Risk Factors Summary
The following is a summary of the principal risks that could materially adversely affect our business, results of operations, and financial condition, all of which are more fully described in Part 1 in the section titled “Item 1A. Risk Factors” in this Annual Report on Form 10-K. This summary should be read in conjunction with the “Item 1A. Risk Factors” section and should not be relied upon as an exhaustive summary of the material risks facing our business.
• We may not be able to sustain our revenue growth rate or effectively manage growth or new opportunities.
• If we fail to retain or add hosts and guests, if hosts do not provide high-quality stays, experiences, and services, if new offerings and initiatives on our platform are unsuccessful, or if our community support functions are inadequate, our business, results of operations, and financial condition would be materially adversely affected.
• If we are unable to successfully expand our global network or manage the risks presented by our business model internationally, our business, results of operations, and financial condition would be materially adversely affected.
• Host, guest, or third-party actions that are criminal, violent, inappropriate, dangerous, or fraudulent may undermine the trust and safety or the perception of safety and security on our platform and our ability to attract and retain hosts and guests and materially adversely affect our reputation, business, results of operations, and financial condition.
• Any decline or disruption in the travel and hospitality industries or economic downturn could materially adversely affect our business, results of operations, and financial condition.
• The business and industry in which we participate are highly competitive, and we may be unable to compete successfully with our current or future competitors.
• We may experience significant fluctuations in our results of operations, which make it difficult to forecast our future results.
• Changes in tax laws or tax rulings could materially adversely affect our business, results of operations and financial condition.
• We may have exposure to greater than anticipated income tax liabilities.
• 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.
• We are subject to a wide variety of laws, regulations, and rules applicable to short-term rental, experiences, services, long-term rental, and home sharing businesses, or that govern our business practices, including among others, e-commerce, data privacy and cybersecurity, artificial intelligence, payment services, advertising, consumer protection, employment, licensing requirements, and commercial practices.
• We offer travel insurance products to guests, which subject us and our business to extensive laws, regulations, and supervision.
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• Our payments operations are subject to extensive, complex, overlapping, and frequently changing government regulation and oversight and any failure or perceived failure to comply with such laws, rules, regulations, policies, legal interpretations, and regulatory guidance could materially adversely affect our business, results of operations, and financial condition.
• Compliance with federal, state, and foreign laws relating to data privacy, data security, marketing, and consumer protection involves significant expenditure and resources, and any actual or perceived failure by us or our vendors to comply may result in significant liability, litigation or other legal action against us, negative publicity, an erosion of trust, and/or result in regulatory scrutiny, fines, and penalties and could materially adversely affect our business, results of operations, and financial condition.
• Our use of artificial intelligence and machine learning gives rise to legal, business, and operational risks.
• We could face liability for information or content on or accessible through our platform.
• Our share price has been, and may continue to be, volatile, and the value of our Class A common stock may decline.
• Our multi-series structure may have a material adverse effect on the market price of our Class A common stock.
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PART I
Item 1. Business
Overview
Airbnb was founded in 2007 when two hosts welcomed three guests to their San Francisco home, and has since grown into a global community of over 5 million hosts who have welcomed over 2.5 billion guest arrivals in almost every country and region across the globe. Every day, hosts offer unique stays, experiences, and services that enable guests to connect with communities in a more authentic way. We operate a global marketplace connecting guests with stays, experiences, and services, collectively in over 220 countries and regions. Our offerings have expanded to include services and redesigned experiences, which launched in May 2025.
We operate with five key stakeholders in mind: our employees, shareholders, hosts, guests, and the communities we serve. Our commitment to making long-term decisions that benefit all these stakeholders is fundamental to our sustained success.
Our Long-Term Growth Strategy
Our key strategic priorities include making our service better, bringing Airbnb to more parts of the world, and expanding what we offer. Over the past several years, we have introduced hundreds of new features and upgrades to our platform spanning nearly every part of our service from pricing to quality to customer support. Additionally, we are leveraging our global markets strategy, which includes a more localized approach to product updates and marketing to raise awareness and consideration in less mature markets. We are also extending our platform beyond stays with new offerings, such as Airbnb Services and redesigned experiences, with plans to continue to expand our business beyond travel accommodations using our multi-year product roadmap to help drive long-term growth.
Our Platform
Our Platform for Hosts
We built our platform to seamlessly onboard new hosts, especially those who previously had not considered hosting. We partner with hosts throughout the process of setting up their listings and provide them with a robust suite of tools to successfully manage their listings, including scheduling, merchandising, integrated payments, community support, host protections, pricing tools, and feedback from reviews. In addition, we provide the Co-Host Network, which connects potential and existing hosts with co-hosts who can help manage their listings. Co-hosts are experienced hosts who provide personalized support based on the hosts’ needs, from listing setup to managing bookings and communicating with guests. In 2025, we continued to deliver host improvements, including updates to cancellation policies that make it easier for hosts to earn income, better pricing tools and price tips, and a refreshed messages tab.
Our Platform for Guests
Our website and mobile app provide our guests with an engaging and intuitive way to discover and book a diverse selection of homes, experiences, and services. Over the last several years, we have launched a significant number of new features and upgrades to help guests find affordable, high quality and reliable stays, experiences, and services across the platform. In 2025, we launched a redesigned app experience featuring unified search and booking for all offerings, artificial intelligence (“AI”)-powered personalization, and integrated social features that allow guests to connect with co-travelers or experience attendees. Guests benefit from flexible payment options, including Pay Less Upfront and Reserve Now, Pay Later. Additionally, guests can utilize enhanced search tools and improved maps to help find high-quality, reliable options that fit their preferences.
Our System of Trust
The system for trust that we designed continues to include core components such as host and guest reviews, account protection, risk scoring, secure payments, a nondiscrimination policy, watchlist and background checks in certain jurisdictions, cleanliness, fraud and scam prevention, insurance and similar protections, booking restrictions, an urgent safety line, a 24/7 neighborhood support line, anti-party technology, and a guest refund policy. In 2025, we made further investments in technology and processes to enhance trust and safety across our platform.
We offer protection for our hosts through AirCover for Hosts, which includes property damage protection of up to $3 million per stay, liability coverage of up to $1 million per occurrence for third-party claims of personal injury or property damage, deep cleaning protection, and pet damage protection.
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.
During 2025, we expanded the use of AI-powered customer service and support features to help more quickly and effectively resolve issues for both hosts and guests. AI capabilities now assist in risk assessment and rapid fraud and scam detection, supplementing our existing review, watchlist, and background check procedures. We also enhanced automation in case management, supporting more timely response and resolution for urgent situations on the platform. With further initiatives under development, we are working to create additional features to strengthen the trust and safety on our platform.
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Our Technology
Our technology platform powers our two-sided global marketplace and supports the broad, evolving needs of our network of hosts and guests. In 2025, we substantially completed a rebuild of our technology stack, enhancing scalability, reliability, and the pace of innovation across the platform. This modern architecture enables us to move rapidly in responding to changing customer needs while maintaining stability and correctness.
Given the nature of the business, our technology platform has broad and complex requirements:
• Support of secure global payments . It enables guests and hosts to transact in their preferred currency across approximately 20 local payment methods, with advanced protections against fraud and money laundering.
• Delivery of global community support . It provides multilingual, real-time community support, including responsive city-specific regulatory support.
• Delivery of deep business insights . It delivers deep business intelligence insights and robust analytics to manage marketplace performance, optimize pricing, and maximize occupancy for our hosts.
• Incorporation of AI and machine learning . It incorporates expanded AI and machine learning capabilities, which are integral to key areas, from fraud detection, to personalized listing matching and 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.
As we continue to evolve our foundational technology, we are focused on the following broad capabilities:
• Data management systems that are designed to support user privacy, analytics, and machine learning and AI-driven insights.
• Service reliability leading to best-in-class performance centered on availability, latency, business continuity, security, testability, observability, operability, and agility.
• Cloud support focusing on robust capabilities for granular attribution and usage patterns to realize efficiency gains.
These continued technological investments aim to create 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 combines brand marketing, communications, performance marketing, and strategic partnerships to increase awareness among existing and potential hosts and guests, demonstrating what makes Airbnb distinct. In 2025, we focused on unified brand campaigns promoting our full suite of offerings: homes, experiences, and services, showcasing where guests can seamlessly book all three on Airbnb. We also leverage select sponsorships and co‑marketing collaborations with cultural institutions, sports and entertainment organizations, destinations, and media platforms to amplify our brand, align with key cultural moments, and engage our community globally. Our global communications team coordinates with partners across press, policy, and social media to share timely news and drive engagement in support of our brand strategy. While performance marketing remains a component of our multi-faceted approach, the strength of Airbnb’s brand and our communication strategy has allowed us to maintain lower reliance on paid marketing channels.
Our Human Capital
We consider the management of our global talent to be essential to the ongoing success of our business. As of December 31, 2025, we had approximately 8,200 employees.
Consistent with prior years, we relied on a global network of approximately 13,000 third-party workers as of December 31, 2025, to support the majority of our community support contacts. Our internal community support employees focus on managing complex and sensitive issues, while enablement teams support all community-facing teams and partners.
Attracting, developing, and retaining talent from a wide range of backgrounds and experiences remains critical for delivering innovative products and serving our stakeholders globally. Through our hiring process, we commit to finding the most qualified candidates for each role while fostering inclusion and striving to eliminate bias. We continue to invest in programs that support all employee growth and learning throughout the employee lifecycle.
Our “Live and Work Anywhere” policy allows for the vast majority of our employees to work remotely, supporting our ability to expand our talent pool well beyond the commuting range of our physical offices. We believe this allows us to attract the best employees, as it helps us to have a broader and more diverse range of qualified candidates for any given position. We continue to promote employee connection and alignment with our business priorities through regular collaboration, including in-person sessions at offices or off-site locations, reinforcing both our remote flexibility and our focus on team cohesion tied to our product roadmap.
Climate Change
We continue to pursue our goal of operating as a “net zero” company for our global corporate operations by year end 2030, reducing greenhouse gas emissions associated with our corporate operations across Scope 1 (direct emissions from stationary combustion and
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refrigerants), Scope 2 (indirect emissions from purchased electricity, purchased electricity from diesel generators, onsite renewable electricity and purchased direct heat (market-based)), and select Scope 3 categories as currently defined by the Greenhouse Gas Protocol (these select Scope 3 categories are 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). To help meet our goals, we continue to advance decarbonization initiatives designed to make our corporate operations more sustainable.
Alongside decarbonization in furtherance of our goal, we purchase carbon credits and we expect to continue to do so to ultimately achieve our goals in the long term. We aim to prioritize projects that meet our internal criteria and provide co-benefits, such as improved biodiversity, economic development, or improved community services and infrastructure.
Regulations
We are subject to an evolving array of laws, regulations, and rules at the local, city, state, and national levels worldwide that impact short-term and long-term rental, home sharing, and related business activities. While many jurisdictions have enacted or updated legislation on short-term rentals, others may do so in the future.
We seek to work with governments to establish clear, fair, and workable home sharing rules to create clarity for our hosts; however, certain cities have passed onerous restrictions on short-term rentals. For example, New York City passed regulations in 2023, which resulted in a de facto ban of short-term rental activities. Other smaller cities have also passed onerous restrictions on short-term rentals. We will continue to collaborate with policymakers to implement sensible legislation around the world and/or dispute regulations that unreasonably restrict the right to host.
Beyond short-term rental regulations, we are also subject to a wide spectrum of laws, rules, regulations, policies, legal interpretations, and regulatory guidance governing our business practices. These include those related to the Internet, Internet access, e-commerce, and electronic devices, and those involving taxation, privacy, data privacy, data security, insurance, pricing, content, advertising, discrimination, consumer protection, employment, protection of minors, copyrights, distribution, messaging, mobile communications, use of AI, electronic device certification, electronic waste, electronic contracts, communications, competition, and unfair commercial practices. We are also subject to laws, regulations, and rules governing the provision of online payment services, the design and operation of our platform, and the operations, characteristics, and quality of our platform and services. Additionally, we are subject to a variety of taxes and tax collection obligations in the United States (federal, state, and local) and numerous foreign jurisdictions.
Our payments platform is subject to various laws, rules, regulations, policies, legal interpretations, and regulatory guidance, including those governing cross-border and domestic money transmission and funds transfers, stored value and prepaid access, foreign exchange, data privacy, data security, cybersecurity, banking secrecy, payment services (including payment processing and settlement services), consumer protection, economic and trade sanctions, anti-corruption and anti-bribery, and anti-money laundering and counter-terrorist financing.
Our business collects, processes, and uses the personal data of individuals across the globe. As a result, we must comply with certain laws on data privacy and data security regulating the collection, storage, handling, use, disclosure, transfer, security, and other processing of personal data. We take a variety of technical and organizational security measures and other procedures and protocols designed to protect personal 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. 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. Data privacy, data security and AI laws and their interpretations continue to develop and are inconsistent from jurisdiction to jurisdiction.
As we continue to expand the reach of our brand into additional markets, we will be increasingly subject to additional laws, rules, regulations, policies, legal interpretations, and regulatory guidance. For additional information, 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. Risk Factors of Part I of this Annual Report on Form 10-K.
Seasonality
Our business is seasonal, reflecting typical global travel patterns. In a typical year, Nights and Seats Booked are highest in the first, second, and third quarters and lowest in the fourth quarter, with the peak travel season occurring in the third quarter across North America and Europe, the Middle East, and Africa (“EMEA”).
Gross Booking Value (“GBV”) generally follows the same seasonal trends as Nights and Seats Booked. Because revenue is recognized when guest check-ins occur, revenue, and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) have historically been highest in the third quarter and lowest in the first quarter. Holiday timing, such as Easter, and other events can also shift quarterly performance.
Seasonality in GBV also affects Free Cash Flow (“FCF”). Higher GBV in the first half of the year typically results in increased unearned fees and higher FCF. During the third quarter, GBV is typically lower and check-ins reach their peak, resulting in decreased unearned fees. GBV and FCF are generally the lowest in the fourth quarter.
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.
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Competition
We operate in a highly competitive environment. As we seek to expand our community globally, we face competition in attracting hosts and guests.
Competition for Hosts
We compete to attract and retain hosts to and on our platform to list their homes, experiences, and services, as hosts have a range of options for doing so. We compete for hosts based on many factors including the volume of bookings generated by guests, ease of use of our platform, the service fees we charge, host protections, such as those included in AirCover for Hosts, our brand, and community support.
