Third quarter revenue was $577 million, an increase of 22% compared to the third quarter of the prior year.
This dynamic, combined with new client wins, helped us deliver net income of $19 million in the third quarter versus $9 million in the third quarter of the prior year.
And adjusted EBITDA was up $11 million year-over-year, with corresponding margin up 130 basis points.
First, we are excited third quarter revenue for PeopleScout, our highest-margin business, surpassed pre-pandemic levels, up 9% versus Q3 2019.
Our hardest hit market, travel and leisure, was up 308% during the quarter, and new business wins were up 217% year-to-date, with annualized revenue of $38 million.
At PeopleManagement, revenue was down only 1% versus Q3 2019.
New business wins continue to be strong for this segment, which had $22 million of new wins in August, bringing the annualized total to $86 million or up 34% year-to-date.
Revenue for PeopleReady was down 16% versus Q3 2019.
We have serviced this industry for 15 years and have specialized teams and processes in place to capitalize on this market expansion.
For example, in PeopleReady, billable associates are up 9% in October versus the Q3 weekly average.
PeopleReady weekly revenue trends in October are encouraging as well, up 17% year-over-year versus a 14% increase year-over-year in September.
PeopleReady is our largest segment, representing 58% of total trailing 12-month revenue and 62% of total segment profit.
Year-over-year, PeopleReady revenue was up 19% during the quarter.
PeopleManagement is our second largest segment, representing 31% of total trailing 12-month revenue and 13% of total segment profit.
Year-over-year, PeopleManagement revenue grew by 7% in the third quarter.
PeopleScout represents 11% of total trailing 12-month revenue and 25% of total segment profit.
PeopleScout revenue surpassed pre-pandemic levels with year-over-year growth of 108% in the third quarter.
Since rolling out the application to associates in 2017, and our clients in 2018, associate adoption has grown to over 90%, and our JobStack client user count ended the quarter at 29,100, up 11% versus Q3 2020.
As a reminder, a heavy user has 50 or more touches on JobStack per month, whether it's entering an order, rating a worker or approving time.
Overall, heavy client users account for 56% of PeopleReady U.S. on-demand revenue compared to 31% in Q3 2020.
We've also seen continued growth in our digital fill rates, which have increased 3 times to nearly 60% with 940,000 shifts filled via the app during the quarter.
The service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch.
We are seeing strong results as PeopleManagement secured $22 million of new deals in August, bringing the year-to-date annualized new business wins to $86 million, up more than 40% versus the three prior year comparable average.
Our efforts are delivering results with annualized new wins of $38 million so far this year, versus the three prior year comparable average of $9 million.
This has led to a rapid recovery in the third quarter, where revenue exceeded pre-pandemic levels by 9%.
Total revenue for Q3 2021 was $577 million, representing growth of 22%, driven by new business wins and higher existing client volumes.
We posted net income of $19 million or $0.53 per share, an increase of $10 million compared to net income of $9 million in the prior year.
Adjusted net income was $21 million or an increase of $13 million, which is greater than the increase in GAAP net income, primarily due to $4 million of government subsidies in Q3 2020 that were excluded from adjusted net income.
We delivered adjusted EBITDA of $29 million, an increase of $11 million and adjusted EBITDA margin was up 130 basis points, again driven by revenue growth and gross margin expansion.
Gross margin of 25.4% was up 210 basis points.
Our staffing segments contributed 110 basis points of margin expansion comprised of 70 basis points from lower workers' compensation costs primarily due to favorable development of prior period reserves, and the remaining 40 basis points largely due to increased sales mix from our PeopleReady segment, which has a higher gross margin profile than PeopleManagement.
PeopleScout contributed 100 basis points of expansion driven by operating leverage from higher volumes.
SG&A expense increased 32%, which was higher than our revenue growth of 22% due to the severity of the cost actions taken in Q3 last year.
In Q3 2020, our cost management actions produced a decline in SG&A of 31%, which outpaced the revenue decline of 25% for that quarter.
Q3 2020 also benefited from $4 million in government subsidies, which were excluded from our adjusted net income and adjusted EBITDA calculations.
Compared to Q3 2019, SG&A as a percentage of revenue in Q3 2021 was 20 basis points lower despite having $60 million less revenue.
Our effective income tax rate was 15% in Q3.
PeopleReady revenue increased 19%, while segment profit increased 32% with margin of 70 basis points.
PeopleReady revenue was up 17% during the first three weeks of October versus growth of 14% in September.
PeopleManagement revenue increased 7%, while segment profit decreased 48% with 160 basis points of margin contraction.
PeopleManagement had $86 million of annualized new business wins through September, with $9 million of new business revenue recorded this quarter and approximately $30 million expected for the full year.
The decline in segment profit margin is partially due to the severity of employee-related cost reductions last year, such as cuts in pay and 401(k) match as well as additional recruiting costs to stay ahead of the holiday surge given the tight labor market.
PeopleScout revenue increased 108% with segment profit up $9 million and nearly 1,300 basis points of margin expansion.
Revenue benefited from strong recovery in our hardest hit industries, including travel and leisure, which grew over 300%.
New business wins also contributed to revenue growth as PeopleScout delivered $38 million of annualized new wins through September this year versus $9 million in the prior three-year comparable average.
New wins generated $5 million of revenue in Q3 with $28 million expected for the full year.
We finished the quarter with $49 million in cash and no outstanding debt.
While our profitability increased compared to Q3 last year, cash flow from operations decreased largely due to a $60 million payment in Q3 this year for 2020 employer payroll taxes that were allowed to be deferred as part of the CARES Act.

Summary:
Third quarter revenue was $577 million, an increase of 22% compared to the third quarter of the prior year.
Total revenue for Q3 2021 was $577 million, representing growth of 22%, driven by new business wins and higher existing client volumes.
We posted net income of $19 million or $0.53 per share, an increase of $10 million compared to net income of $9 million in the prior year.