Byrna Technologies Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 10, 2025

Key Takeaways

  • Positive Sentiment: Record revenue growth of 41% year-over-year to $28.5 M in Q2, driven by the launch of the Compact Launcher, expanded dealer sales, and direct-to-consumer gains.
  • Neutral Sentiment: GAAP gross margin held steady at 62%, net income increased to $2.4 M, while operating expenses rose due to higher selling costs, marketing spend, and launch-related expenses.
  • Negative Sentiment: Cash and marketable securities fell to $13 M from $25.7 M as inventory climbed to $32.3 M ahead of product launches, though the company remains debt-free.
  • Positive Sentiment: Sportsman’s Warehouse partnership expands with 22 store-within-store locations (14 shooting pods) live now and plans to reach around 140 locations by year-end, fueling weekly sales growth.
  • Positive Sentiment: New initiatives include AI-driven ad production with high ROAS, celebrity influencers, and an upcoming subscription service (“Berna Care”) plus smart-chip integration to unlock recurring revenue.
AI Generated. May Contain Errors.
Earnings Conference Call
Byrna Technologies Q2 2025
00:00 / 00:00

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Operator

Good morning. Welcome to Brno's Fiscal Second Quarter twenty twenty five 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, Brian Gantz and CFO, Lori Kearns. Following their remarks, we will open the call to questions.

Operator

Earlier today, Berner released results for its fiscal second quarter ended 05/31/2025. A copy of the press release is available on the company's website. Before turning the call over to Brian Gantz, Berner Technologies' Chief Executive Officer, I will read the Safe Harbor statement. Some discussions held today include forward looking statements. Actual results could differ materially from the statements made today.

Operator

Please refer to Berner's most recent 10 ks and 10 Q filings for a more complete description of risk factors that could affect these projections and assumptions. 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 Investors section of our website, ir.berna.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 Werner's CEO, Brian Ganz. Sir, please proceed.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Thank you, Daryl, and thank you everyone for joining us today. This morning, we filed our 10 Q with the SEC and issued press release providing our financial results and business highlights for the fiscal second quarter ended 05/31/2025. As usual, I will start by turning the call over to our CFO, Laurie Kearns, who will review our financial results for the period. Following her remarks, I'll discuss the operational highlights that drove our 41% year over year revenue growth and continued GAAP and non GAAP EBITDA profitability for the quarter. I will then offer insights into our strategy on a go forward basis before we open the call to questions from our covering research analysts. Laurie?

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

Thank you, Brian. Good morning, everyone. Let's review our financial results for the fiscal second quarter ended 05/31/2025. Net revenue for Q2 twenty twenty five was $28,500,000 a 41% increase from the $20,300,000 reported in the fiscal second quarter of twenty twenty four. This $8,200,000 increase was driven by the launch of the CL, increased dealer and chain store sales and broader brand adoption.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

In Q2, direct to consumer revenues increased by $2,200,000 through verna.com and amazon.com compared to the prior year period. Additionally, sales to dealers increased by $3,900,000 or 106%, largely driven by initial stocking orders for Sportsman's Warehouse. Gross profit for Q2 twenty twenty five was $17,600,000 or 62% of net revenue compared to $12,600,000 or 62% of net revenue for Q2 twenty twenty four. The introduction of the compact launcher led to a favorable product sales mix that offset any decrease due to a change in channel mix from stronger dealer sales. Operating expenses for Q2 twenty twenty five were $14,200,000 compared to $10,600,000 for Q2 twenty twenty four.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

The increase in operating expenses was driven by increased variable selling expenses, discretionary marketing spend and higher payroll costs, as well as some expenses directly related to the launch of the Compact Launcher. Net income for Q2 twenty twenty five was $2,400,000 compared to $2,100,000 for Q2 twenty twenty four. This increase was driven by the overall increase in product sales, which was partially offset with higher income tax expense for the quarter. As mentioned in our last call, due to the release of our valuation allowance in Q4 twenty twenty four, the company will transition into full taxpayer status in 2025 and we expect our effective tax rate to be approximately 23% for the year. Adjusted EBITDA, a non GAAP metric, for Q2 twenty twenty five totaled $4,300,000 compared to $2,800,000 for Q2 twenty twenty four.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

