Q3 2026 Byrna Technologies Inc Earnings Call

October 8, 2026

Operator 1: Good morning. Welcome to Byrna's fiscal Q3 2026 earnings conference call. My name is Daryl, 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, Laurilee Kearnes. Following their remarks, we will open the call to questions. Earlier today, Byrna released results for its fiscal Q3 ended 31 August 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's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect those projections and assumptions.

Operator: Good morning. Welcome to Byrna's fiscal Q3 2026 earnings conference call. My name is Daryl, 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, Laurilee Kearnes. Following their remarks, we will open the call to questions. Earlier today, Byrna released results for its fiscal Q3 ended 31 August 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's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect those projections and assumptions.

Speaker #1: Good morning. Welcome to Byrna's fiscal third quarter 2026 earnings conference call. My name is Darryl, and I will be your operator for today's call.

Speaker #1: Joining us for today's presentation are the company's CEO, Con Davis, and CFO, Laurie Kearns. Following their remarks, we will open the call for questions.

Speaker #1: Earlier today, Byrna released results for its fiscal third quarter ended August 31, 2026. A copy of the press release is available on the company's website.

Speaker #1: 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.

Speaker #1: Please refer to Byrna's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect those projections and assumptions.

Speaker #1: 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 and the investor section of our website, ir.byrna.com, for further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results.

Operator 1: 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 investor section of our website, ir.byrna.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's CEO, Conn Davis. Sir, please proceed.

Operator: 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 investor section of our website, ir.byrna.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's CEO, Conn Davis. Sir, please proceed.

Speaker #1: Now, I would like to turn the call over to Byrna's CEO, Con Davis. Sir, please proceed.

Speaker #2: 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.

Conn Davis: 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, 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 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. We believe the long-term opportunity to expand adoption is substantially larger than the business today.

Speaker #2: Our results in the quarter reflect our ongoing transition, and while they remain below the level of performance we expect for Byrna, we are seeing signs that many of the initiatives we began implementing this year are starting to gain traction.

Speaker #2: And that reinforces my conviction in the opportunity ahead. We continue to believe Byrna is uniquely positioned at the intersection of personal safety and consumer self-defense.

Speaker #2: The need for a less lethal option remains significant, consumer awareness is low, and we believe the long-term opportunity to expand adoption is substantially larger than the business today.

Speaker #2: Our focus since I arrived in March has been centered around three priorities: improving customer conversion and retail productivity, transforming how Byrna builds demand, and enhancing operational efficiency across the business.

Conn Davis: Our focus since I arrived in March has been centered around three priorities: improving customer conversion and retail productivity, transforming how Byrna 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 re-accelerate growth.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Beyond the individual metrics, what encourages me most is that many of the building blocks we set out to establish earlier this year are now coming into place.

Speaker #2: And we still have more to come to help re-accelerate growth. Many of our refreshed marketing programs are now active, and our creator ecosystem is live and expanding.

Conn Davis: 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 on 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 2026 building is materially stronger than it was six months ago.

Speaker #2: 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 are outperforming our internal expectations, and inventory is beginning to trend lower.

Speaker #2: 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 on execution.

Speaker #2: 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.

Speaker #2: 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 Laurie to review our results from the quarter.

Conn Davis: I will discuss more on our quarter and also introduce a longer-term outlook for the business in a bit. First, I will turn the call over to Lauri to review our results from the quarter. Lauri?

Speaker #2: Laurie?

Speaker #3: Thank you, Con. And good morning, everyone. Let's review our financial results for the fiscal third quarter ended August 31, 2026. Net revenue for the third quarter was $15.3 million, down approximately 46% from $28.2 million in the prior year period.

Laurilee Kearnes: Thank you, Conn, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended 31 August 2026. Net revenue for the third quarter was $15.3 million, down approximately 46% from $28.2 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. Gross profit was $12.2 million or 79% of revenue, compared to $16.9 million or 60% of net revenue in the prior year quarter. Reported gross profit includes the impact of a $2.3 million tariff refund. Adjusting for this item, adjusted gross profit, a non-GAAP measure, was $9.9 million, representing an adjusted gross margin of approximately 65%.

Lauri Kearnes: Thank you, Conn, and good morning, everyone. Let's review our financial results for the fiscal third quarter ended 31 August 2026. Net revenue for the third quarter was $15.3 million, down approximately 46% from $28.2 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. Gross profit was $12.2 million or 79% of revenue, compared to $16.9 million or 60% of net revenue in the prior year quarter. Reported gross profit includes the impact of a $2.3 million tariff refund. Adjusting for this item, adjusted gross profit, a non-GAAP measure, was $9.9 million, representing an adjusted gross margin of approximately 65%.

Speaker #3: 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.

Speaker #3: Gross profit was $12.2 million, or 79% of revenue, compared to $16.9 million, or 60% of net revenue in the prior year quarter. Reported gross profit includes the impact of a $2.3 million tariff refund.

Speaker #3: Adjusting for this item, adjusted gross profit, a non-GAAP measure, was $9.9 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.

Laurilee Kearnes: 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. Operating expenses for Q3 2026 were $15.1 million, compared to $14.1 million for Q3 2025, an increase of 7%. The increase primarily reflects continued investment in new marketing initiatives, as well as $1.7 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 have previously discussed, we expect incremental expense as our 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.

Lauri Kearnes: 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. Operating expenses for Q3 2026 were $15.1 million, compared to $14.1 million for Q3 2025, an increase of 7%. The increase primarily reflects continued investment in new marketing initiatives, as well as $1.7 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 have previously discussed, we expect incremental expense as our 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.

Speaker #3: Operating expenses for Q3 2026 were $15.1 million, compared to $14.1 million for Q3 2025, an increase of 7%. The increase primarily reflects continued investment in new marketing initiatives, as well as $1.7 million in bad debt expenses related to two large international customers.

Speaker #3: Partially offset by the change in variable selling expenses associated with the decrease in sales. As we've previously discussed, we expect incremental expense as our new commercial and consumer acquisition programs ramp up.

Speaker #3: Those investments will proceed 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.

Speaker #3: We reported a net loss for the quarter of $2.9 million, or a loss of $0.13 per diluted share, compared to net income of $2.2 million, or $0.09 per diluted share in the same period a year ago.

Laurilee Kearnes: We reported a net loss for the quarter of -$2.9 million, or a loss of $0.13 per diluted share, compared to net income of $2.2 million or $0.09 per diluted share in the same period a year ago. Adjusted EBITDA, a non-GAAP metric, for Q3 2026 was negative $1.4 million, compared to $4.1 million in the same period a year ago. Cash, cash equivalents, and marketable securities totaled $9.4 million as of 31 August 2026, compared to $9 million in the prior year period. It was $15.5 million in 30 November 2025, and $10.4 million at the end of the fiscal Q2. Lower collections of accounts receivable weighed on cash during the quarter, and we ended the period with no debt. Inventory totaled $30 million as of 31 August 2026, compared to $34.1 million in the prior year period.

