filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“2024 Annual Report”). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” of our 2024 Annual Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Overview
We are a community based on connection and belonging—a community that was born in 2007 when two hosts welcomed three guests to their San Francisco home, and has since grown to over 5 million hosts who have welcomed over 2 billion guest arrivals in almost every country and region across the globe. Every day, hosts offer unique stays and experiences that make it possible for guests to connect with communities in a more authentic way.
We have five stakeholders and we have designed our Company with all of them in mind. Along with employees and shareholders, we serve hosts, guests, and the communities in which they live. We intend to make long-term decisions considering all of our stakeholders because their collective success is key for our business to thrive.
First Quarter Financial Highlights
Revenue for the three months ended March 31, 2025 grew by 6% to $2.3 billion, compared to the same period in the prior year. The increase was primarily due to an increase in the number of check-ins relating to Nights and Experiences Booked, partially offset by the impact of a slight decrease in Average Daily Rate (“ADR”).
Net income for the three months ended March 31, 2025 decreased by 42% to $154 million, compared to the same period in the prior year. This decline was primarily due to higher payroll-related expenses driven by increased headcount and impairment losses associated with private company investments. Additionally, lower interest income due to a decline in interest rates contributed to the decrease, which was slightly offset by our revenue growth.
Cash provided by operating activities was $1.8 billion for the three months ended March 31, 2025, compared to $1.9 billion in the same period in the prior year. We generated Free Cash Flow1 of $1.8 billion for the three months ended March 31, 2025, compared to $1.9 billion, in the same period in the prior year.
During the three months ended March 31, 2025, we repurchased 6.1 million shares of Class A common stock for $807 million, leaving $2.5 billion available to repurchase under our share repurchase program.
Macroeconomic and Geopolitical Conditions on our Business
As we look forward, we recognize the potential impact of challenging macroeconomic and geopolitical conditions on our business, including inflation, interest rates, foreign currency fluctuations, tariffs and trade controls, and potential decreased consumer spending. To date, these conditions have not had a material impact on our business, results of operations, cash flows, and financial condition; however, the impact in the future of these macroeconomic and geopolitical conditions on our business, results of operations, cash flows, and financial condition is uncertain and will depend on future developments that we may not be able to accurately predict.
Key Business Metrics and Non-GAAP Financial Measures
We track the following key business metrics and financial measures that are not calculated and presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) (“non-GAAP financial measures”) to evaluate our operating performance, identify trends, formulate financial projections, and make strategic decisions. Accordingly, we believe that these key business metrics and non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance, and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their U.S. GAAP results.
These key business metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with U.S. GAAP, and may be different from similarly titled metrics or measures presented by other companies. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided under the subsection titled “— Adjusted EBITDA Reconciliation” and “— Free Cash Flow Reconciliation” below. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures.
1 A reconciliation of non-GAAP financial measures to the most comparable U.S. GAAP financial measures is provided under the subsection titled “Key Business Metrics and Non-GAAP Financial Measures— Free Cash Flow Reconciliation” below.
Key Business Metrics
We review the following key business metrics to measure our performance, identify trends, formulate financial projections, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.
The following table summarizes our key business metrics, for each period presented below (in millions, except percentages):
| Three Months Ended March 31, | |||||||||||
| 2024 | 2025 | % Change | |||||||||
| Nights and Experiences Booked | 133 | 143 | 8 | % | |||||||
| Gross Booking Value | $ | 22,925 | $ | 24,515 | 7 | % |
Nights and Experiences Booked
Nights and Experiences Booked is a key measure of the scale of our platform, which in turn drives our financial performance. Nights and Experiences Booked on our platform in a period represents the sum of the total number of nights booked for stays and the total number of seats booked for experiences, net of cancellations and alterations that occurred in that period. For example, a booking made on February 15 would be reflected in Nights and Experiences Booked for our quarter ended March 31. If, in the example, the booking were canceled on May 15, Nights and Experiences Booked would be reduced by the cancellation for our quarter ended June 30. A night can include one or more guests and can be for a listing with one or more bedrooms. Nights and Experiences Booked grows as we attract new customers to our platform and as repeat guests increase their activity on our platform. A seat is booked for each participant in an experience. Substantially all of the bookings on our platform to date have come from nights. We believe Nights and Experiences Booked is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a single unit of transaction on our platform.
