WRAP TECHNOLOGIES, INC. (WRAP)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 revenue was $0.593M, with operating expenses reduced 22% year over year to $3.9M from $4.9M, reflecting aggressive cost control and a leaner operational model .
• Management is prioritizing monetization of a $25M finished goods inventory and has paused manufacturing while it develops an integrated “technology-as-a-service” offering targeted for launch in Q1 2025 .
• Net cash used in operations improved materially YTD, declining by $6.0M to $6.9M for the nine months ended September 30, 2024 (vs. $12.9M in 2023), supported by tighter financial controls .
• A go-forward strategy includes relocating manufacturing and distribution to Virginia (20,000 sq ft facility) with support from the state and plans to expand “Made-in-America” partnerships—positioned as an adoption catalyst with 120 new jobs in the region .
• Wall Street consensus estimates from S&P Global were unavailable for this review; consequently, beats/misses versus consensus could not be assessed. Values would be sourced from S&P Global if available.*

What Went Well and What Went Wrong

What Went Well

• Operating expense reduced 22% YoY to $3.9M, demonstrating execution on cost containment and improved financial discipline .
• Significant improvement in operating cash flow: net cash used in operations declined by $6.0M YTD to $6.9M for the nine months ended September 30, 2024 .
• Strategic footprint expansion: relocation to Virginia with a 20,000 sq ft facility centralizing BolaWrap, Wrap Reality, and R&D for AR/VR and integrated devices; CEO Scot Cohen: “This facility is a major step forward… Virginia provides an ideal location and environment to advance this mission” .

What Went Wrong

• Q3 revenue of $0.593M is modest, reflecting a transition period with paused manufacturing while focusing on inventory monetization and integrated offerings .
• No quantitative guidance provided; earnings call transcript unavailable, limiting visibility into near-term trajectory. Management noted a stockholder call will be scheduled before year-end .
• Marketing-led narrative suggests product-market evolution toward integrated solutions; absence of specifics (e.g., revenue guidance, margin targets) can be a near-term investor concern .

Financial Results

Core Financials vs Prior Periods

Notes:

• Q3 2024 operating expenses were disclosed in the press release; Q1 2024 figures from the 10-Q. Gross margin for Q3 was not disclosed.
• YTD cash flow comparison provided for nine months ended September 30, 2024 vs 2023 .

Year-over-Year Operating Expense Comparison

Segment/Product Mix (Most recent available detail)

Additional Disclosures and KPIs

Estimates vs Actuals:

• S&P Global consensus estimates for Q3 2024 EPS and revenue were unavailable for this review; beats/misses could not be determined. Values would be sourced from S&P Global if available.*

Guidance Changes

Earnings Call Themes & Trends

Note: No Q3 2024 earnings call transcript was available; management indicated a stockholder call would be scheduled before year-end .

Management Commentary

• CEO Scot Cohen on Virginia facility: “This facility is a major step forward in our mission to equip every officer with cutting-edge tools and training… Virginia provides an ideal location and environment to advance this mission” .
• Strategic focus: Developing “trusted service provider” integrated solutions, with launch anticipated in Q1 2025 and a more integrated training approach to drive BolaWrap adoption .
• Financial discipline: Emphasis on operating expense reduction (22% YoY) and improved operating cash flow YTD .

Q&A Highlights

• No formal Q&A transcript available in company documents; management stated it “will be scheduling a stockholder call before year-end,” indicating forthcoming direct investor engagement .

Estimates Context

• S&P Global consensus for Q3 2024 EPS and revenue was unavailable for this review. If available, we would benchmark actuals vs S&P Global consensus and highlight beats/misses.*
• Given the transition narrative and absence of quantitative guidance, near-term estimate revisions may depend on clarity from the upcoming stockholder call and progress on inventory monetization and the integrated offering rollout .

Key Takeaways for Investors

• Execution on cost controls is tangible: 22% YoY OpEx reduction (to $3.9M) and a $6.0M improvement in YTD operating cash usage—supportive of extending runway while the strategy pivots .
• Revenue softness in Q3 ($0.593M) reflects a transition year; watch for cadence from inventory monetization and early integrated offering pilots in Q1 2025 .
• Strategic Virginia relocation enhances “Made-in-America” narrative and may strengthen public sector procurement positioning; deepening regional partnerships could catalyze orders .
• Lack of quantitative guidance and missing call details increase near-term uncertainty; next stockholder call is a key catalyst for visibility into revenue/margin trajectory .
• Product integration (BolaWrap + body cameras + VR training + DEM) targets end-to-end value; if adoption accelerates, recurring cassettes and subscription services could expand mix quality .
• Monitor listing stability and capital structure dynamics (Series A preferred and warrants) alongside operating improvements to gauge dilution risk and funding flexibility .
• Trading lens: Near-term moves likely tied to concrete commercialization updates (Virginia facility milestones, Q1 2025 launch specifics, large agency wins) and any inventory monetization disclosures .

Disclaimers:

• *Estimates unavailable: Wall Street consensus data via S&P Global was not accessible during this session. If provided, values would be retrieved from S&P Global and compared to reported results.