Earnings Call Transcript - ABNB Q1 2026

Operator, Operator

Good afternoon, and thank you for joining Airbnb's earnings conference call for the first quarter of 2026. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb's website following this call. I will now hand the call over to Andrew Slabin, Vice President of Investor Relations. Please go ahead.

Andrew Slabin, Vice President, Investor Relations

Good afternoon, and welcome to Airbnb's First Quarter of 2026 Conference Call. Thank you for joining us today. On the call, we have Airbnb's Co-Founder and CEO, Brian Chesky; and our Chief Financial Officer, Ellie Mertz. Earlier today, we issued a shareholder letter with our financial results and commentary for our first quarter of '26. These items were also posted on the Investor Relations section of Airbnb's website. During the call, we'll make brief opening remarks and then spend the remainder of the time on Q&A. Before I turn it over to Brian, I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our shareholder letter and in our most recent filings with the Securities and Exchange Commission. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on the call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also during this call, we will discuss some non-GAAP financial measures. We provided reconciliations to the most directly comparable GAAP financial measures in the shareholder letter posted to our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. And with that, I will pass the call over to Brian.

Brian Chesky, CEO

All right. Thank you, and good afternoon, everyone. Thanks for joining. Airbnb had a strong start to 2026. Last quarter, we talked about the path we've been on to rebuild our foundation, innovate faster and accelerate growth. In Q1, that work continued to pay off. Revenue grew 18% year-over-year to $2.7 billion, which exceeded the high end of our guidance. Our gross booking value grew 19% year-over-year, driven by strong demand and continued pricing strength. Nights and Seats Booked grew 9% after accounting for an approximate 100 basis point headwind from the conflict in the Middle East. We're seeing this momentum show up across the business. Nights booked on our app grew 22% year-over-year, and they now account for 63% of total nights booked, which is up from 58% a year ago. Growth in first-time bookers also accelerated 10%. This is the highest growth rate since 2022 with the strong acceleration in Brazil, Japan and India. Net nights for expansion markets grew at roughly twice the rate of our core markets. This is Project Hawaii at work, the blueprint that I talked about last quarter, where we create small elite teams and give them a clear mandate. We start with simple improvements, ship, learn quickly and double down on what works. And eventually, we tackle bigger, more ambitious bets. Last year, it drove hundreds of millions of dollars in revenue. This quarter, you can see it really showing up more broadly across our business. I want to give you a few examples. First, new features for guests and hosts. We shipped a ton of improvements for guests in Q1. Reserve Now, Pay Later is one of them. We introduced it last year to give guests a more flexible way to pay, and the response has been incredible. In Q1, we expanded to more markets around the world. As a result, roughly 20% of global GBV came from Reserve Now, Pay Later bookings. This increased flexibility is changing how guests book. We're seeing longer lead times as well as a mix shift towards larger, higher-priced homes. In addition to Reserve Now, Pay Later, we're also improving search. Guests now see more relevant listings and it's having a positive impact on bookings. On the host side, we're building more of what hosts have been asking for. We redesigned host sign-up flow to make it easier to start hosting, and we're testing host insights, which are personalized recommendations to help hosts improve their listing and stay competitive. We're also upgrading our pricing tools to make it easier for hosts to set prices based on demand and seasonality. Second, we're expanding what Airbnb offers. In Q1, we continued piloting new Airbnb services to make every part of the trip better. You will hear more about what's new at our May 20 launch in two weeks. We also continued scaling experiences, and early results show that's becoming a demand flywheel. Almost one quarter of new