BYRN

This article first appeared on GuruFocus. - Net Revenue: $15.3 million, down approximately 46% from $28.2 million in the prior year period. - Gross Profit: $12.2 million, or 79% of revenue, compared to $16.9 million or 60% of net revenue in the prior year quarter; includes a $2.3 million tariff refund. - Adjusted Gross Profit (non-GAAP): $9.9 million, representing an adjusted gross margin of approximately 65%. - Adjusted Gross Margin: Approximately 65%, up from 62% in 2Q and roughly 500 basis points above last year. - Operating Expenses: $15.1 million, up 7% from $14.1 million in 3Q '25; includes $1.7 million in bad debt expenses related to two large international customers. - Net Loss: $2.9 million, or a loss of $0.13 per diluted share, compared to net income of $2.2 million or $0.09 per diluted share in the same period a year ago. - Adjusted EBITDA (non-GAAP): Negative $1.4 million, compared to $4.1 million in the same period a year ago. - Cash, Cash Equivalents, and Marketable Securities: $9.4 million as of August 31, 2026, compared to $9 million in the prior year period, $15.5 million at November 30, 2025, and $10.4 million at the end of the fiscal second quarter; no debt at period end. - Inventory: $30 million as of August 31, 2026, compared to $34.1 million in the prior year period, $32.7 million at November 30, 2025, and $30.4 million at the end of the fiscal second quarter; expected to decrease by $2 million to $3 million in 4Q. - Website Sessions: Averaged approximately 29,000 per day in August, the highest since March this year. - Website Conversion: Improved from June to August sequentially. - Social Engagement: Up 95% across social channels compared to 1Q. - Creator Ecosystem: More than 50 active creators onboarded with a combined following of 3.8 million; generated more than $45,000 in sales, exceeding the September target by approximately 300%. - First Pass Yield: Exceeded 89%, approaching the 90% target set for 4Q. - Ammunition Gross Margin Benefit: Approximately 1,200 basis points from transitioning ammunition manufacturing to an outsourced model. - Find the Right Launcher Quiz: Over 280,000 responses to date; converting at over 2 times the rate of the broader website. - Try Before You Buy Program: Maintained a conversion rate of approximately 35%. - Warning! 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Release Date: October 08, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Adjusted gross margin improved to approximately 65%, up from 62% in Q2 and 500 basis points above last year, driven by operational efficiency gains and favorable product mix. - Website conversion rates improved sequentially from June to August, with August sessions averaging 29,000 per day, the highest since March. - Social creator ecosystem expanded to over 50 active creators with a combined following of 3.8 million, driving engagement up 95% from Q1 and generating over $45,000 in sales, exceeding September target by 300%. - Inventory is expected to decrease by $2 million to $3 million in Q4, with further reductions in 2027, improving working capital efficiency. - Ammunition manufacturing transition to an outsourced model yielded an approximate 1,200 basis point gross margin benefit in ammunition, with continued benefits expected. - Net revenue declined approximately 46% year-over-year to $15.3 million, driven by lower e-commerce sales and slower reorder activity from dealers and chain stores. - Operating expenses increased 7% to $15.1 million, including $1.7 million in bad debt expenses related to two large international customers. - Net loss for the quarter was $2.9 million, or $0.13 per diluted share, compared to net income of $2.2 million in the prior year period. - Adjusted EBITDA turned negative at $1.4 million, down from $4.1 million in the same period a year ago. - Cash, cash equivalents, and marketable securities decreased to $9.4 million from $15.5 million at the end of fiscal 2025, due to lower collections of accounts receivable. Q: Jeremy Hamblin of Craig-Hallum asked about the improvement in web sessions, noting August averaged 29,000 sessions a day, and whether that improvement continued into September along with conversion rates.A: CEO Conn Davis said the company was encouraged by both sessions and conversion rate in August and is focused on continuing that trend into Q4. He noted Q4 is a higher-intent period and that the creator ecosystem and new marketing initiatives will be rolling out in full force, so they expect improvements over Q3 numbers throughout Q4. Q: Jeremy Hamblin asked about the wholesale business, which was down 64%, and requested an update on retail door expansion, including the Academy deal, and how much of the recovery should come from wholesale.A: CEO Conn Davis explained that previously announced partnerships are live, but meaningful new doors won't be added during the holiday period since stores have already set assortments. He expects door expansion to ramp in Q1 next year. CFO Laurilee Kearnes added that the company is offering exclusive holiday bundles with a couple of large chains, including a unique color and a bundled product, to differentiate their locations and drive sales. Q: Jeremy Hamblin asked whether sell-through rates in the wholesale channel are starting to show traction as the marketing approach improves.A: CEO Conn Davis said reorder activity has picked up through Q3 and sell-through was stronger than earlier in the year. He noted limited store-level detail with some chains, but reorder cadence is improving. He also highlighted expanding e-commerce partnerships enabling retail platforms to drop ship from Byrna's Fort Wayne operations, which should help drive e-commerce and support retail partners over time. Q: Jeremy Hamblin asked about the cost and timing of entering the law enforcement and professional security markets, noting the entrenched competition in law enforcement.A: CEO Conn Davis said the near-term focus remains on improving the D2C business, with law enforcement, professional security, and international growth as long-term pillars. Incremental investments will begin next year but won't be significant short-term costs. He said the initial focus will likely be on the professional security market since law enforcement sell-through takes longer. CFO Laurilee Kearnes added that professional security is attractive because a less-lethal, carryable option is often more appealing than a lethal firearm. Q: Jeremy Hamblin asked whether the mid-60s gross margin rate is sustainable going forward or if investors should be more conservative than the Q3 result.A: CFO Laurilee Kearnes said the company expects the mid-60s range to be where they operate going forward, supported by operational efficiencies gained and other initiatives planned for next year. Q: Matt Koranda of Roth Capital asked where website conversion rates currently sit, noting they had been sub-1% in prior quarters and improved sequentially through Q3.A: CEO Conn Davis said conversion is not yet at 1% overall, though certain parts of the site like the quiz program are north of 1%. He said overall conversion is north of 0.6% but still below long-term targets, and he expects continued improvement throughout Q4 as the company applies learnings from the quiz and session data. Q: Matt Koranda asked whether traffic from new influencers converts accretively and how that factors into driving better conversion over the next several quarters.A: CEO Conn Davis said the influencer strategy allows targeting specific audiences with tailored messages. Traffic from specific influencers is converting at a higher rate than returning customers, which he called great to see, though the company still wants to improve overall conversion rates across the portfolio. Q: Matt Koranda asked about POS and sell-through trends at major mature retail partners and dealers, given the noise from stocking orders.A: CFO Laurilee Kearnes said sell-through has been lower than expected and the company is working with retail partners on initiatives to drive it. Locations with shooting experiences perform better. She said Byrna is focused on helping partners through e-commerce drop shipping, holiday bundles, co-op advertising, and email traffic. CEO Conn Davis noted the company lacks the same conversion visibility across third-party stores as it has on Byrna.com. Q: Matt Koranda asked about the HERO integration timeline and whether it will be sold on the Byrna website or through a different channel.A: CEO Conn Davis said HERO products will absolutely be placed on the Byrna website as an integrated part of the product ecosystem and product ladder, likely in connection with SHOT Show in early January, when the product will be positioned and rebranded under the Byrna umbrella. Currently, HERO is still available on Amazon as its original primary sales channel. Q: An unidentified participant asked about the refurbished launcher program, how large the opportunity is, its contribution to gross margin, and whether other margin expansion opportunities exist beyond ammunition outsourcing.A: CFO Laurilee Kearnes said the refurbished program is somewhat sporadic. The company sold through all SD refurb launchers and recently launched CL refurb. Refurbished margins are slightly north of overall gross margin, making it accretive. She noted the SD trade-up program supports supply. CEO Conn Davis added that opportunities exist to source better and improve gross margins across product lines, with accessories as the first focus area, and manufacturing will be a key focus for new product launches going forward. Q: The unidentified participant asked whether Byrna is looking at further acquisition opportunities similar to HERO and whether HERO will carry the Byrna brand and design language.A: CEO Conn Davis said there is nothing to announce currently, but HERO represents the type of opportunity Byrna would pursue one that adds to the personal safety ecosystem, can plug into Byrna's stronger distribution network, and benefits from brand recognition. He confirmed HERO will be rolled out under the Byrna brand as an integrated part of the product suite, with brand architecture currently being developed. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Thursday, Oct. 8, 2026 - Chief Executive Officer - Conn Davis - Chief Financial Officer - Lauri Kearnes Operator: Good morning. Welcome to Byrna's Fiscal Third Quarter 2026 Earnings Conference Call. My name is Darrell and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Conn Davis, and CFO, Lauri Kearnes. Following their remarks, we will open the call to questions. Earlier today, Byrna released results for its fiscal third quarter ended August 31, 2026. A copy of the press release is available on the company's website. Before turning the call over to Mr. Davis, I will read the company's safe harbor statement. Some discussions held today include forward-looking statements. Actual results could differ materially from the statements made today. Please refer to Byrna's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect those projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise. As this call will include references to non-GAAP results, please see the press release in the Investors section of our website, ir.byrna.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. Now I would like to turn the call over to Byrna's CEO, Conn Davis. Sir, please proceed. Conn Davis: Thank you, operator. Thank you, everyone, for joining us today. Over the past several months, we have made significant progress in building the foundations necessary to support sustainable long-term growth. Our results in the quarter reflect our ongoing transition, and while they remain below the level of performance we expect for Byrna, we are seeing signs that many of the initiatives we began implementing this year are starting to gain traction. And that reinforces my conviction in the opportunity ahead. We continue to believe Byrna is uniquely positioned at the intersection of personal safety and consumer self-defense. The need for a less-lethal option remains significant. Consumer awareness of the category remains relatively low, and we believe the long-term opportunity to expand adoption is substantially larger than the business today. Our focus since I arrived in March has been centered around 3 priorities: Improving customer conversion and retail productivity, transforming how Byrna builds demand, and enhancing operational efficiency across the business. During the quarter, we began seeing encouraging progress across each of these priorities. Our direct-to-consumer metrics improved, with website sessions averaging approximately 29,000 per day in August, the highest since March this year, while conversion rates improved from June to August sequentially. We also expanded our social creator ecosystem to more than 50 active creators, helping us reach new consumer audiences and driving engagement up 95% across our social channels compared to Q1. Beyond the individual metrics, what encourages me most is that many of the building blocks we have set out to establish earlier this year are now coming into place, and we still have more to come to help re-accelerate growth. Many of our refreshed marketing programs are now active. Our creator ecosystem is live and expanding. Our retail initiatives are rolling out ahead of the holiday season, our leadership team has been strengthened. We are also seeing measurable operational progress, with first-pass yield exceeding 89% and approaching the 90% target we set for 4Q, gross margins outperforming our internal expectations and inventory beginning to trend lower. Collectively, these indicators reinforce our confidence that the actions we are taking today are creating a stronger platform for future growth. As we move toward the upcoming holiday season, our focus remains on execution. We still have meaningful work ahead of us and remain realistic about the uphill climb. At the same time, we believe the foundation we have spent much of fiscal '26 building is materially stronger than it was 6 months ago. I'll discuss more on our quarter and also introduce a longer-term outlook for the business in a bit. But first, I will turn the call over to Lauri to review our results from the quarter. Lauri? Laurilee Kearnes: Thank you, Conn, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended August 31, 2026. Net revenue for the third quarter was $15.3 million, down approximately 46% from $28.2 million in the prior year period. This was driven primarily by a decline in e-commerce sales and slower reorder activity from dealers and chain stores following substantial restocking in fiscal Q1 and slower than expected sell-through. Gross profit was $12.2 million, or 79% of revenue, compared to $16.9 million or 60% of net revenue in the prior year quarter. Reported gross profit includes the impact of a $2.3 million tariff refund. Adjusting for this item, adjusted gross profit, a non-GAAP measure, was $9.9 million, representing an adjusted gross margin of approximately 65%. The increase in adjusted gross margin is primarily attributable to operational efficiency gains in both manufacturing and supply chain, as well as favorable product and channel mix. Operating expenses for 3Q '26 were $15.1 million compared to $14.1 million for Q3 '25, an increase of 7%. The increase primarily reflects continued investment in new marketing initiatives as well as $1.7 million in bad debt expenses related to 2 large international customers, partially offset by the change in variable selling expenses associated with the decrease in sales. As we've previously discussed, we expect incremental expense as our new commercial and consumer acquisition programs ramp. Those investments will precede their full potential revenue contributions and outside of those targeted areas, we are managing spending against the current revenue base and continuing to evaluate costs. We reported a net loss for the quarter of $2.9 million or a loss of $0.13 per diluted share, compared to net income of $2.2 million or $0.09 per diluted share in the same period a year ago. Adjusted EBITDA, a non-GAAP metric, for Q3 '26 was negative $1.4 million compared to $4.1 million in the same period a year ago. Cash, cash equivalents, and marketable securities totaled $9.4 million as of August 31, 2026, compared to $9 million in the prior year period. It was $15.5 million in November 30, 2025, and $10.4 million at the end of the fiscal second quarter. Lower collections of accounts receivable weighed on cash during the quarter, and we ended the period with no debt. Inventory totaled $30 million as of August 31, 2026, compared to $34.1 million in the prior year period, $32.7 million at November 30, 2025, and $30.4 million at the end of the fiscal second quarter. As we head into the holiday sales season, we expect inventory levels to decrease by $2 million to $3 million during the fourth quarter and to continue to decrease in 2027, leading to improved working capital efficiency. In summary, we believe we have a strong financial position today and the available resources to further invest in our long-term growth objectives. I'll now pass the call back to Conn to discuss more on the quarter and the actions underway across the business. Conn? Conn Davis: Thank you, Lauri. As I mentioned in my opening remarks, we are starting to see encouraging early signs in many of the long-term growth initiatives we've previously outlined. For remainder of today's call, I'd like to spend time specifically covering each of those areas in detail before getting into our longer-term outlook. Let me start with customer conversion and retail productivity. One of our primary objectives this year has been improving how effectively we convert customer consumer interests into purchases across both our direct-to-consumer and retail channels. We are beginning to see meaningful evidence that these efforts are producing results, both in initial discovery and in conversion. For Q3, website conversion improved from June to August sequentially. While we see ample room for continued improvement in conversion, this tells us that our early investments are starting to show initial signs of progress. Heading into the holiday season, we expect conversion to continue moving in the right direction, both as a result of it being a higher intent period and as we apply our early learnings to better tune our approach. Getting into details, the improvement is being driven by several factors. First, we are doing a better job of targeting, meaning we are attracting more new consumers who are more likely to purchase. With updated messaging, updated media placement, improved targeting, and added influencer partnerships, we are doing a better job of reaching audiences that are closely aligned with Byrna's products and mission. Second, once consumers arrive at Byrna.com, we are doing a better job of educating them and ultimately assisting them in making an informed purchase decision. Our Find the Right Launcher quiz continues to generate valuable insights while helping consumers better understand the differences across our product portfolio. To date, the program has generated over 280,000 responses and is converting at over 2 times the rate of the broader website. Similarly, our Try Before You Buy program continues producing encouraging results. The program has maintained a conversion rate of approximately 35% while introducing many new consumers to the Byrna ecosystem. On a related note, our returned launchers are also helping support our new refurbished products program. During the quarter, we sold through all available Byrna SD refurbished product inventory, creating an incremental revenue opportunity while improving asset utilization and further supporting our operational efficiency initiatives. We expect this to remain a reoccurring initiative, allowing us to efficiently monetize returned inventory when sufficient refurbished product is available. Altogether, these initiatives are helping us improve both online traffic quality and website conversion. As for retail, productivity remains an area where we have more work to do. Partner inventory levels continue to weigh on reorder activity, and retail improvements typically take longer to implement than digital initiatives. That said, much of the work we set out to complete for the holiday season is now in place. We have updated retail marketing materials, improved product merchandising, enhanced product displays, expanded training efforts, and continued rolling these initiatives out with retail partners throughout our network. Additionally, we've continued to find unique ways to work with our retail partners, and this holiday season, we are equipping them with exclusive holiday bundles that we believe will resonate with shoppers. Combined, these investments position us well heading into the holiday season and should support stronger sales productivity over time. Our second priority is transforming how Byrna builds demand. Historically, Byrna relied heavily on a relatively narrow audience and a concentrated group of marketing partners. While those relationships remain important, we have been actively broadening both our audience and marketing approach as we work to expand on this narrow and deep initial audience. Our traditional influencer channels continue to represent an important part of the business. These traditional channels have represented the majority of our marketing activity year-to-date, as the marketing program committed to at the beginning of the year has played out. While we believe the upcoming election cycle creates stronger demand trends within some of those audiences, their performance has declined over the past 18 months and remains below where we ultimately need them to be. As a result, we've continued reallocating marketing dollars where possible toward channels and partnerships capable of reaching broader audiences and attracting new consumers to Byrna, while still delivering attractive customer acquisition economics. One example is our Fox Sports Media Partnership through iHeartMedia. While programs like this typically take time to build awareness and momentum, we've already begun seeing more consumers reference this partnership and believe it is contributing positively to overall brand awareness. Building on those efforts, we recently launched a new campaign with iHeartMedia's The Bobby Bones Show, America's leading country morning radio program. This partnership reflects our continued strategy of reallocating existing media investments, when possible, towards trusted platforms with broader mainstream reach, allowing us to introduce Byrna's less-lethal personal security solutions to a new consumer audience. Through a combination of national radio endorsements, podcast integrations, and digital media placements, we believe these initiatives will help expand brand awareness, improve customer education, and further strengthen engagement with prospective customers as we continue expanding the Byrna brand. Another important area focus has been our creator strategy. Working alongside Acceleration Partners, we have now onboarded more than 50 creators into our social creator ecosystem that have a combined following of 3.8 million. We also remain on track towards our objective of building a network of approximately 100 creators by calendar year-end. As a reminder, we are targeting established personalities as well as micro and mid-sized creators with 10,000 to 500,000 followers on Instagram, Facebook, and YouTube. The initiative has targeted both our traditional, firearm-owning core audience and our new growth audiences. Encouragingly, we have seen a strong response from creators that primarily reach new audiences that include women's self-defense, families, runners, commuters, and outdoor consumers, including many that were completely unaware of Byrna before our engagement with them. This has enabled us to create and promote creator-driven content that shows how Byrna's products can support personal safety at home, while commuting, during exercise and travel, and in outdoor settings. While still early, results have been encouraging. Engagement across Byrna's social media channels has increased by 95% from Q1, and we are beginning to see meaningful traffic, engagement, and sales activity generated by creator content. In fact, despite launching only recently, the program has already generated more than $45,000 in sales, exceeding our September target by approximately 300%. We have also already achieved our full-year click-Through objective in just 2 months, while several months remain in the year. While the ecosystem remains in its early stages, these results suggest adoption is ramping faster than we initially anticipated. We believe this creator ecosystem will become an increasingly important customer acquisition engine over time. We are also continuing to look for creative ways to introduce Byrna to new consumers in person. One example was our recent activation at the Bass Pro Shops Night Race at the Bristol Motor Speedway, where we were in front of more than 100,000 race fans over 3 nights of racing. The event provided opportunity to showcase Byrna to a highly relevant consumer audience, many of whom were learning about the brand for the first time. Live product displays, and educational discussions around Byrna's personal safety solutions, we were able to drive meaningful consumer engagement while significantly expanding brand and category awareness. Experiences like these allow consumers to see our products firsthand and better understand the value proposition, helping support both awareness and future demand generation. On a separate but related note, I'd like to provide a brief update on our recent acquisition of HERO Defense Systems, as it also supports this broader demand generation strategy. I'm pleased to report that the acquisition officially closed in August, and we have begun integration efforts here. Our focus has been on rapidly improving the cost, quality, and manufacturability of the HERO product lines. With these concentrated efforts across product design, supply chain and manufacturing, we intend to relaunch HERO's products as an integrated part of Byrna's product lineup at SHOT Show in January. HERO expands Byrna's product ecosystem into new price points and everyday carry form factors, creating additional entry points into the category while providing us with more opportunities to engage consumers through their personal safety journey. Additionally, we believe that the HERO product lines will open up opportunities across new retail partners. Moving to our third priority, which is enhancing operational efficiency, throughout the year, we've remained focused on building systems that will improve profitability, increase cash generation, and better align production with demand. One of the most important actions we took was transitioning ammunition manufacturing to an outsourced model this past quarter. We are already seeing meaningful benefits from this transition, including reduced operational complexity, enhanced strategic flexibility, and improved profitability. The shift has produced an approximate gross margin benefit of 1,200 basis points in our ammunition, and we expect those benefits to continue moving forward. More broadly, margins continued to improve during the quarter. Adjusted gross margin was approximately 65%, up from 62% in Q2 and roughly 500 basis points above last year. Well ahead of the approximately 62% level we said we expected to hold through year-end. Notably, we achieved this on lower volume, driven by operational efficiency gains, and favorable product and channel mix. The team's ability to deliver these results during a challenging top-line quarter speaks to the long-term potential we're building in the business. Reducing and right-sizing our inventory levels also remains a significant focus area as we look to better align production with demand in the future. As we move into the holiday season, we expect stronger sell-through of existing retail inventory. As Lauri mentioned, we expect a reduction of inventory by $2 million to $3 million in Q4. Combined with temporarily moderated production levels, we expect to see overall inventory begin to normalize while also providing the added benefit of improved cash generation. In summary, we are continuing to identify opportunities to further improve manufacturing efficiency, product costs, and operational productivity so that as our sales continue to ramp, we'll see more of that reflected in our bottom line. Moving forward, the first steps of our marketing transformation are implemented. Our creative ecosystem is expanding, our retail programs are rolling out and will accelerate post-holiday, and our operational initiatives are beginning to generate measurable benefits. At the same time, we remain realistic about the work still to be done. We are still in a transition period, and while we expect to drive sequentially improved results, Q4 faces a difficult comparison against an exceptionally strong prior year period. Looking into the end of the fiscal year, we believe it is clear that the business is now moving in the right direction. And with the majority of the initiatives we targeted for the holiday season now in place, we are ready to start playing offense. As we begin looking beyond the current transition period, it is important to emphasize that our focus extends far beyond restoring near-term growth. We believe Byrna has an opportunity to play a leading role in shaping the future of personal safety by expanding awareness and adoption of less-lethal solutions, among a much broader population of consumers. Today, we remain in the early stages of that opportunity. Our ability to meet that opportunity is rooted in 4 key pillars. First, continue expanding awareness, adoption, and conversion across the Byrna platform. Everything we've discussed today, from media partnerships and creator programs to website improvements and retail initiatives, is ultimately designed to increase awareness of Byrna's unique personal safety solutions, improve conversion throughout the customer journey, and bring new consumers into the category. We are encouraged by the early improvements we've seen in website traffic and conversion rates. We believe there remains a significant opportunity to further optimize the customer experience. As part of this effort, we plan to launch a redesigned mobile native website in the first quarter that better reflects how consumers shop today and establishes a foundation for continuous optimization rather than periodic improvements. We also see substantial opportunity within our retail and dealer channels, where we have hired our first dedicated regional sales manager focused on continuously meeting with our partners to improve sell-through, expanding