Especially as you want to sell more things beyond home. We want to have a point of sale for every single person on a trip, not just a point of sale for the booker. So this is really, really critical for us. And what we’ve seen is a major jump in the number of co-travelers that are now creating accounts in Airbnb and not only creating accounts, but filling out their profile. And so to answer your question, yes, this is the beginning of something much bigger. To probably zoom out, when we started Airbnb, there already were vacation rentals, but they were mostly on classified sites like Craigslist [ph] or there were like paid subscription services like Vrbo. And one of the innovations we brought is we added profiles, payments, two-sided reviews and messaging and those capabilities unlocked really this whole new category.
This was what we may call the system of trust. So what we’re now doing is we’re going to be investing a lot more in increasing our profiles and our profile capabilities, both our account structure, cleaning it up, our identity verification, making, getting more people to complete more robust profiles, increasing their preferences so we have more information about people. And this is so strategic because as trust goes up, more, you can unlock more things for people. And as we know more about you, we can match you better. So, I think in the future, right now, if you think of like the Airbnb solar system, the home is like the sun at the center of the solar system. I think in the future, the profile will be at the center of the solar system of Airbnb and the home will be one of many categories orbiting the profile.
Kevin Kopelman: Great, thanks so much.
Operator: Your next question comes from the line of Nick Jones with Citizens JMP. Please go ahead.
Nick Jones: Great, thanks for taking the questions. I guess maybe going back to supply and your effort to remove low quality supply. I guess, can you speak to the percentage of the supply that you’ve removed over time? I think you said 100 to 1,000 that I guess maybe take the removal and I guess the learnings and come back and try to list and provide a kind of a higher quality or better experience. I guess as you continue to remove lower quality supplies, it’s becoming a tool to kind of nudge hosts into the behavior you’re looking for without actually having to remove them.
Brian Chesky: Yes, I mean, hey Nick, why don’t I take the first one? So, the first thing I’ll say is the global occupancy on Airbnb is so much lower than hotels. So, even though you type in a certain date and a location, when it’s a popular day and location, occupancy can rise at a global level. We are still like, not even close to high occupancy. And so, one of the games we need to do is we want to point them in to the best supply on Airbnb. So, we don’t, and so having removed all this supply, we haven’t seen a fundamental shift or impact on global bookings because a lot of them either weren’t getting as many bookings in the first place, or they were eating up page views, they were lower converting listings, or people were booking them, they were really expensive because they were leading to customer service contacts, which were expensive.
And if you went through all that, the revoking rate for them was much lower. Now, as far as the answer to your question about like how many of them come back, I don’t have the stats on top of my head. But, I think that like this quality control program, one of the things we’ve noticed is that a lot of hosts are very coachable and learnable. They’re very coachable and they can learn. So I think one of the problems in this category is historically there’s these marketplaces have been so hands off that people don’t know what it takes to be successful. And as you give them more like metrics, as you give them more incentive to be good, and as you create more boundaries about what’s not acceptable in Airbnb, it actually does change behavior and people do come back.
So, we’re seeing that for sure. And we’re seeing that the good people reward and they tend to expand their business. So, I don’t have the exact numbers of people that come back, but absolutely, we do think people will come back, if they’ve remediated some of their issues. And some of what we do too is we’ll give warnings to people. So, we don’t always have to remove people. We can give warnings first. And warnings are like very, very effective. We’re just giving them a heads up. And that actually has a way of increasing the quality of our platform. The last thing I’ll just say on this is, we’ve, what I think makes Airbnb different than our competitors, we have a much more hands-on approach to quality than our competitors. But we are getting more and more hands-on every single year.
As we want to get bigger, and we want to capture more of the hotel traveling market, our quality has to go up. And that means that we need to just continue to raise the bar of quality. So, we have a multi-year roadmap where we’re going to continue to do so and continue to invest in host education.
Nick Jones: Thanks for the color, Brian.
Operator: Your next question will come from the line of Naved Khan with B. Riley Securities. Please go ahead.
Naved Khan: Yes. Hi. Thanks a lot. Maybe a clarification from Ellie. I think, I heard you say you saw really good ROIs on the performance marketing channels. I wanted to understand better where that came from. And maybe on a related topic, was there any effect from either the rollout of the DMA in Europe in March, or maybe changes to Google search in late March and early April? And then I have a follow-up.