Competition for Guests
We compete to attract and retain guests to and on our platform, as guests have a range of options to find and book accommodations, experiences, and services. We compete for guests based on many factors, including unique inventory and availability of listings, the value and all-in cost of host offerings on our platform relative to other options, our brand, ease of use of our platform, the trust and safety of our platform, and community support.
Our competitors include:
• online travel agencies (“OTAs”), such as Booking Holdings (including the brand Booking.com), Expedia Group (including the brands Expedia and VRBO), Trip.com Group, and other regional OTAs;
• internet search engines, such as Google and those powered by AI, including its travel search products;
• hotel chains, such as Marriott, Hilton, Accor, and Wyndham, as well as boutique hotel chains and independent hotels;
• property management companies;
• online platforms offering experiences and activities, such as Viator, GetYourGuide, and Klook; and
• providers in the highly fragmented guest services industry, which include many vertical-specific marketplaces that offer photography, beauty, spa, fitness, food, and other services.
Our Intellectual Property
Our intellectual property is an important component of our business. To establish and protect our proprietary rights, we rely on a combination of patents, trade secrets, trademarks, copyrights, domain names, social media handles, know-how, license agreements, confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other intellectual property and contractual rights.
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 around the world for our primary brands — AIRBNB and our Bélo logo, 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, sub brands including AirCover, and brands associated with businesses we have acquired, including HotelTonight. We have registered domain names that we use in or relate to our business, such as the airbnb.com domain name and country code top-level domain name equivalents.
Available Information
Our website address is www.airbnb.com. Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K. The U.S. Securities and Exchange Commission (“SEC”) maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. 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. In addition, we routinely post other information, which could be deemed to be material to investors, on our investor relations website. Information regarding our sustainability initiatives is also available on our website. Information on our website, including the information published in our corporate responsibility and sustainability reports, is not incorporated by reference in this Report.
We webcast our quarterly results calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, and press and earnings releases, as part of our investor relations website. 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.
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Item 1A. Risk Factors
Our business, operations, and financial results are subject to various risks and uncertainties, including those described below, that could materially adversely affect our business, results of operations, financial condition, and the trading price of our Class A common stock. The following material factors, among others, could cause our actual results to differ materially from historical results and those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors, and oral statements.
Risks Related to Our Business and Operations
Revenue and Growth Risks
We may not be able to sustain our revenue growth rate or effectively manage growth or new opportunities.
Our future revenue growth depends on the growth of supply and demand for listings on our platform and the development and adoption of new offerings and initiatives. Our business is also affected by general economic and business conditions worldwide as well as trends in the global travel and hospitality industries and the short and long-term accommodation regulatory landscape. A softening of supply or demand for our current or future offerings, whether caused by events outside of our control, challenging macroeconomic and political conditions, changes in host and guest preferences, public health crises such as pandemics, and any of the other factors described in these Risk Factors and elsewhere in this Annual Report on Form 10-K, or otherwise, may result in decreased revenue and our business, results of operations, and financial condition could be materially adversely affected.
If we fail to retain or add hosts and guests, if hosts do not provide high-quality stays, experiences, and services, if new offerings and initiatives on our platform are unsuccessful, or if our community support functions are inadequate, our business, results of operations, and financial condition would be materially adversely affected.
Our business success is heavily reliant on both hosts and guests engaging with our platform. Hosts must maintain and enhance their listings by offering a variety of desirable, competitively priced, and high-quality stays, experiences, and services, while providing exceptional hospitality and timely responses to guest inquiries. These factors are largely outside our direct control, and if hosts fail to meet these expectations, or if they choose to cross-list or list exclusively with competitors, or if we are unable to attract and retain hosts in a cost-effective manner, or at all, our revenue and business operations could be adversely affected.
Our ability to attract and retain guests is crucial and can be impacted by external factors such as pandemics, natural disasters, political instability, climate change, and economic downturns, as well as business-specific factors like competition, brand perception, and platform usability. Our brand and reputation are critical to our success, as they influence our ability to attract and retain hosts, guests, and employees. Any negative perceptions or incidents related to safety, security, or quality could harm our public image and business operations. Issues such as unreliable reviews, regulatory scrutiny, or negative media coverage can further damage trust within our community, materially adversely affecting our business, results of operations, and financial condition.
We continue to invest in the development of new offerings and initiatives, including innovations focused on improving the experience of our hosts and guests; however, developing and delivering these new offerings and initiatives increase our expenses and our organizational complexity, and we may experience difficulties in developing and implementing these new offerings and initiatives. New offerings and initiatives on our platform have a high degree of risk, as they may involve unproven businesses with which we have limited or no prior development or operating experience. There can be no assurance that our hosts and guests will adopt or respond positively to such offerings and initiatives, that we will be able to successfully manage the development and delivery of such offerings and initiatives, or that any of these offerings or initiatives will help attract and retain users on our platform and gain sufficient market acceptance to generate sufficient revenue to offset associated expenses or liabilities. If new offerings and initiatives on our platform are not successful, or if we fail to provide a seamless and satisfactory experience for both hosts and guests, or if our host protection programs, including those provided through AirCover for hosts, become ineffective, our business, results of operations, and financial condition could be materially adversely affected.
Furthermore, our growth relies on delivering high-quality support to our community, which requires significant investment in staffing, technology, infrastructure, and training. During 2025, we introduced new artificial intelligence (“AI”) features to help deliver customer support in certain countries and languages. AI presents risks and challenges that could affect the expansion of these features, and therefore our business; for more information, see our risk factor titled “Our use of artificial intelligence and machine learning gives risk to legal, business, and operational risks, which may result in diminished performance, regulatory scrutiny, social impacts, reputational harm, and liability arising from the use of this technology.” In addition, as our global customer base expands, particularly outside of North America and Europe, we face increased pressure to provide efficient, multilingual support. The vast majority of our community support is performed by third-party service providers, and our reliance on third-party service providers necessitates stringent guidance and quality control to maintain satisfactory service levels. Inadequate support or dispute resolution can harm our reputation and affect retention, and may also lead to potential revenue reductions through refunds or coupons. The cost of maintaining robust community support is expected to rise, and efforts to reduce support requests may not offset these costs, materially adversely affecting our business, results of operations, and financial condition.
If we are unable to successfully expand our global network or manage the risks presented by our business model internationally, our business, results of operations, and financial condition would be materially adversely affected.
We operate a global marketplace connecting guests with stays, experiences, and services, collectively in over 220 countries and regions. For the year ended December 31, 2025, 61% of our revenue was generated from listings outside of the United States. We expect to continue to make investments to expand our international operations; however, there can be no assurance that our international expansion efforts will be successful or result in revenue growth. Managing a global organization is difficult, time consuming, and expensive, and requires
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significant management attention and careful prioritization. As such, any international expansion efforts that we may undertake may not be successful. In addition, conducting international operations subjects us to operational, tax, regulatory, and compliance risks.
Increased operating expenses, decreased revenue, negative publicity, negative reaction from our hosts and guests and other stakeholders, or other adverse impacts from any of the risks related to our international operations could materially adversely affect our brand, reputation, business, results of operations, and financial condition.
We rely on the value of our brand and traffic to our platform to grow revenue, and if we are unable to market our brand and drive traffic cost-effectively, it would materially adversely affect our business, results of operations, and financial condition.
We believe maintaining and strengthening our brand is crucial for attracting and retaining hosts and guests. We invest significantly in brand marketing across various channels to drive traffic to our platform, but these efforts may not always be cost-effective or successful. Additionally, increased spending by competitors on brand marketing could hinder our ability to grow platform traffic.
Our marketing strategy includes performance marketing through search engines and social media, as well as paid and unpaid channels like search engine optimization (“SEO”). However, rising costs for keywords and changes in search engine algorithms can impact our visibility and increase customer acquisition costs. If we cannot effectively grow traffic without increasing performance marketing spend, our business, results of operations, and financial condition could be adversely affected.
SEO efforts are vulnerable to changes in search engine algorithms and consumer behavior, which can reduce our platform's prominence. If our listings are less visible, we may need to increase paid marketing, raising costs and affecting our business, results of operations, and financial condition. If consumers become less reliant on search engines for travel searches and instead use AI apps and other channels, we may not be able to optimize for searches on these emerging channels and may risk losing traffic to competitors. Additionally, if major platforms like Google or Apple favor their own services or other partner services, our ability to engage users via mobile app or search could be impacted.
As guests compare offerings across multiple sites, our marketing efficiency may decline, necessitating increased expenditures that may not yield additional revenue. Additionally, negative publicity or complaints could harm our reputation, reducing platform usage and requiring further marketing spend to recover traffic.
Brand and Reputation Risks
Host, guest, or third-party actions that are criminal, violent, inappropriate, dangerous, or fraudulent may undermine the trust and safety or the perception of safety and security on our platform and our ability to attract and retain hosts and guests and materially adversely affect our reputation, business, results of operations, and financial condition .
We cannot control or predict the actions of users and third parties, such as neighbors or invitees, during stays, experiences, or services, including actions that may compromise the safety and security of hosts, guests, and others. Incidents involving alleged fatalities, injuries, sexual violence, fraud, privacy invasion, property damage, and discrimination have occurred and may occur in the future, potentially leading to legal liabilities and reputational damage. When a user is identity verified, it means that they provided information we validated through our process. In addition, we do not currently and may not in the future require users to re-verify their identity following their successful completion of the initial verification process. We conduct background checks in the United States and India for certain users and we screen users against sanctions watch lists, but these are not exhaustive due to regulatory, information, and frequency limitations. We do not verify all listings for safety or compliance, relying instead on user-reported issues, which may be incomplete or inaccurate. We do not independently verify the safety, suitability, location, quality, compliance with Airbnb policies or standards, and legal compliance, such as fire code compliance or the presence of carbon monoxide detectors, hidden cameras or pool safety, of all our hosts’ listings, experiences, and services. While we have in the past independently evaluated the expertise and reputation of some experiences or services hosts to the extent possible, we generally have not and may not in the future undertake to independently verify those factors, or the location, safety, or suitability of experiences or services for individual guests, or the qualifications of individual experiences or services guests.
We have faced civil litigation, regulatory investigations, and inquiries involving allegations related to unsafe listings, discriminatory practices, and other misconduct by third parties. Despite efforts to enhance trust and safety, we may not fully succeed, impacting public perception and platform adoption.
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, 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, potentially leading consumers to think our platform and the listings on our platform are not safe or secure, and lower the adoption rate of our platform.
In addition, certain regions where we operate have higher reported rates of violent crime or varying safety requirements, which can lead to more safety and security incidents, and may adversely impact the adoption of our platform in those regions and elsewhere.
Further, claims have been asserted against us from our hosts, guests, and third parties for compensation due to alleged fatalities, gun violence, other violent acts, carbon monoxide incidents, hidden camera incidents, accidents, injuries, assaults, theft, property damage, data privacy and data security issues, fraudulent conduct, and other incidents that are caused by other hosts, guests, or third parties while using our platform. These claims subject us to potentially significant liability and reputational damage, increase our operating costs and could materially adversely affect our business, results of operations, and financial condition. We have obtained some third-party insurance, which is subject to certain conditions and exclusions, for claims and losses incurred based on incidents related to bookings on our platform. Our insurance policies, which may or may not be applicable to some claims and may not be available to us in the future on economically reasonable terms or at all, may be inadequate to fully cover alleged claims of liability, investigation costs, defense costs, and/or payouts.
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Even if these claims do not result in liability, we could incur significant time and cost investigating and defending against them. As we expand our offerings, or if the quantity or severity of incidents increases, our insurance rates and our financial exposure will grow, which could materially adversely affect our business, results of operations, and financial condition.
We track certain operational metrics, which are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and materially adversely affect our stock price, business, results of operations, and financial condition.
We track operational metrics such as Nights and Seats Booked, GBV, Average Daily Rate (“ADR”), active listings, active bookers, hosts, guest arrivals, greenhouse gas emissions, and other ESG metrics, which may differ from third-party estimates due to varying methodologies and assumptions. Our internal systems have limitations, and changes in tracking methods could lead to unexpected metric variations. Errors in these systems may result in inaccurate data reporting. Metrics like Nights and Seats Booked and GBV are adjusted for cancellations and alterations that happen in the reporting period, but such cancellations and alterations can occur beyond the reporting period and can affect future metrics. Calculating these operational metrics requires ongoing data collection on new offerings that are added to our platform over time. Our business is complex, and the methodology used to calculate these metrics may require adjustments to accurately represent the full value of new offerings.
An active booker is a unique guest who has booked a stay, experience, or service in a given time period. Certain individuals may have more than one guest account and therefore may be counted more than once in our count of active bookers. We count the number of hosts on our platform based on the number of hosts with an available listing as of a certain date. Some individuals may have more than one host account and therefore may be counted more than once as hosts.
Fraudulent activities not identified by our systems can also skew metrics, impacting their accuracy. Inaccurate metrics or perceptions of inaccuracy could harm our reputation, affect our stock price, lead to litigation, and materially adversely affect our business, results of operations, and financial condition.
Industry, Financial, and Insurance Risks
Any decline or disruption in the travel and hospitality industries or economic downturn could materially adversely affect our business, results of operations, and financial condition.
Our financial performance is dependent on the strength of the travel and hospitality industries, which can be significantly impacted by events beyond our control such as extreme weather, natural disasters, pandemics or public health crises, economic downturns, political unrest, wars, and changes in travel-related policies. These unpredictable events can abruptly alter consumer travel behavior, reducing demand for our platform and services, and materially adversely affecting our business, results of operations, and financial condition. Climate change and other environmental or social pressures, as well as societal responses to the same, may exacerbate or lead to additional impacts from such events.
Macroeconomic conditions, including economic downturns, inflation, tariffs, and currency fluctuations, also influence consumer discretionary spending, which is crucial for our business. Factors like unemployment, consumer debt, and financial market volatility can decrease consumer confidence and spending, particularly affecting leisure travel, which forms a substantial part of our business. Economic downturns have historically reduced travel spending, and future downturns could similarly decrease demand for our platform, leading to lower bookings, increased cancellations, and reduced revenue, thereby materially adversely affecting our business, results of operations, and financial condition.
The business and industry in which we participate are highly competitive, and we may be unable to compete successfully with our current or future competitors.
