Good morning. Welcome to Byrna Technologies Inc.'s Fiscal Third Quarter 2025 Earnings Conference Call. My name is Donna, and I will be your operator for today's call. Joining us for today's presentation are the company's CEO, Bryan Ganz, and CFO, Laurilee Kearnes. Following their remarks, we will open the call to questions. Earlier today, Byrna Technologies Inc. released results for its fiscal third quarter ended August 31, 2025. A copy of the press release is available on the company's website. Before turning the call over to Bryan Ganz, Byrna Technologies Inc.'s Chief Executive Officer, I will read the 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 Technologies Inc.'s most recent 10-Ks and 10-Q filings for a more complete description of risk factors that could affect these 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. I will now turn the call over to Byrna Technologies Inc.'s CEO, Mr. Ganz.

Thank you, operator, and thank you, everyone, for joining us today. This morning, we filed our 10-Q with the SEC and issued a press release providing our financial results and business highlights for the fiscal third quarter ended August 31, 2025. I'll start today by turning the call over to our CFO, Laurilee Kearnes, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our 35% year-over-year revenue growth and continued GAAP and non-GAAP EBITDA profitability for the quarter. I'll then offer insights into our strategy moving forward, before we open the call up to questions from our covering research analysts. Laurilee?

Thank you, Bryan, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended August 31, 2025. Net revenue for Q3 2025 was $28.2 million, a 35% increase from the $20.9 million reported in 2024. The $7.2 million increase was driven largely by strong chain store and dealer sales tied to our expanding retail presence, the success of our new advertising initiatives, and broader brand adoption. Web traffic began to build late in the quarter and has continued into fiscal Q4. Gross profit for Q3 2025 was $16.9 million or 60% of net revenue, compared to $13 million or 62% of net revenue for Q3 2024. Gross margin performance reflects the changing channel mix, which saw much stronger dealer and international sales for the quarter, the one-time startup costs associated with the compact launcher release, and related manufacturing ramp-up costs, as well as the start of ammo manufacturing in Fort Wayne. We anticipate that the compact launcher and ammo margins will continue to grow as production volumes increase and manufacturing processes become more efficient. Operating expenses for Q3 2025 were $14.1 million compared to $12.2 million for Q3 2024. The increase in operating expenses was driven primarily by increased variable selling expenses and discretionary marketing investment to support the growth. Net income for Q3 2025 was $2.2 million, up from $1 million for Q3 2024. This increase was driven by the overall increase in product sales. We continue to expect our effective tax rate to be approximately 23% for the year. Adjusted EBITDA and non-GAAP metrics totaled $3.7 million, which was up from $1.9 million for Q3 2024. Cash, cash equivalents, and marketable securities at August 31, 2025, totaled $9 million compared to $25.7 million at November 30, 2024. Cash has been increasing since the end of the third quarter, which primarily reflects just normal seasonal working capital timing and collections subsequent to quarter-end, as well as the planned drawdown of inventory. We expect the drawdown of inventory and increase in cash to accelerate throughout the fourth quarter. The company has no current or long-term debt. Accounts receivable on August 31, 2025, totaled $8.9 million compared to $2.6 million at November 30, 2024, driven largely by the increase in dealer sales. Inventory at August 31, 2025, totaled $34.1 million compared to $20 million at November 30, 2024, reflecting our strategic builds ahead of the holiday season and the compact launcher rollout. Mix dynamics this quarter favored the Byrna SD more than initially anticipated, leading to additional purchases of SD million parts. We saw the high point of inventory in July with the reduction since that time of over $3.5 million. We expect inventory to normalize as we move through the peak season and into fiscal Q1 2026. I'll now turn it back to Bryan.

Thank you, Laurilee. First, an advertising update. Our Q3 growth of 35% year-over-year is due to several factors, including the growth of our dealer network, the impact of our new advertising initiatives, and the growing awareness of Byrna Technologies Inc. brands. In August, our AI-enabled advertising campaign expanded our reach across new channels that up until now were off-limits to Byrna Technologies Inc. The growing awareness generated by this advertising campaign, including the now-iconic "We Don't Sell Bananas" ad, lifted average daily sessions on byrna.com from 33,000 a day to more than 50,000 a day. That momentum has carried into early fiscal Q4, with web sessions on byrna.com averaging 58,000 sessions per day in the month of September. This surge in web traffic has grown Byrna Technologies Inc.'s opt-in email list to 1.9 million subscribers. We plan to leverage this expanded audience to drive Q4 sales through targeted outreach for our October Black and Orange Sale and our Black Friday Cyber Monday promotions. The "We Don't Sell Bananas" ad was the first campaign we created with the help of AI. By combining this technology with our own proprietary processes, we can quickly generate professional-quality commercials, refresh creative continuously, and A/B test variations at scale. This has also allowed us to adapt content to the requirements of cable and streaming networks more efficiently, creating broader ad distribution opportunities and lowering customer acquisition costs. With these ads, we've also been able to secure placements on MLB, Major League Baseball streaming services, and NFL airport displays, among other networks. These mainstream opportunities on highly visible platforms have elevated brand recognition and acceptance. As these placements demonstrate our credibility and normalization of our product category, we fully expect that they will open the doors to additional mainstream networks with comparable demographics, further amplifying reach…