The increase in Nights and Experiences Booked during the three months ended March 31, 2025, compared to the same period in the prior year, was driven by growth across all regions, with the strongest growth percentages in Latin America and Asia Pacific, as we continue to focus on international expansion.
Gross Booking Value
GBV represents the dollar value of bookings on our platform in a period and is inclusive of host earnings, service fees, cleaning fees, and taxes, net of cancellations and alterations that occurred during that period. The timing of recording GBV and any related cancellations is similar to that described in the subsection titled “— Key Business Metrics and Non-GAAP Financial Measures — Nights and Experiences Booked” above. Revenue from the booking is recognized upon check-in; accordingly, GBV is a leading indicator of revenue. The entire amount of a booking is reflected in GBV during the quarter in which booking occurs, whether the guest pays the entire amount of the booking upfront or elects to use our Pay Less Upfront program. Growth in GBV reflects our ability to attract and retain customers and reflects growth in Nights and Experiences Booked.
The increase in GBV during the three months ended March 31, 2025, compared to the same period in the prior year, was primarily due to an increase in Nights and Experiences Booked. We saw GBV growth across all regions, with the strongest growth percentages in Latin America and Asia Pacific.
Non-GAAP Financial Measures
Our non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow Margin, which are described below. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP is provided below. Investors are encouraged to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures. Adjusted EBITDA and Adjusted EBITDA Margin have limitations as a financial measure, should be considered as supplemental in nature, and are not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP. Because of these limitations, Adjusted EBITDA and Adjusted EBITDA Margin should be considered alongside other financial performance measures, including net income and net income margin as well as our other U.S. GAAP results. Free Cash Flow and Free Cash Flow Margin have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of other U.S. GAAP financial measures, such as net cash provided by operating activities and net cash provided by operating activities margin. Free Cash Flow and Free Cash Flow Margin do not reflect our ability to meet future contractual commitments and may be calculated differently by other companies in our industry, limiting their usefulness as comparative measures.
| Non-GAAP Measure | Definition | Purpose of Non-GAAP Measure | ||||||
| Adjusted EBITDA & Adjusted EBITDA Margin | Adjusted EBITDA: Net income adjusted for: •provision for income taxes, •other expense, net, •interest income, •depreciation and amortization, •stock-based compensation expense, •acquisition-related impacts consisting of gains (losses) recognized on changes in the fair value of contingent consideration arrangements, and •lodging taxes for which we may have joint and several liability with hosts for collecting and remitting such taxes, withholding taxes on payments made to hosts and any related settlements, and transactional taxes where there is significant uncertainty as to how the taxes apply to our platform. Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue. | •Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business. •Used by management to make operating decisions such as evaluating performance, performing strategic planning, and budgeting. | ||||||
| Free Cash Flow & Free Cash Flow Margin | Free Cash Flow: Net cash provided by operating activities less purchases of property and equipment. Free Cash Flow Margin: Free Cash Flow divided by revenue. | •Indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after purchases of property and equipment, that can be used for strategic initiatives. •Used by management to measure operational performance, to assess our ability to generate cash from ongoing business operations, and to make decisions about capital allocation. | ||||||
| Constant currency revenue growth rate | The change in the current period revenue over the prior comparable period where current period foreign currency revenue is translated using the exchange rates of the comparative period. | •Enhances comparability and provides investors with useful insight into the operational changes in revenue. •Used by management for financial and operational decision-making and as a means to evaluate performance by excluding the effects of foreign currency volatility which is not indicative of our core operating results. |
