GAAP gross margin was 48% and non-GAAP gross margin was 48.9% for the third quarter of 2023. On a non-GAAP basis, continued high raw material costs and relative strength of the U.S. dollar compared to historical exchange rates resulted in the third quarter’s year-over-year gross margin decline. Sequentially, we are pleased that reported non-GAAP gross margin improved 90 basis points due in part to improved product mix, a modest decrease in unfavorable purchase price variance that resulted from our 2022 broker buys. And importantly, we saw initial benefits from supply chain localization. The sequential gross margin improvement from our shift to a Southeast Asia supply chain is important as it marks up a point on our way to realizing $12 million in annualized savings.
Additionally, in Q3, while lower than Q2, we continue to recognize approximately 300 basis points of the unfavorable 2022 broker buy PPV amortization that will no longer affect us in early 2024. Taken together, we continue to expect a meaningful improvement in 2024 gross margin. GAAP operating expenses were $48.6 million and included approximately $4.6 million in acquisition-related intangible amortization and stock completion expenses and $2.5 million in restructuring and other transaction costs. Non-GAAP operating expense of $41.5 million was down $2.8 million from Q3 last year, as we realized the first full quarter benefit of our restructuring efforts. As we stated last quarter, with our expense reductions largely completed, we remain committed to realizing quarterly spending at present FX rates of approximately $40 million to $43 million.
GAAP operating loss was $6.9 million in the third quarter of 2023 compared with an operating loss of $7.1 million in the third quarter of 2022. Non-GAAP operating income was $900,000 in the third quarter of 2023 compared to a loss of approximately $750,000 in the third quarter of 2022. Adjusted EBITDA was $3.5 million or approximately 4.1% of sales. Our GAAP net loss was $8.8 million or 46% per share. Our non-GAAP net income was approximately $450,000 or $0.02 per share for the third quarter of 2023 compared to a net income of approximately $550,000 or $0.03 per share in Q3 2022. In May, we discussed a total charge of between $22 million and $28 million to realize our new quarterly expense base. On a year-to-date basis, we have incurred approximately $25 million in charges resulting from cash severance for affected employees, inventory write-offs as we increase our focus on core strategic product lines and facility and other asset-related write-downs as we seek to reduce utilized work footage.
We continue to expect that approximately 40% of the combined charges to be cash payments. Our cash balance at the end of the quarter was $79.9 million, down $8.6 million from Q2, largely due to restructuring charges. Excluding the restructuring and other nonrecurring cash payments, our free cash flow would have been approximately neutral in the third quarter. We remain very focused on improving our days sales outstanding with accelerated collections expected in the fourth quarter of 2023 and into 2024. Given our current accounts receivable balance, expectations for revenue and our new expense base as well as further enhancements to our inventory management, we continue to expect cash flow to be positive in the second half of 2023. While we are pleased with our third quarter results and view them as evidence, the business is moving in the right direction, we remain cautious on extrapolating this trend into the fourth quarter.
From a geographic perspective, in the third quarter, we experienced an unexpected softening in the Chinese market. At this stage, we do not expect China demand to rebound in the fourth quarter, which will create an incremental headwind to the seasonal year-end strength. Together with PMI remaining below 50 and sales cycles remaining above historical levels, we want to remain thoughtful and measured in setting expectations for the remainder of this year. As a result, at present FX rates, we expect fourth quarter revenue of between $92 million and $100 million. At those revenue levels and given corresponding non-GAAP gross margin improvement to between 50.5% and 52% and non-GAAP operating expenses of between $41 million and $43 million, we would expect non-GAAP earnings per share of between $0.18 and $0.34.
This concludes our prepared remarks. And at this time, we’d be pleased to take questions.
Operator: [Operator Instructions] We will go first to Greg Palm with Craig-Hallum Capital Group.
Greg Palm: Yes. Congrats on the results and Pete and especially a good start for you. So congrats as well.
Peter Lau: Thanks, Greg. Nice to speak to you.
Greg Palm: Maybe just kind of starting on the revenue and the sort of demand outlook side of things, as you kind of look back on the quarter and just general activity, I’m curious, are you characterizing the better than expected activity due to — how much is due to market conditions versus just better execution and sort of company specific? I’m guessing it’s a mix of both, but maybe leans towards the latter, but I just wanted to get some kind of further input on what your thoughts are.
