing products or technologies, which could result in a loss of revenue or otherwise harm its business. To date, the Company has not incurred any material costs as a result of such cases and has not recorded any material liabilities in its consolidated financial statements related to such matters. Litigation and Other Legal Proceedings The Company is currently involved in, and may in the future be involved in, legal proceedings, claims, and government investigations in the ordinary course of business. These include proceedings, claims, and investigations relating to, among other things, regulatory matters, commercial matters, intellectual property, competition, tax, employment, pricing, discrimination, consumer rights, personal injury, and property rights. Depending on the nature of the proceeding, claim, or investigation, the Company may be subject to monetary damage awards, fines, penalties, and/or injunctive orders. Furthermore, the outcome of these matters could materially adversely affect the Company’s business, results of operations, and financial condition. The outcomes of legal proceedings, claims, and government investigations are inherently unpredictable and subject to significant judgment to determine the likelihood and amount of loss related to such matters. While it is not possible to determine the outcomes, the Company believes based on its current knowledge that the resolution of all such pending matters will not, either individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows. The Company establishes an accrued liability for loss contingencies related to legal matters when a loss is both probable and reasonably estimable. These accruals represent management’s best estimate of probable losses. Such currently accrued amounts are not material to the Company’s consolidated financial statements. However, management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. Until the final resolution of legal matters, there may be an exposure to losses in excess of the amounts accrued. With respect to outstanding legal matters, based on current knowledge, the amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows. Legal fees are expensed as incurred. Host Protections The Company offers AirCover coverage, which includes but is not limited to, the Company’s Host Damage Protection program that provides protection of up to $ 3 million for direct physical loss or damage to a Host’s covered property caused by guests during a confirmed booking and when the Host and guest are unable to resolve the dispute. The Company retains risk and also maintains insurance from third parties on a per claim basis to protect the Company’s financial exposure under this program. In addition, through third-party insurers and self-insurance mechanisms, including a wholly-owned captive insurance subsidiary, the Company provides insurance coverage for third-party bodily injury or property damage liability claims that occur during a stay. The Company’s Host Liability Insurance and Experiences Liability Insurance consists of a commercial general liability policy, with Hosts and the Company as named insureds and landlords of Hosts as additional insureds. The Host Liability Insurance and Experiences Liability Insurance provides primary coverage for up to $ 1 million per occurrence, subject to a $ 1 million cap per listing location, and includes various market standard conditions, limitations, and exclusions. Indemnifications The Company has entered into indemnification agreements with certain of its employees, officers and directors. The indemnification agreements and the Company’s Amended and Restated Bylaws (the “Bylaws”) require the Company to indemnify its directors and officers and those employees who have entered into indemnification agreements to the fullest extent not prohibited by Delaware law. Subject to certain limitations, the indemnification agreements and Bylaws also require the Company to advance expenses incurred by its directors and officers and those employees who have entered into indemnification agreements. No demands have been made upon the Company to provide indemnification or advancement under the indemnification agreements or the Bylaws, and thus, there are no indemnification or 95 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements advancement claims that the Company is aware of that could have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows. In the ordinary course of business, the Company has included limited indemnification provisions in certain agreements with parties with whom the Company has commercial relations, which provisions are of varying scope and terms with respect to indemnification of certain matters, which may include losses arising out of the Company’s breach of such agreements or out of intellectual property infringement claims made by third parties. It is not possible to determine the maximum potential loss under these indemnification