Ellie Mertz: Yes. So, in terms of first, the higher ROIs that we’re seeing on marketing, I would say we over the last year have just been frankly very encouraged with the ROIs that we’ve been able to deliver from that channel. In particular, like what has been driving that? Well, we’ve been continually testing, improving our performance marketing execution. We have expanded the target audiences. We’ve expanded our keyword coverage. We’ve made general improvements to the landing pages. And all of that has been, I would say, quite successful in terms of allowing us to spend marginally more and maintain really great efficiencies. So, really good channel for us, even though it is obviously a minority of our overall marketing spend or strategy.
In terms of your second question, impact from the D&A rollout, I would say we haven’t seen any meaningful impact. I think primarily that is because the majority, 90% of our traffic is coming to us through direct or unpaid traffic. And so, we have not seen any noticeable impact there yet or at all, I should say.
Naved Khan: Okay. And then, yes, I know it does help. So, maybe just on the changes to the extenuating circumstances policy, I wanted to kind of understand better what kind of led to that change and what kind of impact we can expect from the outside looking in?
Ellie Mertz: I didn’t hear that question. Sorry.
Naved Khan: Sorry, the changes to the extenuating circumstances policy, I think it was tweaked recently to kind of maybe raise the bar on the cancellation.
Ellie Mertz: Extenuating circumstance policy. Brian, do you have any comments on that? I would say we just tried to clarify over time and make that more equitable for our guests and hosts, but no meaningful impact to the business.
Naved Khan: Yes, I agree.
Operator: Your next question will come from the line of Conor Cunningham with Melius Research. Please go ahead.
Conor Cunningham: Hi everyone. Thank you. Just on the under-penetrated international markets, as you develop those, I’m just curious if they’re producing the, what you’d expect in terms of key KPIs from, take rate ADR profits, just trying to understand how the mixed changes are going to impact the overall company. And then just one on the 2Q to 3Q re-acceleration. I would assume that the booking window is a little bit more extended this year, given some of the events. Just curious on where you’re booked into 3Q right now, just trying to understand the confidence interval there. Thank you.
Ellie Mertz: Yes, sure. So first the question is around economics of our international expansion markets. So if you think about the various factors on our economics, so first there’s virtually no change in terms of our underlying take rates by market. So that’s not a factor. I would say second, depending on the market that we’re targeting, many of these markets will have lower ADRs than our averages. So over time, to the extent that we were incrementally more successful in higher, seeing higher penetration in places like Latin America or Asia Pacific, we would anticipate that the global ADR would come down. And yet all of those nights would be accretive. So it would be market expanding, even if the nights were coming in at a lower ADR.
And what we’ve been able to achieve over time is very strong economics at the booking level for a wide range of ADRs. So it is not a concern for us to be expanding in markets where the average ADRs are lower. It is again, just accretive in terms of the top line and the volume of the business. Your second question is around lead time. I would say generally speaking, as I said previously, our lead times year-to-date have been pretty flat on a year-over-year basis. We did not see a pull forward that maybe some others in the industry mentioned. And yet when we look forward in terms of the backlog for Q3, it’s quite strong. And it’s that backlog that gives us quite a bit of confidence around the comments we made in the outlook that Q3 revenue should accelerate above the Q2 outlook.
Conor Cunningham: Appreciate it, thank you.
Operator: I will now turn the call back over to Brian Chesky for closing remarks.
Brian Chesky: All right, well, thank you all for joining us today. And I just wanted to say before I wrap up, this was Ellie’s first earning call as CFO and the transition has gone incredibly well. Her, Dave and I are really, really focused on this next chapter of growth. So to recap, revenue was $2.1 billion, this is 18% higher than a year ago. Net income and adjusted EBITDA were both Q1 records and our trailing 12 month free cash flow was $4.2 billion, representing a free cash flow margin of 41%. Now we’ve made a tremendous amount of progress over the past few years. And with the launch of Icons, we’re now laying the foundation for our plan to expand beyond our core business. This is just the beginning. Thank you all and we’ll see you next quarter.
Operator: That concludes our call for today. We thank you all for joining and you may now disconnect.
Brian Chesky: For business. This is just the beginning. Thank you all and we’ll see you next quarter.