We operate in a highly competitive environment, and we face significant competition in attracting hosts and guests. Hosts have numerous options for listing their spaces, experiences, and services, both online and offline, and often cross-list their offerings. We compete for hosts based on factors like booking volume, platform usability, service fees, host protections, brand, and reputation. Guests also have various options for booking accommodations, experiences, and services, and we compete on inventory uniqueness, value and all-in cost, brand and reputation, platform usability, search relevance and personalization, trust and safety, and customer support.
Our competitors include OTAs, search engines, listing and meta-search websites, hotel chains, property management companies, and online experience and service platforms. Many competitors have advantages such as greater brand recognition, larger marketing budgets, and more resources. They may offer a more comprehensive product experience and respond more effectively to market changes. They may develop technological advancements that allow them to offer better products and services at a lower price. Failure to offer or deploy new technologies as effectively as our competitors could adversely affect our business. Industry consolidation and emerging start-ups further intensify competition, potentially impacting our growth and financial condition.
Numerous companies offer homes for booking, often cross-listed on multiple platforms, which can make our pricing appear less competitive for a number of reasons, including differences in fee structure and policies. Some property managers and hosts encourage direct bookings, bypassing our platform, which reduces our usage. Competitors with established consumer relationships may leverage these to enter the travel market, creating “super-apps” that integrate multiple services, potentially increasing our customer acquisition costs and affecting our competitive position.
We also face competition from search engines like Google, which can influence search traffic and promote their own travel services, potentially disintermediating our platform. To the extent that major technology companies favor their own travel offerings or restrict our
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app distribution, it could impact our ability to engage with users, materially affecting our business, results of operations, and financial condition.
Our failure to properly manage funds held on behalf of customers could materially adversely affect our business, results of operations, and financial condition.
We offer integrated payments in approximately 50 currencies to allow access to guest demand from more than 220 countries and regions and the ability for many hosts to be paid in their local currency or payment method of choice. When a guest books and pays for a stay, experience, or service on our platform, we hold the total amount the guest has paid until check-in, at which time we recognize our service fee as revenue and initiate the process to remit the payment to the host, which generally occurs on the business day after the scheduled check-in, barring any alterations or cancellations, which may result in funds being returned to the guest. Accordingly, at any given time, we hold on behalf of our hosts and guests a substantial amount of funds, which are generally held in bank deposit accounts and in money market funds and recorded on our consolidated balance sheets as funds receivable and amounts held on behalf of customers. In certain jurisdictions, we are required to either safeguard customer funds in bankruptcy-remote bank accounts, or hold such funds in eligible liquid assets, as defined by the relevant regulators in such jurisdictions, equal to at least 100% of the aggregate amount held on behalf of customers. 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. Our success requires significant public confidence in our ability to handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain the necessary controls or to manage the assets underlying our customer funds accurately could result in reputational harm, lead customers to discontinue or reduce their use of our platform and services, and result in significant penalties and fines from regulators, each of which could materially adversely affect our business, results of operations, and financial condition.
The insurance coverage afforded by or available from our insurers may be inadequate for the needs of our business, and losses under our damage protection program could materially adversely affect our business, results of operations, and financial condition.
We use a combination of insurance and self-insurance, including a wholly-owned captive insurance subsidiary, to manage the exposures related to our business operations. We support our host community by maintaining a variety of host protection programs, such as AirCover for Hosts, which includes Host Liability Insurance, Experiences Liability Insurance, and our Host Damage Protection program.
In relation to Airbnb’s insurance programs, our business, results of operations, and financial condition would be materially adversely affected if (i) cost per claim, premiums, or the number of claims significantly exceeds our expectations; (ii) we experience a claim in excess of our coverage limits; (iii) our insurance providers become insolvent or otherwise fail to pay on our insurance claims; (iv) we experience a claim for which coverage is denied by or disputed by our insurance providers; (v) claims costs exceed our captive insurance subsidiary’s forecast or reserves; or (vi) the number of claims under our deductibles or self-insured retentions differs from historic averages. Our spending for insurance has increased as our business has grown. Losses from covered claims have increased, resulting in increased premiums. Due to the limited availability of companies insuring our risks, we have experienced and expect to continue to experience increased difficulty in obtaining appropriate policy limits and levels of coverage at a reasonable cost and with reasonable terms and conditions. Our costs for obtaining these policies will continue to increase as our business grows and continues to evolve. Furthermore, as our business continues to develop and diversify, we may experience difficulty in obtaining insurance coverage for new and evolving offerings, which could require us to incur greater costs and materially adversely affect our business, results of operations, and financial condition.
Our Host Damage Protection program is a commercial guaranty agreement that provides reimbursement of up to $3 million for certain guest-caused losses or damages to a host property that are not reimbursed by the guest. We maintain a contractual liability insurance policy to provide coverage to us for losses incurred by us under the Host Damage Protection program. Increased frequency and severity and increased fraud could result in greater payouts, increased investigation costs, premium increases, and/or difficulty securing insurance coverage.
Additionally, if we fail to comply with insurance regulatory requirements in the regions where we operate, or other regulations governing insurance coverage, our brand, reputation, business, results of operations, and financial condition could be materially adversely affected.
We rely on third-party payment service providers to process payments made by guests and payments made to hosts on our platform. If these third-party payment service providers become unavailable or if we are subject to increased fees, our business, results of operations, and financial condition could be materially adversely affected.
We rely on a number of third-party payment service providers, including payment card networks, banks, payment processors, and payment gateways, to link us to payment card and bank clearing networks to process payments made by our guests and to remit payments to hosts on our platform. If these providers, some of whom are the sole providers of their particular service, become unable or unwilling to offer services on acceptable terms or at all, our business could be disrupted, requiring us to find alternatives providers and they may not be able to be replaced in a timely manner, or at all, or on favorable terms. Transitioning to new providers would demand significant resources and might not be well-received by users, potentially leading to losses and necessitating payments to hosts from our funds, which could materially adversely affect our business, results of operations, and financial condition.
In addition, the software and services from these providers may fail to meet our expectations, contain errors or vulnerabilities, be compromised, or experience outages, all of which could impact our ability to process payments, make timely payments to hosts, or comply with regulatory requirements, which could deter users and harm our reputation, possibly leading to regulatory scrutiny, investigations, or enforcement action. Agreements with providers may even allow them to hold our cash as a reserve under certain conditions, such as adverse business changes, which could materially affect our business, results of operations, and financial condition.
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For certain payment methods, including credit and debit cards, we pay interchange and other fees, and such fees result in significant costs. Payment card networks may impose special fees or assessments on any transaction that accesses their network. Our payment card processors have the right to pass any increases in interchange fees, assessments or special fees on to us. Such interchange and other fees may increase over time and raise our operating costs and lower profitability.
Credit card transactions result in higher fees to us than transactions made through debit cards. Any material increase in interchange fees in the United States or other geographies, including as a result of changes in interchange fee limitations imposed by law in some geographies, or other network fees or assessments, or a shift from payment with debit cards to credit cards among our guests could increase our operating costs and materially adversely affect our business, results of operations, and financial condition.
Additionally, inadequate investment in our payment infrastructure could hinder functionality and competitiveness, affecting usage. Further, expanding our payment services into additional geographies or offering new methods may introduce additional regulations and fraud risks, which would increase operating expenses.
If one or more of our counterparty financial institutions default on their financial or performance obligations to us or fail, we may incur significant losses or be unable to process payment transactions.
We have significant amounts of cash, cash equivalents, and other investments, including money market funds, certificates of deposit, U.S. government debt securities, commercial paper, corporate debt securities, government agency debt securities, mortgaged-backed and asset-backed securities, with banks or other financial institutions in the United States and abroad for both our corporate balances and for funds held on behalf of our hosts and guests. We also rely on such banks and financial institutions to help process payments transactions. We have both significant funds flows from and to various financial institutions as a result of our processing of payments from guests to hosts. As part of our currency hedging activities on these balances, we enter into transactions involving derivative financial instruments with various financial institutions. We regularly monitor our exposure to counterparty credit risk and manage this exposure in an attempt to mitigate the associated risk. Despite these efforts, we may be exposed to the risk of default by, or deteriorating operating results or financial condition, or service interruptions at, or failure of, these counterparty financial institutions. If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses or to access or recover our assets may be limited by the counterparty’s liquidity or the applicable laws governing the insolvency or bankruptcy proceedings. Furthermore, our ability to process payment transactions via such counterparties would be severely limited or cease. In the event of default or failure of one or more of our counterparties, we could incur significant losses and be required to make payments to hosts and/or refunds to guests out of our own funds, which could materially adversely affect our results of operations and financial condition.
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.
In 2021, we issued $2.0 billion aggregate principal amount of 0% convertible senior notes due March 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”). As of December 31, 2025, there were no borrowings outstanding under the 2022 Credit Facility, and we had total outstanding letters of credit of $20 million under the 2022 Credit Facility. We may also incur additional indebtedness to meet future financing needs.
Our ability to make payments under or to refinance our indebtedness, including the 2026 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient funds, and we may otherwise be unable to maintain sufficient cash reserves, to pay amounts due under our indebtedness, including the 2026 Notes, and our cash needs may increase in the future.
Additionally, certain provisions of our 2026 Notes and related agreements could complicate or increase the cost for a third-party seeking to acquire us. Noteholders may require us to repurchase their notes for cash following a fundamental change, potentially straining our financial resources and leading to defaults under the indenture or other debt agreements.
In addition, the accounting treatment of the 2026 Notes as a liability and the use of the "if-converted" method for earnings per share calculations may negatively impact our reported financials.
Moreover, the capped call transactions entered into in connection with the pricing of the 2026 Notes may affect the value of our Class A common stock.
In addition, our existing credit agreement for our 2022 Credit Facility contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants, including a leverage ratio and fixed charge coverage ratio covenants, that limit our ability to operate our business, raise capital, or make payments under our other indebtedness. The covenants in the agreement governing our 2022 Credit Facility, among other things, limit our and our subsidiaries’ abilities to (i) incur additional indebtedness at subsidiaries that are not guarantors of the 2022 Credit Facility; (ii) create or incur additional liens; (iii) partake in sale/leaseback transactions; (iv) engage in certain fundamental changes, including mergers or consolidations; and (v) enter into negative pledge clauses and clauses restricting subsidiary distributions.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
Operational Risks
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The failure to successfully execute and integrate acquisitions could materially adversely affect our business, results of operations, and financial condition.
We have acquired multiple businesses and we regularly evaluate potential acquisitions. We may expend significant cash or incur substantial debt to finance such acquisitions, which indebtedness could result in restrictions on our business and significant use of available cash to make payments of interest and principal. In addition, we may finance acquisitions by issuing equity or convertible debt securities, which could result in further dilution to our existing stockholders. We may enter into negotiations for acquisitions that are not ultimately consummated. Those negotiations could result in diversion of management time and significant out-of-pocket costs. If we fail to evaluate and execute acquisitions successfully, our business, results of operations, and financial condition could be materially adversely affected.
In addition, we may not be successful in integrating acquisitions, or the businesses we acquire may not perform as well as we expect. While our acquisitions to date have not caused major disruptions in our business, any future failure to manage and successfully integrate acquired businesses could materially adversely affect our business, 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.
From time to time, we also make investments in private companies, which are inherently risky. To the extent our investments in such companies have experienced a decline in value, we have recognized an expense to adjust the carrying value to its estimated fair value. Negative changes in the estimated fair value of private companies in which we invest could have a material adverse effect on our results of operations and financial condition.
Our results of operations and financial condition could be materially adversely affected by changes in accounting principles.
The accounting for our business is subject to change based on the evolution of our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations of accounting and financial reporting requirements of the SEC or other regulatory agencies. Adoption of a change in accounting principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions completed before the adoption of such change. It is difficult to predict the impact of future changes to accounting principles and accounting policies over financial reporting, any of which could adversely affect our results of operations and financial condition and could require significant investment in systems and personnel.
Our business depends on attracting and retaining capable management and employees, and the loss of any key personnel could materially adversely affect our business, results of operations, and financial condition.
Our success depends in large part on our ability to attract and retain high-quality management and employees. 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. The loss of qualified employees, or an inability to attract, retain, and motivate employees required for the planned expansion of our business, would materially adversely affect our business, results of operations, and financial condition and impair our ability to grow. To attract and retain key personnel, we use various measures, including an equity incentive program, and our ability to attract, retain, and motivate employees may be adversely affected by declines in our stock price. Additionally, if we issue significant equity to attract employees or to retain our existing employees, we would incur substantial additional stock-based compensation expense and the ownership of our existing stockholders would be further diluted.
We have adopted a Live and Work Anywhere policy. The increase in remote working subjects us to certain operational challenges and could have adverse tax implications, which could materially adversely affect our business, results of operations, and financial condition.
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In 2022, we adopted our Live and Work Anywhere policy, which permits the majority of our employees to work remotely. Remote working subjects us to operational challenges and risks. For example, a natural disaster, power outage, connectivity issue, or other event may impact our employees’ ability to work remotely. We are also exposed to risks associated with the locations of remote workers, including compliance with local laws and regulations or exposure to compromised internet infrastructure. Allowing members of our workforce to work remotely creates intellectual property risk if employees create intellectual property on our behalf while residing in a jurisdiction with unenforced or uncertain intellectual property laws. Further, if employees fail to inform us of changes in their work location, we may unknowingly be exposed to additional risks. Remote working at our company (and at many third-party providers) also results in consumer, privacy, information technology and cybersecurity, and fraud risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
Our transition to full or predominantly remote work environments also presents significant challenges to maintaining compliance with country and state requirements such as employee income tax withholding, the recording of reserves to cover withholding corrections or penalties, payroll tax remittance and reporting, payroll registration, and workers’ compensation insurance. Additionally, foreign tax authorities may assert that certain of our entities have created permanent establishment in their countries , which could result in additional corporate income taxes and employee payroll withholding obligations. Any of these operational challenges or tax implications resulting from our Live and Work Anywhere policy may materially adversely affect our business, results of operations, and financial condition.
Climate, Economic, and Market Risks
We are subject to risks associated with the physical impacts of climate change as well as various efforts to transition to a low-carbon society.
