TripAdvisor, Inc. (NASDAQ: TRIP) Q2 2022 earnings call dated Aug. 05, 2022
Corporate Participants:
Angela White — Vice President, Investor Relations
Matt Goldberg — President & Chief Executive Officer
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Analysts:
Naved Khan — Truist Securities — Analyst
Richard Clarke — Bernstein — Analyst
Lloyd Walmsley — UBS Equities — Analyst
Mario Lu — Barclays — Analyst
James Lee — Mizuho Securities USA — Analyst
Deepak Mathivanan — Wolfe Research — Analyst
Ronald Josey — Citigroup — Analyst
John Colantuoni — Jefferies — Analyst
Presentation:
Operator
Good day, and thank you for standing-by. Welcome to the Tripadvisor Second Quarter 2022 Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Angela White, Vice President of Investor Relations. Please go ahead.
Angela White — Vice President, Investor Relations
Thank you, Michelle. Good morning, everyone, and welcome to Tripadvisor’s second Quarter 2020 financial results call. Joining me today are, Matt Goldberg, President and CEO, and Ernst Teunissen, CFO and Chief Executive, Viator, TheFork and Cruise Critic.
Last night, after market closed, we distributed and filed our earnings release and made available our shareholder letter on our IR website. In the release, you’ll find reconciliations of non-GAAP financial measures to the most comparable GAAP financial measures discussed on this call. Also, on our IR website, you’ll find supplemental financial information, which also includes reconciliations of certain non-GAAP financial measures discussed on this call as well as other metrics.
Before we begin, I would like to remind you that this call may contain certain estimates and other forward-looking statements that represent management’s views as of today, August 5 2022. Tripadvisor disclaims any obligation to update these statements to reflect future events or circumstances. Please refer to our earnings release as well as our filings with the SEC for information concerning factors that could cause actual results to differ materially from these forward-looking statements.
With that, I’ll turn the call over to Matt.
Matt Goldberg — President & Chief Executive Officer
Thank you, Angela. Good morning, everyone, and thanks for joining us today. I’m excited to be here. I’ve been looking forward to my first earnings call with Tripadvisor. It’s an exciting time to join this iconic company given the travel environment over the last few years, the trajectory of recovery in the sector, the return of the leisure traveler and the potential to serve consumers in new and unique ways as they look to satisfy their growing demand to get out and experience the world.
As you read in the shareholder letter, we had a strong quarter. Our Viator experiences focused offer stood-out in its pace and level of recovery at a 160% percent of 2019 levels. TheFork achieved 103% relative to 2019 and the recovery in our Core Tripadvisor hotels offering improved at 89% in the quarter, up from 63% last quarter. Since this is my first call as CEO, I wanted to take a step back from the quarterly results and share some high level perspectives and reflections for my first 30 days, including why I wanted to return to the travel sector and the opportunities I saw at Tripadvisor.
I am personally passionate about travel and the meaning it brings to us all, by opening us up to different cultures and perspectives and the higher purpose that it serves by reminding us how much we all have in common at our core. The travel industry has always captured my professional attention as a category ripe for innovation and growth. The size of the market is massive and the sector continues to go through constant change, marked by an evolution in the democratization of travel information and distribution. This creates a compelling opportunity to reimagine the consumer experience by solving problems in what is often a fragmented and frustrating ecosystem.
When Tripadvisor launched back in 2000, it introduced a unique and disruptive offering to the market that pioneered a new way to enable travelers to decide where they want to go and discover trusted resources to make it happen. The Tripadvisor I joined today is fortunate to have a strong and stable foundation and an enduring set of assets, our trusted brand, a large global audience, a scalable content model, a rich set of data and passionate teams committed to our future. It fits squarely in the category of experiences over material consumption, a secular trend that we can expect to continue.
My mission, simply stated, is to make sure we continue to evolve the company, so that we can serve travelers, diners and experience seekers for decades to come. While I recognize that we operate in a competitive space with external pressures, there are a number of advantages that attracted me to the opportunity. First, Tripadvisor is the company that I have long admired both as a traveler and a travel industry executive. I saw the opportunity to follow a visionary founder and identify new ways we can be disruptive by reimagining the future of travel at a time when consumers are looking for trusted guidance.
I also looked at the company’s portfolio. We have a collection of diverse assets in Viator and TheFork as well as Core Tripadvisor that allow us to participate across travel experiences and business models. As the pace of change increases, this can play a meaningful role in how we serve consumers in unique and seamless ways. Given my background in digital media, something that jumped out to me is truly differentiated and valuable at Tripadvisor is the community of like-minded people actively contributing content to help their fellow travelers make the most of every experience. This has created the world’s largest travel guidance platform built on a relationship of trust with over 1 billion reviews and hundreds of millions of visitors every month.
With this scale, I was also energized by the potential of our data assets to create a better experience for consumers and enable all areas of the company. Having spent a number of years, leading advertising, content and commerce businesses enabled by data, I’m confident that our data can help us drive deeper consumer insight and higher levels of engagement, create further operational agility, as well as identify meaningful commercial opportunities.
