Ladies and gentlemen, thank you for standing by, and I would like to welcome you to the Q3 2023 earnings call of Huuuge Games. The speakers today are Wojciech Wronowski, the CEO, and Marek Chwałek, EVP Finance. The call will start with a presentation from the company, followed by Q&A. For the Q&A session, we'll also be joined by Erik Duindam, the COO, and Maciej Hebda, SVP Strategy and Planning. The presentation will be available for download on our website after the call. You're also welcome to type in the questions in the chat box while the presenters are speaking. So with that, I'll now pass the line over to Wojciech to start the presentation. Please go ahead, sir.
Hello, everyone. Thank you all for tuning in. My name is Wojciech Wronowski, and I'm the new Chief Executive Officer of Huuuge. First of all, I would like to express my gratitude for the opportunity to lead the company and extend my thanks to Anton, the Board of Directors, the team, and shareholders for their support. Anton transitioned in his role and he's now the Executive Chairman of the Board of Directors and will continue to be an instrumental part of the team, focused now more on strategy, investment, and M&A. Being mindful of time, I'll keep my intro short. I've been working with Anton for, like, last 18 years, starting my journey during the Gamelion times. In 2014, I've been part of founding team member of Huuuge.
Early in the Huuuge era, during the hypergrowth phase, I was responsible for driving our core products, Huuuge and Billionaire Casino. In the recent years, as a chief operating officer, I've been working alongside Anton, contributing to building and executing our profitability strategy, which is now yielding strong cash generation results. Regarding the future of Huuuge, Anton and I share the same vision. Do not expect strategy changes. The North Star remains unchanged. My objective is to bring Huuuge back on the growth track by doubling down on improving our core products and by investing in new games, something that I'm personally extremely excited and passionate about. Let's start with the Q3 highlights. There is a lot to unpack here. We had a strong quarter marked by revenue growth in our core products for the first time in several quarters.
I'm going to cover the main growth drivers in the next slides. Our products outperformed the market. According to Eilers & Krejcik report, the social casino market declined by 2.2% quarter-over-quarter, while Huuuge Casino experienced 4.2% quarter-over-quarter growth. Huuuge market share increased from 4.5% up to 4.6%. Our direct-to-consumer solution continues to grow and has already exceeded our internal expectations. We remain optimistic about Q4 performance. Typically, Q4 is the strongest due to numerous seasonal events in the calendar: Thanksgiving, Black Friday, Cyber Monday, and the holiday period. We expect at least stable performance and another strong quarter. The last highlight is one of which we are most proud of. In the last twelve months, the company generated $112 million of adjusted EBITDA and produced over $86 million in cash.
This is the result of the tough decisions we've made in the first quarter, maintaining discipline, discipline with costs, and becoming more effective as an organization. With the current market conditions, Huuuge is strongly positioned and has the flexibility to decide and choose amongst potential capital deployment options. Let me briefly bring you up to speed in regards to core franchises and development of new games. In the first quarter, we implemented comprehensive changes within our marketing department. Strategic decisions was made to undergo a major reorganization, establishing new processes and appointing new leadership in the marketing team. We are quite pleased with these changes, as the new team has demonstrated considerable success in increasing quarter-over-quarter spending while maintaining payback within our tolerance thresholds. Our approach remains the same. We are prioritizing quality over quantity for our games.
As we move into the fourth quarter of this year, we anticipate the spending will remain at a similar level. We are actively monitoring performance metrics, and adjustments may be made based on the results. We have not only been successful in managing our marketing performance, but have also executed one of the largest updates to date in our core products. This update included one of the biggest economic changes and introduced a highly anticipated loyalty program for our players, Huuuge Rewards. Our efforts on both sides of the funnel have played a role in the improvements we are witnessing with MAU, monthly active users. It's not just the marketing spend, also the improvements in player engagement and stickiness resulting from the product changes have positively impacted our player base. The loyalty program is a feature we plan to consistently build upon.