Cash, cash equivalents and marketable securities at 05/31/2025 totaled 13,000,000 compared to $25,700,000 at 11/30/2024. The decrease reflects the planned increase in inventory ahead of the compact launcher release and normal seasonal working capital movements. Inventory at 05/31/2025 totaled $32,300,000 compared to $20,000,000 at 11/30/2024. The company has no current or long term debt. I'll now turn it back to Brian.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Thanks, Laurie. As our results demonstrate, the sales momentum from the launch of our compact launcher in May catapulted us to a new quarterly revenue record of $28,500,000 We achieved this significant 41% year over year growth despite the slowdown in consumer spending and the subdued sales in April that we saw while people waited for the launch of the compact launcher. It's important to note that we were able to achieve these record sales without yet selling the compact launcher on Amazon, which as everyone knows has been growing at a faster rate than berna.com. As of May 27, however, the CL is now available on Amazon and is included in this week's Prime Day sales event. We believe that having the compact launcher on Amazon will significantly increase product visibility and will help support future sales growth.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

As a reminder, the fee on products sold through Amazon is 15%. That said, we are somewhat agnostic as to whether we sell through Amazon or berner.com as our margins are not that much different as there are several areas of savings on Amazon, including no credit card fees, no Shopify fees and lower outbound freight. Additionally, our advertising costs are significantly lower in Amazon. Laurie spoke about Sportsman's Warehouse. That was another important driver for last quarter.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

And it was a solid start to our partnership with Sportsman's Warehouse. Q2 dealer sales, as Laurie mentioned, were up 106% or $3,900,000 with the bulk of that coming from Sportsman's initial stocking order, which drove $2,400,000 of the $3,900,000 increase in dealer sales. During the quarter, we launched 21 store within a store locations, 14 of which have a Berna supplied shooting pod. Another 34 stores have Berna's point of sale display, which is a four sided fixture. And finally, four more Sportsman stores use Sportsman supplied end caps to offer Berna products.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

This brings the total number of Sportsman's locations that currently stock Berna products to 59 stores. Even in the locations that only have a Berna point of sale display or a Sportsman supplied end cap, Sportsman sales associates can let people test fire the Berna in their archery range. And many of the Sportsman's locations have successfully taken advantage of this opportunity to allow potential customers to test fire the Berna launchers. And as a result, some of the POS locations, that is the locations with just a point of sale display are outperforming Sportsman's locations that have a burner shooting pod. We recently staffed 12 of the Sportsman's locations that have a store within a store with a burn a representative or what we call our burn a geniuses.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

These are representatives that can walk customers through the less lethal experience. It is our intention to provide Berna geniuses for every store with a shooting pod. We believe that this in store support will further strengthen sales going forward. I have to say that both Berna and Sportsman's are pleased with the initial results of the partnership as sales have grown every single week since we started off the program. As a result, we are looking to add nine more shooting pods in Sportsman's Best locations over the next several months.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

At the same time, Berna and Sportsman's are working on outfitting an additional 72 stores with Berna's POS displays, which would bring the total number of Sportsman stores that carry Berna to approximately 140 locations by year end. It is important that we bring on the remaining Sportsman stores as quickly as possible as our celebrity endorsers such as Tucker Carlson are now telling their audiences that they can try and buy Berna's range of non lethal launchers at their nearest Sportsman's Warehouse location. Other outdoor and sporting goods chains are starting to take notice of the success that Sportsman's Warehouse is having with Berna. And while Berna cannot offer these chains a shooting experience due to our exclusive arrangements with Sportsman's Warehouse, we are seeing increased interest in Berna, which is translating into more stores carrying burn up. Specifically, Big five Sporting Goods, a chain with over 400 locations and Schiele's, are already carrying burn up products, are growing the number of stores stocking burn up.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