guests who booked an experience go on to book a stay or a service. About one in three people who book an experience book a stay within 90 days. Service experiences are about more than just stand-alone products; they are a great way to introduce new guests to everything Airbnb has to offer. We're also expanding our partnership with Delta Air Lines so that travelers can earn Delta miles on qualifying Airbnb Experiences and Services in addition to homes. To capture even more trips, we're scaling our boutique and independent hotel pilot to more mature markets around the world. Early results are strong, especially in cities where the supply of homes isn't meeting demand or where supply is constrained because of regulation. Bringing more hotels onto the platform helps us serve guests when a hotel might be the right choice. It also introduces more new guests to Airbnb. Roughly 55% of guests who book a hotel on Airbnb come back and book a home. Third, we're using big events to drive our business. Big events are how Airbnb got a start, and we've spent years refining our strategy around them. They do a few big things for the business. First, they help us bring on thousands of new hosts at scale. Many hosts who join for big events are renting out their home for the first time, and they may continue hosting long after the crowds leave. Events also strengthen our relationship with cities and governments that need new ways to host millions of visitors. And they give Airbnb a global stage to do what we do best, which is bring people together from all over the world. We saw this playbook in action this February during the Winter Olympics in Italy. As an official Olympics partner, almost 200,000 guests stayed on Airbnb, with supply in host markets growing about 30% and GBV more than tripling. Our marketing campaigns generated around 1 billion impressions. We met with dozens of government officials and community leaders during the games, strengthening our relationships across Italy. The World Cup is the next chapter in our event strategy, and we expect to host more guests than any event in Airbnb's history. Since we started outreach in October, over 100,000 homes have listed on Airbnb for the first time. It's also worth noting that this isn't just a stretch for big global events because we have a playbook that works at every scale so we can be targeted about where and when we grow supply. Finally, AI. It's changing how we build and innovate. Nearly 60% of the code our engineers produce is now written by AI, which we estimate is about twice the industry average. That means our teams are shipping more features and iterating more quickly. But it's not just about speed, it's about delivering a better experience for our guests and hosts. Customer support is a great example of this. When guests contact us through our AI assistant, over 40% of issues are now resolved without a human agent, up from about one third in Q4, with significantly faster resolution time. We've seen the cost per booking decrease about 10% year-over-year in Q1, and we expect to see more of this as we improve AI customer support this year. You can see why we're really excited about the year ahead, and our guidance reflects that. We're raising our guidance for 2026 and now expect year-over-year revenue growth to accelerate to low to mid-teens, and we anticipate our adjusted EBITDA margin to be at least 35%. All of this is happening against the backdrop of macroeconomic and geopolitical uncertainty. In moments like this, it shows just how resilient Airbnb's model is. When travel patterns shift, Airbnb adapts with them. When tariff uncertainty led to fewer people traveling to the U.S. last year, they came to Airbnb and found somewhere else to go. We're seeing a similar dynamic now. We have millions of homes everywhere in the world at nearly every price point. That's something most travel companies can't replicate. It's a core reason we're able to deliver consistent results even in challenging environments. While we can't predict each quarter with precision, we can control the speed of our innovation. In the long run, that's what leads to more growth. Lastly, I want to remind everyone that our 2026 summer release is coming up two weeks from Wednesday on May 20. I'm really proud of what the team is building, and I'm excited for you to see it. I hope you all tune in. With that, I'll turn it over to Ellie.

