UPDATED 14:35 EDT / OCTOBER 17 2019

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Marketing surge reportedly led Airbnb to incur $306M first-quarter loss

Heavy investments in growth caused Airbnb Inc. to incur a $306 million operating loss during the first quarter, more than twice what it had racked up during the same period a year earlier.

That’s according to a report published today in The Information, which cited undisclosed financial data. The first-quarter operating loss is said to stem from a 47% rise in expenditures. For comparison, Airbnb’s revenues rose by 31% year-over-year in the same period, to $839 million.

The accommodation booking giant’s spending surge is partially pinned on a more aggressive approach to customer acquisition. According to the leaked financial data, Airbnb’s marketing and sales expenditures rose 58% year-over-year, to $367 million, while total marketing spending for 2019 is apparently expected to pass $1.1 billion.

The company appeared to confirm the growth initiative in a statement to CNBC. “We can’t comment on the figures, but 2019 is a big investment year in support of our hosts and guests,” an Airbnb spokesperson told the network.

The company can easily afford the marketing splurge: It reportedly had $3.5 billion in cash on hand as of March 31. Airbnb’s formidable treasure chest is the result of several major funding rounds and the fact that it has managed to mostly avoid the kind of massive losses posted by other sharing-economy players. As a matter of fact, the company was profitable in 2018 before interest, taxes, depreciation and amortization.

But the increased marketing investments may make it harder for Airbnb to stay out of the red going forward. The company will need to demonstrate a strong financial position when it goes public next year in order to win over Wall Street, which has grown weary of loss-making tech firms. Two such firms, Uber Technologies Inc. and Lyft Inc., are trading below the price at which they went public this year, while WeWork parent The We Co. was forced to call off its listing as investors apparently balked at its huge losses.

None of the three companies has ever ended a quarter in the black. The fact that Airbnb was profitable on adjusted basis as of the end of 2018, as well as in the year before, likely puts in a much better position to stage a successful stock market debut. 

Photo: opengridscheduler/Flickr

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