Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2024 refer to the year ended December 31, 2024, references to 2023 refer to the year ended December 31, 2023, and references to 2022 refer to the year ended December 31, 2022.
This section of this Annual Report on Form 10-K discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 16, 2024.
Glossary of Terms
Active booker An active booker is a unique guest who has booked a stay or experience in a given period.
Active listing We consider a listing of a home or an experience to be an active listing if it is viewable on Airbnb and has been previously booked at least once on Airbnb (excluding HotelTonight).
Available listings Available listings are accommodations and experiences that are viewable on a certain date on our platform (excluding HotelTonight).
Check-ins Check-ins represent individual stays or experiences that occur during a period that have not been canceled.
Co-hosts Co-hosts are experienced hosts who provide personalized support based on the hosts’ needs, from listing setup to managing bookings and communicating with guests.
Guest arrivals Guest arrivals represent an individual and all co-travelers included on a reservation for a stay for completed check-ins during a given period.
Hosts We count the number of hosts on our platform based on the number of users with available listings as of a certain date.
Payments to customers
We make payments to customers as part of our 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.
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Overview
We are a community based on connection and belonging—a community that was born in 2007 when two hosts welcomed three guests to their San Francisco home, and has since grown to over 5 million hosts who have welcomed over 2 billion guest arrivals in almost every country and region across the globe. Every day, hosts offer unique stays and experiences that make it possible for guests to connect with communities in a more authentic way.
We have five stakeholders and we have designed our Company with all of them in mind. Along with employees and shareholders, we serve hosts, guests, and the communities in which they live. We intend to make long-term decisions considering all of our stakeholders because their collective success is key for our business to thrive.
2024 Financial Highlights
In 2024, revenue increased by 12% to $11.1 billion compared to 2023, primarily due to a 10% increase in Nights and Experiences Booked of 43.3 million combined with higher Average Daily Rate (“ADR”) driving a 12% increase in Gross Booking Value of $8.5 billion. The growth in GBV and revenue demonstrated continued strong travel demand.
In 2024, net income decreased by 45% to $2.6 billion, compared to the prior year, primarily due to the release of the majority of our valuation allowance on U.S. federal and state deferred tax assets of $2.9 billion in 2023, and the recognition of deferred tax expense related to the utilization of some of those assets in 2024 (see Note 14, Income Taxes, to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details). This was partially offset due to a decrease in withholding taxes, associated fees, and penalties and interest expense due to a withholding tax settlement related to Italy of $770 million, $196 million and $64 million respectively.
Adjusted EBITDA 1 increased 11% to $4.0 billion in 2024 demonstrating the continued strength of our business, growth in revenue and discipline in managing our cost structure.
Our net cash provided by operating activities was $4.5 billion in 2024, compared to $3.9 billion, in the prior year. We generated Free Cash Flow 1 of $4.5 billion for the year ended December 31, 2024, compared to $3.8 billion, in the prior year.
During 2024, we repurchased an aggregate of 24.5 million shares of Class A common stock for $3.4 billion. As of December 31, 2024, we completed the repurchases under the August 2, 2022 share repurchase program and had $3.3 billion available for repurchase of Class A common stock under the May 9, 2023 share repurchase program.
Trends
Inflation and other macroeconomic pressures in the United States and the global economy, such as tariffs, foreign currency fluctuations, as well as wars and other geopolitical conflicts, have contributed to an increasingly complex business environment. As a result, our future operational results may be subject to volatility. Additionally, health-related events, political instability, acts of terrorism, and natural disasters, are examples of other events that could have a negative impact on the travel industry in the future.
Key Business Metrics and Non-GAAP Financial Measures
We track the following key business metrics and financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (“non-GAAP financial measures”) to evaluate our operating performance, identify trends, formulate financial projections, and make strategic decisions. Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance, and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their U.S. GAAP results.
These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with U.S. GAAP, and may be different from similarly titled metrics or measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided under the subsection titled “— Adjusted EBITDA Reconciliation” and “— Free Cash Flow Reconciliation” below. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.
Key Business Metrics
We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.
1 A reconciliation of non-GAAP financial information to the most comparable U.S. GAAP financial measures is provided under the subsection titled “Key Business Metrics and Non-GAAP Financial Measures— Adjusted EBITDA Reconciliation” and “— Free Cash Flow Reconciliation” below.
