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What changed in Airbnb's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Airbnb's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+573 added−602 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in Airbnb's 2023 10-K

573 paragraphs added · 602 removed · 435 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeLegal requirements relating to the collection, storage, handling, use, disclosure, transfer, and security of personal data continue to evolve, and regulatory scrutiny in this area is increasing around the world. This increases the complexity of compliance requirements, may limit offerings, and result in additional expenses while also diverting attention and resources from other projects.
Biggest changeWe take a variety of technical and organizational security measures and other procedures and protocols designed to protect data, including data pertaining to Hosts, guests, employees, and others. Legal requirements relating to the collection, storage, handling, use, disclosure, transfer, security and other processing of personal data continue to evolve, and regulatory scrutiny in this area is increasing around the world.
As we continue to evolve our foundational technology, we are focused on the following broad capabilities: • Data management systems that continue to support user privacy, analytics, machine learning, and business insights. • Service reliability leading to best-in-class performance centered on availability, latency, disaster recovery and business continuity, security, testability, observability, operability, and agility. • Cloud support focusing on robust capabilities for granular attribution and usage patterns to realize efficiency gains.
As we continue to evolve our foundational technology, we are focused on the following broad capabilities: • Data management systems that continue to support user privacy, analytics, machine learning/AI, and business insights. • Service reliability leading to best-in-class performance centered on availability, latency, disaster recovery and business continuity, security, testability, observability, operability, and agility. • Cloud support focusing on robust capabilities for granular attribution and usage patterns to realize efficiency gains.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are also available free of charge on our investor relations website (investors.airbnb.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) are also available free of charge on our investor relations website (investors.airbnb.com) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our competitors include: • Online travel agencies (“OTAs”), such as Booking Holdings (including the brands Booking.com, KAYAK, Priceline.com, and Agoda.com); Expedia Group (including the brands Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity); Trip.com Group (including the brands Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner); Hopper; Meituan Dianping; Fliggy (a subsidiary of Alibaba); Despegar; MakeMyTrip; and other regional OTAs; • Internet search engines, such as Google, including its travel search products; Baidu; and other regional search engines; • Listing and meta search websites, such as TripAdvisor, Trivago, Mafengwo, AllTheRooms.com, Hometogo, Holidu, and Craigslist; • Hotel chains, such as Marriott, Hilton, Accor, Wyndham, InterContinental, OYO, and Huazhu, as well as boutique hotel chains and independent hotels; • Property management companies, such as Vacasa, Sonder, Inspirato, Evolve, Awaze, and other regional property management companies; and • Online platforms offering experiences, such as Viator, GetYourGuide, Klook, Traveloka, TUI Musement, and KKDay.
Our competitors include: • Online travel agencies (“OTAs”), such as Booking Holdings (including the brands Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (including the brands Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity), Trip.com Group (including the brands Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Hopper, Fliggy (a subsidiary of Alibaba), Despegar, MakeMyTrip, and other regional OTAs; • Internet search engines, such as Google, including its travel search products, Baidu, and other regional search engines; • Listing and meta search websites, such as TripAdvisor, Trivago, Mafengwo, AllTheRooms.com, Hometogo, Holidu, and Craigslist; • Hotel chains, such as Marriott, Hilton, Accor, Wyndham, InterContinental, OYO, and Huazhu, as well as boutique hotel chains and independent hotels; • Property management companies, such as Vacasa, Sonder, Inspirato, Evolve, Awaze, and other regional property management companies; and • Online platforms offering experiences, such as Viator, GetYourGuide, Klook, Traveloka, TUI Musement, and KKDay.
As of December 31, 2022, 49% of our global employees identify in the gender binary as women and 16% of our U.S.-based employees identify as under-represented minorities. Through our hiring process, we commit to encouraging diversity and eliminating bias, and we publish the changing demographic makeup of our workforce to hold ourselves accountable.
As of December 31, 2023, 49% of our global employees identify in the gender binary as women and 16% of our U.S.-based employees identify as under-represented minorities. Through our hiring process, we commit to encouraging diversity and eliminating bias, and we publish the changing demographic makeup of our workforce to hold ourselves accountable.
These continued technology investments aim to ensure we have a robust platform that allows us to more quickly adapt to the needs of our Hosts and guests around the world and increase the productivity of our product development organization. Our Marketing Our marketing strategy includes brand marketing, communications, and performance marketing.
These continued technological investments aim to ensure we have a robust platform that allows us to more quickly adapt to the needs of our Hosts and guests around the world and increase the productivity of our product development organization. Our Marketing Our marketing strategy includes brand marketing, communications, and performance marketing.
We typically see a slight decline in GBV and a peak in check-ins in the third quarter, which results in a decrease in unearned fees and lower sequential level of Free Cash Flow, and a greater decline in GBV in the fourth quarter, where Free Cash Flow is typically lower.
We typically see a slight decline in GBV and a peak in check-ins in the third quarter, which results in a decrease in unearned fees, a lower sequential decrease in Free Cash Flow, and a greater decline in GBV in the fourth quarter, where Free Cash Flow is typically lower.
Additionally, we own trademark protections around the world for other brands or protectable brand elements important to our business, including but not limited to Rausch, our primary corporate color, localizations, translations, and transliterations of our primary brands, and brands associated with businesses we have acquired.
Additionally, we own trademark protections around the world for other brands or protectable brand elements important to our business, including but 6 Table of Contents not limited to Rausch, our primary corporate color, localizations, translations, and transliterations of our primary brands, and brands associated with businesses we have acquired.
As a result, increases in unearned fees generally make our Free Cash Flow and Free Cash Flow as a percentage of revenue the highest in the first two quarters of the year.
As a result, increases in unearned fees typically make our Free Cash Flow and Free Cash Flow as a percentage of revenue the highest in the first two quarters of the year.
Human Capital We consider the management of our global talent to be essential to the ongoing success of our business. As of December 31, 2022, we had 6,811 employees. 4 Table of Contents As of December 31, 2022, we relied on a global network of approximately 11,000 third-party contingent workers to handle the vast majority of our community support contacts.
Human Capital We consider the management of our global talent to be essential to the ongoing success of our business. As of December 31, 2023, we had 6,907 employees. 4 Table of Contents As of December 31, 2023, we relied on a global network of approximately 11,000 third-party contingent workers to handle the vast majority of our community support contacts.
Our costs are relatively fixed across quarters or vary in line with the volume of transactions, and we historically achieve our highest GBV in the first and second quarters of the year with comparatively lower check-ins.
A significant portion of our costs are relatively fixed across quarters or vary in line with the volume of transactions, and we historically achieve our highest GBV in the first and second quarters of the year with comparatively lower check-ins.
Our business collects, processes and uses the personal data of individuals across the globe. As a result, compliance with laws on data privacy and data security regulating the storage, sharing, use, processing, transfer, disclosure, and protection of personal data is core to our strategy and integral to the creation of trust in our platform.
Our business collects, processes, and uses the personal data of individuals across the globe. As a result, compliance with laws on data privacy and data security regulating the collection, storage, handling, use, disclosure, transfer, security, and other processing of personal data is core to our strategy and integral to the creation of trust in our platform.
We intend to continue to invest in our brand to educate new Hosts and guests on the benefits of Airbnb and the uniqueness of our offerings. We will continue to leverage our brand through a cohesive and integrated marketing strategy punctuated by our two product launches per year. • Expand our global network.
We intend to continue to invest in our brand to educate new Hosts and guests on the benefits of Airbnb and the uniqueness of our offerings. We will continue to leverage our brand through a cohesive and integrated marketing strategy through our two annual product launches. • Expand our global network.
For additional information regarding these and other laws, regulations, and rules that affect us and our business, see Note 12, Commitments and Contingencies – Legal and Regulatory Matters – Regulatory Matters to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K and Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K.
For additional information regarding these and other laws, regulations, and rules that affect us and our business, see Note 13, Commitments and Contingencies – Legal and Regulatory Matters – Regulatory Matters, to our consolidated financial statements included in Item 8 of Part I of this Annual Report on Form 10-K and Item 1A.
Business Overview We are a community based on connection and belonging—a community that was born in 2007 when two Hosts welcomed three guests to their San Francisco home, and has since grown to over 4 million Hosts who have welcomed over 1.4 billion guest arrivals to over 100,000 cities and towns in almost every country and region across the globe.
Item 1. Business Overview We are a community based on connection and belonging—a community that was born in 2007 when two Hosts welcomed three guests to their San Francisco home, and has since grown to over 5 million Hosts who have welcomed over 1.5 billion guest arrivals in almost every country and region across the globe.
With new behaviors developed during the COVID-19 pandemic, we believe the ways that people approach work, living, and travel have fundamentally changed. We believe there will be further opportunities to enhance our offerings based on these new behaviors and attract more guests to our platform. • Invest in our brand.
With new behaviors developed during the COVID-19 pandemic, we believe the ways that people approach work, living, and travel have fundamentally changed. We believe there will be further opportunities to enhance our offerings based on these new behaviors and attract more guests to our platform. • Perfect the core service.
First, our business model is adaptable. We have nearly every type of space in nearly every location, so however travel changes, we are able to adapt. Regardless of the economic environment, our guests come to Airbnb because they can find great value, and our Hosts can earn extra income. Second, we’ve relentlessly innovated while also staying focused and disciplined.
We have nearly every type of space in nearly every location, so however travel changes, we are able to adapt. Regardless of the economic environment, our guests come to Airbnb because they can find great value, and our Hosts can earn income. We’ve relentlessly innovated while also staying focused and disciplined.
Our Technology Our technology platform powers our two-sided marketplace and enables our global network of Hosts and guests. As of December 31, 2022, we had more than 1,900 engineers within our product development organization. Given the nature of the business, our technology platform has broad and complex requirements: • Support of global payments .
Our Technology Our technology platform powers our two-sided marketplace and enables our global network of Hosts and guests. As of December 31, 2023, we had more than 2,000 engineers within our product development organization. Given the nature of the business, our technology platform has broad and complex requirements: • Support of global payments .
AirCover for Hosts includes, among other features, guest property damage protection of up to $3 million per stay, liability coverage to Hosts of up to $1 million per occurrence in the event of third-party claims of personal injury or property damage, deep cleaning protection, and pet damage protection.
We offer top-to-bottom protection for our Hosts through AirCover for Hosts. AirCover for Hosts includes, among other features, guest property damage protection of up to $3 million per stay, liability coverage to Hosts of up to $1 million per occurrence in the event of third-party claims of personal injury or property damage, deep cleaning protection, and pet damage protection.
No single city represented more than 1.3% of our revenue before adjustments for incentives and refunds during the year ended December 31, 2022 or 1.1% of our active listings as of December 31, 2022.
No single city represented more than 2% of our revenue before adjustments for incentives and refunds during the year ended December 31, 2023 or approximately 1% of our active listings as of December 31, 2023.
The contents of these websites are not intended to be incorporated by reference into this report or in any other report or document we file. 7 Table of Contents
The contents of these websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file. 7 Table of Contents
Our key business metrics, including Gross Booking Value (“GBV”) and Adjusted EBITDA, can also be impacted by the timing of holidays and other events. We experience seasonality in our GBV that is generally consistent with the seasonality of Nights and Experiences Booked.
Our key business metrics, including Gross Booking Value (“GBV”) and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), can also be impacted by the timing of holidays and other events. We experience seasonality in our GBV that is generally consistent with the seasonality of Nights and Experiences Booked.
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Business Metrics and Non-GAAP Financial Measures” included in Item 7 of Part 2 of this Annual Report on Form 10-K for definitions of our key business metrics.
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Business Metrics and Non-GAAP Financial Measures” included in Item 7 of Part II of this Annual Report on Form 10-K for definitions of our key business metrics. Competition We operate in a highly competitive environment.
We are also focused on supporting our employees across the full employee lifecycle from recruitment to onboarding to ongoing development. Given the productivity of our workforce throughout the COVID-19 pandemic, in April 2022, we announced our Live and Work Anywhere policy. This policy allows for the vast majority of our employees to work remotely on a permanent basis.
We are also focused on supporting our employees across the employee lifecycle from recruitment to onboarding to ongoing development. Our Live and Work Anywhere policy allows for the vast majority of our employees to work remotely on a permanent basis.
We plan to expand our global network and continue to partner with communities to update laws and regulations for short-term rentals to allow more Hosts to join our platform. • Design new products and offerings.
We plan to continue to expand our global network and partner with communities to update laws and regulations for short-term rentals to allow more Hosts to join our platform. Our Platform Our Platform for Hosts We built our platform to seamlessly onboard new Hosts, especially those who previously had not considered hosting.
We will continue to invest in growing the size and quality of our Host community. We plan to attract more Hosts globally by expanding use cases and supporting all different types of Hosts, including those who host occasionally.
We plan to attract more Hosts globally by expanding use cases and supporting all different types of Hosts, including those who host occasionally. We will also continue to increase the support that we provide to our Hosts to deliver high-quality stays and experiences for guests.
It supports global payment capabilities; multilingual, real-time, community safety and support; city-specific regulatory support; and sophisticated anti-fraud and anti-money-laundering measures. • Delivery of deep business insights . It delivers deep business intelligence insights to manage our marketplace, including pricing insights and occupancy optimization for our Hosts. • Incorporation of sophisticated machine learning .
It supports global payment capabilities and sophisticated anti-fraud and anti-money-laundering measures. • Delivery of global community support . It provides multilingual, real-time community safety and support, and city-specific regulatory support. • Delivery of deep business insights .
Seasonality Our business is seasonal, reflecting typical travel behavior patterns over the course of the calendar year.
Risk Factors of Part I of this Annual Report on Form 10-K. Seasonality Our business is seasonal, reflecting typical travel behavior patterns over the course of the calendar year.
In addition to AirCover for Hosts, we introduced AirCover for guests in May 2022. AirCover for guests provides guests with a booking protection guarantee, a check-in guarantee, a “get-what-you-booked” guarantee, and a 24-hour safety support line. We have new initiatives under development and will continue to create additional features to strengthen the trust and safety on our platform.
We also offer AirCover for guests, which provides support for serious issues with a booking or during a stay, including Host cancellations, inability to check-in, inaccurate listings, and a 24-hour safety support line. We have new initiatives under development and will continue to create additional features to strengthen the trust and safety on our platform.
It incorporates sophisticated machine learning to power key areas, from fraud detection, to enabling customized and real-time community support. • Operation of a microservices architecture . We operate a microservices architecture and are evolving our foundational components to enable us to move rapidly in response to evolving customer needs without sacrificing correctness or stability.
We operate a microservices architecture and are evolving our foundational components to enable us to move rapidly in response to evolving customer needs without sacrificing correctness or stability.
We intend to make long-term decisions considering all of our stakeholders because their collective success is key for our business to thrive.
We intend to make long-term decisions considering all of our stakeholders because their collective success is key for our business to thrive. A Resilient Model We believe we are well positioned for the road ahead due to our adaptability and relentless innovation. Our business model is adaptable.
Our innovations are focused on improving our Host and guest experiences, making Airbnb more accessible and appealing for new Hosts and guests and driving increased engagement and loyalty with our existing community. We have made over 340 upgrades to our platform over the past two years, making it even easier to host and guests to book on Airbnb.
Our innovations are focused on improving our Host and guest experiences, making Airbnb more accessible and appealing for new Hosts and guests and driving increased engagement and loyalty with our existing community. Two years ago, we started doing twice-a-year product releases to address feedback from our existing community.
As our business matures, other seasonal trends may develop, or these existing seasonal trends may become more extreme.
As our business and travel continues to recover following the COVID-19 pandemic, other seasonal trends may develop, or these existing seasonal trends may become more extreme.
Regulators around the world continue to propose more stringent data privacy and data security laws, and these laws are rapidly increasing in number, complexity, enforcement, fines, and penalties.
This increases the complexity of compliance requirements, may limit offerings, and result in additional expenses while also diverting attention and resources from other projects. Regulators around the world continue to propose more stringent data privacy and data security laws, and these laws are rapidly increasing in number, complexity, enforcement, fines, and penalties.
We will also continue to increase the support that we provide to our Hosts to deliver high-quality stays and experiences for guests. • Grow and engage our guest community. We intend to continue to attract new guests to Airbnb and will continue to focus on engaging our existing guests to return to book and to use Airbnb with more frequency.
