Executive Summary / Key Takeaways

• Transformative Growth & Profitability: Byrna Technologies has achieved five consecutive quarters of revenue growth, culminating in a record $28.2 million in Q3 2025, driven by strategic marketing shifts and expanding distribution, leading to sustained GAAP and non-GAAP EBITDA profitability.
• Technological & Product Differentiation: The new Compact Launcher (CL) is a key growth driver, offering superior portability and power with higher margins, while the proprietary 61-caliber ammunition creates a captive consumables market. Future innovations include a connected safety platform with SOS alert capabilities and value-focused product lines.
• Omnichannel Market Penetration: Byrna is aggressively expanding its market footprint through a robust direct-to-consumer (DTC) strategy (including Amazon's growing share), company-owned retail stores, and strategic partnerships with major retailers like Sportsman's Warehouse , leveraging experiential selling to boost conversion rates.
• Strategic Onshoring & Tariff Mitigation: The company's "Made-in-America" initiative, moving component and ammunition production to the U.S., significantly reduces supply chain risks, insulates against tariffs, and is expected to enhance gross margins by reducing manufacturing variances and soft costs.
• Recurring Revenue Potential: New initiatives like "Byrna Care" and the developing connected safety platform are poised to introduce significant recurring revenue streams, deepening customer engagement and expanding the addressable market to include firearms owners seeking integrated less-lethal solutions.

Setting the Scene: Byrna's Mission and Market Position

Byrna Technologies Inc. (NASDAQ:BYRN) stands at the forefront of the less-lethal personal security market, offering innovative alternatives to traditional firearms without the risk of taking a life. Incorporated in 2005 and rebranded in March 2020, Byrna's core mission has evolved to encompass providing civilians and security professionals with safe, reliable, and effective less-lethal solutions, alongside technology-based systems for home, vehicle, and public safety. This strategic pivot reflects a broader vision to normalize less-lethal options as a mainstream component of personal defense.

The company's journey has been marked by strategic adaptations, including an "all truck strategy" initiated around 2020 to diversify its supply chain and a proactive move to exit Chinese suppliers by 2025 due to geopolitical concerns. This foresight has positioned Byrna favorably against potential tariff impacts, with U.S. content in its launchers soaring from 11% in mid-2023 to 87-92% by early 2025. While this onshoring increased launcher costs by approximately 14%, it mitigated a potential 29% increase from tariffs, demonstrating a commitment to supply chain resilience and a "Made-in-America" ethos.

The less-lethal defense industry is experiencing a significant spike in demand, driven by a growing desire for personal security solutions that avoid lethal force. Byrna operates within this expanding market, targeting both individual consumers and professional security personnel. Its overarching strategy is to establish Byrna as a consumer lifestyle brand synonymous with confidence and protection, leveraging its brand to expand product lines, broaden its user base, and generate increasing sales.

Technological Edge: Innovation in Less-Lethal Solutions

Byrna's competitive moat is significantly reinforced by its differentiated technology and continuous innovation in less-lethal solutions. The company specializes in CO2-powered launchers and a range of projectiles, including chemical irritant, kinetic, and inert rounds, alongside self-defense aerosol products.

The Compact Launcher (CL), launched in May 2025, exemplifies Byrna's technological prowess. This device is an engineering marvel, being 38% smaller and 36% lighter than the Byrna SD, and 27% narrower than its current pistols, making it ideal for concealed carry. Crucially, it delivers the same stopping power, measured in force per square inch, as Byrna's most powerful launcher, the Byrna LE. This smaller form factor, with a grip-to-trigger distance of only 2.5 inches (compared to 3.25 inches for SD/LE), is specifically designed to appeal to women and individuals with smaller hands, unlocking a critical new demographic for Byrna. The CL also boasts a 7 to 8 percentage point higher gross margin than existing launchers, directly contributing to profitability. Its proprietary 61-caliber round further strengthens Byrna's ecosystem, as no other manufacturer currently produces this ammunition, ensuring a captive market for consumables for the foreseeable future.

Beyond hardware, Byrna is leveraging Artificial Intelligence (AI) to drive efficiency and innovation. AI has been instrumental in rapidly generating professional-quality commercials, continuously refreshing creative content, and enabling A/B testing at scale. This has broadened ad distribution opportunities and lowered customer acquisition costs. Internally, AI has dramatically reduced the cost and time for developing in-house applications, such as Byrna's proprietary Point-of-Sale (POS) system and shop floor factory management system. The latter has already demonstrated its impact by virtually eliminating labor and overhead variances in September 2025, with expectations to drive gross margins towards a target of 63-65% next year.

Looking ahead, Byrna is developing a Connected Safety Platform, integrating SOS alert capabilities, compact communication, and recording devices with its launchers and sprays. This initiative aims to provide users with the ability to neutralize a threat, contact authorities, and capture events, dramatically enhancing the value proposition. This platform, expected for a phased release in 2026, could broaden Byrna's addressable market to millions of firearms owners interested in connected less-lethal solutions that can be affixed to their firearms. This technological evolution is anticipated to create new, technology-driven recurring revenue streams, such as monthly fees for geo-locating services or smart home integration.

