Good morning, and welcome to BuildDirect's Third 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 will now turn the call over to Matt Alexander, Interim CFO of BuildDirect. Please go ahead.
Thank you, and good morning, everyone. Welcome to BuildDirect's call to present the company's third quarter 2022 earnings. Before we begin, I'd like to note some of our comments today will contain forward-looking information and statements under applicable securities law that reflects management's current views with respect to future events. Any such information and statements are subject to risks, uncertainty, 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 have filed with the Canadian Securities Administrators for a broader description of the risk factors that could affect the company's performance. In addition, I'd like to note all dollar amounts are mentioned in the presentation are in US dollars. Finally, I'd like to highlight our discussion this morning will align with the third quarter earnings presentation, which is available on our website.
I'd like to now pass the call over to BuildDirect's new CEO, who joined in mid-September, Shawn Wilson. Shawn is a seasoned home improvement executive with cross-functional experience throughout the building material industry, including e-commerce, big box retailer, manufacturing and installation services. He is a proven leader that is skilled in developing teams and effective strategy to deliver profitable growth. We're thrilled to have Shawn on board. Shawn, over to you.
All right, great. Thank you, Matt. I joined BuildDirect as CEO in September of this year. As a flooring and e-commerce veteran, I saw massive unlocked potential in the company, and I'm really excited to guide the company to a bright future. BuildDirect has continued its transformation process to focus efforts on the pro segment, which is a growing yet overlooked segment by traditional retailers, which still in the U.S. represents 65% of about $70 billion flooring industry. Really, that's because they're seen as competitors by full service retailers, and serving and focusing on pros is disruptive to their operating models. From a synergy perspective, we have tremendous opportunity leveraging our current businesses in regards to supply chain, pricing power, marketing services, among others, and have realized very early wins over the last month.
Case in point, we booked our single largest order of $1.6 million in October by leveraging our specification, procurement, and logistics capabilities, all of which resided within our three distinct divisions. In Q3, I'm pleased to report that BuildDirect continues to grow its customer base with the pro segment, increasing pro revenue by 6% quarter-over-quarter and maintaining positive Adjusted EBITDA. Pro revenue reached $19.4 million, representing 88.2% of total revenue at the quarter end. This growth largely came from our acquisitions and our strategy to take pro customer market share. Moving forward, maximizing profitability is gonna be a large focus for myself and team. I've already seen improvements in that direction.
Gross margin for Q3 came in a bit light. However, that was mostly due to the November 2021 acquisition of Superb Flooring & Design, which is focused on lower margin but healthy EBITDA contracts, which intuitively diluted the overall company's margin. After the first 60 days, I recognize a lot of potential in the company's respective capabilities and competitive advantages. They'll be focused on driving efficiencies while also growing top line for the company. To help realize its potential, as you're aware, in September, we obtained funding from a non-brokered private placement offering of 6,847,830 common shares issued at a price of CAD 0.46 per common share for total gross proceeds of $2.4 million.
We continue to explore debt and equity financing alternatives to support our strategy, which we're expected to update later in 2022 this year. Okay, regarding our pro focus strategy in a nutshell, BuildDirect is focused on helping pros build out their own businesses by providing products and services from a platform perspective to them. We'll be very focused on better understanding our pros' needs and creating tech-enabled solutions to help them grow their business and our respective businesses together. BuildDirect has reallocated resources that focus on really two distinct segments of pro customers. The first segment are pros who need a product fulfillment partner that can assist with specifying the right products for the right projects, which tend to be on the larger side, and ensuring quality delivery on time.
BuildDirect serves these pros through our e-commerce operations and will continue to add products and services to further strengthen our relationships with these pros. Our longer-term goal is to be the full service back-end platform for these pros to support and grow their independent businesses. The second segment are pros who need a local product fulfillment partner that can provide same-day product pickup. BuildDirect serves these pros who are brick-and-mortar locations through pro-centric product and merchandising programs and will continue to add products, services, and potentially new locations to further support this segment. There are inherent synergies between these two pro segments that BuildDirect is exploring and creating programs that will better leverage our operations. It's a total market that's just really poised for disruption.
As we've noted before, our addressable market, the US flooring market is around $78 billion in the US, and there are two relevant facts that make this market very attractive for BuildDirect. The first is online penetration is only about 4%. It's one of the lowest across all US retail product categories, and it's growing at 11%, about three times the overall growth rate for the flooring industry. Second, it's very fragmented. Traditional big box retail still only has about 24% of the market share of independent retailers dominating the market at a 65% share. However, they're often missing the online channel, and these brick-and-mortar companies are traditionally low tech. While they may see the opportunity to close the gap, they're naturally disincentivized, having invested tremendously in their own retail operations.