Perhaps most importantly, one final attribute that attracted me to Tripadvisor was the culture and people. Tripadvisor has a culture that attracts talent with a passion for purpose, and a highly skilled, knowledgeable and capable team. Over the past month, I’ve enjoyed spending time with teams across the organization and just wanted to say thanks for welcoming me with such enthusiasm.
At this early point of my tenure, I can say that my excitement for the opportunity in front of us has only grown stronger, and I’m looking forward to rolling up my sleeves, engaging with our talent and charting a course for the future. One area of clear focus is driving stronger and more effective execution. In the coming months, we will align our strategy, operating model and teams to deliver against our goals in a structured and rigorous manner. I expect to empower our leaders and their teams to ideate, execute and enable every employee to do their best work. I believe that building a foundation of trust with all our employees and stakeholders is critical as we set the framework for our future together. I’m also looking forward to connecting and collaborating with our customers, partners, industry peers and shareholders to understand their perspectives and help us better serve consumers.
As we pursue our next phase of growth, we are well-positioned to build on our foundation as we strengthen the essential role we play in the travel ecosystem. I will aim to be clear about our plans, communicate transparently as we go and identify milestones along the way. In the meantime, I look forward to meeting many of you soon and sharing more in the coming months.
With that, I’ll turn the call over to Ernst.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Thanks, Matt, and welcome to your first earnings call with us. To echo Matt, we had an impressive quarter, and we are pleased with the continued demand recovery as well as the strong execution by our team. I think the results speak for themselves. In addition to what Matt highlighted, we reached 99% of our 2019 revenue in Q2, a strong step-up from the 70% in Q1, and our adjusted EBITDA was $109 million, or 26% of revenue. Both revenue and EBITDA exceeding our expectation. Free cash flow in the quarter was $282 million, and we had a little over $1 billion of cash on our balance sheet at the end of the quarter.
Despite the news flow on macro factors such as inflation, recession fears and consumer sentiment, travel has been and continues to be strong. While U.S. travel strength continued, this quarter also saw Europe coming back very strongly. We saw a progressive improvement of revenue as a percentage of 2019 each month of Q2. And at this time, we expect to be able to report further improvement in Q3. This expectation includes a currency headwind versus 2019 that we expect in the back half of roughly 4% impact on 2019 recovery. And within that about 10% impact versus 2019 recovery for TheFork whose revenue is, as you all know is predominantly in euro.
We covered a lot of specifics about drivers of performance in our shareholder letter, which we posted last night. So rather than go through all the specifics, I wanted to highlight a few salient points here. Our new Tripadvisor Core segment has continued on its path to 2019 recovery, reaching 84% of 2019 revenue in Q2, and on-track to do better again in Q3. This is with about a 3% drag from revenue lines that were discontinued or no longer consolidated. I’ll highlight that our hotel auction was above 100% of 2019 in the U.S. and Europe, which is pleasing.
I also highlight that we are narrowing the gap with media and hotel B2B, two revenue streams that we have reported in the last quarter as slower to recover. We expect these revenue streams to progressively do better and ultimately intersect with our pre-pandemic trajectory. Although, our hotel B2B business may not get there this year.
While we’re pleased with our performance and the recovery trends, we believe that the mix of our offers within TA Core, including our weighting to hotels rather than alternative accommodations and a slower recovery in B2B and media, that I just mentioned, has been a relative headwind for Core Tripadvisor. We are confident, however, that we have the levers to improve our performance going forward and believe that we have the assets within our portfolio to drive attractive and profitable growth for Core Tripadvisor. Notably, our Core Tripadvisor segment exceeded pre-pandemic EBITDA margin levels in Q2, even with revenue still trailing 2019, a testament to the fixed cost reductions we affected during the pandemic.
Our new Viator segment is showing remarkable growth, 60% growth versus 2019 in the quarter, 240% revenue growth year-over-year, and in Q3, we expect to improve our performance again. Despite a lot of growth investment, our adjusted EBITDA margin in this business slightly improved versus 2019 this quarter and improved strongly versus last year. Our new TheFork segment, also exceeded 2019 levels in Q2 and is set to improve again in Q3. Studies indicate that the European restaurant industry as a whole has not fully recovered yet, with fewer restaurant openings than in 2019 and staff shortages. This makes it all the more promising that TheFork with its ability to drive more volume for restaurateurs is exceeding 2019 levels already.
We have provided you with a series of documents including a memo outlining the technicalities of our segment change, and the historical presentation of segment numbers that will provide a lot of the specifics. Let me just highlight the why of this change here. First, the segments are a good reflection of how we are currently thinking about and managing our business. These 3 segment P&Ls, TripAdvisor Core, Viator and TheFork reflect the true standalone economics with market-based commercial agreements between them and overhead allocations. The segment reporting highlights that we managed Viator and TheFork for high growth and future rather than current margin. It’s also a reflection that we see great opportunity in managing brand Tripadvisor more holistically around the central user experience rather than in verticals.
Despite operating these segments as separate segments, we also derive significant benefit from the intersections. Viator and TheFork provide great and very strategic access to bookable supply for Tripadvisor Core, and Tripadvisor Core provides a significant volume of additional leads and demand to Viator and TheFork. It’s also our belief that by presenting these 3 segments this way we have made it possible for investors to truly do a sum of the parts valuation of Tripadvisor, something that was not as straightforward to do with the old segments. We continue to look at other ways to highlight the value of these businesses in addition to segment reporting as we have called in previous quarter. And although currently not yet demonstrating their profit potential as we invest in growth, we believe longer term, both Viator and the TheFork can reach EBITDA margins of 25% to 30% given their strong gross margin profiles, potential for scale, given their large TAMs and attractive unit economics.