The following table summarizes our non-GAAP financial measures, along with the most directly comparable U.S. GAAP measure (in millions, except percentages):
| Three Months Ended March 31, | |||||||||||||||||
| 2024 | 2025 | ||||||||||||||||
| Net income | $ | 264 | $ | 154 | |||||||||||||
| Net income margin | 12 | % | 7 | % | |||||||||||||
| Adjusted EBITDA | $ | 424 | $ | 417 | |||||||||||||
| Adjusted EBITDA Margin | 20 | % | 18 | % | |||||||||||||
| Net cash provided by operating activities | $ | 1,923 | $ | 1,789 | |||||||||||||
| Net cash provided by operating activities margin | 90 | % | 79 | % | |||||||||||||
| Free Cash Flow | $ | 1,909 | $ | 1,781 | |||||||||||||
| Free Cash Flow Margin | 89 | % | 78 | % |
Adjusted EBITDA Reconciliation
The following is a reconciliation of net income to Adjusted EBITDA (in millions, except percentages):
| Three Months Ended March 31, | |||||||||||||||||
| 2024 | 2025 | ||||||||||||||||
| Revenue | $ | 2,142 | $ | 2,272 | |||||||||||||
| Net income | $ | 264 | $ | 154 | |||||||||||||
| Adjusted to exclude the following: | |||||||||||||||||
| Provision for income taxes | 29 | 19 | |||||||||||||||
| Other expense, net | 10 | 38 | |||||||||||||||
| Interest income | (202) | (173) | |||||||||||||||
| Depreciation and amortization | 14 | 25 | |||||||||||||||
| Stock-based compensation expense | 295 | 358 | |||||||||||||||
| Acquisition-related impacts | 6 | — | |||||||||||||||
| Lodging taxes, host withholding taxes, and transactional taxes, net | 8 | (4) | |||||||||||||||
| Adjusted EBITDA | $ | 424 | $ | 417 | |||||||||||||
| Adjusted EBITDA Margin | 20 | % | 18 | % |
The above items are excluded from our Adjusted EBITDA measure because they are non-cash in nature, or because the amount and timing of these items are unpredictable, not driven by core results of operations, and renders comparisons with prior periods and competitors less meaningful.
The decrease in Adjusted EBITDA for the three months ended March 31, 2025, compared to the same period in the prior year, was primarily due to higher product development and sales and marketing expenses. This was primarily driven by increased employee compensation costs and expenses related to our upcoming product launches. These impacts were partially offset by revenue growth from an increase in the number of check-ins for Nights and Experiences Booked, which was partially offset by the impact of a slight decrease in ADR.
Free Cash Flow Reconciliation
The following is a reconciliation of net cash provided by operating activities to Free Cash Flow (in millions, except percentages):
| Three Months Ended March 31, | |||||||||||||||||
| 2024 | 2025 | ||||||||||||||||
| Revenue | $ | 2,142 | $ | 2,272 | |||||||||||||
| Net cash provided by operating activities | $ | 1,923 | $ | 1,789 | |||||||||||||
| Purchases of property and equipment | (14) | (8) | |||||||||||||||
| Free Cash Flow | $ | 1,909 | $ | 1,781 | |||||||||||||
| Free Cash Flow Margin | 89 | % | 78 | % | |||||||||||||
Our Free Cash Flow is impacted by the timing of GBV because we collect our service fees at the time of booking, which is generally before a stay or experience occurs. Funds held on behalf of our customers and amounts payable to our customers do not impact Free Cash Flow, except interest earned on these funds.
Constant Currency
In addition to revenue growth rates derived from revenue presented in accordance with U.S. GAAP, we disclose below the percentage change in our current period revenue from the corresponding prior period by comparing the change in revenue using constant currencies. We present constant currency revenue growth rate information to provide a framework for assessing how our underlying revenue performed excluding the effect of changes in exchange rates. We use the percentage change in constant currency revenues for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe the presentation of revenue on a constant currency basis in addition to the U.S. GAAP presentation helps improve the ability to understand our performance because it excludes the effects of foreign currency volatility that are not indicative of our core operating results. We calculate the percentage change in constant currency by determining the change in the current period revenue over the prior comparable period where current period foreign currency revenue is translated using the exchange rates of the comparative period.
Seasonality
Our business is seasonal, reflecting typical travel behavior patterns over the course of the calendar year. In a typical year, the first, second, and third quarters have higher Nights and Experiences Booked than the fourth quarter, as guests plan for travel during the peak travel season, which is in the third quarter for North America and EMEA.
