Q3 2024 Byrna Technologies Inc Earnings Call
Speaker Change: Music
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Kevin: Good morning and welcome to Burners Fiscal 3rd Quarter 2024 earnings conference call. My name is Kevin and I'll be a operator for today's call. Joining us for today's presentation of the company's CEO Bryan Ganz and CFO Laurie Kearnes.
Kevin: Following the remarks, blow up in the call to questions.
Kevin: Earlier today.
Kevin: Berner-Releast results for fiscal 3rd quarter ended August 31, 2024, a copy of the press releases available on the company's website.
Speaker Change: Berenot Technologies, Chief Executive Officer, Aubrey DeSafe Harbor Stateman.
Speaker Change: Some discussions held today include forward-looking statements, after all, as all could differ materially from the statements made today.
Speaker Change: Please refer to Berners' most recent 10K and 10Q filings for more complete description of risk factors that can affect these projections in assumptions. The company seems to have obligations to update for looking statements as a result of new information, future events or otherwise.
Speaker Change: As this call, include references to non-gapresults, please see the press release in the investor section of our website, IR.Barnet.com for further information regarding forward-looking statements and recommendations of non-gapresults to gapresults. Now, I'd like to turn the call over to Berniceo Bryan Ganz. Sir, please proceed.
Bryan Ganz: Thank you Kevin and thank you everyone for joining us today. This morning, we issued a press release providing our financial results for the fiscal third quarter and in August 31st, 2024.
Bryan Ganz: as well as highlighting key business accomplishments for the quarter. We'll be filing our 10Q with the SEC on Friday of this week.
Bryan Ganz: I'll start by passing the call to Lauri Kearnes, our CFO who will discuss our financial results for the third quarter.
Bryan Ganz: Following her remarks, I'll review the operational highlights from the third quarter, which resulted in the record 20.9 million of revenue and our continued gap and non-gap EBITDA profitability. I will then offer insights into our Go Forward Strategy. Lastly, I'll offer the call to questions for our covering research analyst, Lauri.
Lauri Kearnes: Thank you, Bryan, and good morning, everyone. Let's review our financial results for the fiscal Q3 ended August 31, 2024.
Lauri Kearnes: Net revenue for Q3 2024 was $20.9 million, a 194% jump from the $7.1 million reported in the fiscal third quarter of 2023.
Lauri Kearnes: This 13.8 million increase is primarily due to the transformational shift in our advertising strategy, which began in September 2023.
Lauri Kearnes: The ongoing success of our Celebrity endorsement strategy helps drive the 10.5 million dollar increase and direct to consumer revenues through our website and Amazon compared to the prior year period.
Lauri Kearnes: For the first nine months of 2024, net revenue total 57.8 million, which is up 114% from 27 million in the first nine months of 2023.
Lauri Kearnes: Gross Profit for Q3 2024 was 13 million or 62.4% of net revenue compared to 3.2 million or 44.6% of net revenue for Q3 2023.
Lauri Kearnes: The Improvement and Gross Profit margin is largely attributable to additional sales through our higher margin DTC channels.
Lauri Kearnes: and Intensis Cost Component Reduction Effort, which was spearheaded by Burness Engineering team.
Lauri Kearnes: and the economies of scale resulted resulting from increased production volumes. For the first nine months of 2024, Gross Profit was 35.2 million or 60.9% of net revenue.
Lauri Kearnes: Compared to 14.6 million or 54.1% of net revenue for the same period in 2023.
Lauri Kearnes: Operating Expenses for Q3, 2020, or 12.2 million, compared to 7.3 million for Q3, 2020.
Lauri Kearnes: The increase in operating expenses was driven by an increase in variable selling costs such as freight and sales transaction processing fees.
Lauri Kearnes: An increase in marketing spend related to the company's new advertising strategy and an increase in payroll primarily in marketing and engineering as the company made focus in improvements in these areas.
Lauri Kearnes: For the first nine months of 2024, operating expenses were 32.6 million, compared to 21.5 million for the same period in 2023, reflecting a 52% year-over-year increase.
