Byrna Technologies Inc. Q3 FY2025 earnings call

• Advertising: AI-enabled campaign expanded reach, web traffic increased with byrna.com averaging 58,000 sessions per day in September, opt-in email list grew to 1.9 million.
• Retail: Over 1,000 stores nationwide, company-owned stores performing well, developed in-house POS system with AI.
• Product strategy: Developing connected safety platform integrating SOS alert technology with launchers, plan to introduce 61-caliber launcher and simplified protection device in 2026.
• Production/inventory: Inventory normalized, expecting drawdown to continue, with cash expected to accelerate in Q4.

For the fiscal third quarter ended August 31, 2025, net revenue was $28.2 million, a 35% increase from $20.9 million in Q3 2024. Gross profit was $16.9 million (60% of net revenue) compared to $13 million (62% of net revenue) in Q3 2024. Operating expenses were $14.1 million vs $12.2 million in Q3 2024. Net income was $2.2 million vs $1 million in Q3 2024. Launcher sales mix: SD is about 50% of sales, CL accounts for around 30% of sales.

• Full-year fiscal 2025 revenue growth expected between 35-40%.
• Q4 sales expected strong due to holiday season, Black Friday/Cyber Monday timing may affect Q4/Q1 recording.
• Expect expense leverage to continue, though Q4 may have some additional marketing spend.

• Conversion rates initially lowered by new advertising campaign, but expected to improve over time.
• Inventory drawdown and cash flow timing risks.
• Dependence on successful execution of new product development and marketing initiatives.

Q: Thoughts on adding new influencers, latest CL launcher, lower price point unit, ByrnaCare adoption A: Okay. So in 2023, we kicked off our celebrity influencer campaign with Sean Hannity. And since that time, it's expanded to approximately a dozen conservative radio talk show hosts. We believe that at this point, we have a sufficient number of conservative radio talk show hosts, and we are looking to expand beyond that universe. Towards that end, you may have noticed that we recently brought on board a new director by the name of Adam Roth. Adam was head of sales and marketing for Nike North America before he retired. And he brings with him a wealth of knowledge regarding celebrity influencers or what Nike called brand ambassadors. In fact, I was just on the phone with Adam yesterday as we are putting together a plan and pitch deck for going after a whole new host of brand ambassadors or celebrity endorsers for Byrna Technologies Inc. that will help us expand beyond our existing customer demographic. At this point, I cannot share with you the names of anybody that we're talking to. But we are well into this process. Jeff Van Sinderen: Okay. That's great to hear. And then maybe if you can just touch on the latest, I think there's another CL launcher that's planned. And then also just give us an update if you could on the lower price point unit that you plan to roll out? Bryan Ganz: Yeah. Jeff, I'm not sure what you mean by another CL launcher that's planned. The next new launcher going to be coming out will be the 61-caliber price point launcher, which will come out sometime next year. And it will be largely based on the CL design. It'll be similar in size to the existing CL. But there are no different variations of the CL that are going to be coming out. In terms of the basic box, the price point launcher that we brought out, interestingly, it has not been as popular as we would have expected. We still sell both the basic box configuration, which is just the launcher by itself with no accessories, as well as what we call the universal ready kit, which comes with CO2 and ammunition and an extra magazine so that you can buy simply the ready kit and you are ready to use it. That is still probably 90% of our sales. So, you know, initially, we were concerned that maybe the price point was too high. The market has clearly voted with their and said, no. You know, your $540.99 price point is perfect. Jeff Van Sinderen: Okay. That's an interesting development. So one other thing if I could squeeze it in. Just wondering how ByrnaCare adoption is running in the early days. Bryan Ganz: ByrnaCare adoption is running in line with expectations. We have not yet been able to adopt our website to ask for people to buy ByrnaCare at the end of every purchase. This requires a little bit of additional coding, and we think that we'll have even greater impact. But it's in line with expectations.