Competitive Landscape: Carving a Niche in Personal Safety

Byrna operates in a competitive landscape that includes both direct and indirect rivals. Direct competitors like Axon Enterprise (AXON) (TASER devices), Sabre Security (SBR) (pepper sprays), and Mace Security International (MACE) (pepper sprays, alarms) offer various less-lethal solutions. Byrna differentiates itself by focusing on compact, reusable kinetic launchers and a comprehensive ecosystem of products and services, aiming for a qualitative edge in civilian-focused innovation.

Axon Enterprise, a dominant player, is known for its integrated hardware and software solutions, particularly TASER devices and body cameras for law enforcement. Axon's strength lies in its established brand credibility within public safety and its recurring software service revenue. While Axon offers advanced technological integration, Byrna's products are positioned for greater portability and simplicity for everyday personal security, potentially allowing for faster market share capture in civilian segments. Byrna's gross profit margin of 61.32% (TTM) is qualitatively competitive, but Axon's diversified recurring revenue streams likely contribute to stronger overall profitability and efficiency.

Sabre Security and Mace Security International primarily focus on more traditional, often disposable, self-defense products like pepper sprays. Byrna's launchers offer a more versatile and reusable kinetic option, providing a qualitative advantage in scenarios requiring non-contact deterrence. While Sabre and Mace excel in pricing competitiveness and broad retail distribution, Byrna's emphasis on advanced, durable devices and its growing international presence help it carve out a distinct market segment. Byrna's strategic onshoring and proprietary 61-caliber ammunition also provide a competitive edge, insulating it from tariffs that might affect competitors manufacturing in China and ensuring a captive market for its new CL ammunition.

Indirect competitors include traditional firearms manufacturers (e.g., Smith & Wesson (SWBI), Ruger (RGR)) and providers of mobile personal safety apps or surveillance systems (e.g., Ring). These alternatives could pressure Byrna's market share by offering different solutions, some with lower upfront costs or broader accessibility. However, Byrna's updated mission statement and developing connected safety platform aim to bridge this gap by offering integrated solutions that combine physical deterrence with alert capabilities, potentially appealing to firearms owners seeking an additional layer of non-lelethal protection.

Financial Performance: A Trajectory of Growth and Profitability

Byrna Technologies has demonstrated a compelling trajectory of financial growth and improving profitability. For the nine months ended August 31, 2025, net revenue surged to $82.87 million, a 43.4% increase from $57.78 million in the prior year period. This growth culminated in a record $28.18 million in net revenue for the third fiscal quarter ended August 31, 2025, marking a 35.1% year-over-year increase.

The company's profitability has also seen significant improvement. Net income for Q3 2025 reached $2.24 million, up from $1.03 million in Q3 2024. For the nine months ended August 31, 2025, net income was $6.32 million, a substantial increase from $3.12 million in the comparable prior year period.

Adjusted EBITDA, a non-GAAP metric, totaled $3.72 million for Q3 2025, nearly doubling from $1.94 million in Q3 2024, reflecting strong operational leverage. For the nine months, Adjusted EBITDA was $10.79 million, up from $6.32 million.

Gross profit for Q3 2025 was $16.92 million, representing a gross margin of 60.1% of net revenue. While this was a slight decrease from 62.4% in Q3 2024, primarily due to a shift towards lower-margin wholesale channels and initial ramp-up costs for the Compact Launcher, management anticipates gross margins to rebound. The introduction of the Compact Launcher, with its 7-8 percentage point higher gross margin, is expected to drive overall gross margin percentages towards a target of 63-65% next year as production volumes increase and efficiencies improve.

Operating expenses for Q3 2025 increased to $14.06 million from $12.18 million in the prior year, driven by increased variable selling expenses and discretionary marketing investments to support growth. However, the company expects to maintain expense leverage going forward, with the exception of increased marketing spend in Q4.

Liquidity and capital resources show a strategic deployment of cash. Cash, cash equivalents, and marketable securities totaled $9 million at August 31, 2025, a decrease from $25.7 million at November 30, 2024. This decrease primarily reflects a planned increase in inventory ahead of the Compact Launcher release and normal seasonal working capital movements. Inventory at August 31, 2025, stood at $34.11 million, up from $20 million at November 30, 2024. However, management noted that inventory peaked in July and has since reduced by over $3.5 million, with further drawdown expected in Q4 2025, leading to an increase in cash. The company maintains a strong balance sheet with no current or long-term debt.

Strategic Initiatives and Operational Excellence

Byrna's growth is underpinned by a multi-pronged strategy encompassing marketing, retail expansion, and manufacturing optimization. The company's new marketing strategy, implemented in September 2023, shifted focus from social media to celebrity endorsers, significantly boosting brand awareness and web traffic. Average daily sessions on byrna.com surged from 33,000 to over 50,000 in August 2025, and to 58,000 in September. This expanded reach, coupled with AI-enabled advertising, has lowered customer acquisition costs and opened doors to mainstream media placements, further amplifying brand recognition.