There are inherent climate-related risks wherever business is conducted. For example, the physical impacts 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, wildfires, and natural disasters) may interrupt infrastructure on which our platform relies, impact demand or supply for lodging, or otherwise adversely impact our business. Climate change is expected to increase the frequency and severity of certain such events, as well as contribute to chronic changes (such as changes to meteorological and hydrological patterns) that may also impact the behaviors of guests and hosts or infrastructure on which we rely.
Growing awareness of climate and other environmental or social pressures, including over-tourism, has also prompted responses by various groups, which may adversely impact the travel and hospitality industries and demand for our platform and services, whether due to the imposition of policies and regulations or changing societal attitudes towards travel. For example, both we and hosts are increasingly subject to regulatory requirements related to climate-related considerations, and any additional regulations may require increased costs or attention for compliance. Our platform and services may also be adversely impacted to the extent travel behavior or other societal expectations shift in response to climate considerations, including if we do not successfully navigate evolving stakeholder expectations regarding our own response to climate change.
We may experience significant fluctuations in our results of operations, which make it difficult to forecast our future results.
Our results of operations can vary significantly and are not necessarily indicative of future performance due to seasonal fluctuations and other factors. Our business is seasonal, reflecting typical global travel patterns, with the peak travel season occurring in the third quarter across North America and EMEA. We experience seasonality in our Nights and Seats Booked, GBV, Adjusted EBITDA and FCF. Holiday timing and other events can also shift quarterly performance. As our business evolves, seasonal trends may change.
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 events 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 in these Risk Factors and elsewhere in this Annual Report on Form 10-K.
In addition, we may not accurately forecast our results of operations due to timing differences between when bookings are made and revenue recognition, which occurs at check-in. For example, the effect of significant downturns in bookings in a particular quarter may not be fully reflected in our financial results until future periods due to this timing difference. Our expense levels are based on revenue estimates that may be inaccurate, and fixed expenses may lead to greater-than-expected losses if revenue falls short. Incorrect assumptions or failure to address risks could materially affect our business, results of operations, and financial condition.
A significant portion of our bookings and revenue are denominated in foreign currencies, and our financial results are exposed to changes in foreign exchange rates.
A significant portion of our business is denominated and transacted in foreign currencies, which subjects us to foreign exchange risk. We offer integrated payments to our hosts and guests in approximately 50 currencies. Revenue could be negatively impacted by currency fluctuations.
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Generally speaking, a strong U.S. dollar can negatively impact our revenue, as approximately 54% and 56% of our revenue in 2024 and 2025, respectively, were in non-U.S. dollar currencies. We also face foreign exchange risk with certain assets, like cash balances held for hosts, affecting our financial results through currency remeasurement and translation. Our platform allows guests to pay in their preferred currency, which may differ from the host's payment currency, leading to currency risk due to timing differences.
We utilize a foreign exchange cash flow hedging program to reduce the impact of currency fluctuations on our revenue. However, hedging may not fully mitigate losses, and our hedging positions may be incomplete or absent in the future. While we may hedge revenue and balance sheet exposures, predicting or eliminating foreign exchange rate effects is not possible.
Legal, Regulatory and Compliance Risks
Tax Compliance
Changes in tax laws or tax rulings could materially adversely affect our business, results of operations and financial condition.
We are subject to evolving global tax regimes, which could materially adversely affect our business, results of operations, and financial condition. For example, the U.S. Inflation Reduction Act (the “IRA”) introduced a corporate alternative minimum tax and an excise tax on stock repurchases. Additionally, the U.S. government may implement further changes, such as increasing the corporate income tax rate or altering the taxation of international income.
Many countries in Europe, as well as a number of other countries and states, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase our tax obligations in many countries and states where we do business or require us to change the manner in which we operate our business. For example, Italy passed a law in 2017, purporting to require short-term rental platforms that process payments to withhold and remit host income tax and collect and remit tourist tax, amongst other obligations. In December 2023, without admitting any liability, Airbnb Ireland signed an agreement with the Italian Revenue Agency in settlement of the 2017-2021 audit periods for an aggregate payment of 576 million Euro ($621 million). In December 2024, Airbnb Ireland signed a similar agreement in settlement of the 2022 audit period for an aggregate payment of 139 million Euro ($150 million). In January 2025, Airbnb Ireland signed a similar agreement in settlement of the 2023 audit period for an aggregate payment of 179 million Euro ($186 million). Such agreements settled the dispute about Airbnb Ireland’s obligations to withhold and remit host income tax, including taxes, interest, and penalties, for those relevant periods. Airbnb Ireland commenced withholding on host payments related to Italian listings in 2024. However, Airbnb’s subsidiary in Italy and Airbnb Ireland continue to be, or could in the future be, subject to tax audits in Italy, including in relation to permanent establishment, transfer pricing, withholding obligations, and tourist taxes. Such audits could result in the imposition of additional potentially significant prior and future tax obligations.
The U.S. federal and state governments, countries in the European Union, and a number of other countries and organizations such as the Organization for Economic Cooperation and Development (the “OECD”), are actively considering changes to existing tax laws that could increase our tax obligations in jurisdictions where we do business. For example, the 15% global minimum tax under Pillar Two of the OECD Base Erosion and Profit Shifting (“BEPS”) Project could increase our overall taxes and have a materially adverse impact on our business, results of operations, and financial conditions.
The European Commission is also conducting investigations into preferential tax treatments, which may lead to changes in how our foreign operations are taxed. As our international business expands, these developments could raise our effective tax rate and non-income tax obligations, materially adversely affecting our business, results of operations, and financial conditions. Additionally, some changes may apply retroactively, leading to unexpected tax liabilities beyond our current estimates.
We may have exposure to greater than anticipated income tax liabilities.
Our income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which we operate our business, develop, value, manage, protect, and use our intellectual property, and determine the value of our intercompany transactions. The tax laws applicable to our business, including those of the United States and other jurisdictions, are subject to interpretation, and certain jurisdictions are aggressively interpreting their laws in new ways in an effort to raise additional tax revenue from companies such as Airbnb. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, which could increase our worldwide effective tax rate and materially adversely affect our results of operations and financial condition.
We are subject to regular review and audit by U.S. federal, state, local, and foreign tax authorities. For example, our 2008 to 2025 tax years remain subject to examination in the United States and California due to tax attributes and statutes of limitations, and our 2021 to 2025 tax years remain subject to examination in Ireland. We are currently under examination for income taxes by the Internal Revenue Service (“IRS”) for the years 2013, 2016, 2017 and 2018. We are continuing to respond to inquiries related to these examinations. In December 2020, we received a Notice of Proposed Adjustment (“NOPA”) from the IRS for the 2013 tax year relating to the valuation of our international intellectual property which was sold to a subsidiary in 2013. The notice proposed an increase to our U.S. taxable income that could result in additional income tax expense and cash tax liability of $1.3 billion, plus penalties and interest, which exceeds our current reserve recorded in our consolidated financial statements by more than $1.0 billion. We strongly disagree with the proposed adjustment and intend to vigorously contest it. In January 2022, we entered into an administrative dispute process with the IRS Independent Office of Appeals (“IRS Appeals”) regarding the proposed adjustment. An acceptable outcome was not reached with IRS Appeals, and in May 2024, we received a Statutory Notice of Deficiency (“Notice”) from the IRS related to the aforementioned valuation of our international intellectual property. The Notice claims that we owe $1.3 billion in tax, plus penalties and interest. We will continue to pursue all available remedies to resolve this dispute. In July 2024, we petitioned the U.S. Tax Court (“Tax Court”) for redetermination, and if necessary, we will appeal the Tax Court’s decision to the appropriate appellate court. If the IRS prevails in the assessment of additional tax due based on its position and such tax and
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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.
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.
We face complex and evolving tax obligations across various jurisdictions, which could significantly impact our business. We are subject to numerous taxes, including income and indirect taxes, and have received demands from governments for data to enforce tax laws against our hosts and guests. We collect and remit taxes on behalf of hosts when legally required, but disputes and lawsuits over tax responsibilities persist. New or revised tax laws could increase our tax liabilities and operational costs, potentially leading to penalties for non-compliance.
The application of indirect taxes, such as lodging taxes, transactional taxes, hotel, sales and use tax, privilege taxes, excise taxes, VAT, goods and services tax, digital services taxes, harmonized sales taxes, business tax, and gross receipt taxes (together, “indirect taxes”) to e-commerce activities such as ours and to our hosts or guests is a complex and evolving issue. These taxes could raise costs for hosts and guests, discourage platform use, and reduce revenue. Compliance with tax reporting may require disclosing personal data, risking privacy concerns and regulatory actions. Competitors may adopt different tax strategies, potentially attracting our hosts and guests.
We devote significant resources, including management time, to the application and interpretation of laws and working with various jurisdictions to clarify whether taxes are applicable and the amount of taxes that apply. Rapid regulatory changes and lack of uniformity complicate compliance, risking errors and enforcement actions. As our business evolves, tax obligations may increase, further affecting our financial condition and platform usage.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
While U.S. federal net operating loss carryforwards generated on or after January 1, 2018 are not subject to expiration, the deductibility of such net operating loss carryforwards is limited to 80% of our taxable income for taxable years beginning on or after January 1, 2021. Utilization of our net operating loss carryforwards and other tax attributes, such as the federal research tax credit, depends on our future taxable income, and there is a risk that some of our existing net operating loss carryforwards and tax credits could expire unused (to the extent subject to expiration) and be unavailable to offset future taxable income, which could materially adversely affect our results of operations and financial condition. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by significant stockholders or groups of stockholders over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, to offset its post-change taxable income or income tax liabilities may be limited. Similar rules may apply under state tax laws. We may have undergone ownership changes in the past, and we may experience ownership changes in the future because of shifts in our stock ownership, many of which are outside of our control. As a result, our ability to use our net operating loss carryforwards and other tax attributes to offset future U.S. federal taxable income or income tax liabilities may be, or may become, subject to limitations, which could result in increased future tax liability to us.
Compliance with Laws and Regulations, Litigation and Disputes
We are subject to a wide variety of laws, regulations , and rules applicable to short-term rental, experiences, services, long-term rental, and home sharing businesses, or that govern our business practices, including among others, e-commerce, data privacy and cybersecurity, artificial intelligence, payment services, advertising, consumer protection, employment, licensing requirements, and commercial practices. Such laws and regulations are complex, evolving, and sometimes inconsistent and have limited and may continue to limit the ability or willingness of new or existing hosts to list on our platform. These regulations may expose our users or us to regulatory inquiries, litigation, and/or other disputes and to potentially significant liabilities, including taxes, compliance costs, fines, and criminal or other penalties, which have had and could continue to have a material effect on our business, results of operations, and financial condition.
Hosts list, and guests search for, stays experiences, and services on our platform in more than 220 countries and regions across the globe. There are national, state, local, and foreign laws and regulations in jurisdictions that relate to or affect our business and, since we began our operations in 2008, there have been and continue to be legal and regulatory developments and inconsistent or ambiguous interpretations among local, regional, or national laws or regulations that affect the short-term rental, experiences, services, long-term rental, digital platform companies, and home sharing business. These laws and regulations may impact the ability of hosts to list entirely and/or may limit the location and/or duration of stays permitted, the nature of experiences or services provided, or may establish other conditions upon which they are allowed to host. Additionally, regulations may require that we, in addition to local, state, or national regulatory enforcement agencies, implement tools that limit hosts’ ability to list within those requirements.
Compliance Costs
Compliance with diverse and evolving laws across jurisdictions is costly and complex, increasing our operational expenses and potential liabilities (including potential criminal or other penalties). For example, we incur significant operational costs to comply with requirements of jurisdictions and cities that have disparate requirements around tax collection, tax reporting, data sharing, host registration, limits on lengths of stays, and other regulations, each of which may require us to dedicate significant resources to provide the infrastructure and tools needed on our platform for our hosts to meet these legal requirements and for us to fulfill any obligations we may have. Environmental, health, and safety requirements have also become increasingly stringent, and our costs, and our hosts’ costs, to comply with such requirements may increase as a result. The complexity of our platform and changes required to comply with the large number of varying requirements can lead to constraints on supply as well as compliance gaps. Additionally, unclear and changing laws can deter hosts and
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guests from using our platform, reduce supply and demand, and increase litigation risks, adversely affecting our business. Failure or delays in complying with laws, even if unclear or in dispute, could subject us to penalties, including fines, business disruption, and site blocking.
We require hosts and guests to comply with all applicable legal obligations under our terms of service, but governments may nonetheless seek to hold us accountable for hosts’ and guests’ compliance. This can lead to penalties and costs that impact our reputation and financial condition.
Our compliance measures, such as requiring hosts to include registration numbers for listings in some jurisdictions, may increase platform friction and reduce listings and bookings. Host listings may also be limited by night caps, density restrictions, onerous permitting requirements, primary residence or host presence requirements, permit caps, minimum night stays, and/or discretionary permitting or lottery systems. Additional regulations could necessitate significant platform changes, discouraging use and increasing scrutiny and liability.
We are subject to laws and regulations governing our business practices, the Internet, e-commerce, and electronic devices, including those relating to taxation, data privacy, cybersecurity, pricing, content, advertising, discrimination, consumer protection, protection of minors, insurance, copyrights, distribution, messaging, mobile communications, electronic device certification, electronic waste, electronic contracts, communications, Internet access, licensing requirements, competition, AI, and unfair commercial practices as well as federal, state, local, and foreign laws regulating employment, employee working conditions, including wage and hour laws, employment dispute and employee bargaining processes, collective and representative actions, employment classification, and other employment compliance requirements. Violation of these laws could subject us to fines and penalties, including in some cases, criminal penalties, and requirements to change our business practices.
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 local, national, and international jurisdictions. Additionally, private groups, such as homeowners and neighborhood associations, may adopt contracts or regulations that purport to ban or otherwise restrict the ability of hosts to list their spaces. In some jurisdictions, regulations imposing restrictions on short-term rentals are increasingly fragmented at the local level, leading to increased compliance burden. These efforts, along with existing and potential new laws, could restrict short-term rentals, impose registration requirements and other limits on hosts’ ability to list, and lead to significant fines and liabilities, materially affecting our operations and financial condition. For instance, the EU Short-Term Rental Regulation (“EU STR Regulation”), which intends to enhance and harmonize transparency, listing registration, and reporting requirements for short-term rental platforms, will enter into force in May 2026 and will require additional compliance efforts such as steps to enhance the transparency of certain host information on the platform, and reporting and data sharing to local authorities (e.g. host information; length of stay and number of guests), potentially discouraging and prohibiting current and potential hosts from listing properties. As another example, the City of New York has effectively banned short-term rentals, and this has led to similar restrictions being considered throughout the State of New York. To the extent that other geographies emulate these regulations, it could have a material adverse effect on our business and financial condition.