We recognize numerous opportunities to enhance this functionality, providing more incentives for players to play, stay, and pay. The comprehensive changes to the economy and the diligent work invested in managing our core game have led to substantial improvements across all product metrics. In addition to 1% increase quarter-over-quarter daily active users, we have achieved a 3% quarter-over-quarter growth in the number of paying users and their spending in our products. ARPDAU, so average revenue per daily active user, has increased by 3% quarter-over-quarter. We anticipate to continue capitalizing on these positive changes, and we'll introduce new game mechanics as early as December. We expect, at very least, stable performance in December and are optimistic about slight increase in Q4 versus Q3.
We are making significant progress in our direct-to-consumer channels, and the performance has surpassed our internal expectations. By the end of the year, we anticipate that 8% of our revenue will be generated through the webshop. Our focus remains on effectively managing the growth of our D2C initiatives. Given that our games rely solely on the in-game currency, it is critical to navigate potential cannibalization. This is a long-term plan for us, and we anticipate slow but steady growth, aiming not only for increased profits, but also a net positive impact on total revenue. As we speak, we are in the process of rolling out new D2C services that will undergo testing against the current webshop. Currently, our payment fees are lower than those of competitors.
With the new solutions, we aim to maintain the same or similar fee structures, and at the same time, we're expecting increasing adoption rates through incremental improvements in user experience and gamification layers. The testing phase of our dot-com version of core product is underway. Our goal is to provide an experience on par, if not better than our native games. While we are taking our time with the global rollout, we are already started to generate low thousands of dollars from these platforms. Let's dive into the latest on our new games development. We have four pods working on multiple initiatives. Each Huuuge Pod zeros in a specific genre. It's not only about creating new games, it's about nurturing talented teams, building the solid business know-how and acumen and general mastery.
Huuuge Pod is a long-term game for us, and in the past last month, we've been experimenting with numbers of prototypes, scraping some and refining others. Making games is hard. Making successful games in the post-IDFA reality is harder. Right now, we are testing two games in the market. We are quite excited about those, and as soon as we are seeing material success, we might spill more details on one or both in the upcoming quarter. Regarding the financial update, Marek, the floor is yours.
Thank you, Wojtek. Hello, everyone. Good morning. I'll cover the financial section of this presentation. Next slide, please. Thank you. As Wojtek mentioned, we are proud to report that our adjusted EBITDA for the trailing twelve months reached $112 million, and the net cash flow from operations reached $86.5 million. These numbers showcase our strategic focus and continued efforts to deliver on our promises. We continue to be one of the most cash-generative businesses in the games industry, with an impressive net operating cash flow to adjusted EBITDA conversion of over 77% when considering the last twelve months.
At the end of the third quarter, just three months after settlement of $150 million share buyback, the company's balance sheet showed $127.7 million in cash and equivalents, which, combined with our track record of generating substantial free cash flow, positions us well to pursue value-enhancing deals and exploring opportunities of further cash distribution to our shareholders in the next year. Moving on to the next slide, I'll walk you through the financials and discuss the third quarter in greater detail. In the third quarter of this year, our revenue amounted to over $71 million, representing an 8.2% decline compared to the same period last year. Over 67% of this difference is attributable to no longer supported games, like Traffic Puzzle.
Our core franchises in the third quarter declined by 2.9% year-over-year, but grew 4.2% sequentially, despite a slight decrease by 2.2% of the social casino market, as reported by Eilers & Krejcik. As Wojtek pointed out, we also see a growing positive impact of the direct-to-consumer channel, accounting for almost 7% of revenue in the third quarter, which significantly contributed to our gross margin improvement in this period, nearly 2 percentage points. While the UA marketing campaigns expenses for the first nine months of this year were significantly lower year-over-year, as mentioned on the previous call, we started ramping up spend in the second and third quarters as paybacks exceeded our expectations. In the third quarter, our UA marketing campaign expenses for core franchises increased year-over-year without any deterioration in paybacks.
During the first quarter of this year, we initiated a comprehensive restructuring plan, which resulted in approximately 22% reduction in our global headcount, and we see the full effect of this change in our P&L. The restructuring effort, combined with optimization of other cost categories, converged in the third quarter in significant savings in both R&D and G&A expenses, which dropped year-over-year by 22.9% and 34.7% respectively. This accounts for a one-off impact of $1.7 million to our G&A expenses, related to the financial provision in connection with an ongoing legal proceeding before the United States Federal District Court for the Central District of California.