Lauri Kearnes: Net income for Q32024 was 1 million, a $5.1 million improvement from a net loss of $4.1 million for Q32023.
Lauri Kearnes: For the first nine months of 2024 net income was 3.1 million compared to a net loss of 7.4 million in the first nine months of 2023, which was a $10.5 million improvement.
Lauri Kearnes: Adjusted EBidda, a non-gap metric, for Q3 2024 totals 1.9 million, compared to a negative 2.4 million for Q3 2023. This brings adjusted EBidda for the first nine months.
Lauri Kearnes: 2.
Lauri Kearnes: 6.3 million and an 8.1 million dollar improvement from the prior year.
Lauri Kearnes: Cash and Cash Equivalence at August 31, 2024 totalled $20.1 million compared to $20.5 million at November 30, 2023 Inventory at August 31, 2024 totalled $19.8 million compared to $13.9 million at November 30, 2023 The company has no current or long-term debt.
Speaker Change: All now turn the call back over to Bryan.
Bryan Ganz: Thanks, Lauri.
Bryan Ganz: As you can see from the financial results, we are continuing to see significant growth even during what is traditionally a seasonally slow quarter for us with the dog days of summer. For the quarter, revenues were up 194 percent compared to the same period last year. For the full year revenues are expected to be up by almost 100 percent. What we didn't initially expect is sequential growth from Q2 to Q3.
Bryan Ganz: which was now our fourth consecutive quarter of sequential growth.
Bryan Ganz: The slow-seasonal effect of Q3 was overwhelmed by the strong growth for Burna. The four quarters of sequential growth highlights the continued impact of our celebrity endorsement advertising strategy, and I think also the ongoing normalization of both and less lethal product category and Burna's growing brand awareness.
Bryan Ganz: Since launching the celebrity endorsement advertising program in Q4 of last year, we've consistently maintained a minimum row as or return on advertising spend of at least 5x, which is highly a creative to burn as bottom line.
Bryan Ganz: This has resulted in driving burn-in to profitability, as a result of this burn-in is now a stable, profitable enterprise with positive cash flow and, as Lauri mentioned, approximately 20 million dollars of cash in the bank.
Bryan Ganz: Today, we are working with more than 10 celebrity influencers who are actively evangelizing Burners' Lesleethal mission and helping to normalize Lesleethal weapons as legitimate alternative to lethal force.
Bryan Ganz: Most importantly, we are continuing to success.
Bryan Ganz: with a number of influencers that have been on board for many months, including Glenn Beck, Bill O'Reilly, Judge Janine Pirro, Dan Bongino, and Jesse Kelly. In fact, Sean Hannity, our original celebrity endorser, has been promoting burner for well over a year now and is still generating more than a million dollars a month in sales.
Bryan Ganz: Our high margin, DTC, or direct to consumer business, continues to be the dominant factor in our sales growth.
Bryan Ganz: of the $20.9 million revenue in Q3.
Bryan Ganz: DTC sales on Burnet.com and Amazon.com accounted for 15.5 million or 74% of total sales compared to just 5 million or 70% of total revenue in the same period last year.
Bryan Ganz: Keep in mind that the DTC sales channel is our highest margin sales channel with a gross profit percentage of 68.7% in this past quarter.
Bryan Ganz: While we were initially focused solely on terrestrial radio, when we pivoted away from social media advertising, we have since expanded to additional advertising mediums, including podcast and TV.
Bryan Ganz: Keep in mind that the reason our advertising program is generating such strong results, however, is not the medium. It's the endorser. As I've said before, we took a page out of Phil Knight's playbook at Nike by using celebrity endorsers.
Bryan Ganz: That said, we are now beginning to run traditional 30-second ads on Newsmax. These ads do not feature an endorser and they're doing extremely well, generating a 6.3x video ads since the inception at a 5.6x row as over the past 13 weeks.
Bryan Ganz: Based on our success with Newsmax, we started advertising on TPN and News Nation, and we have been approached by OAN and the CW. As Burn against greater brand awareness and the less lethal industry gains greater public acceptance.
