100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property, if we or certain of our subsidiaries do not reinvest those proceeds in assets to be used in our business or to make certain other permitted investments within (i) 450 days or (ii) 630 days, so long as a commitment to reinvest is made within 450 days, in each case subject to certain exceptions; and |
| • |
100% of the net cash proceeds of all incurrence or issuance by us or certain of our subsidiaries of any indebtedness (except for permitted debt (other than debt incurred in connection with, related to, or associated with any governmental assistance and/or sponsored facility or program related to the COVID-19 pandemic that is secured on a pari passu basis with the First Lien Loan)). |
Prepayment Premium and Make-Whole Premium
If any prepayment of First Lien Loans (whether voluntary, mandatory, or due to the acceleration of the loans) is made prior to the third anniversary of the closing date, a premium of 3% of the principal amount prepaid is required to be paid. If any prepayment of loans is made from and after the third anniversary but before the fourth anniversary of the closing date, a premium of 1% is required to be paid. From and after the fourth anniversary of the closing date, no premium is required.
Any prepayment of First Lien Loans (whether voluntary, mandatory or due to the acceleration of the loans) made prior to the second anniversary of the closing date will also be subject to a make-whole premium equal to the difference between (a) the aggregate amount of interest (assuming such interest is paid in cash and calculated at the First Lien Eurodollar Rate with a three month interest period) that would have otherwise been payable from the prepayment date through the second anniversary of the closing date on the applicable principal amount, minus (b) the aggregate amount of interest (assuming such interest is paid in cash and calculated at the First Lien Eurodollar Rate with a three month interest period) that would have been earned if the prepaid principal amount were reinvested for the period from the prepayment date through the second anniversary of the closing date at a treasury rate determined by the administrative agent.
Certain Covenants and Events of Default
The First Lien Credit Agreement contains a number of covenants that restrict, subject to certain exceptions, our and our subsidiaries’ ability to, among other things:
| • |
incur additional indebtedness; |
| • |
create or incur liens; |
| • |
engage in certain fundamental changes, including mergers or consolidations; |
| • |
sell or transfer assets; |
| • |
pay dividends and distributions on our and our subsidiaries’ capital stock; |
| • |
payments and prepayments of junior or unsecured indebtedness; |
| • |
make acquisitions, investments, loans, or advances; |
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engage in certain transactions with affiliates; and |
| • |
enter into negative pledge clauses and clauses restricting subsidiary distributions. |
The First Lien Credit Agreement also contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the First Lien Credit Agreement will be entitled to take various actions, including the acceleration of amounts due under the First Lien Credit Agreement and all actions permitted to be taken by a secured creditor.
Second Lien Loan
In April 2020, we, as borrower, and certain of our subsidiaries, as guarantors, entered into a $1.0 billion Second Lien Credit Agreement with Top IV Talents, LLC, as administrative agent, and the lenders from time to time party thereto, resulting in proceeds of $967.5 million, net of debt discount and issuance costs. The loan is due and payable in July 2025. The underlying loan can be repaid in whole or in part prior to July 2025 at our option, subject to applicable prepayment premiums, make-whole premiums, and the priority of lenders under the First Lien Credit Agreement over any proceeds we receive from the sale of collateral.
Interest and Fees
Interest on the Second Lien Loan is payable monthly or quarterly in arrears, at our option depending on the chosen per annum interest rate equal to (i) in the case of LIBOR borrowings, 10% plus LIBOR, subject to a floor of 1% (the “Second Lien Eurodollar Rate”), or (ii) in the case of base rate borrowings, 9% plus the greatest of (a) the prime rate, (b) the federal funds effective rate plus 0.5%, and (c) LIBOR for a one-month period plus 1%, subject to a floor of 3%. In addition, at our election, payment-in-kind interest up to 5.5% per annum may be paid by increasing the principal amount of the Second Lien Loan by such amount.
Interest on base rate borrowings is payable in arrears on the last business day of each March, June, September, and December and on the maturity date of the Second Lien Loan. Interest on LIBOR borrowings is payable at the end of each applicable interest period of one month or three months. Interest on all past due amounts will accrue at the Default Rate. The Default Rate will also apply upon the occurrence of an event of default, subject to customary conditions.
We pay certain customary administration fees under the Second Lien Credit Agreement.
Guarantees and Security
All obligations under the Second Lien Credit Agreement are unconditionally guaranteed by substantially all of our and certain of our existing and future, direct and indirect, wholly-owned material domestic subsidiaries, subject to certain exceptions.
Obligations under the Second Lien Credit Agreement, and the guarantees of such obligations, are secured, subject to permitted liens and other exceptions, by substantially all of our and our subsidiary guarantors’ assets, subject to certain exceptions.
Prepayments
Principal amounts outstanding under the Second Lien Loan are due and payable in full at maturity.
Voluntary Prepayments
Subject to the priority of lenders under the First Lien Credit Agreement over any proceeds we receive from the sale of collateral , we may prepay at our option, in full or in part, borrowings under the Second Lien Credit Agreement, subject to notice requirements, minimum prepayment amounts, increment limitations, and a prepayment premium and a make-whole premium under certain circumstances.
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Mandatory Prepayments
Subject to our obligation to make mandatory prepayments under the First Lien Credit Agreement, the Second Lien Credit Agreement requires us to prepay outstanding Second Lien Loans, plus any applicable prepayment premium and make-whole premium, in the event of non-ordinary course asset sales or other dispositions of property or incurrence, or issuance by us or certain of our subsidiaries of any indebtedness, subject to certain exceptions, with:
| • |
100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property, if we or certain of our subsidiaries do not reinvest those proceeds in assets to be used in our business or to make certain other permitted investments within (i) 450 days or (ii) 630 days, so long as a commitment to reinvest is made within 450 days, in each case subject to certain exceptions; and |
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100% of the net cash proceeds of all incurrence or issuance by us or certain of our subsidiaries of any indebtedness (except for permitted debt (other than debt incurred in connection with, related to, or associated with any governmental assistance and/or sponsored facility or program related to the COVID-19 pandemic that is secured senior in the right of priority to the Second Lien Loan)). |
Prepayment Premium and Make-Whole Premium
If any prepayment of Second Lien Loans (whether voluntary, mandatory or due to the acceleration of the loans) is made prior to the 18-month anniversary of the closing date (the “Second Lien Call Date”), a premium of 2% of the principal amount prepaid is required to be paid. If any prepayment of loans is made from and after the Second Lien Call Date but before the first anniversary of the Second Lien Call Date, a premium of 2% is required to be paid. If any prepayment of loans is made from and after the first anniversary of the Second Lien Call Date but before the second anniversary of the Second Lien Call Date, a premium of 1% is required to be paid. From and after the second anniversary of the Second Lien Call Date, no premium is required.
Any prepayment of Second Lien Loans (whether voluntary, mandatory, or due to the acceleration of the loans) made prior to the Second Lien Call Date will also be subject to a make-whole premium equal to the difference between (a) the aggregate amount of interest (assuming such interest is paid in cash and calculated at the Second Lien Eurodollar Rate with a three month interest period) that would have otherwise been payable from the payment date through the Second Lien Call Date on the applicable principal amount, minus (b) the aggregate amount of interest (assuming such interest is paid in cash and calculated at the Second Lien Eurodollar Rate with a three month interest period) that would have been earned if the prepaid principal amount were reinvested for the period from the prepayment date through the Second Lien Call Date at a treasury rate determined by the administrative agent.
Certain Covenants and Events of Default
The Second Lien Credit Agreement contains a number of covenants that restrict, subject to certain exceptions, our and our subsidiaries’ ability to, among other things:
| • |
incur additional indebtedness; |
| • |
create or incur liens; |
| • |
engage in certain fundamental changes, including mergers or consolidations; |
| • |
sell or transfer assets; |
| • |
pay dividends and distributions on our and our subsidiaries’ capital stock; |
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payments and prepayments of junior or unsecured indebtedness; |
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make acquisitions, investments, loans, or advances; |
| • |
engage in certain transactions with affiliates; and |
| • |
enter into negative pledge clauses and clauses restricting subsidiary distributions. |
The Second Lien Credit Agreement also contains certain customary affirmative covenants and events of default, including a change of control. If an event of default occurs, the lenders under the Second Lien Credit Agreement will be entitled to take various actions, including the acceleration of amounts due under the Second Lien Credit Agreement and all actions permitted to be taken by a secured creditor, subject to the terms of the Intercreditor Agreement (as defined below).
Intercreditor Agreement
As between the First Lien Loan and the Second Lien Loan, lien priorities, rights and obligations of lenders during liquidation or insolvency proceedings, ability of lenders to release and foreclose on collateral and other intercreditor matters are governed by the First Lien and Second Lien Intercreditor Agreement, dated as of April 21, 2020 (the “Intercreditor Agreement”), by and among us, certain of our subsidiaries, Cortland Capital Market Services LLC, in its capacity as administrative agent under the First Lien Credit Agreement, Top IV Talents, LLC, in its capacity as administrative agent under the Second Lien Credit Agreement, and the other parties party thereto.
Warrants
In connection with the Second Lien Loan, we issued warrants to purchase 7,934,794 shares of Class A common stock with an initial exercise price of $28.355 per share, subject to adjustments upon the occurrence of certain specified events, to the Second Lien Loan lenders. The warrants expire on April 17, 2030 and the exercise price can be settled in cash or in net shares at the holder’s option. The fair value of the warrants of $116.6 million at issuance was recorded as a liability on the consolidated balance sheet, and the warrant liability will be subsequently remeasured to fair value at each reporting date as long as the warrants remain outstanding and unexercised with changes in fair value recorded in other income (expense), net in the consolidated statements of operations.