With that, I’ll hand it over to the operator for questions.
Questions and Answers:
Operator
{Operator Instructions] The first question comes from Naved Khan with Truist. Your line is now open.
Naved Khan — Truist Securities — Analyst
Thank you. Just a couple of questions from me. On Viator maybe you can provide us some color on the repeat booking behavior that you’re seeing with the cohorts that you have acquired in the past 1 to 2 years? And maybe just on the branded ad campaign that you’re planning in the back half, how sizable is it going to be, and what the markets or geographies that you’re looking to target? And then I had a follow-up on the Core hotels?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
All right. Good morning, Naved. Viator yes, very, very pleasing performance there indeed. We’ve seen a tremendous growth in the business continuing and we were very, very pleased with that. The growth — the demand push we’re making, the branded demand push which is the second part of your question, is that we are diversifying away from purely relying on SEM online channels towards also doing some brand, it’s not very TV-based, although it might be a little bit of TV-based questions, investment, but there is going to be a lot of other online, more branded-oriented investment. I say that within the context of the guidance that we’ve given, so we are reinvesting some of the overage that we’ve seen in the business, we’ve given some guidance for the third quarter of where we see profit come in, and those trends will be continuing into the fourth quarter. So within that envelope, you will see those investments happening.
On the repeat economics, with Viator, we have been able to measure quite precisely and quite consistently of its history, how our cohorts behave, and that behavior has been ticking up consistently every year, and we feel great confidence in the data that we’re getting. What we’re seeing, is that increasingly we are able to trigger within the first 30 days repeat behavior, which is often just around the same trip, which is fantastic news, because that is really the power of in destination offerings. So we have already sold something in either before the trip or during the trip, we sell a repeat transaction. But then in the first 12 months, we are successful in selling onward transactions as well. And then there is a lifetime value, there is year 2, year 3, year 4 repeats.
Our investments that we’re making in marketing are investing beyond that first transaction for that reason. We have stretched that to 12 months before, 18 months in the past periods. So still attractive ROI from a beyond 18 months perspective. But loss making immediately, but the unit economics support that very clearly. So what you see in ’21 and ’22 that these marketing investments have a negative impact on EBITDA in the year itself, but have a very important tailwind. And we’ve seen that tailwind really come through this year in our repeat revenue and in our free revenue, very, very clearly.
We still attractively across are all channels. So if I take the pay channels and the free channels, if we look at new consumers coming in across all those channels, we are immediately profitable. So although our pay channels may not be profitable immediately, we have a lot of new customers that we acquire also through our app, through our site directly, and SEO, and so on a blended basis, we are actually profitable immediately with new customers. So these are powerful economics. They’re very attractive. We keep improving them, and the team has been successful in improving them. And it’s a main focus for us, and some of these brand investments are going to help with that.
Matt Goldberg — President & Chief Executive Officer
Hey Naved, it’s Matt. I thought I might just add one thing. As you know the Viator team has done a fabulous job reinforcing their market position, and driving growth coming out of the pandemic. And one of the things that I am really excited about is the way that they’ve shifted fixed cost into variable cost, and I’m a big believer in the power and value of brands and have made many brand investments in a number of my past roles. I get excited about brands that have a loyal and passionate following, that can pioneer the industry and really stand the test of time. In fact it’s one of the reasons I was excited to join Tripadvisor. And I would just say that the Viator brand has a real opportunity to drive market leadership and continue to scale. So being smart about how we make some of those investment and really thinking about the ROI of that investment is something that I’m excited that they’re doing great.
Naved Khan — Truist Securities — Analyst
Great. And the follow-up I had is on the core hotel side, and for you, Matt. So on things like Tripadvisor Plus, which maybe like a year ago looked pretty exciting, and then obviously you guys have been trying to iterate and improve that offering. Any thoughts on how you see the potential for these kind of offerings? And then just what do you see that can be done better and maybe just give us your take as we kind of look at the press set of eyes?
Matt Goldberg — President & Chief Executive Officer
Thanks, Naved. I appreciate that. And as I think many of you know I’m a consumer-first executive. I really want to make sure that everything we do puts the traveler, and the experience seeker at the very center of everything we do. And in that context, a direct-to-consumer offering that offers clear traveler needs with tangible benefits that consumers value is a compelling opportunity, particularly when you have an audience of this size. And as I learn about all the various aspects of the business and I understand that this was launched as an experimental model and it’s still being tested, and while the discounts in the offer are substantial and frequently cover the cost of the annual subscription, of course, there have been some challenges to scale. And I recognize that the offering has not necessarily reached the milestones that might have been expected. But, of course, I come from a a subscription background in my time with Dow Jones and the Wall Street Journal, so this is an area I plan to dive into, and I don’t want to get ahead of myself on a timeline, but what I will say is that it will be a priority area of focus as we dive into strategy.
Naved Khan — Truist Securities — Analyst
Thank you, Matt. Thank you.
