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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 10-Q
______________
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____ to _____
Commission File Number: 001-39778
______________
ABNBLogo.jpg
Airbnb, Inc.
(Exact Name of Registrant as Specified in Its Charter)
______________
Delaware26-3051428
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
888 Brannan Street
San Francisco, California 94103
(Address of Principal Executive Offices) (Zip Code)
(415) 510-4027
(Registrant’s Telephone Number, Including Area Code)
______________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Class A common stock, par value $0.0001 per share
ABNBThe Nasdaq Stock Market
______________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 20, 2023, 434,744,969 shares of the registrant's Class A common stock were outstanding, 204,493,090 shares of the registrant's Class B common stock were outstanding, no shares of the registrant’s Class C common stock were outstanding, and 9,200,000 shares of the registrant’s Class H common stock were outstanding.


AIRBNB, INC.
Form 10-Q

TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1.
Item 3.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•the effects of macroeconomic conditions, including inflation, slower growth or recession, higher interest rates, high unemployment and foreign currency fluctuations, on the demand for travel or similar experiences;
•the effects of supply constraints on availability of Host homes;
•our ability to effectively manage our exposure to fluctuations in foreign currency exchange rates;
•the impact of the ongoing armed conflicts around the world on our business;
•the continued effects of the COVID-19 pandemic, including as a result of new strains or variants of the virus, as well as other highly infectious diseases, on our business, the travel industry, travel trends, and the global economy generally;
•our expectations regarding our financial performance, including our revenue, costs, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), and Free Cash Flow;
•our expectations regarding future operating performance, including Nights and Experiences Booked, Gross Booking Value (“GBV”), Average Daily Rate, and GBV per Night and Experience Booked;
•our ability to attract and retain Hosts and guests;
•our ability to compete in our industry;
•our expectations regarding the resilience of our model, including in areas such as domestic travel, short-distance travel, travel outside of top cities, and long-term stays;
•seasonality, including the return of pre-COVID-19 pandemic patterns of seasonality, and the effects of seasonal trends on our results of operations;
•our expectations regarding the impact of our marketing strategy, and our ability to continue to attract guests and Hosts to our platform through direct and unpaid channels;
•anticipated trends, developments, and challenges in our industry, business, and the highly competitive markets in which we operate;
•our ability to anticipate market needs or develop new or enhanced offerings and services to meet those needs;
•our ability to manage expansion into international markets and new businesses;
•our ability to stay in compliance with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally and our expectations regarding various laws and restrictions that relate to our business;
•laws, regulations, and rules that affect the short-term rental, long-term rental, and home sharing business, including short-term rental laws in New York City, for example, that have limited and may continue to limit the ability or willingness of Hosts to share their spaces over our platform and expose our Hosts or us to significant penalties;
•the impact on our income as a result of the release of valuation allowances on deferred tax assets;
•our expectations regarding lodging tax obligations and other non-income tax matters;
•our expectations regarding our income tax liabilities, including anticipated increases in foreign taxes, valuation allowances, and the adequacy of our reserves;
•our ability to effectively manage our growth and expand our infrastructure and maintain our corporate culture, and our employee initiatives;
•the safety, affordability, and convenience of our platform and our offerings;
•our ability to successfully defend litigation brought against us;
•the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to make required payments under our credit agreement and to comply with the various requirements of our indebtedness; and
•our expectations relating to the implementation of a new enterprise resource planning system.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, results of operations, financial condition, and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors. Risks that contribute to the uncertain nature of the forward-looking statements include, among others, the effects of the COVID-19 pandemic on the Company’s business, including as a result of new strains or variants of the virus, the travel industry, travel trends, and the global economy generally; the Company’s ability to retain existing Hosts and guests and add new Hosts and guests; any further and continued decline or disruption in the travel and hospitality industries or economic downturn; the Company’s ability to compete successfully; changes to the laws and regulations that may limit the Company’s Hosts’ ability and willingness to provide their listings, and/or result in significant fines, liabilities, and penalties to the Company, including short-term rental laws in New York City, for example; the effect of extensive regulation and oversight, litigation, and other proceedings related to the Company’s business in a variety of areas; the Company’s ability to maintain its brand and reputation, and effectively drive traffic to its platform; the effectiveness of the Company’s strategy and business initiatives, including measures to improve trust and safety; the Company’s operations in international markets; the Company’s indebtedness; the Company’s final closing procedures, final adjustments, and other developments that may arise in the course of audit and review procedures; and changes in political, business, and economic conditions; as well as other risks listed or described from time to time in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K
1
for the fiscal year ended December 31, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made available. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

