Airbnb, Inc. (ABNB) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to our next fireside discussion with Ellie Mertz, the CFO of Airbnb. We are very thrilled to have Ellie here. This is her first interview in this setting as the CFO. So Ellie, thank you so much for joining us. Great to see you.

Great to see you as well. Go ahead.

No, we've known each other a long time since pre-IPO, so I'm really excited too. So congratulations.

Thank you. Thank you.

Before we start, disclosures. All important disclosures, including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures. They are also available at the registration desk. Some of the statements made today by Airbnb may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Airbnb undertakes no obligation. Please refer to Airbnb's Form 10-K for a discussion of the risk factors that may impact actual results.

So let's talk early learnings. So you've been with the company for many years, pre-IPO, post-IPO, and now you've been in the new role for a few months. Maybe sort of talk to us about what have sort of been some things you've learned now in the new seat? And as you sort of look ahead to 2024, what are the biggest areas that you and the team are focused on from an execution perspective?

Yes. So just to clarify, I've been at Airbnb for over 11 years, but this is, I think, day 2 as CFO. So I appreciate you all coming out for my inaugural speaking event. In terms of what I've learned and kind of where we are today in terms of our overall strategy, the strategy has been pretty consistent over the last couple of years. As you're well aware, we've been focused on recovering from the pandemic, obviously, meaningfully improving our overall financial structure. And over this time, we've been focused on 3 things. We've been focused on making hosting mainstream, so making sure that we have enough hosts to grow the business. Second, we've been focusing on perfecting the core business, making sure that we're getting better every single year. And then our third priority has been around expanding beyond the core. And so to the question of learnings, one of the things that we've been, I think, very cognizant of over the last couple of years is we wanted to make sure that our core business was in a position of strength before we overextended ourselves by pushing beyond our core business. And what I can say today in this seat is that we feel like we are, right now, in a huge position of strength. We've obviously come out of the pandemic extremely well. We've gained a huge amount of market share during this period. Our balance sheet and P&L are extremely strong with very strong EBITDA margins, great cash flow generation. We've got a great team, and we feel like this is the point at which we really begin to dig in to expand beyond the core. And so coming into this seat today versus maybe the many years that I've been at Airbnb, I'm really excited about this point in time where we have the opportunity to transform from effectively what's been a one revenue stream business into a business that, in coming years, we hope to be layering on incremental services and products to continue to drive top line growth.

Okay, great. Well, I want to get into all those incremental services throughout the discussion. But maybe can we start on the core hotel business or the core alternative accommodation business...

It's not a hotel.

Not hotels. Not hotels, my fault.

This is one...

My rookie mistake, that's my rookie mistake. The core alternative accommodation business, so I know there's been a lot of sort of puts and takes around COVID, reopening and sort of room night growth. It looks like, as you sort of look into the first quarter to start the year, the guide implies sort of a high single-digit room night growth range. As we think about 2024, what are the puts and takes or the regions that we should look at to potentially accelerate that, to be faster than that? Or is this just sort of where we are given normalization and travel demand?