Ellie Mertz, CFO

Thanks, Brian, and good afternoon, everyone. I'll start with Q1 financial results, then cover our outlook for Q2 and full year 2026. Q1 was another great quarter for Airbnb with continued momentum seen across the business. Gross booking value grew 19% year-over-year to $29 billion, representing consistent sequential acceleration for the last four quarters, driven by both strong growth in nights and ADR. During the quarter, nights growth accelerated from January to February. However, we saw a slight deceleration in March, largely due to conflict-related cancellations across EMEA and APAC. Absent the impact of the conflict, we estimate growth of Nights and Seats Booked would have been approximately 10% year-over-year, an acceleration compared to Q1 2025. ADR increased 9% year-over-year or 4% excluding the impact of FX, with noticeable strength in North America. Continuing on the progress we made last year, we've been steadily making it easier to find and book a home on Airbnb. Last quarter, I shared three initiatives in particular that helped drive the continued momentum across our business: the broader expansion of Reserve Now, Pay Later, updates to our cancellation policies, and the migration of certain hosts to a simplified fee structure. First, we expanded Reserve Now, Pay Later to more markets and adoption continued to increase. In addition to driving longer booking lead times and contributing to the increase in ADR, Reserve Now, Pay Later is driving a meaningful lift to all booking metrics, net of cancellation. We believe this is a longer-term competitive benefit, locking in earlier calendar share and better aligning our payment options with guest preferences. Second, as shared previously, we redesigned our cancellation policies to give guests more flexibility and confidence to book. And lastly, we began migrating our API hosts to a single service fee. We believe this simplification of fee structure will help our hosts price more competitively and provide greater price transparency. Over one quarter of our active listings is now subject to a single service fee. In total, we estimate these three features delivered approximately three points of nights booked growth and approximately four points of GBV growth in Q1. We're testing the expansion of the single service fee to more hosts this year, and we'll continue iterating to simplify pricing, improve transparency and help our hosts stay competitive. Now turning to our Q1 financials. Revenue grew 18% year-over-year to $2.7 billion, exceeding the high end of our outlook by two percentage points, largely driven by the positive impact of our product updates and FX to a lesser extent. In terms of profitability, our net income was $160 million, while adjusted EBITDA was $519 million, up 24% year-over-year, also exceeding guidance. Net income was negatively impacted by a one-time adjustment of approximately $70 million to certain deferred tax assets as a result of changes to the U.S. Corporate Alternative Minimum Tax effective in Q1. For 2026, we anticipate our effective tax rate to be in the high teens, down from 20% in 2025 due to the One Big Beautiful Bill Act, primarily due to how foreign earnings are taxed. Next, our balance sheet and cash flow. We continue to benefit from our efficient and capital-light business model, delivering $1.7 billion of free cash flow in Q1. Over the trailing 12 months, we generated $4.5 billion of free cash flow, representing a free cash flow margin of 36%. Absent the impact of Reserve Now, Pay Later bookings, which defer guest payments from the time of booking closer to the date of stay, we expect that earned fees and free cash flow would have both grown year-over-year in Q1. Specifically, Reserve Now, Pay Later results in lower unearned fees in Q1 and Q2 and higher unearned fees in Q3. Our strong balance sheet and cash flow generation allowed us to repurchase $1.1 billion of our common stock in Q1. As a reminder, returning capital to shareholders remains a key component of our capital allocation strategy. And lastly, in Q1, we received investment-grade ratings from the major agencies and subsequently completed a $2.5 billion senior unsecured debt offering for debt repayment and general corporate purposes. We believe establishing a presence in the corporate bond market expands our access to financing, diversifies our investor base and supports long-term optimization of our cost of capital. Now let's shift to our Q2 and full year 2026 outlook. We're encouraged by the momentum we've seen so far this year and are excited about our road map to drive growth in 2026. In Q2, we expect to generate revenue of $3.54 billion to $3.6 billion, representing year-over-year growth of 14% to 16%. This includes an approximate 3% foreign exchange tailwind after factoring in our hedging program. We expect GBV to increase in the low double digits year-over-year, driven by growth in Nights and Seats Booked and a moderate increase in ADR. We expect the FX tailwind to ADR to be significantly lower in Q2 than in Q1. Finally, in Q2, we expect year-over-year growth in Nights and Seats Booked to decelerate slightly relative to the 9% growth we saw in Q1. This assumes an approximate 100 basis point headwind related to the conflict in the Middle East. On profitability, we expect adjusted EBITDA and adjusted EBITDA margin to be up year-over-year in Q2. Finally, for the full year 2026, we are raising our guidance and now expect year-over-year revenue growth to accelerate to low to mid-teens. The upward revision to our revenue outlook reflects meaningful progress across our growth initiatives and improvements to monetization through a simplified fee structure and our insurance program, which are expected to lift our full year take rate. We remain optimistic about our continued momentum even as we face tougher comps in the back half of this year against the rollout of Reserve Now, Pay Later and current headwinds from the Middle East. For profitability, we're now expecting our adjusted EBITDA margin to be at least 35%. We'll continue to prioritize reinvestment to support further growth across the business, specifically on efficient marketing spend, international expansion and AI initiatives. To close, our confidence in the increased full year outlook we provided is grounded in the trends we're seeing. Underlying demand is strong. Our product improvements are working. Our monetization initiatives are gaining traction, and our balance sheet and significant liquidity give us the flexibility to keep investing. With that, I will open it up to Q&A.