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Shares Eligible for Future Sale
Prior to this offering, there has been no public market for our Class A common stock, and a liquid trading market for our Class A common stock may not develop or be sustained after this offering. Sales of substantial amounts of our Class A common stock in the public market after this offering, or the perception that such sales could occur, could adversely affect the trading price of our Class A common stock and may make it more difficult for you to sell your Class A common stock at a time and price that you deem appropriate.
Upon the completion of this offering, based on the number of shares of our common stock outstanding as of September 30, 2020, we will have a total of shares of our Class A common stock and shares of our Class B common stock outstanding, assuming the conversion of all outstanding shares of our redeemable convertible preferred stock, of which 239,623,894 shares are outstanding as of September 30, 2020, into an aggregate of 240,910,588 shares of our Class B common stock, including 1,286,694 shares of common stock issuable pursuant to the anti-dilution adjustment provisions relating to our Series C redeemable convertible preferred stock, immediately prior to the completion of this offering and the net issuance of shares of our Class A common stock upon the vesting and settlement of RSUs, for which the service-based vesting condition was satisfied as of September 30, 2020 and for which we expect the liquidity-based vesting condition to be satisfied in connection with this offering, after withholding shares to satisfy associated estimated income tax obligations (based on the assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and an assumed % tax withholding rate), and 9,200,000 shares of our Class H common stock outstanding, which are held by our wholly-owned Host Endowment Fund subsidiary. Of these shares, all of the Class A common stock sold in this offering by us or the selling stockholders, plus any shares sold by us upon exercise, if any, of the underwriters’ option to purchase shares of Class A common stock, will be freely tradable in the public market without restriction or further registration under the Securities Act, unless these shares are purchased by one of our “affiliates,” as that term is defined in Rule 144, or by certain individuals identified by our officers and directors in the directed share program. There will be no shares of Class C common stock outstanding upon the completion of this offering.
The remaining shares of Class A, Class B, and Class H common stock will be, and shares of Class A and Class B common stock underlying outstanding RSUs, or subject to stock options or warrants will be on issuance, deemed “restricted securities,” as defined in Rule 144. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act (“Rule 701”), which rules are summarized below.
As a result of the lock-up agreements and market standoff agreements described below and subject to the provisions of Rules 144 or 701, these restricted securities will be available for sale in the public market as follows:
| Earliest Date Available for Sale in the Public Market | Number of Shares of Class A Common Stock | |
| The first trading day on which our common stock is traded on Nasdaq (the “first release window”). |
Up to shares. Includes shares held by persons not subject to lock-up agreements or market standoff agreements and certain securities held by Employee Stockholders (as defined below). Excludes securities held by “affiliates” for the purposes of Rule 144, as described below under “— Rule 144.”(1) |
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| Earliest Date Available for Sale in the Public Market | Number of Shares of Class A Common Stock | |
| The second trading day immediately following our public release of earnings for the first quarter following the most recent period for which financial statements are included in this prospectus (the “second release window” provided that the closing price of our Class A common stock on Nasdaq is at least 33% greater than the initial public offering price per share set forth on the cover page of this prospectus for the periods described in the section titled “Underwriting”). |
Up to shares. Includes shares held by persons not subject to lock-up agreements or market standoff agreements and certain securities held by Employee Stockholders and selling stockholders (excluding current executive officers, our Principal Accounting Officer, and directors including our founders). Includes all available for sale shares described above. Excludes securities held by “affiliates” for the purposes of Rule 144. | |
| The later of (i) the 91st day after the date of this prospectus and (ii) the beginning of the second release window, assuming in either case that we are current in our Exchange Act reporting at such time. |
Up to shares held by Employee Stockholders and selling stockholders (excluding current executive officers, our Principal Accounting Officer, and directors including our founders). Includes all available for sale shares described above as well as securities held by “affiliates” for the purposes of Rule 144 that are available for sale (without giving effect to applicable Rule 144 volume limitations as described below). | |
| The later of (i) the opening of trading on the second trading day immediately following our public release of earnings for the second quarter following the most recent period for which financial statements are included in this prospectus and (ii) the 121st day after the date of this prospectus (assuming that as of such date we have publicly released our earnings for the second quarter following the most recent period for which financial statements are included in this prospectus). |
All remaining shares held by our stockholders not previously eligible for sale, subject to volume limitations applicable to “affiliates” under Rule 144 as described below. |
| (1) |
Includes an estimated shares that will be eligible for sale in the public market in order to satisfy tax obligations in connection with the settlement of RSUs outstanding as of , 2020 that fully vest in connection with this offering, and an estimated shares that will be eligible for sale in the public market in order to satisfy tax obligations in connection with the settlement of additional RSUs that are expected to vest on February 25, 2021, in each case, based on an assumed a personal tax rate of % and upon an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus. The actual number of shares eligible for sale in the public market in connection with tax obligations may differ based on our stockholders’ personal tax rates. |
Rule 144
Under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, and we are current in our Exchange Act reporting at the time of sale, a person (or persons whose shares are required to be aggregated) who is not deemed to have been one of our “affiliates” for purposes of Rule 144 at any time during the 90 days preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months, including the holding period of any prior owner other than one of our “affiliates,” is entitled to sell those shares in the public market without complying with the manner of sale, volume limitations, or notice provisions of Rule 144, but subject to compliance with the public information requirements of Rule 144. If
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such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than one of our “affiliates,” then such person is entitled to sell such shares in the public market without complying with any of the requirements of Rule 144.
In general, under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, our “affiliates,” as defined in Rule 144, who have beneficially owned the shares proposed to be sold for at least six months, are entitled to sell in the public market, within any three-month period, a number of those shares that does not exceed the greater of:
| • |
1% of the number of shares of our Class A common stock then outstanding, which will equal shares immediately after the completion of this offering; or |
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the average weekly trading volume of our Class A common stock on during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
Such sales under Rule 144 by our “affiliates” or persons selling shares on behalf of our “affiliates” are also subject to certain manner of sale provisions, notice requirements, and requirements related to the availability of current public information about us.
Rule 701
In general, under Rule 701 as currently in effect, any of our employees, directors, officers, consultants, or advisors who acquired common stock from us in connection with a written compensatory stock or option plan or other written agreement in compliance with Rule 701 before the effective date of the registration statement of which this prospectus is a part and who are not our “affiliates” as defined in Rule 144 during the immediately preceding 90 days, is entitled to rely on Rule 701 to resell such shares beginning 90 days after the date of this prospectus in reliance on Rule 144, but without complying with the manner of sale, notice requirements, requirements related to the availability of current public information, or volume limitation provisions of Rule 144. The SEC has indicated that Rule 701 applies to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, and will apply to shares acquired upon exercise of such stock options, including exercises after the date of this prospectus. Persons who are our “affiliates” may resell those shares beginning 90 days after the date of this prospectus without compliance with minimum holding period requirements under Rule 144.
Registration Rights
Pursuant to our amended and restated investors’ rights agreement, assuming the selling stockholders sell shares and there is no exercise of the underwriters’ option to purchase additional shares, the holders of up to shares of our common stock (including shares issuable upon the conversion of our outstanding redeemable convertible preferred stock, including the shares of common stock issuable pursuant to the anti-dilution adjustment provisions relating to our Series C redeemable convertible preferred stock, immediately prior to the completion of this offering) and holders of warrants to purchase shares of our common stock, or their transferees, will be entitled to certain rights with respect to the registration of the offer and sale of those shares or the shares issued pursuant to such warrants under the Securities Act. See the section titled “Description of Capital Stock — Registration Rights” for a description of these registration rights. If the offer and sale of these shares or the shares issued pursuant to such warrants is registered, the shares will be freely tradable without restriction under the Securities Act, and a large number of shares or the shares issued pursuant to such warrants may be sold into the public market.
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Lock-up and Market Standoff Agreements
We and all of our directors, executive officers, and certain other record holders that together represent approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock are subject to lock-up agreements with the underwriters or market standoff agreements with us for the benefit of the underwriters agreeing that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, in accordance with the terms of such agreements, during the period ending on the later of (i) the opening of trading on the second trading day immediately following our public release of earnings for the second quarter following the most recent period for which financial statements are included in this prospectus and (ii) the 121st day after the date of this prospectus (assuming that as of such date we have publicly released our earnings for the second quarter following the most recent period for which financial statements are included in this prospectus) (such period, the “restricted period”):
| (1) |
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, make any short sale, or otherwise transfer or dispose of, directly or indirectly, any shares of our Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock; |
| (2) |
enter into any swap, hedging transaction, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A common stock, whether any such transaction described above is to be settled by delivery of our Class A common stock or such other securities, in cash or otherwise; or |
| (3) |
publicly disclose the intention to take any of the actions restricted by clause (1) or (2) above. |
In addition to the above, an additional approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock is subject to market standoff provisions applicable to equity awards issued under our equity incentive plans that restrict the holders of such securities from taking any of the actions with respect to such securities described by clause (1) above during the restricted period. As a result of the foregoing, an aggregate of approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock is subject to a lock-up agreement or market standoff provisions during the restricted period.