Lauri Kearnes: We reported a net loss for the quarter of -$2.9 million, or a loss of $0.13 per diluted share, compared to net income of $2.2 million or $0.09 per diluted share in the same period a year ago. Adjusted EBITDA, a non-GAAP metric, for Q3 2026 was negative $1.4 million, compared to $4.1 million in the same period a year ago. Cash, cash equivalents, and marketable securities totaled $9.4 million as of 31 August 2026, compared to $9 million in the prior year period. It was $15.5 million in 30 November 2025, and $10.4 million at the end of the fiscal Q2. Lower collections of accounts receivable weighed on cash during the quarter, and we ended the period with no debt. Inventory totaled $30 million as of 31 August 2026, compared to $34.1 million in the prior year period.

Speaker #3: Adjusted EBITDA, a non-GAAP metric, for Q3 2026 was negative $1.4 million, compared to $4.1 million in the same period a year ago. Cash, cash equivalents, and marketable securities totaled $9.4 million as of August 31, 2026.

Speaker #3: Compared to $9 million in the prior year period, it was $15.5 million as of November 30, 2025, and $10.4 million at the end of the fiscal second quarter.

Speaker #3: Lower collections of accounts receivable weighed on cash during the quarter, and we ended the period with no debt. Inventory totaled $30 million as of August 31, 2026.

Speaker #3: Compared to $34.1 million in the prior year period, $32.7 million at November 30, 2025, and $30.4 million at the end of the fiscal second quarter.

Laurilee Kearnes: 32.7 million at 30 November 2025, and 30.4 million at the end of the fiscal Q2. As we head into the holiday sell season, we expect inventory levels to decrease by $2 million to $3 million during the Q4, 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 will now pass the call back to Colin to discuss more on the quarter and the actions underway across the business. Colin?

Lauri Kearnes: 32.7 million at 30 November 2025, and 30.4 million at the end of the fiscal Q2. As we head into the holiday sell season, we expect inventory levels to decrease by $2 million to $3 million during the Q4, 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 will now pass the call back to Colin to discuss more on the quarter and the actions underway across the business. Colin?

Speaker #3: As we head into the holiday sales season, we expect inventory levels to decrease by 2 to 3 million during the fourth quarter and to continue to decrease in 2027, leading to improved working capital efficiency.

Speaker #3: 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 Con to discuss more on the quarter and the actions underway across the business.

Speaker #3: Con?

Speaker #2: Thank you, Laurie. As I mentioned in my opening remarks, we are starting to see encouraging early signs in many of the long-term growth initiatives we've previously outlined.

Conn Davis: 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 have previously outlined. For the remainder of today's call, I would 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.

Speaker #2: 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.

Speaker #2: Let me start with customer conversion and retail productivity. One of our primary objectives this year has been improving how effectively we convert customer consumer interest into purchases across both our direct-to-consumer and retail channels.

Speaker #2: We're beginning to see meaningful evidence that these efforts are producing results, both in initial discovery and in conversion. For Q3, website conversion improved sequentially from June to August.

Speaker #2: 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.

Speaker #2: 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.

Conn Davis: 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. Second, once consumers arrive at byrna.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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Second, once consumers arrive at Byrna.com, we are doing a better job of educating them and ultimately assisting them in making an informed purchase decision.

Speaker #2: 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 twice the rate of the broader website.

Conn Davis: To date, the program has generated over 280,000 responses and is converting at over 2 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 return 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.

Speaker #2: 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.

Speaker #2: On a related note, our returned launchers are also helping support our new refurbished products program. During the quarter, we sold through all available Berna SD refurbished product inventory, creating an incremental revenue opportunity while improving asset utilization and further supporting our operational efficiency initiatives.

Speaker #2: We expect this to remain a recurring 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.

Speaker #2: 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.

Conn Davis: 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, enhanced product displays, expanded training efforts, and continued rolling these initiatives out with retail partners throughout our network. Additionally, we have 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.

Speaker #2: 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, enhanced product displays, expanded training efforts, and continued rolling these initiatives out with retail partners throughout our network.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Conn Davis: 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 have 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Conn Davis: While programs like this typically take time to build awareness and momentum, we have 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 audience. 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.

Speaker #2: 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, toward trusted platforms with broader mainstream reach—allowing us to introduce Byrna's less-lethal personal security solutions to a new consumer audience.

Speaker #2: 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.

Speaker #2: Another important area of focus has been our creator strategy. Working alongside Acceleration Partners, we have now onboarded more than 50 creators into our social creator ecosystem, and they have a combined following of 3.8 million.

Conn Davis: Working alongside Acceleration Partners, we have now onboarded more than 50 creators into our social creator ecosystem that have a combined following of 3.8 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-size 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.

Speaker #2: We also remain on track toward 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 midsize creators, with 10,000 to 500,000 followers on Instagram, Facebook, and YouTube.

Speaker #2: 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, including women's self-defense, families, runners, commuters, and outdoor consumers—many of whom were completely unaware of Byrna before our engagement with them.

Speaker #2: This has enabled us to create and promote creator-driven content that shows how Byrna's products can support personal safety at home, while commuting, during exercise and travel, and in outdoor settings.

Conn Davis: This has enabled us to create and promote creator-driven content that shows how Byrna's 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Conn Davis: 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 displays 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.

Speaker #2: Where we were in front of more than 100,000 race fans over three nights of racing. The event provided an opportunity to showcase Byrna to a highly relevant consumer audience, many of whom were learning about the brand for the first time.

Speaker #2: Through live product displays and educational discussions around Byrna's personal safety solutions, we were able to drive meaningful consumer engagement while significantly expanding brand and category awareness.

Speaker #2: 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.

Conn Davis: 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. With these concentrated efforts across product design, supply chain, and manufacturing, we intend to relaunch Hero's products as an integrated part of Byrna's product lineup at SHOT Show in January of 2027. Hero expands Byrna's product ecosystem into new price points and everyday carry form factors, creating additional entry points into the category while providing us with more opportunities to engage consumers through their personal safety journey. Additionally, we believe that the Hero product lines will open up opportunities across new retail partners.

Speaker #2: 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.

Speaker #2: With these concentrated efforts across product design, supply chain, and manufacturing, we intend to relaunch Hero's products as an integrated part of Byrna's product lineup at SHOT Show in January of 2027.

Speaker #2: Hero expands Byrna's product ecosystem into new price points and everyday carry form factors, creating additional entry points into the category while providing us with more opportunities to engage consumers through their personal safety journey.

Speaker #2: Additionally, we believe that the Hero product lines will open up opportunities across new retail partners. Moving to our third priority, which is enhancing operational efficiency.

Conn Davis: Moving to our third priority, which is enhancing operational efficiency. Throughout the year, we have remained focused on building systems that will improve profitability, increase cash generation, and better align production with demand. One of the most important actions we took was transitioning ammunition manufacturing to an outsourced model this past quarter. We are already seeing meaningful benefits from this transition, including reduced operational complexity, enhanced strategic flexibility, and improved profitability. The shift has produced an approximate gross margin benefit of 1,200 basis points in our ammunition, and we expect those benefits to continue moving forward. More broadly, margins continued to improve during the quarter. Adjusted gross margin was approximately 65%, up from 62% in Q2 and roughly 500 basis points above last year, well ahead of the approximately 62% level we said we expected to hold through year-end.

Speaker #2: Throughout the year, we've remained focused on building systems that will improve profitability, increase cash generation, and better align production with demand. One of the most important actions we took was transitioning ammunition manufacturing to an outsource model this past quarter.