dealer relationships, and increasing our presence with both existing and new retail partners. As we continue to broaden our product portfolio, including the HERO offerings, we believe these efforts can further strengthen our product acceptance in large chains to expand our distribution footprint and accelerate adoption across multiple channels. Our second pillar is extending our presence into professional security, law enforcement, and international markets. Historically, these markets have not been major focus areas for Byrna and remain largely underpenetrated relative to their long-term potential. Third, continuing to improve operational efficiency. The progress we've made with gross margins, manufacturing efficiency, ammunition production, inventory management, and cash generation demonstrate the steps we've taken to build a stronger financial model. There are still more ways for us to further improve this, and we see this as an exciting opportunity as we aim to grow both our top and bottom lines. Finally, we will continue evaluating strategic opportunities that strengthen and complement our personal safety platform. We believe HERO is a good example of the type of opportunity we are interested in pursuing as it broadens our ecosystem, expands our addressable market, and creates additional pathways for long-term growth. Let me be more specific about why we're confident in this framework. First, our margin structure is fundamentally better now compared to Byrna's last growth phase. At mid-60s adjusted gross margins, ammunition sourced variably and at a lower cost, and production more closely aligned to demand, more of every incremental revenue dollar can flow through to the bottom line. Second, investments in leadership, partner relationships, and our creator platform are now largely in place. So growth from here should come without significant incremental cost, which creates real operating leverage. Third, the runway from our expanded audience segmenting provides us a greater market opportunity without alienating our legacy core demographic. We are adding more than 50 million likely buyers in segments Byrna has never addressed in a focused way. Additionally, we're implementing a clear plan to drive sell-through in our retail footprint, and with the HERO acquisition, a product ladder that meets consumers at every stage of their personal safety journey. When put together, we believe this complementary framework positions Byrna to return to a meaningful growth profile with expanding EBITDA margins and strong cash conversion. We intend to host an Investor Day in the first half of next year where we plan to further lay out the financial algorithm and key drivers underpinning our 4 long-term pillars. We will provide additional information on timing in the coming months. As a final note, I'd like to highlight a few key additions to our senior leadership team that we've announced over the past few weeks. We are always looking to bring on great talent, and it is our belief that with these recent additions, we now have the team in place to execute against the strategy I've outlined today. First, we appointed Jim White as Senior Vice President of Retail and Channel Growth. And second, we announced Nate Secor as Senior Vice President of Brand and Marketing. Together, Jim and Nate will be focused on accelerating retail expansion, omnichannel growth, customer acquisition, and brand development. At the board level, we also announced the appointments of Rose Lopez Keravuori and Dr. Matthew McBrady. Rose and Matt provide valuable and uniquely differentiated backgrounds in enterprise risk management, capital markets, corporate governance, and scaling growth-oriented organizations that will be a significant value add to our existing team as we build the architecture of Byrna's next phase of growth. To close, we believe we have the people, strategy, and operational framework necessary to build Byrna into a growth company again, larger, more profitable, and a more durable business over time. The opportunity ahead remains significant, and we look forward to updating you on our progress in the quarters ahead. With that, operator, we are ready to take questions. Operator: Thank you. We will now be conducting a question and answer session. [Operator Instructions] Our first questions come from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions. Jeremy Hamblin: Good morning. I wanted to just start with some of the improvements that you saw in your web sessions. You noted that I think August was 29,000 sessions a day. Still obviously down from what you had been seeing. But have you seen some of that? Did that improvement continue into September? And were you also seeing conversion rates continue to improve in September? Conn Davis: Thanks, Jeremy, and great to hear from you. Thanks for the question. You know, we were really encouraged by what we saw from both a sessions and conversion rate in August. And, you know, we're really focused on now continuing that trend into Q4. And what's exciting about that is not only is it really a higher intent period where we see, you know, more consumers will be engaging, but a lot of the initiatives that we've put in place from both the creative ecosystem and the new marketing initiatives will really be rolling out in full force. So we expect to see improvements over kind of the Q3 numbers throughout Q4, which we're excited about. Jeremy Hamblin: Okay. Well, let me switch gears and ask a little bit about the wholesale business, which obviously had a tough quarter. I think down 64%. I wanted to understand, you've had some partnerships that were previously announced. I wanted to get an update on your retail door expansion. You had a deal with Academy, and a couple of other retail chains, but just wanted to get a sense of stabilization. I noted in the commentary that it sounded like the sell-through didn't hit your targets that you were anticipating. So wanted to get an update on that channel of business and then as we look ahead into '27 and beyond? How much of the recovery in the total business should we be expecting to come from the wholesale channel, which I think previously really had been seen as a big opportunity for growth? Conn Davis: Thanks. I appreciate the question. So if you think about where we are from a retail channel point of view, a lot of the previously announced partnerships, they are live and they are going. But we don't anticipate seeing meaningful doors added in those new chains throughout the holiday period. Typically, once you get to that point in time, you know, stores have set their assortment and their displays for the holiday period. So we expect that to pick up and ramp in 1Q next year from a door expansion point of view. We still definitely view the retail channel as an overall growth pillar for the business going forward and certainly an area where we think we are, you know, investing meaningfully to drive sell-through, which is really an area that we didn't have meaningful investments when we launched the programs a little over 1 year ago now. So increasing and ramping those sell-through programs is what's really going to drive us going forward. Lauri, anything else you'd add? Laurilee Kearnes: And the only thing I'd add is we are doing with a couple of large chains. Some holiday bundles that are specific and exclusive to their locations. In 1 case, it's a color, and in another case, it's kind of a bundled product. So we think, you know, those should do really well, giving them something that differentiates them, and those are the type of partnerships and arrangements we want to do going forward to help them with their sales. Jeremy Hamblin: Okay, got it. In terms of the sell-through rates, you know, right? So you had, I think you know there was some, you know, stocking, inventory stocking that happened earlier and that's part of why you're seeing the percentage rate down as much in Q3. But the sell-through rates, as you've, you know, improved on your marketing approach. Are you starting to see some traction, you know, with the sell-through and conversion rates in your wholesale channel? Conn Davis: Yes, so we have definitely started seeing that reorder activity pick up as we went through 3Q and saw that sell-through, you know, be stronger than it had been kind of earlier in the year. And we don't have as good of detail at the store level with some chains, but those that we do, we've started to see some traction across those platforms, but more encouragingly is the reorder cadence picking up to some extent. Another important factor there is we are expanding our e-commerce partnerships with our retail platforms so that we're enabling them to drop-ship. So when they are out of stock in their stores or don't have inventory in a certain region, we can backfill them and drop-ship from our operations in Fort Wayne, as well as expand the overall assortment that they have available online. We believe that is another initiative that will help drive e-commerce over time and help drive our retail partners. Jeremy Hamblin: Got it. Okay. Another just high-level question. Again, as you continue to transform the business and you have your 4 pillars, if we think about this newer channel that hasn't been a focused historically law enforcement, professional security, those sound like some interesting opportunities. Law enforcement, of course, does have a fairly large entrenched player that has a pretty large penetration in the space. Just talk to me about the cost involved as you get into this particular category. You know, I wonder what type of investment needs to be made to make significant progress. I don't know that like the strategy on influencers and social media is maybe going to have the same impact on that particular channel of potential business. So, you know, what's the kind of the timing on when you think that channel, you know, law enforcement, professional security, that we can start to see some traction, or is that mostly going to be an international focus for you? Conn Davis: Yes, no, appreciate the question. And to be clear, you know, our near-term focus is absolutely on improving the D2C business, the D2C conversion, and traffic on the D2C side. So you'll see the majority of our initiatives in the very near term targeting that. As you think about law enforcement, professional security, and growth in internationally. Those become key pillars for the long-term growth of the organization as we continue to expand and grow. And we'll start making incremental investments in those areas next year, but they're not going to be, you know, things that meaningfully drive in the short term or become significant costs in the short term around that. I would say is focus initially will likely be on that security market because, as you know, the long-term sell-through in the law enforcement side of the house takes longer. Lauri, anything you'd highlight there? Laurilee Kearnes: I mean, I think, you know, we've got some internal resources and as Conn said, we can make some small incremental investments there to start driving that. But there are certainly some large opportunities. And, you know, our product just fits a good need for some of these. And professional security is a great area where something less-lethal, that they can carry is much more attractive to them and oftentimes than a lethal firearm. Jeremy Hamblin: Got it. Last one real quick. Gross margin, the color on the change in ammunition production, super helpful. Can we assume then that this kind of mid-60s gross margin rate is sustainable on a go-forward basis and kind of a step-up from that 62%? Or should we be a little bit more conservative than what you did in Q3? Laurilee Kearnes: Yes, thanks Jeremy. We do expect that range, you know, near the mid-60s to be where we expect to be going forward, both, you know, with the operational efficiencies that we've gained and other initiatives that we'll work through in next year. So we expect that to continue on. Conn Davis: Thanks, Jeremy. Operator: Thank you. Our next question has come from the line of Matt Koranda with ROTH Capital Partners. Please proceed with your questions. Matt Koranda: Hey guys, good morning. Maybe just picking up on the web traffic questions that Jeremy was asking, where does conversions sit right now, maybe over the last couple of months, if you want to do a blended number? I know you mentioned for the last couple of quarters, it's been sub 1%. But you said in the, I think in the prepared remarks and in the release that it had improved sequentially throughout Q3. Are we now back to that 1% number or do we still have some wood to chop on that front? Conn Davis: Yes. No, I appreciate the question, Matt, and good morning to you as well. We are not at 1% from a conversion point at this point in time. We have parts of the site, like the quiz that we mentioned and the program that are north of 1%, but if you think about where we are today, we are, you know, north of 0.6%, but we are not where we need to be kind of long-term. We expect that to continue improving throughout 4Q. You know, mentioned both, it is a higher intent program, but we are rapidly applying the learning that we're seeing from both the quiz and our sessions to really drive an improved conversion rate overall. Matt Koranda: Okay, that's helpful. And then maybe one, I wanted to hear a little bit more about if you can, I'm sure you can do this, but like, the new creators that have been added to the platform, some of the new influencers, obviously they're going to be additive to traffic to the site, but if you isolate sort of what you're seeing from visitors that are coming through those channels, is conversion accretive, I guess, and how you think about sort of driving better conversion over the next several quarters. Is that a good guy for you as you drive more traffic from those new influencers? Conn Davis: Great question. What's great about that influencer strategy is we can really target specific audiences with the right message. So I'm sure as you're aware, people who follow a certain influencer really, one, listen to them and two, attune to the messages that they're delivering into that micro-segment. So what we have seen is traffic coming from those specific influencers into the website are converting at a higher rate than what I would call returning customers at this point in time, which is great to see. However, we still want to continue to improve and drive overall conversion rates across the portfolio. Matt Koranda: Okay, fair enough. Maybe on the retail and dealer channel demand, one way I'd like to try to think about it is, if you're willing to share sort of POS and what you're seeing maybe at the, you know, at the retail level on, on a POS point of view, because obviously there's going to be noise from stocking orders that were taken over the last, you know, several quarters and, and, you know, last year or so. But what does sort of sell-through look like at your, I guess, your more major mature retail partners or your mature dealers? I wanted to see if we can get at it that way. Laurilee Kearnes: Yes, thanks Matt. I mean, I would say that sell-through, as we've said, has been lower than we expected and we're working with those retail partners to try and find initiatives to help drive that. We still know that those locations that have shooting experience do better than those that don't. So we've continued