Good afternoon, and welcome to BuildDirect's second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. Management will be available to take any questions in one-on-one meetings following the call. You can request a meeting or send your questions to investor relations at ir@builddirect.com. As a reminder, this call is being recorded. I would like to turn the conference over to Ethan Rudin, CFO at BuildDirect. Please go ahead, sir.
Thank you, and good morning. Good afternoon, everyone. Welcome to BuildDirect's call to present the company's second quarter 2022 earnings. Before we begin, I would like to note that some of our comments today will contain forward-looking information and statements under applicable securities laws that reflect management's current views with respect to future events. Any such information and statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information and statements. Please refer to the various materials we've filed with the Canadian securities regulators for a broader description of operational and risk factors that could affect the company's performance. In addition, please note that all dollar amounts mentioned in this presentation are in U.S. dollars. Finally, I'd like to highlight that our discussion this morning will align with our earnings presentation for the second quarter of 2022.
This presentation is also available on our website. I'd now like to pass the call over to David Lazar, CEO of BuildDirect. Take it away, David.
Thank you, Ethan. I am pleased to report that BuildDirect continues to grow its pro customer base, increasing pro revenue 6% quarter-over-quarter and improving its overall profitability. Pro revenue grew to $19.9 million, reaching 82.6% of total revenue at the quarter end. This growth largely came from our acquisitions and our strategy to take pro customer market share. In Q2 2022, gross profit reached almost $8.4 million, a decrease of 3.4% quarter-over-quarter and 3.8% year-over-year. Gross margin remains consistent, only decreased slightly by 80 basis points quarter-over-quarter to 35%. This is expected as we focus on the pro customer, which has lower gross margins, however, better overall profitability 'cause there are lower fulfillment costs and lower marketing expenses.
We achieved a positive adjusted EBITDA, which reached almost $0.6 million, increasing 1,195% quarter-over-quarter and 959% year-over-year. We delivered this improvement by strategically reallocating resources to the pro market. As you are aware, we closed the secured debt financing in an aggregate amount of $1.5 million in June, and we continue to explore additional debt and equity financing to support our strategy, which we expect to update you on later in 2022. Our pro focus strategy in a nutshell is we are continuing to focus on increasing our share of the pro customer market segment through four key pillars. To recap, they are the reallocation of our resources to focus primarily on serving the pro segment.
This includes curating products and services that will be attractive to the pro customer with the ultimate goal of using technology to drive more efficiency where it can be easy, easily adopted by the trade. Two, continuing to drive costs and operational synergies from our acquisitions to expand margins. Three, leveraging our leading heavyweight delivery capabilities to maximize our customer service offering in these two networks. Four, expanding our share of pro market through our omni-channel offering, enabling an end-to-end quoting to installation solution. Five, a TAM poised for disruption. Looking at our addressable market, the U.S. flooring market segment is about $70 billion. There are two relevant facts that make this market very attractive for BuildDirect.
One, online penetration is about 4%, one of the lowest across all U.S. retail product categories, growing at 11%, three times the overall flooring growth rate. Two, very fragmented traditional big box only has 24% share, with independent retailers dominating market segment share at 45%. However, they are missing the online channel. These brick-and-mortar companies are very traditional, low tech. While they want to close the gap here, they simply lack the focus on this channel and the capital to make it happen. Realigning our costs to support our strategy. As we announced in the Q2 earnings, we're improving our margins and driving adjusted EBITDA in 2022 through key cost adjustments. As demand has continued to increase, product costs have risen sharply in parallel.
While we cannot slow rising product costs, we can use trend insights and work even faster to pass some off to the customer to improve margins. Two, to offset product cost pressure, we're maximizing efficiencies in our cost base by reviewing our product sourcing network to get the best products for the best prices and leveraging purchasing synergies in our acquisitions to maximize relationships and buying power. Three, we're also ensuring that our operational costs align with our growth strategy. We have significantly reduced paid advertising budgets as the pro customer is much less receptive to paid advertising. We also know the pro customer is more likely to purchase products in person than online, so we're shifting investments into our pro focused efforts and services in response.
Further, at the end of the second quarter and subsequent to quarter end, the company made further cost reductions that will allow the company to recognize almost $2 million in annualized operating expense savings. The cost reductions were primarily focused within the BuildDirect e-commerce business as the company continued to shift its focus onto the profitable pro market segment and away from the higher cost consumer segment. The results of these initiatives are now coming through as planned, with, one, pro revenue growing by 6% to reach $19.9 million, representing 82.6% of total revenue at the quarter end. Two, adjusted EBITDA increasing 1,195.5% quarter-over-quarter, moving BuildDirect into the black.
I'd now like to hand the call over to Ethan, who will take you through our financial performance and the drivers behind the numbers in a bit more detail.
Thanks, David. Today, independent retailers represent almost half of the $70 billion flooring market, but have not spent focused effort on selling via e-commerce and digital functionality. What they do have, however, are very loyal and sticky pro customers, many exceeding 80% retention rates through their relationships, local market knowledge, and service. We've successfully acquired and integrated two of these independent retailers into the business, Michigan-based Superb and FloorSource, which have delivered a range of financial and operational synergies, a strong combined foothold in the Midwest U.S., relationships with a network of home builders and construction pros, the opportunity to leverage our omni-channel offering to deliver an improved customer service experience for these pros. Michigan-based Superb, an established name brand in serving pro customers, brought strong relationships with home builders, condominium developers, and commercial and residential contractors.
To recap our financial highlights, Q2 2022 revenues reached $24.1 million, decreasing 1.4% quarter-over-quarter. However, increased slightly year-over-year. The decrease quarter-over-quarter is a result of a change in strategy where the company is spending less on digital marketing and focusing more on the pro business, which has better unit economics. Q2 2022 pro revenue reached $19.9 million, representing almost 83% of total revenue at quarter end. Pro revenues grew 6% quarter-over-quarter and almost 22% year-over-year due to increased strategic focus on driving pro market share. Gross profit reached $8.4 million, a decrease of 3.4% quarter-over-quarter, and 3.8% year-over-year.
We focused on the pro customer, which has lower gross margins, however, better overall profitability because there are lower fulfillment costs and lower marketing expenses. Gross margin in Q2 2022 decreased slightly 80 basis points to 35% compared to Q1 2022. Adjusted EBITDA increased by 1,195.5 quarter-over-quarter and 959% year-over-year as we continued to reallocate our resources to the pro customer segment and have successfully reduced our operating expenses by almost $2 million on a run rate basis. Looking forward to the remainder of 2022, we remain focused on strategies to continue to produce positive adjusted EBITDA as we continue to deploy our time and resources to capturing pro market share.
Let me close by recapping our strategy, which focuses on reallocating resources and operations to focus on the pro customer, driving cost and operational synergies from our acquisitions to enhance margins, leveraging our unique leading heavyweight delivery network, and continuing to grow our share of the pro market through end-to-end omni-channel offerings. As you can see, the results of our strategy are coming through with our key metrics improving in Q2 2022. We remain confident that we're taking the right steps for BuildDirect's future, and thank you for all of your time today on the call. Turning it over to you, operator.
Thank you, sir. Ladies and gentlemen, as a reminder, if you would like to request a meeting or send your questions to investor relations at ir@builddirect.com. Thank you once again for your attendance. You may disconnect.