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The following table summarizes our key business metrics, for each period presented below (in millions, except percentages):
2023 2024 % Change
Nights and Experiences Booked 448 492 10 %
Gross Booking Value $ 73,252 $ 81,784 12 %
Nights and Experiences Booked
Nights and Experiences Booked is a key measure of the scale of our platform, which in turn drives our financial performance. Nights and Experiences Booked on our platform in a period represents the sum of the total number of nights booked for stays and the total number of seats booked for experiences, net of cancellations and alterations that occurred in that period. For example, a booking made on February 15 would be reflected in Nights and Experiences Booked for our quarter ended March 31. If, in the example, the booking was canceled on May 15, Nights and Experiences Booked would be reduced by the cancellation for our quarter ended June 30. A night can include one or more guests and can be for a listing with one or more bedrooms. Nights and Experiences Booked grows as we attract new customers to our platform and as repeat guests increase their activity on our platform. A seat is booked for each participant in an experience. Substantially all of the bookings on our platform to date have come from nights. We believe Nights and Experiences Booked is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a single unit of transaction on our platform.
The increase in our Nights and Experiences Booked was driven by strong growth across all regions.
Gross Booking Value
GBV represents the dollar value of bookings on our platform in a period and is inclusive of host earnings, service fees, cleaning fees, and taxes, net of cancellations and alterations that occurred during that period. The timing of recording GBV and any related cancellations is similar to that described in the subsection titled “— Key Business Metrics and Non-GAAP Financial Measures — Nights and Experiences Booked” above. Revenue from the booking is recognized upon check-in; accordingly, GBV is a leading indicator of revenue. The entire amount of a booking is reflected in GBV during the quarter in which booking occurs, whether the guest pays the entire amount of the booking upfront or elects to use our Pay Less Upfront program. Growth in GBV reflects our ability to attract and retain customers and reflects growth in Nights and Experiences Booked.
The increase in our GBV was primarily due to an increase in Nights and Experiences Booked, combined with a modest increase in ADR. Similar to Nights and Experiences Booked, our GBV improvement was driven by growth in bookings in all regions.
Non-GAAP Financial Measures
Our non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Margin, which are described below. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided below. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as a financial measure, should be considered as supplemental in nature, and are not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP. Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, including net income and net income margin as well as our other U.S. GAAP results. Free Cash Flow and Free Cash Flow Margin have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of other U.S. GAAP financial measures, such as net cash provided by operating activities and net cash provided by operating activities margin. Free Cash Flow and Free Cash Flow Margin do not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.
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Non-GAAP Measure Definition Purpose of Non-GAAP Measure
Adjusted EBITDA &
Adjusted EBITDA Margin Adjusted EBITDA : Net income adjusted for:
• provision for (benefit from) income taxes;
• other income (expense), net;
• interest income;
• depreciation and amortization;
• stock-based compensation expense;
• acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements, and
• lodging taxes for which we may have joint and several liability with hosts for collecting and remitting such taxes, withholding taxes on payments made to hosts and any related settlements, and transactional taxes where there is significant uncertainty as to how the taxes apply to our platform.
Adjusted EBITDA Margin : Adjusted EBITDA divided by revenue.
• Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.
• Used by management to make operating decisions such as evaluating performance, performing strategic planning, and budgeting.
Free Cash Flow & Free Cash Flow Margin
Free Cash Flow: Net cash provided by operating activities less purchases of property and equipment.
Free Cash Flow Margin : Free Cash Flow divided by revenue.
• Indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after purchases of property and equipment, that can be used for strategic initiatives.
