Byrna's Q3 2025 Earnings Call Exposes Contradictions in Influencer Strategy, Advertising Effectiveness, and Store Expansion Plans

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

Date of Call: None provided

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 to be 35%–40%.
• Q4 mix: DTC to be a higher share than Q3; dealer/chain stores remain strong.
• Conversion rates expected to trend back toward ~1% over time; unlikely to fully normalize in Q4.
• Target gross margin of 63%–65% in FY2026 as CL and ammo ramp efficiencies improve.
• Effective tax rate expected ~23% for FY2025.
• Inventory drawdown and cash increase to accelerate through Q4; inventory to normalize by Q1 FY2026.
• Black & Orange and Black Friday/Cyber Monday promos to drive demand; fulfillment timing may shift some orders into Q1 FY2026.

Business Commentary:

* Revenue Growth and Channel Dynamics: - Byrna Technologies reported net revenue of $28.2 million for Q3 2025, representing a 35% year-over-year increase. - Revenue growth was driven by strong chain store and dealer sales, expanded retail presence, successful advertising initiatives, and broader brand adoption.

• Inventory and Production Efficiency:
• Inventory at the end of Q3 2025 totaled $34.1 million, reflecting strategic builds and the launch of the Byrna Compact Launcher.

• Although inventory levels were high, there was an over $3.5 million reduction from the peak in July, indicating a return to more normalized levels post-peak season.

• Advertising Campaign Impact:

• Byrna's AI-driven advertising campaign led to an increase in average daily sessions on Byrna.com, from 33,000 to more than 50,000 a day.

• This surge in traffic resulted in a significant expansion of the email list, now at 1.9 million subscribers, and is expected to drive Q4 sales through targeted outreach.

• Retail Expansion and Customer Experience:

• The company opened its own retail stores, with five locations performing in line with expectations, with an average annualized run rate of $725,000 per store.
• The strong performance highlights the effectiveness of the retail model and the positive impact of customer experiences, particularly with experiential settings that lead to higher conversion rates.

Sentiment Analysis:

• Net revenue grew 35% YOY to $28.2M; adjusted EBITDA rose to $3.7M from $1.9M. Management expects FY2025 revenue growth of 35%–40% and highlighted strong September sales. They target 63%–65% gross margin next year, expect DTC to grow as a share in Q4, and cited no debt with cash increasing post-quarter.

Q&A:

• Question from Jeff Van Sinderen (B. Riley Securities): Thoughts on adding new influencers and expanding beyond conservative radio hosts?
  Response: Byrna is expanding to new celebrity brand ambassadors, guided by former Nike NA sales/marketing head Adam Roth; outreach is underway.

• Question from Jeff Van Sinderen (B. Riley Securities): Update on new launcher plans and lower-price offerings?
  Response: Next launcher is a value-oriented 61-caliber model based on CL, targeted for next year; no new CL variants planned.

• Question from Jeff Van Sinderen (B. Riley Securities): How is the lower-price 'basic box' unit and ByrnaCare adoption performing?
  Response: Basic box underperforms; ~90% of buyers choose the ready kit and $549.99 price point is validated; ByrnaCare adoption is in line, with website upsell improvements pending.

• Question from Jeremy Hamblin (Craig-Hallum): How are conversion rates trending given the 70%–75% sequential lift in web traffic, and is the campaign reaching new customers?
  Response: Conversions lag due to a ~45-day purchase cycle; rates are rising but heavy new traffic (~70k sessions/day) dampens near-term; not expected to fully normalize in Q4.

• Question from Jeremy Hamblin (Craig-Hallum): What channel mix should we expect in Q4?
  Response: Dealer/chain sales remain strong, but DTC is expected to be a higher percentage of sales than in Q3.

• Question from Jeremy Hamblin (Craig-Hallum): Can the expense leverage seen in Q3 persist into Q4 and FY2026?
  Response: Leverage should continue; Q4 marketing will step up and 2026 adds some roles, but overall expense leverage is expected to persist.

• Question from Matthew Koranda (ROTH Capital Partners): How does FY guide align with the big lift in web traffic?
  Response: Guidance assumes conversions recover gradually; conversion likely won’t return to normal in Q4 despite growing sessions.

• Question from Matthew Koranda (ROTH Capital Partners): Any change to holiday promotional strategy to drive conversion?
  Response: Standard Black & Orange and Black Friday/Cyber Monday events will run; shipping capacity may push some late-November orders into Q1.

• Question from Matthew Koranda (ROTH Capital Partners): Outlook for wholesale door expansion into year-end and next year?
  Response: Footprint ~1,000 doors; plan to hold broadly, focus on productivity and SKU expansion with partners; selective corporate stores in underrepresented markets.

• Question from Matthew Koranda (ROTH Capital Partners): Timing for the connected SOS safety platform?
  Response: Phased rollout begins next year using existing SOS tech adapted to Byrna; some products in 2026, more advanced offerings likely in 2027.

• Question from Jon Hickman (Ladenburg Thalmann): Update on Sportsman’s Warehouse rollout and shooting lanes?
  Response: Program is on track; shooting pods materially lift demos and conversion and are exclusive to Sportsman’s; Byrna is nationwide in Bass Pro/Cabela’s with broad SKU coverage.