Q: Advertising campaign, web traffic, conversion rates, channel mix, expense leverage A: Jeremy Hamblin: Thanks and I'll add my congratulations. I want to come back to the success that you're seeing with the advertising campaign, the momentum you have with web traffic in particular, and just a commentary around expectations on conversion rates. You know, with the, you know, what, 70%, 75% increase in web traffic that you are seeing sequentially, can you just discuss a little bit more in terms of conversions that you were seeing? And whether or not this campaign is reaching maybe a customer set that is outside of your traditional customer set given kind of the viral nature of the campaign? Bryan Ganz: Jeremy, thank you for the question. And honestly, that's the question we're asking ourselves every day as well. As we expand the demographic that we're speaking to, will we see the same conversion rates? And the answer simply is that we don't know. What we do know is that the conversion rates will climb significantly from where they are. Because it does take some period of time for people to make a purchase. They come back to the website on average five to seven times before making a purchase. So, you know, we know that the first time we see incremental traffic, it's not going to result in incremental sales. We have started to see a climb in a climbing conversion rate. But interestingly, we're also continuing to see a climb in web sessions. Yesterday, our web sessions were 70,000 sessions, I think, for the third day in a row. So as we're starting to see higher web sessions, we are, again, getting more and more new consumers on. So it is having a dampening effect on the conversion rate, while at the same time, those new consumers that came a month ago, two months ago, are having a positive effect on conversion rate. Last year during the months of October, November, our conversion rates approached one and a half percent. They're always higher during the holiday season. We don't need anything close to one and a half percent this year when we're generating 70,000 sessions a day to hit our numbers. So to answer your question, is it going to get back to exactly where it was? We don't know. But we do know that it will be significantly higher than where it is currently, and we are already seeing that trend. Jeremy Hamblin: Great. That's helpful. And then just in terms of what you expect on channel mix here in Q4, you've obviously had significant expansion in the number of wholesale doors you're selling into. But given this lift that you're seeing in traffic both at byrna.com and on Amazon, how should we be thinking about the mix of business here in Q4? Laurilee Kearnes: Hi, Jeremy, it's Laurilee. Yeah, I mean, we will still continue to see strong dealer and chain store sales. We see additional orders coming in as they're ramping for the holidays as well. So we still expect to see that strength there. That being said, we expect our DTC channels to be a higher percentage of overall sales than they were in Q3. Jeremy Hamblin: Got it. Helpful. And then just last one for me. In terms of thinking about kind of the expense leverage that you're getting in the model, saw, you know, OpEx, you know, really well contained here in the third quarter. As we look ahead, you know, you saw about what $7.3 million year-over-year growth in sales, but OpEx was only up $2 million year-over-year in Q3. Should we expect that kind of expense leverage ratio to maintain here both in Q4, but then as we think about kind of projecting out in 2026 and beyond? Laurilee Kearnes: Yes. I mean, I think in Q4, it'll be close. We do ramp up some additional marketing in Q4 from Q3. So we will continue to see that leverage maybe not quite to the extent. I mean, Q3 was a great quarter for us on leverage. Going into next year, there will be some additional for new positions, some things we're hiring. But for the most part, we'll continue to see that leverage as we move forward. And really, this quarter, it was really just it was marketing expense, and variable selling expense was really the increase. Everything else held pretty steady.