The following table summarizes our non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure, for each period presented below (in millions, except percentages):
2023 2024
Net income $ 4,792 $ 2,648
Net income margin
48 % 24 %
Adjusted EBITDA $ 3,653 $ 4,041
Adjusted EBITDA Margin
37 % 36 %
Net cash provided by operating activities $ 3,884 $ 4,518
Net cash provided by operating activities margin
39 % 41 %
Free Cash Flow $ 3,837 $ 4,484
Free Cash Flow Margin
39 % 40 %
Adjusted EBITDA Reconciliation
The following is a reconciliation of net income to Adjusted EBITDA (in millions, except percentages):
2023 2024
Revenue $ 9,917 $ 11,102
Net income
$ 4,792 $ 2,648
Adjusted to exclude the following:
Provision for (benefit from) income taxes (2,690) 683
Other expense, net
137 40
Interest income (721) (818)
Depreciation and amortization 44 65
Stock-based compensation expense 1,120 1,407
Acquisition-related impacts (3) (7)
Lodging taxes, host withholding taxes, and transactional taxes, net
974 23
Adjusted EBITDA $ 3,653 $ 4,041
Adjusted EBITDA Margin
37 % 36 %
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The above items are excluded from our Adjusted EBITDA measure because they are non-cash in nature, or because the amount and timing of these items are unpredictable, not driven by core results of operations, and renders comparisons with prior periods and competitors less meaningful.
The increase in Adjusted EBITDA for the year ended December 31, 2024, compared to the prior year, was primarily driven by growth in revenue which was driven by the increase in the number of check-ins relating to Nights and Experiences Booked and a modest increase in ADR.
During 2023, we released $2.9 billion of our valuation allowance related to our U.S. federal and state deferred tax assets (see Note 14, Income Taxes, to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for further details).
Free Cash Flow Reconciliation
The following is a reconciliation of net cash provided by operating activities to Free Cash Flow (in millions, except percentages):
2023 2024
Revenue $ 9,917 $ 11,102
Net cash provided by operating activities $ 3,884 $ 4,518
Purchases of property and equipment (47) (34)
Free Cash Flow $ 3,837 $ 4,484
Free Cash Flow Margin
39 % 40 %
Our Free Cash Flow is impacted by the timing of GBV because we collect our service fees at the time of booking, which is generally before a stay or experience occurs. Funds held on behalf of our customers and amounts payable to our customers do not impact Free Cash Flow, except interest earned on these funds.
Geographic Mix
Our operations are global, and certain trends in our business, such as Nights and Experiences Booked, GBV, revenue, ADR, and Nights per Booking vary by geography. We measure Nights and Experiences Booked by region based on the location of the listing.
2023 % of Total 2024 % of Total % Change
(in millions, except percentages)
Nights and Experiences Booked
North America 146 33 % 154 31 % 5 %
EMEA 187 42 201 41 7
Latin America 64 14 76 16 19
Asia Pacific 51 11 61 12 20
Total 448 100 % 492 100 % 10 %
Gross Booking Value
North America $ 34,941 48 % $ 37,816 46 % 8 %
EMEA 26,241 36 29,750 36 13
Latin America 6,054 8 7,092 9 17
Asia Pacific 6,016 8 7,126 9 18
Total $ 73,252 100 % $ 81,784 100 % 12 %
Revenue
North America $ 4,638 47 % $ 5,006 45 % 8 %
EMEA 3,615 36 4,135 37 14
Latin America 824 8 969 9 18
Asia Pacific 840 9 992 9 18
Total $ 9,917 100 % $ 11,102 100 % 12 %
We saw a 2% increase in ADR in 2024 compared to the prior year, primarily due to higher ADR in EMEA, which increased by 5%.
Our total Company average nights per booking, excluding experiences, was 3.8 in 2024 compared to 3.9 in 2023. Average nights per booking in 2024 was 4.1 for North America, 3.8 for EMEA, 3.7 for Latin America, and 3.3 for Asia Pacific. We expect that our blended global average nights per booking will continue to fluctuate based on our geographic mix and changes in traveler behaviors.
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No single city represented more than 2% of our revenue before adjustments for incentives and refunds during the years ended December 31, 2023 and 2024, or more than 1% of our active listings as of December 31, 2023 and 2024.