Notwithstanding the foregoing,
| (A) |
up to 15% of the shares of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock held by our current and former employees, consultants, and contractors (but excluding current executive officers, our Principal Accounting Officer, and directors including our founders, and any other person who is a party to our Investors’ Rights Agreement) (the “Employee Stockholders”) may be sold for a 7-trading day period beginning at the commencement of trading on the first trading day on which our common stock is traded on Nasdaq; and |
| (B) |
up to 25% of the shares of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock held by Employee Stockholders or investors who sell to the underwriters in this offering (excluding current executive officers, our Principal Accounting Officer, and directors including our founders), plus, in the case of Employee Stockholders, any first release window eligible shares held by such |
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|
|
person not sold during the first release window, may be sold beginning at the opening of trading on the second trading day immediately following our public release of earnings for the first quarter following the most recent period for which financial statements are included in this prospectus (such release, our “first post-public earnings release”), provided that the last reported closing price of our common stock on Nasdaq is at least 33% greater than the initial public offering price per share set forth on the cover page of this prospectus: |
| • |
for any 10 trading days out of the 15-consecutive full trading day period ending on the closing of the first full trading day immediately following our first post-public offering earnings release; and |
| • |
at the closing of the first full trading day immediately following our first post-public offering earnings release; |
further provided, that no sales pursuant to this clause (B) will be permitted until at least 60 days after the date of this prospectus. We refer to the period during which sales may occur pursuant to this clause (B) as the “second release window.” The lock-up agreements and market standoff agreements described above are subject to a number of exceptions, including sales of shares on the open market to cover taxes or estimated taxes due as a result of vesting or settlement of RSUs during the restricted period. See the section titled “Underwriting” for information about these exceptions and a further description of these agreements.
Upon the expiration of the restricted period, substantially all of the securities subject to such transfer restrictions will become eligible for sale, subject to the limitations discussed above.
Equity Incentive Plans
We intend to file one or more registration statements on Form S-8 under the Securities Act to register all of the shares of our Class A and Class B common stock issuable or reserved for issuance under our 2008 Plan, 2018 Plan, Hotel Tonight Plan, 2020 Plan, and ESPP. Shares covered by such registration statement will be eligible for sale in the public market, subject to the Rule 144 limitations and vesting restrictions.
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Material U.S. Federal Income Tax Consequences to Non-U.S. Holders
The following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) of the purchase, ownership and disposition of our Class A common stock, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the purchase, ownership, and disposition of our Class A common stock.
This discussion is limited to Non-U.S. Holders that hold our Class A common stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Non-U.S. Holder’s particular circumstances, including the impact of the Medicare contribution tax on net investment income or the alternative minimum tax. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:
| • |
U.S. expatriates and former citizens or long-term residents of the United States; |
| • |
persons holding our Class A common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
| • |
banks, insurance companies, and other financial institutions; |
| • |
brokers, dealers, or traders in securities; |
| • |
“controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
| • |
partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
| • |
tax-exempt organizations or governmental organizations; |
| • |
persons deemed to sell our Class A common stock under the constructive sale provisions of the Code; |
| • |
persons who hold or receive our Class A common stock pursuant to the exercise of any employee stock option or otherwise as compensation; |
| • |
tax-qualified retirement plans; |
| • |
“qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds; and |
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| • |
persons subject to special tax accounting rules as a result of any item of gross income with respect to our Class A common stock being taken into account in an applicable financial statement. |
If an entity treated as a partnership for U.S. federal income tax purposes holds our Class A common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership and certain determinations made at the partner level. Accordingly, partnerships holding our Class A common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THIS DISCUSSION IS NOT TAX ADVICE.
Definition of Non-U.S. Holder
For purposes of this discussion, a “Non-U.S. Holder” is any beneficial owner of our Class A common stock that is neither a “U.S. person” nor an entity treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:
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an individual who is a citizen or resident of the United States; |
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a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
| • |
an estate, the income of which is subject to U.S. federal income tax regardless of its source; or |
| • |
a trust that (i) is subject to the primary supervision of a U.S. court and all substantial decisions of which are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes. |
Distributions
As described in the section titled “Dividend Policy,” we do not anticipate declaring or paying any cash dividends in the foreseeable future. However, if we do make distributions of cash or property on our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder’s adjusted tax basis in its Class A common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under the subsection titled “ — Sale or Other Taxable Disposition.”
Subject to the discussion below on effectively connected income, dividends paid to a Non-U.S. Holder will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies
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for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable tax treaties.
If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States.
Any such effectively connected dividends will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected dividends, as adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Sale or Other Taxable Disposition
Subject to the discussion below regarding backup withholding, a Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our Class A common stock unless:
| • |
the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable); |
| • |
the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or |
| • |
our Class A common stock constitutes a U.S. real property interest (“USRPI”), by reason of our status as a U.S. real property holding corporation (“USRPHC”), for U.S. federal income tax purposes. |
Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.
A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on any gain realized upon the sale or other taxable disposition, which may be offset by certain U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.
With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable
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disposition of our Class A common stock by a Non-U.S. Holder will not be subject to U.S. federal income tax if our Class A common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, and such Non-U.S. Holder owned, actually and constructively, 5% or less of our Class A common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder’s holding period.
Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
Payments of dividends on our Class A common stock will not be subject to backup withholding, provided the Non-U.S. Holder certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E, or W-8ECI, or otherwise establishes an exemption. However, information returns are required to be filed with the IRS in connection with any distributions on our Class A common stock paid to the Non-U.S. Holder, regardless of whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our Class A common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above or the Non-U.S. Holder otherwise establishes an exemption. Proceeds of a disposition of our Class A common stock conducted through a non-U.S. office of a non-U.S. broker that does not have certain enumerated relationships with the United States generally will not be subject to backup withholding or information reporting.
Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Additional Withholding Tax on Payments Made to Foreign Accounts
Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act (“FATCA”)) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our Class A common stock paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code), unless (i) the foreign financial institution undertakes certain diligence and reporting obligations, (ii) the non-financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (i) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
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Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our Class A common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock on or after January 1, 2019, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.
 The underwriters are offering the shares of Class A common stock subject to their acceptance of the shares from us and the selling stockholders and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of Class A common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of Class A common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ option to purchase additional shares described below.
The underwriters initially propose to offer part of the shares of Class A common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the initial offering of the shares of Class A common stock, the offering price and other selling terms may from time to time be varied by the representatives.
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional shares of Class A common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of Class A common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of Class A common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of Class A common stock listed next to the names of all underwriters in the preceding table.
The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of Class A common stock.
| Total | ||||||||||||||||
| Per Share |
No Exercise |
Full Exercise |
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| Public offering price |
$ |
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$ | $ | ||||||||||
| Underwriting discounts and commissions to be paid by |
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| Us |
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| Selling stockholders |
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| Proceeds, before expenses, to us |
$ |
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$ | $ | ||||||||||
| Proceeds, before expenses, to selling stockholders |
$ |
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|
|
$ | $ |
The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ . We have agreed to reimburse the underwriters for expense relating to clearance of this offering with the Financial Industry Regulatory Authority up to $ .
The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of Class A common stock offered by them.
We have applied to list our Class A common stock on the Nasdaq Global Select Market under the trading symbol “ABNB.”
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We and all of our directors, executive officers, and certain other record holders that together represent approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock are subject to lock-up agreements with the underwriters or market standoff agreements with us for the benefit of the underwriters agreeing that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, in accordance with the terms of such agreements, during the period ending on the later of (i) the opening of trading on the second trading day immediately following our public release of earnings for the second quarter following the most recent period for which financial statements are included in this prospectus and (ii) the 121st day after the date of this prospectus (assuming that as of such date we have publicly released our earnings for the second quarter following the most recent period for which financial statements are included in this prospectus) (such period, the “restricted period”):
| (1) |
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, make any short sale, or otherwise transfer or dispose of, directly or indirectly, any shares of our Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock; |
| (2) |
enter into any swap, hedging transaction, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A common stock; or |
| (3) |
publicly disclose the intention to take any of the actions restricted by clause (1) or (2) above; |
whether any such transaction described above is to be settled by delivery of our Class A common stock or such other securities, in cash or otherwise. In addition to the above, an additional approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock is subject to market standoff provisions applicable to equity awards issued under our equity incentive plans that restrict the holders of such securities from taking any of the actions with respect to such securities described by clause (1) above during the restricted period. As a result of the foregoing, an aggregate of approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock is subject to a lock-up agreement or market standoff provisions during the restricted period.
Notwithstanding the foregoing,
| (A) |
up to 15% of the shares of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock held by our current and former employees, consultants, and contractors (but excluding current executive officers, our Principal Accounting Officer, and directors including our founders, and any other person who is a party to our Investors’ Rights Agreement) (the “Employee Stockholders”) may be sold for a 7-trading day period beginning at the commencement of trading on the first trading day on which our common stock is traded on Nasdaq, a period we refer to as the “first release window.” For the purposes of the first release window, the number of shares of Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock that each Employee Stockholder is permitted to sell is based on the number of securities held by such person on November 30, 2020, before giving effect to any sales to the underwriters in this offering, including all such securities held by such persons for which all |
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| vesting conditions, except a liquidity-based vesting condition, were met as of November 30, 2020. We refer to the shares that may be sold by Employee Stockholders during this first release window as the “first release window eligible shares;” and |
| (B) |
up to 25% of the shares of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock held by Employee Stockholders or investors who sell to the underwriters in this offering (excluding current executive officers, our Principal Accounting Officer, and directors including our founders), plus, in the case of Employee Stockholders, any first release window eligible shares held by such person not sold during the first release window, may be sold beginning at the opening of trading on the second trading day immediately following our public release of earnings for the first quarter following the most recent period for which financial statements are included in this prospectus (such release, our “first post-public earnings release”), provided that the last reported closing price of our common stock on Nasdaq is at least 33% greater than the initial public offering price per share set forth on the cover page of this prospectus: |
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for any 10 trading days out of the 15-consecutive full trading day period ending on the closing of the first full trading day immediately following our first post-public offering earnings release; and |
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at the closing of the first full trading day immediately following our first post-public offering earnings release; |
further provided, that no sales pursuant to this clause (B) will be permitted until at least 60 days after the date of this prospectus. We refer to the period during which sales may occur pursuant to this clause (B) as the “second release window.” During the second release window, in addition to any first release window eligible shares held by an Employee Stockholder not sold during the first release window, the number of shares of Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock that each Employee Stockholder is permitted to sell is based on the number of such securities held by such person on November 30, 2020, before giving effect to any sales to the underwriters in this offering, plus any such securities held by such person that have vested between such date and February 25, 2021. See the section titled “Shares Eligible for Future Sale” for information about the number of shares of our Class A common stock, excluding shares sold in this offering, that may be eligible for sale during first release window and the second release window.