At the same time, they're expanding the range of products that each store will carry. We are also seeing interest from new chains that we've not worked before, including Dunham Sports, a chain with two sixty locations that is testing the market. Perhaps most interesting to me is we are seeing interest from chains that serve new markets such as farming and ranching. This quarter, both Rural King with 123 stores and Family Farm and Home with 73 stores will be putting Berna in a number of their stores as they test the market. Expanding our brick and mortar footprint is critically important in the current market environment as the retail market generally and the firearms industry specifically are facing economic headwinds due to falling consumer confidence driven in part by uncertainty over interest rates and the effect of tariffs.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

By growing the number of outdoor and sporting goods stores carrying burn up and by expanding the range of products that they carry, and perhaps most importantly by expanding the markets that we're able to go after such as the farm and ranch market, we can continue to grow our top and bottom line even in the wake of a softer retail environment. For our company owned stores, these stores have performed exceptionally well and are ahead of where we anticipated them to be at this point in the year. Just five months after opening, our stores in Scottsdale, Nashville and Fort Wayne are already profitable and we expect our Salem store to become profitable in the near future. When combined, all five of our retail stores averaged $69,000 in sales in May, which annualizes to approximately $800,000 per store, which is way above their breakeven point. We are incredibly encouraged by the success of these stores.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Scottsdale in particular is already running at the same level as our long standing Las Vegas store. While we don't have any immediate plans to expand our company owned store model, we see long term potential for these stores in select markets that are not really served by our retail partners. We also want to use what we learned at our company owned stores to assist our premier dealers that are running a very similar type of store to our retail stores. We are in the process of rolling out a revised premier dealer program with more generous pricing, including price protection in exchange for higher annual commitments. On the international markets, we generated $2,600,000 in international sales this quarter.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

This is an 86% increase from the prior year period. This included a one time bump in royalties from our partners America. As you may remember, last year we sold our ownership stake in Berna Latam while retaining an option to buy back the entire company. Berna Latam is now simply a distributor and Berna licensee. Under our agreement, we both sell product to Berna LatAm and we earn royalty income on products they produce under license from Berna, which include the Berna SD, the Berna Mission four and certain ammo.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We are extremely encouraged by the success that Berna Latam is seeing in South America. And as a result, we do expect to exercise our call option at some point in the future where Berna Latam is both consistently profitable and honestly can pass a U. S. Public company audit. To support our growth, we've continued to expand our marketing efforts.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Last month, we brought on Tucker Carlson to our roster of celebrity influencers. Tucker, like Sean Hannity and other successful influencers, has a large audience of primarily conservative listeners. So far, the early results of the partnership have been encouraging. We are also currently in ongoing discussions to bring on a few marquee celebrity endorsers that have enormous audiences that cover a much wider swath of the American public, And we will keep you informed of our progress as these negotiations progress.

Operator

In addition to expanding our influencer strategy, we have begun using AI to quickly scale content production and increase the frequency of our advertising across various platforms. This has helped us produce more tailored content both faster and more efficiently as we react to the acceptability and effectiveness of our ads. I am not sure if you've seen our new banana commercial in which potential victims are carrying a banana rather than a burner. Not only does this allow us to get around the sensors that won't permit advertising that shows a weapon, it is sufficiently intriguing to get people to come to our website to see what the burner really is. This piece of creative, which has proven extremely effective and is generating at a very high ROAS, was produced entirely using AI programs, allowing us to produce a thirty second commercial in hours at essentially no cost that would have otherwise taken several months and would have cost several $100,000 to produce.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Next month, we plan to introduce Burnet Care. Burnet Care will be a source of recurring revenue in which we will offer to replace the burner launcher, no questions asked if it is lost, stolen, damaged or confiscated. This will be our first foray into the recurring revenue model, which we hope to augment next year when we install a chipset in the CL that will be able to contact the authorities in the event that the launcher is used in self defense. We also saw an uptick this quarter during the ICE protests in June. As many television news stations were covering events, less lethal was at the forefront of the national conversation and Berna naturally appeared as a trusted leader in this space.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

These type of events further normalize the less lethal market and highlight Berna's role in the personal safety market. The continued normalization of our product category generally and of Berna specifically has allowed us to garner significant earned media. In fact, last night, I was on the NBC Evening News to discuss tariffs, which drove thousands of incremental sessions. The night before, I was on Fox News also discussing tariffs. Our goal is that through increased