Operator
[Operator Instructions] The next question comes from Richard Clarke with Bernstein. Your line is now open.
Richard Clarke — Bernstein — Analyst
Good morning, Matt. Nice to meet you. Welcome to the table, Matt. A couple of questions, if I may. Maybe I can just start with some slightly high level thoughts of yours about, I know you’ve only been there for a month, but do you think Tripadvisor needs dramatic changes, does it need a change in strategy, does it need new verticals to sell to as many customers? Or is this about execution, do you believe the strategy is the right one, but it just needs to be executed on? And then maybe secondly, after months in the business, what is your thought of the potential Tripadvisor, should we be, would you be looking at this as a business that’s going to be a high growth business going forward, I guess, it wasn’t in the couple of years pre-COVID, but can it be longer term or would you see this more as a business that can be more kind of cash generative, what do you think the focus of the performance is going to be and I’ve got a small follow-up if I may ask that as well.
Matt Goldberg — President & Chief Executive Officer
Thank you, Richard. I appreciate the question. And obviously, it’s one that I’ve given a lot of thought to. When I think about entering the company, the first thing is, I feel really fortunate because I’m joining a company that has built a really strong foundation. And it really offers many diverse assets to think about growth path. And, of course, there are opportunities as there are in every company to think transformatively. And in some ways the segment reporting that Ernst shared with you today is where I’m going to focus my time and energy, because we have strong P&L leadership set up Viator and TheFork, both growing, strengthening their market position, and the Tripadvisor Core business, we’ve seen the auction come back strong, media is doing well, we have some opportunities in B2B.
And what I think about over the coming months is really sharpening the strategy and aligning everyone in the company around it, putting an operating model in place, making choices about where we’ll prioritize. I do think execution is fundamental. We have a chance to execute more effectively than we have in the past. And we’ve looked at where we can make some adjustments, we have high performing teams, we’ve got a great culture and I think getting the right cadence and processes that get us collaborating cross-functionally and empowering teams to focus on where they have market insight and knowledge in their respective products and market, we’ll do a great job.
I know that everybody would like to see me set a strategy today. It’s a little early to do that, but I think I can share a couple of areas of near-term focus. I mentioned putting the consumer at the center of all of our decisions, and I think as we do that, we will reinforce the role that we play in the ecosystem and really clearly define the problems that we’re in a position to uniquely solve. I think we can reimagine how we guide travelers before they go on a trip, when they’re ready to make it happen, and when they’re in destination. If we get this right, I’m confident we’ll drive more direct traffic, app downloads and we’ll see higher levels of engagement and monetization.
I’m excited that we have a good number of diverse assets in the portfolio, and the question there is, how do we think about how they fit together to deliver the most value. And we can get all the areas of the business serving the consumer in a seamless manner. And I think that will be noticeable and valuable. I’m excited about data, as I mentioned in my opening remarks, we have a data asset that can be an enabling platform for all areas of the enterprise, and really a strategic lever to drive insight engagement, there are market opportunities that we can be thinking about, it will serve our existing business lines and has the potential to drive new ones. And I think it’s also a currency where we can work even more effectively with partners in the ecosystem to drive our unique solutions and value that we can be differentiated, because it’s an asset that we have uniquely. We talked already about direct-to-consumer, clearly a compelling opportunity. And when I look at it all together, it really comes down to a chance to reimagine our position, reinforce it and do it from a position of strength.
Richard Clarke — Bernstein — Analyst
Thanks very much, Matt. And maybe something a little bit more per se, but just on margin progression, maybe this is one for you Ernst. but it looks like your guidance says the margins will step back a little bit Q2 into Q3, and then step up again into Q4. That’s not the normal progression of margins that I would normally expect at Tripadvisor they tend to come down in Q4. So I just wonder if you can sort of help with why they go down and then back up again, what are the sort of drivers of that margin shift quarter-to-quarter?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
So from Q3 to Q4 we said in our shareholder letter that you should expect the seasonal step-down, that is typical for our Q4. So you’re absolutely right. Typically, Q4 is a smaller quarter for us, and you would typically see a step-down in EBITDA margin as a result because of fixed cost. So that is the commentary there. And you will see that the way we’ve guided for the third quarter is reasonably close to it. We had a — to Q2, we had an unusual benefit in Q2, which we called out, in France, we got paid by the French government for a subsidy for before the pandemic period of $11 million, that was unusual and one-off benefit that occurred in Q2. So if you normalize for that, you will see that the margin development between Q2 and Q3, the way we guided is actually quite consistent.
Richard Clarke — Bernstein — Analyst
Okay. Okay, that’s very helpful. Thanks for that.
Operator
[Operator Instructions] Our next question comes from Lloyd Walmsley with UBS. Your line is now open.
