Detailed narrative
Quarter results and profitability
Net revenue fell about 46% year over year, driven by e-commerce weakness and slower dealer and chain reorders after heavy Q1 restocking and weaker-than-expected sell-through. Reported gross profit of $12.2M (79% margin) includes a $2.3M tariff refund; excluding it, adjusted gross profit (non-GAAP) was $9.9M or ~65%.
Operating expenses rose 7% on marketing investment and $1.7M of bad debt from two large international customers. The result was a $2.9M net loss and negative $1.4M adjusted EBITDA (non-GAAP).
Balance sheet and inventory
Cash and marketable securities were $9.4M at Aug 31, 2026, versus $10.4M at Q2 end, $9.0M a year ago and $15.5M at Nov 30, 2025, with lower receivable collections weighing on cash. The company has no debt. Inventory was $30.0M versus $30.4M in Q2, $32.7M at Nov 30, 2025 and $34.1M a year ago.
Management expects a further $2M-$3M reduction in Q4 aided by temporarily moderated production.
DTC conversion and retail productivity
August sessions averaged ~29,000/day, the highest since March, and conversion improved sequentially from June to August but remains north of 0.6%, short of 1%. The Find the Right Launcher quiz has produced over 280,000 responses and converts at over 2x the site rate; Try Before You Buy converts at ~35%.
Refurbished SD inventory sold out, with CL refurbs launched last week at margins slightly above company gross margin. Retail sell-through is below expectations; holiday bundles, merchandising, training and drop-ship e-commerce are being rolled out.
Demand generation transformation
Traditional influencer channels, still the majority of year-to-date marketing, have declined in performance over 18 months, so dollars are being reallocated to broader platforms such as the iHeartMedia Fox Sports partnership and The Bobby Bones Show campaign. The creator program, run with Acceleration Partners, has >50 creators with 3.8M combined following, targeting 100 by calendar year-end, and creator traffic converts better than returning customers.
A Bristol Motor Speedway activation reached more than 100,000 race fans. Management cites adding more than 50 million likely buyers in new segments.
Operational efficiency and margins
Ammunition manufacturing moved to an outsourced model in the quarter, yielding ~1,200 bps of ammunition gross margin benefit. Adjusted gross margin of ~65% beat the ~62% held-through-year-end expectation despite lower volume, aided by manufacturing and supply chain efficiency and favorable mix. Next sourcing focus is accessories, then manufacturing on new launches. First pass yield exceeds 89% against a 90% Q4 target.
HERO acquisition, leadership and long-term framework
The HERO Defense Systems acquisition closed in August, with product cost and quality work underway ahead of a SHOT Show relaunch under the Byrna brand; terms were not disclosed. Four pillars frame the outlook: awareness/conversion, professional security/law enforcement/international, operational efficiency, and strategic M&A.
New hires include Jim White (SVP Retail and Channel Growth), Nate Secor (SVP Brand and Marketing), and board members Rose Lopez Cavori and Dr. Matthew McBrady. An Investor Day is planned for 1H next year.