This is largely in line with recent quarters and continues to reflect the impact from the lower add-on sales performance in the year. We expect that as we continue to expand our add-on sales capabilities, make improvements in our renewals business and increase our focus on multiyear deals, this metric will improve over time. Recurring gallery retention rate in the third quarter was 85%. As we continue our strategic focus on multiyear deals, this metric becomes less meaningful, as it only captures renewals in the quarter and upsells at the time of renewal and does not factor in the impact of multiyear deals. Our customer count at the end of the third quarter was 2,618, of which 2,077 were classified as premium customers. Looking at our ARPU within our premium customer base, our annualized revenue per premium customer was $95,900 and excludes our entry-level pricing for starter customers, which averaged $3,800 in annualized revenue.
This compares to $95,900 in the third quarter of 2022. As a reminder, this metric includes overages, which are down $3.3 million year-over-year. Looking at our results on a GAAP basis, our gross profit was $31.7 million, operating loss was $2.3 million and net loss per share was $0.06 for the quarter. Turning to our non-GAAP results. Our non-GAAP gross profit in the third quarter was $32.5 million, compared to $34.5 million in the year ago period and represented a gross margin of 64%, which was consistent with the third quarter of 2022. Non-GAAP operating income was $2.3 million in the third quarter compared to $2.8 million in the third quarter of 2022. Adjusted EBITDA was $5.5 million, representing an adjusted EBITDA margin of 11% and an increase of 12% compared to positive $4.9 million in the year ago period and above our guidance range.
The strong margin performance in the quarter is a reflection of the cost initiatives we undertook in the second quarter and our ongoing commitment to expense discipline. Non-GAAP diluted net income per share was $0.05, based on 43.4 million weighted average shares outstanding. This compares to net income per share of $0.05 on 42.1 million weighted average shares outstanding in the year ago period. Turning to the balance sheet and cash flow. We ended the quarter with cash and cash equivalents of $16.4 million. We generated $2.1 million in cash flow from operations, and free cash flow was negative $2.2 million after taking into account $4.3 million of capital expenditures and capitalized internal use software. Cash flow performance reflected two key factors.
First, we have seen customers seeking to move to monthly or quarterly billing terms versus annual in advance, which has altered and effectively slows our collections. We are generally willing to work with customers and be flexible on payment terms in order to maintain customer value and commitments. And second, we have seen our large vendors get more aggressive in their collections efforts, lowering our expected AP balance. I would like to finish by providing our guidance for the fourth quarter and the full year 2023. For the fourth quarter, we are targeting revenue of $49 million to $51 million, including approximately $900,000 of overages and approximately $2.6 million of professional services revenue. From a profitability perspective, we expect non-GAAP operating income to be $300,000 to $2.3 million and adjusted EBITDA to be between $4 million and $6 million.
Non-GAAP net income per share is expected to be a range of breakeven to $0.05, based on 43.7 million weighted average shares outstanding. For the full year, we are now targeting revenue of $200 million to $202 million, including $4.8 million of overages and approximately $8.9 million of professional services revenue. From a profitability perspective, we expect non-GAAP operating loss of $2.5 million to $500,000 and adjusted EBITDA to be between $10.4 million and $12.4 million. Non-GAAP net loss per share is expected to be in a range of $0.09 to $0.04, based on 43 million weighted average shares outstanding. We are now targeting positive free cash flow in the fourth quarter and free cash flow of approximately negative $11 million for the full year due to the factors I mentioned previously.