Airbnb, Inc.
Condensed Consolidated Balance Sheets
(in millions, except par value)
(unaudited)
December 31,
2022		September 30,
2023
Assets
Current assets:
Cash and cash equivalents$7,378 $8,175 
Short-term investments (including assets reported at fair value of $2,224 and $2,297, respectively)
2,244 2,787 
Funds receivable and amounts held on behalf of customers4,783 5,986 
Prepaids and other current assets (including customer receivables of $200 and $241 and allowances of $39 and $35, respectively)
456 575 
Total current assets14,861 17,523 
Property and equipment, net121 147 
Operating lease right-of-use assets138 123 
Goodwill and intangible assets, net684 676 
Deferred tax assets
16 2,775 
Other assets, noncurrent218 195 
Total assets$16,038 $21,439 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$137 $163 
Accrued expenses and other current liabilities1,876 2,205 
Funds payable and amounts payable to customers4,783 5,986 
Unearned fees1,182 1,467 
Total current liabilities7,978 9,821 
Long-term debt1,987 1,990 
Operating lease liabilities, noncurrent295 265 
Other liabilities, noncurrent218 240 
Total liabilities10,478 12,316 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value:
Class A - authorized 2,000 shares; 408 and 435 shares issued and outstanding, respectively;
Class B - authorized 710 shares; 223 and 204 shares issued and outstanding, respectively;
Class C - authorized 2,000 shares; zero shares issued and outstanding, respectively;
Class H - authorized 26 shares; 9 shares issued and zero shares outstanding, respectively
— — 
Additional paid-in capital11,557 11,452 
Accumulated other comprehensive loss(32)(5)
Accumulated deficit(5,965)(2,324)
Total stockholders’ equity5,560 9,123 
Total liabilities and stockholders’ equity$16,038 $21,439 


The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Airbnb, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202320222023
Revenue$2,884 $3,397 $6,497 $7,699 
Costs and expenses:
Cost of revenue401 459 1,154 1,319 
Operations and support290 316 781 915 
Product development366 419 1,104 1,290 
Sales and marketing384 403 1,108 1,339 
General and administrative240 304 694 822 
Restructuring charges— — 89 — 
Total costs and expenses1,681 1,901 4,930 5,685 
Income from operations1,203 1,496 1,567 2,014 
Interest income59 192 84 529 
Interest expense(5)(6)(19)(12)
Other income (expense), net13 (3)13 (46)
Income before income taxes1,270 1,679 1,645 2,485 
Provision for (benefit from) income taxes56 (2,695)71 (2,656)
Net income $1,214 $4,374 $1,574 $5,141 
Net income per share attributable to Class A and Class B common stockholders:
Basic$1.90 $6.83 $2.47 $8.08 
Diluted$1.79 $6.63 $2.31 $7.74 
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:
Basic639 640 637 636 
Diluted680 660 683 665 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Airbnb, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in millions)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202320222023
Net income $1,214 $4,374 $1,574 $5,141 
Other comprehensive income (loss):
Net unrealized loss on available-for-sale marketable securities, net of tax(4)(1)(11)(5)
Net unrealized income on cash flow hedges, net of tax
— 37 — 35 
Foreign currency translation adjustments(13)(8)(23)(3)
Other comprehensive income (loss)(17)28 (34)27 
Comprehensive income $1,197 $4,402 $1,540 $5,168 