Lloyd Walmsley — UBS Equities — Analyst
Thanks. Two, one for Matt and one for Ernst. So Matt, thanks for sharing some of your views already on what brought you to Tripadvisor and kind of what you like about the asset. I know it’s still early to ask you to kind of layout your plan, but maybe instead you could just share maybe some anecdotes about things you’ve done in the past, you’ve had kind of a broad range of experiences in kind of media and tech. So like are there things from your past analogs from your career that may serve as a playbook for what you might apply here it at Tripadvisor, anything you could share that would give us kind of a sense of you’re taking over here. Even though, obviously it’s a little early to ask you to kind of layout the future, would be helpful. And then Ernst, can you give us just like a broad sense of kind of health in the metasearch auction, clearly the numbers were strong this quarter, the cadence looked better than — more consistent than what we’re hearing from other travel channels. But there are big players talking about leaning away from performance marketing, curious just like to get your views on, yeah, just broadly the health of the auction and what you’re seeing there. Thanks.
Matt Goldberg — President & Chief Executive Officer
Well, thanks for the question, and I’m sure you all have had a chance to see what I’ve spent time doing in my career, and having had a chance to be early in my career in the travel industry really going deep on digital media and the transformation of a number of different of iconic assets, commerce, data, I’ve been active thinking about how to take a consumer’s perspective to drive product-led innovation, of course, I’ve worked in sales, marketing, business development, M&A, operations. If I were to go to a couple of anecdotes, I think I’d start most recently with my time at The Trade Desk, which was just a great experience to operate with a platform at scale across a number of categories in a data-driven advertising environment. It really gave me a much deeper perspective and a pre-categories in a data-driven advertising environment. It really gave me a much deeper perspective and appreciation on the power of data. And importantly, really starting with an ROI focus for partners and advertisers to show real value to their business. This can be helpful in our media and B2B businesses, our auction, really thinking about a solution orientation, because if you start with client objectives and deliver solutions that meet their needs, you can build a business of scale.
And of course, at The Trade Desk, really working across all the most contemporary platforms where consumers are engaging, which helps connect it all back to the consumer and that traveler and experience seeker and putting their needs at the heart of everything we do, it would be remiss for me not to share some thoughts about back at Lonely Planet, because it was one of the best experiences in my career that I’ve had the pleasure of doing, as a relatively young global CEO in the travel sector at a time of incredible change also coming out of the 2008 period, which was very dynamic. It was another iconic company looking for an inflection point from a publisher to a diversified travel information provider and paid content digital media marketplaces.
And I was really proud of that team as well achieving growth in transformation through a dynamic environment, and we really leaned into digital and understanding our audience global and cross-border in some interesting product-led innovation, just as the iPhone was emerging and the iPad, where we were in rooms that were blacked out and secure so that we can develop the very first travel apps that would leverage all of the newest technology in those devices. And that adaptation to a rapidly changing landscape and the learnings that I took from it about the needs of the travel consumer and where companies could go to serve them most effectively, I certainly will bring with me in this experience to come. Ernst?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Yeah. Lloyd, on your question about the auction, the auction has been healthy. We’ve experienced healthy dynamics, a good bidding levels and participations from OTAs, hotels, our CPCs have been strong. I commented earlier that in the quarter for U.S. and Europe, we were actually quite close to 2019 revenue, exceeding it at different parts. We saw in the auction in the first half of July, we saw a bit of weakness, a bit of a step-back and you may have heard others comment on that as well, with everything that was going on in travel, multiple factors, probably, but we’ve seen that sort of go back up again. It’s the second half of July and the early days of August are off to a very good start, and so everything is back to sort of normal, and we expect continued improvement in that.
APAC is still underperforming, I talked about U.S. and Europe, which in 2019 was say three quarters of of our revenue. So it’s an important chunk of it that is back on. But also have important chunk of geographic revenue that is not, we’re still performing well, and we’re looking forward to the recovery to happen in those areas, maybe not in the back half of this year, but hopefully, into next year. So strong performance overall.
And if I broaden my comments about July out to the rest of the business, in the rest of the business, we saw no such first half weakness in July, we have seen quite consistent strong performance, and overall for us as a percentage of 2019, July was a little bit better than June. So we look at the health of the auction, we look at the rest of our business and we see strong trends and with anticipation looking looking forward to the rest of the year.
Lloyd Walmsley — UBS Equities — Analyst
If I can actually ask a follow-up, Ernst, that’s great, helpful color and I appreciate that perspective, Matt. Just digging into the hotel auctions, I know you’re not disclosing like hotel shoppers anymore, but can you kind of help us think through how much of the recovery has happened on the kind of hotel shopper side and the monetization side to kind of get back to where you are?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Yeah, we’ve seen more progress on the monetization side, CPCs, revenue per shopper than on the volume side. So volume is still under 2019 and price realization have been strong, obviously driven by strong ADRs in the hotel business, but also driven by obviously a healthy auction environment. So strong price volume is still not completely back.
Matt Goldberg — President & Chief Executive Officer
And I would just add a broad perspective on the auction, we were, of course, pleased to see the strong comeback following the pandemic. And for me, this is a sign of continued relevance for the product, and that the auction really has a place in the ecosystem. We can think differently about data, and of course, we always work with partners to help them achieve their objectives. And I think as we get that solution orientation, we will be able to leverage that product to be really helpful and continue to reinforce its place in the ecosystem.
Lloyd Walmsley — UBS Equities — Analyst
All right. Thanks guys. Nice quarter.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Thank you.
Operator
[Operator Instructions] The next question comes from Mario Lu with Barclays. Your line is now open.