Bryan Ganz: We expect that additional broadcast and cable networks will start to allow us to advertise. In fact, personally, I suspect that it's only a matter of time before we're able to run our ads on Fox, CNN and MSNBC.
Bryan Ganz: Even without the ability currently to advertise on these mainstream broadcasts and cable networks, we believe that there is still significant upside growth to be had simply by expanding our roster of celebrity endorsers on terrestrial radio, podcast, and the smaller cable networks.
Bryan Ganz: Currently, we are working with celebrity endorsers across several platforms, including eye-hard, Westwood, one, Salem, media, and radio-America among others.
Bryan Ganz: Not only does each of these networks have many additional celebrity endorsers that we can work with, but there are also a number of other networks that we have not even begun to tap into.
Bryan Ganz: Looking ahead, we plan to continue growing our celebrity influencer program by adding two to three additional personalities each quarter.
Bryan Ganz: We recently signed Governor Mike Huckabee on TVN, and we have agreements in place with nephew Tommy of the Steve Harvey Show and Dave Ramsey to extremely well-known celebrities. These celebrities are set to kick off in the next few months.
Bryan Ganz: In addition to our paid advertising, we have been pursuing the earned media route with the help of a public relations firm. Our goal is to both drive brand awareness for Burna and to continue to normalize the less lethal industry.
Bryan Ganz: has been featured on more than 2 dozen news programs on channels such as ABC, Fox, News Max, News Nation and numerous local radio and television shows.
Bryan Ganz: Interestingly, not every interview is about the benefits of less lethal. Many of these interviews are simply about business, like the port strike or inflation.
Bryan Ganz: or law enforcement topics, such as school shootings or the trouble at the border. Nevertheless, these interviews help legitimize Burna and establish me, Luan Pham, our sales and marketing officer, and Josh Rard, had a law enforcement as credible spokesperson.
Bryan Ganz: Well, the goal is not necessarily to drive immediate sales.
Bryan Ganz: When I was on Fox News with Dana Prano last week, web sessions jumped from 200 people to more than 1900 people while I was on air, and drove record revenues for a day in which we were not running a sale, which proves that when people learn about Burna and the non-lethal industry sales go up.
Bryan Ganz: The added benefit is that it drives people to look for burn and not just online, but also at brick and mortar stores.
Bryan Ganz: Over the last few weeks, Bass Pro Shop and Kubellas upgraded our status from a regional pilot program to a national account. This increased our store count from 42 stores to 137 stores and allowed us to bring on a significant number of additional new products.
Bryan Ganz: At the same time, both sportsmen's warehouse and by-marts substantially increase their purchases in anticipation of the upcoming holiday season due to strong-custer interest in a growing acceptance of less lethal as a legitimate alternative to lethal force.
Bryan Ganz: As these outlets increase their efforts to move to Burro, we are hopeful that we can convince them to open stores within a store. This model has proven quite successful at a number of FFL gun stores and I think can be successfully adopted by these big box retailers.
Bryan Ganz: With the new partnerships kicking off at the end of the fourth quarter, we expect our discretionary marketing spend to tick up by $200,000 a month this quarter.
Bryan Ganz: As I looked to 2025, we expect a further increase our budget for celebrity influencers by approximately 50% for the year as compared to our 2024 spend.
Bryan Ganz: We are holding our growth in advertising spend to 50% for 2025.
Bryan Ganz: As you need to keep in mind, we are a manufacturer and we can not outpace our ability to produce launchers. We are not selling insurance or software that can be easily downloaded. We are selling complicated products, built from over 100 parts, most of which are unique custom-made components.
Bryan Ganz: More over Burlantris must be airtight, holding an air at over 800 PSI, and of course, most importantly, they must be able to reliably stop in a saloon.
Bryan Ganz: Beyond our advertising efforts, we are actively expanding our retail store footprint.
Bryan Ganz: As we see a strong opportunity to reach customers through dedicated burner retail stores. As of today, we have signed lease agreements for new stores in Nashville, Tennessee, Scottsville, Arizona, and Salem, New Hampshire with plans to finalize a lease and pass the data in the next few weeks.