The accompanying notes are an integral part of these condensed consolidated financial statements.
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Airbnb, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in millions)
(unaudited)
Three and Nine Months Ended September 30, 2022
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive Loss		Accumulated
Deficit		Total
Stockholders’ Equity
Shares
Amount
Balances as of December 31, 2021634 $— *$11,140 $(7)$(6,358)$4,775 
Net loss— — — — (19)(19)
Other comprehensive loss— — — (5)— (5)
Exercise of common stock options, net of shares withheld for taxes— — *12 — — 12 
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes2 — *(224)— — (224)
Stock-based compensation— — 198 — — 198 
Balances as of March 31, 2022636 — 11,126 (12)(6,377)4,737 
Net income— — — — 379 379 
Other comprehensive loss— — — (12)— (12)
Exercise of common stock options, net of shares withheld for taxes1 — *5 — — 5 
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes2 — *(133)— — (133)
Issuance of common stock under employee stock purchase plan, net of
shares withheld for taxes		— *— *20 — — 20 
Stock-based compensation— — 249 — — 249 
Balances as of June 30, 2022639 — 11,267 (24)(5,998)5,245 
Net income—— — — 1,214 1,214 
Other comprehensive loss— — — (17)— (17)
Exercise of common stock options1 — *2 — — 2 
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes2 — *(142)— — (142)
Issuance of common stock under employee stock purchase plan, net of shares withheld— — *— — — — 
Repurchases of common stock(9)— *— — (1,000)(1,000)
Stock-based compensation— — 238 — — 238 
Balances as of September 30, 2022633 $— $11,365 $(41)$(5,784)$5,540 
*Amounts round to zero and do not change rounded totals.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Airbnb, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(in millions)
(unaudited)
Three and Nine Months Ended September 30, 2023
Common StockAdditional
Paid-In
Capital		Accumulated
Other
Comprehensive
Loss		Accumulated
Deficit		Total
Stockholders’ Equity
Shares
Amount
Balances as of December 31, 2022631 $— *$11,557 $(32)$(5,965)$5,560 
Net income— — — — 117 117 
Other comprehensive income— — — 2 — 2 
Exercise of common stock options, net of shares withheld for taxes2 — *17 — — 17 
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes1 — *(155)— — (155)
Stock-based compensation— — 243 — — 243 
Repurchases of common stock(4)— *— — (493)(493)
Balances as of March 31, 2023630 — 11,662 (30)(6,341)5,291 
Net income— — — — 650 650 
Other comprehensive loss— — — (3)— (3)
Exercise of common stock options, net of shares withheld for taxes6 — *(561)— — (561)
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes2 — *(153)— — (153)
Issuance of common stock under employee stock purchase plan, net of shares withheld for taxes— *— *31 — — 31 
Stock-based compensation— — 311 — — 311 
Repurchases of common stock(4)— *— — (507)(507)
Balances as of June 30, 2023634 — 11,290 (33)(6,198)5,059 
Net income— — — — 4,374 4,374 
Other comprehensive income— — — 28 — 28 
Exercise of common stock options, net of shares withheld for taxes2 — *15 — — 15 
Shares issued upon net settlement of warrants exercised5 — *— — — — 
Issuance of common stock upon settlement of RSUs, net of shares withheld for taxes2 — *(146)— — (146)
Stock-based compensation— — 293 — — 293 
Repurchases of common stock(4)— *— — (500)(500)
Balances as of September 30, 2023639 $— $11,452 $(5)$(2,324)$9,123 
*Amounts round to zero and do not change rounded totals.
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Airbnb, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Nine Months Ended September 30,
20222023
Cash flows from operating activities:
Net income $1,574 $5,141 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization68 28 
Stock-based compensation expense676 830 
Deferred income taxes15 (2,759)
Foreign exchange (gain) loss83 (49)
Impairment of long-lived assets89 — 
Other, net45 40 
Changes in operating assets and liabilities:
Prepaids and other assets(185)(56)
Operating lease right-of-use assets27 14 
Accounts payable39 27 
Accrued expenses and other liabilities217 321 
Unearned fees319 284 
Net cash provided by operating activities2,967 3,821 
Cash flows from investing activities:
Purchases of property and equipment(17)(30)
Purchases of short-term investments(3,015)(2,365)
Sales and maturities of short-term investments3,149 1,828 
Other investing activities, net(2)— 
Net cash provided by (used in) investing activities115 (567)
Cash flows from financing activities:
Taxes paid related to net share settlement of equity awards(491)(1,023)
Proceeds from exercise of stock options19 37 
Proceeds from the issuance of common stock under employee stock purchase plan20 31 
Repurchases of common stock(1,000)(1,500)
Change in funds payable and amounts payable to customers1,527 1,196 
Net cash provided by (used in) financing activities
75 (1,259)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(625)(10)
Net increase in cash, cash equivalents, and restricted cash2,532 1,985 
Cash, cash equivalents, and restricted cash, beginning of period9,727 12,103 
Cash, cash equivalents, and restricted cash, end of period12,259 14,088 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds$52 $69 
Cash paid for interest$8 $2 
Non-cash financing activities:
Net settlement of cashless stock options exercised$— $36 
Net settlement of cashless warrants exercised$— $171 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