No person who has the right to require us to register shares of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock under the Securities Act may make any demand for, or exercise any right with respect to, the registration of such securities before the 180th day after the date of this prospectus, other than with respect to certain registrations that we may initiate.
We have a large number of equityholders and such equityholders have acquired their interests over an extended period of time and pursuant to a number of different agreements imposing market standoff provisions. Record holders of approximately % of our outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock (including our founders) are parties to our Investors’ Rights Agreement (as defined elsewhere in this prospectus) and are subject to the market standoff provisions described above under the terms of that agreement. Securities issued pursuant to one of our equity incentive plans are subject to our standard forms of option exercise agreements and RSU agreements, which impose the market standoff provisions applicable to equity awards described above. We have agreed to enforce all such market standoff
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restrictions on behalf of the underwriters and not to amend or waive any such market standoff provisions during the restricted period without the prior consent of Morgan Stanley & Co. LLC on behalf of the underwriters.
The restrictions set forth above, including those that restrict hedging, became effective for all persons subject to market standoff provisions pursuant to our Investors’ Rights Agreement beginning on , 2020. Restrictions with respect to other persons who entered into lock-up agreements with the underwriters became effective on the date such agreements were signed. Securities issued pursuant to our equity incentive plans to persons who are not parties to the Investors’ Rights Agreement or who have otherwise executed a lock-up agreement with the underwriters are subject to the applicable market standoff provisions beginning as of the effective date of the registration statement of which this prospectus is a part.
The restrictions on our executive officers, directors, and other record holders set forth above are subject to certain exceptions, including with respect to (i) the sale of our Class A common stock to the underwriters pursuant to the underwriting agreement; (ii) Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock acquired in this offering or in open market transactions after the closing of this offering; (iii) transfers of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock as bona fide gifts (including any pledge or similar commitment to donate such securities or the proceeds from the sale of securities), by will, to an immediate family member, or to certain trusts, provided that the transferee enters into a lock-up agreement with the underwriters; (iv) distributions of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock to another corporation, partnership, limited liability company, trust, or other business entity that is an affiliate, or to an investment fund or other entity controlled or managed by an affiliate, or to the stockholders, current or former partners, members, beneficiaries, or other equity holders, or to their estates, provided that the distributee enters into a lock-up agreement with the underwriters; (v) the exercise of options, settlement of RSUs, or other equity awards, or the exercise of warrants outstanding as of the date of this prospectus and disclosed in this prospectus, provided that any Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock received upon such exercise or settlement would be subject to the restrictions set forth above; (vi) transfers of Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock to us for the net exercise of options, settlement of RSUs or warrants, or to cover tax withholding; (vii) the establishment by such holders of trading plans under Rule 10b5-1 under the Exchange Act, provided that such plans do not provide for the transfer of Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock during the restricted period (except as permitted by clause (x)); (viii) transfers of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock that occur by operation of law pursuant to a qualified domestic order; (ix) the conversion of our outstanding preferred stock, warrants to purchase preferred stock into shares of our Class A common stock, or warrants to purchase our Class A common stock prior to of in connection with this offering, or the conversion of shares of any class of our common stock into Class A common stock, provided that any such shares of Class A common stock or warrants received upon such conversion will be subject to the restrictions set forth above; (x) in the case of Employee Stockholders, sales in open market transactions (including sales pursuant to a trading plan under Rule 10b5-1 under the Exchange Act) during the restricted period to generate net proceeds up to the total amount of taxes or estimated taxes that become due as a result of the vesting or settlement of equity awards issued pursuant to a plan or arrangement described in this prospectus that are scheduled to vest or settle immediately prior to or during the restricted period;
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(xi) transfers of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock in connection with a bona fide third-party tender offer, merger, consolidation, or other similar transaction involving a change of control that is approved by our board of directors, provided that if such transaction is not completed, all such securities would remain subject to the restrictions set forth above; (xii) transfers of our Class A common stock or any securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock to us pursuant to any right to repurchase or any right of first refusal we may have over such securities; and (xiii) the conversion of warrants to purchase shares of Class A common stock that are outstanding as of the date of this prospectus into Class A common stock prior to, or in connection with, this offering, provided that the Class A common stock received upon such conversion is subject to the restrictions set forth above.
Morgan Stanley & Co. LLC, in its sole discretion, may release the securities subject to the lock-up agreements with the underwriters or the market standoff agreements with us described above in whole or in part at any time. Morgan Stanley & Co. LLC has agreed that in the event it grants an early release or discretionary waiver of the above restrictions with respect to any Class A common stock or any securities convertible into or exercisable or exchangeable for shares of our Class A common stock having an aggregate value in excess of $1.0 million to a stockholder party to the Investors’ Rights Agreement, then it will provide a pro rata release or waiver to such restrictions to each other stockholder party to the Investors’ Rights Agreement.
Record holders of our securities are typically the parties to the lock-up agreements with the underwriters and the market standoff agreements with us referred to above, while holders of beneficial interests in our shares who are not also record holders in respect of such shares are not typically subject to any such agreements or other similar restrictions. Accordingly, we believe that holders of beneficial interests who are not record holders and are not bound by market standoff or lock-up agreements could enter into transactions with respect to those beneficial interests that negatively impact our stock price. In addition, an equityholder who is neither subject to a market standoff agreement with us nor a lock-up agreement with the underwriters may be able to sell, short sell, transfer, hedge, pledge, or otherwise dispose of or attempt to sell, short sell, transfer, hedge, pledge, or otherwise dispose of their equity interests at any time.
In order to facilitate the offering of the Class A common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the option to purchase additional shares. The underwriters can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares. The underwriters may also sell shares in excess of the option to purchase additional shares, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of Class A common stock in the open market to stabilize the price of the Class A common stock. These activities may raise or maintain the market price of the Class A common stock above independent market levels or prevent or retard a decline in the market price
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of the Class A common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.
We, the selling stockholders, and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of Class A common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging. financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. Certain of the underwriters or their respective affiliates were lenders under our Credit Facility and served as financial advisors to us in connection with our First Lien Loan and Second Lien Loan.
In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.
Pricing of the Offering
Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.
Directed Share Program
At our request, the underwriters have reserved up to shares of Class A common stock, or % of the shares offered by this prospectus, for sale at the initial public offering price through a directed share program to:
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eligible U.S. hosts who hosted on our platform in 2019 or 2020; and |
| • |
certain individuals identified by our officers and directors. |
Hosts who reside in the United States and had, by November 1, 2020, accepted a reservation that began, or was scheduled to begin, in 2019 or 2020 are potentially eligible for the program. Airbnb employees are
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not eligible. If demand for the program exceeds capacity, we may invite hosts to participate based on tenure, as determined by the year they first hosted on Airbnb.
If purchased by these persons, these shares will be subject to the terms of any lock-up agreements, except in the case of shares purchased by hosts, which will not be subject to the terms of any lock-up agreements.
The number of shares of Class A common stock available for sale to the general public will be reduced to the extent that such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. Other than the underwriting discount described on the front cover of this prospectus, the underwriters will not be entitled to any commission with respect to shares of Class A common stock sold pursuant to the directed share program. We will agree to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with sales of the shares reserved for the directed share program. Morgan Stanley & Co. LLC will administer our directed share program.
Selling Restrictions
Australia
No placement document, prospectus, product disclosure statement, or other disclosure document has been lodged with the Australian Securities and Investments Commission (the “ASIC”) in relation to this offering. This prospectus does not constitute a prospectus, product disclosure statement, or other disclosure document under the Corporations Act 2001 (the “Corporations Act”) and does not purport to include the information required for a prospectus, product disclosure statement, or other disclosure document under the Corporations Act.
Any offer in Australia of our Class A common stock may only be made to persons, or Exempt Investors, who are “sophisticated investors” (within the meaning of section 708(8) of the Corporations Act), “professional investors” (within the meaning of section 708(11) of the Corporations Act), or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer our Class A common stock without disclosure to investors under Chapter 6D of the Corporations Act.
The Class A common stock applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of twelve months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring securities must observe such Australian on-sale restrictions.
This prospectus contains general information only and does not take account of the investment objectives, financial situation, or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.
Bermuda
The shares of Class A common stock offered by this prospectus may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non-Bermudian persons (including companies) may not carry on
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or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.
Brazil
No securities may be offered or sold in Brazil, except in circumstances that do not constitute a public offering or unauthorized distribution under Brazilian laws and regulations. The securities have not been, and will not be, registered with the Comissão de Valores Mobiliários.
