of 2023. My name is Glen Nelson, and I'm the Vice President of Investor Relations here. With me on the call today, we have Sasha Grujicic, Chief Executive Officer, Alim Virani, the Chief Financial Officer, and Andre Garber, our Chief Development Officer. After the market closed yesterday, we issued our Q3 2023 results press release, as well as the MD&A and financial statements, which you can get on our investor relations section of our website or on SEDAR. The webinar is being broadcast this morning at 9:30 A.M. on November 30th, 2023, and a replay will be available on our IR website after the call's conclusion. During today's call, we will make some statements related to our business that may be considered forward-looking. These statements reflect our views as of today's date, but should not be regarded as representative of our views at any other future dates.
These statements are subject to various uncertainties and could cause actual results to differ materially. Today, all figures that we will discuss will be on an IFRS basis, unless otherwise noted, and we will refer to specific non-IFRS terms, like Adjusted EBITDA. A reconciliation of the closest IFRS measures can be found at the end of our presentation or at the end of the press release we issued last night. Finally, at times in our prepared remarks, in response to your questions, we may discuss additional metrics to give insight into the dynamics of Now and/or our results. Please be advised that we may not continue to provide that additional detail in the future. Also, all the currency is denoted in U.S. dollars. With that, I will pass the call over to Sasha.
Thanks, Glen, and good morning, everyone. Thanks so much for joining us. I'm really excited to share the results of our Q3, as it was our strongest quarter for revenue and profitability to date. In Q3, we achieved $16.5 million in revenue, with $7.2 million in gross profit and $2.4 million in Adjusted EBITDA. Along with that, we achieved a flat net income in the quarter for the first time in the company's history, marking the strong efforts we've made around cost management without hindering revenue generation. We had our second straight quarter with really strong new customer wins and business unit organic growth, speaking to the attractiveness of our work product that's being featured around the world.
Past the cost reductions we had in the quarter, which is now totaling over $6 million annualized that we've pulled out year to date, we have reduced our cash flow from operations burn rate by 84% to $Adjusted EBITDA in Q3. As a point of reference, we burned over $3.6 million in Q1. Finally, we've done a tremendous job in retaining our top talent around the world that are delivering these cutting-edge data and AI solutions to our customers. We continue to operate with discipline and focus as we enter the age of AI, with a very compelling and differentiated offering here at Now. Now let's dive in a little bit more into the quarter. As mentioned, we had a very strong quarter in terms of revenue, with organic growth ranging upwards of 30%.
Profitability also improved as we continued to drive more work throughout our global delivery model. Adjusted EBITDA was also strengthened as we pulled $2.7 million of annualized cost out of our operating group, which ultimately drove a gain from operations of over $800,000, another record for us at Now. Our global group continues to deepen the way in which that we work together to deliver our AI and data services and solutions to our global customers, setting the stage for strong tailwinds leading into 2024. Speaking of our customers, let's talk a little bit more about them. Following a massive quarter in Q2 with 53 new customers, we added an additional 30 new customer logos across our four verticals. Our average contract values per customer ticked down a tiny bit because we added so many customers in the past two quarters.
But moving forward as a global group, customer expansion will continually be increasingly important in how we integrate our standard land and expand methodology and drive increased returns to the company. We're also seeing very strong demand in our service-focused businesses, with our average number of contracts per customer increasing. Our average contract values also ticked up as a result of our team's work of really helping our customers maximize the potential of their technology, data, and their emerging AI investments. Finally, the length of our commercial contracts also continued to expand as the scale and scope of our work continues to grow with our customers. We had a nice balance of customer acquisition across our four verticals, with consumer goods and commercial services leading the way.
This is no surprise, as they tend to be a little bit more advanced in their data estates, data collection, and deployments of new types of technologies and AI solutions in their industries. Industrial customers are increasingly becoming important as they start to deploy more of their capital into data and automation, and we're very much seeing some strong tailwinds in that sector of our business as well. Couple of Q3 highlights. We saw an uptick in demand in the pharmaceutical sector in Q3, with us landing two marquee logos in Novo Nordisk and Takeda. For both of them, we'll be evolving their data estates and supporting them with business intelligence and AI deployments across AWS and Snowflake for Novo Nordisk and Azure for Takeda.