Results of Operations
The following table sets forth our results of operations for the periods presented (in millions, except percentages):
2023 2024
Amount % of Revenue Amount % of Revenue % Change
Revenue $ 9,917 100 % $ 11,102 100 % 12 %
Costs and expenses:
Cost of revenue 1,703 17 1,878 16 10
Operations and support (1)
1,186 12 1,282 12 8
Product development (1)
1,722 17 2,056 19 19
Sales and marketing (1)
1,763 18 2,148 19 22
General and administrative (1)
2,025 20 1,185 11 (41)
Total costs and expenses 8,399 84 8,549 77 2
Income from operations 1,518 16 2,553 23 68
Interest income 721 7 818 7 13
Other expense, net
(137) (2) (40) — (71)
Income before income taxes 2,102 21 3,331 30 58
Provision for (benefit from) income taxes
(2,690) (27) 683 6 (125)
Net income $ 4,792 48 % $ 2,648 24 % (45) %
(1) Includes stock-based compensation expense as follows (in millions, except percentages):
2023 % of Total
2024 % of Total
% Change
Operations and support $ 68 6 % $ 90 6 % 32 %
Product development 694 62 % 886 63 % 28 %
Sales and marketing 130 12 % 170 12 % 31 %
General and administrative 228 20 % 261 19 % 14 %
Stock-based compensation expense $ 1,120 100 % $ 1,407 100 % 26 %
Comparison of the Years Ended December 31, 2023 and 2024
Revenue
Our revenue consists of service fees, net of incentives and refunds, charged to our customers. For stays, service fees, which are charged to customers as a percentage of the value of the booking, excluding taxes, vary based on factors specific to the booking, such as booking value, the duration of the booking, geography, and host type. For experiences, we only earn a host fee. Substantially all of our revenue comes from stays booked on our platform. Incentives include our referral programs and marketing promotions to encourage the use of our platform and attract new customers. We experience a difference in timing between when a booking is made and when we recognize revenue, which occurs upon check-in. We record the service fees that we collect from customers prior to check-in on our balance sheet as unearned fees. Revenue is net of incentives and refunds provided to customers.
(in millions, except percentages)
2023 2024 % Change
Revenue $ 9,917 $ 11,102 12 %
Revenue increased $1.2 billion, or 12%, in 2024 compared to 2023, primarily due to an increase in the number of check-ins relating to Nights and Experiences Booked and a modest increase in ADR driven by our North America and EMEA regions.
Cost of Revenue
Cost of revenue includes payment processing costs, including merchant fees and chargebacks, costs associated with third-party data centers used to host our platform, and amortization of internally developed software and acquired technology. Because we act as the merchant of record, we incur all payment processing costs associated with our bookings, and we have chargebacks, which arise from account takeovers and other fraudulent activities. Cost of revenue may vary as a percentage of revenue from year to year based on activity
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on our platform and may also vary from quarter to quarter as a percentage of revenue based on the seasonality of our business and the difference in the timing of when bookings are made and when we recognize revenue.
(in millions, except percentages)
2023 2024 % Change
Cost of revenue $ 1,703 $ 1,878 10 %
Percentage of revenue 17 % 16 %
Cost of revenue increased $175 million, or 10%, in 2024 compared to 2023, primarily due to an increase in merchant fees of $173 million, due to an increase in GBV, the impact of certain one-time incentives in 2023, and an increase in cloud computing costs of $26 million, due to increased server and data storage usage. These increases were partially offset by a reduction in chargebacks of $34 million.
Operations and Support
Operations and support expense primarily consists of personnel-related expenses and third-party service provider fees associated with community 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 our host protection programs; and allocated costs for facilities and information technology.
(in millions, except percentages)
2023 2024 % Change
Operations and support $ 1,186 $ 1,282 8 %
Percentage of revenue 12 % 12 %
Operations and support expense increased $96 million, or 8%, in 2024 compared to 2023, primarily due to a $38 million increase in payroll-related expenses, an increase in customer relations costs of $25 million, mainly due to higher nights booked, and an increase in insurance costs of $25 million, due to higher premiums as a result of higher nights booked.
Product Development
Product development expense primarily consists of personnel-related expenses and third-party service provider fees incurred in connection with the development of our platform, and allocated costs for facilities and information technology.
(in millions, except percentages)
2023 2024 % Change
Product development $ 1,722 $ 2,056 19 %
Percentage of revenue 17 % 19 %
Product development expense increased $334 million, or 19%, in 2024, compared to 2023, primarily due to a $288 million increase in payroll-related expenses.
Sales and Marketing
Sales and marketing expense primarily consists of brand and performance marketing, personnel-related expenses, including those related to our field operations, policy and communications, portions of referral incentives and coupons, and allocated costs for facilities and information technology.