Yes, it's a great question. I think if we look at the last couple of years, obviously, '21, '22, there were massive rebound growth numbers. '23 and now starting into '24, there is obviously some normalization in terms of overall patterns. At the same time, when we look at the road forward, I would say we still continue to believe that it's early days in terms of just our core business. And the reason I say that is if you look at Airbnb's overall consumer awareness, it's extremely high. But if you double-click and you look at considerations, there's still a pretty big gap between those consumers that are aware of Airbnb, but they don't quite consider it the brand for them. And so what we've been doing over the last couple of years and will continue going forward is really trying to address the barriers for new guests to try Airbnb as well as for existing guests to come back and try Airbnb more frequently. And so those areas that we continue to invest in that I believe if we can resolve, create huge amounts of incremental growth. There are things like reliability, making sure that every time a guest stays with Airbnb, it's a great stay. It's what they expect. It's affordability, which is something that we've been very focused on over the last year. And it's usability, making sure that both the online product as well as the offline product is great to use. So I bring up those barriers just to give you a sense that before we double-click on the regions, when we see the opportunity ahead, we feel like there's still massive room for us to continue to improve the service across those surface areas and bring more people into both trying Airbnb and then using it more frequently when they travel. So if we double-click in terms of what we're seeing on a geo basis, which I think is the question, let's just travel around the world for a moment. So in North America, very steady growth. Obviously, the overall industry in North America has slowed, and yet, we believe on our numbers that we continue to grow faster than the broader industry as well as continue to take market share. I think resolving some of the core issues with our products is constantly additive in terms of North America. But where I would say I'm particularly excited about where we're focused this year is really looking across the U.S. in particular and identifying where do we have pockets of user segments that we're frankly just underpenetrated. And one of the things that we did last year was we looked across the states and said, where are we, say, more penetrated than elsewhere? And for all of us sitting in San Francisco, it will be no surprise that if you look at the map of the U.S., we're very well penetrated on the coast, but there's an entire country in between those coasts. And so what we did last year was just target our marketing a bit more specific across the states. And what we saw was really nice differential growth for what we call Heartland states. I think that continues to be a big opportunity for us in North America, as does focusing on different demos. I think historically, we haven't spoken directly to the U.S.-based Hispanic population. That's also a big, I think, future growth driver in terms of North America specifically. If we turn to EMEA, EMEA, I would say also, we continue to see very nice, stable growth. The double-click on EMEA is that, I think, again, sitting in San Francisco or as an American, we tend to think of Europe as a monolith, right? It's kind of one region that has one growth rate. And yet, the interesting thing about our business is that despite the scale of our business in Europe, what we see is that we've done extremely well in places like the U.K. and France and, frankly, less well across the region. And so the opportunity for us there is to really pinpoint markets and deploy our global playbook to raise overall penetration. Germany has been the one country that we've focused on over the last couple of years and had really nice impact in terms of just taking it as a separate market and understanding what needs to be different about this market such that we can raise penetration to the levels that we've seen in other countries. In EMEA, we will continue to do that across some of the smaller countries as well. So let's take this to Latin America. We're making the tour. Latin America has been a real shining star over the last couple of years in terms of, one, just starting from a very low level of penetration; and two, the success of our international expansion efforts. We, over the last couple of years, have targeted our efforts on Brazil, and that market has grown significantly faster than some of the other geos and the region. We'll continue to focus on the bigger countries there, obviously, Brazil and Mexico, but we're also seeing really nice strength in places like Chile, Peru, Ecuador, which are all up about 2x since pre-COVID. So really nice growth trends there and the opportunity to really work around that continent and raise penetration. Final, APAC.

APAC.

So APAC, I think the story is well told with regard to APAC effectively being the region that's been a COVID laggard even as of 2024. And so I would say, while it hasn't overly contributed to our growth rates in recent years, I think it's a huge opportunity that's still untapped by Airbnb. The overall penetration rates for us across APAC are relatively low. And I think there's an opportunity for us to deploy our global playbook, apply some localization to products and marketing that we have not done yet to raise the growth in that -- I should say, raise penetration in that region as well.

Okay. Very helpful global tour. Over the course...

I only did 4 regions, not all 220 countries...

State by state will be enough. Over the last couple of years, last few years, you've made a lot of improvements to the platform. I think we put together, I think there's 430 new features and upgrades to the core service and the platform. It's a long list, I'm Flexible, et cetera. Can you give us examples of 1 or 2 of those features that really had a positive impact on KPIs? The KPIs, are they engagement? Are they retentions? So what are some of the changes that we should all be paying attention to externally?

Yes. So when we think about our product development road map, we try to think holistically about the user experience, so both on the host side as well as on the guest side. And when we take a holistic approach, what we try to be mindful of is, what are all the things that we need to do to improve the user experience such that the important KPIs will move? And that's different than saying, here's a single opportunity to improve conversion at this point in the flow. And so the example I would give you is not one feature, but it's a whole host, no pun intended, of upgrades that we've made, and that's to the host side of the equation. If you rewind to the early days of the pandemic, back in, say, '21, our supply completely stagnated. So supply was not growing. I think you took some -- you took a big read-through of that, which we'll talk about in a minute.

Yes, we did.