We’ll continue to raise awareness around hosting, make it easier to get started, and improve the overall experience for Hosts. • Grow and engage our guest community. We intend to continue to attract new guests to Airbnb and will continue to focus on engaging our existing guests to return to book and to use Airbnb with more frequency.
We consider a listing of a home or an experience to be an "active listing" if it is viewable on Airbnb and has been previously booked at least once on Airbnb (excluding HotelTonight).
We consider a listing of a home or an experience to be an "active listing" if it is viewable on Airbnb and has been previously booked at least once on Airbnb (excluding HotelTonight). 3 Table of Contents Our Platform for Guests Our website and mobile apps provide our guests with an engaging way to explore a wide variety of unique homes and experiences and an easy way to book them.
In addition to laws, regulations, and rules directly applicable to the short-term rental and home sharing business, we are subject to a wide variety of laws, regulations and rules governing our business practices, the Internet, e-commerce, and electronic devices, including those relating to taxation, privacy, data privacy, data security, pricing, content, advertising, discrimination, consumer protection, protection of minors, copyrights, distribution, messaging, mobile communications, electronic device certification, electronic waste, electronic contracts, communications, Internet access, competition, and unfair commercial practices.
These include those related to the Internet, e-commerce, and electronic devices, and involving taxation, privacy, data privacy, data security, pricing, content, advertising, discrimination, consumer protection, protection of minors, copyrights, distribution, messaging, mobile communications, use of AI and automated decision making, electronic device certification, electronic waste, electronic contracts, communications, Internet access, competition, and unfair commercial practices.
Hosts on Airbnb are everyday people who share their worlds to provide guests with the feeling of connection and being at home. We strive to connect people and places. Airbnb has five stakeholders and is designed with all of them in mind. Along with employees and shareholders, we serve Hosts, guests, and the communities in which they live.
Every day, Hosts offer unique stays and experiences that make it possible for guests to connect with communities in a more authentic way. Airbnb has five stakeholders and is designed with all of them in mind. Along with employees and shareholders, we serve Hosts, guests, and the communities in which they live.
We own a trademark portfolio with protections in more than 170 countries in which we currently operate for our primary brands — AIRBNB and our Bélo logo.
We have a substantial patent portfolio, consisting of issued patents and pending patent applications (“patent assets”) from the United States and multiple foreign jurisdictions. The portfolio includes both organically grown and acquired patent assets. We own a trademark portfolio with protections in 170 countries in which we currently operate for our primary brands — AIRBNB and our Bélo logo.
Additionally, in early 2021, we became a founding participant in the Lowering Emissions by Accelerating Forest Finance Coalition, a new public-private initiative that has mobilized $1 billion to fight tropical deforestation. Regulations We are subject to laws, regulations, and rules that affect the short-term rental and home sharing business at city, state, country, and regional levels.
Our aim is to procure such credits from high integrity projects, with a focus on nature-based solutions where feasible. Regulations We are subject to laws, regulations, and rules that affect the short-term rental and home sharing business at city, state, country, and regional levels.
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A Resilient Model As we look forward, we recognize the potential impact of the challenging macroeconomic conditions, including inflation and rising interest rates, potential decreased consumer spending, and the continued disruption of the COVID-19 pandemic on travel across the world. We believe we are well positioned for the road ahead due to our adaptability and relentless innovation.
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Our Long-Term Growth Strategy Our strategy is to continue to invest in our key strengths: • Make hosting mainstream. We’re focused on making hosting just as popular as traveling on Airbnb. We will continue to invest in growing the size and quality of our Host community.
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During the height of the pandemic, we made many difficult choices to reduce our spending, making us a leaner and more focused company, and we have kept this discipline ever since. Our Long-Term Growth Strategy Our strategy is to continue to invest in our key strengths: • Unlock more hosting.
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Since then, we’ve launched more than 430 new features and upgrades to our core service. In the past year alone, this included improved customer service, total price display, and new tools to help Hosts set more competitive prices.
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Our Platform Our Platform for Hosts We built our platform to seamlessly onboard new Hosts, especially those who previously had not considered hosting.
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We’ve made significant progress over the past three years to build a strong and profitable business. In addition to laying the foundation for differentiated offerings for our Hosts and guests, we’ve been focused on international expansion. We are investing in under-penetrated international markets and have seen strong results.
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In November 2022, we launched Airbnb Setup, which is a new way to easily list a home, with free one-to-one guidance from a Superhost Ambassador.
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During 2023, we launched new pricing tools to help Hosts set competitive prices, easily add weekly and monthly discounts, and compare their listing to similar ones in their area.
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In July 2022, all of our mainland Chinese listings were taken down as part of our decision to close the domestic business in China and instead focus on the outbound China business.
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To better meet the needs of our guests, we have launched a series of new features and upgrades through our biannual product releases to help guests find affordable, high quality and reliable stays across the platform.
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As of December 31, 2022, we had 6.6 million active listings globally. 3 Table of Contents Our Platform for Guests Our website and mobile apps provide our guests with an engaging way to explore a wide variety of unique homes and experiences and an easy way to book them.
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It delivers deep business intelligence insights to manage our marketplace, including pricing insights and occupancy optimization for our Hosts. • Incorporation of artificial intelligence (“AI”)/machine learning . It incorporates sophisticated AI to power key areas, from fraud detection, to personalized listing matching and enabling customized and real-time community support. • Operation of a microservices architecture .
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To better meet the needs of our guests in 2022, we launched a new way to search on Airbnb designed around Airbnb Categories, with over 60 new categories that organize homes based on their style, location, or proximity to a travel activity.
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Climate Change In 2021, we committed to a goal to operate as a net zero company for our global corporate operations by 2030, reducing greenhouse gas emissions associated with our corporate operations across Scope 1 (direct emissions from stationary combustion and refrigerants), Scope 2 (indirect emissions from purchased electricity, diesel generators and district heat), and the following Scope 3 categories defined by the Greenhouse Gas Protocol: purchased goods and services, capital goods, fuel- and energy-related activities (not included in Scope 1 or Scope 2), waste generated in operations, business travel, employee commuting, and upstream leased assets.
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In June 2022, we also launched travel insurance for guests to provide guests in certain jurisdictions with the option to insure guest reservations against certain risks associated with their bookings.
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To meet our goals, we are implementing a broad range of initiatives designed to help decarbonize our business and make our corporate operations more sustainable. We also purchase, and plan to continue purchasing, carbon credits to fully achieve our emissions goals in the long-term.
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We offer top-to-bottom protection for our Hosts through AirCover for Hosts, which we expanded in November 2022.
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In addition to laws, regulations, and rules directly applicable to the short-term rental and home sharing business, we are subject to a wide variety of laws, regulations and rules governing our business practices.
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Climate Change In 2021, we announced our commitment to operating as a Net Zero company for our global corporate operations by 2030. To meet our goal, we have committed to a number of steps, including reducing greenhouse gas emissions associated with our corporate operations, and investing in quality nature-based solutions to offset residual emissions.
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This commitment is the latest step we are taking to help address the climate crisis. In 2020 and 2021, we achieved 100 percent renewable energy in our global offices, fulfilling a commitment we made in 2020, by purchasing energy attribute certificates sufficient to match our global electricity use for our corporate operations for those years.
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We take a variety of technical and organizational security measures and other procedures and protocols to protect data, including data pertaining to Hosts, guests, employees, and others. Despite measures we put in place, we may be unable to anticipate or prevent unauthorized access to such data.
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While we saw COVID-19 distort the historical patterns of seasonality for our GBV, revenue, Adjusted EBITDA, and Free Cash Flow in 2020 and 2021 as a result of travel restrictions and changing travel preferences relating to the COVID-19 pandemic, we saw pre-pandemic patterns of seasonality return in 2022. Competition We operate in a highly competitive environment.
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We have a substantial patent portfolio, consisting of issued patents and pending patent applications from the United States and multiple foreign jurisdictions. The portfolio includes both organically grown patent assets and a large number of assets acquired from IBM as part of a 6 Table of Contents 2020 patent litigation settlement.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe have been, and expect to continue to be, subject to various government inquiries, investigations, audits, and proceedings related to legal and regulatory requirements such as compliance with laws related to short-term rentals, long-term rentals, and home sharing, tax, escheatment, consumer protection, pricing and currency display, advertising, discrimination, data sharing, payment processing, data 14 Table of Contents privacy, data security, cancellation policies, and competition.
Biggest changeOur efforts to influence legislative and regulatory proposals have an uncertain chance of success, could be limited by laws regulating lobbying or advocacy activity in certain jurisdictions, and even if successful, could be expensive and time consuming, and could divert the attention of management from operations. 13 Table of Contents Regulatory Inquiries, Litigation & Disputes We have been, and expect to continue to be, subject to legal and regulatory claims, litigation or pre-litigation disputes, and proceedings arising in the normal course of business, including various government inquiries, investigations, audits, and proceedings related to legal and regulatory requirements such as compliance with laws related to short-term rentals, long-term rentals, and home sharing, tax, escheatment, insurance services, employee related claims, consumer protection, pricing and currency display, advertising, discrimination, data sharing, payment processing, data privacy, data security, cancellation policies, and competition.
These professional Hosts often list on our platform as well as on the platforms of our competitors. We do not 8 Table of Contents control whether professional Hosts provide us with a sizable allocation of rooms and competitive pricing relative to the same properties listed with other services.
These professional Hosts often list on our platform as well as on the platforms of our competitors. We do not control whether professional Hosts provide us with a sizable allocation of rooms and competitive pricing relative to the same properties 8 Table of Contents listed with other services.
In addition, conducting international operations subjects us to risks, which include: • operational and compliance challenges caused by distance, language, and cultural differences; • the cost and resources required to localize our platform and services, which often requires the translation of our platform into foreign languages and adaptation for local practices and regulatory requirements; • unexpected, more restrictive, differing, and conflicting laws and regulations, including those laws governing Internet activities, short-term and long-term rentals (including those implemented in response to the COVID-19 pandemic), tourism, tenancy, taxes, licensing, payments processing, messaging, marketing activities, registration and/or verification of guests, ownership of intellectual property, content, data collection and privacy, security, data localization, data transfer and government access to personal information, and other activities important to our business; • uncertainties regarding the interpretation of national and local laws and regulations, uncertainty in the enforceability of legal rights, and uneven application of laws and regulations to businesses, in particular U.S. companies; • competition with companies that understand local markets better than we do, or that have a local presence and pre-existing relationships with potential Hosts and guests in those markets; • differing levels of social acceptance of home sharing, our brand, and offerings; • legal uncertainty regarding our liability for the listings, the services, and content provided by Hosts, guests, and other third parties; • uncertain resolutions of litigation or regulatory inquiries; • variations in payment forms for Hosts and guests, increased operational complexity around payments, and inability to offer local payment forms like cash or country specific digital forms of payment; • lack of familiarity and the burden of complying with a wide variety of U.S. and foreign laws, legal standards, and regulatory requirements, which are complex, sometimes inconsistent, and subject to unexpected changes; • potentially adverse tax consequences, including resulting from the complexities of foreign corporate income tax systems, value added tax (“VAT”) regimes, tax withholding rules, lodging taxes, often known as transient or occupancy taxes, hotel taxes, and other indirect taxes, tax collection or remittance obligations, and restrictions on the repatriation of earnings; • difficulties in managing and staffing international operations, including due to differences in legal, regulatory, and collective bargaining processes; • fluctuations in currency exchange rates, and in particular, decreases in the value of foreign currencies relative to the U.S. dollar; • regulations governing the control of local currencies and impacting the ability to collect and remit funds to Hosts in those currencies or to repatriate cash into the United States; • oversight by foreign government agencies whose approach to privacy or human rights may be inconsistent with that taken in other countries; • increased financial accounting and reporting burdens, and complexities and difficulties in implementing and maintaining adequate internal controls in an international operating environment; • political, social, and economic instability abroad, terrorist attacks, and security concerns in general; • operating in countries that are more prone to crime or have lower safety standards; • operating in countries that have higher risk of corruption; and • reduced or varied protection for our intellectual property rights in some countries.
In addition, conducting international operations subjects us to risks, which include: • operational and compliance challenges caused by distance, language, and cultural differences; • the cost and resources required to localize our platform and services, which often requires the translation of our platform into foreign languages and adaptation for local practices and regulatory requirements; • unexpected, restrictive, differing, and conflicting laws and regulations, including those laws governing Internet activities, short-term and long-term rentals (including those implemented in response to the COVID-19 pandemic), tourism, tenancy, taxes, licensing, payments processing, messaging, marketing activities, registration and/or verification of guests, ownership of intellectual property, content, data collection and privacy, security, data localization, data transfer and government access to personal information, and other activities important to our business; • uncertainties regarding the interpretation of national and local laws and regulations, uncertainty in the enforceability of legal rights, and uneven application of laws and regulations to businesses, in particular U.S. companies; • competition with companies that understand local markets better than we do, or that have a local presence and pre-existing relationships with potential Hosts and guests in those markets; • differing levels of social acceptance of home sharing, our brand, and offerings; • legal uncertainty regarding our liability for the listings, the services, and content provided by Hosts, guests, and other third parties; • uncertain resolutions of litigation or regulatory inquiries; • variations in payment forms for Hosts and guests, increased operational complexity around payments, and inability to offer local payment forms like cash or country specific digital forms of payment; • lack of familiarity and the burden of complying with a wide variety of U.S. and foreign laws, legal standards, and regulatory requirements, which are complex, sometimes inconsistent, and subject to unexpected changes; • potentially adverse tax consequences, including resulting from the complexities of foreign corporate income tax systems, value added tax (“VAT”) regimes, tax withholding rules, lodging taxes, often known as transient or occupancy taxes, hotel taxes, and other indirect taxes, tax collection or remittance obligations, and restrictions on the repatriation of earnings; • difficulties in managing and staffing international operations, including due to differences in legal, regulatory, and collective bargaining processes; • fluctuations in currency exchange rates, and in particular, decreases in the value of foreign currencies relative to the U.S. dollar; • regulations governing the control of local currencies and impacting the ability to collect and remit funds to Hosts in those currencies or to repatriate cash into the United States; • oversight by foreign government agencies whose approach to privacy or human rights may be inconsistent with that taken in other countries; • increased financial accounting and reporting burdens, and complexities and difficulties in implementing and maintaining adequate internal controls in an international operating environment; • political, social, and economic instability abroad, terrorist attacks, and security concerns in general; • operating in countries that are more prone to crime or have lower safety standards; • operating in countries that have higher risk of corruption; and • reduced or varied protection for our intellectual property rights in some countries.
Our indebtedness could materially adversely affect our financial condition. Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could materially adversely affect our business, results of operations, and financial condition, and impair our ability to satisfy our obligations under our indebtedness.
Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could materially adversely affect our business, results of operations, and financial condition, and impair our ability to satisfy our obligations under our indebtedness.
The failure to comply with applicable state and foreign laws and regulations could result in fines and/or proceedings against us by governmental agencies and/or consumers which, if material, could adversely affect our business, financial condition and results of operations.
The failure to comply with applicable state and foreign laws and regulations could result in fines and/or proceedings against us by governmental agencies and/or consumers which, if material, could adversely affect our business, results of operations, and financial condition.
These proposals include changes to the existing framework to calculate income tax, as well as proposals to change or impose new types of non-income (including indirect) taxes, including taxes based on a percentage of revenue.
These proposals include changes to the existing framework to calculate income tax, as well as proposals to change or impose new types of non-income taxes (including indirect taxes), including taxes based on a percentage of revenue.
If the protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to more effectively mimic our technologies, offerings, or features or methods of operations.
If the protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and competitors may be able to mimic our technologies, offerings, or features or methods of operations more effectively.
Our multi-series structure may have a material adverse effect on the market price of our Class A common stock. Our multi-series structure may result in a lower or more volatile market price of our Class A common stock, in adverse publicity, or other adverse consequences.
Our multi-series structure may have a material adverse effect on the market price of our Class A common stock. Our multi-series structure may result in a lower or more volatile market price of our Class A common stock, adverse publicity, or other adverse consequences.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. The trading market for our Class A common stock is influenced by the research and reports that industry or securities analysts publish about us or our business.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. The trading market for our Class A common stock is influenced by research and reports that industry or securities analysts publish about us or our business.
Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity (deficit). Realized gains and losses and other than-temporary impairments are reported within other income (expense), net in the consolidated statements of operations.
Unrealized gains and losses on available-for-sale debt securities are reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity (deficit). Realized gains and losses and other than-temporary impairments are reported within other income (expense), net on the consolidated statements of operations.
Our marketable equity securities 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 consolidated statements of operations. If the fair value of our marketable equity securities declines, our earnings will be reduced or losses will be increased.
Our marketable equity securities 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 on the consolidated statements of operations. If the fair value of our marketable equity securities declines, our earnings will be reduced or losses will be increased.
While we rely on a variety of statutory and common-law frameworks and defenses, including those provided by the DMCA, the CDA, the fair-use doctrine and various tort law defenses in the United States and the E-Commerce Directive in the European Union and other regulations, differences between statutes, limitations on immunity or responsibility, requirements to maintain immunity or proportionate responsibility, and moderation efforts in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by Hosts and guests or otherwise contributed by third-parties to our platform.
While we rely on a variety of statutory and common-law frameworks and defenses, including those provided by the DMCA, the CDA, the fair-use doctrine and various tort law defenses in the United States and the E-Commerce Directive and the DSA in the European Union and other regulations, differences between statutes, limitations on immunity or responsibility, requirements to maintain immunity or proportionate responsibility, and moderation efforts in the many jurisdictions in which we operate may affect our ability to rely on these frameworks and defenses, or create uncertainty regarding liability for information or content uploaded by Hosts and guests or otherwise contributed by third-parties to our platform.
In addition, if our platform is not easy to navigate, guests have an unsatisfactory sign-up, search, booking, or payment experience on our platform, the listings and other content provided on our platform is not displayed effectively to guests, we are not effective in engaging guests across our various offerings and tiers, or we fail to provide an experience in a manner that meets rapidly changing demand, we could fail to convert first-time guests and fail to engage with existing guests, which would materially adversely affect our business, results of operations, and financial condition.
In addition, if our platform is not easy to navigate, guests have an unsatisfactory sign-up, search, booking, or payment experience on our platform, the listings and other content provided on our platform is not displayed effectively to guests, we are not effective in engaging guests across our various offerings, or we fail to provide an experience in a manner that meets rapidly changing demand, we could fail to convert first-time guests and fail to engage with existing guests, which would materially adversely affect our business, results of operations, and financial condition.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, extreme temperatures and ambient temperature increases, hurricanes, flooding, rising sea levels, shortages of water, droughts, and wildfires (although it is currently impossible to accurately predict the impact of climate change on the frequency or severity of these events), any of which could have a material adverse effect on our business, results of operations, and financial condition.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, extreme weather events, extreme temperatures and ambient temperature increases, hurricanes, flooding, rising sea levels, shortages of water, droughts, and wildfires (although it is currently impossible to accurately predict the impact of climate change on the frequency or severity of these events), any of which could have a material adverse effect on our business, results of operations, and financial condition.
These provisions provide for the following: • a multi-series structure which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, Class C common stock, and Class H common stock; • a classified board of directors with three-year staggered terms, who can only be removed for cause, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to set the size of the board of directors and to elect a director to fill a vacancy, however occurring, including by an expansion of the board of directors, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including voting or other rights or preferences, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • in addition to our board of director’s ability to adopt, amend, or repeal our amended and restated bylaws, our stockholders may adopt, amend, or repeal our amended and restated bylaws only with the affirmative vote of the holders of at least 66 2/3% of the voting power of all our then-outstanding shares of capital stock; • the required approval of (i) at least 66 2/3% of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation and (ii) for so long as any shares of Class B common stock are outstanding, the holders of at least 80% of the shares of Class B common stock outstanding at the time of such vote, voting as a separate series, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation; • the ability of stockholders to act by written consent only as long as holders of our Class B common stock hold at least 50% of the voting power of our capital stock; • the requirement that a special meeting of stockholders may be called only by an officer of our company pursuant to a resolution adopted by a majority of our board of directors then in office or the chairperson of our board; • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us; and • the limitation of liability of, and provision of indemnification to, our directors and officers.
These provisions provide for the following: • a multi-series structure which provides our holders of Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock, Class B common stock, Class C common stock, and Class H common stock; • a classified board of directors with three-year staggered terms, who can only be removed for cause, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to set the size of the board of directors and to elect a director to fill a vacancy, however occurring, including by an expansion of the board of directors, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including voting or other rights or preferences, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • in addition to our board of director’s ability to adopt, amend, or repeal our amended and restated bylaws, our stockholders may adopt, amend, or repeal our amended and restated bylaws only with the affirmative vote of the holders of at least 66 2/3% of the voting power of all our then-outstanding shares of capital stock; • the required approval of (i) at least 66 2/3% of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation and (ii) for so long as any shares of Class B common stock are outstanding, the holders of at least 80% of the shares of Class B common stock outstanding at the time of such vote, voting as a separate series, to adopt, amend, or repeal certain provisions of our restated certificate of incorporation; • the ability of stockholders to act by written consent only as long as holders of our Class B common stock hold at least 50% of the voting power of our capital stock; • the requirement that a special meeting of stockholders may be called only by an officer of our Company pursuant to a resolution adopted by a majority of our board of directors then in office or the chairperson of our board; 45 Table of Contents • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us; and • the limitation of liability of, and provision of indemnification to, our directors and officers.
Our systems and operations, including those provided by third-party service providers, are vulnerable to damage or interruption from human error, computer viruses, earthquakes, floods, fires, power loss, and similar events. For example, we have significant operations in San Francisco, which is built on a high-risk liquefaction zone and is near major earthquake fault lines.
Our IT Systems and operations, including those provided by third-party service providers, are vulnerable to damage or interruption from human error, computer viruses, earthquakes, floods, fires, power loss, and similar events. For example, we have significant operations in San Francisco, which is built on a high-risk liquefaction zone and is near major earthquake fault lines.
For example, if new regulations requiring us to share Host data with such governmental organizations or to ensure that Hosts have a registration or permit number before publishing their listings or some other form of regulation are implemented, our revenue from listings there may be substantially reduced due to the departure from our platform of Hosts who do not wish to share their data or to obtain a registration or permit number.
For example, if new regulations requiring us to share Host data with governmental organizations or to ensure that Hosts have a registration or permit number before publishing their listings or some other form of regulation are implemented, our revenue from listings there may be substantially reduced due to the departure from our platform of Hosts who do not wish to share their data or to obtain a registration or permit number.
As a result, governments may enact new laws and regulations and/or view matters or interpret laws and regulations differently than they have in the past, including laws and regulations which are responsive to ESG trends or otherwise seek to reduce the carbon emissions relating to travel and set minimum energy efficiency requirements, which could materially adversely affect our business, results of operations, and financial condition.
As a result, governments are, and may continue to, enact new laws and regulations and/or view matters or interpret laws and regulations differently than they have in the past, including laws and regulations which are responsive to ESG trends or otherwise seek to reduce the carbon emissions relating to travel and set minimum energy efficiency requirements, which could materially adversely affect our business, results of operations, and financial condition.
The successful assertion of one or more large claims against us that exceed available insurance coverage, denial of coverage as to any specific claim, or any change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements, could have a material adverse effect on our business, results of operations, and financial condition.
Therefore, the successful assertion of one or more large claims against us that exceed available insurance coverage, denial of coverage as to any specific claim, or any change or cessation in our insurance policies and coverages, including premium increases or the imposition of large deductible requirements, could have a material adverse effect on our business, results of operations, and financial condition.
Any incident, whether actual or rumored to have occurred, involving the safety or security of listings, Hosts, guests, or other members of the public, fraudulent transactions, or incidents that are mistakenly attributed to Airbnb, and any media coverage resulting therefrom, could create a negative public perception of our platform, which would adversely impact our ability to attract Hosts and guests.
Any incident, whether actual or rumored to have occurred, involving the safety, security or quality of listings, Hosts, guests, or other members of the public, fraudulent transactions, or incidents that are mistakenly attributed to Airbnb, and any media coverage resulting therefrom, could create a negative public perception of our platform, which would adversely impact our ability to attract Hosts and guests.
Share repurchases could have an impact on our share trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations. Under our restated certificate of incorporation, we are authorized to issue 2,000,000,000 shares of Class C common stock.
Share repurchases could have an impact on our share trading prices, increase the volatility of the price of our Class A common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations. Under our restated certificate of incorporation, we are authorized to issue 2,000,000,000 shares of Class C common stock.
While we seek to work with governments, we have in the past been, and are likely in the future to become, involved in disputes with government agencies regarding such laws and regulations. For example, some governments have attempted to impose fines on us regarding what they contend is illegal offering of short-term accommodations in violation of applicable laws.
While we seek to work with governments, we have in the past been, and are likely in the future to become, involved in disputes with government agencies regarding laws and regulations. For example, some governments have attempted to impose fines on us regarding what they contend is illegal offering of short-term accommodations in violation of applicable laws.
Bad actors may also employ other schemes aimed at defrauding our Hosts or guests in ways that we may not anticipate or be able to adequately guard against. Even if phishing and spamming attacks and other fraud schemes are not carried out through our systems, victims may nevertheless seek recovery from us.
Bad actors may also employ other schemes aimed at defrauding our Hosts or guests in ways that we may not anticipate or be able to adequately guard against. Even if phishing and spamming attacks and other fraud schemes are not carried out through our IT Systems, victims may nevertheless seek recovery from us.
The ability of fraudsters to directly target our Hosts and guests with fraudulent communications, or cause an account takeover, exposes us to significant financial fraud risk, including costly litigation, which is difficult to fully mitigate. Generally, our practice is to encrypt certain sensitive data when it is in transit and at rest.
The ability of fraudsters to directly target our Hosts and guests with fraudulent communications, or cause an account takeover, exposes us to significant fraud risk, including costly litigation, which is difficult to fully mitigate. Generally, our practice is to encrypt certain sensitive data when it is in transit and at rest.
We may not be able to upgrade our systems and infrastructure to accommodate such conditions in a timely manner, and depending on the systems affected, our transaction and payment processing, and financial and accounting systems could be impacted for a meaningful amount of time, which could materially adversely affect our business, results of operations, and financial condition.
We may not be able to upgrade our IT Systems and infrastructure to accommodate such conditions in a timely manner, and depending on the systems affected, our transaction and payment processing, and financial and accounting systems could be impacted for a meaningful amount of time, which could materially adversely affect our business, results of operations, and financial condition.
We rely primarily on Amazon Web Services in the United States and abroad to host and deliver our platform. Third parties also provide services to key aspects of our operations, including Internet connections and networking, data storage and processing, trust and safety, security infrastructure, source code management, and testing and deployment.
We rely primarily on Amazon Web Services in the United States and abroad to host and deliver our platform. Third parties also provide services to key aspects of our operations, including Internet connections and networking, messaging, data storage and processing, trust and safety, security infrastructure, source code management, and testing and deployment.
Because liability often flows from information or content on our platform and/or services accessed through our platform, as we continue to expand our offerings, tiers, and scope of business, both in terms of the range of offerings and services and geographical operations, we may face or become subject to additional or different laws and regulations.
Because liability often flows from information or content on our platform and/or services accessed through our platform, as we continue to expand our offerings and scope of business, both in terms of the range of offerings and services and geographical operations, we may face or become subject to additional or different laws and regulations.
We have, from time to time, found defects or errors in our system and software limitations that have resulted in, and may discover additional issues in the future that could result in, platform unavailability or system disruption, or the inability of our systems to implement timely updates that are required for regulatory compliance.
We have, from time to time, found defects or errors in our IT Systems and software limitations that have resulted in, and may discover additional issues in the future that could result in, platform unavailability or system disruption, or the inability of our systems to implement timely updates that are required for regulatory compliance.
The impact of these issues may be more pronounced if we are seen to have failed to provide prompt and appropriate community support or our platform policies are perceived to be too permissive, too restrictive, or providing Hosts and/or guests with unsatisfactory resolutions.
The impact of these issues may be more pronounced if we are seen to have failed to provide prompt and appropriate community support or our platform policies are perceived to be too permissive, too restrictive, or provide Hosts and/or guests with unsatisfactory resolutions.
Compliance with laws and regulations of different jurisdictions imposing varying standards and requirements is burdensome for businesses like ours, imposes added cost and increases potential liability to our business, and makes it difficult to realize business efficiencies and economies of scale.
Compliance Costs Compliance with laws and regulations of different jurisdictions imposing varying standards and requirements is burdensome for businesses like ours, imposes added cost and increases potential liability to our business, and makes it difficult to realize business efficiencies and economies of scale.
In addition, the number of listings on Airbnb may decline as a result of a number of other factors affecting Hosts, including: the COVID-19 pandemic; enforcement or threatened enforcement of laws and regulations, including short-term occupancy and tax laws; private groups, such as homeowners, landlords, and condominium and neighborhood associations, adopting and enforcing contracts that prohibit or restrict home sharing; leases, mortgages, and other agreements, or regulations that purport to ban or otherwise restrict home sharing; Hosts opting for long-term rentals on other third-party platforms as an alternative to listing on our platform; economic, social, and political factors; perceptions of trust and safety on and off our platform; negative experiences with guests, including guests who damage Host property, throw unauthorized parties, or engage in violent and unlawful acts; and our decision to remove Hosts from our platform for not adhering to our Host standards or other factors we deem detrimental to our community.
In addition, the number of listings on Airbnb may decline as a result of a number of other factors affecting Hosts, including: any pandemic; enforcement or threatened enforcement of laws and regulations, including short-term occupancy and tax laws; private groups, such as homeowners, landlords, and condominium and neighborhood associations, adopting and enforcing contracts that prohibit or restrict home sharing; leases, mortgages, and other agreements, or regulations that purport to ban or otherwise restrict home sharing; Hosts opting for long-term rentals on other third-party platforms as an alternative to listing on our platform; economic, social, and political factors; perceptions of trust and safety on and off our platform; negative experiences with guests, including guests who damage Host property, throw unauthorized parties, or engage in violent and unlawful acts; and our decision to remove Hosts from our platform for not adhering to our Host standards or other factors we deem detrimental to our community.
Our ability to manage and account accurately for the cash underlying our customer funds requires a high level of internal controls. As our business continues to grow and we expand our offerings and tiers, we must continue to strengthen our associated internal controls.
Our ability to manage and account accurately for the cash underlying our customer funds requires a high level of internal controls. As our business continues to grow and we expand our offerings, we must continue to strengthen our associated internal controls.
We may also be subject to additional tax liabilities relating to indirect or other non-income taxes, as described in our risk factor titled “— Uncertainty in the application of taxes to our Hosts, guests, or platform could increase our tax liabilities and may discourage Hosts and guests from conducting business on our platform.” Our tax positions or tax returns are subject to change, and therefore we cannot accurately predict whether we may incur material additional tax liabilities in the future, which would materially adversely affect our results of operations and financial condition.
We may also be subject to additional tax liabilities relating to indirect or other non-income taxes, as described in our risk factor titled “Uncertainty in the application of taxes to our Hosts, guests, or platform could increase our tax liabilities and may discourage Hosts and guests from conducting business on our platform.” Our tax positions or tax returns are subject to change, and therefore we cannot accurately predict whether we may incur material additional tax liabilities in the future, which would materially adversely affect our results of operations and financial condition.
In addition, bad actors have targeted and will continue to target our Hosts and guests directly with attempts to breach the security of their accounts or management systems, such as through phishing attacks where a third party attempts to infiltrate our systems or acquire information by posing as a legitimate inquiry or electronic communication, which are fraudulent identity theft schemes designed to appear as legitimate communications from us or from our Hosts or guests, partners, or vendors.
In addition, bad actors have targeted and will continue to target our Hosts and guests directly with attempts to breach the security of their accounts or management systems, such as through social engineering or phishing attacks where a third party attempts to infiltrate our systems or acquire information by posing as a legitimate inquiry or electronic communication, which are fraudulent identity theft schemes designed to appear as legitimate communications from us or from our Hosts or guests, partners, or vendors.