Bryan Ganz: We also intend to open a retail location at our new Burna ammo manufacturing facility in Fort Wayne.
Bryan Ganz: These new stores are based on the successful proof of concept store that we opened in Las Vegas two years ago.
Bryan Ganz: The Las Vegas store currently has a run rate of more than $1 million a year at a 65% gross profit margin, with relatively modest operating costs when compared to other retail stores. At this level of sales, the Bernest Store is generating contribution margins of approximately 35%.
Bryan Ganz: Moreover, customers who demoed our products in store convert at around 80% rate. That means 8 out of 10 people that shoot the product by a launcher. This compares to our online conversion rate of 1.2%.
Bryan Ganz: We intend to open these new stores in the coming months with most of them opened by the end of this calendar year. Our goal is to use these stores to further validate and refine our store model as we prepare for a much broader rollout.
Bryan Ganz: Specifically, we plan to use these stores to perfect the look and feel of the physical premises.
Bryan Ganz: developed the store operating manuals, build out the employee training programs, develop and debug the ERP and point to sell computer systems, work out the advertising strategies, and finalize the product and services to be offered at these stores.
Bryan Ganz: If the store is performed as expected, we will begin rolling out additional retail stores later next year.
Bryan Ganz: We believe that the market could easily support a hundred or more of these stores across the US.
Bryan Ganz: The precise split between company owner franchise stores will be determined based on how quickly we feel that we could support the rollout of new stores from a product availability perspective. In other words, how quickly can we manufacture the product to support these stores?
Bryan Ganz: If we believe we could roll out a hundred stores in short order, we will need to rely more heavily on franchise needs to be able to roll out such a large number of stores quickly.
Bryan Ganz: On the other hand, if we determine that we could only support 20 new stores a year, we will likely keep these as company-owned store operations because the margins are much much higher. We will update you in the near future as we open these locations.
Bryan Ganz: On the International Front, as our store model comes online, we're making strong progress overseas.
Bryan Ganz: As you may have seen, we made several announcements throughout the quarter to demonstrate our traction in Latin America and highlight the region's significant growth potential.
Bryan Ganz: with deployments of Uruguay and the expanding programs in Argentina, such as the airport security agency. So we are now carried by every airport guard all through Argentina. We continue to be the leading solution as these large law enforcement agencies shift towards less lethal alternatives.
Bryan Ganz: Because of this success in South America, we made the strategic decision in Q3. To transfer our 51% stake in Bernalatt Ham, to our joint venture partner Fusati.
Bryan Ganz: We felt that the accounting and reporting requirements of the U.S. public company limited the ability of our startup company in Argentina to rapidly grow.
Bryan Ganz: This agreement enables Burna to fully recognize the revenue from future sales to Burna Latam and also to earn royalties on every launcher produced in Argentina.
Bryan Ganz: The Royalty starts at $45 for Launcher and grows to $55 and $65 in years, two and three respectively. Based on current projections, this should add more than a million dollars in the Royalty income next year.
Bryan Ganz: By restructuring our relationship, we have optimized our ability to allocate resources more effectively, while burn-a-lat Tam can now operate more nimbly on developing opportunities, particularly with major law enforcement agencies in the region. We will provide dedicated support to burn-a-lat Tam as it pushes to gain access and key markets, particularly Brazil.
Bryan Ganz: Importantly, this sale means that burning no longer needs to report for a lot of times, losses as it's in its early years of operation in our financial statements, which will improve our reported net income, and we'll allow us to focus on our core markets.
Bryan Ganz: We have structured the deal so that we have the right to re-acquire our stake in three years. Should burn a lot of them reach critical scale and should be able to implement the accounting and internal controls necessary to be part of a U.S. public company.
Bryan Ganz: In the meantime, burner will continue to manufacture burner products, maintain local inventory, offer customer service and the local language, manage, invoicing and collections of the local currency.
Bryan Ganz: Ultimately, this move is expected to optimize operations and increase efficiencies across both North and South America.