(in millions, except percentages)
2023 2024 % Change
Brand and performance marketing $ 1,208 $ 1,455 20 %
Field operations and policy 555 693 25 %
Total sales and marketing $ 1,763 $ 2,148 22 %
Percentage of revenue 18 % 19 %
Sales and marketing expense increased $385 million, or 22%, in 2024, compared to 2023, primarily due to a $294 million increase in marketing activities associated with ongoing marketing campaigns and search engine marketing, a $58 million increase in payroll-related expenses, and a $26 million increase in consultant and other service provider costs.
General and Administrative
General and administrative expense primarily consists of personnel-related expenses for management and administrative functions, including finance and accounting, legal, and human resources. General and administrative expense also includes certain professional services fees, general corporate and director and officer insurance, allocated costs for facilities and information technology, indirect taxes,
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including lodging tax reserves for which we may be held jointly liable with hosts for collecting and remitting such taxes, and bad debt expense.
(in millions, except percentages)
2023 2024 % Change
General and administrative $ 2,025 $ 1,185 (41) %
Percentage of revenue 20 % 11 %
General and administrative expense decreased $840 million, or 41%, in 2024, compared to 2023, primarily due to decreased non-income taxes and related fees and penalties, partially offset by an increase in payroll-related expenses. Non-income taxes and related fees and penalties decreased $656 million and $194 million, respectively, primarily due to a withholding tax settlement related to Italy, partially off-set by an increase in payroll-related expenses of $22 million.
Interest Income
Interest income consists primarily of interest earned on our cash, cash equivalents, marketable securities, and amounts held on behalf of customers.
(in millions, except percentages)
2023 2024 % Change
Interest income $ 721 $ 818 13 %
Interest income increased $97 million, or 13%, in 2024 compared to 2023, primarily due to higher cash and investment balances.
Other Expense, Net
Other expense, net consists primarily of realized and unrealized gains and losses on foreign currency transactions and balances, unrealized gains and losses on derivatives, the change in fair value of investments and financial instruments, including our share of income or loss from our equity method investments, and interest expense, which consists primarily of interest associated with various indirect tax reserves, amortization of debt issuance and debt discount costs.
(in millions, except percentages)
2023 2024 % Change
Other expense, net
$ (137) $ (40) 71 %
The change in other expense, net of $177 million in 2024 compared to 2023 was primarily due to increased foreign exchange gains of $77 million and a decrease in interest expense of $58 million related to interest on withholding taxes recorded in 2023, partially offset by an impairment charge of $45 million on an investment in a privately-held company in 2024.
Provision for (benefit from) Income Taxes
We are subject to income taxes in the United States and foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. We expect our effective tax rate in the future to depend upon the proportion between the following items and income before income taxes: U.S. tax benefits from foreign-derived intangible income, U.S. tax on foreign income net of allowable credits, tax effects from share-based compensation, research tax credits, tax effects from capital losses not expected to be utilized, restructurings, settlement of tax contingency items, tax effects of changes in our business, and the effects of changes in tax law.
(in millions, except percentages)
2023 2024 % Change
Provision for (benefit from) income taxes $ (2,690) $ 683 125 %
Effective tax rate (128) % 21 %
The provision for income taxes during 2024 was driven by current tax on U.S. and foreign earnings and deferred tax expense resulting from prior year’s valuation allowance release on our U.S. federal and state deferred tax assets and the utilization of some of those assets in 2024. The income tax benefit for 2023, was primarily due to the release of $2.9 billion of our valuation allowance related to certain of our U.S. federal and state deferred tax assets, as a discrete tax benefit.
In 2021, the Organization for Economic Co-operation and Development (“OECD”) established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution to global taxation, focusing on global profit allocation, known to as Pillar One and a 15% global minimum effective tax rate, known as Pillar Two. In December of 2022, the EU member states agreed to implement the OECD’s global minimum tax rate of 15%. The OECD issued Pillar Two model rules and continues to release guidance on these rules. The inclusive framework calls for tax law changes by participating countries to take effect in 2024 and 2025. Various countries have enacted or have announced plans to enact new tax laws to implement the global minimum tax. We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and concluded there was no material impact to our tax provision for 2024. We will continue to evaluate the impact of these tax law changes on future reporting periods.