They're often extremely reluctant to empower flooring contractors or pros to build out their own businesses because it would potentially cut themselves out of the customer's purchase equation. Regarding our cost relating to our strategy, we announced at the Q3 earnings we're improving the profitability this year through key cost adjustments. As demand stabilizes, product costs are starting to stabilize as well, and our cost focuses are as follows. First and foremost, we're focusing on pricing to ensure we are optimizing profitability for all revenue channels. Second, to offset product cost pressure, we're maximizing efficiencies in our cost base by reviewing our sourcing network to get the best products at the best prices and also leveraging purchasing synergies in our acquisitions to maximize relationships and buying power. We're also ensuring that our operational costs align with our growth strategy.
We have significantly reduced paid advertising budgets as our pro customer is much less receptive to paid advertising. We also know that the pro segment is still much more likely to purchase products in person than online, so we're shifting investments into our pro-focused efforts and service response. Further, during Q3, the company made further cost reductions that will allow the company to recognize almost $2 million in annualized operating expense savings. The cost reductions are primarily focused on the BuildDirect e-commerce business as the company continues to shift its focus into the profitable pro segment and away from the higher cost consumer segment. We haven't yet seen softening in our business due to rising interest rates and fears of a potential recession. However, we are preparing for this potential heading into next year.
We're also optimistic that we could continue to see tailwinds due to low and underbuilt housing stock in the U.S. Regardless, we believe that the pro segment are going to need services like ours to be successful, especially in tougher times, which for which we should be well positioned to capitalize from. The flooring industry has a considerable addressable market, and we believe there's opportunity for us to grow even in tougher times. The results of the initiatives are now coming through. Pro revenue grew by 6%, reaching $19.4 million, which as I mentioned, is 88% of total revenue, and EBITDA increased $0.9 million year-over-year. This is BuildDirect's third consecutive quarter posting positive adjusted EBITDA. Okay. With that, I'd like to hand the call back over to Matt.
Apologies. In Q3, BuildDirect achieved $22 million in revenue, a decrease of 8.5% quarter-over-quarter and 1.3% year-over-year. Both the quarter-over-quarter and year-over-year decrease are a result of the change in the strategy, where the company is spending less on digital marketing and focusing more on the pro business, which has better unit economics and is more profitable. This change in strategy can be seen in our pro revenue results, which reached $19.4 million and now represents 88.2% of our total revenue at the quarter end. Our revenues grew by 6% quarter-over-quarter and 19.5% year-over-year due to this change in strategy and focus on pro.
Our Q3 gross profit was $6.9 million, a decrease of 17.8% quarter-over-quarter or 14.8% year-over-year. Our gross margin decreased by 360 basis points quarter-over-quarter or 500 basis points year-over-year to 31.4%. Both the gross profit dollar and the gross margin percent decrease were expected and can be attributed to the acquisition of Superb Flooring & Design, which occurred in November 2021. Revenues from Superb Flooring & Design are focused on lower margin but healthy EBITDA contracts. This shift diluted the company's overall margin but improves the bottom line or Adjusted EBITDA. To that note, Q3 Adjusted EBITDA was $0.3 million, which represents an increase of $0.9 million year-over-year.
This increase, again, is due to the strategic shift and the reallocation of our resources to pro customer and the acquisition of Superb Flooring & Design. Our strategy to improve profitability by focusing on the pro is coming into play or playing out as this is the third consecutive quarter of positive Adjusted EBITDA. Looking forward to the remainder of 2022, we expect to maintain the positive Adjusted EBITDA as we continue to focus on the profitable pro market. As we see success focusing on our existing pro business, we have not lost focus on the potential to expand our pro market share through acquisition. To recap on the strategy, independent retailers represent over half of the $70 billion flooring market. They do not have the capabilities to win long-term. They lack e-commerce functionality, scale, and often direct manufacturer relationships.
Most importantly, these are family or founder-led businesses with owners who are close to retiring and without, in most cases, a succession plan. The only options for them are selling, merging, or shutting down. What these businesses do have, however, are very loyal and sticky pro customers, many exceeding 80% retention rates through their relationship, local market knowledge, and service. To date, we have successfully acquired and integrated two of these independent retailers into the business, Michigan-based Superb and FloorSource, which have delivered a range of financial operational synergies, a strong combined foothold in the Midwest U.S., relationships with a network of home builders and construction pros, and finally, the opportunity to leverage our omni-channel offering to deliver an improved customer service experience to these pros.
Let me close by recapping our strategy, which focuses on, firstly, reallocating our resources and operations to focus on the pro customer. Secondly, driving costs and operational synergies from our acquisitions to enhance profitability. Thirdly, leveraging our unique leading heavyweight delivery network. And finally, continuing to grow our share of pro market through an end-to-end omni-channel offering. As you can see from the results, our strategies are coming through with key indicators improving in Q3. Confident that we're taking the right steps for BuildDirect's future. Thank you. Back to the operator.
Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.