Good morning, and welcome to the Acorn Energy 2022 third quarter conference call. At this time, all participants will be in a listen-only mode. After some prepared remarks, we will conduct a question-and-answer session. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix subsidiary. Mrs. Clifford, please go ahead.
Thank you, and welcome everyone to today's conference call. As a reminder, many of the remarks that follow and answers to questions may be forward-looking in nature. Expectations are subject to various risks and uncertainties. For example, the operating and financial performance of the company in 2022 and in future years is subject to risks associated with disruptions to business operations, customer demand resulting from executing the company's operating strategy, maintaining high renewal rates, growing its customer base, changes in technology, changes in the competitive environment, financial and economic risks, among other risks. Forward-looking statements are based on management's beliefs and assumptions made using information currently available to management within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are no assurances that Acorn or OmniMetrix will be able to achieve management's growth goals in 2022 or in future years.
The company undertakes no obligation to disclose revisions to these forward-looking statements to reflect events or circumstances occurring after today. A full discussion of the risks and uncertainties that may affect the company is included in risk factors on Acorn's Form 10-K and filed with the Securities and Exchange Commission. Reconciliations of certain non-GAAP financial metrics to their corresponding GAAP measures are provided in today's press release, which is available in the investor relations section of the company's website. I'll now turn the call over to Jan Loeb, CEO of Acorn and its OmniMetrix subsidiary, for an overview of our business performance and outlook. Jan?
Thank you, Tracy. Good morning, and thanks to everyone for joining our call. The resilient hardware plus monitoring service model of Acorn's OmniMetrix subsidiary delivered year-over-year and sequential revenue growth in the third quarter. Total revenue growth for Q3 grew 5% versus Q3 of 2021. Even in the face of macro headwinds, including rising interest rates, persistent high fuel prices, inflation, and economic uncertainty. As we note each quarter, GAAP requires us to defer our hardware sales over three years and amortize it monthly into revenue. On a cash revenue basis, our growth was stronger at 5.6%, and we provide a reconciliation of GAAP to cash revenue in today's press release. In Q3, our Hardware revenue growth was strong, rising 17.7% year-over-year.
This reflects our solid base business coupled with recent large volume hardware orders from a real estate management company that is deploying smart building technology across a new portfolio of buildings under its management. On prior calls, we've discussed the sunsetting of legacy 3G monitoring units, a process which has now concluded, but it did have a residual negative impact on Q3 monitoring revenue as a result of certain customers who chose not to purchase new hardware with renewed service contracts when their older units were decommissioned over the past year. With this cycle now complete, we expect accretive monitoring revenue growth moving forward. On our last call, I said we anticipated a stronger second half and a return to an attractive, sustainable long-term path to growth. We start to see that in Q3 and expect positive trends to continue in Q4.
Our positive outlook is based on Q4 to date sales orders, purchasing and forecast discussions with key customers and new business leads. We are also confident about our longer-term growth prospects, especially in under-penetrated commercial and industrial markets we currently serve and from expected build and demand starting next year driven by demand response programs as well as opportunities in new complementary applications. With regards to commercial and industrial opportunities in Q3, a global business solutions provider with approximately 250 U.S. locations began having OmniMetrix monitors installed for its standby generator monitoring and control needs. OmniMetrix is currently providing monitoring at 36 of their locations. As mentioned, we also saw significant demand for our standby generator solutions from a current customer that is a real estate management company deploying smart building technology over a portfolio of properties.
Our remote AC mitigation disconnect solution for gas pipelines, which we call RAD, continues with customer trials including a few new customer prospects. We're pleased with the progress of these trials and are confident in the process for more orders this quarter and into 2023. I touched on demand response already. Let's go a little deeper. This is a great opportunity for 2023 and beyond, where our monitoring and control technology plays a key role in enabling standby generators to be automatically turned on to provide electric power grid relief during periods of peak demand. This helps the grid, independent system operators or ISOs avoid rolling brownouts or blackouts. These demand response programs compensate generator owners each year for enrolling in the program, along with additional payments based on the amount of electricity they take off the grid during peak power demand.