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Liquidity and Capital Resources
Sources and Conditions of Liquidity
As of December 31, 2024, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $10.6 billion. As of December 31, 2024, cash and cash equivalents totaled $6.9 billion, which included $2.6 billion held by our foreign subsidiaries. Cash and cash equivalents consist of checking and interest-bearing accounts and highly-liquid securities with an original maturity of 90 days or less. As of December 31, 2024, short-term investments totaled $3.7 billion. Short-term investments primarily consist of highly-liquid investment grade corporate debt securities, time deposits, commercial paper, certificates of deposit, U.S. government and government agency debt securities (“government bonds”), and mortgage-backed and asset-backed securities. These amounts do not include funds of $5.9 billion as of December 31, 2024, that we held for bookings in advance of guests completing check-ins that we record separately on our consolidated balance sheet in funds receivable and amounts held on behalf of customers with a corresponding liability in funds payable and amounts payable to customers.
Our cash and cash equivalents are generally held at large global systemically important banks (or G-SIBs), which are subject to high capital requirements and are required to regularly perform stringent stress tests related to their ability to absorb capital losses. Our cash, cash equivalents, and short-term investments held outside of the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of such funds may result in additional tax liabilities. We believe that our existing cash, cash equivalents, and short-term investments balances in the United States are sufficient to fund our working capital needs in the United States.
We have access to $1.0 billion of commitments and a $200 million sub-limit for the issuance of letters of credit under the 2022 Credit Facility. As of December 31, 2024, no amounts were drawn under the 2022 Credit Facility and outstanding letters of credit totaled $19 million. See Note 10, Debt , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for a description of the 2022 Credit Facility.
Material Cash Requirements
As of December 31, 2024, we had outstanding $2.0 billion in aggregate principal amount of indebtedness of our 0% convertible senior notes due on March 15, 2026. On March 3, 2021, in connection with the pricing of the 2026 Notes, we 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 approximately $100 million. 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 Call Transactions.
As of December 31, 2024, our total minimum lease payments were $299 million, of which $83 million is due in the succeeding 12 months. We have a commercial agreement with a data hosting services provider to spend or incur an aggregate of at least $672 million for vendor services through 2027. See Note 9, Leases , Note 10, Debt , and Note 13, Commitments and Contingencies, to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for further information regarding these commitments.
During 2024, we repurchased an aggregate of 24.5 million shares of Class A common stock for $3.4 billion through two share repurchase programs. As of December 31, 2024, we had $3.3 billion available to repurchase shares of Class A common stock under our share repurchase program.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in millions):
2023 2024
Net cash provided by operating activities $ 3,884 $ 4,518
Net cash used in investing activities (1,042) (616)
Net cash used in financing activities (2,430) (3,572)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 152 (237)
Net Cash Provided by Operating Activities
Net cash provided by operating activities in 2024 was $4.5 billion, which was primarily due to income from operations of $2.6 billion and interest income of $818 million, adjusted for non-cash items including stock-based compensation expense of $1.4 billion.
Net Cash Used in Investing Activities
Net cash used in investing activities in 2024 was $616 million, which was primarily due to purchases of short-term investments, partially offset by proceeds resulting from sales and maturities of short-term investments.
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Net Cash Used in Financing Activities
Net cash used in financing activities in 2024 was $3.6 billion, primarily due to share repurchases of $3.4 billion, and an increase in taxes paid related to net share settlement of equity awards of $630 million, partially offset by the increase in funds payable and amounts payable to customers of $320 million.
Effect of Exchange Rates
During 2024, we recorded a reduction of $237 million in cash, cash equivalents, and restricted cash, primarily due to the strengthening of the U.S. dollar. The impact of exchange rate changes on cash balances can serve as a natural hedge for the effect of exchange rates on our liabilities to our hosts and guests. The effect of exchange rate changes on cash, cash equivalents, and restricted cash on our consolidated statements of cash flows relates to certain of our assets, principally cash balances held on behalf of customers, that are denominated in currencies other than the functional currency of certain of our subsidiaries.
