Skip to main content

Airbnb Reportedly Lost $100 Million In Q2

Airbnb CEO Brian Chesky

Photograph by Stuart Isett/Fortune Global Forum

According to a report from The Information, Airbnb lost about $100 million in the second quarter of this year, compared to a profit of $10 million it made in the same period last year. The Information reports the loss is driven by increased marketing and administrative expenses, an indication that the company is dedicating more resources to its growth ahead of a planned IPO next year. A previous report from The Information had said Airbnb lost $306 million in the first quarter of this year, attributable in part to higher sales and marketing spend.

The losses recorded by Airbnb this year are in contrast to an upheld status as one of the few profitable private tech companies out there. Airbnb is known to have been profitable for two years running before reports of losses sprang up this year. While losses due to higher investments and bets on growth could pay off in the long-term, it may muddle Airbnb's ability to present itself to investors as a tech company that makes money, especially at a time when loss-making companies like Uber and Lyft have taken a beating in the public markets. It isn't uncommon for companies to ramp up marketing spend in order to display growth ahead of their public debuts, however, this seems like a time investors are particularly sensitive about loss-making companies, which may lead to complications for Airbnb's planned public debut next year.

As a private company, Airbnb doesn't reveal its full financial stats, making it difficult to draw conclusions from one or two quarterly results. It's possible that Airbnb's increased sales and marketing spend is paying off, with the company having said it "substantially" eclipsed $1 billion in revenue in the second quarter of this year, up $300 million from the same quarter last year according to The Information.

According to The Information, Airbnb spent $1.1 billion on sales and marketing in 2018, and is expected to surpass that this year. Such spend isn't out of the box when compared with that of its competitors, for reference, Expedia and Booking Holdings, whose combined marketing spend came in at $10 billion last year. One recent event, a nine-year Olympics sponsorship deal sealed by Airbnb, is an indication of increased marketing spend by the company. The sponsorship deal, which grants Airbnb exclusive marketing rights at several Olympics events, is said to be worth $500 million in its entirety.

Even as reports of Airbnb recording substantial losses come to light, the company looks like it's making a killing in markets outside the U.S. and China, evidenced by a $46 million profit in those regions last year.





Comments

Most Read Posts

Epic Games Closes $1.8 Billion Round

Epic Games, the gaming studio best known for creating Fortnite, has announced that it's raised $1.8 billion in new funding that values it at $17.3 billion post-money. The funding both consisted of primary capital for Epic as well as the purchase of shares from existing shareholders in the company. The $1.8 billion figure includes $250 million in funding that recently came from Sony. Other participants include the likes of BlackRock, Fidelity, Baillie Gifford, Lightspeed Venture Partners, KKR, and hedge fund tycoon David Tepper. Even with the new funding, Epic remains controlled by its founder and CEO, Tim Sweeney.

With the new funding, Epic Games has now raised a total of about $3.4 billion in known outside funding since its inception.





Zomato Begins "Period Leave" For Employees

Zomato, the Indian food delivery company, has said it would begin allowing female employees to take up to 10 days of “period leave” per year, as part of efforts to tackle what it says is a stigma surrounding the issue, particularly in India. Zomato seems like the most high profile organization in India to have instituted such a policy in the country, where menstruation is still a taboo to some. “There shouldn’t be any shame or stigma attached to applying for a period leave,” Zomato's CEO, Deepinder Goyal, penned in an e-mail to the company's staff on Saturday.

Zomato is one of the best-known companies in India, currently with more than 5,000 employees. The company has come a long way from its humble beginnings in 2008 to clinching nearly $400 million in annual revenues. It's been buoyed by just shy of a billion dollars in total funding by investors such as the likes of Naspers, Delivery Hero, Shunwei Capital, and Tencent.





SpaceX And ULA Land Big US Contracts

Aerospace companies SpaceX and the United Launch Alliance (ULA) have landed big respective contracts to launch satellites into orbit for the U.S. government through this year to 2024. The contract, in particular, is the second phase of the US National Security Space Launch program, which assures access to space for U.S. government payloads. The ULA is receiving 60% of the specified contracts while SpaceX takes on the remaining 40%. Already, the U.S. Department of Defense has awarded $316 million to SpaceX and $337 million to ULA “to meet fiscal year 2022 launch dates” [implying the first half of the stipulated contracts], according to a press statement.

“This was an extremely tough decision and I appreciate the hard work industry completed to adapt their commercial launch systems to affordably and reliably meet our more stressing national security requirements,” Colonel Robert Bongiovi, director of the U.S. Space and Missile Systems Center Launch Enterprise, said in a press statement…

EA Investors Chide Executive Pay

Shareholders of gaming company Electronic Arts have profusely rejected the company's executive pay plan in a recent advisory vote, with 171 million votes cast against the pay plan for named officers against about 60 million in favor, as indicated by a regulatory filing. Such a vote marks a rare rebuke for a company of EA's caliber, with major opposition coming from proxy advisers such as Institutional Shareholder Services (ISS), which had earlier voiced concerns about a special round of stock awards for EA's top executives.