We face ongoing disputes with government agencies over regulations, which may result in fines and operational changes. Some jurisdictions have imposed or may seek to impose taxes and licensing requirements on our platform and failure to comply could lead to penalties. For example, in 2025, the Spanish Ministry of Consumer Affairs proposed to assess a fine of approximately 65 million Euro ($76 million) in connection with alleged non-compliance with short-term rental listing regulations in Spain. We have resolved some disputes by agreeing to remove listings or share data with authorities. From time to time, we attempt to defend against application of laws and regulations that limit hosts’ or guests’ ability or willingness to list and search for accommodations, but have sometimes been and may continue to be unsuccessful in certain of those efforts.
Increased regulatory interest in technology companies, particularly regarding AI, data privacy, consumer protection, competition, pricing, and sustainability, could lead to further compliance challenges. New or changing laws could impose significant costs and liabilities, affecting our business operations and financial condition. Our attempts to influence legislation face uncertainty and may divert resources from core operations.
Regulatory Inquiries, Litigation, and Disputes
We are frequently involved in legal and regulatory claims, including government inquiries, oversight engagements with regulators, and litigation related to short-term rentals, taxes, consumer protection, payment services, insurance, and data privacy. These proceedings and engagements are complex, costly, and time-consuming, requiring significant resources and potentially leading to fines, penalties, product rollout delays and changes, and operational changes. As our business grows, the number and complexity of these claims are expected to increase, potentially impacting our brand and financial condition.
We face litigation, inquiries, investigations, audits, and proceedings with governments and other entities over regulations affecting short-term rentals and platform liability. Changes in legal interpretations could further impact our operations. Additionally, we are subject to claims related to incidents at listings, such as personal injuries, cancellations and refunds, and privacy violations, as well as class action lawsuits and government inquiries. 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.
We may also become more vulnerable to third-party claims as U.S. laws such as the Digital Millennium Copyright Act (“DMCA”), the Stored Communications Act, and the Communications Decency Act (“CDA”), and non-U.S. laws such as the Digital Services Act (“DSA”), the EU STR Regulation, and the European E-Commerce Directive and their national transpositions are interpreted by the courts or if they are otherwise modified or amended, as our platform and services to our hosts and guests continue to expand, and as we expand geographically into
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jurisdictions where the laws with respect to the potential liability of online intermediaries such as ourselves are either unclear or less favorable.
We also face intellectual property disputes and indemnification obligations, which could lead to further litigation. In addition, compliance with escheatment laws and audits could result in additional liabilities and impact our financial results.
Adverse outcomes in legal proceedings may result in significant financial penalties, changes to business practices, increased costs and reputational damage. Litigation diverts resources and may not be fully covered by our existing insurance policies, which may not be available to us on financially reasonable terms in the future or at all. Additionally, if we enter an agreement with a government or governmental agency to resolve a dispute, the terms of such agreement may be publicly available and could create a precedent that may lead to similar disputes in other jurisdictions and may put us in a weaker bargaining position in future disputes with other governments. As we expand, we anticipate continued legal challenges that could materially adversely affect our business, results of operations, and financial condition.
We offer travel insurance products to guests, which subject us and our business to extensive laws, regulations, and supervision.
Since June 2022, guests in certain jurisdictions have had the opportunity to purchase travel insurance when they make a booking. Over time, we expect to make travel insurance available to guests in additional countries. In the United States, travel insurance products are subject to extensive regulation in the states in which we transact business by state insurance departments. This regulation is generally designed to protect the interests of consumers. States have also adopted legislation defining and prohibiting unfair methods of competition, and unfair or deceptive acts and practices in the business of insurance that may apply to insurance agencies. Non-compliance with any of such state statutes may subject us to regulatory action by the relevant state insurance regulator, and, in certain states, private litigation. In addition, we cannot predict the impact that any new laws, rules, or regulations, or unfavorable changes in or interpretations of existing laws, rules, or regulations, may have on our business and financial results. States also regulate various aspects of the contractual relationships between insurers and independent agents. State insurance regulators may also conduct periodic examinations, the results of which could give rise to regulatory orders requiring remedial, injunctive, or other corrective action. Similarly, travel insurance products are subject to extensive regulation and supervision by the applicable regulators in the United Kingdom, Canada, Australia, and the European Union. The failure to comply with applicable state and foreign laws and regulations could result in fines, investigations, and/or civil or criminal proceedings against us by governmental agencies and/or consumers which could materially adversely affect our business, results of operations, and financial condition.
Additionally, insurance carriers with which we place business are subject to regulations, which may affect how we conduct our operations. We may need to expend resources to address questions or concerns regarding our relationships with these insurers and underwriters, diverting resources away from operating our business, which could adversely affect our business, results of operations, and financial condition.
Our payments operations are subject to extensive, complex, overlapping, and frequently changing government regulation and oversight and any failure or perceived failure to comply with such laws, rules, regulations, policies, legal interpretations, and regulatory guidance could materially adversely affect our business, results of operations, and financial condition.
Our payments platform is subject to various laws, rules, regulations, policies, legal interpretations, and regulatory guidance, including those governing: cross-border and domestic money transmission and funds transfers; stored value and prepaid access; foreign exchange; data privacy, data security, and cybersecurity; banking secrecy; payment services (including payment processing and settlement services); consumer protection; economic and trade sanctions; anti-corruption and anti-bribery; and anti-money laundering (“AML”) and counter-terrorist financing (“CTF”). As we expand further, we face varying and sometimes conflicting legal obligations. For example, certain transactions that may be permissible in one jurisdiction may be prohibited by sanctions, AML, CTF, or other regulations in a different jurisdiction. We regularly assess our compliance programs and may identify gaps requiring costly enhancements to our policies and controls.
Non-compliance or perceived failure to comply with these existing or new laws and regulations, including changes to or expansion of their interpretations, can lead to significant fines, lawsuits, regulatory and/or governmental investigations, enforcement actions, loss of required licenses, and other civil and criminal penalties, forcing us to alter operations or delay product launches, adversely affecting our brand, business, results of operations, financial condition, and future prospects. The complexity of global regulations may trigger overlapping investigations by multiple authorities, impacting our relationships with financial institutions. Maintaining robust internal controls is essential to comply with these regulations, and failure to do so could result in reputational damage and substantial penalties.
Airbnb UK Services Limited (“AUKSL") operates as an “appointed representative” and utilizes the license of a regulated third party (“principal firm”) to distribute: (i) guest travel insurance; and (ii) host and experiences liability insurance. We are reliant on the principal firm to continue to permit us to use their license to offer or distribute these products and they can cancel our agreement, with notice, at any time, which could have an adverse impact on these revenue streams if we were unable to find a suitable replacement principal firm. If we were found to have breached the terms of our agreement with the principal firm and/or breached regulatory requirements applicable to us, for example, by misrepresenting insurance products to UK consumers, despite our not holding the licenses to perform these activities, we could nevertheless be liable to penalties imposed by the UK regulators. This could potentially also impact the UK license from the Financial Conduct Authority which another group entity holds (see Payments Regulation below).
Payments Regulation
In the United States, our wholly-owned subsidiary, Airbnb Payments, Inc. (“Airbnb Payments”), is regulated as a “Money Services Business” by the Financial Crimes Enforcement Network and requires state licenses to act as a money transmitter. Compliance involves handling customer funds, record-keeping, and reporting, with potential licensing needs in unlicensed states due to regulatory changes.
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Airbnb Payments Luxembourg SA (“APLux”) operates as a licensed payments institution across the European Economic Area (“EEA”) from Luxembourg, Airbnb Payments UK Limited (“APUK”) is licensed as an electronic money institution (“EMI”) providing payment services from the United Kingdom, and Airbnb Payments Canada Inc. is registered as a payment service provided (“PSP”) in Canada. Compliance with EEA, UK, and Canadian regulations, such as the EU Digital Operational Resilience Act Regulation, the Luxembourg implementation of the EU Second Payment Services Directive (“PSD2”), the UK's Payment Services Regulations 2017 (“UK PSR”), and Canada’s Retail Payment Activities Act (“RPAA”), involves complex and potentially onerous requirements, including ICT risk and operational-resilience and payment security and strong customer authentication, which may increase compliance costs, raise risk of non-compliance, and impact the ease of usage of the payment features and of our platform.
From time to time, we apply for licenses in new jurisdictions, which subject us to additional compliance requirements and regulatory scrutiny. In unclear regulatory environments, we partner with local banks and processors, but may face restrictions from local regulators or need additional licenses or approvals. Obtaining and maintaining compliance with global licensing and regulatory requirements causes us to incur significant costs and operational changes, with potential fines or other enforcement actions for violations. These challenges could delay or restrict our services, affecting our business, results of operations, financial condition, and future prospects.
Consumer Protection
We are subject to consumer protection laws in the United States and other countries where we operate. In the United States, the Dodd-Frank Act established the Consumer Financial Protection Bureau (“CFPB”), which enforces federal consumer financial protection laws. We must comply with these laws, including the Electronic Fund Transfer Act and Regulation E, which require service disclosures, error resolution, and consumer reimbursement for unauthorized transactions. The CFPB may adopt other regulations governing consumer financial services, including regulations defining unfair, deceptive, or abusive acts, potentially increasing our compliance costs and litigation risks. Consumer protection laws could also be violated inadvertently, for example as a result of technical bugs.
Violations of consumer protection laws could lead to fines, penalties, and changes in business practices, causing us to incur substantial costs. State attorneys general and other officials can enforce federal consumer protection laws, and various agencies can conduct investigations that may result in significant penalties.
In the United Kingdom and Luxembourg, payments-related consumer protection laws apply to APUK and APLux, and EU regulators may impose additional local requirements, including on our local banks and processors, potentially increasing our costs or delaying business expansion in EU countries.
We also issue gift cards in the United States, United Kingdom, European Union, and many other jurisdictions, which are subject to consumer protection laws, and we may face additional regulations if we expand these services.
Additionally, our payment services are subject to U.S. data privacy laws, including the Gramm-Leach-Bliley Act of 1999 (“GLBA”), which governs the handling of personal information and imposes data security standards. Non-compliance could result in financial penalties. See our risk factor on data privacy and cybersecurity compliance for more details.
Anti-Money Laundering and Counter-Terrorist Financing
We are subject to various AML and CTF laws and regulations around the world, including the Bank Secrecy Act (“BSA”) and the UK Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) (the “MLRs”). Among other things, the BSA and MLRs require money services businesses (including money transmitters like Airbnb Payments) to implement risk-based AML and CTF programs, report suspicious transactions or activities, and maintain transaction records. We must also comply with, among other requirements, the UK Proceeds of Crime Act 2002 and Terrorism Act 2000, which prohibit the handling of criminal proceeds. We provide information to government agencies to assist in the detection and prevention of illegal activities and may be required to deny certain transactions, risking inadvertent denials of legal transfers.
Regulators may demand enhancements to our compliance programs, including customer identity verification and transaction monitoring. In the United Kingdom and European Union, stricter AML regulations could increase our compliance costs and operational challenges and/or require us not to provide services to certain clients, potentially reducing business. Non-compliance with local laws implementing EU directives could result in fines up to 10% of APLux’s annual revenue, and similar penalties apply to APUK under the MLRs.
The EU has agreed and adopted a comprehensive package of measures to reform the primary AML and CTF legislation across all EU 27 Member States (the package together is known as “MLD6”). APLux will need to undertake required uplifts to existing policies and procedures. This will result in material changes to the day to day AML and CTF operating procedures of APLux and material divergence between the AML and CTF rules applicable to APUK in the UK and those applicable to APLux, resulting in increased costs and regulatory enforcement risks associated with designing compliance with a nascent regime.
We are subject to governmental economic and trade sanctions laws and regulations that limit the scope of our offerings. Additionally, failure to comply with applicable economic and trade sanctions laws and regulations could subject us to liability and negatively affect our business, results of operations , and financial condition.
We must comply with economic and trade sanctions from governments where we operate, including U.S. agencies like the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the Council of the European Union, the Office of Financial Sanctions Implementation of His Majesty’s Treasury in the United Kingdom (“OFSI”), and Luxembourg's Ministry of Finance. These sanctions restrict transactions or dealings with certain countries, regions, and governments, and certain individuals or entities, such as those operating, organized, or resident in certain countries or regions or those listed on OFAC’s List of Specially Designated Nationals and Blocked Persons. Future sanctions in key business areas could materially impact our business, results of operations, and financial condition.
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To comply, we maintain and regularly update internal controls and report to OFAC, OFSI, and Luxembourg authorities on blocked or rejected payments and potential violations. These controls do not guarantee that transactions inconsistent with applicable sanctions laws will not occur. Any breaches or investigations could lead to claims or actions against us, affecting our business, results of operations, and financial condition. As we grow and as regulations evolve, we may need to invest further in our internal controls or adjust our operations.
We are subject to payment network rules , and any material modification of our payment card acceptance privileges could have a material adverse effect on our business, results of operations, and financial condition.
The loss of our credit and debit card acceptance privileges or the significant modification of the terms under which we obtain card acceptance privileges would significantly limit our business model since a vast majority of our guests pay using credit or debit cards. We must comply with payment card network rules, including the Payment Card Industry Data Security Standards (the “PCI DSS”), which requires robust internal controls over the use, storage, and transmission of card data to help prevent fraud. Compliance demands significant resources and ongoing attention, and any system failures could materially adversely affect our business, results of operations, and financial condition.
Non-compliance with PCI DSS or payment network rules could breach our contracts with payment processors, leading to fines, penalties, and potential loss of card processing capabilities. Payment networks may also change rules, causing operational disruptions and compliance challenges. We cannot guarantee the maintenance of our card acceptance privileges or the prevention of data or security breaches, illegal or improper use of our payments platform, or the theft, loss, or misuse of card data or the maintenance of card acceptance privileges.
We are also subject to network operating rules and guidelines promulgated by the National Automated Clearing House Association (“NACHA”) relating to payment transactions we process using the Automated Clearing House (“ACH”) Network, which may change and result in costly compliance measures. Failure to comply with these standards could result in losing our payment card acceptance privileges, materially adversely affecting our business, results of operations, and financial condition.