Retail expansion is a critical component of Byrna's strategy, leveraging the "shooting is believing" experience. The company now operates in over 1,000 stores nationwide, including its four company-owned brick-and-mortar locations. These stores, such as the Fort Wayne, Indiana, location, are performing strongly, with an average annualized run rate of $725,000 in September 2025, validating the retail model's effectiveness and scalability. Conversion rates in these experiential settings range from 50% to 68% for individuals, dramatically outperforming online conversion rates of just over 1%.

A significant strategic partnership is with Sportsman's Warehouse , which is rolling out a "store-within-a-store" pilot program in 13 locations, with plans to expand to approximately 140 locations by the end of 2026. This initiative involves converting existing archery ranges into Byrna firing ranges, with Byrna co-funding the build-out and providing "Byrna geniuses" for in-store support. This partnership, along with increased interest from other retailers like Big 5 Sporting Goods (BGFV) and SCHEELS, and entry into new markets via Rural King and Family Farm & Home, is crucial for expanding Byrna's physical footprint and driving sales.

Operationally, Byrna has focused on onshoring and manufacturing efficiency. The company's Fort Wayne, Indiana, facility increased monthly launcher production to 24,000 units by implementing a second shift. In a significant move, Byrna opened a domestic ammunition manufacturing facility in Fort Wayne, initiating production of payload rounds in March 2025 and relocating all three South African ammo manufacturing machines to the U.S. The South Africa manufacturing facility ceased operations in Q3 2025. This "Made-in-America" strategy aims to source virtually 100% of components from U.S. suppliers by the end of 2025, reducing lead times, improving quality, and mitigating tariff risks.

Future Outlook and Growth Catalysts

Byrna's management is optimistic about its future growth trajectory, projecting full-year fiscal 2025 revenue growth to be between 35-40%. This outlook is supported by strong September sales momentum and the anticipated impact of the holiday shopping season. The timing of Black Friday and Cyber Monday sales, falling at the end of fiscal year 2025 and beginning of fiscal year 2026, is expected to drive exceptionally high order volume, setting the stage for a strong start to fiscal year 2026. The company expects its effective tax rate to be approximately 23% for the year as it transitions into full taxpayer status.

Key growth catalysts include the continued success and broader adoption of the Compact Launcher, which is expected to provide a significant sales boost and higher margins. The proprietary 61-caliber ammunition for the CL ensures a captive market for consumables, enhancing recurring revenue potential. Byrna is also planning to introduce a value-focused 61-caliber launcher and a simplified, highly portable protection device in 2026, targeting budget-minded consumers and expanding its demographic reach. More affordable inert and kinetic practice rounds are also planned to encourage frequent training and repeat purchases.

The introduction of "Byrna Care" in July 2025, an insurance-like service for lost, stolen, damaged, or confiscated launchers, marks the company's first foray into a recurring revenue model. This will be significantly augmented by the developing connected safety platform, which integrates SOS alert technology with Byrna products. This platform is expected to create new technology-driven recurring revenue streams, with some elements slated for release in 2026, and has the potential to broaden the addressable market to firearms owners seeking integrated less-lethal safety solutions.

Risks and Challenges

Despite a strong growth outlook, Byrna faces several risks. The retail market and firearms industry are experiencing economic headwinds due to falling consumer confidence and uncertainty over interest rates, which could impact sales. While Byrna has proactively mitigated tariff risks through onshoring, the move has increased launcher costs by 14%, potentially impacting gross margins in the long term if not offset by efficiencies and higher-margin products.

Working capital management, particularly inventory levels, remains a focus. The significant increase in inventory to $34.11 million by August 31, 2025, while strategic for holiday and CL launch, consumed substantial cash from operations. Although a drawdown is expected, efficient inventory management is crucial to optimize cash flow. Furthermore, the company's exposure to foreign currency fluctuations, particularly the South African rand, could impact financial results, though management currently deems the impact immaterial. Credit risk is also present, with two customers accounting for approximately 32% of total accounts receivable as of August 31, 2025.

Conclusion

Byrna Technologies Inc. is demonstrating a compelling investment thesis, driven by its innovative less-lethal technology, aggressive market expansion, and a clear roadmap for sustained growth and profitability. The company's strategic shift towards celebrity-backed advertising and a robust omnichannel distribution strategy, including company-owned stores and key partnerships like Sportsman's Warehouse (SPWH), is effectively broadening brand awareness and converting customers through experiential selling. The launch of the Compact Launcher, with its superior design, higher margins, and proprietary ammunition, is a significant technological differentiator that is expected to fuel future sales and enhance profitability.

Byrna's proactive "Made-in-America" initiative not only fortifies its supply chain against geopolitical risks and tariffs but also promises long-term operational efficiencies and margin expansion. The nascent recurring revenue streams from "Byrna Care" and the developing connected safety platform represent a pivotal evolution, poised to deepen customer engagement and expand the addressable market. While economic headwinds and working capital management present ongoing challenges, Byrna's strong balance sheet, technological leadership, and strategic execution position it to capitalize on the growing demand for personal safety solutions. The company is in the early innings of penetrating a large and expanding market, laying the groundwork for multiyear growth and solidifying its position as a leader in less-lethal protection.