Q: Guidance vs web traffic, promotions, wholesale expansion, SOS platform timeline A: Matt Koranda: Hey, guys. Good morning and thanks for taking the questions. I guess you sort of tangentially addressed it earlier, Bryan, but I just wanted to put a finer point on sort of how the guidance fits with the 70% lift that you've seen in web traffic. I guess if I just look at the midpoint of your guide, and it would suggest about 25% growth in sales in the fourth quarter, but the web traffic numbers are pretty substantially above that. So maybe just fit those two things together. Assume the answer is generally conversion and being conservative there, but just a little bit more color on that would be great. Bryan Ganz: Yeah. As we said before, it will take us some time for our conversion rates to get back to a mean of 1%. And we have seen this happen time and time and time again. Where we see a significant spike in web sessions and it takes some period of time for the conversion rate to catch up. But in every case, it ultimately does catch up. So we don't believe that we're going to get back to our normal conversion rate in Q4. And in fact, you know, web sessions are growing daily. But we do expect that it will occur over time. And I think, you know, we have to be cognizant of that, you know, it's going to take some time for that to happen. Matt Koranda: Okay. And then maybe just a tool at your disposal would be promotions. So just any thoughts that you have heading into the holiday on sort of the promotional posture that we're considering? Any shift in strategy that we might consider to drive improved conversion that would sort of help with the web traffic you're seeing. Bryan Ganz: Every year, at this time of year, we have two separate sales. We have kind of an early Black Friday sale, which is our Byrna Technologies Inc. Black and Orange Sale that happens at the end of October, and there's always a big conversion during that period of time. And then we have the traditional Black Friday, Cyber Monday sale that happens starting the Wednesday before Thanksgiving. This year is a little bit of an issue because this period of time, these six days, represent 40% of our sales in November. So it's an enormous amount of sales that are happening in the last six days of the month, one of which is Thanksgiving, and we're closed. And then when we come back for three days, we're going to have to get something like six or 7,000 packages out the door. So, you know, my only concern is, you know, how many of those packages can we get out the door and what, you know, ends up falling into Q1. Matt Koranda: Okay. Understood. Maybe just curious for an update on how to think about the wholesale expansion into the end of this year and next. I know you mentioned a thousand doors, I think you're in as of the end of the third quarter. Where do you think things will shake out by the end of this fiscal year? And do we have any kind of stretch goals for next year in terms of doors that we'd enter? Laurilee Kearnes: Yes. Hi, Matt. So where we are right now, we think we're pretty well positioned. You know, we want to make sure we don't become too saturated. So we're probably mostly holding where we are on our current retail footprint. We'll continue to work with all of our partners to make sure we help them with better conversion, better tools, and I think we'll hold at that point. Perhaps there will be more later. You know, as Bryan said, we may look for special markets where we put additional corporate stores in some of those markets. But, right now, we feel pretty good as far as where we are on the retail store. Bryan Ganz: If I can just add, Matt, I think, you know, our team has done an amazing job working with our partners. And I think at this point, we have a very, very good footprint of stores. There are, as Laurilee says, certain areas where, you know, we're not as represented as well as we should be. And we will likely open up Byrna Technologies Inc. retail stores in those areas. But I think the bigger issue for us and our focus for 2026 is going to be expanding our existing relationships. We have seen Bass Pro, for example, increase the number of SKUs that they're offering. They're offering additional colors. They're offering additional models. And this is having a significant impact on their weekly sales. This is what we need to do with all of our partners to make sure that they're doing as well as they can in each store. And I think there's huge opportunities for growth within the existing footprint. And not that we will not take on more partners. We will, but we need to be very selective about it because putting two stores right next to each other is not helpful. Matt Koranda: Okay. Makes a ton of sense. Maybe if I could just sneak one more in. You mentioned the SOS and connected platform, which sounds really exciting. And I'm curious, when do you think loosely that could become sort of commercially available to consumers? Would that be a next year event, or is that something like a more like a 2027 event? Bryan Ganz: No. It will be a next year event. But keep in mind that it is going to be phased. So that and let me just say, all of this technology exists. These SOS alert systems, RapidSOS, Noonlight. There's a lot of these services out there already. The hardware technology already exists. What we are doing is packaging it in a format to work with Byrna Technologies Inc.'s products. So there are some things that we are very far along on that will certainly be released in 2026. There are other sort of more aspirational products that we have that may, you know, not come out until 2027. But unlike the development of a brand new launcher where there's a lot of technology that has to be developed from scratch, this is really taking existing technology and adapting it for use with Byrna Technologies Inc.'s suite of products. So this will happen much more quickly than traditional development projects.

Q: Sportsman's Warehouse, SKUs, Cabela's A: Jon Hickman: Jon? Oh, hello. I just wanted to maybe just a follow-up from one of the last questions. But how are you could you elaborate on how the whole Sportsman's Warehouse? Are you complete with them? Are you still rolling out stores? Are you adding more shooting lanes? Can you talk about that a little bit? Laurilee Kearnes: Hi, Jon. It's Laurilee. Yes, I think we're on track with where we expect to be with Sportsman's. They have a mix of, you know, different presence in different stores. They're working through some of their stores and their markets to determine what works best. What we found is these stores where we put the shooting pod seems to help drive additional demos, additional conversion in those stores. So that's really something that's driving well. Now that doesn't fit in all of their stores, due to, you know, their footprint, and what works in different markets. So continuing to support them. We feel great about the partnership with them. And, you know, like I said, we've got a various mix, but we're on track and well positioned. Jon Hickman: How many SKUs are they carrying? Laurilee Kearnes: They carry most of our SKUs. You know, there are obviously a few accessories and things that they don't. But they carry all of the various launchers. They carry ammo. They carry CO2 and a number of accessories. And sprays as well. Jon Hickman: Okay. Okay. Know the exact number, but it's pretty much our full product line. Bryan Ganz: Yeah. And Jon, I think that the big takeaway from that Laurilee said is that this shooting pod has proven to be very, very effective. Now we have an agreement with Sportsman's where this is exclusive to them. So, you know, unfortunately, we don't have the shooting experience in some of the other partners that we work with. But these shooting pods have been very effective, and the stores that have the pods have done extremely well. Jon Hickman: I don't know. Maybe you can't answer this. Are you in Cabela's or are you trying to get into Cabela's? Laurilee Kearnes: Yeah. Cabela's is part of Bass Pro. So last October, we actually went on a national basis with Bass Pro Cabela's. So we are in all of their stores. Jon Hickman: Okay. All my other questions were basically answered. So great. Thanks so much, Jon.