Byrna Technologies Inc. (BYRN)·Q4 2024 Earnings Summary

Executive Summary

• Record Q4 revenue of $28.0M (+79% YoY) and gross margin of 62.8% on stronger DTC mix and cost-down/scale benefits; net income reached $9.7M vs. a $(0.8)M loss in Q4’23, aided by a $5.6M tax valuation allowance release .
• Adjusted EBITDA rose to $5.2M vs. $0.4M in Q4’23 as marketing-led DTC growth, throughput gains, and design-for-manufacturability expanded profitability .
• Management reiterated no formal numeric guidance but indicated 2025 to be a “very strong double‑digit” revenue growth year with margin expansion expected in 2H as the higher‑margin Compact Launcher launches; Q1 is seasonally slower but should be a record ex‑Q4 .
• Strategic catalysts: (1) Sportsman’s Warehouse store‑within‑a‑store pilot (11 sites) with potential rapid scale, (2) U.S. ammo on‑shoring to 10M rounds/month capacity later in 2025, (3) monthly launcher capacity lifted to 24k as of January, and (4) accelerating retail footprint and influencer spend with ROAS >5x in 2024 .

What Went Well and What Went Wrong

• What Went Well
  • DTC-driven revenue and mix expansion: Q4 revenue $28.0M with gross margin 62.8% as DTC and cost reductions drove leverage; ROAS remained >5x for 2024 .
  • Operating scale/throughput: Monthly launcher capacity increased 33% to 24,000 units (Jan) and Q4 production exceeded 55,000 launchers; U.S. ammo facility to support 10M rounds/month later in 2025 .
  • Retail/channel expansion: Signed LOI with Sportsman’s Warehouse for 11 pilot “store‑within‑a‑store” ranges and opened new own stores (Nashville live; Scottsdale, Salem opening; Fort Wayne coming), broadening physical reach .
• What Went Wrong
  • OpEx growth: Q4 OpEx up 39% YoY to $13.5M on variable selling, higher marketing, and payroll as the company scaled .
  • Tax-driven bottom line: Q4 net income benefited from a $5.6M tax benefit (valuation allowance release), which is non-recurring in nature .
  • Seasonality/near-term dilution from retail ramp: Management flagged Q1 seasonal slowdown vs. Q4 and 4–6 month ramp/loss-leader dynamics for new stores (estimated $0.4–$0.5M quarterly expense headwind) .

Financial Results

Sales channel mix (Q4 2024 vs. Q4 2023 preliminary):

KPIs and balance sheet:

Notes:

• Q4 gross margin improved on richer DTC mix, cost reductions and scale efficiencies; management cites design-for-manufacturability and throughput improvements as key drivers .
• Q4 net income benefited from a $5.6M tax benefit from valuation allowance release; Adjusted EBITDA normalizes for non-cash/one-time items .

Guidance Changes

Byrna does not issue formal numeric guidance; management provides qualitative outlook only .

Earnings Call Themes & Trends

Management Commentary

• “We successfully generated a record $28.0 million in revenue while also expanding our gross margins to 62.8%... underscores the overall growth in brand recognition and normalization of the less-lethal space.” (CEO) .
• “As we execute across multiple channels, we will continue to be disciplined in evaluating partnerships and optimizing ad spend to maximize impact and ROAS.” (CEO) .
• “We have successfully increased launcher production to 24,000 units as of January... began producing payload ammunition at a new facility in Fort Wayne… eight machines will collectively produce up to 10 million rounds per month.” (CEO) .
• “While the first quarter historically experiences a seasonal slowdown... we expect to achieve strong year-over-year growth… Byrna is well‑positioned to generate additional cash and expand profitability in 2025 and beyond.” (CEO) .

Q&A Highlights

• Q1 seasonality and outlook: Q1 will not exceed Q4 but should be a record quarter ex‑Q4; more platforms opening to ads post‑election, but no material demand shift attributed to the election itself .
• OpEx/EBITDA leverage: Marketing will continue to increase; variable selling costs ~10% of sales; new stores add ~$0.4–$0.5M quarterly expense with 4–6 months to ramp .
• Sportsman’s Warehouse pilot: 11 initial stores in Q2; rapid 3–4 week conversions; success threshold relatively modest per Sportsman’s; potential expansion to 50 by YE25 and 100 by YE26 .
• Supply chain/tariffs: Minimal exposure to China/Canada/Mexico; dual sourcing mitigates; exit China by mid‑year targeted .
• Inventory/CL launch: Plan to build ~30k Compact Launchers pre‑launch (summer 2025), increasing inventory by ~$5M .

Estimates Context

• We attempted to retrieve S&P Global (Capital IQ) consensus for Q4’24 revenue/EPS/EBITDA but the request failed due to an API limit; as a result, Wall Street consensus figures were unavailable at the time of this analysis, and we cannot formally assess beat/miss versus S&P Global consensus. Values from S&P Global could not be retrieved due to “Daily Request Limit Exceeded.”
• Byrna does not provide formal numeric guidance; management commentary points to strong double‑digit growth in 2025 with margin expansion in 2H 2025 as new higher‑margin products launch .

Key Takeaways for Investors

• DTC flywheel intact: Influencer‑led marketing with >5x ROAS and expanded platform access is sustaining high‑margin DTC growth and driving operating leverage .
• Capacity ahead of demand: Launcher capacity now 24k/month; U.S. ammunition on‑shoring to 10M rounds/month later this year de‑risks supply, shortens lead‑times, and supports higher mix of profitable ammo .
• Retail as a catalyst: New company‑owned stores plus Sportsman’s store‑within‑a‑store pilot could accelerate trial and conversion (80% in‑store demo conversion historically), broadening TAM beyond core e‑commerce .
• 2H 2025 margin kicker: Compact Launcher (mid‑2025) expected to be higher‑margin; management expects margins to exceed Q4’24 levels in 2H’25 .
• Watch near‑term OpEx: Marketing/retail ramp and store buildouts weigh on near‑term OpEx; expect 4–6 month ramps for new stores before contribution improves .
• Tax benefit boosted Q4 EPS: The $5.6M valuation allowance release materially aided net income; Adjusted EBITDA is a cleaner run‑rate profitability indicator .
• International optionality: Royalty model in LATAM, large‑scale ammunition orders (e.g., Córdoba) and Canada/Mexico growth provide incremental upside .

Supporting documents and data:

• Q4 2024 8‑K and press release (financial tables and commentary) .
• Q4 2024 earnings call transcript (operations, outlook, Q&A) .
• Q3 2024 press release and call (trend context) .
• Preliminary Q4 2024 press release (channel detail) and holiday PR (December) .