Byrna Technologies Q3 2026 Earnings Call Transcript

On Thursday, Byrna Technologies (NASDAQ: BYRN ) discussed third-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

Access the full call at Summary Byrna Technologies reported a significant revenue decline of 46% year-over-year for the fiscal third quarter, primarily due to decreased e-commerce sales and slow reorder activity. 3 million tariff refund; adjusted gross margin was 65% after excluding non-recurring items. The company is focusing on improving customer conversion, expanding demand generation, and enhancing operational efficiency, with initiatives like a social creator ecosystem and new retail programs. Inventory levels are expected to decrease by $2-3 million in the fourth quarter, aiding working capital efficiency.

The recent acquisition of HERO Defense Systems is expected to expand Byrna's product offerings and improve operational efficiency. Management emphasized the importance of transforming marketing strategies and expanding into professional security, law enforcement, and international markets for long-term growth. The company expects mid-60s gross margins to be sustainable due to operational efficiencies and improved product sourcing. Byrna Technologies is planning an Investor Day in the first half of next year to discuss its long-term financial strategy and growth pillars.

Full Transcript Darrell, Operator Good morning. Welcome to Byrna Technologies' 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 Technologies 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 Technologies' 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. 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 Technologies CEO, Conn Davis. Sir, please proceed.

Conn Davis — President, Chief Executive Officer, and Board Director 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 Technologies, 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 Technologies 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 three priorities: improving customer conversion and retail productivity, transforming how Byrna Technologies 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 reaccelerate 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, and 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 Q4, 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 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 six 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 Kearnes — Chief Financial Officer Thank you, Conn, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended August 31, 2026. 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. 9 million, or 60% of net revenue, in the prior-year quarter. 3 million tariff refund. 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. 1 million for Q3 2025, an increase of 7%. 7 million in bad debt expenses related to two large international customers, partially offset by the change in variable selling expenses associated with the decrease in sales.

As we previously discussed, we expect incremental expense as 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. 09 per diluted share, in the same period a year ago. 1 million in the same period a year ago. 4 million as of August 31, 2026, compared to $9 million in the prior-year period.

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. 4 million at the end of the fiscal second quarter. As we head into the holiday sale 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 Davis — President, Chief Executive Officer, and Board Director 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 previously outlined.

For the 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 consumer interest 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 through 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. 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 two 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 and 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 new consumer audiences 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 of focus has been our creator strategy. 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 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 two 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're 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 three 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.

Through live product plays 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.