In the event of certain system failures, we may not be able to switch to back-up systems immediately and the time to full recovery could be prolonged. We have experienced system failures from time to time.
In the event of certain IT System failures, we may not be able to switch to back-up systems immediately and the time to full recovery could be prolonged. We have experienced IT System failures from time to time.
For instance, from time to time, we have experienced distributed denial-of-service type attacks on our systems that have made portions of our platform slow or unavailable for periods of time.
For instance, from time to time, we have experienced distributed denial-of-service type attacks on our IT Systems that have made portions of our platform slow or unavailable for periods of time.
There are numerous other potential forms of attack, such as phishing, account takeovers, malicious code injections, ransomware or other extortion-based attempts, and the attempted use of our platform to launch a denial-of-service attack against another party, each of which could cause significant interruptions in our operations or involve us in legal or regulatory proceedings.
There are numerous other potential forms of attack, such as social engineering/phishing, account takeovers, malicious code injections, ransomware or other extortion-based attempts, and the attempted use of our platform to launch a denial-of-service attack against another party, each of which could cause significant interruptions in our operations or involve us in legal or regulatory proceedings.
Actions by the U.S. government 16 Table of Contents could also impair our ability to effectively operate in China, including through the use of Executive Orders or trade blacklists to ban or limit the use of services provided by Chinese third parties. We conduct our business in China through a variable interest entity (“VIE”) and a wholly-foreign owned entity.
Actions by the U.S. government 15 Table of Contents could also impair our ability to effectively operate in China, including through the use of Executive Orders or trade blacklists to ban or limit the use of services provided by Chinese third parties. We conduct our business in China through a variable interest entity (“VIE”) and a wholly-foreign owned entity.
Like the payment networks, NACHA may update its operating rules and guidelines at any time, which can require us to take more costly compliance measures or to develop more complex monitoring systems. We rely on third-party payment service providers to process payments made by guests and payments made to Hosts on our platform.
Similar to the payment networks, NACHA may update its operating rules and guidelines at any time, which can require us to take more costly compliance measures or to develop more complex monitoring systems. We rely on third-party payment service providers to process payments made by guests and payments made to Hosts on our platform.
In particular, if we become more involved in Hosts’ listings and conduct related to bookings, then we are more likely to draw scrutiny and additional regulations from governments and undercut various defenses we may have to claims or attempts to regulate us, which further constrain our business and impose additional liability on us as a platform.
Furthermore, if we become more involved in Hosts’ listings and conduct related to bookings, then we are more likely to draw scrutiny and additional regulations from governments and undercut various defenses we may have to claims or attempts to regulate us, which further constrain our business and impose additional liability on us as a platform.
Among other changes, the IRA introduced a corporate minimum tax on certain corporations with average adjusted financial statement income over a three-tax year period in excess of $1 billion and an excise tax on certain stock repurchases by certain covered corporations for taxable years beginning after December 31, 2022.
Among other changes, the IRA introduced a corporate alternative minimum tax (“CAMT”) on certain corporations with average adjusted financial statement income over a three-tax year period in excess of $1 billion, and an excise tax on certain stock repurchases by certain covered corporations for taxable years beginning after December 31, 2022.
The Organization for Economic Cooperation and Development has been working on a Base Erosion and Profit Shifting Project, and issued a report in 2015 and an interim report in 2018 detailing 15 key actions aimed at ensuring profits are taxed where the economic activities generating those profits are performed and where value is created.
The Organization for Economic Cooperation and Development (“OECD”) has been working on a Base Erosion and Profit Shifting Project (“BEPS”), and issued a report in 2015 and an interim report in 2018 detailing 15 key actions aimed at ensuring profits are taxed where the economic activities generating those profits are performed and where value is created.
In March 2021, we issued $2.0 billion aggregate principal amount of 0% convertible senior notes due 2026 (the "2026 Notes"). In addition, on October 31, 2022, we entered into a five-year unsecured revolving credit facility with $1.0 billion of initial commitments from a group of lenders (“2022 Credit Facility”).
In March 2021, we issued $2.0 billion aggregate principal amount of 0% convertible senior notes due 2026 (the “2026 Notes”). In addition, on October 31, 2022, we entered into a five-year unsecured revolving credit facility with $1.0 billion of initial commitments from a group of lenders (“2022 Credit Facility”).
The CCPA provides new and enhanced data privacy rights to California residents, such as affording consumers the right to access and delete their information and to opt out of certain sharing and sales of personal information. The CCPA also prohibits covered businesses from discriminating against consumers (for example, charging more for services) for exercising any of their CCPA rights.
The CCPA provided new and enhanced data privacy rights to California residents, such as affording consumers the right to access and delete their information and to opt out of certain sharing and sales of personal information. The CCPA also prohibits covered businesses from discriminating against consumers (for example, charging more for services) for exercising any of their CCPA rights.
Many large geographies in which we operate, including Australia, Brazil, Canada, China, and India, have passed or are in the process of passing comparable or other robust data privacy and security legislation or regulation, which may lead to additional costs and increase our overall risk exposure.
Many large geographies in which we operate, including Australia, Brazil, Canada, China, India, and South Korea, have passed or are in the process of passing comparable or other robust data privacy and security legislation or regulation, which may lead to additional costs and increase our overall risk exposure.
In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail to or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of our platform and services, increase prices, impose additional costs or requirements on us or our customers, or give preferential treatment to our competitors.
In addition, these third parties may breach their agreements with us, disagree with our interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail to or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of our platform and services, increase prices, impose additional costs or requirements on us or our customers, or give 39 Table of Contents preferential treatment to our competitors.
Together, these laws will add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs, could impact strategies and availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies.
Together, these laws will add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in resources to compliance programs and cyber security, could impact strategies and availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies.
If any jurisdiction in which we operate adopts news laws or changes its interpretation of its laws, rules, or regulations relating to data residency or localization such that we are unable to comply in a timely manner or at all, we could risk losing our rights to operate in such jurisdictions.
If any jurisdiction in which we operate adopts new laws or changes its interpretation of its laws, rules, or regulations relating to data residency or localization such that we are unable to comply in a timely manner or at all, we could risk losing our rights to operate in such jurisdictions.
We believe that our competitors include: • OTAs such as Booking Holdings (including the brands Booking.com, KAYAK, Priceline.com, and Agoda.com); Expedia Group (including the brands Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity); Trip.com Group (including the brands Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner); Hopper; Meituan Dianping; Fliggy (a subsidiary of Alibaba); Despegar; MakeMyTrip; and other regional OTAs; • Internet search engines, such as Google, including its travel search products; Baidu; and other regional search engines; • Listing and meta search websites, such as TripAdvisor, Trivago, Mafengwo, AllTheRooms.com, Hometogo, Holidu, and Craigslist; • Hotel chains, such as Marriott, Hilton, Accor, Wyndham, InterContinental, OYO, and Huazhu, as well as boutique hotel chains and independent hotels; • Property management companies, such as Vacasa, Sonder, Inspirato, Evolve, Awaze, and other regional property management companies; and • Online platforms offering experiences, such as Viator, GetYourGuide, Klook, Traveloka, TUI Musement, and KKDay.
We believe that our competitors include: • OTAs such as Booking Holdings (including the brands Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (including the brands Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity), Trip.com Group (including the brands Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Hopper, Fliggy (a subsidiary of Alibaba), Despegar, MakeMyTrip, and other regional OTAs; 10 Table of Contents • Internet search engines, such as Google, including its travel search products, Baidu, and other regional search engines; • Listing and meta search websites, such as TripAdvisor, Trivago, Mafengwo, AllTheRooms.com, Hometogo, Holidu, and Craigslist; • Hotel chains, such as Marriott, Hilton, Accor, Wyndham, InterContinental, OYO, and Huazhu, as well as boutique hotel chains and independent hotels; • Property management companies, such as Vacasa, Sonder, Inspirato, Evolve, Awaze, and other regional property management companies; and • Online platforms offering experiences, such as Viator, GetYourGuide, Klook, Traveloka, TUI Musement, and KKDay.
If Hosts, guests, or third parties engage in criminal activity, misconduct, fraudulent, negligent, or inappropriate conduct or use our platform as a conduit for criminal activity, consumers may not consider our platform and the listings on our platform safe, and we may receive negative media coverage, or be subject to involvement in a government investigation concerning such activity, which could adversely impact our brand and reputation, and lower the adoption rate of our platform.
If Hosts, guests, or third parties engage in criminal activity, misconduct, fraudulent, negligent, or inappropriate conduct or use our platform as a conduit for criminal activity, consumers may not consider our platform and the listings on our platform safe, and we may receive 22 Table of Contents negative media coverage, or be subject to involvement in a government investigation concerning such activity, which could adversely impact our brand and reputation, and lower the adoption rate of our platform.
In addition, our results of operations may fluctuate as a result of a variety of other factors, some of which are beyond our control, including: • reduced travel and cancellations due to other events beyond our control such as health concerns, including the COVID-19 pandemic, other epidemics and pandemics, natural disasters, wars, regional hostilities or law enforcement demands, and other regulatory actions; • global macroeconomic conditions; • periods with increased investments in our platform for existing offerings, new offerings and initiatives, marketing, and the accompanying growth in headcount; • our ability to maintain growth and effectively manage that growth; • increased competition; • our ability to expand our operations in new and existing regions; • changes in governmental or other regulations affecting our business; • changes to our internal policies or strategies; • harm to our brand or reputation; and • other risks described elsewhere in this Annual Report on Form 10-K.
In addition, our results of operations may fluctuate as a result of a variety of other factors, some of which are beyond our control, including: • reduced travel and cancellations due to other events beyond our control such as health concerns, including epidemics and pandemics, natural disasters, wars, political instability, regional hostilities or law enforcement demands, and other regulatory actions; • global macroeconomic conditions; • periods with increased investments in our platform for existing offerings, new offerings and initiatives, marketing, and the accompanying growth in headcount; • our ability to maintain growth and effectively manage that growth; • increased competition; • our ability to expand our operations in new and existing regions; • changes in governmental or other regulations affecting our business; • changes to our internal policies or strategies; • harm to our brand or reputation; and • other risks described elsewhere in this Annual Report on Form 10-K.
Open source software is licensed by its authors or owners under open source licenses, which in some instances may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license.
Open source software is licensed by its authors or owners under open source licenses, which in some 41 Table of Contents instances may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open source software for no cost, that we make publicly available the source code for any modifications or derivative works we create based upon, incorporating or using the open source software, or that we license such modifications or derivative works under the terms of the particular open source license.
We could be subject to significant fines or other enforcement actions if we are found to violate disclosure, reporting, anti-money laundering, economic and trade sanctions, capitalization, fund management, corporate governance and internal controls, risk management, data privacy, data security and data localization, information security, banking secrecy, taxation, sanctions, or other laws and requirements, including those imposed on UK EMIs and Luxembourg payments institutions.
We could be subject to significant fines or other enforcement actions if we are found to violate disclosure, reporting, anti-money laundering, counter-terrorist financing economic and trade sanctions, capitalization, fund management, corporate governance and internal controls, risk management, data privacy, data security and data localization, information security, banking secrecy, taxation, sanctions, or other laws and requirements, including those imposed on UK EMIs and Luxembourg payments institutions.
The laws of countries in Asia and Latin America generally provide for direct liability if a platform is involved in creating such content or has actual knowledge of the content without taking action to take it down.
Further, the laws of countries in Asia and Latin America already generally provide for direct liability if a platform is involved in creating such content or has actual knowledge of the content without taking action to take it down.
Further, if we or our Hosts and guests were required to comply with laws and regulations, government requests, or agreements with government agencies that adversely impact our relations with Hosts and guests, our business, results of operations, and financial condition would be materially adversely affected.
Further, if we or our Hosts and guests were required to comply with laws and regulations, government requests, or agreements with government agencies that adversely impact our relations with Hosts and guests, our business, results of operations, and financial condition could be materially adversely affected.
The capped call transactions are expected generally to reduce potential dilution to our Class A common stock upon conversion of the 2026 Notes or at our election (subject to certain conditions) offset any cash payments we are required to 22 Table of Contents make in excess of the aggregate principal amount of converted 2026 Notes, as the case may be, with such reduction or offset subject to a cap.
The capped call transactions are expected generally to reduce potential dilution to our Class A common stock upon conversion of the 2026 Notes, or at our election (subject to certain conditions), offset any cash payments we are required to make in excess of the aggregate principal amount of converted 2026 Notes, as the case may be, with such reduction or offset subject to a cap.
These additional authentication requirements may make our platform experience for Hosts and guests in the United Kingdom and EEA substantially less convenient, and such loss of convenience could meaningfully reduce the frequency with which our customers use our platform or could cause some Hosts and guests to stop using our platform entirely, which could materially adversely affect our business, results of operations, and financial condition.
These additional authentication requirements may make our platform experience for Hosts and guests in the United Kingdom and EEA 33 Table of Contents substantially less convenient, and such loss of convenience could meaningfully reduce the frequency with which our customers use our platform or could cause some Hosts and guests to stop using our platform entirely, which could materially adversely affect our business, results of operations, and financial condition.
See our risk factor titled “— If we fail to comply with federal, state, and foreign laws relating to data privacy and data security, we may face potentially significant liability, negative publicity, an erosion of trust, and increased regulation could materially adversely affect our business, results of operations, and financial condition.” In addition to UK and Luxembourg payments-related consumer protection laws that are applicable to our business, regulators in European Union member states could notify APUK and APLux of local consumer protection laws that apply to our businesses, and could also seek to persuade the UK and Luxembourg regulators to order APUK or APLux to conduct their activities in the local country directly or through a branch office.
See our risk factor titled “If we fail to comply with federal, state, and foreign laws relating to data privacy and data security, we may face potentially significant liability, negative publicity, an erosion of trust, and increased regulation could materially adversely affect our business, results of operations, and financial condition.” In addition to UK and Luxembourg payments-related consumer protection laws that are applicable to our business, regulators in EU member states could notify APUK and APLux of local consumer protection laws that apply to our businesses, and could also seek to persuade the UK and Luxembourg regulators to order APUK or APLux to conduct their activities in the local country directly or through a branch office.
If any of these platforms are successful in offering services similar to ours to consumers, or if we are unable to offer our services to consumers within these super-apps, our customer acquisition efforts could be less effective and our customer acquisition costs, 11 Table of Contents including our brand and performance marketing expenses, could increase, any of which could materially adversely affect our business, results of operations, and financial condition.
If any of these platforms are successful in offering services similar to ours to consumers, or if we are unable to offer our services to consumers within these super-apps, our customer acquisition efforts could be less effective and our customer acquisition costs, including our brand and performance marketing expenses, could increase, any of which could materially adversely affect our business, results of operations, and financial condition.
Our founders and other members of our senior management team, as well as other employees, may terminate their employment with us at any time, which could materially adversely affect our business, results of operations, and financial condition. As we continue to grow, we cannot guarantee that we will be able to attract and retain the personnel we need.
Our founders and other members of our senior management team, as well as other employees, may terminate their employment with us at any time, which could materially adversely affect our business, results of operations, and financial condition. 38 Table of Contents As we continue to grow, we cannot guarantee that we will be able to attract and retain the personnel we need.
For example, to avoid being deemed an investment company we may be required to sell certain of our assets and pay significant taxes upon the sale or transfer of such assets, which may have a material adverse effect on our business, results of operations, and financial condition. Item 1B. Unresolved Staff Comments None.
For example, to avoid being deemed an investment company we may be required to sell certain of our assets and pay significant taxes upon the sale or transfer of such assets, which may have a material adverse effect on our business, results of operations, and financial condition. 48 Table of Contents Item 1B. Unresolved Staff Comments None.
Any new or existing laws and regulations applicable to existing or future business areas, including amendments to or repeal of existing laws and regulations, or new interpretations, applications, or enforcement of existing laws and regulations, could expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations, and materially adversely impact bookings on our platform, thereby materially adversely affecting our business, results of operations, and financial condition.