Our key business metrics, including GBV and Adjusted EBITDA, can also be impacted by the timing of holidays and other events. We experience seasonality in our GBV that is generally consistent with the seasonality of Nights and Experiences Booked. Revenue and Adjusted EBITDA have historically been, and are expected to continue to be, highest in the third quarter when we have the most check-ins, which is the point at which we recognize revenue. Seasonal trends in our GBV impact Free Cash Flow for any given quarter. A significant portion of our costs are relatively fixed across quarters or vary in line with the volume of transactions, and we historically achieve our highest GBV in the first and second quarters of the year with comparatively lower check-ins. As a result, increases in unearned fees typically make our Free Cash Flow and Free Cash Flow Margin the highest in the first two quarters of the year. We typically see a slight decline in GBV and a peak in check-ins in the third quarter, which results in a decrease in unearned fees, a lower sequential decrease in Free Cash Flow, and a greater decline in GBV in the fourth quarter, where Free Cash Flow is typically lower.
Results of Operations
The following table sets forth our results of operations (in millions, except for percentages):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2024 | % of Revenue | 2025 | % of Revenue | % Change | ||||||||||||||||||||||
| Revenue | $ | 2,142 | 100 | % | $ | 2,272 | 100 | % | 6 | % | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Cost of revenue | 480 | 22 | % | 506 | 22 | % | 5 | % | ||||||||||||||||||
| Operations and support(1) | 285 | 14 | % | 303 | 13 | % | 6 | % | ||||||||||||||||||
| Product development(1) | 475 | 22 | % | 568 | 25 | % | 20 | % | ||||||||||||||||||
| Sales and marketing(1) | 514 | 24 | % | 563 | 25 | % | 10 | % | ||||||||||||||||||
| General and administrative(1) | 287 | 13 | % | 294 | 13 | % | 2 | % | ||||||||||||||||||
| Total costs and expenses | 2,041 | 95 | % | 2,234 | 98 | % | 9 | % | ||||||||||||||||||
| Income from operations | 101 | 5 | % | 38 | 2 | % | (62) | % | ||||||||||||||||||
| Interest income | 202 | 9 | % | 173 | 8 | % | (14) | % | ||||||||||||||||||
| Other expense, net | (10) | (1) | % | (38) | (2) | % | 280 | % | ||||||||||||||||||
| Income before income taxes | 293 | 13 | % | 173 | 8 | % | (41) | % | ||||||||||||||||||
| Provision for income taxes | 29 | 1 | % | 19 | 1 | % | (34) | % | ||||||||||||||||||
| Net income | $ | 264 | 12 | % | $ | 154 | 7 | % | (42) | % |
(1)Includes stock-based compensation expense as follows (in millions, except percentages):
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| 2024 | % of Total | 2025 | % of Total | % Change | ||||||||||||||||||||||
| Operations and support | $ | 19 | 6 | % | $ | 21 | 6 | % | 11 | % | ||||||||||||||||
| Product development | 185 | 63 | % | 230 | 64 | % | 24 | % | ||||||||||||||||||
| Sales and marketing | 35 | 12 | % | 44 | 12 | % | 26 | % | ||||||||||||||||||
| General and administrative | 56 | 19 | % | 63 | 18 | % | 13 | % | ||||||||||||||||||
| Stock-based compensation expense | $ | 295 | 100 | % | $ | 358 | 100 | % | 21 | % |
Comparison of the Three Months Ended March 31, 2025 with the Same Period in 2024
Revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Revenue | $ | 2,142 | $ | 2,272 | 6 | % |
Revenue increased $130 million, or 6%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to an increase in the number of check-ins relating to Nights and Experiences Booked, partially offset by the impact of a slight decrease in ADR. On a constant-currency basis, revenue increased 8% compared to the same period in the prior year.
Cost of Revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Cost of revenue | $ | 480 | $ | 506 | 5 | % | |||||||||||||||||
| Percentage of revenue | 22 | % | 22 | % |
Cost of revenue increased $26 million, or 5%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to an increase in merchant fees of $17 million, largely due to an increase in pay-in volumes and an increase in amortization costs related to capitalized internal-use software projects of $12 million, partially offset by a reduction in chargebacks of $11 million.
Operations and Support
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Operations and support | $ | 285 | $ | 303 | 6 | % | |||||||||||||||||
| Percentage of revenue | 14 | % | 13 | % |
Operations and support expense increased $18 million, or 6%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to an increase in payroll-related expenses of $9 million, an increase in insurance costs of $7 million, due to higher premiums as a result of higher nights booked, and an increase in customer relations costs of $5 million, which resulted from increased refunds and credits related to customer satisfaction. These increases were partially offset by a decrease in third-party customer service costs of $8 million, due to ongoing partner site optimization.