British Virgin Islands
The shares of Class A common stock offered by this prospectus are not being, and may not be offered to the public or to any person in the British Virgin Islands for purchase or subscription by or on our behalf. The shares may be offered to companies incorporated under the BVI Business Companies Act, 2004 (British Virgin Islands) (each a “BVI Company”), but only where the offer will be made to, and received by, the relevant BVI Company entirely outside of the British Virgin Islands.
This prospectus has not been, and will not be, registered with the Financial Services Commission of the British Virgin Islands. No registered prospectus has been or will be prepared in respect of the shares for the purposes of the Securities and Investment Business Act, 2010 or the Public Issuers Code of the British Virgin Islands.
Canada
The shares of Class A common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of Class A common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Chile
The shares of our Class A common stock offered by this prospectus are not registered in the Securities Registry (Registro de Valores) or subject to the control of the Chilean Securities and Exchange Commission (Superintendencia de Valores y Seguros de Chile). This prospectus supplement and other offering materials relating to the offer of the shares do not constitute a public offer of, or an invitation to subscribe for or purchase, the shares in the Republic of Chile, other than to individually identified purchasers pursuant to a private offering within the meaning of Article 4 of the Chilean Securities Market Act (Ley de Mercado de Valores) (an offer that is not “addressed to the public at large or to a certain sector or specific group of the public”).
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China
This prospectus does not constitute a public offer of shares, whether by sale or subscription, in the People’s Republic of China (the “PRC”). The shares are not being offered or sold directly or indirectly in the PRC to or for the benefit of, legal or natural persons of the PRC.
Further, no legal or natural persons of the PRC may directly or indirectly purchase any of the shares of Class A common stock offered by this prospectus or any beneficial interest therein without obtaining all prior PRC’s governmental approvals that are required, whether statutorily or otherwise. Persons who come into possession of this document are required by the issuer and its representatives to observe these restrictions.
Dubai International Financial Centre
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The Class A common stock to which this prospectus relates may be illiquid or subject to restrictions on its resale. Prospective purchasers of the Class A common stock offered should conduct their own due diligence on the Class A common stock. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
European Economic Area and United Kingdom
In relation to each Member State of the European Economic Area and the United Kingdom (each, a “Relevant State”), each underwriter has represented and agreed that it has not made and will not make an offer of any of the shares of Class A common stock offered by this prospectus to the public in that Relevant State, except that it may make an offer of any Shares to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:
| (a) |
to any legal entity which is a “qualified investor” as defined in the Prospectus Regulation; |
| (b) |
to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or |
| (c) |
in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
provided that no such offer of shares of our Class A common stock will result in a requirement for us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or a supplemental prospectus pursuant to Article 23 of the Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to the shares of Class A common stock offered by this prospectus in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our Class A common stock to be offered so as to enable an investor to decide to purchase or subscribe for any of the shares of Class A common stock offered by this prospectus and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.
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France
Neither this prospectus nor any other offering material relating to the shares described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the shares has been or will be (1) released, issued, distributed or caused to be released, issued or distributed to the public in France; or (2) used in connection with any offer for subscription or sale of the shares to the public in France.
Such offers, sales and distributions will be made in France only:
| (a) | to qualified investors (investisseurs estraint) and/or to a restricted circle of investors (cercle estraint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier; |
| (b) | to investment services providers authorized to engage in portfolio management on behalf of third parties; or |
| (c) | in a transaction that, in accordance with article L.411-2-II-1° -or-2° -or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Réglement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public á l’épargne). |
The shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.
Hong Kong
Shares of our Class A common stock may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation, or document relating to shares of our Class A common stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares of our Class A common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Japan
No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), or the FIEL, has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of Class A common stock.
Accordingly, the shares of Class A common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan
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(which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.
For Qualified Institutional Investors (“QII”)
Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Class A common stock constitutes either a “QII only private placement” or a “QII only secondary distribution” (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Class A common stock. The shares of Class A common stock may only be transferred to QIIs.
For Non-QII Investors
Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of Class A common stock constitutes either a “small number private placement” or a “small number private secondary distribution” (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of Class A common stock. The shares of Class A common stock may only be transferred en bloc without subdivision to a single investor.
Korea
The shares of Class A common stock offered by this prospectus have not been and will not be registered under the Financial Investments Services and Capital Markets Act of Korea and the decrees and regulations thereunder (the “FSCMA”), and the shares have been and will be offered in Korea as a private placement under the FSCMA. None of the shares may be offered, sold or delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the FSCMA and the Foreign Exchange Transaction Law of Korea and the decrees and regulations thereunder (the “FETL”). Furthermore, the purchaser of the shares will comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with the purchase of the shares. By the purchase of the shares, the relevant holder thereof will be deemed to represent and warrant that if it is in Korea or is a resident of Korea, it purchased the shares pursuant to the applicable laws and regulations of Korea.
Kuwait
Unless all necessary approvals from the Kuwait Capital Markets Authority pursuant to Law No. 7/2010, its Executive Regulations, and the various Resolutions and Announcements issued pursuant thereto or in connection therewith have been given in relation to the marketing of and sale of the Shares, these may not be offered for sale, nor sold in the State of Kuwait (“Kuwait”). Neither this prospectus nor any of the information contained herein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait. With regard to the contents of this document we recommend that you consult a licensee as per the law and specialized in giving advice about the purchase of shares and other securities before making the subscription decision.
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Malaysia
No prospectus or other offering material or document in connection with the offer and sale of the shares of Class A common stock offered by this prospectus has been or will be registered with the Securities Commission of Malaysia (“Commission”) for the Commission’s approval pursuant to the Capital Markets and Services Act 2007. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Malaysia other than (i) a closed end fund approved by the Commission; (ii) a holder of a Capital Markets Services License; (iii) a person who acquires the shares, as principal, if the offer is on terms that the shares may only be acquired at a consideration of not less than RM250,000 (or its equivalent in foreign currencies) for each transaction; (iv) an individual whose total net personal assets or total net joint assets with his or her spouse exceeds RM3 million (or its equivalent in foreign currencies), excluding the value of the primary residence of the individual; (v) an individual who has a gross annual income exceeding RM300,000 (or its equivalent in foreign currencies) per annum in the preceding twelve months; (vi) an individual who, jointly with his or her spouse, has a gross annual income of RM400,000 (or its equivalent in foreign currencies), per annum in the preceding twelve months; (vii) a corporation with total net assets exceeding RM10 million (or its equivalent in a foreign currencies) based on the last audited accounts; (viii) a partnership with total net assets exceeding RM10 million (or its equivalent in foreign currencies); (ix) a bank licensee or insurance licensee as defined in the Labuan Financial Services and Securities Act 2010; (x) an Islamic bank licensee or takaful licensee as defined in the Labuan Financial Services and Securities Act 2010; and (xi) any other person as may be specified by the Commission; provided that, in the each of the preceding categories (i) to (xi), the distribution of the shares is made by a holder of a Capital Markets Services License who carries on the business of dealing in securities. The distribution in Malaysia of this prospectus is subject to Malaysian laws. This prospectus does not constitute and may not be used for the purpose of public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Commission under the Capital Markets and Services Act 2007.
Saudi Arabia
This document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the board of the Saudi Arabian Capital Market Authority (“CMA”) pursuant to resolution number 2-11-2004 dated 4 October 2004 as amended by resolution number 1-28-2008, as amended. The CMA does not make any representation as to the accuracy or completeness of this document and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorized financial adviser.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares of our Class A common stock may not be circulated or distributed, nor may the shares of our Class A common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”) (ii) to a relevant person, or any person pursuant to Section 275(1A), and in
345
accordance with the conditions, specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where shares of our Class A common stock are subscribed or purchased under Section 275 by a relevant person which is: (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest in that trust will not be transferable for six months after that corporation or that trust has acquired shares of our Class A common stock under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.
South Africa
Due to restrictions under the securities laws of South Africa, the shares are not offered, and the offer will not be transferred, sold, renounced or delivered, in South Africa or to a person with an address in South Africa, unless one or other of the following exemptions applies:
| (a) |
the offer, transfer, sale, renunciation or delivery is to: |
| (i) |
persons whose ordinary business is to deal in securities, as principal or agent; |
| (ii) |
the South African Public Investment Corporation; |
| (iii) |
persons or entities regulated by the Reverse Bank of South Africa; |
| (iv) |
authorized financial service providers under South African law; |
| (v) |
financial institutions recognized as such under South African law; |
| (vi) |
a wholly-owned subsidiary of any person or entity contemplated in (iii), (iv) or (v), acting as agent in the capacity of an authorized portfolio manager for a pension fund or collective investment scheme (in each case duly registered as such under South African law); or |
| (vii) |
any combination of the person in (i) to (vi); or |
| (b) |
the total contemplated acquisition cost of the securities, for any single addressee acting as principal is equal to or greater than ZAR1,000,000. |
No “offer to the public” (as such term is defined in the South African Companies Act, No. 71 of 2008 (as amended or re-enacted) (the “South African Companies Act”)) in South Africa is being made in connection with the issue of the shares. Accordingly, this document does not, nor is it intended to, constitute a “registered prospectus” (as that term is defined in the South African Companies Act) prepared and registered under the South African Companies Act and has not been approved by, and/or filed with, the South African Companies and Intellectual Property Commission or any other regulatory authority in South Africa. Any issue or offering of the shares in South Africa constitutes an offer of the shares in South Africa for subscription or sale in South Africa only to persons who fall within the exemption from “offers to the public” set out in Section 96(1)(a) of the South African Companies Act. Accordingly, this document must not be acted on or relied on by persons in South Africa who do not fall within Section 96(1)(a) of the South African Companies Act (such persons being referred to as “SA Relevant Persons”). Any investment or
346
investment activity to which this document relates is available in South Africa only to SA Relevant Persons and will be engaged in South Africa only with SA Relevant Persons.