Supply was stagnant, and we looked at the host life cycle and said, what are all the things that we should be doing to get more people to consider hosting and then get them through the flow and make them successful as host? So what did we do? First, we turned our marketing to host, which is actually something that we had not done previously. And what we saw was that we were able to speak to guests who said, oh, I've had a great experience as a guest on Airbnb, but I've never even considered hosting. Maybe I could host. And we saw a really nice acceleration in terms of traffic to all of our host landing pages. We then looked at the online experience about onboarding and said, man, there's a lot of improvement we could do here to make it more intuitive, easier, frankly, more fun to list your space. And so we revamped that. We added a feature to the onboarding called Airbnb Setup, where we'll have a prospective host who can contact an Airbnb Superhost Ambassador and have a human connection to understand what it is like to host and get their questions answered. We improved our AirCover for hosts, which improved the assumption and the belief that Airbnb would be there for hosts when we needed them. There's a whole, again, no pun intended, host of improvements that we've made to the overall host life cycle. And what we've seen is a massive acceleration in our overall supply growth. So we were at flat 0% year-over-year growth a few years ago, and we ended 2023 at 18%. Certainly, that's partially organic trends, but it's also a big, large evidence of the impact of our product changes.

That's helpful. Yes. Let's talk about supply a little bit. Yes, I think a little over a year ago, we got a little more cautious on supply. We've been wrong on the supply numbers. To your point, you've really had very, very strong supply growth, far better than we would have thought.

Is cautious the same as bearish? I just want to clarify.

It is. It is. Yes, it is.

I'm new to this role, so...

Exactly, exactly. But the room nights booked, those numbers we were closer on. So I guess, can you help us understand a little more how you think about occupancy rates or utilization of that newer supply? And is there a difference in how we should think about the long-term potential occupancy of the supply that's come on over that period in the last couple of years?

So I would say there hasn't been any material change in terms of the new listings that we're onboarding. I think what you see instead is, in any given period, there's just going to be a difference on the near-term supply growth versus the near-term demand growth. And yet, if I look back at, say, my tenure of over a decade at Airbnb or if I even look at where we were pre-COVID versus where we are today, what we see generally is that demand and supply have, over those longer periods of time, walked together and grown pretty much in lockstep. And I think you continue to see that, too, today. If you look at a geo-level view, if you look at a market-type-level view, generally speaking, over a matter of a couple of years, the growth of supply and demand are somewhat in lockstep even if they don't match in a given period. Where we are today, I would say a lot of the very strong supply growth that we've seen in recent years has allowed us to actually lower some of the occupancies that, at the kind of height of COVID, were probably not terribly healthy. And I would say we feel very good about these supply levels because it allows us to continue to pull a lot of levers on demand without supply being a limiter to growth.

Got it, okay. Maybe I'll stay on host and sort of ask about host pricing because I know you've had also a series of initiatives that sort of teach hosts about lower pricing options, et cetera. I'd be curious to ask, one, sort of where do you think about that going forward? How do we think about steps pricing going lower from here? And how important is that as opposed to forward supply growth, absolute supply growth and sort of continuing to grow at these rates?

Yes. So I'll spend a little bit of time on what we've done on pricing. But to answer your question specifically, I think they're equally important. It's equally important that we provide good tools for our hosts to make sure that they are appropriately pricing their places. And then, at the same time, if you think of just normal market dynamics, one of the best things we can do to keep prices competitive and affordable is to add more supply, right? So it's pretty straightforward. In terms of more broadly where we are on the pricing journey, I would say we're very happy with the results of the things that we launched last year, but it is a multiyear journey where we know there are many incremental things we can offer to our hosts to make them more competitive, make sure that they are delivering the right value for the price. And so you'll continue to see incremental pricing improvements in years to come.

Got it. Okay. One of the most common pushbacks to my cautious view on the stock, not the company, the stock is around take rate potential from the hosts. So philosophically, how do you think about this balance of your trying to work hosts to get their pricing lower, but then take rates could go higher? What is sort of the philosophical balance you have there?

Yes. Over the last couple of years, we repeatedly get the question of, why have you not raised take rates yet? And there's a couple of reasons why we have not been, I would say, aggressive on take rates. I think first and foremost, in this current environment where we've been focused on affordability, it makes no sense for us to, broadly speaking, raise our fees, decrease affordability and effectively limit our market share growth. So if we think about the choice between, at a general level, the ability to drive incremental growth and market share versus a short-term gain, we are going to preference the former. At the same time, we have a very consistent philosophy that we've shared that over time, we want to be delivering more value to both sides of the marketplace in order to earn more value in terms of fees. And so that is something that, just as a directional philosophy, we have maintained during this period.

And the one fee that you did add or you're testing is the cross-border fee. I think you've talked about how it could impact up to 20% of the bookings. There's a pretty, I think, wide range on the potential fee that's sort of been talked about among Wall Street. So maybe walk us through just sort of guardrails we should think about between the 230 basis points that's been sort of reported as opposed to the actual effective rates you're thinking about testing.