Any new or existing laws and regulations applicable to existing or future business areas, including amendments to or repeal of existing laws and regulations, or new interpretations, applications, or enforcement of existing laws and regulations, could expose us to substantial liability, including significant expenses necessary to comply with such laws and regulations, and/or civil or criminal penalties, and materially adversely impact bookings on our platform, thereby materially adversely affecting our business, results of operations, and financial condition.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), which prevents some stockholders holding more than 15% of our outstanding 46 Table of Contents common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”), which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
In addition, we believe that our revenue growth depends upon a number of factors, including: • global macroeconomic conditions, including inflation and rising interest rates and recessionary concerns; • our ability to retain and grow the number of guests and Nights and Experiences Booked; • our ability to retain and grow the number of Hosts and the number of available listings on our platform; • events beyond our control such as pandemics and other health concerns, restrictions on travel and immigration, political, social or economic instability, including international disputes, war, or terrorism, trade disputes, economic downturns, and the impact of climate change on travel including the availability of preferred destinations and the increase in the frequency and severity of weather-related events, including fires, floods, droughts, extreme temperatures and ambient temperature increases, severe weather, and other natural disasters, and the impact of other climate change on seasonal destinations; • competition; • the legal and regulatory landscape and changes in the application of existing laws and regulations or adoption of new laws and regulations that impact our business, Hosts, and/or guests, including changes in short-term occupancy, tax laws, and real estate broker laws; • the attractiveness of home sharing to prospective Hosts and guests; • the level of consumer awareness and perception of our brand; • our ability to build and strengthen trust and safety on our platform and among members of our community; • the level of spending on brand and performance marketing to attract Hosts and guests to our platform; • our ability to grow new offerings and tiers and to deepen our presence in certain geographies; • timing, effectiveness, and costs of expansion and upgrades to our platform and infrastructure; • the COVID-19 pandemic or any future pandemic or epidemic and its impact on the travel and accommodations industries; and • other risks described elsewhere in this Annual Report on Form 10-K.
In addition, we believe that our revenue growth depends upon a number of factors, including: • global macroeconomic conditions, including inflation and rising interest rates and recessionary concerns; • our ability to retain and grow the number of guests and Nights and Experiences Booked; • our ability to retain and grow the number of Hosts and the number of available listings on our platform; • events beyond our control such as pandemics and other health concerns, restrictions on travel and immigration, political, social or economic instability, including international disputes, war, or terrorism, trade disputes, economic downturns, and the impact of climate change on travel including the availability of preferred destinations and the increase in the frequency and severity of weather-related events, including fires, floods, droughts, extreme temperatures and ambient temperature increases, severe weather, and other natural disasters, and the impact of other climate change on seasonal destinations; • competition; • the legal and regulatory landscape and changes in the application of existing laws and regulations or adoption of new laws and regulations that impact our business, Hosts, and/or guests, including changes in short-term occupancy, tax laws, and real estate broker laws; • the attractiveness of home sharing to prospective Hosts and guests; • the level of consumer awareness and perception of our brand; • our ability to build and strengthen trust and safety on our platform and among members of our community; • the level of spending on brand and performance marketing to attract Hosts and guests to our platform; • our ability to grow new offerings and to deepen our presence in certain geographies; • timing, effectiveness, and costs of expansion and upgrades to our platform and infrastructure; and • other risks described elsewhere in this Annual Report on Form 10-K.
Maintaining and enhancing our brand and reputation is critical to our ability to attract Hosts, guests, and employees, to compete effectively, to preserve and deepen the engagement of our existing Hosts, 17 Table of Contents guests, and employees, to maintain and improve our standing in the communities where our Hosts operate, including our standing with community leaders and regulatory bodies, and to mitigate legislative or regulatory scrutiny, litigation, and government investigations.
Maintaining and enhancing our brand and reputation is critical to our ability to attract Hosts, guests, and employees, to compete effectively, to preserve and deepen the engagement of our existing Hosts, guests, and employees, to maintain and improve our standing in the communities where our Hosts operate, including our standing with community leaders and regulatory bodies, and to mitigate legislative or regulatory scrutiny, litigation, and government investigations.
The effect of significant downturns in bookings in a particular quarter may not be fully reflected in our results of operations until future periods because of this timing in revenue recognition. Moreover, we base our expense levels and investment plans on estimates for revenue that may turn out to be inaccurate.
The effect of significant downturns in bookings in a particular quarter may not be fully reflected in our results of operations until future periods because of this timing in revenue recognition. 19 Table of Contents Moreover, we base our expense levels and investment plans on estimates for revenue that may turn out to be inaccurate.
The DSA will govern, among other things, potential liability for illegal content on platforms, the traceability of traders, and transparency reporting obligations, including information on “monthly active recipients” in the European Union. The DSA may increase our compliance costs and require additional resources as well as changes to our processes and operations.
The DSA governs, among other things, potential liability for illegal content on platforms, traceability of traders, and transparency reporting obligations, including information on “monthly active recipients” in the European Union. The DSA may increase compliance costs and require additional resources as well as changes to our processes and operations.
Adverse results in any regulatory inquiry, litigation, legal proceedings, audit, or claims may include awards of potentially significant monetary damages, including statutory damages for certain causes of action in certain jurisdictions, penalties, fines, compensation orders, injunctive relief, royalty or licensing agreements, or orders preventing us from offering certain services.
Adverse results in any regulatory inquiry, litigation, legal proceedings, audit, or claims may include awards of potentially significant monetary damages, including statutory damages for certain causes of action in certain jurisdictions, penalties, civil and criminal fines, compensation orders, injunctive relief, royalty or licensing agreements, or orders preventing us from offering certain services.
For example, to the extent climate change causes changes in weather patterns or an increase in extreme weather events, our coastal destinations could experience increases in storm intensity and rising sea-levels causing damage to our Hosts’ properties and result in a reduced number of listings in these areas.
For example, to the extent climate change causes changes in weather patterns or an increase in extreme weather events, our coastal destinations could experience increases in storm intensity and rising sea-levels causing damage to our Hosts’ properties and 47 Table of Contents result in a reduced number of listings in these areas.
Hotels and groups affiliated with hotels have engaged and will likely continue to engage in various lobbying and political efforts for stricter regulations governing our business in both local and national jurisdictions.
Regulatory Developments Hotels and groups affiliated with hotels have engaged and will likely continue to engage in various lobbying and political efforts for stricter regulations governing our business in both local and national jurisdictions.
The complexity of our platform and changes required to comply with the large number of disparate requirements can lead to compliance gaps if our internal resources cannot keep up with the pace of regulatory change and new requirements imposed on our platform, or if our platform does not work as intended or has errors or bugs.
The complexity of our 11 Table of Contents platform and changes required to comply with the large number of disparate requirements can lead to compliance gaps if our internal resources cannot keep up with the pace of regulatory change and new requirements imposed on our platform, or if our platform does not work as intended or has errors or bugs.
Acquisitions involve numerous risks, including the following: • difficulties in integrating and managing the combined operations, technology platforms, or offerings of the acquired companies and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays, and failure to execute on the intended strategy and synergies; • failure of the acquired businesses to achieve anticipated revenue, earnings, or cash flow; • diversion of management’s attention or other resources from our existing business; • our inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired businesses; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective data protection and privacy controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; • difficulties in or costs associated with assigning or transferring to us or our subsidiaries the acquired companies’ intellectual property or its licenses to third-party intellectual property; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; • challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with GAAP; and • potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value. 40 Table of Contents The value of our equity investments in private companies could decline, which could materially adversely affect our results of operations and financial condition.
Acquisitions involve numerous risks, including the following: • difficulties in integrating and managing the combined operations, technology platforms, or offerings of the acquired companies and realizing the anticipated economic, operational, and other benefits in a timely manner, which could result in substantial costs and delays, and failure to execute on the intended strategy and synergies; • failure of the acquired businesses to achieve anticipated revenue, earnings, or cash flow; • diversion of management’s attention or other resources from our existing business; • our inability to maintain the key customers, business relationships, suppliers, and brand potential of acquired businesses; • uncertainty of entry into businesses or geographies in which we have limited or no prior experience or in which competitors have stronger positions; • unanticipated costs associated with pursuing acquisitions or greater than expected costs in integrating the acquired businesses; • responsibility for the liabilities of acquired businesses, including those that were not disclosed to us or exceed our estimates, such as liabilities arising out of the failure to maintain effective data protection and privacy controls, and liabilities arising out of the failure to comply with applicable laws and regulations, including tax laws; • difficulties in or costs associated with assigning or transferring to us or our subsidiaries the acquired companies’ intellectual property or its licenses to third-party intellectual property; • inability to maintain our culture and values, ethical standards, controls, procedures, and policies; • challenges in integrating the workforce of acquired companies and the potential loss of key employees of the acquired companies; • challenges in integrating and auditing the financial statements of acquired companies that have not historically prepared financial statements in accordance with GAAP; and • potential accounting charges to the extent goodwill and intangible assets recorded in connection with an acquisition, such as trademarks, customer relationships, or intellectual property, are later determined to be impaired and written down in value.
We also rely on Google Maps and other third-party services for maps and location data that are core to the functionality of our platform, and we integrate applications, content, and data from third parties to deliver our platform and services. 29 Table of Contents We do not control the operation, physical security, or data security of any of these third-party providers.
We also rely on Google Maps and other third-party services for maps and location data that are core to the functionality of our platform, and we integrate applications, content, and data from third parties to deliver our platform and services. We do not control the operation, physical security, or data security of any of these third-party providers.
If our community support third-party service providers are unable to attract, retain and train adequate staffing, there could be an adverse impact on the experience of our Hosts and guests, which could materially adversely affect our brand, business, results of operations, and financial condition.
If our community support third-party service providers are unable to attract, retain, and train adequate staffing, 21 Table of Contents there could be an adverse impact on the experience of our Hosts and guests, which could materially adversely affect our brand, business, results of operations, and financial condition.
If the IRS prevails in the assessment of additional tax due based on its position and such tax and related interest and penalties, if any, exceeds our current reserves, such outcome could have a material adverse impact on our financial position and results 32 Table of Contents of operations, and any assessment of additional tax could require a significant cash payment and have a material adverse impact on our cash flow.
If the IRS prevails in the assessment of additional tax due based on its position and such tax and related interest and penalties, if any, exceeds our current reserves, such outcome could have a material adverse impact on our financial position and results of operations, and any assessment of additional tax could require a significant cash payment and have a material adverse impact on our cash flow.
We are required by our payment processors to comply with payment card network operating rules, including the Payment Card Industry Data Security Standards (the “PCI DSS”). Under the PCI DSS, we are required to adopt and implement internal controls over the use, storage, and 38 Table of Contents transmission of card data to help prevent credit card fraud.
We are required by our payment processors to comply with payment card network operating rules, including the Payment Card Industry Data Security Standards (the “PCI DSS”). Under the PCI DSS, we are required to adopt and implement internal controls over the use, storage, and transmission of card data to help prevent credit card fraud.
Nothing in our restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.
Nothing in our restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Securities 46 Table of Contents Exchange Act of 1934, as amended (the “Exchange Act”), from bringing such claims in federal court to the extent that the Exchange Act confers exclusive federal jurisdiction over such claims, subject to applicable law.
Notwithstanding our commitments to stakeholders and intentions with respect to other constituencies, if we fail to meet evolving investor, regulator, and other stakeholder expectations on ESG matters, if we are perceived not to have responded appropriately or in a timely manner to ESG issues that are material, or perceived to be material, to our business (including failing to pursue or achieve our stated goals, targets and objectives within the timelines we announce, failing to satisfy reporting and disclosure expectations or requirements, or if there are real or perceived inaccuracies in the data and information we report), if we fail to accurately report ESG-related data, or if we fail to fully understand, reflect, disclose, mitigate or manage risks associated with environmental or social matters, we may experience harm to our brand and reputation, adverse press coverage, a reduction in our attractiveness as an investment, greater regulatory scrutiny and potential legal claims, greater difficulties in attracting and retaining customers and talent, increased costs associated with our legal compliance, insurance, or access to capital, and as a consequence, our business, results of operations, financial condition, and/or stock price could be materially adversely affected.
Notwithstanding our commitments to stakeholders and intentions with respect to other constituencies, if we fail to meet rapidly evolving investor, regulator, and other stakeholder expectations on ESG matters, if we are perceived not to have responded appropriately or in a timely manner to ESG issues that are material, or perceived to be material, to our business (including failing to pursue or achieve our stated goals, targets and objectives within the timelines we announce, failing to satisfy reporting and disclosure expectations or requirements, or if there are real or perceived inaccuracies in the data and information we report or if we are exposed to greenwashing initiatives), if we fail to accurately report ESG-related data or fail to accurately report the challenges associated with our ESG initiatives or the degree to which we will or will not be able to meet our ESG-related commitments, or if we fail to fully understand, reflect, disclose, mitigate or manage risks associated with environmental or social matters, we may experience harm to our brand and reputation, adverse press coverage, a reduction in our attractiveness as an investment, greater regulatory scrutiny and potential legal claims, greater difficulties in attracting and retaining customers and talent, increased costs associated with our legal compliance, insurance, or access to capital, and as a consequence, our business, results of operations, financial condition, and/or stock price could be materially adversely affected.
The market price of our Class A common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in response to the risk factors described in this Annual Report on Form 10-K, and others beyond our control, including: • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; • any major change in our board of directors, management, or key personnel; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, new products, services, features, integrations, or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; • the legal and regulatory landscape and changes in the application of existing laws or adoption of new laws that impact our business, Hosts, and/or guests, including changes in short-term occupancy and tax laws; • legal and regulatory claims, litigation, or pre-litigation disputes and other proceedings; • the COVID-19 pandemic and its impact on the travel and accommodations industries; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and • sales or expected sales of our Class A common stock by us, our officers, directors, principal stockholders, and employees.
The market price of our Class A common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in response to the risk factors described in this Annual Report on Form 10-K, and others beyond our control, including: • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet these projections; 42 Table of Contents • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet the estimates or the expectations of investors; • any major change in our board of directors, management, or key personnel; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, new products, services, features, integrations, or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; • the legal and regulatory landscape and changes in the application of existing laws or adoption of new laws that impact our business, Hosts, and/or guests, including changes in short-term occupancy and tax laws; • legal and regulatory claims, litigation, or pre-litigation disputes and other proceedings; • the impact of pandemics, epidemics, or other health emergencies on the travel and accommodations industries; • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and • sales or expected sales of our Class A common stock by us, our officers, directors, principal stockholders, and employees.
In particular, companies, including Airbnb, face heightened expectations with respect to their practices, disclosures, and performance in relation to climate change, diversity, equity and inclusion, human rights, energy and water consumption, human capital management, data privacy and security, and supply chains (including human rights issues), among other topics.
In particular, companies, including Airbnb, face heightened expectations with respect to their practices, disclosures, and performance in relation to environmental sustainability, climate change, biodiversity, diversity, equity and inclusion, human rights, energy and water consumption, human capital management, data privacy and security, and supply chains (including human rights issues), among other topics.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We are headquartered in San Francisco, California, where we have lease commitments for approximately 924,000 square feet, including approximately 616,000 square feet offered for sublease, across multiple buildings. As of December 31, 2022, we leased office facilities totaling approximately 1.6 million square feet in multiple locations in the United States and internationally.
Biggest changeItem 2. Properties We are headquartered in San Francisco, California, where we have lease commitments for approximately 828,000 square feet, including approximately 5 33,000 square feet offered for sublease, across multiple buildings. As of December 31, 2023, we leased office facilities totaling approximately 1.4 millio n square feet in multiple locations in the United States and internationally.
As a result of the pandemic’s impact on the working environment, in April 2022, we announced our Live and Work Anywhere policy. This policy allows for the vast majority of our employees to work remotely on a permanent basis. Where we ceased using office space, we have either terminated, subleased, or offered for sublease.
In 2022, as a result of the COVID-19 pandemic’s impact on the working environment, we announced our Live and Work Anywhere policy. This policy allows for the vast majority of our employees to work remotely on a permanent basis. Where we ceased using office space, we have either terminated, subleased, or offered for sublease.
See Note 17, Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We believe our facilities are adequate and suitable for our current needs.
See Note 18, Restructuring, to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. We believe our facilities are adequate and suitable for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 12, Commitments and Contingencies – Legal and Regulatory Matters to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Depending on the nature of the proceeding, claim, or investigation, we may be subject to monetary damage awards, fines, penalties, or injunctive orders.