Switzerland
We have not and will not register with the Swiss Financial Market Supervisory Authority (the “FINMA”) as a foreign collective investment scheme pursuant to Article 119 of the Federal Act on Collective Investment Scheme of 23 June 2006, as amended (CISA) and accordingly the securities being offered pursuant to this prospectus have not and will not be approved, and may not be licensable, with FINMA. Therefore, the securities have not been authorized for distribution by FINMA as a foreign collective investment scheme pursuant to Article 119 CISA and the securities offered hereby may not be offered to the public (as this term is defined in Article 3 CISA) in or from Switzerland. The securities may solely be offered to “qualified investors,” as this term is defined in Article 10 CISA, and in the circumstances set out in Article 3 of the Ordinance on Collective Investment Scheme of 22 November 2006, as amended (the “CISO”) such that there is no public offer. Investors, however, do not benefit from protection under CISA or CISO or supervision by FINMA. This prospectus and any other materials relating to the securities are strictly personal and confidential to each offeree and do not constitute an offer to any other person. This prospectus may only be used by those qualified investors to whom it has been handed out in connection with the offer described herein and may neither directly or indirectly be distributed or made available to any person or entity other than its recipients. It may not be used in connection with any other offer and will in particular not be copied or distributed to the public in Switzerland or from Switzerland. This prospectus does not constitute an issue prospectus as that term is understood pursuant to Article 652a or 1156 of the Swiss Federal Code of Obligations. We have not applied for a listing of the securities on the SIX Swiss Exchange or any other regulated securities market in Switzerland, and consequently, the information presented in this prospectus does not necessarily comply with the information standards set out in the listing rules of the SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange.
Taiwan
The shares of Class A common stock offered by this prospectus have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be sold, issued or offered within Taiwan through a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Act of Taiwan that requires a registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the shares in Taiwan.
United Arab Emirates
The shares of Class A common stock offered by this prospectus have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates (including the Dubai International Financial Centre) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Financial Centre) governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including the Dubai International Financial Centre) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority.
347
United Kingdom
Each underwriter has represented and agreed that:
| (a) |
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the “FSMA”) received by it in connection with the issue or sale of the shares of our Class A common stock in circumstances in which Section 21(1) of the FSMA is complied with or does not apply; and |
| (b) |
it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our Class A common stock in, from or otherwise involving the United Kingdom. |
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The validity of the shares of Class A common stock offered hereby will be passed upon for us by Latham & Watkins LLP, Menlo Park, California. Simpson Thacher & Bartlett LLP, Palo Alto, California, has acted as counsel for the underwriters in connection with certain legal matters related to this offering.
The financial statements as of December 31, 2018 and 2019 and for the years ended December 31, 2017, 2018, and 2019 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP (“PwC”), an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
In connection with this offering, PwC completed an independence assessment to evaluate the services and relationships with the Company and its affiliates that may bear on PwC’s independence under the SEC and the PCAOB (United States) independence rules for an audit period commencing January 1, 2017. A relationship, described below, was found to exist within the audit period, which is not in accordance with the auditor independence standards of Regulation S-X and the Public Company Accounting Oversight Board.
| • |
Commencing in September 2017 and continuing through December 2018, an employee of a member firm within PricewaterhouseCoopers International Limited (“PwC member firm”) performed permissible tax consulting services for a subsidiary of Airbnb, Inc. During the same period, the PwC member firm employee’s spouse was in an accounting role at the subsidiary. |
PwC noted the PwC member firm employee did not participate in the audits of the Company’s financial statements and the tax consulting services were unrelated to the audits. The filing of the registration statement of which this prospectus is a part necessitates compliance with the SEC’s and PCAOB’s auditor independence rules. After consideration of the relevant facts and circumstances, management, our Audit Committee, and PwC have concluded that PwC is capable of exercising objective and impartial judgment in connection with their audits of the Company’s financial statements for each of the years ended December 31, 2017 and 2018 and that no reasonable investor would conclude otherwise.
Where You Can Find Additional Information
We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act, with respect to the shares of Class A common stock being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and our Class A common stock, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.
349
You may read our SEC filings, including this registration statement, over the Internet at the SEC’s website at www.sec.gov. Upon the completion of this offering, we will be subject to the information reporting requirements of the Exchange Act and we will file reports, proxy statements, and other information with the SEC. These reports, proxy statements, and other information will be available for review at the SEC’s website referred to above. We also maintain a website at www.airbnb.com, at which, following the completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus, and the inclusion of our website address in this prospectus is an inactive textual reference only. Investors should not rely on any such information in deciding whether to purchase our Class A common stock.
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Index to Consolidated Financial Statements
| Page | ||||
| F-2 | ||||
| Consolidated Financial Statements |
||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit |
F-6 | |||
| F-8 | ||||
| F-10 | ||||
| Financial Statement Schedule |
||||
| F-74 |
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Airbnb, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Airbnb, Inc. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, of comprehensive loss, of redeemable convertible preferred stock and stockholders’ deficit, and of cash flows for each of the three years in the period ended December 31, 2019, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019 in conformity with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
March 3, 2020, except for the effects of disclosing net loss per share information discussed in Notes 2 and 15 to the consolidated financial statements, the segment information discussed in Notes 2 and 18, and the financial statement schedule, as to which the date is August 19, 2020, and except for the effects of the stock split discussed in Note 2 to the consolidated financial statements, as to which the date is October 26, 2020
We have served as the Company’s auditor since 2011.
F-2
Consolidated Balance Sheets
(in thousands, except share and per share data)
| As of December 31, | As of September |
Pro Forma as of September 30, 2020 |
||||||||||||||
| 2018 | 2019 | |||||||||||||||
| (unaudited) | ||||||||||||||||
| Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Cash and cash equivalents |
$ | 2,140,877 | $ | 2,013,547 | $ | 2,664,390 |
|
|
| |||||||
| Marketable securities |
1,188,431 | 1,060,726 | 1,830,821 |
|
|
| ||||||||||
| Restricted cash |
— | 115 | 55,628 |
|
|
| ||||||||||
| Funds receivable and amounts held on behalf of customers |
2,305,011 | 3,145,457 | 2,354,450 |
|
|
| ||||||||||
| Prepaids and other current assets (including customer receivables of $80,755, $129,474, and $184,838, net of allowance of $25,966, $51,311, and $76,171, respectively) |
240,213 | 341,598 | 306,919 |
|
|
| ||||||||||
| Total current assets |
5,874,532 | 6,561,443 | 7,212,208 |
|
|
| ||||||||||
| Property and equipment, net |
309,408 | 301,273 | 261,232 |
|
|
| ||||||||||
| Operating lease right-of-use assets |
— | 385,594 | 354,461 |
|
|
| ||||||||||
| Intangible assets, net |
28,756 | 102,912 | 74,567 |
|
|
| ||||||||||
| Goodwill |
289,861 | 652,088 | 653,766 |
|
|
| ||||||||||
| Other assets, noncurrent |
110,532 | 306,809 | 172,245 |
|
|
| ||||||||||
| Total assets |
$ | 6,613,089 | $ | 8,310,119 | $ | 8,728,479 |
|
|
| |||||||
| Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Accounts payable |
$ | 70,630 | $ | 151,417 | $ | 45,972 |
|
|
| |||||||
| Operating lease liabilities, current |
— | 38,022 | 62,711 |
|
|
| ||||||||||
| Accrued expenses and other current liabilities |
864,130 | 1,224,080 | 1,461,151 |
|
|
| ||||||||||
| Funds payable and amounts payable to customers |
2,305,011 | 3,145,457 | 2,354,450 |
|
|
| ||||||||||
| Unearned fees |
496,239 | 674,788 | 459,772 |
|
|
| ||||||||||
| Total current liabilities |
3,736,010 | 5,233,764 | 4,384,056 |
|
|
| ||||||||||
| Long-term debt, net of current portion |
— | — | 1,811,302 |
|
|
| ||||||||||
| Operating lease liabilities, noncurrent |
— | 381,374 | 380,079 |
|
|
| ||||||||||
| Other liabilities, noncurrent |
162,885 | 271,164 | 297,824 |
|
|
| ||||||||||
| Total liabilities |
3,898,895 | 5,886,302 | 6,873,261 |