As the principal basis of this claim, centering on regulations pertaining to the advertising of services, differs from other legal actions, we anticipate that any potential settlement we have will have no bearing on our non-current participation in other legal actions. In our view, the reserved amount is sufficient to cover the expected costs of a potential settlement. To sum up, we are pleased with our financial performance in the third quarter of this year. Our adjusted EBITDA for the first nine months of this year increased by more than 50% compared to the previous year, and the third quarter was the fifth consecutive quarter of improved EBITDA compared to the same period year before. With that, I will now turn to the balance sheet.
During the first nine months of this year, the structure of the balance sheet has undergone changes on both sides, primarily due to a share buyback, resulting in a $150 million decrease in the cash balance and a corresponding adjustment in equity. Despite the share buyback, our cash balance remains robust, standing at $127.7 million at the end of the third quarter. Our trade and other receivables increased by over 31% as compared to the end of 2022, mostly due to changes in Apple payments calendar, which seems to have changed permanently, and we expect to see in accounts receivable two months of Apple-related revenues at the end of each reporting period.
Our trade and other payables decreased by 19%, attributable to a reduction in performance bonus accrual and the settlement of liabilities associated with the strategic option review process. In conclusion, our robust balance sheet at close of September this year, despite the share buyback, places us in a strong position amidst the challenges of the dynamic mobile gaming landscape. Turning to the next slide, we can expand a bit on our cash position and cash flow generation. As we pointed out on the last earnings call, cash generation is among our top priorities, and it is well reflected in our net operating cash flow of $57.6 million in the first nine months of this year, as compared to $42.1 million year before.
Net operating cash flow for the first nine months of this year was impacted by a $13.1 million increase in net working capital, as briefly explained in the balance sheet slide. Additionally, the $12.1 million income tax payment reflects a different pattern of quarterly advanced tax payments compared to the previous year, as well as the slight increase in taxes payable due to the higher EBITDA, while effective tax in the first nine months of this year remains almost unchanged from year ago. The positive investment cash flow in the first nine months of this year, of $3.2 million, was mostly driven by interest received from bank deposits and money market funds, as we have been gradually rolling our cash balance to higher yields.
The financing cash flow of -$153.9 million reflects the cash flow related to share buybacks and the associated expenses, as well as our ongoing lease repayments, primarily related to our offices. As mentioned before, at the end of September this year, despite the share buyback, we had a strong cash position of almost $130 million, allowing us to explore other investment opportunities with the ultimate goal of increasing the return on invested capital. Turning to the next slide, I'd like to reiterate our 2023 directional outlook as compared to the last year, presented during the previous investor calls. As for our top line, we expect to end this year with slightly lower revenue than the year before.
However, as mentioned before, the downward revenue trend of core franchises reversed in the third quarter and is stabilizing or even slightly growing in the fourth quarter. We are ramping up our marketing spend, and for the core franchises, our quarterly run rate has already exceeded the levels that we saw in the second half of the last year. However, given the decreased marketing spend in the first half of this year and the significantly reduced user acquisition spend for Traffic Puzzle, we expect to end this year with marketing spend much below the prior year. The restructuring efforts in the first quarter of this year, combined with optimization of other cost categories, have already resulted in a slight decrease in non-marketing operating expenses. In this fourth quarter, we are not expecting significant changes from what we observed in the third quarter.
We are currently working on our plan for next year, and we will provide our first guidance for the upcoming year in the next earnings call, to which we would like to warmly invite you. With that, I'm handing over to Wojtek for his closing remarks.
Thanks, Marek. Summing up, we are optimistic as there are multiple reasons to be positive about our future. If there is anything we would like you to remember, it is these four takeaways. Our core games outperform the market and experience the first revenue growth in the last several quarters. We are experiencing at least stable performance next quarter. In the last twelve months, the company generated over $112 million in adjusted EBITDA and produced over $86 million in cash. The company has a super strong cash position. By the end of September this year, we had $128 million in our war chest. We are exploring different investment opportunities, and we are not excluding the potential buyback next year. Thank you all for-