Operator, Operator

Your first question comes from the line of Ron Josey from Citi.

Ronald Josey, Analyst

I wanted to ask two, please. First, on app room nights booked through the app, the 22% growth and the two-thirds coming through the app, Brian, talk to us about the changes in the app that you've made that's driving that. And then maybe a larger, bigger picture question. I think recently, you had some comments on a podcast about rebuilding or rethinking how teams are structured given the world of AI. Any insights on there would be helpful on how the organization is organized.

Brian Chesky, CEO

Ron, on the app nights growth, one of the general trends we're seeing is that more and more people are gravitating to using our mobile application. This has been happening for over a decade. There are a couple of reasons for this. One, we've been more aggressive over the last year and a half in pushing people who open Airbnb on a mobile website to download the app, letting them know we have a much better experience. Increasingly, more people are opting in to notifications. Notifications pull people back into the app. We also optimize our email strategy to create hooks that bring people back into the application. We're seeing momentum on downloads in the App Store. Our rank in the App Store among global apps keeps improving year-over-year. Much of it is general improvements in optimization rather than a single silver bullet. Regarding how teams are being restructured with AI, I think it's very early. We're at the beginning of how AI will change how we work. One of my principles is that Airbnb has to move at the speed of AI. AI should be thought of as an accelerant to everything. The number one characteristic of AI is speed — it speeds every single thing up. It requires everyone to be more hands-on, nimble and adaptive to change. One benefit of how Airbnb is run is that leaders are hands-on. I do not think there will be as much of a role for pure people managers who operate only at 30,000 feet. Everyone will have to be more hands-on, engaged with details and data. Data inside a company is increasingly democratized; you don't need to go to data scientists to get data, we have self-serve dashboards. We're seeing many of our design managers and engineering managers return to coding or using AI tools. We have nearly 60% of our code being authored with AI assistance, significantly higher than our peers. These are some of the changes we're seeing. What the long-term implications are for team structure is too early to say definitively, but the themes will be speed, hands-on leadership and leveraging AI to increase productivity.

Operator, Operator

Your next question comes from the line of Richard Clarke from Bernstein.

Richard Clarke, Analyst

Just want to ask a couple on the Delta partnership you've set out today. I guess you talked about expanding take rate. I assume that this partnership comes at a bit of a cost. Is it just small enough that it doesn't affect your take rate trajectory? Are there more partnerships like this you can do? And I guess, embedding yourself into another airline partnership, how should we think about your own ambitions to do loyalty or your ambitions to sell air tickets going forward? Are those held back at all by this partnership?

Ellie Mertz, CFO

Let me speak a little bit about Delta and then Brian will talk about loyalty. We're excited about the Delta partnership that we announced earlier this week. I think it's a great opportunity for us to work with partners and effectively share in demand. In terms of economics, it is a revenue share program. You shouldn't anticipate that it has a negative impact on our take rate this year. Instead, as we called out in the letter, you should see modest upside to our take rate from both the migration to the single fee structure as well as our insurance program. So you shouldn't see this as a negative to our take rate. We think it's an effective and high ROI way to generate demand.