Avoiding regulation under the Investment Company Act may adversely affect our operations.
The Investment Company Act of 1940, as amended (the “Investment Company Act”), contains substantive legal requirements that regulate the manner in which “investment companies” are permitted to conduct their business activities. We currently conduct, and intend to continue to conduct, our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act. We are not engaged primarily, nor do we hold ourselves out as being engaged primarily, in the business of investing, reinvesting, or trading in securities. We do, however, make minority investments in companies and acquire other financial instruments from time to time that may be deemed investment securities. As such, there is no guarantee that we will continue to be exempt from registration under the Investment Company Act without taking actions that may adversely affect our operations. 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.
Evolving focus on environmental, social, and governance issues by shareholders, customers, regulators, politicians, employees, and other stakeholders may impose additional risks and costs on our business.
There continues to be scrutiny on climate change, environmental sustainability, human capital, human rights, data privacy and other ESG matters among our shareholders and other stakeholders, including customers, employees, regulators, politicians, and the general public in the United States and abroad. Companies like Airbnb face heightened expectations regarding such matters due to our size and geographical reach, as well as our brand recognition and public commitments. We engage in various initiatives to serve our stakeholders in these and other areas, and to respond to stakeholder expectations regarding ESG, but such initiatives can be costly and may not have the desired effect. For example, many ESG initiatives (including related metrics and targets) are based on methodologies, standards, and data that are still evolving or are subject to variable interpretation; as with other companies, our approach to such matters evolves, including as a result of changes in technology, stakeholder responses, or other factors that may be in or out of our control. We cannot guarantee that our approach, either now or in future, will align with the expectations or preferences of any particular stakeholder or that certain disclosures will not be considered erroneous or subject to misinterpretation.
Moreover, stakeholders have varying and sometimes conflicting perceptions of ESG matters. Both advocates and opponents of various issues are increasingly resorting to activism (including media campaigns and litigation) to advocate for their positions. Responding to such issues involves inherent costs, and any failure to successfully navigate stakeholder expectations could have a material adverse effect on our business, results of operations, and financial condition.
The regulatory landscape for ESG issues is also rapidly evolving, and various policymakers, including the European Union and State of California, among others, have adopted (or are considering adopting) requirements for climate- or other ESG-related disclosures or other actions, including undertaking value chain due diligence. We may face risks related to sustainability reporting obligations under the evolving regulatory landscape in the European Union. For example, the EU Corporate Sustainability Reporting Directive (“CSRD”) imposes stringent requirements on in scope companies to disclose detailed information. We may also face risks as a result of the application of existing and new rules concerning greenwashing, particularly in the EU, where those new rules will amend existing consumer protection laws in relation to environmental claims made by companies. These requirements may not be interpreted or applied uniformly, which may increase the cost and complexity of compliance, as well as any related risks. Various of our suppliers and other stakeholders are subject to similar risks, which may exacerbate, or create additional, risks related to such matters.
From time to time we are subject to claims that we or others violated certain third-party intellectual property rights, which, even where meritless, can be costly to defend and could materially adversely affect our business, results of operations, and financial condition.
The Internet and technology industries frequently face litigation over intellectual property rights, including allegations of infringement or misappropriation. We face claims from third parties, including practicing and non-practicing entities, asserting that our platform,
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technologies, or branding infringe on or misappropriate their intellectual property rights. These claims can be costly and time-consuming to address, potentially diverting management's attention and resources.
Intellectual property disputes could lead to significant liabilities, force us to cease using certain technologies or branding, or require us to obtain costly licenses or develop alternative solutions. These outcomes could increase our expenses and reduce our competitiveness, adversely affecting our business, results of operations, and financial condition.
We receive from time to time, communications from third parties, including practicing and non-practicing entities, claiming that we have infringed, misused, or otherwise misappropriated their intellectual property rights, including alleged patent infringement. Additionally, from time to time we have been involved in claims, suits, regulatory proceedings, and other proceedings involving alleged infringement, misuse, or misappropriation of third-party intellectual property rights, or relating to our intellectual property holdings and rights. While a number of the infringement claims raised against us have been based on our use or implementation of third-party technologies for which those third parties have been required to defend against the claims on our behalf and indemnify us from liability, intellectual property claims against us, regardless of merit, could be time consuming and expensive to litigate or settle, and could divert our management’s attention and other resources.
As we expand our offerings or acquire new businesses, our exposure to intellectual property claims may increase. Third parties may assert infringement claims related to newly acquired technologies or business areas, which could materially adversely affect our ability to compete and our business, results of operations, and financial condition.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Our restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers who are, or are threatened to be, made a party to or otherwise involved in an action, suit or proceeding by reason of the fact of their service to the Company, in each case to the fullest extent permitted by Delaware law.
In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws and/or our indemnification agreements that we have entered or intend to enter into with our directors and officers and certain other employees provide that:
• we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful;
• under certain circumstances we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding in advance of its final disposition, except that our obligation to provide advancement to such directors or officers is contingent upon their agreement to repay such advances if it is ultimately determined that such person is not entitled to indemnification;
• we may, in our discretion, (i) indemnify employees and agents in those circumstances where indemnification is permitted by applicable law, and (ii) advance expenses, as incurred, to our employees and agents in connection with defending a proceeding in advance of its final disposition, contingent on such employees’ or agents’ agreement to repay such advances if it is ultimately determined that such persons are not entitled to indemnification;
• we are bound by any existing indemnification agreements for employees or agents;
• the rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons; and
• we may not retroactively amend or repeal our amended and restated bylaws to reduce our indemnification or advancement obligations relating to any act or omission occurring prior to the time of such amendment or repeal.
While we have procured directors’ and officers’ liability insurance policies, such insurance policies may not be available to us in the future at a reasonable rate, may not cover all potential claims for indemnification, and may not be adequate to indemnify us for all liability that may be imposed.
We have operations in countries known to experience high levels of corruption , and any violation of anti-corruption laws could subject us to penalties and other adverse consequences.
We are subject to anti-corruption laws and regulations including the U.S. Foreign Corrupt Practices Act (“FCPA”) and other laws in the United States and elsewhere (including the UK Bribery Act 2010) that prohibit improper payments or offers of payments to foreign governments and their officials, political parties, state-owned or controlled enterprises, and/or private entities and individuals for the purpose of obtaining or retaining business. We have operations in and deal with countries known to experience corruption. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, contractors, agents, or users that could be in violation of various laws, including the FCPA and anti-corruption and anti-bribery laws in these countries. We have implemented policies, procedures, systems, and controls designed to ensure compliance with applicable laws and to discourage corrupt practices by our employees, consultants, and agents, and to identify and address potentially impermissible transactions under such laws and regulations; however, we cannot guarantee the efficacy of our existing and future safeguards, including training and compliance programs to discourage corrupt practices by such parties, and we cannot ensure that all such parties, including those that may be based in or from countries where practices that violate U.S. or other laws may be customary, will not take actions in violation of our policies, for which we may be ultimately responsible. Additional compliance requirements may require us to revise or expand our compliance programs, including the procedures we use to monitor international and domestic transactions. Failure to comply with any of these laws and regulations may result in extensive
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internal or external investigations as well as significant financial penalties and reputational harm, which could materially adversely affect our business, results of operations, and financial condition.
Technology, Data and Cybersecurity Risks
Technology, Data Privacy and Cybersecurity
Compliance with federal, state, and foreign laws relating to data privacy, data security, marketing, and consumer protection involves significant expenditure and resources, and any actual or perceived failure by us or our vendors to comply may result in significant liability, litigation or other legal action against us, negative publicity, an erosion of trust, and/or result in regulatory scrutiny, fines, and penalties and could materially adversely affect our business, results of operations, and financial condition.
There are numerous federal, state, and foreign data privacy, data security, marketing, and consumer protection laws, rules, and regulations that relate to the collection, maintenance, disclosure, and processing of personal data, data breach notification laws, electronic communications laws, and marketing and consumer protection laws, rules, and regulations. These laws, rules, and regulations are complex and rapidly evolving, and we could be materially adversely affected by new legal requirements or changes to existing requirements including their interpretations and enforcement practices. Compliance with such laws may require changes to our data processing practices, potentially increasing compliance costs or adversely affecting our business. We process personal data, such as names, dates of birth, email addresses, nationality, location information, Social Security numbers, phone numbers, and identity verification information (for example, government issued identification or passport), as well as credit card, bank account, or other financial information, from and about hosts and guests, as well as our employees, job applicants, contractors, and representatives of our third-party vendors, and other companies we do business with. We utilize third-party vendors, some of whom process data for us and provide various services, including but not limited to digital storage technology, business technology support, and other support functions. We and our vendors must comply with various state, federal, and foreign data privacy and security laws, rules, regulations, industry standards, and other requirements, including those that generally require that we implement reasonable measures to keep such information secure and otherwise restrict the ways in which such information can be collected and used. These requirements, and their application, interpretation, and amendment are constantly evolving.
In the European Union and the United Kingdom, we are subject to the European Union General Data Protection Regulation (the “EU GDPR”) and to the UK General Data Protection Regulation and Data Protection Act 2018 (the “UK GDPR”), respectively (the EU GDPR and UK GDPR together referred to as the “GDPR”), both of which have resulted, and will continue to result, in significantly greater compliance burdens and costs for companies like ours. The GDPR comprehensively regulates our use of personal data, including cross-border transfers of personal data out of the EEA and the United Kingdom. Ongoing legal developments in these regions may further impact our compliance obligations. 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.
We expect that the ongoing legal complexity and uncertainty surrounding data privacy and security, including international transfers of personal data will continue. Specifically, cross-border transfers outside of the EEA and the United Kingdom, including those to the United States and other jurisdictions, will likely continue to face enhanced scrutiny from regulators. Consequently, we cannot guarantee the ongoing effectiveness of our current data transfer mechanisms. It is also possible that transfers of personal data outside the United States could be restricted or impacted by developments at the federal level. As the regulatory guidance and enforcement landscape in relation to data transfers continue to develop, we could suffer additional costs, complaints, and/or regulatory investigations or fines, we may have to stop using certain tools and vendors and make other operational changes, including updating agreements or implementing additional safeguards which could otherwise affect the manner in which we provide our services, our ability to provide our services, and adversely affect our business, results of operations, and financial condition. For example, in 2025 the DOJ issued a new rule, to implement Executive Order 14117 aimed at preventing access to “bulk U.S. sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela). The rule is new, complex, and has yet to be enforced, and as such, there is a risk that our interpretation of its applicability, scope, and requirements is incorrect, incomplete, or misapplied. Compliance with the rule may require us to stop or restrict certain data transfers, alter the geographic scope of our operations, cease doing business with certain third parties or cease using certain tools or vendors, or change how data flows throughout our business, any of which could materially impact our business operations or hinder our ability to grow our business. Non-compliance with the rule could result in significant civil or criminal penalties, which could materially adversely affect our business, results of operations, and financial condition.
From time to time, we receive correspondence, and are subject to more formal inquiries, from regulators including the Irish Data Protection Commission, our lead EU data protection regulator, regarding our personal data processing activities. Additionally, required engagement with data regulators may require us to make changes in our product and/or delay product rollouts. To date, we have not received any fines in respect of statutory inquiries relating to personal data protection and have in place an internal process to review and process such inquiries to ensure we respond appropriately and update our privacy compliance with any findings.
In the United States, the Federal Trade Commission (“FTC”) and state regulators enforce a variety of data privacy issues, such as misrepresentations in privacy policies or failures to appropriately protect information about individuals, as unfair or deceptive acts or practices in or affecting commerce in violation of the FTC Act or similar state laws. Additionally, the GLBA and its implementing regulations restrict and impose certain requirements on the processing of personal data, including notice to individuals of privacy practices and requirements for the safeguarding and proper destruction of personal data. Moreover, as we send marketing messages via email and short message service, or SMS, text messages, we are subject to the CAN-SPAM Act, and the Telephone Consumer Protection Act, which impose certain obligations on us.
The U.S. government, including Congress, the FTC, the CFPB, and the Department of Commerce, has announced that it is reviewing the need for greater regulation for the collection of information concerning personal data processing practices and consumer behavior on the Internet, including regulation aimed at restricting certain targeted advertising practices. In addition, numerous states have enacted or are in the process of enacting state level data privacy laws and regulations governing the processing of state residents’ personal data that have
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and may continue to require us to modify our data processing practices and policies and incur related costs and expenses. For example, the California Consumer Privacy Act (“CCPA”) provides enhanced data privacy rights to California residents, allows for statutory damages, and provides a private right of action for certain data breaches, increasing the risk of litigation. The enactment of the CCPA prompted a wave of similar legislative developments in over a third of other states, which created a patchwork of overlapping but different state laws.
We are also subject to evolving privacy laws on cookies, tracking technologies, and e-marketing. In the European Union and United Kingdom, informed consent is required for the placement of certain cookies or similar tracking technologies on an individual’s device and for direct electronic marketing. Recent European court and regulator decisions are driving increased attention to cookies and similar tracking technologies, which may lead to additional costs and increase our overall risk exposure.
Further, the DSA governs, among other things, our potential liability for illegal services/products or content on our platform, obligations around traceability of business users, and requires enhanced transparency measures. In particular our obligations to diligence the services offered on our platform could require significant additional resources. Further, the DSA contains general requirements that user interfaces may not deceive or manipulate users. Similarly, in the United Kingdom, the Online Safety Act 2023 (the “OSA”) establishes an extensive regulatory framework for certain user-to-user and search services and imposes obligations to protect users from illegal content. The DSA, and the OSA may increase our compliance costs, expose us to potential regulatory action and liability, require further changes to our user interfaces, processes, operations, and business practices, which may adversely affect our ability to attract, retain, and provide our services to customers, and may otherwise adversely affect our business, results of operations, and financial condition.
Various other governments and consumer agencies around the world have also called for new regulation and changes in industry practices for protecting personal information collected and maintained electronically. Together, these existing and proposed laws add additional complexity, variation in requirements, restrictions, and potential legal risk, and require additional investment in resources to compliance programs and cybersecurity, which could impact strategies, and could result in increased compliance costs and/or changes in business practices and policies. Compliance with numerous and often contradictory requirements of different jurisdictions is particularly difficult for an online business such as ours, which collects personal information from hosts, guests, and other individuals in multiple 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. In many cases these laws are relatively new and the interpretation and application of these laws is uncertain. There may be litigation, claims, and enforcement relating to data privacy, and the processing of personal data may involve new interpretations of privacy laws. For example, there has been a noticeable increase in class actions in the United States where plaintiffs have attempted to bring claims pursuant to a variety of laws, including state wiretapping laws, in relation to the use of tracking technologies, such as cookies and pixels.