|
|
| ||||||||||
| Commitments and contingencies (Note 13) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Redeemable convertible preferred stock, $0.0001 par value, 247,217,042 shares authorized as of December 31, 2018 and 2019 and September 30, 2020 (unaudited); 239,623,894 shares issued and outstanding as of December 31, 2018 and 2019 and September 30, 2020 (unaudited); aggregate liquidation preference of $3,250,665 as of December 31, 2018 and 2019 and September 30, 2020 (unaudited); no shares issued and outstanding as of September 30, 2020, pro forma (unaudited) |
3,231,502 | 3,231,502 | 3,231,502 |
|
|
| ||||||||||
| Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Common stock, $0.0001 par value, 710,000,000 shares of Class A common stock authorized as of December 31, 2018 and 2019 and September 30, 2020 (unaudited); 11,514,764, 16,284,068, and 17,455,568 shares of Class A common stock issued and outstanding as of December 31, 2018 and 2019 and September 30, 2020 (unaudited), respectively; shares of Class A common stock issued and outstanding as of September 30, 2020, pro forma (unaudited); 710,000,000 shares of Class B common stock authorized as of December 31, 2018 and 2019 and September 30, 2020 (unaudited); 246,577,028, 247,530,250, and 249,978,646 shares of Class B common stock issued and outstanding as of December 31, 2018 and 2019 and September 30, 2020 (unaudited), respectively; shares of Class B common stock issued and outstanding as of September 30, 2020, pro forma (unaudited) |
26 | 26 | 26 |
|
|
| ||||||||||
| Additional paid-in capital |
259,466 | 617,690 | 744,413 |
|
|
| ||||||||||
| Accumulated other comprehensive loss |
(7,912 | ) | (4,410 | ) | (2,867 | ) |
|
|
| |||||||
| Accumulated deficit |
(768,888 | ) | (1,420,991 | ) | (2,117,856 | ) |
|
|
| |||||||
| Total stockholders’ equity (deficit) |
(517,308 | ) | (807,685 | ) | (1,376,284 | ) |
|
|
| |||||||
| Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit) |
$ | 6,613,089 | $ | 8,310,119 | $ | 8,728,479 |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Consolidated Statements of Operations
(in thousands, except per share amounts)
| Year Ended December 31, | Nine Months Ended September 30, |
|||||||||||||||||||
| 2017 |
2018 |
2019 |
2019 |
2020 |
||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Revenue |
$ | 2,561,721 | $ | 3,651,985 | $ | 4,805,239 | $ | 3,698,443 | $ | 2,518,935 | ||||||||||
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Cost of revenue |
647,690 | 864,032 | 1,196,313 | 902,695 | 666,295 | |||||||||||||||
| Operations and support |
395,739 | 609,202 | 815,074 | 600,788 | 548,369 | |||||||||||||||
| Product development |
400,749 | 579,193 | 976,695 | 693,796 | 690,677 | |||||||||||||||
| Sales and marketing |
871,749 | 1,101,327 | 1,621,519 | 1,184,506 | 545,510 | |||||||||||||||
| General and administrative |
327,156 | 479,487 | 697,181 | 490,262 | 421,082 | |||||||||||||||
| Restructuring charges |
— | — | — | — | 136,969 | |||||||||||||||
| Total costs and expenses |
2,643,083 | 3,633,241 | 5,306,782 | 3,872,047 | 3,008,902 | |||||||||||||||
| Income (loss) from operations |
(81,362 | ) | 18,744 | (501,543 | ) | (173,604 | ) | (489,967 | ) | |||||||||||
| Interest income |
32,102 | 66,793 | 85,902 | 68,661 | 23,830 | |||||||||||||||
| Interest expense |
(16,403 | ) | (26,143 | ) | (9,968 | ) | (6,801 | ) | (107,548 | ) | ||||||||||
| Other income (expense), net |
6,564 | (12,361 | ) | 13,906 | 42,130 | (115,751 | ) | |||||||||||||
| Income (loss) before income taxes |
(59,099 | ) | 47,033 | (411,703 | ) | (69,614 | ) | (689,436 | ) | |||||||||||
| Provision for income taxes |
10,947 | 63,893 | 262,636 | 253,187 | 7,429 | |||||||||||||||
| Net loss |
$ | (70,046 | ) | $ | (16,860 | ) | $ | (674,339 | ) | $ | (322,801 | ) | $ | (696,865 | ) | |||||
| Net loss per share attributable to Class A and Class B common stockholders, basic and diluted |
$ | (0.27 | ) | $ | (0.07 | ) | $ | (2.59 | ) | $ | (1.24 | ) | $ | (2.64 | ) | |||||
| Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted |
255,006 | 256,326 | 260,556 | 259,946 | 263,726 | |||||||||||||||
| Pro forma net loss per share attributable to Class A and Class B common stockholders, basic and diluted (unaudited) |
|
|
|
|
|
|
$ |
|
|
|
$ | |||||||||
| Weighted-average shares used in computing pro forma net loss per share attributable to Class A and Class B common stockholders, basic and diluted (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Consolidated Statements of Comprehensive Loss
(in thousands)
| Year Ended December 31, | Nine Months Ended September 30, |
|||||||||||||||||||
| 2017 | 2018 | 2019 | 2019 | 2020 | ||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Net loss |
$ | (70,046 | ) | $ | (16,860 | ) | $ | (674,339 | ) | $ | (322,801 | ) | $ | (696,865 | ) | |||||
| Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
| Net unrealized gain (loss) on available-for-sale marketable securities, net of tax |
817 | (3,009 | ) | 1,493 | 1,855 | 2,935 | ||||||||||||||
| Foreign currency translation adjustments |
3,104 | (6,747 | ) | 2,009 | (1,804 | ) | (1,392 | ) | ||||||||||||
| Other comprehensive income (loss) |
3,921 | (9,756 | ) | 3,502 | 51 | 1,543 | ||||||||||||||
| Comprehensive loss |
$ | (66,125 | ) | $ | (26,616 | ) | $ | (670,837 | ) | $ | (322,750 | ) | $ | (695,322 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit
(in thousands, except share data)
| Redeemable Convertible Preferred Stock |
Common Stock | Additional Paid-In Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Deficit |
Total Stockholders’ Deficit |
|||||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2016 |
238,671,514 | $ | 3,181,637 |
|
|
|
|
|
|
253,386,696 | $ | 26 | $ | 64,492 | $ | (2,077 | ) | $ | (682,945 | ) | $ | (620,504) | ||||||||||||||||||
| Net loss |
— | — |
|
|
|
|
|
|
— | — | — | — | (70,046 | ) | (70,046) | |||||||||||||||||||||||||
| Cumulative effect from adoption of ASU 2016-16 |
— | — |
|
|
|
|
|
|
— | — | — | — | (897 | ) | (897) | |||||||||||||||||||||||||
| Foreign currency translation adjustments |
— | — |
|
|
|
|
|
|
— | — | — | 3,104 | — | 3,104 | ||||||||||||||||||||||||||
| Net unrealized gain on marketable securities |
— | — |
|
|
|
|
|
|
— | — | — | 817 | — | 817 | ||||||||||||||||||||||||||
| Issuance of Series F redeemable convertible preferred stock, net of issuance costs |
952,380 | 49,865 |
|
|
|
|
|
|
— | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for acquisition of businesses |
— | — |
|
|
|
|
|
|
1,538,754 | — | 81,087 | — | — | 81,087 | ||||||||||||||||||||||||||
| Exercise of common stock options |
— | — |
|
|
|
|
|
|
534,914 | — | 1,007 | — | — | 1,007 | ||||||||||||||||||||||||||
| Exercise of common stock warrants |
— | — |
|
|
|
|
|
|
15,576 | — | — | — | — | — | ||||||||||||||||||||||||||
| Restricted stock issued with compensation arrangements |
— | — |
|
|
|
|
|
|
1,236,788 | — | — | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation |
— | — |
|
|
|
|
|
|
— | — | 38,357 | — | — | 38,357 | ||||||||||||||||||||||||||
| Balances as of December 31, 2017 |
239,623,894 | 3,231,502 |
|
|
|
|
|
|
256,712,728 | 26 | 184,943 | 1,844 | (753,888 | ) | (567,075) | |||||||||||||||||||||||||
| Net loss |
— | — |
|
|
|
|
|
|
— | — | — | — | (16,860 | ) | (16,860) | |||||||||||||||||||||||||
| Cumulative effect from adoption of ASU 2016-01 |
— | — |
|
|
|
|
|
|
— | — | — | (1,860 | ) | 1,860 | — | |||||||||||||||||||||||||
| Foreign currency translation adjustments |
— | — |
|
|
|
|
|
|
— | — | — | (6,747 | ) | — | (6,747) | |||||||||||||||||||||||||
| Net unrealized loss on marketable securities |
— | — |
|
|
|
|
|
|
— | — | — | (1,149 | ) | — | (1,149) | |||||||||||||||||||||||||
| Issuance of common stock for acquisition of businesses |
— | — |
|
|
|
|
|
|
76,578 | — | 4,587 | — | — | 4,587 | ||||||||||||||||||||||||||
| Exercise of common stock options |
— | — |
|
|
|
|
|
|
1,142,018 | — | 16,043 | — | — | 16,043 | ||||||||||||||||||||||||||
| Exercise of common stock warrants |
— | — |
|
|
|
|
|
|
68,572 | — | — | — | — | — | ||||||||||||||||||||||||||
| Restricted stock issued with compensation arrangements |
— | — |
|
|
|
|
|
|
91,896 | — | — | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation |
— | — |
|
|
|
|
|
|
— | — | 53,893 | — | — | 53,893 | ||||||||||||||||||||||||||
| Balances as of December 31, 2018 |
239,623,894 | 3,231,502 |
|
|
|
|
|
|
258,091,792 | 26 | 259,466 | (7,912 | ) | (768,888 | ) | (517,308) | ||||||||||||||||||||||||
| Net loss |
— | — |
|
|
|
|
|
|
— | — | — | — | (674,339 | ) | (674,339) | |||||||||||||||||||||||||
| Cumulative effect from adoption of ASU 2016-02 |
— | — |
|
|
|
|
|
|
— | — | — | — | 22,236 | 22,236 | ||||||||||||||||||||||||||
| Foreign currency translation adjustments |
— | — |
|
|
|
|
|
|
— | — | — | 2,009 | — | 2,009 | ||||||||||||||||||||||||||
| Net unrealized gain on marketable securities |
— | — |
|
|
|
|
|
|
— | — | — | 1,493 | — | 1,493 | ||||||||||||||||||||||||||
| Issuance of common stock for vesting of restricted stock units |
— | — |
|
|
|
|
|
|
500 | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of common stock for acquisition of businesses |
— | — |
|
|
|
|
|
|
4,307,302 | — | 240,687 | — | — | 240,687 | ||||||||||||||||||||||||||
| Exercise of common stock options |
— | — |
|
|
|
|
|
|
898,088 | — | 5,873 | — | — | 5,873 | ||||||||||||||||||||||||||
| Exercise of common stock warrant |
— | — |
|
|
|
|
|
|
144,986 | — | — | — | — | — | ||||||||||||||||||||||||||
| Restricted stock issued with compensation arrangements |
— | — |
|
|
|
|
|
|
371,650 | — | — | — | — | — | ||||||||||||||||||||||||||
| Reclassification of derivative warrant liability to equity |
— | — |
|
|
|
|
|
|
— | — | 14,117 | — | — | 14,117 | ||||||||||||||||||||||||||
| Stock-based compensation |
— | — |
|
|
|
|
|
|
— | — | 97,547 | — | — | 97,547 | ||||||||||||||||||||||||||
| Balances as of December 31, 2019 |
239,623,894 | $ | 3,231,502 |
|
|
|
|
|
|
263,814,318 | $ | 26 | $ | 617,690 | $ | (4,410 | ) | $ | (1,420,991 | ) | $ | (807,685) |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Airbnb, Inc.