Brian Chesky, CEO

With regards to flights and loyalty, they're absolutely both on the table. I've always believed the best loyalty program is people loving your product and coming back. That is the best loyalty program. It is remarkable Airbnb has become as a large travel brand without a loyalty program. We're looking at something, but if we do, it won't be an additive points program. We are considering a differentiated and unique program true to Airbnb. I don't have anything to announce today, but when we do something, it will be distinct. Regarding flights, our vision is to build a global community for people to travel and live anywhere. How you get there is part of that vision. We don't have announcements on flights today, but it's on the table as part of our future vision.

Operator, Operator

Your next question comes from the line of Jed Kelly from Oppenheimer.

Jed Kelly, Analyst

I've noticed an improvement in the hotel product in New York City. Can you give us an update on how room nights are trending in some of your hotel test markets?

Ellie Mertz, CFO

We're excited about the work we've done on hotels. We're actively scaling the number of great high-quality boutique and independent hotels on the platform, and we've upgraded the product experience for hotels. We've improved the product display for individual hotels so they show the information consumers expect from a hotel versus a home. We're making it easier for consumers to find hotels if that's what they're looking for and to know when they're looking at a hotel relative to a home. Hotels today are a relatively small portion of the business — a single-digit percentage number of nights. But over the last couple of quarters, all the top-line metrics for hotels are growing more than double that of the entire business. We're seeing nice scaling on both the supply side and bookings, and we're excited about the path forward. When thinking about why we've entered hotels, it does three things. One, it allows us to satisfy demand in markets where we don't have sufficient supply due to regulation or other reasons. Two, it allows us to fill in travel nights for loyal guests when a hotel is the better offering — for last-minute one-night stays or solo travel. Three, it's a significant onboarding opportunity: having hotels on the platform can introduce new global travelers to Airbnb. Over 55% of people who book a hotel on the platform come back to book a home, so we're already seeing that onboarding ramp.

Brian Chesky, CEO

I'll add that we plan some updates to our hotel product and strategy on May 20.

Operator, Operator

Your next question comes from the line of Ken Gawrelski from Wells Fargo.

Kenneth Gawrelski, Analyst

If I could follow up on the hotel point. Could you talk a little about what you expect the customer experience to look like? Will it look more like Booking.com where homes and hotels are co-mingled? Or do you expect separate tabs and separate experiences and entry points for users? And second, can you talk about early learnings from the AI search experience? What are the early learnings? It seems like you've expanded it somewhat from a smaller test. Could you talk about what you've learned?

Brian Chesky, CEO

On hotels, our experience will be quite different than other OTAs. We care a lot about conversion, but first and foremost we want to do something differentiated and design-forward. Regarding inventory co-mingled versus tabs: currently, if you search in New York City, it is co-mingled, but we are testing a variety of UI components like a carousel, which allows distinct inventory types within a search results page. We're likely to have more tabs in the future for people who want to find something very specific, but the more important trend is personalization. People who only want hotels should only see hotels; those who only want homes should only see homes; others will see a blend depending on trip type. If you're searching last minute for one night on a business trip, and we know you sometimes book hotels, we'll likely show hotels. If you're looking for a family vacation of a week in Tuscany, we'll likely show homes. The ultimate paradigm is deep personalization: understanding intent and giving each member exactly what they're looking for. On AI search, our strategy differs from many competitors who started at the top of the funnel with 'where should I travel?' We started at the bottom of the funnel with customer service because it's the hardest problem in AI: you cannot hallucinate, responses must be quick, multilingual, and escalate accurately to humans when needed. It also requires protecting personally identifiable information and training on many policies and prior adjudications. I'm proud that over 40% of people interacting with our AI assistant self-solve; I believe it's the best AI self-solve in travel. From the bottom of the funnel, we moved to mid-funnel. For example, we have hundreds of millions of reviews, but guests don't have time to read them all, so we now provide AI summaries and filters; AI helps with matching and relevance too. On May 20 we'll show more mid-funnel AI features. Top of funnel or AI search is what we're currently testing. AI can feel magical, but under the hood it requires strong foundational technology and clean data. We've been cleaning our data warehouse and hired Ahmad, our CTO, who led the LLaMa model work at Meta, so we have AI-native leadership. We're piloting many ways to use AI in the search box, filter panels, and post-booking experiences. I don't think anyone has fully figured out AI for travel or e-commerce yet. Chatbot-style interfaces have several problems for travel: too much text in a photo-forward category, lack of direct manipulation, difficulty with large-scale comparison across tens of thousands of homes, and they are primarily single-player while most bookings involve multiple guests. Travel needs map-native, multiplayer, photo-forward interfaces. Over the next year you'll see a lot of innovation around AI-native interfaces for travel, and that's an opportunity for us.