Product Development
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Product development | $ | 475 | $ | 568 | 20 | % | |||||||||||||||||
| Percentage of revenue | 22 | % | 25 | % |
Product development expense increased $93 million, or 20%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to an increase in payroll-related expenses of $86 million, driven by an increase in average headcount of 11%.
Sales and Marketing
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Brand and performance marketing | $ | 370 | $ | 378 | 2 | % | |||||||||||||||||
| Field operations and policy | 144 | 185 | 28 | % | |||||||||||||||||||
| Total sales and marketing | $ | 514 | $ | 563 | 10 | % | |||||||||||||||||
| Percentage of revenue | 24 | % | 25 | % |
Sales and marketing expense increased $49 million, or 10%, for the three months ended March 31, 2025, compared to the same period in the prior year. The increase was primarily due to an increase in payroll-related expenses of $20 million, an increase in third-party service provider expenses related to our upcoming product launches of $19 million, and an increase in marketing activities driven by an increase in search engine marketing of $21 million. These increases were partially offset by a reduction in marketing campaign spend of $29 million.
General and Administrative
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| General and administrative | $ | 287 | $ | 294 | 2 | % | |||||||||||||||||
| Percentage of revenue | 13 | % | 13 | % |
General and administrative expense increased $7 million, or 2%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to higher payroll-related expenses of $13 million, partially offset by a reduction in non-income taxes related fees and penalties of $7 million.
Interest Income
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Interest income | $ | 202 | $ | 173 | (14) | % | |||||||||||||||||
Interest income decreased $29 million, or 14%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to lower interest rates.
Other Expense, Net
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Other expense, net | $ | (10) | $ | (38) | (280) | % | |||||||||||||||||
Other expense, net increased $28 million, or 280%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to impairment charges on investments in privately-held companies of $37 million, partially offset by foreign exchange gains of $8 million.
Provision for Income Taxes
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2025 | % Change | |||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||
| Provision for income taxes | $ | 29 | $ | 19 | (34) | % |
The provision for income taxes decreased by $10 million, or 34%, for the three months ended March 31, 2025, compared to the same period in the prior year, primarily due to decreased profitability and an increased deduction on foreign income.
In 2021, the Organization for Economic Co-operation and Development (“OECD”) established an inclusive framework on base erosion and profit shifting and agreed on a two-pillar solution to global taxation, focusing on global profit allocation, known as Pillar One and a 15% global minimum effective tax rate, known as Pillar Two. The OECD issued Pillar Two model rules and continues to release guidance on these rules. The inclusive framework calls for tax law changes by participating countries to further take effect in 2025. Various countries, including the European Union, have enacted or have announced plans to enact new tax laws to implement the global minimum tax. We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and concluded there was no material impact to our tax provision for the three months ended March 31, 2025. We will continue to evaluate the impact of these tax law changes on future reporting periods.
Liquidity and Capital Resources
Sources and Conditions of Liquidity
As of March 31, 2025, our principal sources of liquidity were cash, cash equivalents and short-term investments totaling $11.5 billion. As of March 31, 2025, cash and cash equivalents totaled $7.6 billion, which included $2.2 billion held by our foreign subsidiaries. Cash and cash equivalents consist of checking and interest-bearing accounts and highly-liquid securities with an original maturity of 90 days or less. As of March 31, 2025, short-term investments totaled $3.9 billion. Short-term investments primarily consist of highly-liquid investment grade corporate debt securities, time deposits, commercial paper, certificates of deposit, U.S. government and government agency debt securities (“government bonds”), and mortgage-backed and asset-backed securities. These amounts do not include funds of $9.2 billion as of March 31, 2025, that we held for bookings in advance of guests completing check-ins that we record separately on our unaudited condensed consolidated balance sheets in funds receivable and amounts held on behalf of customers with a corresponding liability in funds payable and amounts payable to customers.
Our cash and cash equivalents are generally held at large global systemically important banks (“G-SIBs”) which are subject to high capital requirements and are required to regularly perform stringent stress tests related to their ability to absorb capital losses. Our cash, cash equivalents, and short-term investments held outside the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of such funds may result in additional tax liabilities. We believe that our existing cash, cash equivalents, and short-term investments balances in the United States are sufficient to fund our working capital needs in the United States.