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 unaudited condensed consolidated financial statements (“financial statements”) have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial information. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 17, 2023. The results for the interim periods are not necessarily indicative of results for the full year. The Company has changed its presentation from thousands to millions and, as a result, any necessary rounding adjustments have been made to prior period disclosed amounts. Certain immaterial amounts in prior periods have been reclassified to conform with current period presentation.

In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the condensed consolidated financial position, results of operations and cash flows for these interim periods.

Principles of Consolidation

The accompanying 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 September 30, 2023, the Company’s consolidated VIEs were not material to the financial statements.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the 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, and income and non-income taxes, 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 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 financial statements could be affected.

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 (expense), net in the condensed consolidated statements of operations. The assessment for impairment takes into account the severity and
9

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
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 in the condensed consolidated statements of operations.

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 condensed 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 condensed consolidated statement of operations. The Company does not exclude any components in the assessment of hedge effectiveness for forwards and options.

When 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 condensed consolidated statement of operations in other income (expense), net.

The Company presents derivative assets and liabilities at their gross fair values in the condensed 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 condensed consolidated statement of cash flows.

Recently Adopted Accounting Standards

In March 2022, the FASB issued 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 financial statements.

Recently Issued Accounting Standards Not Yet Adopted

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 is evaluating the impact on the Company’s 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 financial statements or disclosures.

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 condensed consolidated balance sheets to the total amount presented in the condensed consolidated statements of cash flows (in millions):

December 31,
2022		September 30,
2023
Cash and cash equivalents$7,378 $8,175 
Cash and cash equivalents included in funds receivable and amounts held on behalf of customers4,708 5,889 
Restricted cash included in prepaids and other current assets
17 24 
Total cash, cash equivalents, and restricted cash presented in the condensed consolidated statements of cash flows$12,103 $14,088 
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Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in millions):
December 31,
2022		September 30,
2023
Indirect taxes payable$418 $588 
Compensation and employee benefits380 451 
Indirect tax reserves206 253 
Gift card liability141 146 
Operating lease liabilities, current59 54 
Other672 713 
Total accrued expenses and other current liabilities$1,876 $2,205 

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):

Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202320222023
Reductions to revenue
$107 $114 $219 $269 
Charges to operations and support
24 29 68 75 
Charges to sales and marketing expense
20 18 45 47 
Total payments made to customers
$151 $161 $332 $391 

Revenue Disaggregated by Geographic Region

The following table presents revenue disaggregated by listing location (in millions):

Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202320222023
North America$1,326 $1,478 $3,246 $3,595 
Europe, the Middle East, and Africa
1,263 1,533 2,368 2,932 
Latin America139 178 454 576 
Asia Pacific156 208 429 596 
Total revenue disaggregated by geographic region$2,884 $3,397 $6,497 $7,699 
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Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
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 bonds83 — — 83 
Commercial paper574 — — 574 
Corporate debt securities965 1 (7)959 
Mortgage-backed and asset-backed securities
37 — (3)34 
Total debt securities2,232 1 (10)2,223 
Time deposits20 — — 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 

September 30, 2023
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Total
Estimated
Fair Value
Short-term investments
Debt securities:
Certificates of deposit
$328 $— $— $328 
Government bonds
291 — — 291 
Commercial paper
366 — — 366 
Corporate debt securities
1,209 1 (10)1,200 
Mortgage-backed and asset-backed securities
117 — (6)111 
Total debt securities2,311 1 (16)2,296 
Time deposits490 — — 490 
Equity investments (1)
1 — — 1 
Total short-term investments
$2,802 $1 $(16)$2,787 
Long-term investments (2)
Debt securities:
Corporate debt securities$13 $— $(9)$4 

(1)Unrealized gain (loss) on equity investments were immaterial for the three and nine months ended September 30, 2022 and 2023.
(2)Classified within other assets, noncurrent on the condensed consolidated balance sheets.

