Byrna's Q3 2025 Earnings Call: Contradictions Emerge in Influencer Strategy, Online Sales, Retail Expansion, and Pricing

The above is the analysis of the conflicting points in this earnings call

Date of Call: October 9, 2025

Financials Results

• Revenue: $28.2M, up 35% YOY (vs $20.9M in Q3 2024)
• Gross Margin: 60%, compared to 62% in Q3 2024

Guidance:

• FY2025 revenue growth expected at 35%–40%.
• Q4 mix: DTC expected to be a higher percentage than Q3; dealer/chain store sales remain strong.
• Gross margin targeted at 63%–65% in FY2026 as production efficiencies ramp.
• Inventory to normalize after peak season; inventory drawdown and cash increase to accelerate in Q4.
• Effective tax rate expected to be ~23% for FY2025.
• Black Friday/Cyber Monday timing may shift some orders between Q4 FY2025 and Q1 FY2026.

Business Commentary:

* Revenue and Sales Growth: - Byrna Technologies reported a 35% increase in net revenue to $28.2 million for the fiscal third quarter of 2025, compared to $20.9 million in the same period last year. - This growth was driven by strong sales through both the company's expanding retail presence and effective advertising initiatives.

• Earnings and Profitability:
• The company's net income for the quarter increased to $2.2 million, up from $1 million in the previous year.

• This improvement in earnings was attributed to the overall increase in product sales, particularly in the change store and dealer sales segments.

• Web Traffic and Conversion Rates:

• Byrna's web traffic surged, with daily sessions on byrna.com increasing from 33,000 to over 50,000 after the introduction of new advertising campaigns.

• While the initial traffic surge led to a decrease in conversion rates, the company expects conversion rates to improve as the campaigns continue to run and generate brand awareness.

• Retail Expansion and Sales Channels:

• Byrna expanded its retail presence to over 1,000 stores nationwide by the end of the third quarter.
• This expansion contributed to increased sales, especially when customers could physically experience the products, leading to higher conversion rates.

Sentiment Analysis:

• Management reported Q3 revenue up 35% YOY to $28.2M and adjusted EBITDA of $3.7M (vs $1.9M prior year), with continued GAAP and non-GAAP profitability. They expect FY2025 revenue growth of 35%–40% and cited strong September sales and holiday momentum. Web sessions rose to ~58k/day in September (70k on recent days), expanding the funnel, and retail footprint surpassed 1,000 stores. They target 63%–65% gross margin next year as new systems improve manufacturing efficiency.

Q&A:

• Question from Jeff Van Sinderen (B. Riley Securities): Thoughts on adding new influencers and areas of focus?
  Response: Expanding beyond conservative radio hosts; recruited ex-Nike exec Adam Roth to lead a broader brand-ambassador push now in planning.

• Question from Jeff Van Sinderen (B. Riley Securities): Any new CL launcher variant and update on lower price-point unit?
  Response: No new CL variants; value 61-caliber launcher planned for 2026; the higher-priced ready kit (~$540.99) is ~90% of sales, basic box underperforms.

• Question from Jeff Van Sinderen (B. Riley Securities): How is ByrnaCare adoption trending?
  Response: In line with expectations; web checkout upsell integration is pending and should lift adoption once implemented.

• Question from Jeremy Hamblin (Craig-Hallum): How are conversion rates trending given the 70%+ sequential web traffic increase?
  Response: Conversions lag due to a ~45-day purchase cycle; rates are rising but unlikely to hit historical levels in Q4 despite growing sessions.

• Question from Jeremy Hamblin (Craig-Hallum): Expected Q4 channel mix given wholesale expansion and elevated web traffic?
  Response: DTC should be a higher percentage than Q3 while dealer/chain store sales remain strong with additional holiday orders.

• Question from Jeremy Hamblin (Craig-Hallum): Can expense leverage persist into Q4 and FY2026?
  Response: Yes, leverage should continue, though Q4 will see higher marketing; modest incremental hiring expected in FY2026.

• Question from Matt Koranda (ROTH Capital Partners): Why does guidance imply ~25% Q4 growth despite much higher web traffic?
  Response: Guidance reflects slower conversion normalization; traffic is rising but conversion likely won’t return to ~1% mean in Q4.

• Question from Matt Koranda (ROTH Capital Partners): Holiday promotional plans and any change to drive conversion?
  Response: Running late-October Black & Orange and Black Friday/Cyber Monday sales; fulfillment capacity may shift some orders into Q1.

• Question from Matt Koranda (ROTH Capital Partners): Outlook for wholesale door expansion into year-end and FY2026?
  Response: Hold near current ~1,000-door footprint to avoid saturation; focus on deeper SKUs and productivity with existing partners; selective new company stores in underrepresented markets.

• Question from Matt Koranda (ROTH Capital Partners): Timing of the SOS-connected safety platform?
  Response: Phased rollout begins in 2026 using existing SOS tech; some advanced features may follow in 2027.