Byrna Technologies Q3 Earnings Call Highlights

Key Points

• 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.

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.

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.

Margins Improved Despite Lower Sales

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.

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.

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.

Online Traffic, Conversion Show Early Improvement

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.

Broader Marketing Push and Retail Efforts

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.

Inventory, HERO Integration and Longer-Term Plans

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.

About Byrna Technologies (NASDAQ:BYRN)

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.

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