to roll out some of that, certainly talking with partners on how that can work. But I think we are focused on how we help them with the sell-through, whether that be as Conn mentioned through the e-commerce, so we can drop-ship from their e-commerce side as well as these holiday bundles in particular, you know, maybe certain advertising that we can do, kind of co-op type of things and email traffic to help drive their sales as well. So we're looking at all of those initiatives to help them. Conn Davis: Yes, and we just don't have the same level of conversion visibility across all of our third-party stores. That we can obviously see on Byrna.com. Matt Koranda: Okay, got it. Maybe just last one on the HERO. I guess I haven't picked up on the product on your website yet. Maybe I missed that. How soon should we expect that to be integrated into the Byrna site? Will it be integrated onto your site? Or is this more of, you know, sort of a different channel rather that we should be thinking about? Conn Davis: No, we absolutely intend to place the HERO product line on the Byrna website as an integrated part of our total product ecosystem and our product ladder. Matt, that will likely come on the Byrna site in connection with SHOT Show early January as we position and rebrand the product under the Byrna umbrella. Today, it is still available as HERO on Amazon. Matt Koranda: As their original primary sales channel. Okay, understood. I'll leave it there, guys. Thank you. Conn Davis: Thank you. Laurilee Kearnes: Thank you. Operator: Thank you. Our next questions come from the line of Dillon Heins with B. Riley Securities. Please proceed with your questions. Dillon Heins: Hey, I was going in for Jeff Sinderen. I was wondering with the refurbished launchers, you're expecting that to continue. I was just wondering, could you size how much this, you know, what this opportunity looks like and how much does that contribute to gross margin? And then on margin with the, you know, most notably the ammunition outsourcing providing the benefit. Is there anything else that you've identified that could be meaningful to margin expansion like ammunition? Laurilee Kearnes: Yes, thanks Dillon. So on the refurbished program, it does get a little bit more sporadic. We took some inventory that we had, as Conn mentioned, we sold through all the SD refurb launchers that we had. We just launched last week some CL refurb. So as we get that inventory in and build up enough to be meaningful, then we'll go through the refurb process and get those sold. The margin is slightly north of where our overall gross margin is. So it's absolutely accretive to us. And I think some of the supply depends on things like we launched an SD trade-up program where you could trade in your SD and get a good discount on a CL. So as those launchers come in and we get a group of those, we'll put them out on the website. So we think that's a great program going forward. Conn Davis: Thank you. You know, Dillon, you also asked kind of about longer-term areas where we've identified. And I would just tell you that, yes, as you look across the portfolio, I think we have opportunities to source better, to improve gross margins across different product lines. The first area that we'll focus on is accessories in that arena. But going forward, I think, you know, manufacturing, as we do new product launches will be a key area of focus so that we can keep improving that gross margin line over time. Laurilee Kearnes: And I would add that's been our focus on HERO as well, right? So getting that to a place where we can get, you know, improvement in the cost structure of that to help our margins and also potentially help the price point for consumers. Dillon Heins: Okay. Got you. And I was wondering in, you know, along the lines of the HERO mentioned also, you know, be open to continuing to further opportunities like that. Do you have anything that, else that you're looking at or I guess you have a target list or anything else? Conn Davis: So Dillon, nothing that we would announce at this time from that point of view, but I do think HERO presents the type of opportunity that we would be looking at going forward, an area that adds to the total portfolio and ecosystem of what Byrna offers in that personal safety and personal defense space that we could plug into our much stronger distribution network than other players have, and that would benefit from the brand recognition that Byrna brings to it. So that's a good example of what we'll be looking to do in the future, but nothing to announce today. Dillon Heins: Got you. Is the HERO going to be part of the Byrna brand? Like, is it going to have the same design language and things like that? Or is it going to be still just separate HERO line? Conn Davis: So it will be rolled out under the Byrna brand, and we're currently working through what I would think of as the brand architecture to go along with that, but it will be an integrated part of our product suite. Operator: Thank you. At this time, this does conclude our question and answer session. I would now like to turn the call back over to Mr. Davis for his closing remarks. Conn Davis: Thank you, everyone. We appreciate your continued interest in Byrna. I want to take this opportunity to thank all of our investors, our customers, vendors, partners, and employees. The journey that we're on today is only possible because of their tremendous support and belief in our mission of saving lives. Thank you. Have a great day. Operator: Thank you for joining us today for Byrna's Fiscal Third Quarter 2026 Earnings Conference Call. You may now disconnect your lines. Enjoy the rest of your day. Before you buy stock in Byrna Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Byrna Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Byrna (BYRN) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

ANDOVER, Mass., Oct. 08, 2026 (GLOBE NEWSWIRE) -- Byrna Technologies Inc. ("Byrna" or the "Company") (Nasdaq: BYRN), a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions, today reported select financial results for its fiscal third quarter ("Q3 2026") ended August 31, 2026. Fiscal Third Quarter 2026 and Recent Operational Highlights - Completed the acquisition of HERO Defense Systems, LLC, a complementary less-lethal self-defense company, expanding Byrna's product portfolio into additional price points and form factors. - Onboarded more than 50 influencers with a combined following of 3.8 million people through Acceleration Partners as part of a broader initiative to build the Company's growing social creator ecosystem and expand brand awareness on new platforms. - Reallocated marketing investments within iHeartMedia toward a partnership with The Bobby Bones Show, expanding Byrna's reach to mainstream consumer audiences while increasing national brand awareness. - Launched and sold through all available refurbished product inventory, driving incremental earnings during the period and providing a longer-term revenue diversification channel. - Successfully transitioned ammunition production to an outsourced model, improving ammunition gross margins by approximately 1,200 basis points in the quarter and reducing operational complexity to drive greater overall profitability. - Continued executing operational efficiency initiatives and product mix optimization efforts, contributing to gross margin expansion from 60% to 79% year-over-year, reflecting a one-time $2.3 million tariff refund; excluding that item, adjusted gross margin, a non-GAAP measure, improved to approximately 65%. - Strengthened leadership team with the additions of Jim White, Senior Vice President of Retail & Channel Growth, and Nate Secor, Senior Vice President of Brand and Marketing, to accelerate retail expansion, omnichannel growth, customer acquisition, and brand development. - Appointed Rose Lopez Keravuori and Dr. Matthew McBrady to the Board of Directors, bringing additional expertise in enterprise risk management, capital markets, corporate governance, and scaling growth-oriented organizations. Fiscal Third Quarter 2026 Financial Results Results compare Q3 2026 to the 2025 fiscal third quarter ended August 31, 2025, unless otherwise indicated. Net revenue for Q3 2026 was $15.3 million, compared to $28.2 million in the fiscal third quarter of 2025 ("Q3 2025"). The approximately 46% year-over-year decrease was driven primarily by a decline in e-commerce sales and slower reorder activity from dealers and chain stores following substantial restocking in fiscal Q1 and slower-than-expected sell-through. Gross profit for Q3 2026 was $12.2 million (79% of net revenue), down from $16.9 million (60% of net revenue) in Q3 2025. Gross profit for Q3 2026 includes the benefit of a one-time $2.3 million refund of previously paid tariffs. Excluding this item, adjusted gross profit, a non-GAAP measure reconciled below, was $9.9 million, representing adjusted gross margin of approximately 65%, compared to 60% in Q3 2025. The improvement in adjusted gross margin is primarily attributed to improving launcher margins through manufacturing efficiency gains and a continued shift to higher margin products. Operating expenses for Q3 2026 were $15.1 million, compared to $14.1 million for Q3 2025, an increase of 7%. The increase primarily reflects continued investment in new marketing initiatives as well as $1.7 million in other one-time costs, partially offset by the change in variable selling expenses associated with a decrease in sales. Net income (loss) for Q3 2026 was $(2.9) million, compared to $2.2 million for Q3 2025. The decline was primarily driven by the factors discussed above, partially offset by lower income tax expense and a net gain in interest and other income. Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q3 2026 totaled $(1.4) million, compared to $4.1 million in Q3 2025. Cash, cash equivalents and marketable securities as of August 31, 2026 totaled $9.4 million, compared to $9.0 million at August 31, 2025, and $15.5 million at November 30, 2025. Inventory on August 31, 2026 totaled $30.0 million, compared to $34.1 million at August 31, 2025, and $32.7 million at November 30, 2025. The Company expects inventory levels to continue normalizing in subsequent quarters and more substantially during the upcoming holiday sales period leading to improved working capital efficiency. Management Commentary "Over the past several months, we have made significant progress in rebuilding the foundations necessary to support sustainable long-term growth," said Byrna CEO Conn Davis. "Our results in the quarter reflect our ongoing transition, but we are now starting to see positive signs of new initiatives taking hold and expect to improve sequentially as we approach the end of our fiscal year. For example, we averaged over 29,000 website sessions per day in August, the highest since March of this year. Website conversion also improved from June to August sequentially. Both of these metrics reflect the work we've done increasing engagement across our digital channels, onboarding creators to our social engagement program, and launching new media partnerships. While these efforts remain in their early stages, the initial indicators are encouraging and give us confidence that we are moving in the right direction. "Heading into our critical holiday sales season, we believe we have established a foundation for many of the transformation initiatives and are now focused on executing against them and building momentum. Our refreshed marketing programs are active, our creator network continues to expand, and we are working closely with our expanded dealer base to support holiday sell-through and improve retail productivity. As these initiatives come together, we expect to see more substantial inventory sell through, leading to improved cash generation and overall results. While many of these initiatives remain in their early stages, we are encouraged by the initial results and believe their impact will become more meaningful as they continue to mature and scale. "Looking further ahead, we believe Byrna's opportunity extends well beyond current market conditions. By providing consumers with an effective option between being defenseless and carrying a firearm, we are helping reshape the personal safety landscape and expand the less-lethal category. As the clear market leader in the category we pioneered, we believe we are only beginning to unlock the substantial growth opportunity that lies ahead through increased consumer awareness, broader distribution, and continued category adoption. "Over the next several years, our focus will be on four pillars: continuing to expand awareness, adoption, and distribution of the Byrna brand; extending our presence further into international, professional security, and law enforcement markets; improving operational efficiency through margin expansion, inventory productivity, and cash generation; and evaluating strategic opportunities that strengthen and complement our personal safety platform. Collectively, we believe these initiatives can support a significantly larger, more profitable, and more durable business over time. "Just as importantly, we now have the team and organizational structure in place to execute against that vision. During the quarter, we strengthened our leadership team with the additions of Jim White and Nate Secor, whose experience in retail growth, omnichannel sales, brand building, and customer acquisition are already helping shape the next phase of Byrna's evolution. We also enhanced our Board with the appointments of Rose Lopez Keravuori and Dr. Matthew McBrady, adding valuable expertise in governance, risk management, capital allocation, and strategic growth. Collectively, we believe these additions significantly strengthen our ability to execute our strategy and accelerate the development of a larger, more profitable, and more durable business. "The work underway today is designed not only to improve near-term performance, but to establish a repeatable growth model capable of creating lasting value for our customers, partners, employees, and shareholders over the long term." Conference Call The Company's management will host a conference call today, October 8, 2026, at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these results, followed by a question-and-answer period. Toll-Free Dial-In: 877-709-8150 International Dial-In: +1 201-689-8354 Confirmation: 13762670 Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860. The conference call will be broadcast live and available for replay here and via the Investor Relations section of Byrna's website. About Byrna Technologies Inc. Byrna is a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions. For more information on the Company, please visit the corporate website here or the Company's investor relations site here. The Company is the manufacturer of the Byrna® CL, Byrna® LE and Byrna® SD personal security devices, state-of-the-art handheld CO2 powered launchers designed to provide a less-lethal alternative to a firearm for the consumer, private security, and law enforcement markets. To purchase Byrna products, visit the Company's e-commerce store. Forward-Looking Statements This news release contains "forward-looking statements" within the meaning of the federal securities laws. All statements contained in this news release, other than statements of current and historical