Yes. So let me tie this question to the prior one. I said just a moment ago that we want to be delivering more value as we think about taking more value out. And what you've seen with this testing is the FX fee, and then also a change we made last summer is us trying to just be a bit more nuanced in terms of where the value proposition may be a little bit inconsistent. So last summer, what we did, the first fee change that we had made in quite some time was actually to reduce fees. So we looked at our long-term stays business and we looked at the really long-duration stays, so think of stays over 90 days or more. And what we realized was that if you're going to be staying in an Airbnb for 120 days, on that 100th day, you're still paying a pretty generous fee to Airbnb and yet, you're in that listing. We're not delivering a ton of incremental value at that point. And so what we decided was, why don't we reduce the fees for those longer-duration stays because it's more consistent with the value delivered? And so we did that last summer. And not surprisingly, as designed, what we saw was a nice lift in the bookings for those long-duration listings, which told us that the value proposition was a little bit off, and so there was an opportunity for us to be more surgical with our fees. Fast forward to this FX, I think it was also called a service fee addition, we're just testing it. What we shared in the shareholder letter is that we're going to test it in April -- starting on April 1. And the thinking there is that a ton of marketplaces, a ton of platforms charge FX fees when there's a mismatch between, in our case, what the currency the guest is paying versus what currency the host is paying. And it's a part of our fee structure that we have essentially absorbed for the last several years. And what we recognize is that the guest doesn't actually realize that we do that relative to our competitors, and so there's a bit of a value delivered misalignment. So it's a very small potential adjustment to our overall fees. I think the takeaway should be that we are looking for pockets where we can optimize the overall fee schedule. We're looking to be more sophisticated with that structure, but you shouldn't expect to see any radical pivots with regards to the overall fee structure.

Okay. The other topic that's come up a lot over the last couple of years has been sponsored listings. Maybe just to sort of level set for investors, what have you learned in the sponsored listing tests you've done over the years? And what are sort of the gating factors that hold back scaling that to be a larger part of the platform?

Yes. Unoriginal question, but I get it every time. So sponsored listing certainly is something that we could offer as we think about expanding services to our hosts. One of the historical, I wouldn't say obstacles, but considerations in terms of Airbnb offering a sponsored listing or a paid placement product is when we think about what is differentiated about Airbnb, it is our exclusive individual host. And when we think about a classic paid placement product, we know that it would likely be preferenced by property managers. And so when we think about how we might roll that product out, we would want to be extremely nuanced such that it didn't change the distribution of what we were merchandising and what we are known for, which is that differentiated exclusive listing base. That being said, I don't think that is a nonstarter. It's just something that we will need to be very thoughtful of in terms of how we implement such that we don't erode what is differentiated to Airbnb. I think a second component is, should that be a near-term priority versus other things? And I think when we think about how we can expand this platform, I would say our priority is to think about how can we make the existing service better, how can we offer more things that our guests or hosts want to pay for to make the overall marketplace bigger, not necessarily focus initially on how do we monetize better the volume that we have. So there's a prioritization discussion as well when we think about paid placement.

Okay. Let's go back to your first answer about new products, new revenue opportunities, et cetera. I mean Brian has talked about how excited he is about sort of finding your AWS in non-travel. So if you want to announce new products today, feel free. But if not, maybe just talk about...

That would make a very short tenure, right?

Exactly, day 2. Maybe just, if not, talk to us about some of the consumer pain points you see on the platform that are potential opportunities for you to drive higher spend per customer or spend per user.

Yes. So we've been talking about expanding beyond the core for some time. When we think about the state of the business, we recognize it's pretty incredible that it's a $70 billion-plus gross booking value business, and we have one core service. And so what we've been looking at is, what are those things that we could offer either on the host or the guest side that would make the overall experience with Airbnb either easier, more convenient or more differentiated? And I think his comments were taken a bit more maybe expansively than intended. I think what you should expect from us is we're going to be looking to prioritize those things that are adjacencies to our core business so that there is a right to win and a likelihood that people will want to buy the incremental services to make the existing service and experience better. So what might these things look like? I think on the hosting side, something that we already have in markets that we're looking to expand is what we call co-hosting. And a co-host is effectively a person in your market that you, as a homeowner, can rely on to manage your listing. And the thinking behind that product is that there's a lot of homeowners that, for either interest or time reasons, have no interest in managing their own listings. And if we, Airbnb, can connect you as a prospective host with a co-host, it opens up a world of opportunities to, one, bring on more listing to the platform, but also build out the services that a host requires to manage their listings. So that's an area where you will see us continue to scale that product and likely add adjacent services over time. On the guest side, I think there's really 2 buckets of opportunity. One, we do have an Experiences product that we will return to in the future. There's an opportunity for us to move beyond the accommodations to effectively fill out your travel itinerary. More to come on that in the future. Another opportunity is for us to provide services in the listing. And again, you'll hear more from us in future quarters.