Operator

Ladies and gentlemen, please standby for technical difficulties. Please standby. Okay. Thank you. We are all set. Laurie, Brian, you're good to go.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Okay. I apologize. It appears that we got disconnected. I believe we were disconnected when I was talking about production. As we move into the second half of the year, we are actively working to keep our production in line with demand.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Ahead of the compact launcher debut, production was running at 24,000 units a month as we work to build up inventory. We now have a solid inventory position in place. We've reduced production to a steady state of 15,000 units per month across all of our various launchers and we have the ability to adjust to changes in demand on a real time basis. Following the compact launcher debut, we've seen what we expected, which is some cannibalization of the LE launcher given the relatively small price difference between the LE at $4.79 and the compact launcher at $5.49. This has caused customers to gravitate to the compact launcher.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Honestly, the compact launcher has better margins. So we're just as happy to see people gravitating away from the LE to the CL. The CL in fact is 38% smaller, 36% lighter than the Berna SD, our entry point launcher, yet it is just as powerful in terms of energy density or joules per square inch as our most powerful launcher, the Berna LE. It's also 27% narrower than our current pistols, which make it ideal to conceal carry. As I said, we don't really mind the cannibalization as the CL helps our margins with a seven to eight percentage point advantage over the other launches.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Additionally, we've shifted production away from traditional assembly lines to a more efficient assembly pod based manufacturing system, which is reducing our labor requirements and improving our first pass yield. This initiative along with our onshoring or reshoring initiatives is improving, as I said, first pass yield, reducing manufacturing variances and improving quality. Looking ahead, while we expect consumer sentiment to remain subdued, which may impact what I refer to as same store sales, I believe that we will continue to grow our top line between 2540% as a result of more stores carrying an increasing array of burner products and as a result of the continued normalization of our product category and the impact of earned media. We also plan to roll out several variations of our new CL launcher, both up and down the pricing spectrum as we target a broader demographic. This is going to result in our cash position rebounding quickly as our inventory levels normalize over the coming months quarters.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Well, the third quarter is typically a slower period for Berna. We continue to focus on executing against operational priorities, expanding market awareness and setting the stage for a strong finish to the year. That concludes my prepared remarks. Daryl, I'll turn it back to you for questions.

Operator

Thank you. The company will now be taking questions from sell side analysts. Our first questions come from the line of Matt Koranda with ROTH Capital Partners. Please proceed with your questions.

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Hi, guys. Good morning. Maybe just wanted to start off with the June trends that you mentioned, Brian, in your prepared remarks. I think you said maybe you saw some strength around the civil unrest that we saw in June. Maybe could you give us a sense for growth in June and quarter to date?

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

And I think you mentioned at the end of your prepared remarks there 25% to 40% is sort of the sustained growth rate you expect. Is that sort of the range we can kind of pencil in for the near term?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Yes. Matt, thanks for the question. We did see strength during the week where the riots were occurring in Los Angeles, but that's not surprising. Whenever there is civil unrest, we see much stronger sales. I would say during that week sales were probably up by 40% versus the prior week.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

That said, it's a very transitory trend. Happened that week during the riots and then sales returned exactly to where they were before the riots. You can use 25% to 40%. Last quarter, we were up 41%, slightly more, but I think 25% to 40% is a very good range for the year. So, I would work with that.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Again, as I said, there is some softness that we're seeing in the market and that other CEOs that I speak to are seeing in the market. That said, we are growing dramatically in terms of our distribution channel, the number of celebrity endorsers and the places where you can buy Burna. So I think even in a softer market, 25% to 40% is a safe bet.

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Okay, fair enough. And then maybe just since you mentioned softness in the prepared remarks and here in the Q and A. Curious, where do you see that showing up, I guess? Is that like in between promotional periods where you're on promotion with some of the launchers? Is that a trade down into sort of maybe the SD from people that might have bought the CL?