fact, are forward-looking statements. Often, but not always, forward-looking statements can be identified by the general use of words such as "plans," "expects," "intends," "anticipates," and "believes" and statements that certain actions, events or results "may," "could," "would," "should," "might," "occur," or "be achieved," or "will be taken." Forward-looking statements in this news release include but are not limited to statements concerning expected sequential improvement as Byrna approaches the end of its fiscal year; the anticipated effects of its refreshed marketing programs, creator network, media partnerships, digital engagement efforts and expanded dealer base on brand awareness, customer acquisition, website conversion, holiday sell-through and retail productivity; expected inventory normalization, including during the holiday sales period, and resulting improvements in working capital efficiency and cash generation; the expected effects of outsourced ammunition production and other operational efficiencies on margins, costs and profitability; the anticipated benefits of the HERO Defense Systems, LLC acquisition, including an expanded product portfolio; Byrna's plans to increase brand awareness and adoption, broaden distribution, extend its presence in international, professional security and law enforcement markets, and evaluate complementary strategic opportunities; and its ability to build a larger, more profitable and durable business over time, as well as statements regarding the growth of the less-lethal personal defense category, Byrna's market position within that category and the growth opportunity Byrna believes lies ahead, the expected contributions of recently appointed executives and directors, and Byrna's ability to establish a repeatable growth model and create long-term value for its stakeholders. Forward-looking statements are not, and cannot be, a guarantee of future results or events. Forward-looking statements are based on, among other things, opinions, assumptions, estimates, and analyses that, while considered reasonable by the Company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies, and other factors that may cause actual results and events to be materially different from those expressed or implied. Any number of risk factors could affect our actual results and cause them to differ materially from those expressed or implied by the forward-looking statements in this news release, including, but not limited to, disappointing market responses to current or future products or services; prolonged, new, or exacerbated disruption of our supply chain; the further or prolonged disruption of new product development; production or distribution disruption or delays in entry or penetration of sales channels due to inventory constraints, competitive factors, increased transportation costs or interruptions, including due to weather, flooding or fires; prototype, parts and material shortages, particularly of parts sourced from limited or sole source providers; determinations by third party controlled distribution channels, including Amazon, not to carry or reduce inventory of the Company's products; determinations by advertisers or social media platforms, or legislation that prevents or limits marketing of some or all Byrna products; the loss of marketing partners; the execution of the Company's strategic priorities and the integration of recently appointed leaders; the risk that the anticipated benefits of our recently completed acquisition are not realized, or that we are unable to integrate the acquired business on the anticipated timeline or at all; the risk that outsourcing ammunition production increases reliance on third-party suppliers, disrupts supply or does not sustain anticipated margin improvements; the risk that our planned reductions in inventory do not materialize on the anticipated timeline or result in additional inventory write-downs or reserves; investments in e-commerce enhancements or digital capabilities, including improvements to Byrna.com, do not yield anticipated improvements in conversion rates, customer acquisition, or revenue; the risk that efforts to broaden brand messaging or expand into new customer segments do not achieve anticipated market penetration or revenue results; increases in marketing expenditure may not yield expected revenue increases; the risk that creator, media and dealer initiatives do not generate anticipated holiday sell-through, sequential improvement, cash generation or retail productivity; the risk that recent improvements in website traffic and conversion are not sustained; the risk that the Company's cash resources are insufficient to fund its operations, inventory and strategic initiatives, or that additional financing is not available on acceptable terms or at all; potential cancellations of existing or future orders including as a result of any fulfillment delays, introduction of competing products, negative publicity, or other factors; product design or manufacturing defects or recalls; litigation, enforcement proceedings or other regulatory or legal developments; changes in consumer or political sentiment affecting product demand; regulatory factors including the impact of commerce and trade laws and regulations; changes in domestic or international trade policy, including the imposition of new or increased tariffs, export controls or other trade restrictions, that could result in an increase in the cost of materials, components or finished goods used or sold by the Company, and/ or that could disrupt the Company's supply chain, or otherwise adversely affect the Company's costs, revenues, or results of operations; the risk that anticipated manufacturing efficiency improvements do not materialize or are offset by increases in input, labor, or overhead costs; the risk that efforts to expand distribution or develop international, professional security and law enforcement markets are delayed or do not produce anticipated results; and, future restrictions on the Company's cash resources, increased costs and other events that could potentially reduce demand for the Company's products or result in order cancellations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive; accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. Investors should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, ("Risk Factors") in the Company's most recent Form 10-K and in the Company's subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission, and should understand it is impossible to predict or identify all such factors or risks, and should not consider the foregoing list, or the risks identified in the Company's SEC filings, to be a complete discussion of all potential risks or uncertainties, and should not place undue reliance on forward-looking information. The Company assumes no obligation to update or revise any forward-looking information, except as required by applicable law. Investor Contact: Tom Colton and Greg Bradbury Gateway Group, Inc. 949-574-3860 [email protected] BYRNA TECHNOLOGIES INC. Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Amounts in thousands except share and per share data) (Unaudited) | | | | | | | | | | | | | | | | | | | | For the Three Months Ended | | For the Nine Months Ended | | | August 31 | | August 31 | | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | | Net revenue | | $ | 15,296 | | | $ | 28,179 | | | $ | 60,733 | | | $ | 82,874 | | Cost of goods sold | | | 3,142 | | | | 11,257 | | | | 29,394 | | | | 32,464 | | Gross profit | | | 12,154 | | | | 16,922 | | | | 31,339 | | | | 50,410 | | Operating expenses | | | 15,084 | | | | 14,059 | | | | 46,186 | | | | 42,525 | | INCOME FROM OPERATIONS | | | (2,930 | ) | | | 2,863 | | | | (14,847 | ) | | | 7,885 | | OTHER INCOME (EXPENSE) | | | | | | | | | Foreign currency transaction loss | | | (27 | ) | | | (91 | ) | | | (224 | ) | | | (305 | ) | Interest income | | | 37 | | | | 97 | | | | 167 | | | | 400 | | Other income | | | 9 | | | | (6 | ) | | | 40 | | | | 10 | | INCOME BEFORE INCOME TAXES | | | (2,911 | ) | | | 2,863 | | | | (14,864 | ) | | | 7,990 | | Income tax benefit (expense) | | | - | | | | (628 | ) | | | 2,666 | | | | (1,666 | ) | NET INCOME (LOSS) | | $ | (2,911 | ) | | $ | 2,235 | | | $ | (12,198 | ) | | $ | 6,324 | | | | | | | | | | | Foreign currency translation adjustment for the period | | | 29 | | | | 82 | | | | 292 | | | | 27 | | Unrealized gain on marketable securities | | | (14 | ) | | | (51 | ) | | | (16 | ) | | | 27 | | COMPREHENSIVE INCOME (LOSS) | | $ | (2,896 | ) | | $ | 2,266 | | | $ | (11,922 | ) | | $ | 6,378 | | | | | | | | | | | Basic net income (loss) per share | | $ | (0.13 | ) | | $ | 0.10 | | | $ | (0.54 | ) | | $ | 0.28 | | Diluted net income (loss) per share | | $ | (0.13 | ) | | $ | 0.09 | | | $ | (0.54 | ) | | $ | 0.26 | | | | | | | | | | | Weighted-average number of common shares outstanding - basic | | | 22,981,181 | | | | 22,691,574 | | | | 22,779,451 | | | | 22,649,525 | | Weighted-average number of common shares outstanding - diluted | | | 22,981,181 | | | | 24,103,760 | | | | 22,779,451 | | | | 24,147,430 | | | | | | | | | | | BYRNA TECHNOLOGIES INC. Condensed Consolidated Balance Sheets (Amounts in thousands except share and per share data) | | | | | | | | | | | | August 31 | | November 30, | | | 2026 | | 2025 | | | Unaudited | | | ASSETS | | | | | CURRENT ASSETS | | | | | Cash and cash equivalents | | $ | 8,418 | | | $ | 13,727 | | Marketable Securities | | | 1,001 | | | | 1,754 | | Accounts receivable, net | | | 2,538 | | | | 10,840 | | Inventory, net | | | 29,974 | | | | 32,694 | | Prepaid expenses and other current assets | | | 3,821 | | | | 4,681 | | Total current assets | | | 45,752 | | | | 63,696 | | LONG TERM ASSETS | | | | | Deposits for equipment | | | 245 | | | | 1,495 | | Right-of-use-asset, net | | | 1,051 | | | | 2,042 | | Property and equipment, net | | | 3,869 | | | | 7,726 | | Intangible assets, net | | | 3,944 | | | | 3,086 | | Goodwill | | | 2,714 | | | | 2,258 | | Deferred tax asset | | | 6,855 | | | | 4,134 | | Other assets | | | 153 | | | | 51 | | TOTAL ASSETS | | $ | 64,583 | | | $ | 84,488 | | | | | | | LIABILITIES | | | | | CURRENT LIABILITIES | | | | | Accounts payable and accrued liabilities | | $ | 7,374 | | | $ | 15,864 | | Operating lease liabilities, current | | | 705 | | | | 734 | | Deferred revenue, current | | | 186 | | | | 496 | | Total current liabilities | | | 8,265 | | | | 17,094 | | LONG TERM LIABILITIES | | | | | Deferred revenue, non-current | | | 18 | | | | 25 | | Operating lease liabilities, non-current | | | 532 | | | | 1,612 | | Contingent consideration liability, non-current | | | 649 | | | | – | | Total liabilities | | | 9,464 | | | | 18,731 | | | | | | | | | | | | STOCKHOLDERS' EQUITY | | | | | Preferred stock | | | – | | | | – | | Common stock | | | 25 | | | | 25 | | Additional paid-in capital | | | 138,107 | | | | 135,870 | | Treasury stock | | | (23,308 | ) | | | (22,355 | ) | Accumulated deficit | | | (59,294 | ) | | | (47,096 | ) | Accumulated other comprehensive loss | | | (411 | ) | | | (687 | ) | | | | | | Total Stockholders' Equity | | | 55,119 | | | | 65,757 | | | | | | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 64,583 | | | $ | 84,488 | | | | | | | Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide additional financial measures that are not prepared in accordance with GAAP (non-GAAP), consisting of non-GAAP adjusted EBITDA, non-GAAP adjusted cost of goods sold and non-GAAP adjusted gross profit (and the related adjusted gross profit margin). Management uses these non-GAAP financial measures, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure. Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison. Adjusted EBITDA Adjusted EBITDA is defined as net (loss) income as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (i) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss, and (vi) one time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands): | | | | | | | | | | | | | | | | | | | | | | | For the Three Months Ended | | For the Nine Months Ended | | | | August 31 | | August 31 | | | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | | Net Income (Loss) | | $ | (2,911 | ) | | $ | 2,235 | | | $ | (12,198 | ) | | $ | 6,324 | | | | | | | | | | | | Adjustments: | | | | | | | | | | Interest income | | | (37 | ) | | | (97 | ) | | | (167 | ) | | | (400 | ) | | Income tax expense | | | - | | | | 628 | | | | (2,666 | ) | | | 1,666 | | | Depreciation and amortization | | | 466 | | | | 618 | | | | 1,828 | | | | 1,617 | | Non-GAAP EBITDA | | $ | (2,482 | ) | | $ | 3,384 | | | $ | (13,203 | ) | | $ | 9,207 | | | | | | | | | | | | Stock-based compensation expense | | | 601 | | | | 734 | | | | 1,972 | | | | 2,297 | | Impairment loss | | | - | | | | - | | | | 4,506 | | | | - | | Write-down of ammunition inventory | | | - | | | | - | | | | 3,605 | | | | - | | Inventory reserve - strategic product rationalization | | | - | | | | - | | | | 2,324 | | | | - | | Severance/Leadership transition | | | 521 | | | | (36 | ) | | | 1,041 | | | | 210 | | Non-GAAP adjusted EBITDA | | $ | (1,360 | ) | | $ | 4,082 | | | $ | 245 | | | $ | 11,714 | | | | | | | | | | | | Adjusted Cost of goods sold and gross profit Adjusted cost of goods sold is defined as cost of goods sold as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (i) impairment loss; (ii) write down of ammunition inventory; (iii) inventory reserve due to strategic product rationalization, and (iv) refunds of previously paid tariffs. Our Adjusted cost of goods sold measure eliminates potential differences in performance caused by certain one-time or unusual events. Adjusted gross profit is defined as revenue as reported in our condensed consolidated statement of operations and comprehensive (loss) income less Adjusted cost of goods sold. Reconciliation of Adjusted cost of goods sold to Cost of goods sold, as well as a reconciliation of Adjusted Gross profit to Gross profit, the most directly comparable GAAP measures, are as follows (in thousands): | | | | | | | | | | | | | | | | | | | | For the Three Months Ended | | For the Nine Months Ended | | | August 31 | | August 31 | | | | 2026 | | | | 2025 | | | | 2026 | | | | 2025 | | Net revenue | $ | 15,296 | | | $ | 28,179 | | | $ | 60,733 | | | $ | 82,874 | | Cost of goods sold | | 3,142 | | | | 11,257 | | | | 29,394 | | | | 32,464 | | Gross profit | | 12,154 | | | | 16,922 | | | | 31,339 | | | | 50,410 | | Gross profit margin | | 79.5 | % | | | 60.1 | % | | | 51.6 | % | | | 60.8 | % | | | | | | | | | | Cost of goods sold | | 3,142 | | | | 11,257 | | | | 29,394 | | | | 32,464 | | Adjustments: | | | | | | | | | Impairment loss | | - | | | | - | | | | (3,488 | ) | | | - | | | Tariff refund | | 2,282 | | | | - | | | | 3,349 | | | | - | | | Write-down of ammunition inventory | | - | | | | - | | | | (3,605 | ) | | | - | | | Inventory reserve - strategic product rationalization | | - | | | | - | | | | (2,324 | ) | | | - | | Non-GAAP adjusted cost of goods sold | | 5,424 | | | | 11,257 | | | | 23,326 | | | | 32,464 | | | | | | | | | | | Non-GAAP adjusted gross profit | | 9,872 | | | | 16,922 | | | | 37,407 | | | | 50,410 | | Non-GAAP adjusted gross profit margin | | 64.5 | % | | | 60.1 | % | | | 61.6 | % | | | 60.8 | % | | | | | | | | | | ________________ 1 See non-GAAP financial measures at the end of this press release for a reconciliation and a discussion of non-GAAP financial measures.