I remember years ago, pre-COVID, where you have different types of partnerships with other platforms, maybe I could get my groceries delivered on the way to my Airbnb or I can have a rideshare service pick me up. How are you sort of thinking about organic as opposed to partnering to address some of these pain points?

I would say we are open across the gamut. I think it really depends on where do we have a core capability where we think we could do something different and do it well and do it differentiated from what's in the market. I think we're also cognizant of a lot of those services that you mentioned. There are very successful businesses out there, and so we would have to think very carefully as to would we want to try to replicate something that consumers already have great popularity against.

Okay. Can I ask you a couple on gen AI? You recently acquired this company, GamePlanner.AI. They are described as a stealth AI company, but it's led by one of the co-founders of Siri. So what does that acquisition bring to the company? And then sort of going back to the core focus on hosts and guests, how do you think about gen AI improving the host-guest experience?

Yes. So Brian -- I think everybody is talking about gen AI. Brian has spoken a lot about our intent in terms of how we would leverage AI. And what he has shared is that we understand where our capabilities are. You should not expect Airbnb to be in the business of building out models. Where we do think that we have a core asset is around product design and interfaces. And so where we'd like to focus on leveraging AI is really building out those interfaces to make a better experience, both booking on Airbnb more broadly. So we brought in the GamePlanner team to really help us accelerate our AI road map. And again, it will be focused on the user experience, the interfaces, and through those, developing a better guest experience to booking. I think one of the observations that we have had is that despite all of the kind of amazing shifts that we are seeing from AI, where there has not yet been a material shift in terms of improving the consumer experience is the interface. So I think what we're seeing -- what we're all seeing quite frequently is just slapping on a chatbot to a model and assuming that, that's the kind of leverage point for a consumer. Our ambition would be to have an interface that is more personalized, more intuitive and, frankly, more helpful. And that's what we'll be spending our effort.

Great. Okay. Let's shift to internal opportunities with gen AI. There's been a lot written about coding assistant, customer service potential with gen AI. What are you most focused on and sort of excited about to sort of drive more efficiency over the next couple of years from gen AI to your P&L?

So I think it is those 2 areas. I think it's pretty straightforward. I think we, like everyone else, are very eager to see productivity gains on the product development side. I would anticipate that, one, it's really getting more out of the team you have versus having smaller teams. I think second, there's a time horizon ahead of us that's not tomorrow in terms of realizing those efficiencies. I think for us, it's probably a bit more exciting what we think we can do on the community support side. If you think about our community support operations, if you are a seasonal worker in one of our partner sites, it's a hard job to be an Airbnb agent in that you're dealing with a guest, you're dealing with a host, you're dealing with online interaction, in-person interaction, you're across many languages, often not the same language between the guest and the host, and then there's probably 70 policies that you're trying to reference to figure out how to resolve an issue. And so that's the area that we've been really leaning into early to understand how can we leverage AI to bring the right information to bear quickly and efficiently so that we can resolve both our guest and host issues as quickly as possible and to deliver a much better experience to the entire marketplace.

Interesting. Let me ask more about customer acquisition when it comes to gen AI because one of the things that's interesting is you have a lot of business that's direct, but we're still going to the app, we're still going to the website. What are the biggest gating factors to have in an Airbnb gen AI travel assistant that I can talk with, chat with, e-mail with to put together an itinerary the week of Christmas to go to Hawaii for a place that sleeps 4 and has access to a golf course? And then that assistant, next August, could say, Brian, are you planning on going to Hawaii this Christmas? Here's my itinerary. What are the gating factors to getting that type of product in people's hands?