Thank you. The company will now be taking questions from sell-side analysts. If you would like to register a question, please press. Our first question is coming from Jeff Van Sinderen of B. Riley Securities. Please go ahead.

Good morning, everyone, and great to hear of the continued business momentum. Bryan, maybe you could just touch on thoughts on adding new influencers. I know that's something that has been discussed. Maybe touch on areas of focus there?

Okay. So in 2023, we kicked off our celebrity influencer campaign with Sean Hannity. And since that time, it's expanded to approximately a dozen conservative radio talk show hosts. We believe that at this point, we have a sufficient number of conservative radio talk show hosts, and we are looking to expand beyond that universe. Towards that end, you may have noticed that we recently brought on board a new director by the name of Adam Roth. Adam was head of sales and marketing for Nike North America before he retired. And he brings with him a wealth of knowledge regarding celebrity influencers or what Nike called brand ambassadors. In fact, I was just on the phone with Adam yesterday as we are putting together a plan and pitch deck for going after a whole new host of brand ambassadors or celebrity endorsers for Byrna Technologies Inc. that will help us expand beyond our existing customer demographic. At this point, I cannot share with you the names of anybody that we're talking to. But we are well into this process.

Okay. That's great to hear. And then maybe if you can just touch on the latest, I think there's another CL launcher that's planned. And then also just give us an update if you could on the lower price point unit that you plan to roll out?

Yeah. Jeff, I'm not sure what you mean by another CL launcher that's planned. The next new launcher going to be coming out will be the 61-caliber price point launcher, which will come out sometime next year. And it will be largely based on the CL design. It'll be similar in size to the existing CL. But there are no different variations of the CL that are going to be coming out. In terms of the basic box, the price point launcher that we brought out, interestingly, it has not been as popular as we would have expected. We still sell both the basic box configuration, which is just the launcher by itself with no accessories, as well as what we call the universal ready kit, which comes with CO2 and ammunition and an extra magazine so that you can buy simply the ready kit and you are ready to use it. That is still probably 90% of our sales. So, you know, initially, we were concerned that maybe the price point was too high. The market has clearly voted with their and said, no. You know, your $540.99 price point is perfect.

Okay. That's an interesting development. So one other thing if I could squeeze it in. Just wondering how ByrnaCare adoption is running in the early days.

ByrnaCare adoption is running in line with expectations. We have not yet been able to adopt our website to ask for people to buy ByrnaCare at the end of every purchase. This requires a little bit of additional coding, and we think that we'll have even greater impact. But it's in line with expectations.

Okay. Thanks for taking my questions. I'll take the rest offline.

Thank you. Thank you. The next question is coming from Jeremy Hamblin of Craig Hallum. Please go ahead.

Thanks and I'll add my congratulations. I want to come back to the success that you're seeing with the advertising campaign, the momentum you have with web traffic in particular, and just a commentary around expectations on conversion rates. You know, with the, you know, what, 70%, 75% increase in web traffic that you are seeing sequentially, can you just discuss a little bit more in terms of conversions that you were seeing? And whether or not this campaign is reaching maybe a customer set that is outside of your traditional customer set given kind of the viral nature of the campaign?