Our partnership ecosystem for SnowGraph continues to build and evolve as we move into 2024, and our engagement with Snowflake, specifically creating new pipeline opportunities for it—for us in the U.S., which is the largest, largest sector for them, in the media, retail, travel, and CPG industries, which are actually driving a lot of the increased consumption. You can take a look at the kind of latest report that they put out with their quarter, had their first-ever beat and raise, and they're very supportive of us in deploying SnowGraph into some of their emerging customers. So more to come on that in the next few quarters on SnowGraph.
We also launched SmartPacks, our popular analytics as a service product, that has been available primarily in the U.K. into the U.S. this quarter, to help satisfy the need for on-demand data and AI enablement. And our strategic partnership with the PwC in the U.K. has opened up new conversations for us with PwC in other markets, including Canada, the United States, Mexico, and South Africa, to further deepen and support that partnership. There are many, many more amazing achievements to highlight here at Now, but one of the most exciting things to come is how we continue to drive deeper integration, which brings me to the way in which that the group is working together.
It's been a fantastic achievement for the group to continue to deepen the way in which that we integrate, leveraging our global delivery model, improving our gross profit percentage up to 44% in the quarter. We had a number of examples that demonstrated just how Now has transferable sets of skills and capabilities around the world, that can work together efficiently and seamlessly to deliver to our customers. This work includes customers that we're working with in the U.S. and the U.K., as well as some of our internal R&D on our product suite, which we are super excited about as we continue to evolve that. Going into 2024, the global strength of our group, our leaders, and our people will continue to shine through as they did in Q3.
I'm gonna hand it over to Alim to dive a little bit more into the numbers.
Thank you, Sasha. These charts are pulled from data within our MD&A and provide an overview of the performance of just the operating units, excluding the corporate and operating costs. The Q3 revenue increased $1 million versus Q2 2023, which was driven by the expansion on contracts with current customers and strong billings. As a reminder, the Q1 2023 results only included partial results from the acquisitions that closed in Q1. Q3 organic growth for the business units is consistent to what we were seeing in Q2 and ranges from the low single digits to up to 30%. Our gross profit margins are hovering around 42%-45% for fiscal year 2023. The increase in Q3 is caused by a true-up of government subsidies in Latin America and the mobilization of our global delivery model.
Through our integration efforts, we are seeing more collaborations between our business units, as resources in Latin America and India are being utilized to service contracts in the U.K. and the U.S., which is having a direct impact on our gross margin. This trend is expected to continue into 2024 as we further integrate our business units and optimize the use of our global talent pool. The increase in revenue during Q3 is directly correlated to the increase in the business unit, in the EBITDA, which hit just under $3.4 million in Q3. In addition to the top-line performance, the improvements in gross profit, the business units have also been focused on reducing non-discretionary costs and identifying redundancies with their sister business units, which has had a direct impact on profitability.
As you can see here, the EBITDA percentages just for the business units are ranging between 13%-17%, which, you know, is a trend that we're expecting—we're hoping to continue into the future. Next slide. This chart shows our consolidated Adjusted EBITDA, which is net of our operating model costs. As a reminder, the operating model costs include the corporate functions that support the integration of the business units and the compliance costs. Creating efficiencies within the operating model has been a focus area for 2023 and is shown on the chart. As we can see here, the impact of the changes that we have made in Q1 and Q2 has been significant, as the Q3 operating costs are almost 50% lower than what was incurred in Q1 2023.
So you can see the chart highlighted in blue in Q1, our operating costs were $1.7 million. This dropped to point eight million, eight hundred K in Q2, and hovered around the same amount in Q3. We will continue to analyze the efficiencies of our operating model and are hoping to realize further savings as we deepen the integration of our corporate and business unit operations. Next slide. This chart, this chart focuses on cash flow specifically and working capital. The bar charts are a depiction of the quarter-over-quarter cash flow from operations. As you can see, the operating burn has decreased significantly since Q3, which is a function of the lower operating costs, improved profitability from our business units, and strong AR collections during Q3.