OmniMetrix earns fees for enabling and managing the generator endpoints for demand response customers. We believe these programs offer the potential to substantially increase the value of our business by possibly doubling our profit per enrolled generator. Demand response programs are available across commercial, industrial, and residential markets that are only available to the latest generator models that deliver enhanced energy efficiency. We partnered with CPower Energy Management, the leading national energy solutions provider, who develops demand response programs for the ISOs. This partnership will enable OmniMetrix to offer demand response solutions to dealers in a growing number of areas across the U.S. We signed our first deal with CPower in the third quarter.
Through this partnership, Texas homeowners will be able to earn compensation for offering grid relief to the Electric Reliability Council of Texas, or ERCOT, which manages electric power in about 90% of the state's electrical load. Currently, electric grid issues are already a significant concern in the United States, and the growth of electric vehicle market, increasing severe weather events, and other factors will create further grid stress over the next decade. We believe this backdrop should create long-term demand for grid relief and demand response provided by stationary generators, and we expect to begin to see the financial benefits of this program through Acorn in 2023. As it relates to our operations, our team has done a pretty good job and continues to execute and deliver despite macro challenges in 2022, many of which are beyond our control.
In 2021, we implemented advanced procurement of critical components to protect against supply chain challenges. We still carry higher than normal levels of component inventories, but as supply chain returns to normal, we will be selling through our safety stock and return to normal inventory levels. In terms of inflation, last year we implemented a 15%-20% price increase on monitoring equipment. We will continue to look at pricing adjustments if needed to sustain our business and maintain our margins. On the monitoring side, we have made investments in our infrastructure both to enhance our service levels as well as to optimize our costs. Obviously, inflation has an impact on our costs, including personnel, travel and transportation expenses, et cetera.
There's also the effective marketing issue as our monitoring solutions can reduce personnel costs, travel time, emissions, and overall environmental impact required to maintain industrial assets and critical systems. Therefore, as our customers' costs increase, our value proposition improves as remote monitoring provides a significantly less expensive alternative to physical inspections. Overall, while our revenue growth has lagged the rates that we believe are possible over the long- term, I'm pleased with our team's success in navigating a range of challenges so far in 2022. As well as a growing number of growth opportunities we are advancing across our business. Further, we continue to invest in our products and services as well as our IoT infrastructure to enhance our competitive position and provide for additional growth.
Let me now hand the call over to Tracy Clifford, our CFO and COO of OmniMetrix, to review and provide insights on our performance and financial position before we open it up to your questions. Tracy?
Thanks, Jan. As Jan noted, third quarter revenue rose approximately 5% to $1.78 million versus Q3 2021, reflecting an 18% increase in hardware revenue and a 5% decrease in monitoring revenue. Year- to- date, revenue increased 3% to $5.16 million, with Hardware up 13% and monitoring revenue down 4%. The increase in Hardware revenue reflects the growing strength in our Base business and a large volume of orders, as Jan also mentioned in Q3 from a key customer. The decline in monitoring revenue relates to customer disconnects over the past 12 months related to the sunsetting of legacy 3G monitoring units.
We're continuing to focus our power generation customer portfolio expansion on large commercial and industrial customers, which we believe will restore the growth trend in our monitoring revenue and the negative impact of sunsetting will not be a factor in future years. Despite the decrease in total monitoring revenue, we're seeing an increase in our metric of ARPU, or average revenue per unit, due to product mix, moving to more sales to commercial and industrial customers versus the residential customers, which is a result from our marketing focus on this segment.
Gross profit decreased 2% to $1.82 million in Q3 from $1.24 million in Q3 2021, primarily due to a higher portion of hardware revenue, which carries a lower margin than monitoring revenue, as well as a non-cash write-off of $31,000 for obsolete cathodic protection component inventory that's recorded in COGS. As we grow, we continue to look for opportunities to maintain and further increase gross margin and revenue as well as gain more market share, not just via price adjustments, but by offering more services such as product installation and customer coding, and also soliciting customer feedback on what other monitoring type products, data tiers, and feature enhancements will be beneficial in next-generation products.