Biggest changeSee Note 13, Commitments and Contingencies – Legal and Regulatory Matters , to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. 49 Table of Contents Depending on the nature of the proceeding, claim, or investigation, we may be subject to monetary damage awards, fines, penalties, or injunctive orders.
Mine Safety Disclosures Not applicable. 49 Table of Contents PART II
Mine Safety Disclosures Not applicable. 50 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table sets forth information relating to repurchases of our equity securities during the three months ended December 31, 2022 (in millions, except per share amounts): Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) October 1 - 31 — $ — — $ 1,000.0 November 1 - 30 2.6 99.59 2.6 737.5 December 1 - 31 2.6 95.16 2.6 $ 500.0 Total 5.2 $ 97.38 5.2 (1) Includes broker commissions.
Biggest changeIssuer Purchases of Equity Securities The following table sets forth information relating to repurchases of our equity securities during the three months ended December 31, 2023 (in millions, except average price paid per share amounts): Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) October 1 - 31 — $ — — $ 1,500 November 1 - 30 3.3 $ 124.57 3.3 $ 1,091 December 1 - 31 2.5 $ 137.05 2.5 $ 750 Total 5.8 $ 129.94 5.8 (1) Includes broker commissions.
The Share Repurchase Program does not have an expiration date, does not obligate us to repurchase any specific number of shares, and may be modified, suspended, or terminated at any time at our discretion.
The 2023 Share Repurchase Program does not have an expiration date, does not obligate us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time at our discretion.
The graph uses the closing market price on December 10, 2020 of $144.71 per share as the initial value of our Class A common 50 Table of Contents stock. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock. Item 6. [Reserved]
The graph uses the closing market price on 51 Table of Contents December 10, 2020 of $144.71 per share as the initial value of our Class A common stock. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock. Item 6. [Reserved]
This number does not include stockholders for whom shares were held in “nominee” or “street name.” • Class B common stock: 91 stockholders of record. • Class C common stock: There were no shares outstanding. • Class H common stock: All outstanding shares were held by our wholly-owned Host Endowment Fund subsidiary.
This number does not include stockholders for whom shares were held in “nominee” or “street name.” • Class B common stock: 82 stockholders of record. • Class C common stock: There were no shares outstanding. • Class H common stock: All outstanding shares were held by our wholly-owned Host Endowment Fund subsidiary.
Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors our board of directors may deem relevant. Unregistered Sales of Equity Securities None.
Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to applicable laws and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions, and other factors our board of directors may deem relevant.
The graph assumes $100 was invested at the market close on December 10, 2020, which was the first day our Class A common stock began trading. Data for the S&P 500 Index, S&P 500 Information Technology Index, and Nasdaq Composite Index assume reinvestment of dividends.
The graph assumes $100 was invested at the market close on December 10, 2020, which was the first day our Class A common stock began trading. Data for the S&P 500, S&P 500 IT, and NASDAQ assume reinvestment of dividends.
Prior to that date, there was no public trading market for our Class A common stock. Our Class B, Class C, and Class H common stock are neither listed nor publicly traded. Holders of our Common Stock Holders of our common stock as of February 3, 2023, were as follows: • Class A common stock: 1,096 stockholders of record.
Prior to that date, there was no public trading market for our Class A common stock. Our Class B, Class C, and Class H common stock are neither listed nor publicly traded. Holders of our Common Stock Holders of our common stock as of February 2, 2024, were as follows: • Class A common stock: 998 stockholders of record.
(2) On August 2, 2022, we announced that our board of directors approved a share repurchase program with authorization to purchase up to $2.0 billion of our Class A common stock at management’s discretion (the “Share Repurchase Program”).
(2) On May 9, 2023, we announced that our board of directors approved a share repurchase program (the “2023 Share Repurchase Program”) with authorization to purchase up to $2.5 billion of our Class A common stock at management’s discretion.
Added
Unregistered Sales of Equity Securities On November 14, 2023, we completed our acquisition of a company pursuant to which we issued an aggregate of 877,062 shares of our Class A common stock as part of the consideration for the acquisition.
Added
The issuance of the shares in connection with the acquisition was exempt from registration under the Securities Act by reason of Section 4(a)(2) of the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCost of Revenue 2021 2022 % Change (in millions, except percentages) Cost of revenue $ 1,156 $ 1,499 30 % Percentage of revenue 19 % 18 % Cost of revenue increased $343.2 million, or 30%, in 2022 compared to 2021, primarily due to an increase in merchant fees of $313.9 million and an increase of $35.8 million in chargebacks, both related to an increase in pay-in volumes, an increase in cloud computing costs of $24.9 million due to increased server and data storage usage, and an increase of $10.0 million related to SMS notification costs, partially offset by a decrease of $44.3 million in amortization expense for internally developed software and acquired technology. 59 Table of Contents Operations and Support 2021 2022 % Change (in millions, except percentages) Operations and support $ 847 $ 1,041 23 % Percentage of revenue 14 % 12 % Operations and support expense increased $193.8 million, or 23%, in 2022 compared to 2021, primarily due to $130.7 million increase in third-party community support personnel and customer relations costs, a $29.8 million increase in insurance costs due to a higher Host Liability Insurance premium resulting from higher overall nights and a higher premium rate, and a $29.2 million increase in payroll-related expenses due to growth in headcount and increased compensation costs.
Biggest change(in millions, except percentages) 2022 2023 % Change Operations and support $ 1,041 $ 1,186 14 % Percentage of revenue 12 % 12 % Operations and support expense increased $145 million, or 14%, in 2023 compared to 2022, primarily due to a $105 million increase in third-party community support personnel and customer relations costs, a $25 million increase in payroll-related expenses primarily due to growth in headcount and increased compensation costs, and a $16 million increase in insurance costs due to higher Host Liability Insurance premiums resulting from higher overall nights.
We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to our management, investors and others about the amount of cash generated from operations, after purchases of property and equipment, that can be used for strategic initiatives, including continuous investment in our business, growth through acquisitions, and strengthening our balance sheet.
We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after purchases of property and equipment, that can be used for strategic initiatives, including continuous investment in our business, growth through acquisitions, and strengthening our balance sheet.
In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include funding capital expenditures, debt repayments, share repurchases, introduction of new products and offerings, timing and extent of spending to support our efforts to develop our platform, and expansion of sales and marketing activities.
In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include share repurchases, introduction of new products and offerings, timing and extent of spending to support our efforts to develop our platform, debt repayments, and expansion of sales and marketing activities.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2022 refer to the year ended December 31, 2022, references to 2021 refer to the year ended December 31, 2021, and references to 2020 refer to the year ended December 31, 2020.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2023 refer to the year ended December 31, 2023, references to 2022 refer to the year ended December 31, 2022, and references to 2021 refer to the year ended December 31, 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K.
For example, a booking made on February 15 would be reflected in Nights and Experiences Booked for our quarter ended March 31. If, in the example, the booking were canceled on May 15, Nights and Experiences Booked would be reduced by the cancellation for our quarter ended June 30.
For example, a booking made on February 15 would be reflected in Nights and Experiences Booked for our quarter ended March 31. If, in the example, the booking was canceled on May 15, Nights and Experiences Booked would be reduced by the cancellation for our quarter ended June 30.
Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP.
Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP.
Material Cash Requirements As of December 31, 2022, we had outstanding $2.0 billion in aggregate principal amount of indebtedness of our convertible senior notes due 2026.
Material Cash Requirements As of December 31, 2023, we had outstanding $2.0 billion in aggregate principal amount of indebtedness of our 0% convertible senior notes due in 2026.
Effect of Exchange Rates 62 Table of Contents The effect of exchange rate changes on cash, cash equivalents, and restricted cash on our consolidated statements of cash flows relates to certain of our assets, principally cash balances held on behalf of customers, that are denominated in currencies other than the functional currency of certain of our subsidiaries.
Effect of Exchange Rates The effect of exchange rate changes on cash, cash equivalents, and restricted cash on our consolidated statements of cash flows relates to certain of our assets, principally cash balances held on behalf of customers, that are denominated in currencies other than the functional currency of certain of our subsidiaries.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed on February 25, 2022.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 17, 2023.
General and administrative expense also includes certain professional services fees, general corporate and director and officer insurance, allocated costs for facilities and information technology, indirect taxes, including lodging tax reserves for which we may be held jointly liable with Hosts for collecting and remitting such taxes, and bad debt expense.
General and administrative expense also includes certain professional services fees, general corporate and director and officer insurance, allocated costs for facilities and information technology, indirect taxes, 58 Table of Contents including lodging tax reserves for which we may be held jointly liable with Hosts for collecting and remitting such taxes, and bad debt expense.
Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.
Additionally, our effective tax rate can vary based on the amount of pre-tax income or loss. 59 Table of Contents For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.
Because we act as the merchant of record, we incur all payment processing costs associated with our bookings, and we have chargebacks, which arise from account takeovers and other fraudulent activities.
Because we act as the 57 Table of Contents merchant of record, we incur all payment processing costs associated with our bookings, and we have chargebacks, which arise from account takeovers and other fraudulent activities.
On March 3, 2021, in connection with the pricing of the 2026 Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers and other financial institutions (the "option counterparties") at a cost of approximately 61 Table of Contents $100.2 million.
On March 3, 2021, in connection with the pricing of the 2026 Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers and other financial institutions (the "option counterparties") at a cost of approximately $100 million.
Free Cash Flow We define Free Cash Flow as net cash provided by (used in) operating activities less purchases of property and equipment.
Free Cash Flow We define Free Cash Flow as net cash provided by operating activities less purchases of property and equipment.
Evaluating our uncertain tax positions, determining our provision for (benefit from) 63 Table of Contents income taxes, and evaluating the impact of tax law changes, are inherently uncertain and require making judgments, assumptions, and estimates.
Evaluating our uncertain tax positions, determining our provision for (benefit from) income taxes, and evaluating the impact of tax law changes, are inherently uncertain and require making judgments, assumptions, and estimates.
Free Cash Flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by (used in) operating activities.
Free Cash Flow has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our other U.S. GAAP financial measures, such as net cash provided by operating activities.
Overview We are a community based on connection and belonging—a community that was born in 2007 when two Hosts welcomed three guests to their San Francisco home, and has since grown to over 4 million Hosts who have welcomed over 1.4 billion guest arrivals to over 100,000 cities and towns in almost every country and region across the globe.
Overview We are a community based on connection and belonging—a community that was born in 2007 when two Hosts welcomed three guests to their San Francisco home, and has since grown to over 5 million Hosts who have welcomed over 1.5 billion guest arrivals in almost every country and region across the globe.
Cash, cash equivalents, and marketable securities held outside the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of such funds may result in additional tax liabilities.
Our cash, cash equivalents, and short-term investments held outside of the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of such funds may result in additional tax liabilities.
The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, not driven by core results of operations, and renders comparisons with prior periods and competitors less meaningful.
Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of payments of these items is unpredictable, not driven by core results of operations, and renders comparisons with prior periods and competitors less meaningful.
These amounts do not include funds of $4.8 billion as of December 31, 2022 that we held for bookings in advance of guests completing check-ins that we record separately on our balance sheet in funds receivable and amounts held on behalf of customers with a corresponding liability in funds payable and amounts payable to customers.
These amounts do not include funds of $5.9 billion as of December 31, 2023, that we held for bookings in advance of guests completing check-ins that we record separately on our consolidated balance sheet in funds receivable and amounts held on behalf of customers with a corresponding liability in funds payable and amounts payable to customers.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K. 62 Table of Contents
We account for income taxes using the asset and liability method. We account for uncertainty in tax positions by recognizing a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination.
Income Taxes We are subject to income taxes in the United States and foreign jurisdictions. We account for income taxes using the asset and liability method. We account for uncertainty in tax positions by recognizing a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination.
Cash Provided by (Used in) Financing Activities Net cash used in financing activities in 2022 was $689.2 million, primarily reflecting the increase in funds payable and amounts payable to customers of $1.3 billion resulting from significantly higher bookings, offset by our share repurchase of $1.5 billion under the Share Repurchase Program, and an increase in the taxes paid related to net share settlement of equity awards of $607.4 million.
Net cash used in financing activities in 2022 was $689 million, primarily due to share repurchases of $1.5 billion under our share repurchase programs, and an increase in the taxes paid related to net share settlement of equity awards of $607 million, partially offset by an increase in funds payable and amounts payable to customers of $1.3 billion resulting from significantly higher bookings.
Leases , Note 9, Debt , and Note 12, Commitments and Contingencies to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further information regarding these commitments.
See Note 9, Leases , Note 10, Debt , and Note 13, Commitments and Contingencies, to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for further information regarding these commitments.
Accordingly, the ultimate resolution of lodging taxes may be greater or less than reserve amounts we have established. See Note 12, Commitments and Contingencies , to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information. Income Taxes We are subject to income taxes in the United States and foreign jurisdictions.
Accordingly, the ultimate resolution of lodging taxes may be greater or less than reserve amounts we have established. See Note 13, Commitments and Contingencies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for additional information.
The contingent consideration, which was in the form of equity, was valued as of the acquisition date and is marked-to-market at each reporting period based on factors including our stock price; • Adjusted EBITDA does not reflect net changes to reserves for lodging taxes for which management believes it is probable that we may be held jointly liable with Hosts for collecting and remitting such taxes; and • Adjusted EBITDA does not reflect restructuring charges, which include severance and other employee costs, lease impairments, and contract amendments and terminations.
The contingent consideration, which was in the form of equity, was valued as of the acquisition date and is marked-to-market at each reporting period based on factors including our stock price; • Adjusted EBITDA does not reflect net changes to reserves for lodging taxes for which management believes it is probable that we may be held jointly liable with Hosts for collecting and remitting such taxes and reserves, and the applicability of withholding taxes on payments made to such Hosts; and • Adjusted EBITDA does not reflect restructuring charges, which include impairment of operating lease right-of-use assets and leasehold improvements.
The following table summarizes our non-GAAP financial measures, along with the most directly comparable GAAP measure: 2021 2022 (in millions) Net income (loss) $ (352) $ 1,893 Adjusted EBITDA $ 1,593 $ 2,903 Net cash provided by operating activities $ 2,313 $ 3,430 Free Cash Flow $ 2,288 $ 3,405 Adjusted EBITDA We define Adjusted EBITDA as net income or loss adjusted for (i) provision for (benefit from) income taxes; (ii) other income (expense), net, interest expense, and interest income; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements; (vi) net changes to the reserves for lodging taxes for which management believes it is probable that we may be held jointly liable with Hosts for collecting and remitting such taxes; and (vii) restructuring charges.
GAAP measure, for each period presented below (in millions): 2022 2023 Net income $ 1,893 $ 4,792 Adjusted EBITDA $ 2,903 $ 3,653 Net cash provided by operating activities $ 3,430 $ 3,884 Free Cash Flow $ 3,405 $ 3,837 Adjusted EBITDA We define Adjusted EBITDA as net income or loss adjusted for (i) provision for (benefit from) income taxes; (ii) other income (expense), net, interest expense, and interest income; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements; (vi) net changes to the reserves for lodging taxes for which management believes it is probable that we may be held jointly liable with Hosts for collecting and remitting such taxes, and the applicability of withholding taxes on payments made to such Hosts; and (vii) restructuring charges.
Other Income (Expense), Net Other income (expense), net consists primarily of realized and unrealized gains and losses on foreign currency transactions and balances, the change in fair value of investments and financial instruments, including the warrants issued in connection with a term loan agreement entered into in April 2020, and our share of income or loss from our equity method investments.
Other Income (Expense), Net Other income (expense), net consists primarily of realized and unrealized gains and losses on foreign currency transactions and balances, unrealized gains and losses on derivatives, the change in fair value of investments and financial instruments, including our share of income or loss from our equity method investments.
Free Cash Flow does not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure. In 2022, Free Cash Flow was $3.4 billion compared to $2.3 billion in 2021, representing 41% of revenue.
Free Cash Flow does not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.
GAAP presentation helps improve the ability to understand our performance because it excludes the effects of foreign currency volatility that are not indicative of our core operating results.