provisions due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, no significant costs have been incurred, either individually or collectively, in connection with the Company’s indemnification provisions. Note 14. Income Taxes The domestic and foreign components of income (loss) before income taxes were as follows (in millions): Year Ended December 31, 2021 2022 2023 Domestic $ ( 390 ) $ 1,820 $ 1,913 Foreign 90 169 189 Income (loss) before income taxes $ ( 300 ) $ 1,989 $ 2,102 The components of the provision for (benefit from) income taxes were as follows (in millions): Year Ended December 31, 2021 2022 2023 Current Federal $ 5 $ 19 $ 19 State 2 10 8 Foreign 34 68 158 Total current provision for income taxes 41 97 185 Deferred Federal — — ( 2,410 ) State — — ( 461 ) Foreign 11 ( 1 ) ( 4 ) Total deferred provision for (benefit from) income taxes 11 ( 1 ) ( 2,875 ) Total provision for (benefit from) income taxes $ 52 $ 96 $ ( 2,690 ) The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate: Year Ended December 31, 2021 2022 2023 Expected income tax expense at federal statutory rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefits ( 0.7 ) 0.4 0.3 Foreign tax rate differential ( 5.1 ) 1.0 2.9 Stock-based compensation 282.4 ( 6.9 ) ( 16.7 ) Deferred tax impacts of restructuring ( 9.7 ) — — Other statutorily non-deductible expenses ( 1.1 ) 0.3 0.1 Non-deductible warrant revaluations ( 20.4 ) ( 0.1 ) — Research and development credits 51.0 ( 4.7 ) ( 5.5 ) Uncertain tax positions—prior year positions ( 3.1 ) 0.1 1.8 Uncertain tax positions—current year positions ( 1.0 ) 0.8 1.7 U.S. tax on foreign income, net of allowable credits and deductions — 0.7 3.9 Foreign-derived intangible income deduction — ( 1.9 ) ( 1.0 ) Other 1.3 0.1 0.1 Change in valuation allowance ( 331.9 ) ( 6.0 ) ( 136.6 ) Effective tax rate ( 17.3 ) % 4.8 % ( 128.0 ) % For the year ended December 31, 2021, the difference in the Company’s effective tax rate and the U.S. federal statutory tax rate was primarily due to the jurisdictional mix of earnings, excess tax benefits related to stock-based compensation, and the Company’s full valuation allowance on its U.S. deferred tax assets. 96 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements For the year ended December 31, 2022, the difference in the Company’s effective tax rate and the U.S. federal statutory tax rate was primarily due to excess tax benefits related to stock-based compensation, research and development credits, and the Company’s full valuation allowance on its U.S. deferred tax assets. For the year ended December 31, 2023, the difference in the Company’s effective tax rate and the U.S. federal statutory tax rate was primarily due to the release of $ 2.9 billion of the Company’s valuation allowance related to its U.S. deferred tax assets, excess tax benefits related to stock-based compensation, and research and development tax credits. The components of deferred tax assets and liabilities consisted of the following (in millions): December 31, 2022 2023 Deferred tax assets: Net operating loss carryforwards $ 1,539 $ 1,232 Tax credit carryforwards 664 844 Accruals and reserves 123 113 Non-income tax accruals 68 78 Stock-based compensation 111 70 Operating lease liabilities 73 62 Intangible assets 188 158 Capitalized research and development costs 413 671 Other 37 55 Gross deferred tax assets 3,216 3,283 Valuation allowance ( 3,166 ) ( 364 ) Total deferred tax assets 50 2,919 Deferred tax liabilities: Property and equipment basis differences ( 9 ) ( 18 ) Operating lease assets ( 23 ) ( 18 ) Other ( 2 ) ( 2 ) Total deferred tax liabilities ( 34 ) ( 38 ) Total net deferred tax assets $ 16 $ 2,881 The Company regularly assesses the need for a valuation allowance against its deferred tax assets each quarter. In making that assessment, the Company considers both positive and negative evidence in the various jurisdictions in which it operates related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2023, based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, the Company has concluded that it is more likely than not that its U.S. federal and state deferred tax assets will be realizable, with the exception of California research and development credits, capital loss carryovers, and certain losses subject to the dual consolidated loss rules. The Company continues to maintain a valuation allowance against its California research and development credit deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as the Company expects research and development tax credit generation to exceed its ability to use the credits in future years. When a change in valuation allowance is recognized during an interim period, the change in valuation allowance resulting from current year income is included in the annual effective tax rate and the release of valuation allowance supported by projections of future taxable income is recorded as a discrete tax benefit in