Turning to our financials below the gross profit line, total operating expenses, including Acorn's overhead, increased 17% to $1.42 million in Q3 2022, reflecting higher SG&A and R&D expenses versus Q3 2021. SG&A increased by $160,000 over Q3 2021, mainly due to investments that we made in personnel, technology and software, as well as increases in travel and trade show costs. R&D increased by $48,000, primarily due to salary increases and bonuses for our engineering team, in addition to expenses for the continued development of next-generation products and exploration of potential new product lines. Acorn reported a Q3 2022 net loss of $210,000 or $0.01 per share versus net income of $23,000 or $0.00 per share in Q3 2021.
The difference due to a lower gross margin as well as an increase in our operating costs, primarily as a result of the strategic investments I mentioned that we've made in personnel and technology. For the year- to- date period, the net loss was $566,000 or $0.01 per share in 2022 as compared to net income of $45,000 or $0.00 per share in the prior year period. In our press release, we reconcile cash basis revenue to GAAP revenue. Cash basis revenue grew 5.6% to $2.2 million in Q3 and 5.1% to $5.8 million for the first nine months of 2022. This is a notable improvement over Q2 due to the concentration of commercial and industrial orders over residential orders.
Looking at cash flow, cash used in operating activities was $311,000 in the first nine months of 2022 compared to cash generated of $323,000 in the first nine months of 2021. This difference reflects the net loss in 2022 that we discussed and approximately $300,000 inventory investments made to mitigate the potential procurement issues for key components and supply. We're still maintaining, as Jan noted, excess inventory, but we will continue to sell through this excess in the next quarters and will subsequently look to return to more normal inventory levels as we move ahead. We continue to invest in our Technology and Software in 2022, including $286,000 for development and design of the new Microsoft Azure cloud hosting environment for our Monitoring Solutions and for Hardware and Software upgrades.
The new cloud server environment provides a more modern, agile, and cost-effective environment on which to scale our IoT connections, services, and innovation with better support. It also lowers our costs by eliminating fixed cost vendor hosting in exchange for a variable rate as we grow. This environment was completed and launched in early May 2022, as we discussed on the last call. Based on user feedback, we are also investing in the design and development of a new customer interface for monitoring data. The new interface provides a significantly improved user experience. We expect to launch the new interface to a small group of customers for beta testing by the end of this year, with a full launch planned for first quarter 2023.
We plan for more strategic investments in personnel and technology in 2023 to continue to bolster OmniMetrix's market position ahead of competitors in terms of capabilities, value, and customer satisfaction. Looking at our financial position as of November 8, 2022, Acorn has consolidated cash balance of $967,000, along with accounts receivable of $1.3 million with no outstanding debt. We've maintained a healthy liquidity position while continually investing for future growth. Overall, we believe we have the liquidity, financial strength, and positive cash flow to continue executing on our growth strategy. We also continue to be very focused on identifying and acquiring an accretive business and/or a product line that would add value for our company and shareholders and expand our offerings to our current and potential customers.
In summary, we believe Acorn is capable of achieving the fast revenue growth we've recently noted of 20% as we execute on our strategic plan for 2023 and beyond. Thank you very much. Let me now turn the call back to the operator to take investor questions. Operator?
All righty. All participants are currently in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Star key followed by zero. To ask a question, you may press Star then one on your telephone keypad. To withdraw your question, please press Star then two. At this time, we have no questions, so I will turn the call back over to Mr. Jan Loeb for closing remarks.
Operator, you want me to give it another couple of seconds to see if anybody wants to come in?
Absolutely.
I know that we always give a very complete call, so there sometimes are no questions. But just in case somebody would like to ask, let's give them an opportunity. Okay.
Okay. At this time, I will turn the conference over to Mr. Jan Loeb for closing remarks.
Thank you again for your interest in Acorn Energy. We continue to be excited about the investments we have made to further solidify the future of the company and our opportunities in the long-term prospects of Acorn's business. I appreciate the support, and I'm happy to speak with investors or prospective investors. We do have an investor call planned for December with the research group littlegrapevine.com, and we will announce specific details shortly. You can also set up a call with myself or ask any questions through our IR team, whose contact information is in this morning's press release. We look forward to updating investors on our Q4 conference call. Thank you again. All the best.
This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.