Operator, Operator

Your next question comes from the line of Nick Jones from BNP Paribas.

Nicholas Jones, Analyst

I'd like to touch on the World Cup in North America. Can you talk about booking patterns? Do you feel many of the bookings are done so far? How should we think about the shape of that? And what happens to the supply after the event? You added, I believe, 100,000 listings. Do those stick around? Is there follow-through after the event where people still access that supply?

Ellie Mertz, CFO

We're extremely excited about the World Cup. In terms of cumulative bookings heading into the event, the World Cup is slated to be the largest event in Airbnb history. What's particularly exciting is not just the scale of total nights booked or guests we expect to serve, but the breadth: 16 cities across three countries gives us a large opportunity for brand awareness, sentiment, supply and community and policy engagement. We're happy with performance in bookings leading up to the games. One thing to note is that for past events like previous World Cups and the most recent Olympics, a lot of booking activity happens close to the actual games. As the games approach, people get more excited and bookings increase; many bookings are closer to the date than typical travel. Given where we are today, we feel good about the size of the event both for football enthusiasts and for the Airbnb brand and business. Regarding supply, in the 16 host cities for the World Cup we have attracted an incremental 100,000 listings in advance of the games. For supply retention, we saw with Paris that six months after the games we retained in excess of half of the listings that had come on specifically for the games. For events, we don't need all of the supply to stay because these are peak moments, but hosts often come to Airbnb for these events to earn incremental income and many stay because they realize the benefits of being a host on Airbnb.

Operator, Operator

Your next question comes from the line of Eric Sheridan from Goldman Sachs.

Eric Sheridan, Analyst

On the core alternative accommodation side of the business, can you talk about the opportunities and challenges in continuing to grow the supply base of alternative accommodations? Do you have views on AI playing a role in finding or sourcing less easily discoverable supply over the medium to long term?

Brian Chesky, CEO

You can think about our core accommodations business as a few categories. There are hosts that connect via an API — host API partners, primarily property managers. Then there are primary homes where people live primarily, vacation homes, and private rooms. I would break them into two main buckets: API partners and primary/vacation homes. For host API partners, AI enables us to build more tools. We've been a bit behind third parties in building tools for API partners, and that segment is growing fast. One thing we've found is the more properties you manage on Airbnb, the lower your rating tends to be, so guests tend to have higher satisfaction with individual hosts versus property managers. That's encouraging because that inventory is more unique and exclusive to Airbnb, but it also represents opportunity. API partners say they want to be better hosts but need better tools. AI can provide leverage: where previously you might need a team of 20 engineers, an engineer can spin up multiple AI agents to do continuous work. AI doesn't replace supervision entirely, but it significantly increases productivity. Adopting AI tools allows us to accelerate development for API partner functionality. For primary homes, AI helps with sourcing and discovery by making listing easier. Currently, listing requires typing address, title, description, uploading photos. I imagine a world where you say 'list my place,' provide an address and photos, and AI scrapes public info, uses computer vision on photos to write descriptions and populate details. For regular people, removing friction is crucial. Businesses that manage properties already have staff to list them. So AI is one of the best things that has happened for Airbnb because it helps reduce friction for regular hosts and builds better tools for partners.