Bryan Ganz: The this quarter we also expanded our sales reach into Mexico after working with our distributors in the country to partner with one of the country's government offices, we're able to create a federally certified training program for our products.
Bryan Ganz: So this means that once a Mexican citizen completes the training program, they are able to legally use our launches throughout the country.
Bryan Ganz: In conclusion, as our international presence grows, particularly with our recent expansions in Latin America and Mexico, Burna is experiencing very strong demand to both across both consumer and institutional channels.
Bryan Ganz: This is continued into the start of the fourth quarter in September.
Bryan Ganz: Our first month of the first quarter, and traditionally our weakest month of the seasonally strong fourth quarter, sales were 8.3 million, or 275,000 dollars a day. This is up from $220,000 a day in the quarter we just finished.
Bryan Ganz: The math is quite easy. If we continue this run rate, and we have every reason to believe we will, sales for the quarter should be 25 million compared to analysts' consensus of 21.65 million for the quarter.
Bryan Ganz: What makes us all the more remarkable is that in 2018, the year before we introduced the Bernal Launcher, our sales for the entire year was 252,000. We now do more than that every single day, Saturdays and Sundays included.
Bryan Ganz: As we continue to post record sales, our focus has shifted to scaling up production to meet the increasing demand.
Bryan Ganz: In Q3, we produced over 55,000 units, allowing us to build sufficient inventory to support the anticipated strong holiday selling season and the election surge and to prepare for the upcoming launch of our compact launcher in summer of 2025.
Bryan Ganz: To further boost our production capacity, we are implementing a partial second shift this quarter.
Bryan Ganz: with plans to operate a full-second shift by the end of Q1 of 2025. Additionally, we're adding a third production line, which can be used for new products, engineering builds in a rework.
Bryan Ganz: We are also scaling up domestic ammunition production in Q4 by building a new facility 4 miles from our existing launcher facility in Fort Wayne, Indiana.
Bryan Ganz: To the new Ammunition facility expected to be operational by year-end will help us increase our overall...
Bryan Ganz: Capacity for Ammunition, it reduces the risk of a supply chain disruption by having ammo produced here in the US. It shortens our lead time, and it ensures that we can offer the full range of ammunition that is made in America.
Bryan Ganz: Even before the recent port strike discussions, we had already begun dual-sourcing key components as part of our long-term strategy to mitigate supply chain risks.
Bryan Ganz: These efforts continue to help us maintain supply continuity if an issue arises like this port strike or worldwide pandemic in the future.
Bryan Ganz: Last week, I was at the factory and I announced that we were raising the starting wage for our production line workers by $2 an hour or roughly 10%.
Bryan Ganz: We also raised wages for all factory employees by 10% effective this week. In addition, we're offering bonuses for perfect attended records that can add up to $2,500 a year, and we are giving our employees a third week of vacation after two years of service.
Bryan Ganz: We decided to make these changes to attract and retain the very best talent. With this increase, we are now one of the best paying companies in Fort Wayne.
Bryan Ganz: And this is not just about remaining competitive in the labor market. It's about ensuring that we have the very best workers to meet the growing demand and to maintain high levels of productivity and quality. This investment in our workforce is part of a broader strategy to sustain operational efficiencies as we continue to grow.
Bryan Ganz: These investments are critical to maintaining our growth momentum without interruption. At the same time, our initiatives like dual sourcing and scaling domestic production are designed to drive long-term efficiencies and support growth.
Bryan Ganz: By scaling our launcher and ammunition production capabilities, we are positioning Burnet to meet the continued expected growth in demand, while we prepare for the launch of our compact launcher and future product lines later next year.
Bryan Ganz: and Conclusion.
Bryan Ganz: We believe that we are now just scratching the surface of our total addressable market and we have a significant runway for future growth.
Bryan Ganz: Well, we don't expect to maintain the same 100% annual growth rate that we're experiencing this year.
Bryan Ganz: and well, we do not expect Q125 to be higher sales revenue than Q4 of 24.
Bryan Ganz: We are confident that this momentum will carry us to record growth in profits in 2025.
Bryan Ganz: Driven by the continued momentum of our advertising program and the free earned publicity generated by our...