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Just curious maybe if you could expand on the comments there.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Sure. We are a very, very data driven company. We analyze in great detail the activity of all of the people that come onto our website, how much time they spend on a page, what pages they look at, abandoned cart rates. What we're seeing are indications inside our numbers that for example, we're seeing a slightly higher level of abandoned carts. There's a little bit of sticker shock when people are seeing pricing.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

So although we are seeing growth and on the surface, looks like there's no issues. You can see underlying in terms of some of the particular statistics of people's activity on the website that it's softer. And also we're just seeing this and talking to our customers that the market is a little bit softer right now. And I don't think that's a surprise to anybody. That said, we are also in the summer and in our industry, there's kind of the dog days of summer.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

So this is a traditionally slower quarter. Nevertheless, we do expect to see significant growth this quarter.

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Okay. Fair enough. And then maybe just last one for me. When we think about the ramp up with Sportsman's, you threw out a lot of numbers in the prepared remarks in terms of locations that you'll be expanding to. Can you just clarify in terms of shop in shops where we're going to be at the end of the third quarter?

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Is that number 22? It's the 10 in addition to the 12 that you currently have. And maybe just curious about sort of you mentioned there might even be some performance at the POS locations that's even better than where the shooting pods are, which I assume are shop in shops. Maybe just is there a big relative difference between POS locations and shop in shops? Trying to get a sense for how we should think about the ramp up there as you get to the I think you said 140 locations overall.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Okay. So keep in mind that there is a difference between store within a store and shooting pods. So every shooting pod is part of a store within a store, but not every store within a store has a shooting pod. So currently, there are 14 shooting pods, but there are 22 store within a store locations. The ones that don't have a shooting pod have a whole burner store, but they use the archery range for the try before you buy experience.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We have an additional nine shooting pods that have been constructed. They're going to be shipped to Sportsman's that will be installed in their best locations. So they will go from 24 store within a store to 33 store within a store, of which there will be 14 plus the nine, there'll be 23 shooting pod locations. The other locations have just this point of sale display. So there is no shelving and store experience, but there's a point of sale display and there is an archery range.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

So in some of these stores with point of sale display and the archery range, we are seeing them actually outperform some of the other locations with store that have a store within a store. Now, obviously, we need to understand why. Is it a function of these are just better Sportsman's locations, they have more traffic? Is it a function of the personnel? Are they simply better salespeople and they're getting people into the archery range?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We are in the process of putting people on the road, going to all of the Sportsman's locations to really spend time understanding the operational effectiveness of each of the stores, both those stores that are doing well and those stores that are not doing well. We are also providing spiffs to the store employees to give them some incentive to sell the burner product Because look for sportsmans and Bass Pro and Big Five, they are in the business of filling demand. They are not in the business of creating demand. Burna is in the business of creating demand. So the thing that's interesting for Sportsman's Warehouse and for the other locations is they have an opportunity to sell to customers that may have walked into the store not even knowing what burner is, not thinking about buying a burner.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

They have an opportunity to take their existing customer and augment the lifetime value of that customer. To do that, we need an educated sales force. We need a motivated sales force. That's the purpose of one, providing burner geniuses and two, spiffing the sales personnel. So we are in the very, very early innings of this program with Sportsman's Warehouse.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

I do not see any reason honestly why these locations that have hundreds of people a day coming into them cannot be as effective as our retail stores, which have tens of people a day coming into them. So we're doing $800,000 annually on average with our retail stores that are in a strip mall and have a dozen people walking in the front door, we certainly should be able to do $300 $405,100,000 dollars a day in the certainly in the bigger Sportsman's stores. But it's not going to happen overnight. It is going to take some work as we educate the sales team as we build out the stores. But we do expect to have in probably 140 of the 146 stores and in virtually all the major Sportsman stores, we do expect to have burn a presence, whether it's the form of a POS display or whether it's a store within a store that uses an archery range or whether it's a store within a store that uses a shooting pod, we will be in essentially all of the Sportsman stores by the end of the year.

Matthew Koranda
MD & Senior Research Analyst at Roth Capital Partners, LLC

Okay. Super clear and very helpful. I'll leave it there.

Operator

Thank you. Our next question is coming from the line of Jeff Van Sinderen with B. Riley Securities. Please proceed with your questions.