In Q3, as shown, cash flow from operations burned approximately $3.6 million, right? So this is reduced all the way to $300,000 in Q3 because of the specific efforts that and actions that we took earlier on during the year. Furthermore, our focus on integrations and streamlining the finance function has played a key role in improving the working capital position of the company. We expect this trend to continue into Q4 and 2024 as profitability remains of our operations remains a key focus. In addition to producing cash flow from operations, we continue to strengthen our relationships with our lenders as a potential source of gaining access to working capital. This will continue to be a focus for our management team as we transition to positive free cash flow.
With that, I'd like to hand it back to Sasha.
Thanks, Alim, and congratulations on a tremendous quarter. So as we start to look forward, I want to dive into some of the different kind of market dynamics that are happening, because it's important for us to continue to monitor and adapt to these developments in the sector. As we're all aware, AI and the power of its potential, especially in industry deployments, are going to shape the global economy for decades to come. And we're not unique in this perspective, as we see private and public investment continuing to mount and flow into private and public companies around the world. They're all aiming to take advantage of these newer technologies that offer such promise in transforming our global economy. The investment pressure into AI serves as an interesting tailwind for us as a company, as we play a critical role in their success.
Digging a little deeper, we also see the amount of data that's being created, which is the most and critical input to any type of AI deployment, is continuing to scale exponentially. We feel that as a company, each and every day in the work that we do with our customers. But what's often not talked about is the lack of readiness of large organizations in their response to these massive competing pressures created by this new technology. Every big and little tech company that's seeking all of this massive amounts of investment and capital deployment are looking to our customers and our customers' environments to be able to deploy their technologies. That being said, there is a massive bottleneck in those in those deployments for a few reasons. One is most organizations have a lack of data, data readiness.
The second is their lack of governance and risk and compliance associated with data, which places enormous amounts of compliance and risk for organizations looking to deploy AI solutions. Most organizations kind of lack the industry expertise at scale to be able to deploy these new technologies, and the criticality of time to value continues to feature very, very highly as IT and business professionals look to these new types of deployments. Most organizations around the world are not ready for this. With that being said, though, us at Now, we actually directly solve for this. So as the pressure mounts for more companies to maximize the potential for AI, solving their hardest industry problems, and the whole technology sector tries to commercialize, we actually are situated with the right capabilities to unlock that value for everyone.
We can deal with the data readiness problem, we can work with the different technologies, we can deal with the governance risk and compliance requirements to leverage our customers' data in a way that's safe and scales, and we can ensure that the applications reduce the time to value, as we've shown in all the use cases in which we published. As we go into 2024, there are a few major themes for us as a business. They are global consolidation and integration, leveraging our global scale, delivery, and capabilities to our customers. There's a deepening of our focus on data and AI enablement for our customers, as well as integrating large language models into our assets to maximize their extensibility and value to our customers.
We're going to continue to deepen our partnership ecosystem globally with the likes of Snowflake, Microsoft, Amazon, Google, and others, and really digging into growth into key growth markets and leveraging our global delivery capabilities. We'll continue to be opportunistic with M&A, layering new acquisitions onto sustainable base of operations to accelerate growth into this massive market. In summary, the future is very bright for us at Now, and our performance this quarter highlights this group's commitment to disciplined growth, commercial development, and focus on creating shareholder value. I want to thank everybody at the global Now team and all of our partners and stakeholders and investors who stood with us over the past couple of quarters and seen the kind of fruits of the work that everybody has put in. With that, I'll take your questions.
Thank you, Sasha, and may I remind everybody that there's a Q&A submit button. If you have any questions, please feel free to submit those, and we'll put them in front of everyone to answer. So our first question comes from Julian Luke and says, "Congratulations on the incredible growth." I think we'll pass this one over to Alim. And the question is: What is your medium long-term objective in EBITDA margins?
Yeah, I think we want to see the long-term objectives, say, you know, definitely in the double digits, you know, north of, you know, the 12%-15% that we're seeing right now. I think for the medium, short to medium term, we'll want to see the consolidated EBITDA margin stay between the 8% and the 15%, which is consistent with what we're seeing in 2023.
Great. And, again, I'll pass the next part back over to you. Can you explain the impairment of $1.7 million in trade receivables?