Furthermore, to help improve the trust and safety on our platform, we conduct certain verification procedures aimed at our hosts, guests, and listings in certain jurisdictions. Such verification procedures may include utilizing public information on the Internet, accessing public databases such as court records, utilizing third-party vendors to analyze host or guest data, or physical inspection. These types of activities expose us to requirements of other laws and regulations, and to the risk of regulatory engagement and/or enforcement from privacy regulators, consumer protection agencies, consumer credit reporting agencies, and civil litigation.
Any failure or perceived failure by us and/or our vendors or third-party providers to comply with data privacy and data security laws, rules, or regulations could expose us to material penalties, significant legal liability, changes in how we operate or offer our products and services, and interruptions or cessation of our ability to operate in key geographies, any of which could materially adversely affect our business, results of operations, and financial condition.
In addition, any failure or perceived failure to comply with consumer protection, marketing, data privacy, breach notification, or data security laws, rules, and regulations; policies; industry standards; or enforcement notices and/or assessment notices (for a compulsory audit) could lead to legal actions by individuals, consumer rights groups, government agencies, or others. We may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation, injunctive relief, or damages liabilities, as well as associated costs, and diversion of internal resources or other regulatory orders adversely impacting the ways our business can use personal data. These proceedings could be costly to litigate, whether or not they have merit, and result in negative publicity and erode trust, potentially requiring us to make costly changes to our business practices. If these events occur, they could materially adversely affect our business, results of operations, and financial condition.
IT System capacity constraints or system or other operational failures could materially adversely affect our business, results of operations, and financial condition.
Since our founding, we have experienced rapid growth in consumer traffic to our platform. We rely on computer systems, hardware, software, technology infrastructure, and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”). We own and manage some of these IT Systems but also rely on third-party IT Systems for certain operations, including payment processing and accounting. Significant consumer growth or third-party failures may require costly upgrades, potentially affecting our business, and if our systems and network infrastructure cannot be expanded or are not scaled to cope with increased demand or fail to perform, we could experience significant operational interruptions, including poor performance, incorrect payments, search ranking issues, unanticipated disruptions in service, slower response times, and delays in the introduction of new offerings, decreased customer satisfaction, and loss of users. Our reliance on the Internet and mobile networks could also lead to disruptions in access. Our IT Systems, including those from third-party providers, are also vulnerable to damage or interruption from natural disasters. For example, our San Francisco operations are at risk from earthquakes and power outages, which could disrupt business operations. Such disruptions could materially adversely impact our business, results of operations, and financial condition. We have experienced IT System failures from time to time. While we invest in system reliability, these measures may not fully prevent downtime, and our existing business interruption insurance may not cover all losses or be available to us on economically reasonable terms in the future or at all. For further information, see the risk factor titled “If we or our third-party providers fail to protect confidential information and/or experience security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, along with a decline in use of our platform, which would materially adversely affect our business, results of operations, and financial condition.”
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If we do not adequately protect our intellectual property and our data, then our business, results of operations, and financial condition could be materially adversely affected.
We hold a broad collection of intellectual property rights, including those related to our brand; certain content and design elements on our platform; our code and our data; inventions and processes related to our platform, services, and research and development efforts; an extensive repository of wholly-owned audio and visual assets; marketing and promotional concepts and materials; a collection of editorial content; and certain entertainment-related assets. This includes registered domain names, registered and unregistered trademarks, service marks, and copyrights, patents, and patent applications, trade secret rights, licenses of intellectual property rights of various kinds, and other forms of intellectual property rights in the United States and in a number of countries around the world. To further protect our proprietary rights, from time to time we have acquired or licensed patents, trademarks, domain name registrations, and copyrights from third parties. Despite these protections, the use or misappropriation of our intellectual property rights by third parties can diminish the value of our brand and allow competitors to replicate our offerings.
Our intellectual property assets and rights are essential to our business, and in the future, we may acquire or license additional patents or patent portfolios, or other intellectual property assets and rights from third parties, which could require significant cash expenditures. 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. If we fail to protect our intellectual property and data in a cost-effective and meaningful manner, our competitive standing could be harmed; our hosts, guests, other consumers, and corporate and community partners could devalue the content of our platform; and our brand, reputation, business, results of operations, and financial condition could be materially adversely affected.
Our use of artificial intelligence and machine learning gives rise to legal, business, and operational risks, which may result in diminished performance, regulatory scrutiny, social impacts, reputational harm, and liability arising from the use of this technology.
We currently use AI and machine learning technologies (“AI and ML Technologies”) in our offerings, for example with respect to fraud detection, search, enabling customized features and enhancing community support.
The rapid evolution of AI and ML Technologies will continue to require the application of significant resources to adopt, develop, test, integrate, and maintain AI and ML Technologies included in our offerings in order to remain competitive and to help implement these technologies responsibly and minimize unintended or harmful impacts. There are significant risks involved in adopting, developing, maintaining, and deploying these technologies, and no assurance that such technologies will enhance our products or services or be beneficial to our business, including our efficiency or profitability. In particular, AI and ML Technologies may be incorrectly designed or implemented; may be trained or reliant on incomplete, inadequate, inaccurate, biased, or otherwise poor quality data or on data to which we or third parties do not have sufficient rights; and/or may be adversely impacted by unforeseen defects, technical challenges, cybersecurity threats, third-party litigation, regulatory action, or material performance issues. Any of the above could negatively impact the performance of our products and services, as well as our reputation, and we could incur liability and costs resulting from the actual or perceived violation of laws or contracts to which we are a party or civil claims.
In addition, AI and ML Technologies, including generative AI, may be vulnerable to adversarial user behavior or create inaccurate or misleading content or other discriminatory or unexpected results or behaviors, such as hallucinatory behavior, output, or results that are irrelevant, unintended, nonsensical, or factually incorrect. Our hosts, guests, or others may rely on or use this flawed output or results or information to their detriment, which may expose us to brand or reputational harm, competitive harm, consumer complaints, legal liability, and other adverse consequences, any of which could materially adversely affect our business, results of operations, and financial condition.
In addition to our proprietary technologies, we use AI and ML Technologies licensed from third parties. Our ability to continue to adopt, integrate, and use such technologies at the scale we may need may be dependent on access to specific third-party software, and infrastructure, such as processing hardware or third-party AI models, and we cannot control the quality, availability, or pricing of such third-party software and infrastructure, especially in a highly competitive environment. If any such third-party models, software, or infrastructure becomes incompatible with our offerings or unavailable for use or has degradations in performance, or if the providers of such services unfavorably change the terms on which their services are offered or terminate their relationship with us, our offerings may become less appealing to our customers. In addition, to the extent any third-party infrastructure or software is used as a vendor hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or offerings, damage our reputation, cause a loss of confidence in our offerings, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.
We face competition from other companies in our industry with respect to the development and deployment of AI and ML Technologies to enhance our competitive offerings. Those other companies may develop AI and ML Technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop, deploy and maintain. Any inability to develop, offer or deploy new AI and ML Technologies as effectively, quickly and/or as cost-efficiently as our competitors could have a materially adverse impact on our operating results, customer relationships and growth.
The regulatory and intellectual property frameworks governing the use and protection of AI and ML Technologies and its outputs are rapidly evolving, and we cannot predict how future legislation and regulation will impact our ability to offer and protect products or services that we develop which leverage AI and ML Technologies. Regulators (including data protection regulators) have taken, and are expected to continue to take, an increased interest in issues, such as how we and our vendors collect, maintain, process, and provide transparency on the use of personal data in this context. The increased use of AI and ML Technologies means that regulators are increasingly seeking advance engagement with businesses like ours in respect of certain types of data processing, including our lead EU data protection regulator, the Irish Data Protection Commission. In addition, certain existing legal regimes including those related to data privacy, competition, and consumer protection, may also regulate certain aspects of AI and ML Technologies, and new laws may be adopted and interpreted in ways
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that would limit our ability to use AI and ML Technologies. This may affect our use of AI and ML Technologies and our ability to provide, improve or commercialize our services effectively and efficiently and result in increased costs. For example, in the United States, legislation related to AI and ML Technologies has been introduced at the federal level and enacted by various states. Several states – such as California, Colorado, Connecticut, and Texas – have enacted or proposed laws governing the development and deployment of AI and ML Technologies at varying degrees, typically focused on high-risk uses of AI. Many U.S. states continue to advance various AI regulatory frameworks, including requirements around transparency, risk management, and accountability for AI and ML Technologies. Further, the California Privacy Protection Agency has finalized regulations under the CCPA regarding the use of automated decision-making technology. Collectively, these developments signal an emerging trend towards a patchwork of state-level governance of AI in the United States. Further, the EU Artificial Intelligence Act (the “EU AI Act”) entered into force in August 2024 (with the majority of substantive requirements applying from August 2026), and establishes a broad, risk-based governance framework for AI use, development, or provision in the EU market. Applicable requirements depend on the risk level of each AI use case, and actual or perceived contraventions could expose us to material penalties, significant legal liability, and may materially adversely affect our business, results of operations, and financial condition. With regard to China, the regulatory requirements on AI and ML Technologies, export controls and other relevant regulations are still evolving and have ongoing complexity and uncertainty. The positions and interpretation of these regulations by the authorities may not align with our interpretation or may not be consistent across jurisdictions, which may impact our ability, or require additional resources (which may be substantial), to develop and/or maintain related product features.
Finally, existing laws and regulations and their interpretations are inconsistent across jurisdictions, and may be interpreted in ways that would affect the operation and availability of IP protection for our AI and ML Technologies. As a result, implementation standards, enforcement practices, and available scope of protection are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, or standards may have on our business (including our positioning with respect to our competition) and may not be able to anticipate how to respond to these laws or regulations.
Platform Performance and Integrity
We could face liability for information or content on or accessible through our platform.
We could face claims relating to information or content that is made available on our platform. Our platform relies upon content that is created and posted by hosts, guests, or other third parties. Although content on our platform is typically generated by hosts and guests, and not by us, claims of defamation, disparagement, negligence, warranty, personal harm, intellectual property infringement, or other alleged damages could be asserted against us, in addition to our hosts and guests. While we rely on legal exemptions and protections like the DMCA and CDA in the United States and the E-Commerce Directive and the DSA in the European Union, varying laws and interpretations regarding immunity and responsibility across jurisdictions may limit these exemptions or defenses or create uncertainty regarding liability for information or content uploaded by hosts, guests, or other third parties. To the extent that we create or are deemed to create or facilitate such content on the platform, these defenses may be less available. New regulations could increase our liability and compliance costs, impacting our business.
In the United States, changes to the CDA could reduce protections for online platforms. In the European Union, the DSA brings additional compliance requirements and potential fines. Other regions, such as Asia and Latin America, have or are developing regulations that could impose direct or secondary liability on platforms for harmful content. These laws may require us to implement costly measures to mitigate liability, affecting our platform's appeal and our brand reputation.
The EU Consumer Rights Directive and the Unfair Commercial Practices Directive, the United Kingdom Digital Market, Competition and Consumers Act 2024 (“DMCCA”), and national consumer laws impose strict consumer protection requirements, with potential fines for non-compliance and in the case of the DMCCA, an increased risk of enforcement by the UK regulator in light of enhanced powers. Consumers and certain Consumer Protection Associations may bring individual claims against us, and the Collective Redress Directive allows for class actions across the European Union, increasing our litigation risk.
Airbnb does not meet the thresholds to be designated as a gatekeeper platform for the purposes of the Digital Markets Act, although this could change in the future. Compliance with these evolving regulations and such designation may increase operational costs and materially adversely affect our business, results of operations, and financial condition.
Measures that we are taking to improve the trust and safety of our platform may cause us to incur significant expenditures and may not be successful.
We have taken and continue to take measures to help improve the trust and safety on our platform, combat fraudulent activities and other misconduct, and help improve community trust, such as requiring identity and other information from hosts and guests, attempting to confirm the location of listings, removing suspected fraudulent listings or listings repeatedly reported by guests to be significantly not as described, and removing hosts and guests who fail to comply with our policies. While these initiatives are crucial for community trust, they can increase platform friction, potentially reducing host and guest activity and materially adversely affecting our business. These trust and safety efforts, including limited verification of hosts and listings and restrictions on certain types of bookings, our neighborhood support hotline, or other initiatives, cause us to incur significant costs and may lead to fewer listings and bookings.
As a global platform, the implementation of these measures varies by region and may be limited by local laws. Despite our investments, we cannot guarantee these measures will be successful, significantly reduce criminal or fraudulent activity on or off our platform, host or guest violations of policies, or be sufficient to protect our reputation in the event of such activity. Additionally, our community standards, including commitments to inclusion and belonging that are required when a user joins Airbnb, may not always be clearly communicated or well understood by all parts of our community, leading to unmet expectations among hosts and guests, which may lead to fewer listings and bookings.
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We are subject to payment-related fraud , and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions would materially adversely affect our business, results of operations, and financial condition.
We process a significant volume and dollar value of transactions on a daily basis. When hosts do not fulfill their obligations to guests, there are fraudulent listings or bookings on our platform, or there are user account takeovers, we have incurred and will continue to incur losses from claims by hosts and guests, and these losses may be substantial. Such instances have and can lead to the reversal of payments received by us for such bookings, referred to as a “chargeback.” For the year ended December 31, 2025, total chargeback expense was $67 million. The capabilities of criminal fraudsters and the susceptibility of individuals to fraud pose ongoing risks. Despite measures to detect and reduce fraud, these efforts require continuous improvement to address evolving threats, especially with new payment methods and technology platforms.
Our payments platform is vulnerable to illegal uses, such as money laundering and fraudulent listings, which can lead to legal claims, regulatory investigations, and reputational harm. While we strive to combat these activities, our measures may not always be effective, and failure to reduce fraud could result in fines, higher fees, or loss of payment card network access, which could materially adversely affect our business, results of operations, and financial condition.
Our use of third-party open source software and our open source contributions could adversely affect our ability to offer or protect our platform and services and subject us to costly litigation and other disputes.