Speaker #2: We are already seeing meaningful benefits from this transition, including reduced operational complexity, enhanced strategic flexibility, and improved profitability. The shift has produced an approximate gross margin benefit of 1,200 basis points in our ammunition, and we expect those benefits to continue moving forward.

Speaker #2: More broadly, margins continued to improve during the quarter. Adjusted gross margin was approximately 65%, up from 62% in Q2, and roughly 500 basis points above last year.

Speaker #2: Well ahead of the approximately 62% level we said we expected to hold through year-end. Notably, we achieved this on lower volume, driven by operational efficiency gains and favorable product and channel mix.

Conn Davis: Notably, we achieved this on lower volume driven by operational efficiency gains and favorable product and channel mix. The team's ability to deliver these results during a challenging top-line quarter speaks to the long-term potential we are building in the business. Reducing and rightsizing our inventory levels also remains a significant focus area as we look to better align production with demand in the future. As we move into the holiday season, we expect stronger sell-through of existing retail inventory. As Lauri mentioned, we expect a reduction of inventory by $2 million to $3 million in Q4. Combined with temporarily moderated production levels, we expect to see overall inventory begin to normalize while also providing the added benefit of improved cash generation.

Speaker #2: The team’s ability to deliver these results during a challenging top-line quarter speaks to the long-term potential we’re building in the business. Reducing and right-sizing our inventory levels also remains a significant focus area as we look to better align production with demand in the future.

Speaker #2: As we move into the holiday season, we expect stronger sell-through of existing retail inventory. As Laurilee mentioned, we expect a reduction of inventory by $2 to $3 million in Q4.

Speaker #2: Combined with temporarily moderated production levels, we expect to see overall inventory begin to normalize, while also providing the added benefit of improved cash generation.

Speaker #2: In summary, we are continuing to identify opportunities to further improve manufacturing efficiency, product costs, and operational productivity, so that as our sales continue to ramp, we'll see more of that reflected in our bottom line.

Conn Davis: In summary, we are continuing to identify opportunities to further improve manufacturing efficiency, product costs, and operational productivity, so that as our sales continue to ramp, we will see more of that reflected in our bottom line. Moving forward, the first steps of our marketing transformation are implemented. Our creative ecosystem is expanding, our retail programs are rolling out and will accelerate post-holiday, and our operational initiatives are beginning to generate measurable benefits. At the same time, we remain realistic about the work still to be done. We are still in a transition period, and while we expect to drive sequentially improved results, Q4 faces a difficult comparison against an exceptionally strong prior year period. Looking into the end of the fiscal year, we believe it is clear that the business is now moving in the right direction.

Speaker #2: Moving forward, the first steps of our marketing transformation are implemented. Our creative ecosystem is expanding. Our retail programs are rolling out and will accelerate post-holiday.

Speaker #2: Our operational initiatives are beginning to generate measurable benefits. At the same time, we remain realistic about the work still to be done. We are still in a transition period, and while we expect to drive sequentially improved results, Q4 faces a difficult comparison against an exceptionally strong prior-year period.

Speaker #2: Looking ahead to the end of the fiscal year, we believe it is clear that the business is now moving in the right direction. With the majority of initiatives we targeted for the holiday season now in place, we are ready to start playing offense.

Conn Davis: With the majority of initiatives we targeted for the holiday season now in place, we are ready to start playing offense. As we begin looking beyond the current transition period, it is important to emphasize that our focus extends far beyond restoring near-term growth. We believe Byrna has an opportunity to play a leading role in shaping the future of personal safety by expanding awareness and adoption of less-lethal solutions among a much broader population of consumers. Today, we remain in the early stages of that opportunity. Our ability to meet that opportunity is rooted in four key pillars. First, continue expanding awareness, adoption, and conversion across the Byrna platform.

Speaker #2: As we begin looking beyond the current transition period, it is important to emphasize that our focus extends far beyond restoring near-term growth. We believe Byrna has an opportunity to play a leading role in shaping the future of personal safety by expanding awareness and adoption of less lethal solutions among a much broader population of consumers.

Speaker #2: Today, we remain in the early stages of that opportunity. Our ability to meet that opportunity is rooted in four key pillars. First, we must continue expanding awareness, adoption, and conversion across the Byrna platform.

Speaker #2: Everything we've discussed today—from media partnerships and creator programs to website improvements and retail initiatives—is ultimately designed to increase awareness of Byrna's unique personal safety solutions, improve conversion throughout the customer journey, and bring new consumers into the category.

Conn Davis: Everything we've discussed today, from media partnerships and creator programs to website improvements and retail initiatives, is ultimately designed to increase awareness of Byrna's unique personal safety solutions, improve conversion throughout the customer journey, and bring new consumers into the category. We are encouraged by the early improvements we've seen in website traffic and conversion rates. We believe there remains a significant opportunity to further optimize the customer experience. As part of this effort, we plan to launch a redesigned mobile native website in Q1 that better reflects how consumers shop today and establishes a foundation for continuous optimization rather than periodic improvements. We also see substantial opportunity within our retail and dealer channels, where we have hired our first dedicated regional sales manager focused on continuously meeting with our partners to improve sell-through, expanding dealer relationships, and increasing our presence with both existing and new retail partners.

Speaker #2: We are encouraged by the early improvements we've seen in website traffic and conversion rates. We believe there remains a significant opportunity to further optimize the customer experience.

Speaker #2: As part of this effort, we plan to launch a redesigned, mobile-native website in the first quarter that better reflects how consumers shop today and establishes a foundation for continuous optimization rather than periodic improvements.

Speaker #2: We also see substantial opportunity within our retail and dealer channels, where we have hired our first dedicated regional sales manager. We are focused on continuously meeting with our partners to improve sell-through, expanding dealer relationships, and increasing our presence with both existing and new retail partners.

Speaker #2: As we continue to broaden our product portfolio, including the Hero offerings, we believe these efforts can further strengthen our product acceptance in large chains, expand our distribution footprint, and accelerate adoption across multiple channels.

Conn Davis: As we continue to broaden our product portfolio, including the Hero offerings, we believe these efforts can further strengthen our product acceptance in large chains to expand our distribution footprint and accelerate adoption across multiple channels. Our second pillar is extending our presence into professional security, law enforcement, and international markets. Historically, these markets have not been major focus areas for Byrna and remain largely under-penetrated relative to their long-term potential. Third, continuing to improve operational efficiency. The progress we've made with gross margins, manufacturing efficiency, ammunition production, inventory management, and cash generation demonstrate the steps we have taken to build a stronger financial model. There are still more ways for us to further improve this, and we see this as an exciting opportunity as we aim to grow both our top and bottom lines. Finally, we will continue evaluating strategic opportunities that strengthen and complement our personal safety platform.

Speaker #2: Our second pillar is extending our presence into professional security, law enforcement, and international markets. Historically, these markets have not been major focus areas for Byrna, and remain largely underpenetrated relative to the long-term potential.

Speaker #2: Third, continuing to improve operational efficiency. The progress we've made with gross margins, manufacturing efficiency, ammunition production, inventory management, and cash generation demonstrates the steps we've taken to build a stronger financial model.