As of December 31, 2022 and September 30, 2023, the Company did not 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 three and nine months ended September 30, 2022 and 2023. Realized gains and losses reclassified from AOCI to other income (expense), net were not material for the three and nine months ended September 30, 2022 and 2023.

During the three and nine months ended September 30, 2022, the Company received $885 million and $3.1 billion, respectively, in proceeds from the sale and maturities of short-term investments. During the three and nine months ended September 30, 2023, the Company received $325 million and $1.8 billion, respectively, in proceeds from the sale and maturities of short-term investments.

12

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
Debt securities in an unrealized loss position had an estimated fair value of $748 million and $1,097 million, and unrealized losses of $19 million and $24 million as of December 31, 2022 and September 30, 2023, respectively. A total of $92 million and $212 million of these securities, with unrealized losses of $13 million and $18 million, were in a continuous unrealized loss position for more than twelve months as of December 31, 2022 and September 30, 2023, respectively.

The following table summarizes the contractual maturities of the Company’s available-for-sale debt securities (in millions):

September 30, 2023
Amortized
Cost		Estimated
Fair Value
Due within one year$1,377 $1,376 
Due in one year to five years877 859 
Due within five to ten years9 9 
Due beyond ten years61 56 
Total$2,324 $2,300 

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 $79 million as of December 31, 2022 and September 30, 2023, respectively, and are classified within other assets, noncurrent on the condensed consolidated balance sheets. There were no upward or downward adjustments for observable price changes or impairment charges recorded for the three and nine months ended September 30, 2022 and 2023. As of December 31, 2022 and September 30, 2023, the cumulative downward adjustments for observable price changes and impairment were $56 million.

Investments Accounted for Under the Equity Method

As of December 31, 2022 and September 30, 2023, the carrying values of the Company’s equity method investments were $14 million and $8 million, respectively. The Company recorded unrealized losses of $1 million and $4 million for the three and nine months ended September 30, 2022, respectively, and unrealized losses of $1 million and $6 million for the three and nine months ended September 30, 2023, respectively, within other income (expense), net in the condensed consolidated statements of operations, representing its proportionate share of net income or loss based on the investee’s financial results.

The Company recorded no impairment charges related to the carrying value of equity method investments for the three and nine months ended September 30, 2022 and 2023.
13

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
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 1Level 2Level 3Total
Assets
Cash and cash equivalents:
Money market funds$2,326 $— $— $2,326 
Certificates of deposit26 — — 26 
Government bonds— 32 — 32 
Commercial paper— 327 — 327 
Corporate debt securities— 68 — 68 
2,352 427 — 2,779 
Short-term investments:
Certificates of deposit573 — — 573 
Government bonds— 83 — 83 
Commercial paper— 574 — 574 
Corporate debt securities— 959 — 959 
Mortgage-backed and asset-backed securities— 34 — 34 
Equity investments1 — — 1 
574 1,650 — 2,224 
Funds receivable and amounts held on behalf of customers:
Money market funds501 — — 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 $5,522 
Liabilities
Accrued expenses and other current liabilities:
Foreign exchange derivative liabilities$— $31 $— $31 
Total liabilities at fair value$— $31 $— $31 
14

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
September 30, 2023
Level 1Level 2Level 3Total
Assets
Cash and cash equivalents:
Money market funds$2,729 $— $— $2,729 
Government bonds— 64 — 64 
Commercial paper— 220 — 220 
Corporate debt securities— 8 — 8 
2,729 292 — 3,021 
Short-term investments:
Certificates of deposit328 — — 328 
Government bonds— 291 — 291 
Commercial paper— 366 — 366 
Corporate debt securities— 1,200 — 1,200 
Mortgage-backed and asset-backed securities— 111 — 111 
Equity investments1 — — 1 
329 1,968 — 2,297 
Funds receivable and amounts held on behalf of customers:
Money market funds1,718 — — 1,718 
Prepaids and other current assets:
Foreign exchange derivative assets— 97 — 97 
Other assets, noncurrent:
Other
— 5 — 5 
Corporate debt securities— — 4 4 
Total assets at fair value$4,776 $2,362 $4 $7,142 
Liabilities
Accrued expenses and other current liabilities:
Foreign exchange derivative liabilities$— $9 $— $9 
Total liabilities at fair value$— $9 $— $9 

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 nine months ended September 30, 2022 and 2023.