Mario Lu — Barclays — Analyst
Great. Thanks for taking my question, and welcome Matt. The first question is on Core segment margins, you mentioned it exceeded pre-pandemic levels for the first time. So can you help us break down the 200 bps of improvement since 2019, is it mostly from the fixed cost side or anything you’re seeing to the marketing efficiency there?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Yes. It is from fixed cost, is where all the improvement is and this is the fixed cost reduction that we have executed that we executed during the pandemic. Our variable cost is still elevated from 2019, and this is because some of our very profitable B2B and media businesses are not quite back to those levels yet. So that provides some deleverage. And in the auction, we have seen a closing of the gap between free and paid revenue in the pandemic and in the first half of the year, we’ve seen a higher skew to pay revenue, but that gap is closing in. And so, those 2 combined, so some deleverage on the variable, side but some strong leverage on the fixed side, which results in this outperformance even with revenue levels lower than 2019 in the second quarter. So better margin at lower revenue levels still so that bodes really well as we continue the recovery on the revenue side.
Mario Lu — Barclays — Analyst
Great. Thank you. And then one on Viator. So you mentioned previously that the operational take rate was in the 20 percentage range, in the second quarter the reported take rate was around 17%. So that’s just a function of timing with most experiences expected to be realized in the third quarter. And if so, has the operational take rate changed at all versus 2019? Thanks.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Our take rate is in mid-20s, and we have actually been executing on a number of strategies that allowed us to increase that over time by providing suppliers with ways of marketing themselves more effectively on Tripadvisor at higher take rate. So that’s been a very positive trend and improving trend. We have some great programs in place at the moment that help both suppliers and help our take rate accelerate, is the name of the program. So that’s been going really well. If you compare, we’re sharing gross booking value trends and we share revenue trends. There’s a couple of in-betweens as you were alluding to. First of all, revenue gets recognized on the moment of consumption of the experience and GBV is a measure of when the booking takes place. So there is a timing difference there. And especially, as you ramp into the year, bookings lead the revenue recognition, of course. So that’s one difference.
And the other, and then there is take rate in there is a difference, and then there is cancellations. And so cancellations are in line with what we’ve seen last year. They are still a little bit elevated from 2019, but cancellations is another factor as you compare between gross booking value and net revenue, because the gross booking value that we present is pre-cancellations, it’s gross of cancellations.
Mario Lu — Barclays — Analyst
Great. Thank you.
Operator
[Operator Instructions] The next question comes from James Lee with Mizuho. Your line is now open.
James Lee — Mizuho Securities USA — Analyst
Great. Thanks for taking my questions. Matt, congratulations on your first quarter as the CEO. And given your experience in digital marketing, maybe can you give us an early view on the hotel metasearch business, obviously, investors had concerns that OTAs are getting more direct traffic, and Google’s encroaching in the space. Now given that one of the Tripadvisor strength is reviews from consumers, is that a potential end-goal to unlock revenue opportunities or maybe moving up to mid to upper funnel marketing makes more sense, would love your color on that. Thanks.
Matt Goldberg — President & Chief Executive Officer
Yeah. Thanks for that question, James. I think you identify that there is a number of different ways that we can play in this ecosystem, and of course, I recognize that we are in a competitive space, and there are really strong players at the top of the funnel, and that there are players totally optimized at the bottom of the funnel. And I think if we really lean into where we are strong in providing that context, in bringing that audience that may or may not be looking to book right away, and thinking about before they travel and really driving further engagement, I think there’s a number of ways that we can do that. And understanding the signal that they bring and their needs, we can use all of that to do a great job engaging on the site. And then understand that point at which they’re ready to make it happen or they are actually in destination and be thoughtful about what’s the right offer and experience at that moment. We have a lot of assets to leverage to do that. Now, I’ve spent my career competing, cooperating, differentiating from some of the big technology platforms, and of course, we can do the same at Tripadvisor. The key is going to be to focus on how we’re differentiated. And again, as we reimagine the way that we are the definitive guide for consumers as they make those choices, I think that will help a lot. So we can play up and down the funnel.
I think you mentioned the OTAs, and I think obviously they are an important part of the ecosystem. They have what they do best. I think you know everybody wants to see direct traffic, and of course, we will focus on the benefit that we can deliver to them as part of their funnel consideration. And again, I mentioned that we have assets that I think we can take even better advantage of like data and the way we think about a full range of solutions. And it’s that power of context that I think can really be helpful. So I’m excited when I think about having spent a couple of decades in digital media. I feel as though the assets and the diversity and what we represent as a brand is a very, very strong place to start.
James Lee — Mizuho Securities USA — Analyst
Great. If I can ask a follow-up question is more separately related to consumer behavior, and clearly, investors are concerned about macro uncertainty. Are you guys seeing any changes in consumer behavior, may be trading down to lower price hotels, maybe shorter stay, I’m just curios what you seeing there?
Matt Goldberg — President & Chief Executive Officer
Yes. So I’ll kick it off and if Ernst wants to add any detail, he can do that. I’ve only been in the role for about a month, but from everything I see, consumers are actively returning to travel and experiences. So while we’re always looking for signs of slowdown, we don’t see anything today that causes any near-term concern. And of course, we’ve put the business in a good position post-pandemic and rebalanced more towards variable cost, the team did a great job there. I will say, we can’t predict what’s to come, but having operated in a variety of context through a number of cycles, I’m confident that as we watch the macro, we will see if there are early signs and be able to adjust. Ernst, you want to add anything?
