Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our substantial operations around the world expose us to various market risks. These risks primarily include foreign currency risk and investment risk.
Foreign Currency Exchange Risk
We offer the ability to transact on our platform in approximately 50 currencies, of which the most significant foreign currencies to our operations in 2025 were the Euro, British pound, Canadian dollar, Australian dollar, Brazilian real, and Mexican peso. Our international revenue, as well as costs and expenses denominated in foreign currencies, expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. Accordingly, we are subject to foreign currency risk, which may adversely impact our financial results.
We have foreign currency exchange risks related primarily to:
• revenue and cost of revenue associated with bookings on our platform denominated in currencies other than the U.S. dollar;
• balances held as funds receivable and amounts held on behalf of customers and funds payable and amounts payable to customers;
• unbilled amounts for confirmed bookings under the terms of our payment programs (Pay Less Upfront and Reserve Now, Pay Later); and
• intercompany balances primarily related to our payment entities that process customer payments.
For revenue and cost of revenue associated with bookings on our platform outside of the United States, we generally receive net foreign currency amounts and therefore benefit from a weakening of the U.S. dollar and are adversely affected by a strengthening of the U.S. dollar. Furthermore, our platform generally enables guests to make payments in the currency of their choice to the extent that the currency is supported by Airbnb, which may not match the currency in which the host elects to be paid. As a result, in those cases, we bear the currency risk of both the guest payment as well as the host payment due to timing differences in such payments. Movements in foreign exchange rates are recorded in other expense, net in our consolidated statements of operations.
We enter into foreign currency derivative contracts to protect against foreign exchange risks. These hedges are primarily designed to manage foreign exchange risk associated with forecasted foreign denominated revenue, balances held as funds payable and amounts payable to customers, and unbilled amounts for confirmed bookings under the terms of our payment programs. These contracts reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on our revenue, assets, and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including accounting considerations or the prohibitive economic cost of hedging particular exposures.
We have experienced and will continue to experience fluctuations in foreign exchange gains and losses related to changes in exchange rates. If our foreign-currency denominated assets, liabilities, revenues, or expenses increase, our results of operations may be more significantly impacted by fluctuations in the exchange rates of the currencies in which we do business.
If an adverse 10% foreign currency exchange rate change was applied to total net monetary assets and liabilities denominated in currencies other than the local currencies as of December 31, 2025, it would have resulted in a loss of approximately $38 million.
Investment and Interest Rate Risk
We are exposed to interest rate risk related primarily to our investment portfolio. Changes in interest rates affect the interest earned on our total cash, cash equivalents, available-for-sale short-term investments, and the fair value of those securities.
We had cash and cash equivalents of $6.6 billion and short-term investments of $4.5 billion as of December 31, 2025, which primarily consisted of corporate debt securities, mortgage-backed and asset-backed securities, U.S. government and government agency debt securities (“government bonds”), commercial paper, certificates of deposit, and time deposits. As of December 31, 2025, we had an additional $7.0 billion that we held for bookings in advance of guests completing check-ins, which we record separately on our consolidated balance sheets as funds receivable and amounts held on behalf of customers. The primary objective of our investment activities is to preserve capital and meet liquidity requirements without significantly increasing risk. We invest primarily in highly-liquid, investment grade debt securities, and we limit the amount of credit exposure to any one issuer. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Because our cash equivalents and short-term investments generally have short maturities, the fair value of our portfolio is relatively insensitive to interest rate fluctuations. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of $30 million to our investment portfolio as of December 31, 2025.
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