Speaker #2: There are still more ways for us to further improve this, and we see this as an exciting opportunity as we aim to grow both our top and bottom lines.

Speaker #2: Finally, we will continue evaluating strategic opportunities that strengthen and complement our personal safety platform. We believe HERO is a good example of the type of opportunity we are interested in pursuing, as it broadens our ecosystem, expands our addressable market, and creates additional pathways for long-term growth.

Conn Davis: We believe Hero is a good example of the type of opportunity we are interested in pursuing as it broadens our ecosystem, expands our addressable market, and creates additional pathways for long-term growth. Let me be more specific about why we're confident in this framework. First, our margin structure is fundamentally better now compared to Byrna's last growth phase. At mid-60s adjusted gross margins, ammunition sourced variably and at a lower cost, and production more closely aligned to demand, more of every incremental revenue dollar can flow through to the bottom line. Second, investments in leadership, partner relationships, and our creator platform are now largely in place. So growth from here should come without significant incremental cost, which creates real operating leverage. Third, the runway from our expanded audience segmenting provides us a greater market opportunity without alienating our legacy core demographic.

Speaker #2: Let me be more specific about why we're confident in this framework. First, our margin structure is fundamentally better now compared to Byrna's last growth phase.

Speaker #2: At mid-60s adjusted gross margins, ammunition sourced variably and at a lower cost, and production more closely aligned to demand, more of every incremental revenue dollar can flow through to the bottom line.

Speaker #2: Second, investments in leadership, partner relationships, and our creator platform are now largely in place. So, growth from here should come without significant incremental cost, which creates real operating leverage.

Speaker #2: Third, the runway from our expanded audience segmenting provides us a greater market opportunity without alienating our legacy core demographic. We are adding more than 50 million likely buyers in segments Byrna has never addressed in a focused way.

Conn Davis: We are adding more than 50 million likely buyers and segments Byrna has never addressed in a focused way. Additionally, we're implementing a clear plan to drive sell-through in our retail footprint, and with the Hero acquisition, a product ladder that meets consumers at every stage of their personal safety journey. When put together, we believe this complementary framework positions Byrna to return to a meaningful growth profile with expanding EBITDA margins and strong cash conversion. We intend to host an investor day in the first half of next year, where we plan to further lay out the financial algorithm and key drivers underpinning our four long-term pillars. We will provide additional information on timing in the coming months. As a final note, I'd like to highlight a few key additions to our senior leadership team that we've announced over the past few weeks.

Speaker #2: Additionally, we're implementing a clear plan to drive sell-through in our retail footprint. And with the Hero acquisition, we now have a product ladder that meets consumers at every stage of their personal safety journey.

Speaker #2: When put together, we believe this complementary framework positions Byrna to return to a meaningful growth profile with expanding EBITDA margins and strong cash conversion.

Speaker #2: We intend to host an investor day in the first half of next year, where we plan to further lay out the financial algorithm and key drivers underpinning our four long-term pillars.

Speaker #2: We will provide additional information on timing in the coming months. As a final note, I'd like to highlight a few key additions to our senior leadership team that we've announced over the past few weeks.

Speaker #2: We are always looking to bring on great talent, and it is our belief that, with these recent additions, we now have the team in place to execute against the strategy I've outlined today.

Conn Davis: We are always looking to bring on great talent, and it is our belief that with these recent additions, we now have the team in place to execute against the strategy I have outlined today. First, we appointed James White as Senior Vice President of Retail and Channel Growth, and second, we announced Nate Secor as Senior Vice President of Brand and Marketing. Together, Jim and Nate will be focused on accelerating retail expansion, omni-channel growth, customer acquisition, and brand development. At the board level, we also announced the appointments of Rose Lopez Keravuori and Dr. Matthew McBrady. Rose and Matt provide valuable and uniquely differentiated backgrounds in enterprise risk management, capital markets, corporate governance, and scaling growth-oriented organizations that will be a significant value add to our existing team as we build the architecture of Byrna's next phase of growth.

Speaker #2: First, we appointed Jim White as Senior Vice President of Retail and Channel Growth, and second, we announced Nate Secor as Senior Vice President of Brand and Marketing.

Speaker #2: Together, Jim and Nate will be focused on accelerating retail expansion, omnichannel growth, customer acquisition, and brand development. At the board level, we also announced the appointments of Rose Lopez-Cavory and Dr. Matthew McBrady.

Speaker #2: Rose and Matt provide valuable and uniquely differentiated backgrounds in enterprise risk management, capital markets, corporate governance, and scaling growth-oriented organizations that will be a significant value add to our existing team as we build the architecture of Byrna's next phase of growth.

Speaker #2: To close, we believe we have the people, strategy, and operational framework necessary to build Byrna into a growth company again—larger, more profitable, and a more durable business over time.

Conn Davis: To close, we believe we have the people, strategy, and operational framework necessary to build Byrna into a growth company again, larger, more profitable, and a more durable business over time. The opportunity ahead remains significant, and we look forward to updating you on our progress in the quarters ahead. With that, operator, we are ready to take questions.

Speaker #2: The opportunity ahead remains significant, and we look forward to updating you on our progress in the quarters ahead. With that, Operator, we are ready to take questions.

Speaker #1: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator 1: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for your questions. Our first questions come from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for your questions. Our first questions come from the line of Jeremy Hamblin with Craig-Hallum. Please proceed with your questions.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: One moment, please, while we poll for your questions. Our first questions come from the line of Jeremy Hamlet with Craig Hallam. Please proceed with your questions.

Speaker #2: Thanks for taking the questions. Good morning. I wanted to just start with some of the improvements that you saw in your web sessions. You noted that, I think, August was 29,000 sessions a day.

Jeremy Hamblin: Thanks for taking the questions. Good morning. I wanted to just start with some of the improvements that you saw in your web sessions. You noted that, I think August was 29,000 sessions a day. Still obviously down from what you had been seeing. Have you seen some of that? Did that improvement continue into September? Were you also seeing conversion rates continue to improve in September?

Speaker #2: Still, obviously it's down from what you had been seeing. But have you seen some of that—did that improvement continue into September? And were you also seeing conversion rates continue to improve in September?

Speaker #3: Thanks, Jeremy, and great to hear from you. Thanks for the question. We were really encouraged by what we saw from both the sessions and the conversion rate.

Conn Davis: Thanks, Jeremy. Great to hear from you. Thanks for the question. We were really encouraged by what we saw from both a sessions and conversion rate in August. We are really focused on continuing that trend into Q4. What is exciting about that is not only is it really a higher intent period where we see more consumers will be engaging, but a lot of the initiatives that we have put in place from both the creative ecosystem and the new marketing initiatives will really be rolling out in full force. So we expect to see improvements over the Q3 numbers throughout Q4, which we are excited about.

Speaker #3: In August, and we're really focused on now continuing that trend into Q4. And what's exciting about that is not only is it really a higher intent period where we see more consumers will be engaging, but a lot of the initiatives that we've put in place from both the creative ecosystem and the new marketing initiatives will really be rolling out in full force.

Speaker #3: So we expect to see improvements over the Q3 numbers throughout Q4, which we're excited about.

Speaker #2: Okay. Well, let me switch gears then and ask a little bit about the wholesale business, which obviously had a tough quarter. I think it was down 64%.