So I mean, I think you paint a picture that we would like to deliver. It's that personal concierge that knows you. It not only knows your preferences, but it knows why is Brian traveling in this -- for this trip. Is it with his family, is it for work, which have a whole set of different preferences. That is a world we would like to build to. What is challenging about it? I think getting the right personalized information, the right indicators so that we are merchandising the right thing for you. I think another struggle is making it accurate. I think what is kind of the undertone right now with AI is the dream of all of these kind of productivity gains, but the real drag factor is, what is the quality of the information? And if we're going to be in the business of helping you plan your precious once-in-a-year trip, that data and that recommendation needs to be 100% accurate to make sure that we deliver you a great trip.

It's how the utility goes up. Makes sense. Okay. Let me ask you one about loyalty programs. I know we -- it's another discussion we have about once a year. I always say like temperature check. What is sort of the latest internal view and philosophy about the need of a loyalty program? How it could fit into the overall travel landscape coming from Airbnb?

Yes. I would say no update from a year ago. We think loyalty is important, but what we focus on is how do we win every trip that you're on so you want to come back more frequently. That is the major focus of our interaction with past guests as opposed to, I don't think you should expect to see a kind of cookie-cutter points program from Airbnb because we want to offer something that's differentiated. And we also want to make sure that we are earning your repeat booking by every time delivering a great experience.

Got it. Okay. I want to ask you one about the 2024 margin guide on at least a 35% EBITDA margin. Marketing is expected to be flat. And we sort of struggled to see how the margins fall from the 37% level in 2023. So maybe just sort of walk us through the puts and takes around the 2024 margin profile that we should be aware of in the guide.

Yes. I guess it's nice to have people doubt you that you could ever not deliver expanding margins. I guess that's a good position to be in. To step back, I think, Brian, you're very well aware of our trajectory over the last couple of years. We -- prior to the IPO, we had negative 5% EBITDA margins. We said that one day, we could achieve over 30%. And lo and behold, within 3 years, we delivered nearly 37% EBITDA margins last year. So when I look at what we've accomplished, I think it's -- we have proven that this is a very strong business model. It has amazing cash flow generation. The numbers speak for themselves. I think at the same time, while we are proud and we are committed to delivering strong profitability, we also want to focus on growth. And so with the guide that I provided just a few weeks ago, that is exactly what is intended there. It's to give us some room and some flexibility to invest where we see growth opportunities. And that could be in the form of incremental marketing across our international expansion markets. It could be leaning into core marketing channels where we see high ROI. It could be adding at the margin some incremental product development resources where we have things on our road map that we know will contribute to growth, but we don't have quite enough engineers. And so you should read that as us committed to strong profitability, but also leaning into delivering continued strong growth.

Got it. Okay. On those investments on the international side, are there sort of -- are there regions or countries -- I know you talked about Germany before, are there any specific regions that we should be thinking about that are sort of potential areas where you'd look to invest, you're seeing a good signal? Like where do you see the areas of investment?

On the international side? Honestly, it's around the world. When I did that walk around the globe, hopefully, it was clear that even in a place like EMEA, we have -- you think we have a scalable business, and we do, but there's pockets throughout the region for us to double-click and figure out if Germans book earlier in the season, how do we need to adjust our marketing and our product to capture them? If Italians -- and hopefully, I'm not generalizing too much. If the Italians want to call us before they book, how do we instrument that into the flow? It's thinking about what are those specific things that we might need to change about our message or how the product works to make sure that we appear as a local brand wherever we are and that we capture the increased growth and penetration in those markets.

Okay. Last one on capital allocation. You have about $10 billion of cash and securities on the books. A pretty sizable buyback authorization, I think about $6 billion at this point. Just as you move into the seat, just remind us again about sort of prioritization between capital returns as opposed to M&A or investment in the core business.

Yes. So our capital allocation strategy is hopefully pretty straightforward. It's -- we prioritize investing in the core business and driving growth. It's, second, looking for M&A opportunities where they are relevant. And then third, it's returning capital to shareholders. And you just mentioned we have $10 billion of cash and short-term investments. We -- run rate free cash flow of nearly $4 billion. We are in a point of strength where we have the cash and resources to do all 3 of those priorities across the capital allocation strategy. And hopefully, what you've seen from us is that we are open to looking at M&A opportunities where they are relevant. And through both the repurchase program as well as our net settlement of RSUs, we've been very good stewards of our cap table and managing overall dilution.

Great. All right. Well, Ellie, thank you very much.

Thank you.

Excellent job. Thank you so much.

Perfect timing. Thank you.