Jeff Van Sinderen
Senior Analyst at B. Riley & Co

Hi, good morning everyone. A little bit of a tough question, but wondering how you're thinking about the evolution of channel mix in second half with all the moving parts?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

As I said, we are seeing and in Q2, we saw our fastest growth in brick and mortar. We think brick and mortar will continue to be the faster growing segment of Verna. Within the DTC segment of the business, the online segment of the business, we expect Amazon to continue to grow at a faster rate than Berna. When we talk about DTC, one of the things we didn't really focus on is that Sportsman's also has a DTC operation. And whereas Berna has a million plus visitors a month coming to our website, Sportsman's has 7,500,000 people a month coming to their website.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We are really expert in DTC operations. This is not Sportsman's primary focus. For them, DTC is generally people that order a firearm and then have to go to a Sportsman's to pick it up. So our team is working very closely with the Sportsman's team to help them really improve their online presence, particularly for Berna, because they have access to 7,500,000 people a month that probably very little overlap with the million people a month that we have access to. So there's a huge untapped market for Berna through the Sportsman's Warehouse e commerce effort.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

So again, I think we're going to see faster growth in brick and mortar than we see online. With the online segment, we'll see faster growth with Amazon than with Berna. And I do think sort of the wildcard will be Sportsman's. Is this going to be a few sales a day or is this going to be 100 sales a day? The jury is out right now, but I think there's enormous potential there.

Jeff Van Sinderen
Senior Analyst at B. Riley & Co

Okay. And then in Sportsman's, just a point of clarification, the stores with pods, I know there's got moving parts too with more pods coming in. But the stores with the pods versus the archery ranges, just I wasn't clear on the performance there. Were you saying that the archery range performance was sometimes greater than the store with the pod performance?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We don't have enough data yet, Jeff, to say that conclusively. It would make no sense to me that the Archery range would perform better than the pod because the pod is graphically cosmetically it looks great. It's got glass windows on the side, it's placed in the center of the store. When you're there, you hear the bang, bang, bang when it hits the targets. So it draws people into the pod in a way that the archery range does not.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

That said, most things with business come down to human beings. I think when we get the burn of geniuses into these stores, we will the store should perform more efficiently, more effectively and we'll have a much better sense. But my guess is all things being equal, the stores with the shooting pods will perform the best. But it's too early yet to say that conclusively.

Jeff Van Sinderen
Senior Analyst at B. Riley & Co

Okay. Makes sense. And then I just I wonder if you could touch just finally on your mention of the new iterations of the CL. Anything you can elaborate on there?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Okay. So we came out with a particular model of the CL with fiber optic sites in a ready kit. We are looking to move both up and down the pricing spectrum. So the CL comes ready to be equipped with a Red Dot site with laser sites with home grips and we expect to bring out a more bespoke version of the CL. At the same time, we expect to bring out a lower price version of the CL that is in a doesn't come with fiber optic sites, comes in a more basic box, doesn't come with additional CO2 and ammo and magazines, so that we can catch a broader spectrum of our customer base.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We recognize that $550 is expensive. We can see it at checkout where there is a higher abandoned cart rate, the more expensive the sale is. Somebody goes to checkout and it's $700 sale, there can be sticker shock. So we want to be able to price the CL across a broader range of prices. We've done this with our other launchers.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

We came out with a basic box for the SD that performed very well. We're just applying that same strategy to the CL and that will probably happen later this quarter.

Jeff Van Sinderen
Senior Analyst at B. Riley & Co

Okay. Thank you for taking my questions and continued success.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Thank you, Jeff.

Operator

Thank you. Our next questions come from the line of John Hickman with Ladenburg Thalmann. Please proceed with your questions.