Operator, Operator

Your next question comes from the line of John Colantuoni from Jefferies.

John Colantuoni, Analyst

On the expansion of the Reserve Now, Pay Later offering, could you talk about how consumer adoption and awareness has evolved since rolling the product out to more markets? Any notable observations around cancellations or conversion improvements compared to the U.S. market?

Ellie Mertz, CFO

To give color on the expansion and results: we initially launched Reserve Now, Pay Later in the U.S. in Q3 with great results. Over Q4, we began merchandising it up funnel so there was broader awareness before checkout, and that was incremental. In Q1, we rolled out RNPL to most of the rest of the world. There are slight differences in gross lift by geography, but not material. In every market where we've launched Reserve Now, Pay Later, there is a material lift to gross bookings, and in all cases we tested extensively to ensure the net lift to bookings is positive. Certainly, there is an elevated level of cancellations in the program, but across all regions, the net impact is positive to the business. In terms of relative adoption, the U.S. shows the highest level of adoption, but other markets are not far behind.

Operator, Operator

Your next question comes from the line of Lloyd Walmsley from Mizuho.

Lloyd Walmsley, Analyst

Two questions on hotels. First, where are you in terms of ironing out the kinks on the API and otherwise? Ellie mentioned redesigning the merchandising page. What is left to do before expanding to more cities? Second, how do you see Airbnb competing in hotels outside of filling inventory gaps — why would a consumer intent on a hotel shop on Airbnb rather than going to a hotel-focused site?

Ellie Mertz, CFO

We have had great success out of the gate building a product that works for our hotel partners. There's a continued roadmap to ensure we have the tools hotels need that differ from our homes hosts. At the same time, there's considerable opportunity ahead on the front end: making sure our product surfaces hotels at the right time to the right guest so they get booked. It's a different use case in terms of merchandising and timing, and we continue to test and refine to ensure we're bringing on high-quality hotels and getting them booked.

Brian Chesky, CEO

I'll add that we want to have the lowest price guarantee, best-in-class merchandising and a differentiated product. If you search New York today, we already have strong hotel merchandising. We have a lot of improvements, iterations, and customizations planned. One point: we have millions of visits on Airbnb. Hotels could be a multibillion-dollar revenue business just by converting travelers already on our site without having to attract people specifically for hotels. Many travelers are already in our 'store' looking for a place to stay; if they don't find a home here, they go elsewhere. Increasing conversion among existing traffic provides significant upside. Hotels also want to be on Airbnb, particularly boutique independents that often pay higher commissions to OTAs and may not want to franchise. Airbnb can be an appealing channel for them. Building out hotels will be relentless optimization and execution, and we are hiring both internally and externally to accelerate this.

Operator, Operator

Your next question comes from the line of Colin Sebastian from Baird.

Colin Sebastian, Analyst

Following up on the acceleration of first-time bookers, which regions or demographics are driving that expansion? Are those users showing different booking windows or property preferences compared to historical cohorts? Related, what's driving momentum in expansion markets — localization, payments, or other factors?

Ellie Mertz, CFO

We're excited about the continued acceleration in first-time bookers. We're seeing this in two main pools. First, expansion markets — these are relatively new markets for us with a huge opportunity for new guests. Second, younger cohorts, particularly Gen Z customers, are showing strength. Regarding expansion markets, Brazil is a compelling example. We've spent several years investing in marketing and product there, and the compounding growth at scale is strong. A few years ago Brazil was barely in our top 10 markets; now it's consistently in the top three, four or five and compounding over 20%. That gives us confidence in our country-by-country approach where we tailor marketing messages and product to local consumers. In Q1 alone we ran 16 local marketing campaigns to capture local cultural moments and drive awareness and consideration. We continue to localize product changes for specific markets — for example, adjusting displays for popular bed-and-breakfast inventory in Italy. We also tailor features to what specific cultures care about; for example, German guests care a lot about cleanliness, so we've highlighted cleanliness features for those guests. We're making the experience feel local and relevant.