the interim period. The Company released $ 2.9 billion of its valuation allowance during 2023. The Company will continue to monitor the need for a valuation allowance against its deferred tax assets on a quarterly basis. There is no valuation allowance in certain foreign jurisdictions in which it is more likely than not that deferred tax assets will be realized. The Company’s policy with respect to its undistributed foreign subsidiaries’ earnings is to consider those earnings to be indefinitely reinvested. The Company has not provided for the tax effect, if any, of limited outside basis differences of its foreign subsidiaries. The determination of the future tax consequences of the remittance of these earnings is not practicable. As of December 31, 2022 and 2023, the Company had net operating loss carryforwards for federal income tax purposes of $ 6.8 billion and $ 5.3 billion, respectively. The Company’s federal net operating loss carryforwards do not have an expiration date. As of December 31, 2022 and 2023, the Company had federal research and development tax credit carryforwards of $ 578 million and $ 720 million, respectively. The research and development tax credits will expire beginning in 2038 if not utilized. As of December 31, 2022 and 2023, the Company had net operating loss carryforwards for state income tax purposes of $ 4.8 billion and $ 4.6 billion, respectively. Some of the Company’s state net operating loss carryforwards will expire, if not utilized, beginning in 2027. As of December 31, 2022 and 2023, the Company had state research and development tax credit carryforwards of $ 399 million and $ 464 million, respectively. The research and development tax credits do not have an expiration date. 97 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements The Tax Reform Act of 1986 and similar California legislation impose substantial restrictions on the utilization of net operating losses and tax credit carryforwards in the event that there is a change in ownership as provided by Section 382 of the Internal Revenue Code and similar state provisions. Such a limitation could result in the expiration of the net operating loss carryforwards and tax credits before utilization, which could result in increased future tax liabilities. A reconciliation of the beginning and ending amount of the Company’s total gross unrecognized tax benefits was as follows (in millions): Year Ended December 31, 2021 2022 2023 Balance at beginning of year $ 508 $ 597 $ 650 Gross increases related to prior year tax positions 14 7 52 Gross decreases related to prior year tax positions ( 2 ) ( 2 ) ( 8 ) Gross increases related to current year tax positions 85 60 103 Reductions due to settlements with taxing authorities ( 1 ) ( 7 ) ( 12 ) Reduction due to lapse in statute of limitations ( 7 ) ( 5 ) ( 5 ) Balance at end of year $ 597 $ 650 $ 780 The Company is in various stages of examination in connection with its ongoing tax audits globally, and it is difficult to determine when these examinations will be settled. The Company believes that an adequate provision has been recorded for any adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company may be required to record an adjustment to the provision for (benefit from) income taxes in the period such resolution occurs. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact the Company’s tax contingencies. The timing of the resolution of income tax examinations is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months the Company may experience an increase or decrease in its unrecognized tax benefits as a result of additional assessments by various tax authorities, possibly reach resolution of income tax examinations in one or more jurisdictions, or lapses of the statute of limitations. However, an estimate of the range of the reasonably possible change in the next twelve months cannot be made. As of December 31, 2023, $ 780 million of unrecognized tax benefits represents the amount that would, if recognized, impact the Company’s effective income tax rate. The Company’s accrual for interest and penalties was $ 66 million and $ 90 million as of December 31, 2022 and 2023, respectively. The Company’s significant tax jurisdictions include the United States, California, and Ireland. The Company is currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the 2013, 2016, 2017, and 2018 tax years. The primary issue under examination in the 2013 audit is the valuation of the Company’s international intellectual property which was sold to a subsidiary in 2013. In the year ended December 31, 2019, new information became available which required the Company to remeasure its reserve for unrecognized tax benefits. The Company recorded additional tax expense of $ 196 million during the year ended December 31, 2019. In December 2020, the Company received a Notice of Proposed Adjustment (“NOPA”) from the IRS which proposed an increase to the Company’s