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit
(in thousands, except share data)
| Redeemable Convertible Preferred Stock |
Common Stock | Additional Capital |
Accumulated Income (Loss) |
Accumulated Deficit |
Total Deficit |
|||||||||||||||||||||||||||||||||||
|
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||
| Balances as of December 31, 2018 |
239,623,894 | $3,231,502 |
|
|
|
|
|
|
258,091,792 | $26 | $259,466 | $(7,912) | $(768,888) | $(517,308) | ||||||||||||||||||||||||||
| Net loss (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | — | (322,801) | (322,801) | ||||||||||||||||||||||||||
| Cumulative effect from adoption of ASU 2016-02 (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | — | 22,236 | 22,236 | ||||||||||||||||||||||||||
| Foreign currency translation adjustments (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | (1,804) | — | (1,804) | ||||||||||||||||||||||||||
| Net unrealized gain on marketable securities (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | 1,855 | — | 1,855 | ||||||||||||||||||||||||||
| Issuance of common stock for acquisition of businesses (unaudited) |
— | — |
|
|
|
|
|
|
4,307,302 | — | 240,687 | — | — | 240,687 | ||||||||||||||||||||||||||
| Exercise of common stock options (unaudited) |
— | — |
|
|
|
|
|
|
813,442 | — | 5,690 | — | — | 5,690 | ||||||||||||||||||||||||||
| Exercise of common stock warrants (unaudited) |
— | — |
|
|
|
|
|
|
144,986 | — | — | — | — | — | ||||||||||||||||||||||||||
| Restricted stock issued with compensation arrangements (unaudited) |
— | — |
|
|
|
|
|
|
371,650 | — | — | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation (unaudited) |
— | — |
|
|
|
|
|
|
— | — | 72,310 | — | — | 72,310 | ||||||||||||||||||||||||||
| Balances as of September 30, 2019 (unaudited) |
239,623,894 | $3,231,502 |
|
|
|
|
|
|
263,729,172 | $26 | $578,153 | $(7,861) | $(1,069,453) | $(499,135) | ||||||||||||||||||||||||||
| Balances as of December 31, 2019 |
239,623,894 | $3,231,502 |
|
|
|
|
|
|
263,814,318 | $26 | $617,690 | $(4,410) | $(1,420,991) | $(807,685) | ||||||||||||||||||||||||||
| Net loss (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | — | (696,865) | (696,865) | ||||||||||||||||||||||||||
| Foreign currency translation adjustments (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | (1,392) | — | (1,392) | ||||||||||||||||||||||||||
| Net unrealized gain on marketable securities (unaudited) |
— | — |
|
|
|
|
|
|
— | — | — | 2,935 | — | 2,935 | ||||||||||||||||||||||||||
| Capital contribution from founders (unaudited) |
— | — |
|
|
|
|
|
|
— | — | 14,615 | — | — | 14,615 | ||||||||||||||||||||||||||
| Cancellation of restricted stock awards (unaudited) |
— | — |
|
|
|
|
|
|
(21,060) | — | — | — | — | — | ||||||||||||||||||||||||||
| Issuance of restricted stock units, net of shares withheld for taxes (unaudited) |
— | — |
|
|
|
|
|
|
137,352 | — | (2,079) | — | — | (2,079) | ||||||||||||||||||||||||||
| Exercise of common stock options (unaudited) |
— | — |
|
|
|
|
|
|
3,265,848 | — | 5,411 | — | — | 5,411 | ||||||||||||||||||||||||||
| Exercise of common stock warrants (unaudited) |
— | — |
|
|
|
|
|
|
237,756 | — | — | — | — | — | ||||||||||||||||||||||||||
| Stock-based compensation (unaudited) |
— | — |
|
|
|
|
|
|
— | — | 108,776 | — | — | 108,776 | ||||||||||||||||||||||||||
| Balances as of September 30, 2020 (unaudited) |
239,623,894 | $3,231,502 |
|
|
|
|
|
|
267,434,214 | $26 | $744,413 | $(2,867) | $(2,117,856) | $(1,376,284) |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Consolidated Statements of Cash Flows
(in thousands)
| Year Ended December 31, | Nine Months Ended September 30, | |||||||||||||||||||||||
|
2017 |
2018 |
2019 |
2019 |
2020 |
||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| Cash flows from operating activities: |
||||||||||||||||||||||||
| Net loss |
$ | (70,046 | ) | $ | (16,860 | ) | $ | (674,339 | ) | $ | (322,801 | ) | $ | (696,865 | ) | |||||||||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: |
||||||||||||||||||||||||
| Depreciation and amortization |
79,342 | 82,401 | 114,162 | 76,332 | 93,438 | |||||||||||||||||||
| Bad debt expense |
30,876 | 49,028 | 77,053 | 47,865 | 85,531 | |||||||||||||||||||
| Stock-based compensation expense |
38,357 | 53,893 | 97,547 | 72,310 | 108,776 | |||||||||||||||||||
| Deferred income taxes |
(4,180 | ) | (5,017 | ) | (5,627 | ) | (5,277 | ) | 400 | |||||||||||||||
| Impairment of investments |
— | — | 27,751 | — | 82,125 | |||||||||||||||||||
| (Gain) loss on investments, net |
— | — | (38,472) | (29,133) | 26,969 | |||||||||||||||||||
| (Gain) loss on warrants, net |
(218) | 3,473 | (286) | 406 | 41,160 | |||||||||||||||||||
| Amortization (accretion) of premium (discount) on marketable securities, net |
(1,011 | ) | 2,687 | (2,043 | ) | (1,111 | ) | 546 | ||||||||||||||||
| Noncash interest (income) expense, net |
2,547 | (6,358 | ) | 4,153 | 3,383 | 17,365 | ||||||||||||||||||
| Foreign exchange (gain) loss |
(11,025 | ) | 5,964 | 2,927 | (8,346) | (63,177) | ||||||||||||||||||
| Impairment of operating lease right-of-use assets |
— | — | — | — | 25,271 | |||||||||||||||||||
| Other, net |
3,381 | 5,317 | (481 | ) | 2,397 | (6,491 | ) | |||||||||||||||||
| Changes in operating assets and liabilities, net of acquisitions: |
||||||||||||||||||||||||
| Prepaids and other assets |
(138,758 | ) | (102,808 | ) | (186,445 | ) | (155,638 | ) | (816 | ) | ||||||||||||||
| Operating lease right-of-use assets |
— | — | 49,126 | 32,127 | 5,665 | |||||||||||||||||||
| Accounts payable |
11,758 | 29,837 | 75,716 | 19,215 | (106,139) | |||||||||||||||||||
| Accrued expenses and other liabilities |
174,808 | 348,105 | 547,654 | 547,531 | 90,208 | |||||||||||||||||||
| Operating lease liabilities |
— | — | (41,923 | ) | (27,107 | ) | 20,484 | |||||||||||||||||
| Unearned fees |
135,394 | 145,895 | 176,254 | 166,948 | (215,072) | |||||||||||||||||||
| Net cash provided by (used in) operating activities |
251,225 | 595,557 | 222,727 | 419,101 | (490,622) | |||||||||||||||||||
| Cash flows from investing activities: |
||||||||||||||||||||||||
| Purchases of property and equipment |
(100,204 | ) | (90,624 | ) | (125,452 | ) | (99,278 | ) | (29,489 | ) | ||||||||||||||
| Purchases of marketable securities |
(1,040,246 | ) | (1,270,578 | ) | (1,016,155 | ) | (561,657 | ) | (1,999,663 | ) | ||||||||||||||
| Sales of marketable securities |
472,850 | 555,161 | 609,438 | 535,875 | 206,667 | |||||||||||||||||||
| Maturities of marketable securities |
55,305 | 201,310 | 551,647 | 394,396 | 1,005,881 | |||||||||||||||||||
| Payments for equity investments in privately-held companies |
(4,000 | ) | (28,850 | ) | (208,182 | ) | (160,974 | ) | — | |||||||||||||||
| Acquisitions, net of cash acquired |
(172,649 | ) | (31,300 | ) | (192,116 | ) | (192,116 | ) | — | |||||||||||||||
| Other, net |
— | (3,290 | ) | 33,665 | 33,665 | 500 | ||||||||||||||||||
| Net cash used in investing activities |
(788,944 | ) | (668,171 | ) | (347,155 | ) | (50,089 | ) | (816,104 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Airbnb, Inc.
Consolidated Statements of Cash Flows
(in thousands)