EA's top brass had previously received special stock awards for fiscal 2018 that haven't fully vested, drawing queries about the necessity for a new round of such awards. According to the ISS, EA chief executive Andrew Wilson, who pulled in $21 million in compensation last year, is paid 56% more than a median CEO peer, which “has a ratcheting effect on executive compensation.”

With the vote, EA will likely adjust its executive compensation plan…

Robinhood Scores $180 Million Q2 Revenue

As revealed by a regulatory filing, Robinhood, the stock trading company, recorded $180 million in revenue in the second quarter of this year, nearly double the $91 million that it recorded in the same quarter last year. Robinhood's revenue primarily comes from big trading firms that pay the company for order flows to then front-run their trades with the aim of earning profits usually by scrubbing some pennies off each transaction. Out of the $180 million revenue, $111 million came from options trading by Robinhood customers.

Robinhood is benefitting from a recent surge in stock market volatility as numerous more people flock to buying and selling stocks. For a hint, the company added three million funded accounts in the first four months of this year alone and recorded its three most active trading days of all time in June of this year. Other brokers such as TD Ameritrade and Etrade are also witnessing sizeable increases in revenue from order flows ($340 million in Q2, compared …

Nikola Secures Order For 2,500 Trucks

Nikola, the publicly-traded electric vehicle upstart, has announced that it's secured an order for 2,500 electrified refuse trucks from waste collection giant Republic Services, with an option to expand to 5,000. The orders are due to be fulfilled beginning 2023, with on-road testing planned for 2022. The new bulk order marks one of the largest ever seen in the refuse management industry and more so in the electric vehicle scene. Nikola listed on the public markets this year but hasn't sold a single vehicle yet. This has nevertheless not stopped investor hopes and optimism, with the company's current market capitalization (as of writing) hovering at $17 billion.

The order for 2,500 trucks, as well as previous orders from several companies, represents a potential juicy revenue source for Nikola. The electric refuse trucks ordered from Nikola by Republic Services is expected to offer up to 150 miles of range on a single charge. Republic Services is notably the second larges…

ServiceNow Readies $1.5 Billion Bond Sale

Cloud software company ServiceNow has priced a public bond offering that's intended to raise $1.5 billion to finance its operations. The Santa Clara-based company is issuing 1.4%-interest accruing senior notes that'll be due by 2030 to raise the targeted amount, which will be put towards financing its operations and also repurchasing up to $500 million in previously issued bonds that are due by 2022. Investment banks including the likes of J.P. Morgan, Goldman Sachs, Morgan Stanley, Wells Fargo, and Barclays Capital are managing the bond offering.

ServiceNow intends to complete the bond offering on the 11th of August 2020.





Xpeng Files For US IPO

Chinese electric car upstart Xpeng has filed to go public in the U.S., notably on the cusp of securing hundreds of millions of dollars in additional funding. Xpeng is looking to go public just five years after its founding and after having sold thousands of electric vehicles, including about 2,400 in July alone. Xpeng reported revenues of $328 million in 2019 and $522 million in losses in the same year. For the first six months of this year, the company brought in $142 million in sales and recorded losses of $113 million.

Currently, Xpeng sells two vehicles, the G3 SUV and the P7 sedan. The company plans to launch yet another by next year, according to its filing with the U.S. Securities and Exchanges Commission (SEC). Altogether, Xpeng has delivered 18,741 G3 vehicles and 1,966 P7 vehicles. The company's sales network covers 147 stores and service centers across 52 cities in China.

Xpeng's F-1 filing lists a placeholder amount of $100 million, a figure that's likely to c…

AmEx In Talks To Snap Up Kabbage

Financial services giant American Express is in talks to acquire Kabbage, the small business lender backed by the likes of SoftBank and BlueRun Ventures, as first reported [paywall] by Bloomberg. According to Bloomberg, AmEx could cough up as much as $850 million in cash for Kabbage in a deal that could be formalized as soon as this month. AmEx is the biggest provider of small-business credit cards in the US so scooping up a small business lender like Kabbage will help bolster its business.

Throughout its history, Kabbage, which was founded in 2008, has raised about $500 million in equity funding and even hundreds of millions more in debt funding. Investors in the company include the likes of SoftBank, BlueRun Ventures, Recruit Holdings, UPS, and Thomvest Ventures. On the heels of the coronavirus pandemic, business slowed for Kabbage, which then furloughed hundreds of employees and suspended customer credit lines as it grappled with drastic cuts in small business spending across the …

Salesforce Exits Zoom Stake With Profit

Software giant Salesforce has sold all of its shares in video communications company Zoom, as indicated by a recent regulatory filing. Salesforce earlier invested $100 million in Zoom at the cusp of its public listing last year and has apparently reaped sizeable profits thanks to Zoom's shares zooming high amid outsized growth on the heels the coronavirus pandemic. The exact amount Salesforce reaped from offloading its stake isn't clear but for a hint, Zoom went public at $36 a share, the price at which Salesforce bought into, and traded between as low as $114 a share to as high as $259 a share over the second quarter of this year during which Salesforce offloaded its stake.

Alongside Zoom, Salesforce also sold all of its remaining shares in online storage company Dropbox. Just as in the case of Zoom, Salesforce invested $100 million in Dropbox on the cusp of the company's public listing. Through its venture arm, Salesforce is an investor in numerous technology companies.…