Bryan Ganz: by our public relations firm.
Bryan Ganz: Also, as we continue, you know, to expand the roster celebrity endorsers and maintain your 5x row ads, we will see sales growth simply from the additional celebrity endorsers.
Bryan Ganz: We also expect this exposure to drive incremental sales not only through
Bryan Ganz: the advertising itself, but through the add-on effect of friends and family recommendations, friends and family is still one of our most significant drivers of sales, and as we find more and more new customers, each of them bring their own cadre of friends and family with them.
Bryan Ganz: On top of this advertising driven growth, the launch of our new retail stores and mobile trailers will provide additional sales channels and brand visibility.
Bryan Ganz: The introduction of new products, including the Compact Launcher in the summer 2025, is also expected to drive incremental growth. As we expand our target audience to include women, and those seeking smaller, easier to carry it easier to conceal alternatives.
Bryan Ganz: We are also strategically investing in initiative designed to enhance shareholder value.
Bryan Ganz: In the third quarter, we authorized the $10 million share by-back and we have already repurchased $3 million in shares at an average price of $10.25. Demonstrating our confidence in Burners' long-term potential growth.
Bryan Ganz: This brings the total number of shares we purchased to date to 2,458,634 shares at an average price of $8.31.
Bryan Ganz: and it represents 85% of the approximately 2.88 million shares sold in 2021.
Bryan Ganz: Even after buying the $3 million of burn a stock, we still have an additional $7 million of dry powder that we can buy additional stock if we determine we need to do this.
Bryan Ganz: At the same time, our expansion of production capacity and improvements in manufacturing efficiency are expected to continue and will result in improvements in both growth and net margins.
Bryan Ganz: As we scale, Burna has become a self-sustaining, profitable, cash-flowing enterprise that is well-positioned for sustained growth in 2025 and 2026.
Bryan Ganz: and short, we are building on our successes and setting the stage.
Bryan Ganz: for further top and bottom line growth, ensuring that burner remains at the forefront of our industry.
Bryan Ganz: and this concludes my prepared remarks, operator if there are questions from any of our analysts, I'd be happy to take them at this time.
Speaker Change: Thank you. And now, but you're conducting your question and answer session. If you'd like to be placed into question Q, please press star one under public loan keypad. A confirmation, tone will indicate your line is in the question Q. Once again, that star one to be placed into question Q. One moment, please, while we pull for questions.
Speaker Change: Our first question is going to be some depth-end's fingering from B-Royory Securities, your line is not wide.
Speaker Change: I've been morning everyone and let me say congratulations on the considerable progress that you guys are making in the strong metrics that we slice that.
Speaker Change: Can you speak a little bit more about adding the other shift as we get into Q1, where that will bring you in terms of production capacity.
Speaker Change: and then I guess how you're further evolving the supply chain for that ramp. I know you touched a little bit on that and then also kind of where inventory stands today versus the current sales trend that seems to be really strong and just kind of expected sales during the peak holiday period.
Speaker Change: Yeah, as you saw, we can produce approximately $18,000, $18,000 in one shift.
Speaker Change: and our facility.
Speaker Change: We are of this.
Speaker Change: Coming month and next month, probably selling somewhere 18,000 launches or more a month.
Speaker Change: So we clearly need to be expanding our production capacity. The good thing is we've got a second and third shift open to us as a guy who's been in the manufacturing business Most of my life, you know, you hate to see a factory run at just one shift. So we're excited about utilizing the factory more fully.
Speaker Change: So we think that next year we'll probably be pushing production up to, you know, 24,000 launchers a month, maybe 28,000 launchers a month
Speaker Change: and we clearly have the capability of doing that what we need to do is to hire more people.
Speaker Change: and Jeff, that was one of the reasons that I wanted to raise the wages. It has a very, very modest impact on the cost of the launcher and in fact, is more than offset by the increased volume. So even with the increased wages, the cost of the launcher will go down as we expand our production.
Speaker Change: In terms of the supply chain, we have been adding suppliers.
