By Doyinsola Oladipo and Aishwarya Jain
(Reuters) – Vacation home rental company Airbnb narrowly beat third-quarter revenue estimates on Thursday, although profits were lower as it invested heavily in marketing to boost its presence in international markets.
Shares of the San Francisco-based company fell 4% in volatile after-hours trading as its revenue also took a hit from lower bookings at the start of the quarter.
Sales and marketing expenses rose 27.5% in the quarter to $514 million due to investments in underpenetrated markets such as Brazil and Japan, the company said.
The increased investment helped double the average growth rate of nights booked based on origin in its expansion markets in the third quarter, compared to its core markets.
Booked nights and experiences increased 8% to 122.8 million from the previous year, led by 19% growth in Asia-Pacific and 15% in Latin America.
The company posted third-quarter gross booking value of $20.1 billion and revenue of $3.73 billion, both up 10% year-over-year. Analysts expected quarterly revenue to be $3.72 billion.
In the fourth quarter, the company expects revenue of between $2.39 billion and $2.44 billion, or an increase of 8% to 10% from a year ago.
“We anticipate booked nights will accelerate in the fourth quarter relative to the third,” the company said on an earnings call, adding that it also expects tighter year-over-year comparisons.
Airbnb also expects the average daily rate (ADR), or average cost per night, in the current quarter to increase modestly, compared to a year ago. Global rates for the third quarter were $164, up 1% from a year ago.
It reported earnings of $2.13 per share for the quarter ended Sept. 30, just shy of Street estimates of $2.14 per share.
The company's implied acquisition rate remained stable at 18.6%, as revenue generated by the additional service fee amount for cross-currency reservations was offset by investments in customer service.
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