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Yeah, I’ll just echo that, as obviously we’re focused on that we’re looking at the data and seeing, are we seeing some — any signs of potential weakening of the consumer in travel, and we’re not seeing it. The demand is very strong. If you go look at forward behavior, like searches that are being done in the forward level, the bookings that get done forward, they’re all strong versus 2019, and so we’re not seeing signs. Of course as Matt says, we also cannot predict the impact of the economy on travel going forward. But as we look at now and the summer and into the rest of the year, we see the traveler wanting to return to travel, and we talked about pent-up demand, a lot of people are talking about pent-up demand and we’re just seeing it. We’re seeing very enthusiastic travel behavior from our audience, and see no signs of slowdown in our business to-date.
James Lee — Mizuho Securities USA — Analyst
Great. Thanks so much.
Operator
[Operator Instructions] The next question comes from Deepak Mathivanan with Wolfe Research. Your line is now open.
Deepak Mathivanan — Wolfe Research — Analyst
Great. Thanks for taking the questions. So first, Matt, I know it’s still early for you, but how do you think about the org structure currently at Trip; Trip has done a few iterations in the past, but where do you see sort of like the talent gaps that need to be addressed at the high level? And then I wanted to ask you, you have about $1 billion in cash, any thoughts on kind of path for shareholder capital returns, or how are you thinking about it? Thank you.
Matt Goldberg — President & Chief Executive Officer
Thanks, Deepak. I appreciate the question. And as I noted earlier, I think there is a strong team in place. And, of course, we’re always going to seek to be a vibrant home for world-class talent and highly effective teams. And as in any organization, there are always opportunities to stretch a little more regardless of the function, I think that we will be building on the capabilities we already have here, and eventually we will look at where we think we might have gaps. I think that has more to do with the next stage of opportunities will approach through our strategy work, and less to do with me in particular joining the company. The team is really great. There’s a lot of talent. I’m excited to join this team and be a part of it. As we think about organization, I mentioned opportunities for execution, I am excited to think about the way that our strategy and operating model will link. But, of course, any organizations always a function of what you choose to do, how you prioritize and setting your teams up for success, and that’s the order in which we’ll do it.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
And Deepak, to your question of cash, we have indeed a considerable cash balance, and we are evaluating all the different ways of how we can go about that cash, either keep it in reserve for a while, earmark it for acquisitions, we have obviously attractive businesses that might be complemented with acquisitions. And then we have options around delevering or equity repurchases. And so, we continuously evaluate that with Matt coming on board, we’ll look at that together in the months and quarters to come along with our Board, of course.
Matt Goldberg — President & Chief Executive Officer
Yeah, I would just say and I didn’t mention it upfront, as I was evaluating things, I really liked what I saw from a financial perspective, that strong balance sheet, you know and enduring and cash generative Core business, 2 strong growing segments. And I think we have a good array of assets to deliver growth and they will benefit from sharper focus, better alignment, but I am excited about organic opportunities, there of course are other opportunities to consider. I think the main thing is that we will seek always to be great stewards of capital to think about what is the best mix to get the best return on capital. So we’ll certainly be talking about that over time with you all.
Deepak Mathivanan — Wolfe Research — Analyst
Great. Thank you so much.
Operator
[Operator Instructions] The next question comes from Ron Josey with Citi. Your line is now open.
Ronald Josey — Citigroup — Analyst
Great. Thanks for taking the question. I’ll echo everyone else, Matt welcome. I wanted to ask you, Matt, a little bit more about the data aspect of Tripadvisor. You just mentioned a few times the size and value of trips data and and unlocking that asset even more so than today. So just talk just a bit more about, I know it’s been one month, but just how you might envision using this data to call it creative, better or more engaging consumer experience and drive better partner ROI? And then, and maybe Ernst a question about Viator and revenue retention in new users, you talked to just about consistent revenue retention rates and investments in acquiring new users. So maybe talk just about these investments on the consumer side and building up the brand? Thank you, guys.
Matt Goldberg — President & Chief Executive Officer
Yeah, thanks for the question, Ron. And so, of course, it’s still early, but what I can say is, having spent a good number of years thinking about the way that data is transforming, really every industry and all the companies that I’ve been a part of, I do have conviction that we can leverage our data asset in ways that we haven’t before to enable the business. And I think it’s going to deliver agility, more insight, it will be really useful as we think about the way that we bring our strategy together to get all the pieces really reinforcing data is one of those currencies that can play across the entire organization and really help understand that consumer in a more granular way, of course, with all privacy considered, and think about what’s the next best opportunity to serve that consumer need.
