Airbnb (ABNB) reported stronger Q2 bookings as product changes contributed to higher revenue in the quarter, RBC Capital Markets said in a Friday note.
The company reported a 10.3% room nights growth year over year, which management attributed to initiatives like Reserve Now, Pay Later, flexible cancellation policies, and the shift to a single guest fee, according to the note.
The investment firm also said hotels are growing about three times faster than Airbnb's core business despite representing a single-digit share of nights booked. RBC analysts noted the company has added thousands of hotels across more than 20 cities, while about 35% of first-time hotel bookers later booked a home stay.
Management also outlined progress in artificial intelligence initiatives across search, discovery and customer support.
The firm said Airbnb could continue generating organic growth while expanding into hotels, adjacent products and new sub-verticals through its AI-powered platform and direct customer relationship.
RBC maintained its outperform rating on Airbnb and raised its price target to $195 from $173.
Shares of Airbnb were over 15% higher in Friday trading.
Price: $174.54, Change: $+22.90, Percent Change: +15.10%