- Interested in Byrna Technologies Inc.? Here are five stocks we like better. - Byrna's fiscal Q3 results weakened sharply: Revenue fell 46% year over year to $15.3 million, while the company posted a $2.9 million net loss and negative adjusted EBITDA, reflecting lower e-commerce sales and slower dealer and retail reorders. - Profitability improved despite the sales decline. Adjusted gross margin rose to about 65%, supported by manufacturing and supply-chain efficiencies, including the shift to outsourced ammunition production; management expects margins to remain near the mid-60% range. - Management is focused on demand recovery and expansion. Website traffic and conversion showed early improvement, creator marketing is expanding, and Byrna plans to relaunch HERO products under its brand in January 2027, while cash declined to $9.4 million and inventory remained elevated at $30 million. - MarketBeat Week in Review – 07/28 - 08/01 Byrna Technologies (NASDAQ:BYRN) reported lower fiscal third-quarter revenue and a net loss as e-commerce sales declined and dealer and chain-store reorders slowed following earlier inventory restocking. Management said it is seeing early progress from efforts to improve online conversion, broaden marketing reach, increase retail productivity and enhance operational efficiency. For the quarter ended Aug. 31, 2026, net revenue was $15.3 million, down 46% from $28.2 million a year earlier. CFO Lauri Kearnes said the decline was primarily driven by lower e-commerce sales, along with slower reorder activity among dealers and chain stores after substantial restocking in the fiscal first quarter and weaker-than-expected retail sell-through. → Lamb Weston's Turnaround Is Starting to Look Real - Why Byrna Could Be the Top Defense Stock to Watch Now Byrna recorded a net loss of $2.9 million, or $0.13 per diluted share, compared with net income of $2.2 million, or $0.09 per diluted share, in the prior-year quarter. Adjusted EBITDA was negative $1.4 million, compared with positive $4.1 million a year earlier. Gross profit totaled $12.2 million, or 79% of revenue, including a $2.3 million tariff refund. Excluding that refund, adjusted gross profit was $9.9 million and adjusted gross margin was about 65%, up from 62% in the prior quarter and roughly 500 basis points above the prior-year period, according to CEO Conn Davis. → Why onsemi's Synaptics Pivot Could Be a Game Changer - 5 aerospace and defense stocks under $5 Kearnes attributed the adjusted margin increase to manufacturing and supply-chain efficiencies, along with favorable product and channel mix. Davis said the company's transition to outsourced ammunition manufacturing produced an approximately 1,200-basis-point gross-margin benefit for ammunition, while reducing operational complexity and increasing flexibility. During the question-and-answer session, Kearnes said Byrna expects gross margins to remain near the mid-60% range going forward, supported by operational improvements and additional initiatives. Davis said the company also sees opportunities to improve sourcing and margins in other product categories, particularly accessories, while emphasizing manufacturability in future product launches. → Constellation Energy's Google Deal Shows Why Nuclear Uprates Matter for AI Operating expenses increased 7% year over year to $15.1 million. The increase reflected marketing investments and $1.7 million in bad-debt expense related to two large international customers, partially offset by lower variable selling expenses associated with the decline in sales. Davis said management's near-term focus remains centered on improving direct-to-consumer traffic and conversion. Website sessions averaged about 29,000 per day in August, the highest level since March, while website conversion improved sequentially from June through August. In response to analyst questions, Davis said overall conversion was above 0.6% but had not yet returned to 1%. He said select site features are converting above that level, including the company's "Find the Right Launcher" quiz and its Try Before You Buy program. The quiz has generated more than 280,000 responses and is converting at more than twice the rate of the broader website, Davis said. The Try Before You Buy program has maintained an approximately 35% conversion rate. Byrna also sold through its available inventory of refurbished Byrna SD launchers during the quarter and recently introduced refurbished CL products. Kearnes said the refurbished program produces margins slightly above the company's overall gross-margin rate, though inventory availability can vary. Management expects online results to improve further in the fiscal fourth quarter, which Davis described as a higher-intent consumer period. The company is also applying insights from its site programs and marketing initiatives to improve conversion. Byrna has sought to reduce its historical reliance on a narrow audience and concentrated marketing partners by adding broader media relationships and social creators. The company has onboarded more than 50 creators with a combined following of 3.8 million and is targeting approximately 100 creators by the end of the calendar year. Davis said social-media engagement increased 95% from the first quarter, while the creator program generated more than $45,000 in sales after its recent launch, exceeding the company's September target by about 300%. Traffic originating with creators has converted at a higher rate than returning customers, he said. The company cited partnerships with Fox Sports through iHeartMedia and with "The Bobby Bones Show" as part of its effort to reach broader audiences. It also conducted an in-person activation at the Bass Pro Shops Night Race at Bristol Motor Speedway, where Davis said the company reached more than 100,000 race fans over three nights. Retail productivity remains an area requiring additional work, management said. Davis said previously announced retail partnerships are active, but Byrna does not expect meaningful new store-door additions during the holiday period because retailers have already set holiday assortments and displays. The company expects door expansion to begin ramping in the first quarter of next year. Byrna is rolling out updated merchandising, display materials and training, while offering exclusive holiday bundles to certain large retail chains. Management also said it is expanding e-commerce relationships with retail partners to allow drop-shipping from Byrna's Fort Wayne operations when products are unavailable in stores or regions. Cash, cash equivalents and marketable securities were $9.4 million as of Aug. 31, down from $10.4 million at the end of the fiscal second quarter and $15.5 million at Nov. 30, 2025. Kearnes said lower accounts-receivable collections weighed on cash during the quarter. The company had no debt. Inventory totaled $30 million, down from $30.4 million at the end of the second quarter. Byrna expects inventory to decline by an additional $2 million to $3 million in the fourth quarter as holiday sales and temporarily moderated production help better align inventory with demand. The company completed its acquisition of HERO Defense Systems in August and plans to relaunch HERO products as part of Byrna's product lineup at the SHOT Show in January 2027. Davis said the products will be sold under the Byrna brand and added to its website around that time. HERO products remain available through Amazon under the HERO name currently. Davis said Byrna plans to prioritize direct-to-consumer recovery in the near term, while making incremental investments next year in professional security, law enforcement and international markets. He said professional security may be an earlier opportunity than law enforcement because law-enforcement sales cycles tend to be longer. The company also plans to host an Investor Day in the first half of next year to discuss its long-term financial framework and growth priorities. Byrna Technologies Inc is a personal-security company that develops and sells less-lethal protection products for consumers, security professionals and law enforcement agencies. The company's product portfolio is centered on handheld launchers designed to provide an alternative to conventional firearms for personal protection and other security applications. Byrna's products include compact launchers, projectiles and related accessories. Its ammunition offerings include chemical-irritant rounds, kinetic-impact rounds and inert training rounds, while its product line also includes replacement parts, holsters, storage products and other accessories. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Byrna Technologies Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Non-lethal weapons company Byrna (NASDAQ:BYRN) missed Wall Street's revenue expectations in Q3 2026, with sales falling 45.7% year on year to $15.3 million. Its GAAP loss of $0.13 per share was 17% above analysts' consensus estimates. Is now the time to buy Byrna? Find out in our full research report. - Revenue: $15.3 million vs analyst estimates of $16.15 million (45.7% year-on-year decline, 5.3% miss) - EPS (GAAP): -$0.13 vs analyst estimates of -$0.16 (17% beat) - Adjusted EBITDA: -$1.36 million (-8.9% margin, 137% year-on-year decline) - Adjusted EBITDA Margin: -8.9%, down from 13.2% in the same quarter last year - Market Capitalization: $92.33 million Management Commentary"Over the past several months, we have made significant progress in rebuilding the foundations necessary to support sustainable long-term growth," said Byrna CEO Conn Davis. "Our results in the quarter reflect our ongoing transition, but we are now starting to see positive signs of new initiatives taking hold and expect to improve sequentially as we approach the end of our fiscal year. For example, we averaged over 29,000 website sessions per day in August, the highest since March of this year. Website conversion also improved from June to August sequentially. Both of these metrics reflect the work we've done increasing engagement across our digital channels, onboarding creators to our social engagement program, and launching new media partnerships. While these efforts remain in their early stages, the initial indicators are encouraging and give us confidence that we are moving in the right direction. Providing civilians with tools to disable, disarm, and deter would-be assailants, Byrna (NASDAQ:BYRN) is a provider of non-lethal weapons. A company's long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Byrna's 18% annualized revenue growth over the last five years was incredible. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Byrna's annualized revenue growth of 14.3% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. This quarter, Byrna missed Wall Street's estimates and reported a rather uninspiring 45.7% year-on-year revenue decline, generating $15.3 million of revenue. Looking ahead, sell-side analysts expect revenue to decline by 5.2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you're unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Byrna's high expenses have contributed to an average operating margin of negative 4.1% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. On the plus side, Byrna's operating margin rose by 13 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability. Byrna's operating margin was negative 19.2% this quarter. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Byrna's earnings losses deepened over the last five years as its EPS dropped 25.2% annually. We'll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. Sadly for Byrna, its EPS declined by 154% annually over the last two years while its revenue grew by 14.3%. This tells us the company became less profitable on a per-share basis as it expanded. We can take a deeper look into Byrna's earnings to better understand the drivers of its performance. Byrna's operating margin has declined over the last two years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don't tell us as much about a company's fundamentals. In Q3, Byrna reported EPS of negative $0.13, down from $0.09 in the same quarter last year. Despite falling year on year, this print easily cleared analysts' estimates. Over the next 12 months, Wall Street expects Byrna to improve its earnings losses. Analysts forecast its full-year EPS will improve from negative $0.40 to negative $0.24. We were impressed by how significantly Byrna blew past analysts' EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. On the other hand, its revenue missed. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 5.3% to $3.84 immediately after reporting. Is Byrna an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management is shifting Byrna from a narrow marketing focus to a broader 'creator ecosystem' and mainstream media partnerships to reach untapped consumer segments like families and commuters. - The 46% revenue decline was primarily driven by a decline in e-commerce sales and slower reorder activity from dealers following a post-Q1 restocking lull and slow sell-through, prompting a strategic focus on improving conversion rates across both direct-to-consumer and retail channels. - Operational efficiency improved significantly, with adjusted gross margins reaching 65% despite lower volumes, driven by a transition to outsourced ammunition manufacturing. - The company is implementing a 'product ladder' strategy, using the HERO Defense acquisition to provide entry-level price points and everyday carry form factors. - Management highlighted a 95% increase in social engagement since Q1, validating the move toward a network of over 50 active social creators to drive brand awareness. - A new leadership team and regional sales management structure have been established to specifically address retail productivity and channel growth execution. - Q4 guidance assumes a $2 million to $3 million reduction in inventory levels as the company aligns production more closely with holiday demand trends. - Management expects website conversion rates to continue improving sequentially through Q4, aided by a higher-intent holiday shopping period and refined targeting. - The HERO product line is scheduled for a full brand integration and relaunch at the SHOT Show in January, targeting new retail partners and price points. - Long-term growth is predicated on four pillars: expanding consumer awareness, penetrating professional security/international markets, continuous operational efficiency, and strategic M&A. - A redesigned mobile-native website is slated for Q1 launch to establish a foundation for continuous digital optimization and improved mobile shopping experiences. - Gross profit included a $2.3 million one-time tariff refund; excluding this, adjusted gross margin stood at a structurally improved 65%. - Operating expenses were impacted by $1.7 million in bad debt expenses related to two large international customers. - The transition to outsourced ammunition manufacturing resulted in a 1,200 basis point gross margin benefit for that specific product category. - Management acknowledged that retail improvements typically lag digital initiatives, with meaningful door expansion not expected until Q1 2027. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management confirmed the mid-60% adjusted gross margin is sustainable due to permanent operational efficiencies and the new ammunition sourcing model. - Future margin expansion will focus on better sourcing for accessories and optimizing manufacturing for new product launches. - Reorder activity began picking up in Q3 as sell-through improved, though visibility remains limited at the individual store level for some chains. - Byrna is expanding e-commerce drop-ship capabilities for retail partners to mitigate out-of-stock issues and expand available online assortments. - Near-term focus remains on D2C conversion, with professional security and international markets serving as long-term growth pillars. - Management expects to make small incremental investments in these areas next year, noting that professional security is a more immediate opportunity than the longer law enforcement sales cycle. - Traffic from specific influencers is converting at a higher rate than returning customers, validating the micro-segment targeting strategy. - The program exceeded September sales targets by 300% and achieved full-year click-through objectives in just two months.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance fell short of expectations due to a 13% decline in website traffic and elevated retail inventory levels following Q1 restocking. Management is pivoting from a narrow core audience to a systematic demand generation model targeting 50 million potential buyers across new consumer segments. The company separated marketing and sales functions to increase accountability and improve the speed of response to changing demand environments. Operational discipline is being reinforced through a new rolling financial model that connects real-time e-commerce trends and retail sell-through directly to production. Manufacturing was streamlined by reducing launcher assembly lines from four to two and outsourcing ammunition production to lower-cost external suppliers. The acquisition of Hero Defense Systems provides a 'product ladder' with more accessible price points and discreet form factors to attract entry-level consumers. Fiscal 2026 is no longer expected to be a revenue growth year as the company executes a strategic transition against current demand signals. Q3 is characterized as a transition period with new marketing initiatives ramping, while Q4 is expected to show improvement driven by holiday seasonality. Management expects to exit the year with adjusted gross margins at or above 62% and a $5 million reduction in physical inventory. Core brand repositioning is scheduled for the 2026 holiday season, followed by a complete brand and website overhaul in Q1 2027. The Hero acquisition is expected to close within 30 days, with integration into the Byrna digital ecosystem planned for late Q3 and Q4. Recorded a $10.4 million non-cash charge related to the closure of the Fort Wayne ammunition facility and strategic product rationalization. Shifted ammunition sourcing to external suppliers after a make-versus-buy analysis confirmed lower fully loaded costs compared to internal operations. Reported a $1.1 million tariff refund which partially offset inventory write-downs and impairment losses in the cost of goods sold. Inventory levels were reduced to $30.4 million, primarily reflecting the write-down of raw materials and equipment from discontinued manufacturing processes. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Q2 serves as the baseline for OpEx, but management expects an incremental investment of approximately $250,000 per month for new marketing agencies. These investments in commercial and consumer acquisition programs will precede their full potential revenue contributions. Hero fills a portfolio gap between $20 sprays and $400 launchers with a target price point around $250. The product's less 'gun-forward' form factor is intended to appeal to consumers who are not yet ready for a full launcher system. Management plans to reduce Hero's build cost through re-engineering while maintaining margins similar to Byrna's core products. Wholesale revenue was pressured by slow reorders as partners worked through high inventory levels following the holiday season. A pilot program moving products from gun cases to dedicated end caps in 20 stores resulted in monthly purchases increasing from $81,000 to $200,000. The Academy Sports rollout shifted from Q2 into Q3 due to timing adjustments on the partner's side. The decision to stop in-house ammunition production is a permanent shift driven by new external supply availability that was not present when the facility was built. The move is expected to improve gross margins by sourcing at a lower cost than internal production while maintaining quality standards.

This article first appeared on GuruFocus. Revenue: $16.4 million for Q2 2026, down from $28.5 million in the prior-year period. E-commerce Sales: Decreased by $5.8 million or 35% year-over-year. Domestic Dealer Channel: Decreased by $3.5 million or 47%. International Dealer and Distributor Channel: Decreased by $1.2 million or 43%. Gross Profit: $1.8 million or 11% of net revenue, compared to $17.6 million or 62% in Q2 2025. Adjusted Gross Profit: $10.1 million, representing an adjusted gross margin of approximately 62%. Operating Expenses: $14.6 million, up 3% from $14.2 million in Q2 2025. Net Loss: $10.1 million, compared to net income of $2.4 million in Q2 2025. Adjusted EBITDA: Negative $600,000, compared to $4.3 million in Q2 2025. Cash and Equivalents: $10.4 million as of May 31, 2026. Inventory: $30.4 million as of May 31, 2026, down from $33.1 million at February 28, 2026. Website Traffic: Byrna.com sessions down 13% year-over-year. Conversion Rate: Averaged 0.59%, down from 1% in Q2 2025. Average Order Value: Declined 19% to approximately $302. Warning! GuruFocus has detected 3 Warning Signs with BYRN. Is BYRN fairly valued? Test your thesis with our free DCF calculator. Release Date: July 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Byrna Technologies Inc (NASDAQ:BYRN) is implementing tactical changes to demand generation and cost structure, aiming to return to growth. The company has established three key near-term priorities: improving consumer conversion and retail productivity, changing demand generation strategies, and connecting demand more tightly to production and inventory. Byrna's 'Try Before You Buy' program has shown strong conversion rates near 30%, indicating potential for increased consumer engagement. The company is expanding its retail presence with dedicated Byrna in caps, which has led to increased purchases from retail partners. Byrna Technologies Inc (NASDAQ:BYRN) has entered into a definitive agreement to acquire HERO Defense Systems, which will expand its product offerings and potentially attract a broader consumer base. Q2 2026 revenue of $16.4 million was significantly lower than the prior-year period's $28.5 million, reflecting challenges in e-commerce and retail channels. E-commerce sales decreased by 35% due to reduced website traffic and lower conversion rates. The company reported a net loss of $10.1 million for Q2 2026, compared to a net income of $2.4 million in Q2 2025. Gross profit margin dropped to 11% from 62% in the prior year, impacted by inventory write-downs and impairment losses. Byrna Technologies Inc (NASDAQ:BYRN) anticipates fiscal 2026 will not be a revenue growth year, with Q3 expected to remain a transition quarter. Q: Can you discuss how you're managing your operating expense structure given the lower revenue expectations and the need to reformulate marketing and realign the organization? A: Laurilee Kearnes, CFO: We are using Q2 as a baseline for operating expenses but will make some investments in marketing agencies, which will precede revenue. These investments are estimated at $250,000 per month. Variable selling expenses will fluctuate with sales, especially in Q4 due to the holiday season. We aim to hold other operating expenses steady while hiring for new sales and marketing positions. Q: Can you provide an update on the rollout with Academy and feedback from retail partners regarding retail sell-through? A: Conn Davis, CEO: We are focusing on enhancing consumer education and product visibility in retail environments. Retail partners remain excited about Byrna, but high inventory levels from last year's holiday restocking affected reordering. The Academy rollout shifted from Q2 to Q3 due to timing on their side. Q: What are the expected annual revenues from the HERO acquisition, and how does it fit with Byrna's pricing strategy? A: Conn Davis, CEO: HERO products are priced lower than Byrna's, filling a gap between our sprays and launchers. We aim to reduce HERO's build cost to offer a solution around $250, opening new consumer opportunities. HERO's form factor and price point will attract a broader audience. Q: How have e-commerce traffic and conversion trended recently, and when will HLK's new messaging impact traffic? A: Conn Davis, CEO: Traffic and conversion have remained consistent from Q2 into Q3. HLK's new messaging is in early stages and will ramp up in Q3, with full impact expected by Q4. Increased engagement in our "find the right launcher" quiz and "try-before-you-buy" program are positive indicators. Q: How will the HERO acquisition be integrated into Byrna's offerings, and what is the timeline for this integration? A: Conn Davis, CEO: Initially, we will promote HERO's existing product line. Integration into byrna.com is expected by Q3/Q4, with full brand alignment by Q1 2027. This will create a unified consumer experience and broaden our product offerings. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

ANDOVER, Mass., July 09, 2026 (GLOBE NEWSWIRE) -- Byrna Technologies Inc. (“Byrna” or the “Company”) (Nasdaq: BYRN), a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions, today reported select financial results for its fiscal second quarter (“Q2 2026”) ended May 31, 2026. Fiscal Second Quarter 2026 and Recent Operational Highlights Entered into a binding agreement to purchase HERO Defense Systems, LLC, a complementary less-lethal self-defense company, expanding Byrna’s product portfolio across additional price points and everyday-carry form factors. Initiated and recently expanded its “try before you buy” pilot program, following early results achieving an approximately 30% conversion rate among participating customers who received a demo unit, with most conversions occurring in the second week of the two-week trial period. Generated over 150,000 responses on the “Find the Right Launcher” guided shopping experience on Byrna.com since it was introduced in April. Customers who used the product education tool converted at approximately twice the conversion rate of the overall website. Reduced launcher assembly operations from four lines at the end of fiscal Q1 to two lines by May and ceased in-house ammunition manufacturing to better align production with current demand, improve cost efficiency, and support the reduction of finished goods inventory over time. Activated its Fox Sports media partnership through iHeartMedia in June, expanding Byrna’s reach to a broad, highly engaged sports audience across radio and digital platforms. Realigned sales and marketing functions and initiated a search for dedicated leaders to support retail growth and brand expansion. Appointed HLK as agency of record to strengthen brand messaging, customer acquisition, and product education initiatives. Appointed Acceleration Partners as its influencer and affiliate marketing agency to build a broader social creator program, relaunch Byrna’s affiliate marketing program and improve the Company’s ability to measure customer acquisition across its e-commerce channels. Promoted industry veteran Matthew Campagni to Chief Strategy Officer to lead the Company’s strategic planning initiatives and support cross-functional execution. Fiscal Second Quarter 2026 Financial ResultsResults compare Q2 2026 to the 2025 fiscal second quarter ended May 31, 2025, unless otherwise indicated. Net revenue for Q2 2026 was $16.4 million, compared to $28.5 million in the fiscal second quarter of 2025 (“Q2 2025”). The approximately 43% year-over-year decrease was driven primarily by a decrease in e-commerce sales and slower reorder activity from dealers and chain stores following substantial restocking in fiscal Q1 and slower-than-expected sell-through. Gross profit for Q2 2026 was $1.8 million (11% of net revenue), down from $17.6 million (62% of net revenue) in Q2 2025. Reported gross margin included a one-time $5.9 million inventory write-down and a $3.5 million impairment of equipment, this was partially offset by a $1.1 million tariff refund recorded in cost of goods sold. Excluding these items, adjusted gross profit was $10.1 million, representing adjusted gross margin of approximately 62%. Operating expenses for Q2 2026 were $14.6 million, compared to $14.2 million for Q2 2025, an increase of 2.7%. The increase primarily reflected an impairment charge of $1 million as well as continued investment in marketing, partially offset by the change in variable selling expenses associated with a decrease in sales. Net income (loss) for Q2 2026 was $(10.1) million, compared to $2.4 million for Q2 2025. Net loss included non-cash impairment and inventory write-down charges of $10.4 million related to the shutdown of our ammunition manufacturing facility in Fort Wayne and strategic product rationalization. A tax benefit of $2.7 million was also recorded for the quarter. Adjusted EBITDA1, a non-GAAP metric reconciled below, for Q2 2026 totaled $(0.6) million, compared to $4.3 million in Q2 2025. Cash, cash equivalents and marketable securities as of May 31, 2026 totaled $10.4 million, compared to $15.5 million at November 30, 2025. Inventory on May 31, 2026 totaled $30.4 million, compared with $32.7 million on November 30, 2025. The Company is focused on lowering inventory over time and improving working capital efficiency. Management Commentary“Our second quarter results did not reflect the level of performance we believe Byrna can deliver,” said Byrna CEO Conn Davis. “We expected the quarter to begin a transition period, but continued softness in our direct-to-consumer channel as well as a slower pace of reorders across retail partners led to a steeper reset than we initially expected. “In e-commerce, web traffic remained weak, and while conversion rates showed modest improvement as a result of our website changes, overall conversion levels and average order value were below where we expected. In retail, our partners entered the quarter with elevated inventory levels following meaningful post-holiday restocking in Q1. Sell-through during the quarter did not occur at a pace that supported consistent reorder activity, which impacted revenue across both dealer and big box channels. “From an operational standpoint, we took actions during the quarter to better align production and operating costs with current demand. We reduced production capacity in our launcher facility and exited in-house ammo manufacturing where we were not cost competitive. These actions reduce costs, operating complexity, and establish a more balanced operating baseline that should allow us to work down physical inventory through the second half of the year. “We also advanced a number of initiatives designed to improve demand over both the near and longer term. Our top operational priority is improving customer conversion and retail productivity across all channels. “We