Jeremy, thank you for the question. And honestly, that's the question we're asking ourselves every day as well. As we expand the demographic that we're speaking to, will we see the same conversion rates? And the answer simply is that we don't know. What we do know is that the conversion rates will climb significantly from where they are. Because it does take some period of time for people to make a purchase. They come back to the website on average five to seven times before making a purchase. So, you know, we know that the first time we see incremental traffic, it's not going to result in incremental sales. We have started to see a climb in a climbing conversion rate. But interestingly, we're also continuing to see a climb in web sessions. Yesterday, our web sessions were 70,000 sessions, I think, for the third day in a row. So as we're starting to see higher web sessions, we are, again, getting more and more new consumers on. So it is having a dampening effect on the conversion rate, while at the same time, those new consumers that came a month ago, two months ago, are having a positive effect on conversion rate. Last year during the months of October, November, our conversion rates approached one and a half percent. They're always higher during the holiday season. We don't need anything close to one and a half percent this year when we're generating 70,000 sessions a day to hit our numbers. So to answer your question, is it going to get back to exactly where it was? We don't know. But we do know that it will be significantly higher than where it is currently, and we are already seeing that trend.

Great. That's helpful. And then just in terms of what you expect on channel mix here in Q4, you've obviously had significant expansion in the number of wholesale doors you're selling into. But given this lift that you're seeing in traffic both at byrna.com and on Amazon, how should we be thinking about the mix of business here in Q4?

Hi, Jeremy, it's Laurilee. Yeah, I mean, we will still continue to see strong dealer and chain store sales. We see additional orders coming in as they're ramping for the holidays as well. So we still expect to see that strength there. That being said, we expect our DTC channels to be a higher percentage of overall sales than they were in Q3.

Got it. Helpful. And then just last one for me. In terms of thinking about kind of the expense leverage that you're getting in the model, saw, you know, OpEx, you know, really well contained here in the third quarter. As we look ahead, you know, you saw about what $7.3 million year-over-year growth in sales, but OpEx was only up $2 million year-over-year in Q3. Should we expect that kind of expense leverage ratio to maintain here both in Q4, but then as we think about kind of projecting out in 2026 and beyond?

Yes. I mean, I think in Q4, it'll be close. We do ramp up some additional marketing in Q4 from Q3. So we will continue to see that leverage maybe not quite to the extent. I mean, Q3 was a great quarter for us on leverage. Going into next year, there will be some additional for new positions, some things we're hiring. But for the most part, we'll continue to see that leverage as we move forward. And really, this quarter, it was really just it was marketing expense, and variable selling expense was really the increase. Everything else held pretty steady.

Great. I'll hop out and congrats and look forward to seeing the development. Thanks, Jeremy.

Thank you. The next question is coming from Matt Koranda of ROTH Capital Partners. Please go ahead.

Hey, guys. Good morning and thanks for taking the questions. I guess you sort of tangentially addressed it earlier, Bryan, but I just wanted to put a finer point on sort of how the guidance fits with the 70% lift that you've seen in web traffic. I guess if I just look at the midpoint of your guide, and it would suggest about 25% growth in sales in the fourth quarter, but the web traffic numbers are pretty substantially above that. So maybe just fit those two things together. Assume the answer is generally conversion and being conservative there, but just a little bit more color on that would be great.

Yeah. As we said before, it will take us some time for our conversion rates to get back to a mean of 1%. And we have seen this happen time and time and time again. Where we see a significant spike in web sessions and it takes some period of time for the conversion rate to catch up. But in every case, it ultimately does catch up. So we don't believe that we're going to get back to our normal conversion rate in Q4. And in fact, you know, web sessions are growing daily. But we do expect that it will occur over time. And I think, you know, we have to be cognizant of that, you know, it's going to take some time for that to happen.

Okay. And then maybe just a tool at your disposal would be promotions. So just any thoughts that you have heading into the holiday on sort of the promotional posture that we're considering? Any shift in strategy that we might consider to drive improved conversion that would sort of help with the web traffic you're seeing.

Every year, at this time of year, we have two separate sales. We have kind of an early Black Friday sale, which is our Byrna Technologies Inc. Black and Orange Sale that happens at the end of October, and there's always a big conversion during that period of time. And then we have the traditional Black Friday, Cyber Monday sale that happens starting the Wednesday before Thanksgiving. This year is a little bit of an issue because this period of time, these six days, represent 40% of our sales in November. So it's an enormous amount of sales that are happening in the last six days of the month, one of which is Thanksgiving, and we're closed. And then when we come back for three days, we're going to have to get something like six or 7,000 packages out the door. So, you know, my only concern is, you know, how many of those packages can we get out the door and what, you know, ends up falling into Q1.

Okay. Understood. Maybe just curious for an update on how to think about the wholesale expansion into the end of this year and next. I know you mentioned a thousand doors, I think you're in as of the end of the third quarter. Where do you think things will shake out by the end of this fiscal year? And do we have any kind of stretch goals for next year in terms of doors that we'd enter?