U.S. taxable income that could result in additional income tax expense and cash liability of $ 1.3 billion plus penalties and interest, which exceeds its current reserve recorded in its consolidated financial statements by more than $ 1.0 billion. The Company disagrees with the proposed adjustment and continues to vigorously contest it. In February 2021, the Company submitted a protest to the IRS describing its disagreement with the proposed adjustment and requesting the case be transferred to the IRS Independent Office of Appeals (“IRS Appeals”). In December 2021, the Company received a rebuttal from the IRS with the same proposed adjustments that were in the NOPA. In January 2022, the Company entered into an administrative dispute process with IRS Appeals. The Company will continue to pursue all available remedies to resolve this dispute, including petitioning the U.S. Tax Court (“Tax Court”) for redetermination if an acceptable outcome cannot be reached with IRS Appeals, and if necessary, appealing the Tax Court’s decision to the appropriate appellate court. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations. If the IRS prevails in the assessment of additional tax due based on its position and such tax and related interest and penalties, if any, exceeds the Company’s current reserves, such outcome could have a material adverse impact on the Company’s financial position and results of operations, and any assessment of additional tax could require a significant cash payment and have a material adverse impact on the Company’s consolidated statements of cash flow. The Company’s 2008 to 2023 tax years remain subject to examination in the United States and California due to tax attributes and statutes of limitations, and its 2019 to 2023 tax years remain subject to examination in Ireland. There are other ongoing audits in various other jurisdictions that are not material to the Company’s consolidated financial statements. The Company remains subject to possible examination in various other jurisdictions that are not expected to result in material tax adjustments. On August 16, 2022, the Inflation Reduction Act was signed into law, with tax provisions primarily focused on implementing a 15% minimum tax (CAMT) on global adjusted financial statement income and a 1% excise tax on net share repurchases. The Inflation Reduction Act became effective beginning in fiscal year 2023 and did not have a material impact on the year ended December 31, 2023. We may be subject to a material amount of CAMT in the next several years but expect to fully utilize the corresponding tax credits generated from the CAMT in the subsequent following years. 98 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Note 15. Net Income (Loss) per Share The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders for the years indicated (in millions, except per share amounts): Year Ended December 31, 2021 2022 2023 Net income (loss) $ ( 352 ) $ 1,893 $ 4,792 Add: convertible notes interest expense, net of tax — 4 3 Net income (loss) - diluted $ ( 352 ) $ 1,897 $ 4,795 Weighted-average shares in computing net income (loss) per share attributable to Class A and Class B common stockholders: Basic 616 637 637 Effect of dilutive securities — 43 25 Diluted 616 680 662 Net income (loss) per share attributable to Class A and Class B common stockholders: Basic $ ( 0.57 ) $ 2.97 $ 7.52 Diluted $ ( 0.57 ) $ 2.79 $ 7.24 The rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to 20 votes per share. Each share of Class B common stock is convertible into a share of Class A common stock voluntarily at any time by the holder, and automatically upon certain events. The Class A common stock has no conversion rights. As the liquidation and dividend rights are identical for Class A and Class B common stock, the undistributed earnings are allocated on a proportional basis and the resulting net loss per share attributable to common stockholders will, therefore, be the same for both Class A and Class B common stock on an individual or combined basis. There were no preferred dividends declared or accumulated for the years ended December 31, 2021, 2022 and 2023. As of each December 31, 2021, 2022 and 2023, RSUs to be settled in 9.6 million shares of Class A common stock were excluded from the table below because they are subject to market conditions that were not achieved as of such date. As of December 31, 2021, 0.5 million shares of RSAs were excluded from the table below because they are subject to performance conditions that were not achieved as of such date. As of December 31, 2022 and 2023, 0.3 million shares of RSAs were excluded from the table below because they are subject to performance conditions that were not achieved as of such date. Additionally, the following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive (in millions): Year Ended December 31, 2021 2022 2023 2026 Notes (1) 11 — — Warrants 8 — — Stock