How ABNB (Airbnb) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a travel marketplace like ABNB (formerly Airbnb, Inc.) makes money is essential for investors and anyone interested in the business of online travel and hospitality. In this post, we break down ABNB's quarterly income statement (Q2 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick ABNB Overview

ABNB operates a global online marketplace connecting hosts offering accommodations and experiences with guests seeking unique travel stays. Revenue comes primarily from service fees charged to guests and hosts for bookings, as well as fees from experiences and other ancillary services. The business is segmented by geography: North America, EMEA (Europe, Middle East & Africa), Asia Pacific, and Latin America.

Revenue Breakdown

• Total Revenue (Q2 2025): $3.10B (+12.7% YoY)
  • North America Revenue: $1.38B (44.5% of total, +5.3% YoY)
  • EMEA Revenue: $1.23B (39.8% of total, +17.7% YoY)
  • Asia Pacific Revenue: $255M (8.2% of total, +23.2% YoY)
  • Latin America Revenue: $231M (7.5% of total, +24.9% YoY)
• Growth is powered by expansion in international markets, particularly Asia Pacific and Latin America, and increased demand for alternative travel accommodations.

Gross Profit and Margins

• Gross Profit: $2.55B (82.4% gross margin)
  • Cost of Revenue: $544M (-35.5% YoY)
  • ABNB maintains robust margins due to its scalable digital platform, low incremental costs per transaction, and operational efficiencies.
• Most costs come from payment processing, customer support, and insurance-related expenses.

Operating Income and Expenses

• Operating Income: $612M (+23.1% YoY, 19.8% margin)
• Operating Expenses: $1.94B (+37.9% YoY)
  • R&D: $610M (+17.5% YoY, 19.7% of revenue) — Focused on platform improvements, AI-driven personalization, and new product development.
  • SG&A: $998M (+12.4% YoY, 32.2% of revenue) — Includes sales, marketing, general admin, and customer acquisition costs.
  • ABNB continues to prioritize innovation and invest in growth while maintaining efficiency in core operations.

Net Income

• Pre-Tax Income: $779M (+14.4% YoY, 25.2% margin)
• Income Tax: $137M (17.6% effective tax rate)
• Net Income: $642M (+15.7% YoY, 20.7% net margin)
• ABNB converts a significant portion of sales into profit due to its scalable marketplace model and pricing power.

What Drives ABNB's Money Machine?

• Service fees from bookings: Over 80% of revenue comes from guest and host fees on accommodation bookings.
• Nights and Experiences Booked: 120M nights and experiences booked in Q2 2025, up 14% YoY, driving top-line growth.
• Investment in platform technology: $610M in R&D, focusing on AI, personalization, and fraud prevention.
• International expansion: Asia Pacific and Latin America segments are fastest-growing, though not yet as profitable as mature regions.

Visualizing ABNB's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A and R&D) taking the largest chunk.
• Even after large investments in technology and global expansion, 20.7% of revenue drops to the bottom line.

Key Takeaways

• ABNB's money comes overwhelmingly from service fees on accommodation bookings
• High gross and net margins illustrate the power of ABNB's asset-light, digital marketplace model
• Heavy investment in platform technology and global expansion, balanced by efficiency in operating costs
• Ongoing growth is driven by international market expansion and increased travel demand

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FAQ About ABNB's Income Statement

1. What is the main source of ABNB's revenue in 2025?

ABNB generates over 80% of its revenue from service fees on accommodation bookings. Additional revenue comes from experiences and ancillary services.

2. How profitable is ABNB in Q2 2025?

ABNB reported net income of $642M in Q2 2025, with a net margin of approximately 20.7%, reflecting strong profitability driven by its scalable platform and efficient cost structure.

3. What are the largest expense categories for ABNB?

The biggest expenses on ABNB's income statement are operating expenses, particularly Research & Development (R&D) at $610M and Sales, General & Administrative (SG&A) at $998M in Q2 2025, as ABNB prioritizes platform innovation and global marketing.

4. Why does Asia Pacific operate at a loss?

Asia Pacific, despite generating $255M in revenue, posted an operating loss in Q2 2025. This is because ABNB aggressively invests in market entry, local partnerships, and brand awareness, believing these will drive long-term growth—even if the division is unprofitable today.

5. How does ABNB's effective tax rate compare to previous years?

ABNB's effective tax rate in Q2 2025 was 17.6%, consistent with previous years. This moderate rate is primarily due to tax benefits from share-based compensation and international structuring.