Jeremy Hamblin: Well, let me switch gears then and ask a little bit about the wholesale business, which obviously had a tough quarter, I think down 64%. I wanted to understand, you have had some partnerships that were previously announced. I wanted to get an update on your retail door expansion. You had the deal with Academy, and a couple of other retail chains. I just wanted to get a sense of stabilization. I noted in the commentary that it sounded like the sell-through, what did not hit your targets that you were anticipating. So I wanted to get an update on that channel of business. Then as we look ahead into 2027 and beyond, how much of the recovery in the total business should we be expecting to come from the wholesale channel, which I think previously really had been seen as a big opportunity for growth?

Speaker #2: I wanted to understand—you've had some partnerships that were previously announced. I wanted to get an update on your retail door expansion. You had a deal with Academy.

Speaker #2: And a couple of other retail chains. But I just wanted to get a sense of stabilization. I noted in the commentary that it sounded like the sell-through didn't hit your targets that you were anticipating.

Speaker #2: So, I wanted to get an update on that channel of business. And then, as we look ahead into '27 and beyond, how much of the recovery in the total business should we be expecting to come from the wholesale channel?

Speaker #2: Which I think previously had really been seen as a big opportunity for growth.

Speaker #3: Thanks, I appreciate the question. So, if you think about where we are from a retail channel point of view, a lot of the previously announced partnerships—they are live.

Conn Davis: Thanks. I appreciate the question. If you think about where we are from a retail channel point of view, a lot of the previously announced partnerships, they are live and they are going, but we do not anticipate seeing meaningful doors added in those new chains throughout the holiday period. Typically, once you get to that point in time, stores have set their assortment and their displays for the holiday period. So we expect that to pick up and ramp in Q1 next year from a door expansion point of view. We still definitely view the retail channel as an overall growth pillar for the business going forward. Certainly, an area where we think we are investing meaningfully to drive sell-through, which is really an area that we did not have meaningful investments when we launched the programs a little over a year ago now.

Speaker #3: And they are going, but we don't anticipate seeing meaningful doors added in those new chains. Throughout the holiday period, typically once you get to that point in time, stores have set their assortment and their displays for the holiday period.

Speaker #3: So, we expect that to pick up and ramp in Q1 next year from a door expansion point of view. We still definitely view the retail channel as an overall growth pillar for the business going forward.

Speaker #3: And certainly an area where we think we are investing meaningfully to drive sell-through, which is really an area that we didn't have meaningful investments in when we launched the programs.

Speaker #3: A little over a year ago now. So, increasing and ramping those sell-through programs is what's really going to drive us going forward. Laurie, anything else you'd add?

Conn Davis: Increasing and ramping those sell-through programs is what is really going to drive us going forward. Lori, anything else you would add?

Speaker #4: Yeah, the only other thing I'd add is we are doing, with a couple of large chains, some holiday bundles that are specific and exclusive to their locations.

Laurilee Kearnes: Jeremy, only thing I would add is we are doing with a couple of large chains, some holiday bundles that are specific and exclusive to their locations. In one case it is a color, in another case it is kind of a bundled product. We think those should do really well, giving them something that differentiates them, and those are the type of partnerships and arrangements we want to do going forward to help them with their sell-through.

Lauri Kearnes: Jeremy, only thing I would add is we are doing with a couple of large chains, some holiday bundles that are specific and exclusive to their locations. In one case it is a color, in another case it is kind of a bundled product. We think those should do really well, giving them something that differentiates them, and those are the type of partnerships and arrangements we want to do going forward to help them with their sell-through.

Speaker #4: In one case, it's a color, and in another case, it's kind of a bundled product. So we think those should do really well—giving them something that differentiates them. Those are the types of partnerships and arrangements we want to pursue going forward to help them with their sell-through.

Speaker #2: Okay, got it. In terms of the sell-through rates, right? I think you noted there was some inventory stocking that happened earlier, and that's part of why you're seeing that percentage.

Jeremy Hamblin: Okay, got it. In terms of the sell-through rates, I think you noted there was some inventory stocking that happened earlier, and that is part of why you are seeing the percentage rate down as much in Q3. But the sell-through rates, as you have improved on your marketing approach, are you starting to see some traction with the sell-through and conversion rates in your wholesale channel?

Speaker #2: Rate was down as much in Q3. But the sell-through rates, as you've improved on your marketing approach, are you starting to see some traction with the sell-through and conversion rates in your wholesale channel?

Speaker #3: Yeah, so we have definitely started seeing that reorder activity pick up as we went through Q3 and saw that sell-through be stronger than it had been earlier in the year.

Conn Davis: Yeah. We have definitely started seeing that reorder activity pick up as we went through Q3 and saw that sell-through be stronger than it had been earlier in the year. We do not have as good of detail at the store level with some chains. But those that we do, we have started to see some traction across those platforms, but more encouragingly is the reorder cadence picking up to some extent. Another important factor there is we are expanding our e-commerce partnerships with our retail platforms so that we are enabling them to drop ship. So when they are out of stock in their stores or do not have inventory in a certain region, we can backfill them and drop ship from our operations in Fort Wayne, as well as expand the overall assortment that they have available online.

Speaker #3: And we don't have as good of detail at the store level with some chains, but for those that we do, we've started to see some traction across those platforms. More encouragingly, the reorder cadence is picking up to some extent.

Speaker #3: Another important factor there is we are expanding our e-commerce partnerships with our retail platforms so that we're enabling them to drop ship. So, when they are out of stock in their stores or don't have inventory in a certain region, we can backfill them and drop ship from our operations in Fort Wayne.

Speaker #3: As well as expanding the overall assortment that they have available online. We believe that this is another initiative that will help drive e-commerce over time.

Conn Davis: We believe that is another initiative that will help drive e-commerce over time and help drive our retail partners.

Speaker #3: And help drive our retail partners.

Speaker #2: Got it. Okay, another just high-level question. Again, as you continue to transform the business and you have your four pillars, as we think about this newer channel that hasn't been a focus historically—law enforcement, professional security—those sound like some interesting opportunities.

Jeremy Hamblin: Got it. Okay. Another just high level question, again, as you continue to transform the business and you have your four pillars, as we think about this newer channel that hasn't been a focus historically, law enforcement, professional security, those sound like some interesting opportunities. Law enforcement, of course, does have a fairly large entrenched player that has a pretty large penetration in the space. Just talk to me about the cost involved as you get into this particular category. I wonder what type of investment needs to be made to make significant progress. I do not know that the strategy on influencers and social media is maybe going to have the same impact on that particular channel of potential business. So what is the kind of the timing on when you think that channel, law enforcement, professional security, that we can start to see some traction?

Speaker #2: Law enforcement, of course, does have a fairly large entrenched player that has a pretty significant penetration in the space. Just talk to me about the costs involved as you get into this particular category.

Speaker #2: I wonder what type of investment needs to be made to make significant progress. I don't know that the strategy on influencers and social media is maybe going to have the same impact on that particular channel of potential business.

Speaker #2: So, what's kind of the timing on when you think that channel — law enforcement, professional security — that we can start to see some traction?

Speaker #2: Or is that mostly going to be an international focus for you?

Jeremy Hamblin: Or is that mostly going to be an international focus for you?

