San Francisco-based short-term rental giant, Airbnb, reported a 15% decline in second-quarter profits from the previous year, despite an 11% increase in revenue driven by stronger bookings. The company's net income for the three months ending June 30 was recorded at $555 million, or 86 cents per share, compared to $650 million, or 98 cents per share, during the same period last year.

Analysts had predicted earnings per share of 91 cents, according to FactSet, making Airbnb's actual earnings fall short of Wall Street expectations. Following the disappointing results, Airbnb's shares plunged, experiencing a decline of around 14% during after-market trading on Tuesday.

Although revenue fared better, rising 11% to $2.75 billion from the previous year, it still fell slightly short of analysts' forecasts. The company's robust performance was primarily driven by a 9% increase in bookings and experiences, totaling 125.1 million nights and experiences in the second quarter. The average daily rate for rentals also saw a modest 2% growth, reaching $170.

However, the decline in profits was attributed to increased income tax costs, which ate into the company's bottom line. Despite the setback, Airbnb remains optimistic about its position in the vacation-rental market, as demonstrated by steady revenue growth and strong booking numbers.

The COVID-19 pandemic has significantly impacted the travel and hospitality industry, with Airbnb being no exception. As travel restrictions ease and vaccination rates increase, the company is hopeful for a rebound in business and plans to continue investing in its platform to attract more users.

Airbnb's second-quarter performance highlights the ongoing challenges faced by the company as it navigates through the ever-changing landscape of the post-pandemic travel industry. With its shares taking a hit following the profit decline, it remains to be seen how the company will adapt and recover in the coming quarters.