Yeah, so this relates to pre-acquisition AR for some of the acquisitions in Q1. So it's not revenue that we had booked on our books in 2023. It was a part of the balance sheets that we've inherited from the acquisitions, and this will be cleaned up once we're certain that it's not collectible as part of our Q4 reporting.
Perfect. Thank you. And the next question comes from Ted Stoob: "Looks like a strong quarter, team. What is the high-level nature of the cost savings, i.e., people, departments, functions, et cetera?" Maybe we'll get, Sasha to address that one.
Yeah, sure. Thanks, Ted. So it ranges around the world. So the way in which that we evaluated the opportunities for cost improvements across our global group was anything discretionary that's not critical to the delivery of our work product to our customers, just integration across the board, so ways in which that we can kind of leverage the scale and the economies of scale that we have globally across the group. So that really dug into some of the OpEx functions that we had, as well as, you know, really looking at ways in which to kind of standardize the approach to some of our back office functions.
So it was quite broad in terms of the cuts that we've saw within the business units, and as mentioned, you know, we're totaling just over $6 million annually that we've pulled out of the business from a cost perspective thus far.
Great, thank you. And the next question comes from Rob Goff: "You mentioned strengthened relations with your bankers. Could you perhaps go further, i.e., the EDC and your Schedule A bank?" Maybe we'll get Andre to answer that one.
Sure, and thanks, Rob. It's Andre Garber here. Look, we're quite proud of what we've been able to accomplish working collaboratively with our lending partners. For EDC, TD, and MVB Bank, we appreciate the opportunity to continue our partnership and your support in doing that. Look, as our business continues to perform, it does open us up to increased borrowing capacity within the framework of, say, a Schedule A bank, taking into account the cost of capital.
Great, thank you. And as follow-up, is there any more you can say about organic growth, sustainable, driven by additional services with new or existing customers? Maybe Sasha, maybe if you could give some insight there.
Yeah, so this is the extensibility point that I'd referenced earlier. You know, given the kind of seamless interconnectivity that we have across our global capabilities, there is a lot of customer expansion opportunities against some, you know, some early entrances that we have with our newer customers. So for us, the customer expansion piece alone, you know, offers great tailwinds with regards to sustainability of organic growth, and a lot of our acquisitions have been with their key customers for many years, upwards of 10. So the ability in which to continue to work with those customers and expand the capabilities and deployments of what we do with them is absolutely available to us.
Great, thank you. Is there anything further you can discuss with respect to your PwC partnership? Is there potential for other similar partnerships in the future? Yeah, maybe Andre, you could... Or sorry, Sasha, you could give us some feedback there.
Yeah, for sure. It's early days for us in PwC. You know, this, the entry point in the U.K. has just afforded us opportunities now around the world where we have kind of operations and customers. It's safe to say that PwC isn't alone in their sector that's looking for solutions like ours, so we have ongoing conversations there to support others in a similar capacity.
Great, thank you. Well, I'd like to remind everyone they can submit a question now, in the Q&A section. So here's, one question in: What do you think the right valuation metric for Now is, and what multiple range would you like to see the stock at? You know, I can, I can speak to that one in that, you know, we, we really... You know, it really isn't in our, our wheelhouse to say where, like, you know, Now should be valued at, today. You know, we see that there's a plenty of opportunity in the market or in our future for Now, and we are, you know, continue to put up great results quarter over quarter. And, you know, we think that the, the market will, you know, see that value as, as we go forward.
So it looks like we are at the end of our questions. I'll give one more opportunity for people to submit a question today. All right, I think that is it. So I will pass the call back over to Sasha and for concluding thoughts.
Yeah, I just wanted to thank everybody again for all the support and hard work that they've put into here at Now. I think we've got a tremendous global group that is doing remarkable work with some of the largest organizations in the world. I think the tailwinds going into 2024 are there. I think we have a tremendous ability in which to kind of seize this opportunity as it presents ourselves, and we're very excited about that as an organization. So, you know, more from us in the weeks and months to come as we take shape into 2024. But, you know, right now, you know, congratulations to everybody on our team for a great quarter and we thank everybody for their ongoing support and commitment to Now as an organization.
Thank you.
Thanks, everyone.
Awesome.
Thank you, everyone.
Thank you. Cheers. For their ongoing support, and commitment to Now as a, as an organization. So thank you.