📊 Incremental Margins
With Q3 earnings nearly wrapped for the major rideshare, delivery, and travel platforms, we’re starting to see a clearer picture of who’s compounding operational leverage and who is hitting a ceiling. At the below link is one of my favorite charts that captures the state of play: EBITDA margins (as a % of GBV) versus incremental margins across the Experience & Mobility ecosystem.
Incremental margins show how much profit falls through from each new dollar of growth. Plotting that against absolute EBITDA margins gives you a quick read on who’s expanding efficiently versus who’s buying growth. Caveat that Instacart hasn’t reported yet so that’s still TTM through Q2 2025, but there’s a couple interesting takeaways:
Incremental margins for the majority of the space are super healthy
Booking.com continues to defy gravity with 5.3% TTM EBITDA margins on $185B of GBV, and still expanding. For a company that should be in harvest mode, it continues to compound like a growth stock.
Uber, Expedia Group, Instacart, Lyft, and DoorDash I would characterize as very solid. There’s a bit of reinvesting into the product at each, but incremental margins > actual margins = margin expansion which is what matters.
🏬 What is going on at Airbnb?
While they’re certainly re-investing into the product and trying to re-launch experiences and services and create a host marketplace, the incremental margins at Airbnb are horrendous and have consistently been getting worse.
And this is while the business is essentially growing in-line with peers at Expedia and Booking. It’s no wonder that the stock has been dead money with slower growth at industry average and no margin expansion:
Is the S-curve for alternative accomodations over? Are Booking and Expedia just getting better at competing for supply and customers? Is is a struggle of affordability and value for STRs versus traditional hotels? Is it lack of hyperfocus on the cost structure? It could be a bit of all of it but it’ll be interesting to see what/if Brian Chesky and the team can do over the next 12mo with experiences and services and accelerating the core alternative accomodations market.
On the Q3 2025 call, they did hint at margin expansion next year and 2025 being a heavier investment year vs 2026:
”And as we look to ‘26, we anticipate that, one, obviously, we’re scaling the revenue associated with those businesses. And while there is ongoing investment, we don’t have the same heaviness of the kind of first year launch. So you should anticipate that across experience services across hotels, across AI, we will be investing in those next year to drive growth.”
🔗 Link
https://lnkd.in/g8Cn6-Ri
