Chief Executive Officer at Expedia Group
Thank you, Harshit. Good afternoon, everyone and thanks for joining us today. Before we get started with the update on the quarter, I'd like to formally welcome our new CFO, Julie Whalen to her first earnings call. I'm excited to ask Julie to our leadership team. During her 10 years as CFO at Williams Sonoma, she helped drive significant growth in the business and in shareholder returns. I've also worked alongside Julie on our Board since 2019 and she just Chaired our Audit Committee since 2020. So she comes with a great sense of our strategic priorities and what we're trying to achieve. I look forward to the expertise she can bring to our finance and across our entire company.
Now moving into the quarter. We were very pleased with our record-breaking performance in the third quarter. We delivered our highest ever quarterly revenue and adjusted EBITDA, the latter exceeding $1 billion for the first time in our history. We also delivered record third quarter lodging gross bookings. Despite some macroeconomic uncertainty and some short-term impact from Hurricane Ian, travel demand has remained strong and ADRs remain substantially elevated relative to pre-pandemic levels. This quarter, we also further delevered our balance sheet which put us in a position to resume buying back our stock which we continue to believe is highly undervalued. Going forward, we expect to continue to reduce leverage and return capital to our shareholders.
Now moving to the B2C side of our business. As we discussed before, our goal is to use great product innovation and unmatched membership benefits to drive more engagement with our customers and ultimately higher lifetime value from those customers. And the 2 biggest drivers of lifetime value are improving loyalty membership and app usage. I'm proud to announce that in Q3, we reached an all-time high in active loyalty members, surpassing 2019 levels in August. New Expedia customers that became loyalty members in the quarter grew by nearly 50% versus third quarter 2019 and the rollout of verified loyalty program is on track for next year which will be a big catalyst for continued membership growth.
Our app downloads continue to be strong as well but even more important than down with app usage is at an all-time high with quarterly active app users increasing nearly 40% versus 2019. And in the quarter, we continue to see almost 2/3 of our gross bookings result from direct traffic. We are also continuing to see leverage versus 2019 when we compare our all-up marketing spend against booked gross profit. And as a reminder, this spend includes direct marketing but also discounting and loyalty spend which are recorded as contra revenues.
In terms of our marketing mix, we have been shifting towards longer-term channels, including app downloads and other methods to capture traveler intent outside of classic performance channels. These longer-term marketing investments, including loyalty and brand are helping us build a larger base of long-term high customers. But as important as marketing is we are ultimately marketing a product and the product has to be great. So most of our energy is going into product innovation to build the best customer experience we can with the most customer benefits to drive loyalty and consumer love.
Among our recent successes, we have introduced exciting new product features, including price tracking, trip boards and smart shopping, all of which are designed to engage customers, to inform customers and to ensure they are finding the right product at the right time at the right price.
So just to remind you, our flight price tracking feature which we launched earlier this year, has been a great engagement tool. Since launch, we have seen exceptionally high notification open rates which demonstrate the value that our customers see in this. This feature is currently live on our app in the U.S. and is on track for global rollout in the first quarter of 2023.
In Q3, we launched trip boards on Brand Expedia, where users can save their favorite lodging and activities and share and collaborate on trip details. This feature not only increased conversion but has helped us expand our base of customers through sharing with family and friends. In the first 2 months since its broader launch, we saw trip board users have twice the repeat visit rate, they were twice as likely to purchase multiple products and most importantly, they transacted at 4x the conversion right versus nonusers.
And as for smart shopping which is a tool that really helps travelers comparing and choosing between available rooms for a given property, we began leveraging machine learning recommendations to better match our customers with the right products and options. This has led to better consumer outcomes, more premium product sales for our partners and ultimately higher value transactions for us. In addition to these new features, during Q3, we finished the migration of the Hotels.com front end onto the Expedia platform which allowed us to accelerate our optimization programs across our entire conventional lodging portfolio. While we are just getting started, the ability to test and deploy faster across one platform is already driving higher customer conversion, better customer experience and improved sign-ups to our loyalty program.
So overall, we've seen a great reception from customers on these new features and benefits. And for us, it has led to increased engagement, better conversion and higher revenue per customer. I'm really excited about the success we have seen so far and we have a bunch of new features in the pipeline and a terrific opportunity to roll out all of these features worldwide.
Moving on to the B2B front. We remain bullish on this massive opportunity and excited about our expanding role in the travel ecosystem. Everything we are doing on the main technologies act for our B2C products, will have benefits that inure to the B2B business as well as a ton of work we are doing specific to the B2B business that will lead to new products, new partners and new revenue streams.
In the third quarter, B2B continued to demonstrate success with growth across our key product lines as we won wallet share with many of our existing partners, driven by our expanded capabilities and improved product offerings. As excited as we are about the momentum in our existing business, we continue to build pilot and deploy new products and services for our Open World platform. This quarter, we signed the first pilot partner for our best-in-class fraud prevention product. And next year, we plan to continue to deliver more new commercial products and services. I'm really excited about what's on our road map for B2B and the reception we've been getting from the industry.
So to sum it all up, we delivered another record quarter of results, rolled out more products, features and member benefits and continue to add significantly to our member base and our app usage, all of which will be great for our future performance and build the base that we are looking for to grow in the future. So all in all, we're feeling really good about our progress, not least of all because of the phenomenal team of people we have assembled, to drive all of our acceleration.
And with that, I will pass it off to one of our newest, Julie.