In early October, we again participated as a platinum sponsor at the annual PDA Pharmaceutical Microbiology Conference. In addition to the conference, we hosted an invite-only event where prospective and existing customers are paired with members of our commercial and executive leadership team to enable deeper engagement with key users and decision-makers. Over the three day conference and including our customer event, we generated numerous high-quality leads. And finally, in late November, Johnson & Johnson will host a multi-day Growth Direct event at their site in Schaffhausen, Switzerland. The purpose of this event is to facilitate collaboration and education by bringing together industry-thought leaders, customers and prospective customers to discuss current business goals and to share best practices.
We anticipate that over 60 customer participants will attend and the event will feature expert panel discussions on topics such as automation and regulatory approaches using the Growth Direct. In addition, participants will tour a local customer site that includes a fully validated Growth Direct System in a GMP environment. New product development is another important component of our growth strategy. Our goal is to innovate new products that solve customer challenges, create meaningful differentiation and competitive advantage, strengthen partnerships and enhance the Growth Direct’s value proposition. Additionally, we expect innovative products such as Mold Alarm and rapid sterility to become new sources of revenue growth and drive margin expansion.
With respect to rapid sterility, we continue to increase focus on commercialization and expect to be able to provide a more significant update next quarter. In summary, we continue to make good progress against our growth strategy. Accelerating system placement remains our highest priority. Despite the ongoing challenges posed by the macroeconomic environment, we have achieved nearly 30% growth year-to-date through Q which demonstrates that the actions we have been taking to improve our commercial execution and enhance customer experience are gaining traction. Additionally, we are focused on leveraging internal cost initiatives, which combined with the scale we are beginning to achieve will continue to drive gross margin improvement. And with that, I’ll now turn the call over to Sean to discuss our third quarter performance.
Sean?
Sean Wirtjes: Thanks, Rob, and good morning, everyone. I’ll start with a recap of our third quarter 2023 results, followed by our updated outlook. Q3 revenue increased 30% to $6.1 million compared to $4.7 million in Q3 2022. We placed 5 Growth Direct Systems in the third quarter of this year compared to 3 in Q3 last year. Product revenue, which is comprised of systems and consumables increased 31% to $4.2 million in Q3 compared to $3.2 million last year. The growth in revenue was primarily driven by two additional system placements in the quarter. Consumable revenue increased on a year-over-year basis but was down slightly on a sequential basis following a record second quarter due mainly to the timing of customer shipments between Q2 and Q3, both this year and last year.
Service revenue increased 27% to $1.9 million in the third quarter compared to $1.5 million last year. The increase was largely driven by higher recurring service contract revenue, which grew almost 40% in the quarter. Third quarter recurring revenue increased 17% to $3.4 million compared to $2.9 million last year, driven by the growth in both consumables and service contract revenue. Nonrecurring revenue was $2.7 million in Q3 compared to $1.8 million in the prior year quarter. Turning to gross margins. Product margins were negative $1.5 million in Q3 compared to negative $2.4 million in the third quarter last year. The improvement was mainly due to higher placements in production volumes and systems and favorable consumables product mix in Q3 this year as well as the onetime write-off of expired materials and consumables in Q3 last year.
This improvement was partially offset by the impact of planned downtime on our automated consumables manufacturing line to implement enhancements that will benefit future margins as we discussed on our last earnings call. These enhancements are now substantially complete, and we expect them to start making a meaningful contribution to improved consumables margins beginning in the fourth quarter of this year. Service margins were negative $0.1 million in Q3 compared to negative $0.4 million last year, leverage from higher revenues and better productivity drove the improvement in service margins in the quarter. On a combined basis, our third quarter gross margin percentage was negative 27%, representing an 11 percentage point improvement on a sequential basis and a 32 percentage point improvement compared to the third quarter last year.