We believe the presentation of revenue on a constant currency basis in addition to the U.S. GAAP presentation helps improve the ability to understand our performance because it excludes the effects of foreign currency volatility that are not indicative of our core operating results.
We believe Nights and Experiences Booked is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a single unit of transaction on our platform. In 2022, we had 393.7 million Nights and Experiences Booked, a 31% increase from 300.6 million in 2021.
Substantially all of the bookings on our platform to date have come from nights. We believe Nights and Experiences Booked is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a single unit of transaction on our platform.
Net cash used in investing activities in 2021 was $1.4 billion, which was primarily due to purchases of marketable securities of $4.9 billion, partially offset by proceeds resulting from sales and maturities of marketable securities of $1.6 billion and $2.0 billion, respectively.
Net Cash Used in Investing Activities Net cash used in investing activities in 2023 was $1.0 billion, which was primarily due to purchases of short-term investments, partially offset by proceeds resulting from sales and maturities of short-term investments.
We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we believe that the cash flows generated from operating activities will meet our anticipated cash requirements in the short-term.
As such, we believe that the cash flows generated from operating activities will meet our anticipated cash requirements in the short-term.
The balance of the warrants of $1.3 billion was reclassified from liability to equity as the amended warrants met the requirements for equity classification and are no longer remeasured at each reporting period; • Adjusted EBITDA excludes certain recurring, non-cash charges, such as depreciation of property and equipment and amortization of intangible assets, and although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; • Adjusted EBITDA excludes acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements.
These limitations include the following: • Adjusted EBITDA does not reflect interest income, interest expense, and other income (expense), net, which include unrealized and realized gains and losses on foreign currency exchange, investments, and financial instruments; • Adjusted EBITDA excludes certain recurring, non-cash charges, such as depreciation of property and equipment and amortization of intangible assets, and although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; 54 Table of Contents • Adjusted EBITDA excludes acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements.
Our actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies, which are described in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the following accounting policies involve a greater degree of judgment and complexity.
We believe that of our significant accounting policies, which are described in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K, the following accounting policies involve a greater degree of judgment and complexity.
See Note 9, Debt , to our consolidated financial statements included in Item 8 of Part 2 of this Annual Report on Form 10-K for a description of the 2022 Credit Facility entered into on October 31, 2022.
As of December 31, 2023, no amounts were drawn under the 2022 Credit Facility and outstanding letters of credit totaled $29 million. See Note 10, Debt , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for a description of the 2022 Credit Facility entered into on October 31, 2022.
A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided below. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.
Non-GAAP Financial Measures Our non-GAAP financial measures include Adjusted EBITDA, Free Cash Flow, and revenue growth rates in constant currency, which are described below. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided below. Investors are encouraged to review the related U.S.
Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
The financial measures are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (“non-GAAP financial measures”). We believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team.
Cash Used in Investing Activities Net cash used in investing activities in 2022 was $28.0 million, which was primarily from the proceeds from maturities and sales of marketable securities of $3.2 billion and $909.5 million, respectively, partially offset by purchases of marketable securities of $4.1 billion.
Net cash used in investing activities in 2022 was $28 million, which was primarily due to purchases of short-term investments and property and equipment of $4.1 billion and $25 million, respectively, partially offset by proceeds from sales and maturities of short-term investments of $4.1 billion.
Marketable securities primarily consist of highly-liquid investment grade corporate debt securities, commercial paper, certificates of deposit, and U.S. government and agency bonds.
Short-term investments primarily consist of highly-liquid investment grade corporate debt securities, time deposits, commercial paper, certificates of deposit, U.S. government and government agency debt securities (“government bonds”), and mortgage-backed and asset-backed securities.
Provision for (Benefit from) Income Taxes We are subject to income taxes in the United States and foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States.
Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States.
We believe that our existing cash, cash equivalents, and marketable securities balances in the United States are sufficient to fund our working capital needs in the United States. We have access to $1.0 billion of commitments under the 2022 Credit Facility. As of December 31, 2022, no amounts were drawn under the 2022 Credit Facility.
We believe that our existing cash, cash equivalents, and short-term investments balances in the United States are sufficient to fund our working capital needs in the United States. We have access to $1.0 billion of commitments and a $200 million sub-limit for the issuance of letters of credit under the 2022 Credit Facility.
As of December 31, 2022, cash and cash equivalents totaled $7.4 billion, which included $2.1 billion held by our foreign subsidiaries. Cash and cash equivalents consist of checking and interest-bearing accounts and highly-liquid securities with an original maturity of 90 days or less. As of December 31, 2022, marketable securities totaled $2.2 billion.
Cash and cash equivalents consist of checking and interest-bearing accounts and highly-liquid securities with an original maturity of 90 days or less. As of December 31, 2023, short-term investments totaled $3.2 billion.
Cost of Revenue Cost of revenue includes payment processing costs, including merchant fees and chargebacks, costs associated with third-party data centers used to host our platform, and amortization of internally developed software and acquired technology.
On a constant-currency basis, revenue increased 17% compared to 2022, due to a weakened U.S. dollar against the Euro and British Pound. Cost of Revenue Cost of revenue includes payment processing costs, including merchant fees and chargebacks, costs associated with third-party data centers used to host our platform, and amortization of internally developed software and acquired technology.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
In determining the need for a valuation allowance, we weigh both positive and negative evidence in the various jurisdictions in which we operate to determine whether it is more likely than not that our deferred tax assets are recoverable. We regularly assess all available evidence, including cumulative historic losses and forecasted earnings.
In determining the need for a valuation allowance, we weigh both positive and negative evidence in the various jurisdictions in which we operate related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized.
Interest Income Interest income consists primarily of interest earned on our cash, cash equivalents, marketable securities, and amounts held on behalf of customers. 57 Table of Contents Interest Expense Interest expense consists primarily of interest associated with various indirect tax reserves, amortization of debt issuance and debt discount costs, and the loss on extinguishment of debt related to the repayment of the first and second lien loans in March 2021.
There were no restructuring charges in 2023. Interest Income and Expense Interest income consists primarily of interest earned on our cash, cash equivalents, marketable securities, and amounts held on behalf of customers. Interest expense consists primarily of interest associated with various indirect tax reserves, amortization of debt issuance and debt discount costs.
GAAP, we disclose below the percentage change in our current period revenue from the corresponding prior period by comparing results using constant currencies. We present constant currency revenue growth rate information to provide a framework for assessing how our underlying revenue performed excluding the effect of changes in exchange rates.
We present constant currency revenue growth rate information to provide a framework for assessing how our underlying revenue performed excluding the effect of changes in exchange rates. We use the percentage change in constant currency revenues for financial and operational decision-making and as a means to evaluate period-to-period comparisons.
Our net cash provided by operating activities was $3.4 billion in 2022, up from $2.3 billion in 2021, and we generated Free Cash Flow 1 of $3.4 billion. The increase was driven by our revenue growth, net margin expansion, and significant growth in unearned fees.
Our net cash provided by operating activities was $3.9 billion in 2023, compared to $3.4 billion, in the prior year. We generated Free Cash Flow 1 of $3.8 billion for the year ended December 31, 2023, compared to $3.4 billion, in the prior year. The increase was primarily driven by growth in revenue, unearned fees and net income.
Cash Flows The following table summarizes our cash flows for the periods indicated (in millions): 2021 2022 Net cash provided by operating activities $ 2,313 $ 3,430 Net cash used in investing activities (1,352) (28) Net cash provided by (used in) financing activities 1,308 (689) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (210) (337) Net increase in cash, cash equivalents, and restricted cash $ 2,059 $ 2,376 Cash Provided by Operating Activities Net cash provided by operating activities in 2022 was $3.4 billion, which is due to net income in 2022 of $1.9 billion, adjusted for non-cash charges, primarily consisting of $929.6 million of stock-based compensation expense, impairment of long-lived assets of $91.4 million, and $62.5 million of foreign exchange losses due to the strengthening of the U.S. dollar against the Euro and British Pound.
Net cash provided by operating activities in 2022 was $3.4 billion, which was primarily due to income from operations of $1.8 billion, adjusted for non-cash items, primarily consisting of $930 million of stock-based compensation expense, impairment of long-lived assets of $91 million, and $62 million of foreign exchange losses due to the strengthening of the U.S. dollar against the Euro and British Pound.
As a result, in 2022 we recorded restructuring charges of $89.1 million, which include $80.5 million relating to an impairment of both domestic and international operating lease right-of-use (“ROU”) assets, 60 Table of Contents and $8.4 million of related leasehold improvements.
The shift to a remote work model was in direct response to the change in how employees work due to the impact of COVID-19. As a result, we recorded restructuring charges of $89 million during 2022, which included $81 million relating to an impairment of both domestic and international operating lease right-of-use assets, and $8 million of related leasehold improvements.
We recognize accrued interest and penalties related to unrecognized tax benefits in the provision for (benefit from) income taxes. 58 Table of Contents Results of Operations The following table sets forth our results of operations for the periods presented (in millions, except percentages): 2021 2022 Amount % of Revenue Amount % of Revenue Revenue $ 5,992 100 % $ 8,399 100 % Costs and expenses: Cost of revenue 1,156 19 1,499 18 Operations and support (1) 847 14 1,041 12 Product development (1) 1,425 24 1,502 18 Sales and marketing (1) 1,186 20 1,516 18 General and administrative (1) 836 14 950 11 Restructuring charges (1) 113 2 89 1 Total costs and expenses 5,563 93 6,597 78 Income from operations 429 7 1,802 22 Interest income 13 — 186 2 Interest expense (438) (7) (24) — Other income (expense), net (304) (5) 25 — Income (loss) before income taxes (300) (5) 1,989 24 Provision for income taxes 52 1 96 1 Net income (loss) $ (352) (6) % $ 1,893 23 % (1) Includes stock-based compensation expense as follows (in millions): 2021 2022 Operations and support $ 49 $ 63 Product development 545 548 Sales and marketing 100 114 General and administrative 205 205 Stock-based compensation expense $ 899 $ 930 Comparison of the Years Ended December 31, 2021 and 2022 Revenue 2021 2022 % Change (in millions, except percentages) Revenue $ 5,992 $ 8,399 40 % Revenue increased $2.4 billion, or 40%, in 2022 compared to 2021, primarily due to a 31% increase in Nights and Experiences Booked combined with higher ADRs.
Results of Operations The following table sets forth our results of operations for the periods presented (in millions, except percentages): 2022 2023 Amount % of Revenue Amount % of Revenue Revenue $ 8,399 100 % $ 9,917 100 % Costs and expenses: Cost of revenue 1,499 18 1,703 17 Operations and support (1) 1,041 12 1,186 12 Product development (1) 1,502 18 1,722 17 Sales and marketing (1) 1,516 18 1,763 18 General and administrative (1) 950 11 2,025 20 Restructuring charges 89 1 — — Total costs and expenses 6,597 78 8,399 84 Income from operations 1,802 22 1,518 16 Interest income 186 2 721 7 Interest expense (24) — (83) (1) Other income (expense), net 25 — (54) (1) Income before income taxes 1,989 24 2,102 21 Provision for (benefit from) income taxes 96 1 (2,690) (27) Net income $ 1,893 23 % $ 4,792 48 % (1) Includes stock-based compensation expense as follows (in millions): 2022 2023 Operations and support $ 63 $ 68 Product development 548 694 Sales and marketing 114 130 General and administrative 205 228 Stock-based compensation expense $ 930 $ 1,120 Comparison of the Years Ended December 31, 2022 and 2023 Revenue Our revenue consists of service fees, net of incentives and refunds, charged to our customers.
While we believe that we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit.
We released $2.9 billion of our valuation allowance in 2023 and will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. While we believe that we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different.
We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way. 2021 2022 (in millions) Nights and Experiences Booked 301 394 Gross Booking Value $ 46,877 $ 63,212 Nights and Experiences Booked Nights and Experiences Booked is a key measure of the scale of our platform, which in turn drives our financial performance.
GAAP financial measures. Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.
GAAP financial measures. Key Business Metrics We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions.
Despite these factors, we have witnessed a healthy recovery of travel demand, following the COVID-19 pandemic. Key Business Metrics and Non-GAAP Financial Measures We track the following key business metrics and financial measures to evaluate our operating performance, identify trends, formulate financial projections, and make strategic decisions.
Interest Income and Expense 2021 2022 % Change (in millions, except percentages) Interest income $ 13 $ 186 1,361 % Percentage of revenue — % 2 % Interest expense $ (438) $ (24) (95) % Percentage of revenue (7) % — % Interest income increased $173.2 million, or 1,361%, in 2022 compared to 2021, primarily due to higher interest rates.
(in millions, except percentages) 2022 2023 % Change Interest income $ 186 $ 721 288 % Interest expense $ (24) $ (83) 246 % Interest income increased $535 million, or 288%, in 2023 compared to 2022, primarily due to higher cash and investment balances and higher interest rates.
We measure Nights and Experiences Booked by region based on the location of the listing. 2021 % of Total 2022 % of Total (in millions, except percentages) Nights and Experiences Booked North America 114 38 % 133 34 % EMEA 118 39 % 168 43 % Latin America 39 13 % 53 13 % Asia Pacific 30 10 % 40 10 % Total 301 100 % 394 100 % Gross Booking Value North America $ 25,305 54 % $ 32,246 51 % EMEA 14,607 31 % 21,486 34 % Latin America 3,706 8 % 4,838 8 % Asia Pacific 3,259 7 % 4,642 7 % Total $ 46,877 100 % $ 63,212 100 % Revenue North America $ 3,201 54 % $ 4,210 50 % EMEA 1,931 32 % 2,924 35 % Latin America 431 7 % 643 8 % Asia Pacific 429 7 % 622 7 % Total $ 5,992 100 % $ 8,399 100 % We saw an increase in GBV per Night and Experience Booked in 2022 compared to 2021, in part because our geographic mix shifted to these higher GBV per Night and Experience Booked regions.
We measure Nights and Experiences Booked by region based on the location of the listing. 2022 % of Total 2023 % of Total (in millions, except percentages) Nights and Experiences Booked North America 133 34 % 146 33 % EMEA 168 43 187 42 Latin America 53 13 64 14 Asia Pacific 40 10 51 11 Total 394 100 % 448 100 % Gross Booking Value North America $ 32,246 51 % $ 34,941 48 % EMEA 21,486 34 26,241 36 Latin America 4,838 8 6,054 8 Asia Pacific 4,642 7 6,016 8 Total $ 63,212 100 % $ 73,252 100 % Revenue North America $ 4,210 50 % $ 4,638 47 % EMEA 2,924 35 3,615 36 Latin America 643 8 824 8 Asia Pacific 622 7 840 9 Total $ 8,399 100 % $ 9,917 100 % We saw a 2% increase in GBV per Night and Experience Booked in 2023 compared to the prior year, primarily due to higher GBV per Night and Experience Booked in EMEA, which increased from $127.99 to $140.40. 56 Table of Contents Our total Company average nights per booking, excluding experiences, decreased 4% in 2023 compared to the prior year, primarily due to our geographic mix and changes in traveler behaviors.
Product Development 2021 2022 % Change (in millions, except percentages) Product development $ 1,425 $ 1,502 5 % Percentage of revenue 24 % 18 % Product development expense increased $77.4 million, or 5%, in 2022 compared to 2021, primarily due to a $51.9 million increase in payroll-related expenses due to growth in headcount and increased compensation costs, and a $14.9 million increase in third-party service providers for contingent workers and consultant support for infrastructure projects, quality assurance services, and support of new product rollouts, including AirCover.
(in millions, except percentages) 2022 2023 % Change Product development $ 1,502 $ 1,722 15 % Percentage of revenue 18 % 17 % Product development expense increased $220 million, or 15%, in 2023, compared to 2022, primarily due to a $217 million increase in payroll-related expenses due to growth in headcount and increased compensation costs.
We have a commercial agreement with a data hosting services provider to spend or incur an aggregate of at least $941.7 million for vendor services through 2027. See Note 8.
As of December 31, 2023, our total minimum lease payments were $313 million, of which $81 million is due in the succeeding 12 months. We have a commercial agreement with a data hosting services provider to spend or incur an aggregate of at least $842 million for vendor services through 2027.