There were no transfers of financial instruments into or out of Level 3 during the nine months ended September 30, 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.

15

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
The following table summarizes the effect of derivative instruments on the Company’s condensed consolidated balance sheets (in millions):

Derivative Assets(1)
Location
December 31,
2022		September 30,
2023
Derivatives designated as hedging instruments:
Foreign exchange contracts (current) Prepaids and other current assets$— $40 
Foreign exchange contracts (noncurrent)Other assets, noncurrent— 4 
Total derivatives designated as hedging instruments$— $44 
Derivatives not designated as hedging instruments:
Foreign exchange contracts (current)Prepaids and other current assets$14 $58 
Total derivatives not designated as hedging instruments$14 $58 

Derivative Liabilities(1)
Location
December 31,
2022		September 30,
2023
Derivatives not designated as hedging instruments:
Foreign exchange contracts (current)Accrued expenses and other current liabilities$31 $10 
Total derivatives not designated as hedging instruments$31 $10 

(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 September 30, 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 $9 million, resulting in net derivative assets of $92 million.

The effect of derivative instruments designated as hedging instruments on the condensed consolidated statements of operations was not material for the three and nine months ended September 30, 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 and the impact of these derivative contracts on AOCI, net of tax (in millions):

Gain Recognized in Other Comprehensive Income (Loss)
Three Months Ended September 30,Nine Months Ended September 30,
20232023
Derivatives designated as cash flow hedges:
Foreign exchange contracts$36 $34 
Total designated cash flow hedges$36 $34 

As of September 30, 2023, cumulative unrealized gains recorded in AOCI, net of tax related to derivative instruments designated as hedging instruments were $35 million.
16

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

Effect of derivative instruments not designated as hedging instruments on the condensed 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 condensed consolidated statements of operations (in millions):

Realized Gain (Loss) on DerivativesUnrealized Gain on Derivatives
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20222023202220232022202320222023
Derivatives not designated as hedging instruments:
Foreign exchange contracts$61 $(7)$101 $(91)$13 $54 $38 $66 
Total derivatives not designated as hedging instruments$61 $(7)$101 $(91)$13 $54 $38 $66 

Cash flow hedges

The total notional amount of outstanding foreign currency derivatives designated as cash flow hedges was $1.4 billion as of September 30, 2023.

Derivatives not designated as hedging instruments

The total notional amount of outstanding derivatives not designated as hedging instruments was $2.4 billion and $3.1 billion as of December 31, 2022 and September 30, 2023, respectively.

Note 7. Debt

Convertible Senior Notes

In 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.

As of both December 31, 2022 and September 30, 2023, total outstanding debt, net of unamortized debt discount and debit issuance costs, was $2.0 billion. The Company recorded interest expense of $1 million for both the three months ended September 30, 2022 and 2023, and $3 million for both the nine months ended September 30, 2022 and 2023, for debt discount and debt issuance costs.

As of September 30, 2023, the if-converted value of the 2026 Notes did not exceed the outstanding principal amount.

As of September 30, 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.

2022 Credit Facility

In 2022, the Company 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 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 September 30, 2023.