Speaker #3: Yeah, no, I appreciate the question. And to be clear, our near-term focus is absolutely on improving the D2C business, D2C conversion, and traffic on the D2C side.

Conn Davis: Yeah, no, appreciate the question. To be clear, our near-term focus is absolutely on improving the D2C business, the D2C conversion, and traffic on the D2C side. So you will see the majority of our initiatives in the very near term targeting that. As you think about law enforcement, professional security and growth internationally, those become key pillars for the long-term growth of the organization as we continue to expand and grow. We will start making incremental investments in those areas next year, but they are not going to be things that meaningfully drive in the short term or become significant costs in the short term around that. So where I would say is, focus initially will likely be on that security market because as you know, the long-term sell-through in the law enforcement side of the house takes longer. Lauri, anything you would highlight there?

Speaker #3: So, you'll see the majority of our initiatives in the very near term targeting that. As you think about law enforcement, professional security, and growth internationally, those become key pillars for the long-term growth of the organization as we continue to expand and grow.

Speaker #3: And we'll start making incremental investments in those areas next year, but they're not going to be things that meaningfully drive in the short term or become significant costs in the short term around that.

Speaker #3: So, where I would say the initial focus will likely be is on that security market, because as you know, the long-term sell-through on the law enforcement side of the house takes longer.

Speaker #3: Laurie, anything you'd highlight there?

Speaker #4: Yeah, I mean, I think we've got some internal resources in this concept. We can make some small, incremental investments there to start driving that.

Laurilee Kearnes: Yeah. I think we have got some internal resources, and as Khan said, we can make some small incremental investments there to start driving that. But there are certainly some large opportunities. Our product just fits a good need for some of these. Professional security is a great area where something less lethal that they can carry is much more attractive to them oftentimes than a lethal firearm.

Lauri Kearnes: Yeah. I think we have got some internal resources, and as Khan said, we can make some small incremental investments there to start driving that. But there are certainly some large opportunities. Our product just fits a good need for some of these. Professional security is a great area where something less lethal that they can carry is much more attractive to them oftentimes than a lethal firearm.

Speaker #4: But there are certainly some large opportunities, and our product just fits a good need for some of these. Professional security is a great area where something less lethal that they can carry is much more attractive to them, and oftentimes, than a lethal firearm.

Speaker #2: Got it. Last one real quick. Gross margin—the color on the change in ammunition production was super helpful. Can we assume then that this kind of mid-60s gross margin rate is sustainable on a go-forward basis and kind of a step up from that 62%?

Jeremy Hamblin: Got it. Last one real quick. Gross margin, the color on the change in ammunition production, super helpful. Can we assume then that this kind of mid-60s gross margin rate is sustainable on a go-forward basis and a step up from that 62%, or should we be a little bit more conservative than what you did in Q3?

Speaker #2: Or should we be a little bit more conservative than what you did in Q3?

Speaker #4: Yeah, thanks, Jeremy. We do expect that range near the mid-60s to be where we expect to be going forward, both with the operational efficiencies that we've gained and other initiatives that we'll work through next year.

Laurilee Kearnes: Yeah. Thanks, Jeremy. We do expect that range near the mid-60s to be where we expect to be going forward, both with the operational efficiencies that we've gained and other initiatives that we'll work through in next year. So we expect that to continue on.

Lauri Kearnes: Yeah. Thanks, Jeremy. We do expect that range near the mid-60s to be where we expect to be going forward, both with the operational efficiencies that we've gained and other initiatives that we'll work through in next year. So we expect that to continue on.

Speaker #4: So we expect that to continue on.

Speaker #2: Great, thanks so much for taking my questions.

Jeremy Hamblin: Great. Thanks so much for taking my questions.

Speaker #3: Thanks, Jeremy.

Conn Davis: Thanks, Jeremy.

Speaker #1: Thank you. Our next question comes from Matt Koranda with Roth Capital Partners. Please proceed with your questions.

Operator 1: Thank you. Our next questions come from the line of Matt Koranda with Roth Capital Partners. Please proceed with your questions.

Operator: Thank you. Our next questions come from the line of Matt Koranda with Roth Capital Partners. Please proceed with your questions.

Speaker #5: Hey guys, good morning. Maybe just picking up on the web traffic questions that Jeremy was asking—where does conversion sit right now, maybe over the last couple of months, if you want to do a blended number?

Matt Koranda: Hey, guys. Good morning. Maybe just picking up on the web traffic questions that Jeremy Hamblin was asking, where does conversion sit right now, maybe over the last couple of months, if you want to do a blended number? I know you mentioned for the last couple of quarters it has been sub 1%, but you said, I think in the prepared remarks and in the release, that it had improved sequentially throughout Q3. Are we now back to that 1% number, or do we still have some wood to chop on that front?

Speaker #5: I know you mentioned that for the last couple of quarters it's been below 1%. But you said in the, I think, prepared remarks and in the release, that it had improved sequentially throughout Q3.

Speaker #5: Are we now back to that 1% number, or do we still have some wood to chop on that front?

Speaker #3: Yeah, no, appreciate the question, Matt. And good morning to you as well. We are not at 1% from a conversion point at this point in time.

Conn Davis: Yeah, no, appreciate the question, Matt, and good morning to you as well. We are not at 1% from a conversion point at this point in time. We have parts of the site, like the quiz that we mentioned, and the Try Before You Buy program that are north of 1%, but if you think about where we are today, we are north of 0.6%, but we are not where we need to be long term. We expect that to continue improving throughout Q4. Mentioned both, it is a higher intent program, but we are rapidly applying the learnings that we are seeing from both the quiz and our sessions to really drive an improved conversion rate overall.

Speaker #3: We have parts of the site, like the quiz that we mentioned, and the try-at-home program, that are north of 1%. But if you think about where we are today, we are north of 0.6%.

Speaker #3: But we are not where we need to be long term. We expect that to continue improving throughout Q4. As mentioned, it is a higher intent program, but we are rapidly applying the learnings that we're seeing from both the quiz and our sessions to really drive and improve conversion rate overall.

Speaker #5: Okay, that's helpful. And then maybe I wanted to hear a little bit more about—if you can, I'm sure you can do this—the new creators that have been added to the platform, some of the new influencers. Obviously, they're going to add traffic to the site.

Matt Koranda: Okay. That is helpful. Then, maybe wanted to hear a little bit more about if you can, I am sure you can do this, but the new creators that have been added to the platform, some of the new influencers, obviously they are going to be additive to traffic to the site, but if you isolate what you are seeing from visitors that are coming through those channels, is conversion accretive, I guess, and how you think about driving better conversion over the next several quarters. Is that a good guy for you as you drive more traffic from those new influencers?

Speaker #5: But if you isolate what you're seeing from visitors that are coming through those channels, is conversion a creative, I guess? And how do you think about driving better conversion over the next several quarters?

Speaker #5: Is that a good guide for you as you drive more traffic from those new influencers?

Speaker #3: Yeah, great question. What's great about that influencer strategy is we can really target specific audiences with the right message. So, I'm sure as you're aware, people who follow a certain influencer, one, really listen to them, and two, are attuned to the messages that they're delivering into that micro segment.