And so I think it does open up a number of different opportunities. It would be early for me to project, but you know absolutely data in the way that it plays in media ecosystems in the way that we can serve our partners and think about value exchange in different ways, the opportunity to think about yield on the platform, data is something that can be aggregated and anonymized and really get trend signal, and there is a lot of different things we could be doing with that. Of course, there are ways to think about the data ecosystem, and the way that one might target segments at scale. So I think there are a lot of hypotheses that we could develop, and we’ll be very thoughtful about testing and learning and then sharing at that moment of conviction, but I think it’s a starting point, I’m excited about that platform and we’ve already been rolling up our sleeves and getting to it.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
And Ron, on the Viator repeat rates and investments we’re making there. Very important focal point for the team, there has been strides in more we can do around what experiences do we present to people coming to our site at what moment, what do we show people next when they have already booked and experienced and what else they could do and how do we present that. Investment in the app, has been a major focus for us over the last 12 months. Our app usage and number of bookings through the app has grown very impressively over the last 12 months, and that’s important because, not surprisingly, bookings from the app have higher repeat rates, higher LTVs then coming in other ways, and so we’ve been pleased with that progress. Also allows us to have more effective communication within market with folks, which improves the repeat rate.
We’ve been focusing focusing on localization of content, we have historically skewed to the English speaking point-of-sale, not so much the destination, actually Europe as a destination is larger historically for us than the U.S. as a destination, but skewed to U.S. speaking audiences that book and we see a huge opportunity to broaden that to European audiences and later on in the cycle, Asian audiences as well, and so we’re investing in that. And then there are other channels that we can explore that are more conducive to experiences, to repeat rates, app downloads is an attractive investment area that we’ve been looking at. And so, there are a lot of activities going on and all with that, very important KPI of how can we improve repeat behavior of our customers, because that’s ultimately going to be the driver of the LTV per customer, which allows us to invest more, and importantly, show very attractive margins over time.
Ronald Josey — Citigroup — Analyst
Thank you, Matt. Thank you, Ernst.
Operator
[Operator Instructions] The next question comes from John Colantuoni with Jefferies. Your line is now open.
John Colantuoni — Jefferies — Analyst
Hey, thanks for taking my questions. I wanted to start by asking about strength in the U.S. dollar versus the euro and the pound. Based on your data that you’re collecting on cross-border travel behavior, I’m curious whether you saw this U.S. dollar strength help catapult more customer engagement to Tripadvisor as U.S. travelers took advantage of their currency going a little bit further across some of the key destination markets across Europe, given that’s an important driver of traffic for Tripadvisor? And I’ve got a follow-up.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
Yeah, it’s difficult to say that definitively, but it does make common sense, and in the past we have seen that as an important driver. There is a multiple factors going on, including the price of flights, etc. So you have to look at the total trip for a traveler from the USA to Europe. But we have seen in the past that, of course, if the euro is cheap, then it is more attractive to travel overseas and travel to Europe. So nothing really I can give you as a strong data point at this point, but we have seen the growth of intercontinental travel come back progressively during the quarter. We have seen in the U.S. travelers booking hotels in in Europe come back, we’ve seen very strong growth in U.S. travelers buying experiences in Europe, which is a strong indication of more people traveling to Europe. So how much of that is pent-up demand and borders opening versus the euro impact is a little bit difficult to draw a straight line to. But yes, we have seen very, very robust U.S. to Europe travel behavior.
John Colantuoni — Jefferies — Analyst
Great. And Viator’s obviously, it’s been delivering very impressive revenue growth. But when you look at customer trends, sort of what portion in recent periods would you say are new to Viator versus repeat customers, and how does this customer composition between new and repeat compare to pre-COVID, and how does that kind of help inform your outlook for customer lifetime value and the ROI on your ramping marketing spend in that business? Thanks.
Ernst Teunissen — Chief Financial Officer and Chief Executive, Viator, TheFork and Cruise Critic
So new customer growth has been very important for us, and you’ve seen us lean in on marketing in ’21 and in ’22. And so, fortunately, that means we’re getting a lot of new customers in the door. But also fortunately, we see the expected growth in a repeat customer revenue as well. And we see that as we anticipated, come. So we see both lines going up into the right new customer revenue as well as repeat revenue, which is, of course, very pleasing. And new revenue is an indication of repeat revenue in the following year, so that’s been strong.
The other thing I would call out is that pre-pandemic our profile was predominantly Americans and Brits traveling to Europe. That was the big source of our revenue, and Europe as a destination was the big revenue source. Of course, the pandemic shifted a lot of demand to North America domestic, people going to. And so, what we’ve seen now in this year, is that the North America to North America volume and growth has been like it was last year. So our customers continue to do that, plus now the U.S. and UK to Europe revenue has come back in full force, so we’re adding that, plus Europe to Europe revenue has come back. So we’re getting the double benefit of now 2 big markets, where we only had one before, we had U.S. to Europe before, and now we have U.S. to Europe as well as North America to North America as very, very strong market. So that’s an important driver as well. We’ve not only created a lot of new users, we’ve also created a new use case for our users, which is Viator is great to use when you say in the U.S. as well.
John Colantuoni — Jefferies — Analyst
Thank you.
Operator
With that, the call will come to a conclusion. I would now like to turn the conference back to Matt Goldberg for closing remarks.
Matt Goldberg — President & Chief Executive Officer
Thank you all for joining us this summer time Friday morning. We have a lot of opportunities ahead of us, and a lot of exciting work to do. I’m looking forward to this next phase and keeping an open and transparent with all of you. Have a great weekend, everyone.
Operator
[Operator Closing Remarks]