From time to time, we use software under open source licenses and incorporate open source software into our code base as we continue to develop our platform and services. 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. In addition, the use of third-party open source software could expose us to greater risks than the use of third-party commercial software to the extent open source licensors do not provide warranties or controls on the functionality or origin of the software equivalent to those provided by third-party commercial software providers. For purposes of this risk factor, references to “open source software” include AI and ML Technologies that are made available under open source licenses. We also license to others some of our software through open source projects. Open sourcing our own software requires us to make the source code publicly available, and therefore can limit our ability to protect our intellectual property rights with respect to that software. From time to time, companies that use open source software have faced claims challenging the use of open source software or compliance with open source license terms. Furthermore, there is an increasing number of open source software license types, almost none of which have been tested in a court of law, resulting in a dearth of guidance regarding the proper legal interpretation of such licenses. We could be subject to suits by parties claiming ownership of what we believe to be open source software or claiming noncompliance with open source licensing terms.
Inadvertent use of open source software can occur in software development in the Internet and technology industries. Such inadvertent use of open source software could expose us to claims of non-compliance with the applicable terms of the underlying licenses, which could lead to unforeseen business disruptions, including being restricted from offering parts of our platform which incorporate the software, being required to publicly release proprietary source code, being required to re-engineer parts of our code base to comply with license terms, or being required to extract the open source software at issue. Our exposure to these risks may be increased as a result of evolving our core source code base, introducing new offerings, integrating acquired-company technologies, or making other business changes, including in areas where we do not currently compete. Any of the foregoing could adversely impact the value or enforceability of our intellectual property, and materially adversely affect our business, results of operations, and financial condition.
If we or our third-party providers fail to protect confidential information and/or experience material security incidents, there may be damage to our brand and reputation, material financial penalties, and legal liability, along with a decline in use of our platform, which would materially adversely affect our business, results of operations, and financial condition.
We own and manage some IT Systems but also rely on third parties for a range of IT Systems, which include our infrastructure, and related products and services, including, among others, cloud computing services and other third parties for the provision of our community support and other critical operations. We face evolving cybersecurity risks that could impact the confidentiality, integrity, and availability of our and our third-party providers’ IT Systems and confidential information, including personal data and proprietary information if exposed. As we expand our technology use, enhance our AI and ML capabilities, and collaborate with third parties, managing these threats becomes more challenging. These risks come from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), malfeasance by company insiders, suppliers or providers, and human or technological error, and as a result of malicious code embedded in open source software, or misconfigurations, bugs, or other vulnerabilities in software and hardware that is integrated into our or our providers’ IT Systems, products, or services. We have, from time to time, found defects or errors in our IT Systems 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. Additionally, any integration of AI or machine learning in our or our third party providers’ operations, products, or services poses new or unknown cybersecurity risks and challenges. Acquisitions of companies with vulnerable IT Systems further expose us to cybersecurity risks.
We encrypt certain data in transit and at rest, but advances in hacking, AI, and machine learning may further challenge our defenses. We and a subset of our third-party service providers have experienced cyberattacks and other security incidents in the past, including distributed denial-of-service type attacks on our IT Systems that have made portions of our platform slow or unavailable for periods of time. Cyberattacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques—including AI—that circumvent controls, evade detection, and remove forensic evidence, which means that we and our third-party providers may be unable to detect, investigate, contain or recover from future attacks or incidents in a timely or effective manner. Despite significant investments in security, we cannot fully mitigate these risks, and such security incidents could disrupt operations and lead to negative publicity, reputational damage, loss of users, increased support costs, regulatory fines, legal claims
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(including class actions), and significant financial losses, especially under laws which impose statutory damages per breached record, all of which could materially impact our business, results of operations, and financial condition.
We currently rely on a number of third-party service providers to host and deliver a significant portion of our platform and services, as well as to operate our business, and any interruptions or delays in services from these third parties, such as those resulting from cybersecurity incidents, could impair the delivery of our platform and services, and our business, results of operations, and financial condition could be materially adversely affected.
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, infrastructure, source code storage and management, and testing and deployment. In addition, we rely on third parties for many aspects of our payments platform, and the vast majority of our community support operations is performed by a limited number of third-party service 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, or their use of AI, ML, or other technologies in their products and services. Despite our efforts to use commercially reasonable diligence in the selection and retention of such third-party providers, such efforts may be insufficient or inadequate to prevent or remediate such risks. Some of our third-party providers, including our cloud computing providers and our payment processing partners, have been and may be subject to further intrusions, computer viruses, malicious software (such as ransomware), denial-of-service attacks, phishing attacks, sabotage, acts of vandalism, terrorism, or other misconduct, and incidents due to inadvertent error or malfeasance by employees, contractors, or other parties. There can be no assurance that our service providers will anticipate or prevent all types of attacks or that any security measures will be effective against all types of cybersecurity threats and risks. Our service providers are vulnerable to damage or interruption from power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, and similar events, and they may be subject to financial, legal, regulatory, and labor issues, each of which may impose additional costs or requirements on us or prevent these third parties from providing services to us or our customers on our behalf. In addition, these third parties may breach or fail to perform 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. If we are unable to procure alternatives in a timely and efficient manner and on acceptable terms, or at all, we may be subject to business disruptions, losses, or costs to remediate any of these deficiencies and reputational harm. Our systems currently do not provide complete redundancy of hosting, data storage or processing or payment processing, and business continuity and disaster recovery plans may not be effective. The occurrence of any of the above events could result in hosts and guests ceasing to use our platform, reputational damage, legal or regulatory proceedings, or other adverse consequences, which could materially adversely affect our business, results of operations, and financial condition.
Risks Related to Ownership of Our Class A Common Stock
Stock Price and Volatility Risks
Our focus on the long-term best interests of our Company and our consideration of all of our stakeholders, including our hosts, guests, the communities in which we operate, employees, and shareholders, may conflict with short- or medium-term financial interests and business performance, which may negatively impact the value of our Class A common stock.
We believe that prioritizing the long-term interests of our Company and stakeholders, including hosts, guests, the communities in which we operate, employees, and shareholders, will help ensure sustained success and long-term shareholder value. This focus may lead us to make decisions that negatively impact short- or medium-term business performance or the trading price of our Class A common stock, potentially making it less attractive to short-term investors. Our long-term strategies, such as enhancing platform trust and safety, improving community support, investing in relationships, and adapting to regulations, may not result in the long-term benefits that we expect, in which case our business, results of operations, and financial condition, as well as the trading price of our Class A common stock, could be materially adversely affected.
Our share price has been, and may continue to be, volatile, and the value of our Class A common stock may decline.
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;
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• 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 addition, stock markets, and the trading of travel companies’ and technology companies’ stocks in particular, have experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, including travel companies and technology companies, have fluctuated in a manner often unrelated to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of stock volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and materially adversely affect our business, results of operations, and financial condition.
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. The multi-series structure of our common stock could make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track those indices may not invest in our Class A common stock. It is unclear what effect, if any, such policies and restrictions could have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may depress valuations, as compared to similar companies that are included, and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.
We cannot guarantee that our share repurchase programs will be utilized to the full value approved or that it will enhance long-term stockholder value.
Our board of directors has authorized management to repurchase shares of our Class A common stock at management’s discretion. Share repurchases may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, or accelerated share repurchase transactions or by any combination of such methods. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements, and other relevant factors. The manner, timing, and amount of any share repurchases may fluctuate and will be determined by us based on a variety of factors, including the market price of our Class A common stock, our priorities for the use of cash to support our business operations and plans, general business and market conditions, tax laws, and alternative investment opportunities, all of which may be further impacted by macroeconomic conditions and factors, including rising interest rates, and inflation, tariffs, global conflicts, and public health crises. Our share repurchase program authorizations do not have an expiration date nor do they obligate us to acquire any specific number or dollar value of shares. Our share repurchase program authorizations may be modified, suspended, or terminated at any time, which may result in a decrease in the trading prices of our Class A common stock. Additionally, the Inflation Reduction Act of 2022 introduced a 1% excise tax on share repurchases, which increases the costs associated with repurchasing shares of our Class A common stock. Even if our share repurchase program authorizations are fully implemented, they may not enhance long-term stockholder value or may not prove to be the best use of our cash. Share repurchases could have an impact on 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. Any future issuance of Class C common stock may have the effect of further concentrating voting control in the holders of our Class B common stock, including the Class B common stock held by our founders, and may discourage potential acquisitions of our business, and could have an adverse effect on the trading price of our Class A common stock.
Under our restated certificate of incorporation, we are authorized to issue 2,000,000,000 shares of Class C common stock. We may in the future issue shares of Class C common stock for a variety of corporate purposes, including financings, acquisitions, investments, and equity incentives to our employees, consultants, and directors. Our authorized but unissued shares of Class C common stock are available for issuance with the approval of our board of directors without stockholder approval, except as may be required by the Listing Rules of The Nasdaq Stock Market LLC (“Nasdaq”). Because the Class C common stock carries no voting rights (except as otherwise required by law), is not convertible into any other capital stock, and is not listed for trading on an exchange or registered for sale with the SEC, shares of Class C common stock may be less liquid and less attractive to any future recipients of these shares than shares of Class A common stock, although we may seek to list the Class C common stock for trading and register shares of Class C common stock for sale in the future. In addition, because our Class C common stock carries no voting rights (except as otherwise required by law), if we issue shares of Class C common stock in the future, the holders of our Class B common stock, including our founders who are parties to a Nominating Agreement and a Voting Agreement, may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, takeover, or other business combination involving us that stockholders may otherwise support, and could allow us to take actions that some of our stockholders do not view as beneficial, which could reduce the trading price of our Class A common stock. Furthermore, this concentrated control could also discourage a potential investor from acquiring our Class A common stock due to the limited voting power of such stock relative to the Class B common stock and might harm the trading price of our Class A common stock. In addition, if we issue shares of Class C common stock in the future, such issuances would have a dilutive effect on the economic interests of our Class A and Class B common stock. Any such issuance of Class C common stock could also cause the trading price of our Class A common stock to decline.
We may raise additional capital in the future or otherwise issue equity, which could have a dilutive effect on existing stockholders and adversely affect the market price of our common stock. If we require additional funding to support our business, this additional funding may not be available on reasonable terms or at all.
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We may from time to time issue additional shares of common stock, including as consideration for any future acquisitions. As a result, our stockholders may experience immediate dilution. We may engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our Class A common stock. In addition, our stockholders will experience additional dilution when option holders exercise their right to purchase common stock under our equity incentive plans, when restricted stock units (“RSUs”) vest and settle, when we issue equity awards to our employees under our equity incentive plans, or when we otherwise issue additional equity. Additionally, the terms of future debt agreements could include more restrictive covenants, which could further restrict our business operations.
There has been increased volatility in the financial and securities markets, which has generally made access to capital less certain and increased the cost of obtaining new capital. Should we require additional funding, we cannot be sure that additional financing will be available to us on reasonable terms or at all. If we cannot raise additional funds when we need them, our ability to continue to support our business and to respond to business challenges would be significantly limited, and our business, results of operations, and financial condition would be materially adversely affected.
Corporate Governance and Control
The multi-series structure of our common stock has the effect of concentrating voting control with certain holders of our common stock, including our directors, executive officers, and 5% stockholders, and their respective affiliates. This ownership limits or precludes other stockholders’ ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
Our Class A common stock has one vote per share, our Class B common stock has 20 votes per share, our Class C common stock has no votes per share, and our Class H common stock has no votes per share. Because of the 20-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively continue to control a significant percentage of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval until all such outstanding shares of Class B common stock have converted into shares of our Class A common stock. Furthermore, our founders, who collectively hold a majority of the voting power of our outstanding capital stock, are party to a Voting Agreement under which each founder and his affiliates and certain other entities agree to vote their shares for the election of each individual founder to our board of directors. We and each of our founders are party to a Nominating Agreement under which we and the founders are required to take certain actions to include the founders in the slate of nominees nominated by our board of directors for the applicable class of directors, include them in our proxy statement, and solicit proxies or consents in favor of electing each founder to our board of directors. This concentrated control limits or precludes other stockholders’ ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that stockholders may believe are in their best interest.
Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning purposes or transfers among our founders, if all of our founders agree to such transfers. Each share of our Class B common stock is convertible at any time at the option of the Class B holder into one share of Class A common stock. The conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. As a result, it is possible that one or more of the persons or entities holding our Class B common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock. In addition, the conversion of Class B common stock to Class A common stock dilutes holders of Class A common stock in terms of voting power within the Class A common stock. In addition, any future issuances of common stock would be dilutive to holders of Class A common stock. For example, because our Class C common stock carries no voting rights (except as otherwise required by law), if we issue Class C common stock in the future, the holders of Class B common stock may be able to elect all of our directors and to determine the outcome of most matters submitted to a vote of our stockholders for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions. Further, each outstanding share of Class H common stock will convert into a share of Class A common stock on a share-for-share basis upon the sale of such share of Class H common stock to any person or entity that is not our subsidiary, which would dilute holders of Class A common stock in terms of voting power within the Class A common stock.
Anti-takeover provisions contained in our restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
Our restated certificate of incorporation and amended and restated bylaws contain, and Delaware law contains, provisions which could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. 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;
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• 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 directors’ 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, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.
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.
Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Our restated certificate of incorporation and amended and restated bylaws provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, and that the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.
Our restated certificate of incorporation and amended and restated bylaws provide, that: (i) unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our current or former director, officer, other employee, agent, or stockholder to the Company or our stockholders, including without limitation a claim alleging the aiding and abetting of such a breach of fiduciary duty, (c) any action asserting a claim against the Company or any of our current or former director, officer, employee, agent, or stockholder arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or bylaws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (d) any action asserting a claim related to or involving the Company that is governed by the internal affairs doctrine; (ii) unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, and the rules and regulations promulgated thereunder; (iii) any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Company will be deemed to have notice of and consented to these provisions; and (iv) failure to enforce the foregoing provisions would cause us irreparable harm, and we will be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. 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.
We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums, and protection against the burdens of multi-forum litigation. If a court were to find the choice of forum provision that is contained in our restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, results of operations, and financial condition. For example, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act.
The choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former directors, officers, other employees, agents, or stockholders of the Company, which may discourage such claims against us or any of our current or former directors, officers, other employees, agents, or stockholders of the Company and result in increased costs for investors to bring a claim.
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