are seeing encouraging early results from our “try before you buy” program, which is attracting new customers to the brand and generating conversion rates of approximately 30%. This represents a meaningful improvement versus traditional e-commerce and provides a scalable pathway to reaccelerate direct-to-consumer growth over time. “On the retail side, we are focused on continuing our store expansion while also working closely with our partners to improve customer discovery and sell-through. Initiatives such as in-store training, enhanced merchandising, including end-cap displays, and expanded demo experiences are producing stronger results in the locations where they have been implemented. Our focus now is applying those learnings more consistently across the wider footprint. “In parallel, our messaging pivot is underway, as we work to broaden our reach and engage a wider set of customer segments. This includes partnerships such as Fox Sports, along with new social and influencer programs designed to introduce Byrna to previously underpenetrated audiences while continuing to build on the existing foundation with our core customers. We believe this approach will expand our addressable market while supporting more consistent and durable demand over time. We are also in the process of bringing on experienced leaders across marketing and retail to strengthen execution, improve accountability and support the next phase of growth. “Based on current expectations, fiscal 2026 will not be a revenue-growth year. Q2 reset the revenue baseline, and we are planning the business around current demand trends rather than assuming a quick return to prior growth rates. We expect improvement from the first half of the fiscal year to the second half, as retailers prepare for the holidays and more of our marketing, conversion and customer-acquisition initiatives enter the market. “We are building from a more realistic baseline, with the opportunity to improve as these initiatives begin to contribute. Our focus is on improving website traffic and conversion, strengthening retail sell-through and reorder cadence, reducing inventory and improving working capital efficiency. We believe the actions underway position Byrna to finish fiscal 2026 on stronger footing and enter fiscal 2027 with a business capable of delivering more consistent growth.” Conference CallThe Company’s management will host a conference call today, July 9, 2026, at 9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss these results, followed by a question-and-answer period. Toll-Free Dial-In: 877-709-8150International Dial-In: +1 201-689-8354Confirmation: 13761119 Please call the conference telephone number 5-10 minutes prior to the start time of the conference call. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860. The conference call will be broadcast live and available for replay here and via the Investor Relations section of Byrna’s website. About Byrna Technologies Inc.Byrna is a personal defense technology company specializing in the development, manufacture, and sale of innovative less-lethal personal security solutions. For more information on the Company, please visit the corporate website here or the Company’s investor relations site here. The Company is the manufacturer of the Byrna® CL, Byrna® LE and Byrna® SD personal security devices, state-of-the-art handheld CO2 powered launchers designed to provide a less-lethal alternative to a firearm for the consumer, private security, and law enforcement markets. To purchase Byrna products, visit the Company’s e-commerce store. Forward-Looking StatementsThis news release contains "forward-looking statements" within the meaning of the federal securities laws. All statements contained in this news release, other than statements of current and historical fact, are forward-looking statements. Often, but not always, forward-looking statements can be identified by the general use of words such as "plans," "expects," "intends," "anticipates," and "believes" and statements that certain actions, events or results "may," "could," "would," "should," "might," "occur," or "be achieved," or "will be taken." Forward-looking statements in this news release include but are not limited to our statements related to our expected net revenue and top-line performance during the transition period and in future periods, and our expectation that our operating results will continue to reflect the transition we are working through; our expectation that the operational and cost actions taken during the quarter, including the reduction of launcher assembly from four lines to two and the decision to cease in-house ammunition manufacturing, will reduce costs, operating complexity, and finished goods inventory over time and establish a more balanced and cash-efficient operating baseline; our plans to reduce inventory levels over time and improve working capital efficiency, including our expectation of working down physical inventory during the second half of fiscal 2026; the anticipated benefits and integration of our recently completed acquisition, including the expansion of the Company’s price points and product form factors; the early results, conversion rates, and scalability of our “try before you buy” program, and its potential to reaccelerate direct-to-consumer growth over time; the anticipated impact of our “Find the Right Launcher” guided shopping experience on website conversion; our plans to improve customer conversion, retail productivity, and sell-through across our e-commerce, dealer, and big-box channels, including through in-store training, enhanced merchandising and end-cap displays, and expanded demonstration experiences, and our intention to apply those initiatives more consistently across our retail footprint; our continued retail store expansion and our ability to collaborate with retail partners and grow productivity per store; our brand and messaging pivot and related marketing initiatives intended to broaden our reach and expand our addressable market, including our Fox Sports partnership activated through iHeartMedia, the appointment of HLK as our agency of record, and the engagement of Acceleration Partners for our influencer and affiliate marketing programs; our ability to attract, onboard, and retain experienced marketing and retail leaders, including the contributions of Matthew Campagni as Chief Strategy Officer, and to align the organization around near-term execution priorities while building toward our long-term strategic vision; brand awareness of Byrna and continued acceptance of the less-lethal personal defense market; our expectation that meaningful operational changes currently underway in demand generation, website conversion, retail productivity, and internal forecasting will, over time, result in improved operating performance; our expectation that we will emerge from this transition year with a more scalable and cash-efficient operating model; and, Byrna’s positioning for sustained and durable growth in future fiscal years. Forward-looking statements are not, and cannot be, a guarantee of future results or events. Forward-looking statements are based on, among other things, opinions, assumptions, estimates, and analyses that, while considered reasonable by the Company at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies, and other factors that may cause actual results and events to be materially different from those expressed or implied. Any number of risk factors could affect our actual results and cause them to differ materially from those expressed or implied by the forward-looking statements in this news release, including, but not limited to, disappointing market responses to current or future products or services; prolonged, new, or exacerbated disruption of our supply chain; the further or prolonged disruption of new product development; production or distribution disruption or delays in entry or penetration of sales channels due to inventory constraints, competitive factors, increased transportation costs or interruptions, including due to weather, flooding or fires; prototype, parts and material shortages, particularly of parts sourced from limited or sole source providers; determinations by third party controlled distribution channels, including Amazon, not to carry or reduce inventory of the Company’s products; determinations by advertisers or social media platforms, or legislation that prevents or limits marketing of some or all Byrna products; the loss of marketing partners; challenges arising from the transition to the new executive leadership and execution of new strategic priorities by the Company’s new management team; the risk that the anticipated benefits of our recently completed acquisition are not realized, or that we are unable to integrate the acquired business on the anticipated timeline or at all; the risk that our decision to cease in-house ammunition manufacturing increases our reliance on third-party ammunition suppliers, disrupts supply, or does not achieve anticipated cost savings; the risk that our “try before you buy” program does not convert participants at anticipated rates, is not scalable, or does not prove economically accretive; the risk that our planned reductions in inventory do not materialize on the anticipated timeline or result in additional inventory write-downs or reserves; investments in e-commerce enhancements or digital capabilities, including improvements to Byrna.com, do not yield anticipated improvements in conversion rates, customer acquisition, or revenue; the risk that efforts to broaden brand messaging or expand into new customer segments do not achieve anticipated market penetration or revenue results; increases in marketing expenditure may not yield expected revenue increases; potential cancellations of existing or future orders including as a result of any fulfillment delays, introduction of competing products, negative publicity, or other factors; product design or manufacturing defects or recalls; litigation, enforcement proceedings or other regulatory or legal developments; changes in consumer or political sentiment affecting product demand; regulatory factors including the impact of commerce and trade laws and regulations; changes in domestic or international trade policy, including the imposition of new or increased tariffs, export controls or other trade restrictions, that could result in an increase in the cost of materials, components or finished goods used or sold by the Company, and/ or that could disrupt the Company’s supply chain, or otherwise adversely affect the Company’s costs, revenues, or results of operations; the risk that price increases implemented in the first quarter are not sustained, are reversed in response to market or competitive conditions, or otherwise fail to contribute to gross margin improvement as anticipated; the risk that anticipated manufacturing efficiency improvements do not materialize or are offset by increases in input, labor, or overhead costs; the risk that planned retail store launches, including the targeted addition of up to 250 new retail locations, are delayed, reduced in scope, or not executed by retail partners on the anticipated timeline; and, future restrictions on the Company’s cash resources, increased costs and other events that could potentially reduce demand for the Company’s products or result in order cancellations. The order in which these factors appear should not be construed to indicate their relative importance or priority. We caution that these factors may not be exhaustive; accordingly, any forward-looking statements contained herein should not be relied upon as a prediction of actual results. Investors should carefully consider these and other relevant factors, including those risk factors in Part I, Item 1A, ("Risk Factors") in the Company’s most recent Form 10-K, and should understand it is impossible to predict or identify all such factors or risks, and should not consider the foregoing list, or the risks identified in the Company’s SEC filings, to be a complete discussion of all potential risks or uncertainties, and should not place undue reliance on forward-looking information. The Company assumes no obligation to update or revise any forward-looking information, except as required by applicable law. Investor Contact:Tom Colton and Alec WilsonGateway Group, [email protected] Non-GAAP Financial Measures In addition to providing financial measurements based on generally accepted accounting principles in the United States (GAAP), we provide an additional financial metric that is not prepared in accordance with GAAP (non-GAAP) with presenting non-GAAP adjusted EBITDA. Management uses this non-GAAP financial measure, in addition to GAAP financial measures, to understand and compare operating results across accounting periods, for financial and operational decision making, for planning and forecasting purposes and to evaluate our financial performance. We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of certain expenses that we exclude in the calculations of the non-GAAP financial measure. Accordingly, we believe that this non-GAAP financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. This non-GAAP financial measure does not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP. There are limitations in the use of non-GAAP measures, because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment concerning exclusions of items from the comparable non-GAAP financial measure. In addition, other companies may use other non-GAAP measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison. Adjusted EBITDA Adjusted EBITDA is defined as net (loss) income as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (I) depreciation and amortization; (ii) income tax provision (benefit); (iii) interest income (expense); (iv) stock-based compensation expense, (v) impairment loss, and (vi) one time, non-recurring other expenses or income. Our Adjusted EBITDA measure eliminates potential differences in performance caused by variations in capital structures (affecting finance costs), tax positions, the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense). We also exclude certain one-time and non-cash costs. Reconciliation of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP measure, is as follows (in thousands): Adjusted Cost of goods sold and gross profit Adjusted cost of goods sold is defined as cost of goods sold as reported in our condensed consolidated statements of operations and comprehensive (loss) income excluding the impact of (i)impairment loss; (ii) write down of ammunition inventory; (iii) inventory reserve due to strategic product rationalization, and (iv) refunds of previously paid tariffs. Our Adjusted cost of goods sold measure eliminates potential differences in performance caused by certain one-time or unusual events. Adjusted gross profit is defined as revenue as reported in our condensed consolidated statement of operations and comprehensive (loss) income less Adjusted cost of goods sold. Reconciliation of Adjusted cost of goods sold to Cost of goods sold, as well as a reconciliation of Adjusted Gross profit to Gross profit, the most directly comparable GAAP measures, are as follows (in thousands): ________________________________1 See non-GAAP financial measures at the end of this press release for a reconciliation and a discussion of non-GAAP financial measures.