Conn Davis: Yeah. Great question. What's great about that influencer strategy is we can really target specific audiences with the right message. I am sure as you are aware, people who follow a certain influencer really, one, listen to them, and two, attune to the messages that they are delivering into that micro segment. What we have seen is traffic coming from those specific influencers into the website are converting at a higher rate than what I would call returning customers at this point in time, which is great to see. However, we still want to continue to improve and drive overall conversion rates across the portfolio.

Speaker #3: So what we have seen is traffic coming from those specific influencers into the website is converting at a higher rate than what I would call returning customers at this point in time.

Speaker #3: Which is great to see. However, we still want to continue to improve and drive overall conversion rates across the portfolio.

Speaker #5: Okay, fair enough. And then maybe on the retail and dealer channel demand, one way I'd like to try to think about it is if you're willing to share sort of POS and what you're seeing, maybe at the retail level from a POS point of view, because obviously, there's going to be noise from stocking orders that were taken over the last several quarters and last year or so.

Matt Koranda: Okay, fair enough. Then maybe on the retail and dealer channel demand, one way I would like to try to think about it is if you are willing to share POS and what you are seeing maybe at the retail level on a POS point of view, because obviously there is going to be noise from stocking orders that were taken over the last several quarters and last year or so. But what does sell-through look like at your more mature retail partners or your mature dealers? I wanted to see if we can get at it that way.

Speaker #5: But what does sort of sell-through look like at your, I guess, more mature retail partners or your mature dealers? I wanted to see if we can get at it that way.

Speaker #4: Yeah, thanks, Matt. I mean, I would say that sell-through, as we've said, has been lower than we expected. And we're working with those retail partners to try and find initiatives to help drive that.

Laurilee Kearnes: Yeah. Thanks, Matt. I would say that sell-through, as we have said, has been lower than we expected, and we are working with those retail partners to try and find initiatives to help drive that. We still know that those locations that have shooting experience do better than those that do not. So we have continued to roll out some of that, certainly talking with partners on how that can work. But I think we are focused on how we help them with the sell-through, whether that be, as Khan mentioned, through the e-commerce, so we can drop ship from their e-commerce sites as well as these holiday bundles and particular, maybe certain advertising that we can do, kind of co-op type of things, and email traffic to help drive their sales as well. So we are looking at all of those initiatives to help them.

Lauri Kearnes: Yeah. Thanks, Matt. I would say that sell-through, as we have said, has been lower than we expected, and we are working with those retail partners to try and find initiatives to help drive that. We still know that those locations that have shooting experience do better than those that do not. So we have continued to roll out some of that, certainly talking with partners on how that can work. But I think we are focused on how we help them with the sell-through, whether that be, as Khan mentioned, through the e-commerce, so we can drop ship from their e-commerce sites as well as these holiday bundles and particular, maybe certain advertising that we can do, kind of co-op type of things, and email traffic to help drive their sales as well. So we are looking at all of those initiatives to help them.

Speaker #4: We still know that those locations that have shooting experience do better than those that don't, so we've continued to roll out some of that.

Speaker #4: Certainly, talking with partners on how that can work. But I think we are focused on how we help them with the sell-through, whether that be, as Con mentioned, through the e-commerce—so we can drop ship from their e-commerce sites—as well as these holiday bundles.

Speaker #4: And particularly, maybe certain advertising that we can do—kind of co-op type of things—and email traffic to help drive their sales as well.

Speaker #4: So we're looking at all of those initiatives to help them.

Speaker #3: Yeah. And we just don't have the same level of conversion visibility across all of our third-party stores that we can, obviously, see on Byrna.com.

Conn Davis: Yeah, we just do not have the same level of conversion visibility across all of our third-party stores that we can obviously see on byrna.com.

Speaker #5: Okay, got it. Maybe just one last question. Regarding the Hero integration, I guess I haven't picked up on the product on your website. Maybe I missed that.

Matt Koranda: Okay, got it. Maybe just last one. On the Hero integration, I guess I haven't picked up on the product on your website yet. Maybe I missed that, but how soon should we expect that to be integrated into the Byrna site? Will it be integrated onto your site, or is this more of a different channel product that we should be thinking about?

Speaker #5: But how soon should we expect that to be integrated into the Byrna site? Will it be integrated onto your site, or is this more of a different channel?

Speaker #5: Is there a product that we should be thinking about?

Speaker #3: No, we absolutely intend to place the Hero product line on the Byrna website as an integrated part of our total product ecosystem and our product ladder.

Conn Davis: No, we absolutely intend to place the Hero product line on the Byrna website as an integrated part of our total product ecosystem and our product ladder. Matt, that will likely come on the Byrna site in connection with SHOT Show in early January as we position and rebrand the product under the Byrna umbrella. Today, it is still available as Hero on Amazon, which was their original primary sales channel.

Speaker #3: Matt, that will likely come on the Byrna site in connection with Shot Show in early January, as we position and rebrand the product under the Byrna umbrella.

Speaker #3: Today, it is still available as Hero on Amazon, which was their original primary sales channel.

Speaker #5: Okay. Understood. I'll leave it there, guys. Thank you.

Matt Koranda: Okay, understood. I'll leave it there, guys. Thank you.

Speaker #3: Thank you.

Conn Davis: Thank you.

Speaker #4: Thanks.

Laurilee Kearnes: Thanks.

Lauri Kearnes: Thanks.

Speaker #2: Thank you. Our next questions come from the line of Dylan Hines with B. Riley Securities. Please proceed with your questions.

Operator 1: Thank you. Our next questions come from the line of Dylan Hines with B. Riley Securities. Please proceed with your questions.

Operator: Thank you. Our next questions come from the line of Dylan Hines with B. Riley Securities. Please proceed with your questions.

Speaker #6: Hey, I'm just going to wait for Jeff Benson to— I was wondering, with the refurbished launchers, are you expecting that to continue? I was just wondering.

Dylan Hines: Hey. This is Dylan, going for Jeff Van Sinderen. I was wondering with the refurbished launchers, you are expecting that to continue? I was just wondering, could you size what this opportunity looks like, and how much does that contribute to gross margin? On margin with the, most notably the ammunition outsourcing providing the benefit, is there anything else that you have identified that could be meaningful to margin expansion like ammunition?

Dillon Heins: Hey. This is Dylan, going for Jeff Van Sinderen. I was wondering with the refurbished launchers, you are expecting that to continue? I was just wondering, could you size what this opportunity looks like, and how much does that contribute to gross margin? On margin with the, most notably the ammunition outsourcing providing the benefit, is there anything else that you have identified that could be meaningful to margin expansion like ammunition?

Speaker #6: Could you size how much this opportunity looks like, and how much does that contribute to gross margin? And then on margin, with most notably the ammunition outsourcing providing the benefit, is there anything else that you've identified that could be meaningful to margin expansion, like ammunition?

Speaker #4: Yeah, thanks, Dylan. So, on the refurbished program, it does get a little bit more sporadic. We took some inventory that we had, as Con mentioned.

Laurilee Kearnes: Yeah. Thanks, Dylan. On the refurbished program, it does get a little bit more sporadic. We took some inventory that we had, as Colin mentioned, we sold through all the SD refurb launchers that we had. We just launched last week some CL refurb. As we get that inventory in and build up enough to be meaningful, then we will go through the refurb process and get those sold. The margin is slightly north of where our overall gross margin is, so it is absolutely accretive to us. I think some of the supply depends on things like we launched an SD trade-up program, where you could trade in your SD and get a good discount on a CL. As those launchers come in and we get a group of those, we will put them out on the website.