Speaker Change: Continuously, I've spoken for a long time about the all truck.
Speaker Change: Strategy, and we are very close to being there. When this port strike came about, we only had one product that would have been affected by the port strike out of the 115 components that go into producing a launcher.
Speaker Change: We're really in very, very good shape from a supply chain standpoint, almost every single product now has a dual source. Some of the products that are not quite there yet are accessories and not critical to the production of launchers.
Speaker Change: So we're excited to expand the capacity and we're in a good position to do so.
Speaker Change: Okay, great. And then your gross margins came in well above what we're looking for.
Speaker Change: and considering the production app, what do you expect, or I guess any thoughts on gross margin for Q4?
Speaker Change: I'm changing promotional plans. I'll let Lauri take the Gross Margin question if you don't mind Lauri. I think we expect Gross Margin to stay pretty close to that for Q4. It could be a slight uptick but because of the sales that we will be running in Q4, they don't expect much of an uptick. We're looking for more of an uptick on Gross Margin going into 2025.
Speaker Change: And the second half of your question, Jeff, was about promotions.
Speaker Change: So, the interesting thing is, you know, we were running at, you know, a $25 million clip for September, there were no sales in September.
Speaker Change: We will have a sale in October . In fact, today is the second day of prime days, just to give you a little little heads up here. We sold more yesterday on Amazon than we normally do in, you know, five days on Amazon and we expect to do the same. So we would expect, you know, sales for, you know, prime days and also for Black Friday to have some impact on revenues. Although it may have a somewhat negative impact on margins, but I wouldn't imagine that to be more than maybe one percentage point.
Speaker Change: Okay, great. Thanks so much for taking my questions. I'll pick the rest offline.
Speaker Change: Thank you.
Speaker Change: Thank you as a reminder that star one to be placed in the question queue. Our next question is coming from that Karanda from North Capital Partners, your life is now live.
Speaker Change: Hey everybody, congrats on the Great Results.
Speaker Change: So maybe...
Speaker Change: This is one of the cover of the commentary that it sounded like you were making their Brian during the prepared remarks, I guess you don't give official guidance, but it sounded like you did say that it revenue.
Speaker Change: could be up as much as a 100% for the full year.
Speaker Change: and I think you also mentioned there was a run rate in September if we pulled that forward.
Speaker Change: that could resolve in about 25 million.
Speaker Change: in revenue for the fourth quarter. So just wanted to hear about the sort of the range of outcomes that you expect for the fourth quarter and some of the swing factors that might drive you, sort of about that range or below. Yeah, we're, I mean, we're now 10 and a half once into the year, so it's not too much of a stretch to give, you know, where we think we're going to be for the year. You know, as I said, we're running at a $25 million clip. I don't see any reason we would be less than that. There is the possibility that we're more, but you know, I don't know, you know, September is generally a, a weaker.
Speaker Change: Month in the fourth quarter, but this is honestly a map above where we had anticipated being, you know, we didn't expect to be up at 25 million. If we're at 25 million that clearly is going to put us over 80 million last year or 42.
Speaker Change: That was the reason I gave that will be up by 100%. We are not giving guns because we don't see any real benefit from it but we know that there's been very strong momentum. We don't expect the momentum to stop. We're seeing the ability to attract more and more celebrity endorsers. We're seeing a continued normalization of the product. We're seeing our retail investors increasing their purchases. This is before we bring on the new retail stores and before we bring on...
Speaker Change: the new products. So, you know, we think that there'll be pretty good growth for next year. But, you know, we're low to put a number to it.
Speaker Change: Okay, fair enough. And then I wanted to see if you could maybe just dig a layer deeper around the promotions that you ran in the third quarter. Maybe just any learnings in terms of what induce is consumer demand. I noticed there were some 10% off sort of promotions that were around in August . I assume there's probably more in plan for the fourth quarter. How should we think about that heading into sort of that critical Black Friday period and maybe just since Black Friday and several months they are kind of happening pretty late in your quarter. Maybe any any commentary around how that impacts the fourth quarter versus the first.
Speaker Change: Yeah, so first on the last part of that map, so Black Friday this year, right, is November 29th.