We assess our liquidity in terms of our ability to generate cash to fund our short and long-term cash requirements. As such, we believe that the cash flows generated from operating activities will meet our anticipated cash requirements in the short-term. In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include share repurchases, introduction of new products and offerings, timing and extent of spending to support our efforts to develop our platform, debt repayments, and expansion of sales and marketing activities. Our future capital requirements, however, will depend on many factors, including, but not limited to our growth, headcount, and ability to attract and retain customers on our platform. Additionally, we may in the future raise additional capital or incur additional indebtedness to continue to fund our strategic initiatives. On a long-term basis, we would rely on either our access to the capital markets or our credit facility for any long-term funding not provided by operating cash flows and cash on hand. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and/or debt, which may not be available on favorable terms, or at all. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be materially adversely affected. Our liquidity is subject to various risks including the risks identified in the section titled “Risk Factors” in Item IA of Part I of this Annual Report on Form 10-K and the market risks identified in the section titled "Quantitative and Qualitative Disclosures about Market Risk" in Item 7A of Part II of this Annual Report on Form 10-K.
Indemnification Agreements
In the ordinary course of business, we include limited indemnification provisions under certain agreements with parties with whom we have commercial relations of varying scope and terms. See Note 13, Commitments and Contingencies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K further information regarding our indemnification agreements.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we reconsider and evaluate our estimates and assumptions.
We base our estimates on historical experience, current trends and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from any of our estimates under different assumptions or conditions. Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K. We believe the accounting estimates listed below are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
Lodging Tax Obligations and Other Non-Income Tax Matters
In jurisdictions where we do not collect and remit lodging taxes, the responsibility for collecting and remitting these taxes, if applicable, generally rests with hosts. Airbnb is also subject to other non-income taxes primarily arising from transactions with our customers such as transactional taxes (sales, value-added, business, digital service, and similar taxes) where there may be significant uncertainty as to how the taxes apply to our platform, as well as uncertainty on the applicability of withholding taxes on certain payments made to hosts. We estimate liabilities for a certain number of jurisdictions with respect to federal, state, city, and local taxes related to lodging and other non-income taxes where we believe it is probable that Airbnb could be held liable, or, in the case of lodging taxes, jointly and severally liable with hosts for collecting and remitting such taxes, and the related amounts can be reasonably estimated. Changes to these liabilities are recorded in general and administrative expense in our consolidated statements of operations.
Evaluating potential outcomes for lodging and other non-income taxes is inherently uncertain and requires us to utilize various judgments, assumptions, and estimates in determining our liability reserves. A variety of factors could affect our potential obligation for collecting and remitting such taxes, which include, but are not limited to, whether we determine, or any tax authority asserts, that we have a responsibility to collect lodging or other non-income and related taxes on either historic or future transactions; the introduction of new ordinances and taxes which subject our operations to such taxes; or the ultimate resolution of any historic claims that may be settled. Accordingly, the ultimate resolution of lodging and other non-income taxes may be greater or less than reserve amounts we have established. See Note 13,
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Commitments and Contingencies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information.
Income Taxes
We are subject to income taxes in the United States and foreign jurisdictions. We account for income taxes using the asset and liability method. We account for uncertainty in tax positions by recognizing a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination. Evaluating our uncertain tax positions, determining our provision for (benefit from) income taxes, and evaluating the impact of tax law changes, are inherently uncertain and require making judgments, assumptions, and estimates.
In assessing the need for a valuation allowance, we consider both positive and negative evidence regarding the realizability of deferred tax assets across our operating jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. Our actual and forecasted income (loss) before provision is subject to change due to economic, political and other conditions and significant judgment is required in determining our ability to recognize our net deferred tax assets.
As of December 31, 2024, we have determined that it is more likely than not that our U.S. federal and state deferred tax assets are realizable, except for California research and development credits, capital loss carryovers, and certain losses subject to dual consolidated loss rules. We maintain a valuation allowance for California research and development credits due to uncertainty about their realizability, as they have not met the “more likely than not” criteria. Changes in valuation allowance during interim periods are reflected in the annual effective tax rate, with any releases based on future taxable income recorded as discrete tax benefits. In 2023, we released $2.9 billion of our valuation allowance and will continue to review the need for such allowances quarterly.
While we believe that we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for (benefit from) income taxes and the effective tax rate in the period in which such determination is made.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.