We have access to $1.0 billion of commitments and a $200 million sub-limit for the issuance of letters of credit under the 2022 Credit Facility. As of March 31, 2025, no amounts were drawn under the 2022 Credit Facility and outstanding letters of credit totaled $25 million. See Note 7, Debt, to our unaudited condensed consolidated financial statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q additional information.
Material Cash Requirements
As of March 31, 2025, we had outstanding $2.0 billion in aggregate principal amount of indebtedness of our 0% convertible senior notes due in March 2026. In March 2021, in connection with the pricing of the 2026 Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain of the initial purchasers and other financial institutions (the "option counterparties") at a cost of approximately $100 million. The cap price of the Capped Calls was $360.80 per share of Class A common stock, which represented a premium of 100% over the last reported sale price of the Class A common stock of $180.40 per share on March 3, 2021, subject to certain customary adjustments under the terms of the Capped Calls.
In February 2024, our board of directors approved a share repurchase program to purchase up to $6.0 billion of our Class A common stock. During the three months ended March 31, 2025, we repurchased 6.1 million shares of Class A common stock for $807 million through our share repurchase program. As of March 31, 2025, we had $2.5 billion available to repurchase shares of Class A common stock under our share repurchase program.
Cash Flows
The following table summarizes our cash flows (in millions):
| Three Months Ended March 31, | ||||||||
| 2024 | 2025 | |||||||
| Net cash provided by operating activities | $ | 1,923 | $ | 1,789 | ||||
| Net cash used in investing activities | (84) | (151) | ||||||
| Net cash provided by financing activities | 2,134 | 2,145 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (111) | 207 | ||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 3,862 | $ | 3,990 |
Net cash provided by operating activities for the three months ended March 31, 2025 was $1.8 billion, which was primarily due to net income of $154 million, additional cash provided by unearned fees of $1.1 billion, resulting from growth in bookings, and an increase in accrued expenses and other liabilities of $155 million. Additionally, we had adjustments for non-cash charges, primarily consisting of $358 million of stock-based compensation expense.
Net cash used in investing activities for the three months ended March 31, 2025 was $151 million, which was primarily due to purchases of short-term investments, partially offset by proceeds resulting from sales and maturities of short-term investments.
Net cash provided by financing activities for the three months ended March 31, 2025 was $2.1 billion, primarily due to an increase in funds payable and amounts payable to customers of $3.1 billion, partially offset by share repurchases of $807 million and taxes paid related to net share settlement of equity awards of $152 million.
The effect of exchange rate changes on cash, cash equivalents, and restricted cash on our audited consolidated statements of cash flows relates to certain of our assets, principally cash balances held on behalf of customers, that are denominated in currencies other than the functional currency of certain of our subsidiaries. For the three months ended March 31, 2025, we recorded an increase of $207 million in cash, cash equivalents, and restricted cash, primarily due to the weakening of the U.S. dollar. The impact of exchange rate changes on cash balances can serve as a natural hedge for the effect of exchange rates on our liabilities to our hosts and guests.
We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we believe that the cash flows generated from operating activities will meet our anticipated cash requirements in the short-term. In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include share repurchases, introduction of new products and offerings, timing and extent of spending to support our efforts to develop our platform, debt repayments, and expansion of sales and marketing activities. Our future capital requirements, however, will depend on many factors, including, but not limited to our growth, headcount, and ability to attract and retain customers on our platform. Additionally, we may in the future raise additional capital or incur additional indebtedness to continue to fund our strategic initiatives. On a long-term basis, we would rely on either our access to the capital markets or our credit facility for any long-term funding not provided by operating cash flows and cash on hand. In the event that additional financing is required from outside sources, we may seek to raise additional funds at any time through equity, equity-linked arrangements, and/or debt, which may not be available on favorable terms, or at all. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be materially adversely affected. Our liquidity is subject to various risks including the risks identified in Item 3. "Quantitative and Qualitative Disclosures about Market Risk" of Part 1 of this Quarterly Report on Form 10-Q.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. See Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Annual Report for a discussion of the assumptions and judgments involved in our critical accounting estimates. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
Recent Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, to our unaudited condensed consolidated financial statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
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