Operator, Operator

Your next question comes from the line of Doug Anmuth from JPMorgan.

Douglas Anmuth, Analyst

Ellie, can you help us understand the confidence in the higher revenue growth for the year and the slight uptick in the view on EBITDA margin? Brian, given the Reserve Now, Pay Later penetration, are there other payment innovations or services that you see as opportunities on the platform?

Ellie Mertz, CFO

On the revenue revision upward, that reflects the momentum we've seen year-to-date in our growth initiatives. Specifically, we have more confidence in our underlying nights booked forecast for the year, more confidence in the durability of slightly higher ADRs, and we are starting to see the benefits from monetization efforts, which implies a slightly higher take rate in the back half of the year. Those three components drive the upward guide on the top line. On the bottom line, the slight change in language around the 35% EBITDA guide reflects upside on the top line, but we are actively reinvesting to drive growth. Reinvestment priorities include marketing channels with high ROI, expansion markets where we can capture more growth, and policy opportunities where more aggressive action can yield better outcomes. We are also ramping up our use of AI internally, which is an expense that will ramp over the year. Given the efficiencies we've delivered over time, we have the ability to absorb this in the strong margin profile we're confirming and updating here.

Brian Chesky, CEO

Regarding payments, Reserve Now, Pay Later is still in early innings. We're doing a global rollout and bringing it to desktop and merchanting it more. There's more to do. Payment installments have been particularly important in markets like Brazil. Many countries have unique payment methods, and enabling those is important. We've updated cancellation policies to be more flexible, which has helped. We have a roadmap around payments and pricing that we view as a major opportunity. Payments and pricing workstreams can deliver hundreds of millions of dollars of revenue annually. We have a dedicated team using the Project Hawaii model focused on pricing, and there will be many projects beyond RNPL that drive growth.

Operator, Operator

Your next question comes from the line of Brian Nowak from Morgan Stanley.

Brian Nowak, Analyst

Two questions. First, on hotels, what is the biggest hurdle or constraint that will dictate how quickly hotels roll across the platform this year and into next year? Second, on the bigger picture, you have a massive audience in your store — how do you think about adding air, car, grocery, or a more complete travel experience through ancillary offerings? Are teams working on these opportunities?

Brian Chesky, CEO

On the second question, it's not too big — we are thinking expansively. Amazon is an inspiration: they expanded categories from books to everything. We see category expansion opportunities; some will be first-party and some third-party. For example, we've announced grocery (a third-party integration with Instacart) — they have long-standing expertise, so we partner rather than build from scratch. Some first-party services like photography make sense for Airbnb because no site was doing it well for our hosts. We're building an ecosystem where the guest or member is the central focus, and a constellation of services surrounds them: homes, hotels, services, experiences. Every new offering tends to be less work than the prior, because once you solve one service, the next is often 20% different and then 10% different after that. Each new service brings different guest cohorts and has onboarding effects. Regarding hotels, the biggest constraint is not a single obstacle — it's relentless optimization and execution: supply and demand balance, pricing, merchandising and discovery. We have an excellent minimum viable product and will iterate quickly. Hotels want to be on Airbnb, particularly independents that want another channel and may prefer not to franchise. We're optimistic and are hiring experienced people to scale this quickly.

Operator, Operator

And that concludes our question-and-answer session. I will now turn the call back over to Brian for closing remarks.

Brian Chesky, CEO

Thanks, everyone, for joining us today. I'm incredibly proud of where our team continues to deliver. Revenue grew 18%. We beat and raised guidance. The momentum is showing up across every part of the business. I'll have more to share at our summer release on May 20. Thank you for joining.

Operator, Operator

This concludes today's conference call. Thank you for your participation. You may now disconnect.