Speaker Change: is the 29th. Anyway, our fiscal year end is November 30th. As you can imagine, a lot of the cells from Block Friday, five or Monday, those are actually going to fall into our first quarter, because we're not going to have a lot of those delivered other than maybe some Amazon ones, but it's really late for us on the fiscal year.
Speaker Change: I think some of the learnings that we had, I think, you know, 10% when we do 10% off site-wide, and we also did 10% off the LE for the first time in that August cell. That certainly drove some traffic. We know that these prime days on Amazon, we've got, you know, some of the best products, like, you know, some of the products, we've got the best product badge for the air guns in the category for Amazon now. So, that is certainly helping to drive that additional cell. And as Bryan said, it was, you know, yesterday was one of the five times what we would normally do on a day on Amazon. Yeah. So, we don't expect another Amazon sale this quarter. We'll have the prime sales, and then we'll have a Black Friday sale Amazon sale.
Speaker Change: will be the same as Byrna. We traditionally run a Byrna Black Friday at the end of October . So that will really be the sale that impacts Q3. That will probably be a five-day sale. Again, in the 10% range, there's a lot of people that wait for that sale. We want to make sure everybody gets stuff in time for Christmas. The other thing we're seeing is we're seeing incredible power in our email list.
Speaker Change: So, our email list has grown this year from we had 21,000 email subscribers that were active. In other words, if they had bought something or engaged with us over the last 90 days, as of the end of last year.
Speaker Change: At the end of September, that list had grown to 526,000 active email subscribers.
Speaker Change: Every time we send an email out, we see a jump in sales.
Speaker Change: We have traditionally run two emails a week because you have to have a balance between, you know, annoying people so much if they start to unsubscribe and getting the message out. We are now moving that to three emails a week for Q4 because of the holiday season. And we keep very, very close analysis of our unsubscribe rate. And I will tell you, the unsubscribe rate is now down to 0.12%. So about one tenth of a percent.
Speaker Change: At the end of last year, it was 0.47%.
Speaker Change: So we've seen our email unsubscribed lists go down even as the size of our email list has grown and not every email is about a call to action. A lot of these are about people using the Berna stories of people as to why they bought the Berna. They're about topical events. So they're interesting and they get people to open the email. What we've discovered is that when they open the email we have a click-through rate of over 50%. So it really doesn't matter what we're talking about on the email. We just want them to open the email and to click through to our website and then we see growth in sales.
Speaker Change: So we're doing two things. One, we're having a sale in October , the Burn of Black Friday sale. As Lauri said, the actual Black Friday sale that happens at the end of November will have some effect, but a very modest effect in Q4. Most of that effect will be in Q1 of next year. But we have gone from two to three emails a week, and we think that that will have some effect.
Speaker Change: Okay, super helpful. Maybe just one more if I could sneak one in, so on marketing you mentioned that there may be some new advertising channels opening up Bryan. So it sounds like perhaps some mainstream sort of cable news channels, maybe an opportunity. Just wondered if you were willing to put a timeframe on that, where you think it could happen, what that would open up for you in terms of marketing dollars to be.
Speaker Change: Spent any color off.
Speaker Change: and that will be great.
Bryan Ganz: Yeah, so we expect, we're bringing on three new endorsers this quarter and we expect that rate to somewhat.
Bryan Ganz: Stay consistent for next year. And we're growing our marketing spend by about $200,000 a month. So in Q2, we're at about $800,000 a month in Q3. We're at about $1,000,000 a month this quarter. We're at about $1.2 million a month. And we expect it to continue to grow at that rate. That's what I'm saying. I think over next year we'll probably be at a 50% growth rate in terms of marketing spend. And so long as our row has stays consistent at five. And again, we see no reason that it wouldn't.
Bryan Ganz: Well, we'll see a commensurate increase in DTC sales.
Speaker Change: Okay, great, appreciate it. I'll jump out and get you. Thank you.
Speaker Change: Thank you. We reached out to our question and answer session. I'll let you turn the floor back over to management for any further closing comments.