Lauri Kearnes: Yeah. Thanks, Dylan. On the refurbished program, it does get a little bit more sporadic. We took some inventory that we had, as Colin mentioned, we sold through all the SD refurb launchers that we had. We just launched last week some CL refurb. As we get that inventory in and build up enough to be meaningful, then we will go through the refurb process and get those sold. The margin is slightly north of where our overall gross margin is, so it is absolutely accretive to us. I think some of the supply depends on things like we launched an SD trade-up program, where you could trade in your SD and get a good discount on a CL. As those launchers come in and we get a group of those, we will put them out on the website.

Speaker #4: We sold through all the SD refurb launchers that we had. We just launched last week some CL refurb. So as we get that inventory in and build up enough to be meaningful, then we'll go through the refurb process and get those sold.

Speaker #4: The margin is slightly north of where our overall gross margin is, so it's absolutely accretive to us. And I think some of the supply depends on things like we launched an SD trade-up program where you could trade in your SD and get a good discount on a CL.

Speaker #4: So as those launchers come in and we get a group of those, we'll put them out on the website. We think that that's a great program going forward.

Laurilee Kearnes: We think that that is a great program going forward.

Lauri Kearnes: We think that that is a great program going forward.

Speaker #6: Yeah. Dylan, you

Conn Davis: Dylan, you also asked about longer term, areas where we have identified, and I would just tell you that, yes, as you look across the portfolio, I think we have opportunities to source better, to improve gross margins across different product lines. The first area that we will focus on is accessories in that arena. Going forward, I think, manufacturability as we do new product launches will be a key area of focus, so that we can keep improving that gross margin line over time.

Speaker #5: You also asked, kind of, about longer-term areas where we've identified opportunities. And I would just tell you that, yes, as you look across the portfolio, I think we have opportunities to source better—to improve gross margins.

Speaker #5: Across different product lines, the first area that we'll focus on is accessories. In that arena, and going forward, I think manufacturability as we do new product launches will be a key area of focus.

Speaker #5: So that we can keep improving that gross margin line over time.

Speaker #4: Yeah, and I would add that that's been our focus on HERO as well, right? So, getting that to a place where we can get improvement in the cost structure of that to help our margins and also potentially help the price point for consumers.

Laurilee Kearnes: Yeah. I would add that has been our focus on Hero as well, right? So getting that to a place where we can get improvement in the cost structure of that to help our margins and also potentially help the price point for consumers.

Lauri Kearnes: Yeah. I would add that has been our focus on Hero as well, right? So getting that to a place where we can get improvement in the cost structure of that to help our margins and also potentially help the price point for consumers.

Speaker #3: Yeah. Exactly.

Conn Davis: Yeah. Exactly.

Speaker #6: Gotcha. Thanks for that. And I was wondering, along the lines of Hero, you mentioned also being open to continued, further opportunities like that.

Dylan Hines: Got you. Thanks for that. I was wondering, along the lines of Hero, you mentioned also being open to continued, further opportunities like that. Do you have anything else that you are looking at? Or I guess, do you have a target list or anything else?

Dillon Heins: Got you. Thanks for that. I was wondering, along the lines of Hero, you mentioned also being open to continued, further opportunities like that. Do you have anything else that you are looking at? Or I guess, do you have a target list or anything else?

Speaker #6: Do you have anything else that you're looking at, or I guess do you have a target list or anything else?

Speaker #5: So Dylan, nothing that we would announce at this time from that point of view, but I do think HERO presents the type of opportunity that we would be looking at going forward.

Conn Davis: Dylan, nothing that we would announce at this time from that point of view, but I do think Hero presents the type of opportunity that we would be looking at going forward. An area that adds to the total portfolio and ecosystem of what Byrna offers in that personal safety and personal defense space, that we can plug into our much stronger distribution network than other players have. That would benefit from the brand recognition that Byrna brings to it. That is a good example of what we will be looking to do in the future, but nothing to announce today.

Speaker #5: An area that adds to the total portfolio and ecosystem of what Byrna offers in that personal safety and personal defense space, that we can plug into our much stronger distribution network than other players have.

Speaker #5: And that would benefit from the brand recognition that Byrna brings to it. So that's a good example of what we'll be looking to do in the future, but nothing to announce today.

Speaker #6: Gotcha. Just one more thing. Is the HERO going to be part of the Byrna brand? Is it going to have the same design language and things like that, or is it going to still be a separate HERO line?

Dylan Hines: Got you. Just one more thing. Is the Hero going to be part of the Byrna brand? Is it going to have the same design language and things like that? Or is it going to be still in a separate Hero line?

Dillon Heins: Got you. Just one more thing. Is the Hero going to be part of the Byrna brand? Is it going to have the same design language and things like that? Or is it going to be still in a separate Hero line?

Speaker #3: So, it will be rolled out under the Byrna brand, and we're currently working through what I would think of as the brand architecture to go along with that.

Conn Davis: It will be rolled out under the Byrna brand, and we are currently working through what I would think of as the brand architecture to go along with that, but it will be an integrated part of our product suite.

Speaker #3: But it will be an integrated part of our product suite.

Speaker #6: Gotcha. All right, that's it for me. Thank you.

Dylan Hines: Got you. That is it for me. Thank you.

Dillon Heins: Got you. That is it for me. Thank you.

Speaker #3: Thank you, Dylan.

Conn Davis: Thank you, Dylan.

Speaker #4: Thanks, Dylan.

Laurilee Kearnes: Thanks, Dylan.

Lauri Kearnes: Thanks, Dylan.

Speaker #2: Thank you. At this time, this does conclude our question-and-answer session. Now, I'd like to turn the call back over to Mr. Davis for his closing remarks.

Operator 1: Thank you. At this time, this does conclude our question and answer session. I would now like to turn the call back over to Mr. Davis for his closing remarks.

Operator: Thank you. At this time, this does conclude our question and answer session. I would now like to turn the call back over to Mr. Davis for his closing remarks.

Speaker #3: Thank you, everyone. We appreciate your continued interest in Byrna. I want to take this opportunity to thank all of our investors, customers, vendors, partners, and employees.

Conn Davis: Thank you, everyone. We appreciate your continued interest in Byrna. I want to take this opportunity to thank all of our investors, our customers, vendors, partners, and employees. The journey that we are on today is only possible because of their tremendous support and belief in our mission of saving lives. Thank you. Have a great day.

Speaker #3: The journey that we're on today is only possible because of their tremendous support and belief in our mission of saving lives. Thank you. Have a great day.

Speaker #2: Thank you for joining us today for Byrna's fiscal third quarter 2026 earnings conference call. You may now disconnect your lines. Enjoy the rest of your day.

Operator 1: Thank you for joining us today for Byrna's fiscal Q3 2026 earnings conference call. You may now disconnect your lines. Enjoy the rest of your day.

Operator: Thank you for joining us today for Byrna's fiscal Q3 2026 earnings conference call. You may now disconnect your lines. Enjoy the rest of your day.