Sales and Marketing 2021 2022 % Change (in millions, except percentages) Brand and performance marketing $ 723 $ 1,030 42 % Field operations and policy 463 486 5 % Total sales and marketing $ 1,186 $ 1,516 28 % Percentage of revenue 20 % 18 % Sales and marketing expense increased $329.9 million, or 28%, in 2022 compared to 2021, primarily due to a $197.8 million increase in marketing activities associated with our Made Possible by Hosts, Strangers, AirCover, Categories, and OMG marketing campaigns and launches, a $67.9 million increase in our search engine marketing and advertising spend, a $25.1 million increase in payroll-related expenses due to growth in headcount and increase in compensation costs, a $22.0 million increase in third-party service provider expenses, and a $11.1 million increase in coupon expense in line with increase in revenue and launch of AirCover for guests, partially offset by a decrease of $22.9 million related to the changes in the fair value of contingent consideration related to a 2019 acquisition.
(in millions, except percentages) 2022 2023 % Change Brand and performance marketing $ 1,030 $ 1,208 17 % Field operations and policy 486 555 14 % Total sales and marketing $ 1,516 $ 1,763 16 % Percentage of revenue 18 % 18 % Sales and marketing expense increased $247 million, or 16%, in 2023, compared to 2022, primarily due to a $177 million increase in marketing activities associated with our marketing campaigns and launches and our search engine marketing and advertising spend, and a $54 million increase in payroll-related expenses due to growth in headcount and increased compensation costs.
Adjusted EBITDA Reconciliation The following is a reconciliation of Adjusted EBITDA to the most comparable GAAP measure, net income (loss): 2021 2022 (in millions, except percentages) Revenue $ 5,992 $ 8,399 Net income (loss) $ (352) $ 1,893 Adjusted to exclude the following: Provision for (benefit from) income taxes 52 96 Other income (expense), net 304 (25) Interest expense 438 24 Interest income (13) (186) Depreciation and amortization 138 81 Stock-based compensation expense (1) 899 930 Acquisition-related impacts 11 (12) Net changes in lodging tax reserves 3 13 Restructuring charges 113 89 Adjusted EBITDA $ 1,593 $ 2,903 Adjusted EBITDA as a percentage of Revenue 27 % 35 % (1) Excludes stock-based compensation related to restructuring, which is included in restructuring charges in the table above.
GAAP measure, net income (in millions, except percentages): 2022 2023 Revenue $ 8,399 $ 9,917 Net income $ 1,893 $ 4,792 Adjusted to exclude the following: Provision for (benefit from) income taxes 96 (2,690) Other (income) expense, net (25) 54 Interest expense 24 83 Interest income (186) (721) Depreciation and amortization 81 44 Stock-based compensation expense 930 1,120 Acquisition-related impacts (12) (3) Lodging tax reserves and reserves for Host withholding taxes 13 974 Restructuring charges 89 — Adjusted EBITDA $ 2,903 $ 3,653 Adjusted EBITDA Margin 35 % 37 % The increases in Adjusted EBITDA and Adjusted EBITDA Margin for the year ended December 31, 2023, compared to the prior year, were primarily driven by the continued strength of our business, a modest increase in ADR, and discipline in managing our cost structure.
The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report on Form 10-K. This section of this Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
During 2022, we repurchased and subsequently retired 13.8 million shares of our common stock for $1.5 billion under the Share Repurchase Program. As of December 31, 2022, we had $500.0 million available to repurchase shares pursuant to the Share Repurchase Program.
During 2023, we repurchased an aggregate of 17.9 million shares of Class A common stock for $2.3 billion, through two share repurchase programs. As of December 31, 2023, we had $750 million available to repurchase shares of Class A common stock under our share repurchase program.
Hosts on Airbnb are everyday people who share their worlds to provide guests with the feeling of connection and being at home. We have five stakeholders and we have designed our company with all of them in mind. Along with employees and shareholders, we serve Hosts, guests, and the communities in which they live.
Every day, Hosts offer unique stays and experiences that make it possible for guests to connect with communities in a more authentic way. We have five stakeholders and we have designed our Company with all of them in mind. Along with employees and shareholders, we serve Hosts, guests, and the communities in which they live.
The increase was primarily driven by revenue growth, margin expansion, and significant growth in unearned fees. 55 Table of Contents Free Cash Flow Reconciliation The following is a reconciliation of Free Cash Flow to the most comparable GAAP cash flow measure, net cash provided by operating activities: 2021 2022 (in millions, except percentages) Revenue $ 5,992 $ 8,399 Net cash provided by operating activities $ 2,313 $ 3,430 Purchases of property and equipment (25) (25) Free Cash Flow $ 2,288 $ 3,405 Free Cash Flow as a percentage of Revenue 38 % 41 % Other cash flow components: Net cash used in investing activities $ (1,352) $ (28) Net cash provided by (used in) financing activities $ 1,308 $ (689) Constant Currency In addition to revenue growth rates derived from revenue presented in accordance with U.S.
GAAP cash flow measure, net cash provided by operating activities (in millions, except percentages): 2022 2023 Revenue $ 8,399 $ 9,917 Net cash provided by operating activities $ 3,430 $ 3,884 Purchases of property and equipment (25) (47) Free Cash Flow $ 3,405 $ 3,837 Free Cash Flow Margin 41 % 39 % Other cash flow components: Net cash used in investing activities $ (28) $ (1,042) Net cash used in financing activities $ (689) $ (2,430) The increase in Free Cash Flow for the year ended December 31, 2023, compared to the prior year, was primarily driven by increased income from operations and interest income driven by increased interest rates on higher cash balances.
We expect that our blended global average nights per booking will continue to fluctuate based on our geographic mix and changes in traveler behaviors. Components of Results of Operations Revenue Our revenue consists of service fees, net of incentives and refunds, charged to our customers.
Specifically, average nights per booking in 2023 was 4.1 for North America, 3.9 for EMEA, 3.9 for Latin America, and 3.3 for Asia Pacific, with a total average of 3.9 nights. We expect that our blended global average nights per booking will continue to fluctuate based on our geographic mix and changes in traveler behaviors.
Our investment portfolio was largely invested in money market funds and short-term, high-quality bonds. Interest expense decreased $413.9 million in 2022, primarily due to the $377.2 million loss on extinguishment of debt resulting from retirement of two term loans in March 2021.
Our investment portfolio was largely invested in money market funds and short-term, high-quality bonds. Interest expense increased $59 million or 246%, in 2023 compared to 2022, primarily due to non-recurring interest paid relating to withholding tax payments on behalf of Hosts.
Refer to Note 9, Debt , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K, for additional information.
See Note 13, Commitments and Contingencies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K further information regarding our indemnification agreements. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States.
See Note 13, Income Taxes , to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details. Liquidity and Capital Resources Sources and Conditions of Liquidity As of December 31, 2022, our principal sources of liquidity were cash and cash equivalents and marketable securities totaling $9.6 billion.
During 2023, we released $2.9 billion of our valuation allowance related to our U.S. deferred tax assets and is included in provision for (benefit from) income taxes (see Note 14, Income Taxes, to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K for further details).
The growth in revenue demonstrated the continued strong travel demand. On a constant-currency basis, revenue increased 46% in 2022 compared to 2021. We ended 2022 with net income of $1.9 billion, an improvement from a net loss of $352.0 million in 2021, and our first profitable year to date.
The growth in revenue demonstrated continued strong travel demand. On a constant-currency basis, revenue increased 17% in 2023 compared to 2022.
Net cash provided by financing activities in 2021 was $1.3 billion, primarily reflecting the proceeds from the issuance of convertible senior notes, net of issuance costs, of $2.0 billion and an increase in funds payable and amounts payable to customers of $1.6 billion, partially offset by the repayment of long-term debt and a related prepayment penalty of $2.0 billion and $212.9 million, respectively.
Net Cash Used in Financing Activities Net cash used in financing activities in 2023 was $2.4 billion, primarily due to share repurchases of $2.3 billion, and an increase in taxes paid related to net share settlement of equity awards of $1.2 billion, primarily driven from the taxes paid related to the cashless exercise of stock options, partially offset by the decrease in funds payable and amounts payable to customers of $936 million.
During 2021 and 2022, we recorded reductions of $209.9 million and $337.4 million, respectively, in cash, cash equivalents, and restricted cash, primarily due to the strengthening of the U.S. dollar against certain currencies. The impact of exchange rate changes on cash balances can serve as a natural hedge for the effect of exchange rates on our liabilities to our customers.
The impact of exchange rate changes on cash balances can serve as a natural hedge for the effect of exchange rates on our liabilities to our Hosts and guests. We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements.
Indemnification Agreements In the ordinary course of business, we include limited indemnification provisions under certain agreements with parties with whom we have commercial relations of varying scope and terms.
Our liquidity is subject to various risks including the risks identified in the section titled “Risk Factors” in Item IA of Part I of this Annual Report on Form 10-K and the market risks identified in the section titled "Quantitative and Qualitative Disclosures about Market Risk" in Item 7A of Part II of this Annual Report on Form 10-K. 61 Table of Contents Indemnification Agreements In the ordinary course of business, we include limited indemnification provisions under certain agreements with parties with whom we have commercial relations of varying scope and terms.
The liquidity-based vesting condition for RSUs was satisfied upon the effectiveness of our Registration Statement on Form S-1 on December 9, 2020. 2022 Financial Highlights In 2022, revenue grew by 40% to $8.4 billion compared to 2021, primarily due to a 31% increase in Nights and Experiences Booked of 93.0 million combined with higher average daily rates driving a 35% increase in Gross Booking Value of $16.3 billion.
We intend to make long-term decisions considering all of our stakeholders because their collective success is key for our business to thrive. 2023 Financial Highlights In 2023, revenue increased by 18% to $9.9 billion compared to 2022, primarily due to a 14% increase in Nights and Experiences Booked of 54.5 million combined with higher average daily rates driving a 16% increase in Gross Booking Value of $10.0 billion.
Due to cumulative losses in the U.S. during the prior three years, including tax deductible stock compensation, and based on all available positive and negative evidence, we do not believe it is more likely than not that our U.S. deferred tax assets will be realized as of December 31, 2022.
As of December 31, 2023, based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we have concluded that it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California research and development credits, capital loss carryovers, and certain losses subject to the dual consolidated loss rules.
In 2022, our GBV was $63.2 billion, a 35% increase from $46.9 billion in 2021. The increase in our GBV was primarily due to an increase in Nights and Experiences Booked. The travel recovery we are experiencing has been dominated by our higher average daily rate (“ADR”) regions—North America and Europe, in particular.
In 2023, our GBV was $73.3 billion, a 16% increase from $63.2 billion in 2022. The increase in our GBV was primarily due to an increase in Nights and Experiences Booked, combined with a modest increase in ADR. Similar to Nights and Experiences Booked, our GBV improvement was driven by growth in bookings in all regions.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. 54 Table of Contents In 2022, Adjusted EBITDA was $2.9 billion, compared to $1.6 billion in 2021. This favorable change was due to our revenue growth combined with continued cost management.
Because of these limitations, you should consider Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, including net income (loss) and our other U.S. GAAP results. Adjusted EBITDA Reconciliation The following is a reconciliation of Adjusted EBITDA to the most comparable U.S.
A night can include one or more guests and can be for a listing with one or more bedrooms. A seat is booked for each participant in an experience. Substantially all of the bookings on our platform to date have come from nights.
A night can include one or more guests and can be for a listing with one or more bedrooms. Nights and Experiences Booked grows as we attract new customers to our 1 A reconciliation of non-GAAP financial information to the most comparable U.S.
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Revision of Previously Issued Financial Statements As described in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K, we have revised previously issued financial statements to correct immaterial misstatements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring 2022, we experienced negative foreign currency impacts to revenue due to the strengthening of the U.S. dollar relative to certain foreign currencies If an adverse 10% foreign currency exchange rate change was applied to total net monetary assets and liabilities denominated in currencies other than the local currencies as of December 31, 2022, it would not have had a material impact on our consolidated financial statements.
Biggest changeIf an adverse 10% foreign currency exchange rate change was applied to total net monetary assets and liabilities denominated in currencies other than the local currencies as of December 31, 2023, it would have resulted in a loss of approximately $20 million. Investment and Interest Rate Risk We are exposed to interest rate risk related primarily to our investment portfolio.
Because our cash equivalents and marketable securities generally have short maturities, the fair value of our portfolio is relatively insensitive to interest rate fluctuations. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Because our cash equivalents and short-term investments generally have short maturities, the fair value of our portfolio is relatively insensitive to interest rate fluctuations. Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Foreign Currency Exchange Risk We offer the ability to transact on our platform in over 40 currencies, of which the most significant foreign currencies to our operations in 2022 were the Euro, British Pound, Canadian Dollar, Australian Dollar, Brazilian Real, and Mexican Peso.
Foreign Currency Exchange Risk We offer the ability to transact on our platform in over 40 currencies, of which the most significant foreign currencies to our operations in 2023 were the Euro, British Pound, Canadian Dollar, Australian Dollar, Brazilian Real, and Mexican Peso.
As a result, in those cases, we bear the currency risk of both the guest payment as well as the Host payment due to timing differences in such payments. We use foreign currency derivative contracts to protect against foreign exchange risks.
As a result, in those cases, we bear the currency risk of both the guest payment as well as the Host payment due to timing differences in such payments. We enter into foreign currency derivative contracts to protect against foreign exchange risks.
As of December 31, 2022, we had an additional $4.8 billion that we held for bookings in advance of guests completing check-ins, which we record separately on our consolidated balance sheets as funds receivable and amounts held on behalf of customers. The primary objective of our investment activities is to preserve capital and meet liquidity requirements without significantly increasing risk.
As of December 31, 2023, we had an additional $5.9 billion that we held for bookings in advance of guests completing check-ins, which we record separately on our consolidated balance sheets as funds receivable and amounts held on behalf of customers. The primary objective of our investment activities is to preserve capital and meet liquidity requirements without significantly increasing risk.
If our foreign-currency denominated assets, liabilities, revenues, or expenses increase, our results of operations may be more significantly impacted by fluctuations in the exchange rates of the currencies in which we do business.
We have experienced and will continue to experience fluctuations in foreign exchange gains and losses related to changes in exchange rates. If our foreign-currency denominated assets, liabilities, revenues or expenses increase, our results of operations may be more significantly impacted by fluctuations in the exchange rates of the currencies in which we do business.
A hypothetical 100 basis points increase in interest rates would have resulted in a decrease of $13.1 million to our investment portfolio as of December 31, 2022. 65 Table of Contents
A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of $20 million to our investment portfolio as of December 31, 2023. 63 Table of Contents
We had cash and cash equivalents of $7.4 billion and marketable securities of $2.2 billion as of December 31, 2022, which consisted of highly-liquid investment grade corporate debt securities, commercial paper, certificates of deposit, and U.S. government and agency bonds.
We had cash and cash equivalents of $6.9 billion and short-term investments of $3.2 billion as of December 31, 2023, which primarily consisted 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 and time deposits.
Investment and Interest Rate Risk 64 Table of Contents We are exposed to interest rate risk related primarily to our investment portfolio. Changes in interest rates affect the interest earned on our total cash, cash equivalents, and marketable securities and the fair value of those securities.
Changes in interest rates affect the interest earned on our total cash, cash equivalents, available-for-sale short-term investments, and the fair value of those securities.
These hedges are primarily designed to manage foreign exchange risk associated with balances held as funds payable and amounts payable to customers. These contracts reduce, but do not entirely eliminate, the impact of currency exchange rate movements on our assets and liabilities.
These hedges are primarily designed to manage foreign exchange risk associated with forecasted foreign denominated revenue, balances held as funds payable and amounts payable to customers, and unbilled amounts for confirmed bookings under the terms of our Pay Less Upfront program.
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In the first quarter of 2023, we initiated a foreign exchange cash flow hedging program to minimize the effects of currency fluctuations on revenue in the future. We have experienced and will continue to experience fluctuations in foreign exchange gains and losses related to changes in exchange rates.
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These contracts reduce, but do not entirely eliminate, the impact of foreign currency exchange rate movements on our revenue, assets and liabilities. However, we may choose not to hedge certain exposures for a variety of reasons including accounting considerations or the prohibitive economic cost of hedging particular exposures.

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