No amounts were drawn under the 2022 Credit Facility as of December 31, 2022 and September 30, 2023, and outstanding letters of credit totaled $29 million and $28 million as of December 31, 2022 and September 30, 2023, respectively.
17

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 8. Stock-Based Compensation

Stock-Based Compensation Expense

The following table summarizes total stock-based compensation expense (in millions):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202320222023
Operations and support$18 $17 $47 $51 
Product development135 175 398 515 
Sales and marketing28 33 78 97 
General and administrative53 61 153 167 
Stock-based compensation expense$234 $286 $676 $830 

Stock Option and Restricted Stock Unit Activity

A summary of stock option and restricted stock unit (“RSU”) activity under the Company’s equity incentive plans was as follows (in millions, except per share amounts):

Outstanding
Stock Options
Outstanding
RSUs
 Shares
Available for
Grant		Number of
Shares		Weighted-
Average
Exercise
Price		Number of
Shares		Weighted-
Average
Grant
Date Fair
Value
As of December 31, 2022108 22 $23.41 34 $77.07 
Granted(11)1 122.41 10 121.42 
Increase in shares available for grant32 — — — — 
Exercised/Vested3 (16)4.93 (9)98.85 
Canceled2 — — (2)119.46 
As of September 30, 2023134 7 $69.66 33 $83.06 


Number of
Shares		Weighted-
Average
Exercise
Price		Weighted-
Average
Remaining
Contractual
Life (years)		Aggregate
Intrinsic
Value
Options outstanding as of September 30, 20237 $69.66 5.83$544 
Options exercisable as of September 30, 20236 $57.21 5.06$480 

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.

Employee Stock Purchase Plan (“ESPP”)

The Company recorded stock-based compensation expense related to the ESPP of $9 million and $6 million for the three months ended September 30, 2022 and 2023, respectively, and $23 million and $20 million for the nine months ended September 30, 2022 and 2023, respectively.

For the nine months ended September 30, 2022, the Company issued 0.2 million shares of Class A common stock under the ESPP at a weighted-average price of $103.23 per share, resulting in net cash proceeds of $20 million. For the nine months ended September 30, 2023, the Company issued 0.3 million shares of Class A common stock at a weighted-average price of $88.77 per share, resulting in net cash proceeds of $31 million.

Note 9. Commitments and Contingencies

Commitments

The Company has commitments including purchase obligations for web-hosting services and other commitments for brand marketing. As of September 30, 2023, there were no material changes outside the ordinary course of business to the Company’s commitments, as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022.
18

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)

Lodging Tax Obligations and Other Non-Income Tax Matters

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 September 30, 2023, the Company collects and remits Lodging Taxes in approximately 32,400 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 September 30, 2023, the Company had an obligation to remit Lodging Taxes collected from guests on bookings in these jurisdictions totaling $251 million and $370 million, respectively. These payables were recorded in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

In jurisdictions where the Company does not collect and remit Lodging Taxes, the responsibility for collecting and remitting these taxes primarily rests with Hosts. 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 September 30, 2023, accrued obligations related to these estimated taxes, including estimated penalties and interest, totaled $71 million and $115 million, respectively. As of September 30, 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 $30 million to $40 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.

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 which subject the Company’s operations to such taxes. Accordingly, the ultimate resolution of Lodging Taxes may be greater or less than reserve amounts that the Company has recorded.

The Company is currently involved in disputes brought by certain 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 September 30, 2023, the Company accrued a total of $135 million and $137 million of estimated taxes and interest related to Hosts’ withholding tax obligations, respectively. As of September 30, 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 September 30, 2023, the Company estimates that the reasonably possible loss related to these matters in excess of the amounts accrued is between $260 million to $280 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 requiring short-term rental platforms that process payments to withhold 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 are 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 Euros on Airbnb’s subsidiary in Ireland relating to the 2017 Law and associated withholding tax obligations. The matter has also been referred to the public prosecutors' office, which is typical once the Tax Authority issues its audit report and assessment. While the Company continues to believe that it is not subject to the 2017 Law based on the CJEU and Italian court rulings, the Company and the Italian tax authorities are actively working to resolve this matter. However due to the inherent complexity and uncertainty of the 2017 Law, the Company is unable to determine an estimate of the possible loss or range of loss.

19

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
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.

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.

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 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 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.

The Australian Competition and Consumer Commission (“ACCC”) commenced proceedings against Airbnb, Inc. and Airbnb Ireland UC alleging that Airbnb has breached the Australian Consumer Law by making false and misleading representations, because certain users were shown prices and charged in U.S. dollars versus Australian dollars. The Company disputes the allegations of the ACCC.

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 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.

20

Airbnb, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)