options 24 1 2 RSUs 26 9 5 RSAs 1 — — Total 70 10 7 (1) Holders of the 2026 Notes who convert their 2026 Notes in connection with certain corporate events that constitute a make-whole fundamental change are entitled to an increase in the conversion rate. The 11.1 million shares represent the maximum number of shares that could have been issued upon conversion after considering the make-whole fundamental change adjustment on an unweighted basis. Note 16. Employee Benefit Plan The Company maintains a 401(k) defined contribution benefit plan that covers substantially all of its domestic employees. The plan allows U.S. employees to make voluntary pre-tax contributions in certain investments at the discretion of the employee, up to maximum annual contribution subject to Internal Revenue Code limitations. The Company matched a portion of employee contributions totaling $ 19 million, $ 23 million and $ 27 million for the years ended December 31, 2021, 2022 and 2023, respectively. Both employee contributions and the Company’s matching contributions are fully vested upon contribution. 99 Table of Contents Airbnb, Inc. Notes to Consolidated Financial Statements Note 17. Geographic Information The following table sets forth the breakdown of revenue by geography, determined based on the location of the Host’s listing (in millions): Year Ended December 31, 2021 2022 2023 United States $ 2,996 $ 3,890 $ 4,290 International (1) 2,996 4,509 5,627 Total revenue $ 5,992 $ 8,399 $ 9,917 (1) No individual international country represented 10% or more of the Company’s total revenue for years ended December 31, 2021, 2022, and 2023. The following table sets forth the breakdown of long-lived assets based on geography (in millions): December 31, 2022 2023 United States $ 203 $ 229 Ireland 36 32 Other international 20 18 Total long-lived assets $ 259 $ 279 Long-lived assets as of December 31, 2022 and 2023 consisted of property and equipment and operating lease ROU assets. Long-lived assets attributed to the United States, Ireland, and other international geographies are based upon the country in which the asset is located. Note 18. Restructuring In 2020, the Company experienced significant economic challenges associated with a severe decline in bookings, resulting primarily from COVID-19 and overall global travel restrictions. To address these impacts the Company’s management approved a restructuring plan to realign the Company’s business and strategic priorities based on the current market and economic conditions as a result of COVID-19. For the year ended December 31, 2021, the Company incurred $ 113 million in restructuring charges, including $ 75 million related to impairments of operating lease ROU assets and $ 37 million related to impairments of leasehold improvements. For the year ended December 31, 2022, the Company recorded restructuring charges of $ 89 million, which include $ 81 million relating to an impairment of operating lease ROU assets, and $ 8 million of related leasehold improvements. There were no restructuring charges recorded during 2023. Note 19. Subsequent Event In February 2024, the Company’s board of directors approved a share repurchase program (“2024 Share Repurchase Program”) with authorization to purchase up to $ 6.0 billion of the Company's Class A common stock at management’s discretion. Share repurchases under the 2024 Share Repurchase Program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions or by any combination of such methods. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The 2024 Share Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be modified, suspended or terminated at any time at the Company’s discretion. 100 Airbnb, Inc. Schedule II—Valuation and Qualifying Accounts The tables below detail the activity of the customer receivable reserve, insurance liability, and the valuation allowance on deferred tax assets for the years ended December 31, 2021, 2022 and 2023 (in millions): Balance at Beginning of Year Charged to Expenses Charges Utilized/ Write-Offs Balance at End of Year Customer Receivable Reserve Year Ended December 31, 2021 $ 91 $ 27 $ ( 87 ) $ 31 Year Ended December 31, 2022 $ 31 $ 49 $ ( 41 ) $ 39 Year Ended December 31, 2023 $ 39 $ 61 $ ( 56 ) $ 44 Balance at Beginning of Year Additions for Current Period Changes in Estimates for Prior Periods Net Payments Balance at End of Year Insurance Liability Year Ended December 31, 2021 $ 51 $ 85 $ 1 $ ( 90 ) $ 47 Year Ended December 31, 2022 $ 47 $ 140 $ ( 5 ) $ ( 121 ) $ 61 Year Ended December 31, 2023 $ 61 $ 206 $ 2 $ ( 185 ) $ 84 Balance at Beginning of Year Charged to Expenses Credited to Expenses Balance at End of Year Valuation Allowance on Deferred Tax Assets Year Ended December 31, 2021 $ 2,053 $ 1,211 $ — $ 3,264 Year Ended December 31, 2022 $ 3,264 $ — $ ( 98 ) $ 3,166 Year Ended December 31, 2023 $ 3,166 $ 95 $ ( 2,897 ) $ 364 101 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.