Yes. Hi, Matt. So where we are right now, we think we're pretty well positioned. You know, we want to make sure we don't become too saturated. So we're probably mostly holding where we are on our current retail footprint. We'll continue to work with all of our partners to make sure we help them with better conversion, better tools, and I think we'll hold at that point. Perhaps there will be more later. You know, as Bryan said, we may look for special markets where we put additional corporate stores in some of those markets. But, right now, we feel pretty good as far as where we are on the retail store.

If I can just add, Matt, I think, you know, our team has done an amazing job working with our partners. And I think at this point, we have a very, very good footprint of stores. There are, as Laurilee says, certain areas where, you know, we're not as represented as well as we should be. And we will likely open up Byrna Technologies Inc. retail stores in those areas. But I think the bigger issue for us and our focus for 2026 is going to be expanding our existing relationships. We have seen Bass Pro, for example, increase the number of SKUs that they're offering. They're offering additional colors. They're offering additional models. And this is having a significant impact on their weekly sales. This is what we need to do with all of our partners to make sure that they're doing as well as they can in each store. And I think there's huge opportunities for growth within the existing footprint. And not that we will not take on more partners. We will, but we need to be very selective about it because putting two stores right next to each other is not helpful.

Okay. Makes a ton of sense. Maybe if I could just sneak one more in. You mentioned the SOS and connected platform, which sounds really exciting. And I'm curious, when do you think loosely that could become sort of commercially available to consumers? Would that be a next year event, or is that something like a more like a 2027 event?

No. It will be a next year event. But keep in mind that it is going to be phased. So that and let me just say, all of this technology exists. These SOS alert systems, RapidSOS, Noonlight. There's a lot of these services out there already. The hardware technology already exists. What we are doing is packaging it in a format to work with Byrna Technologies Inc.'s products. So there are some things that we are very far along on that will certainly be released in 2026. There are other sort of more aspirational products that we have that may, you know, not come out until 2027. But unlike the development of a brand new launcher where there's a lot of technology that has to be developed from scratch, this is really taking existing technology and adapting it for use with Byrna Technologies Inc.'s suite of products. So this will happen much more quickly than traditional development projects.

Okay. Great. I'll leave it there, guys. Thank you.

Thank you, Matt.

Thank you. Our next question is coming from Jon Hickman of Ladenburg Thalmann. Please go ahead.

Jon? Oh, hello. I just wanted to maybe just a follow-up from one of the last questions. But how are you could you elaborate on how the whole Sportsman's Warehouse? Are you complete with them? Are you still rolling out stores? Are you adding more shooting lanes? Can you talk about that a little bit?

Hi, Jon. It's Laurilee. Yes, I think we're on track with where we expect to be with Sportsman's. They have a mix of, you know, different presence in different stores. They're working through some of their stores and their markets to determine what works best. What we found is these stores where we put the shooting pod seems to help drive additional demos, additional conversion in those stores. So that's really something that's driving well. Now that doesn't fit in all of their stores, due to, you know, their footprint, and what works in different markets. So continuing to support them. We feel great about the partnership with them. And, you know, like I said, we've got a various mix, but we're on track and well positioned.

How many SKUs are they carrying?

They carry most of our SKUs. You know, there are obviously a few accessories and things that they don't. But they carry all of the various launchers. They carry ammo. They carry CO2 and a number of accessories. And sprays as well.

Okay. Okay. Know the exact number, but it's pretty much our full product line.

Yeah. And Jon, I think that the big takeaway from that Laurilee said is that this shooting pod has proven to be very, very effective. Now we have an agreement with Sportsman's where this is exclusive to them. So, you know, unfortunately, we don't have the shooting experience in some of the other partners that we work with. But these shooting pods have been very effective, and the stores that have the pods have done extremely well.

I don't know. Maybe you can't answer this. Are you in Cabela's or are you trying to get into Cabela's?

Yeah. Cabela's is part of Bass Pro. So last October, we actually went on a national basis with Bass Pro Cabela's. So we are in all of their stores.

Okay. All my other questions were basically answered. So great. Thanks so much, Jon.

Thank you. This concludes our question and answer session. I'd now like to turn the call back over to Mr. Ganz for his closing remarks.

Donna, thank you very much. And I just want to thank everybody on the call for taking the time. And we will, of course, keep everybody apprised on these very exciting new projects that we're working on. Thank you very much.

Thank you. Thank you for joining us for today's Byrna Technologies Inc.'s fiscal third quarter 2025 conference call. You may now disconnect.