Jon Hickman
Jon Hickman
MD - Equity Research at Ladenburg Thalmann

Hi. Brian, could you elaborate a little bit on your comments about, recurring revenue with the CL? Is this like an insurance program? That's my first Yes, sure.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

I'm going to let Laurie take that because honestly, so much of this first thing is back office and I'll let her talk about this and then I'll talk about the more SaaS aspect of the recurring revenue model.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

Okay. Hi, John. Yes, the burn of care that we're going to come out with is kind of like an insurance policy. It's really just it's you know, think of it as insurance policy and extended warranty. So people will pay a monthly fee.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

They can pay it in an annual amount or monthly. So we're kind of working on the back end to get this kind of set up for the recurring. Right? So subscription fee that gets auto charged to their card. And, yes, if if they lose it, if it's stolen, if it breaks for any reason and and previously, like, our current warranty only covers if you use burner ammo, burner c o two.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

So this one, we won't restrict it for that. So it'll be a way that they can pay a monthly fee, and, you know, it is an expensive product so that they can have coverage of that. Similar to any other products when you go and check out and they say, you know, do you want the protection plan? That's really what it is. So it'll be recurring and we're just working on setting up kind of that auto charge capability.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

And interestingly, one of the I get people to get through to the CEO of Berna. And unfortunately, one of the reasons people get through to me is they've got some sob story where the thing fell off the boat into the water, I lost it, I can't afford to get a new there's a lot of people for whom they end up either damaging or losing their burn up. We've actually had a bunch that were stolen. So this is a way to address that problem and also to start the recurring revenue model. The much bigger source of recurring revenue though will be next year when we start installing a chipset in the burner.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

This is something that we've been working on and had planned from the very beginning of the development of the CL. And what we want to be able to do and this is not cutting edge technology, the technology exists. But what we want to be able to do is to have your burner be able to speak with your phone. So then if you're out and about and it's set to self defense mode, for example, I'm out in Boston with my burner and walking with my wife and I get a cost and I use my burner, it will immediately speak to my phone, geolocate with my phone, contact the call center that will contact preprogrammed numbers either 911 or potentially if you're a student, maybe campus security or you're a family member. And that's something that maybe it's $5.99 a month.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

There have been other things we're looking at like the ability to talk to your smart home. So John, you're at home and your wife says, hear something downstairs, you pull the burner out, you take the safety off, you talk to your smart home turns on all the lights, $3.99 a month. So these are not new ideas. These are ideas that are used and frankly, think there are other companies that are currently doing similar things. But we think given the fact that there's already over 650,000 burners in the market, I mean, this is something where we're going to have tens of thousands of customers.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

They're going to want to be able to take it to the next step and have their burner be a smart launcher that is able to speak with their smart home or their phone.

Jon Hickman
Jon Hickman
MD - Equity Research at Ladenburg Thalmann

Okay. Thanks. Laurie, could you also elaborate, it sounds remarks that there are some cost savings that are nonrecurring costs due to the launch of the CL and inventory and the ramp in the manufacturing that now will site. Can you help us out with our kind of model for the coming quarter as far as the expenses go?

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

Sure, John. So really the expenses, we had a few $100,000 of extra expenses in the quarter just specifically because of the compact launcher release. That being said, it will really be probably replaced in Q3 with increased marketing spend as we move through the year, we increase our marketing spend. So I don't know that you'll see a much change on the OpEx. On the inventory side of things, we did use a lot of cash to build our inventory.

Lauri Kearnes
Lauri Kearnes
CFO at Byrna Technologies

As you saw, it's kind of a record high inventory at the end of the quarter. And we've reduced our production, and we expect through the balance of this year to start to pull that inventory levels down, and increase our cash position.

Jon Hickman
Jon Hickman
MD - Equity Research at Ladenburg Thalmann

Okay. I got that. Now, let's see. I have, since it's could you elaborate on why you think the Scottsdale store is doing so well, kind of vis a vis expectations and your other stores or other experiences?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

First, it's a great location. It's a very, very heavily trafficked street. I think the traffic on that street is probably 2x the traffic on the streets in front of our other stores. Secondly, it's just a good market. Scottsdale has got a lot of people with our demographic, gun owners, more conservative population.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

It is a wealthy community. There's always part of it is the human element. We have a couple of very good salespeople in Scottsdale and it's telling us that we've got to continue to find good salespeople in all of our various stores. But it is encouraging for us to see there wasn't something unique about Las Vegas. Our biggest concern with Las Vegas doing well is, is it just people that won $10 at the craft stable last night that went in and bought a launcher?

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

And the answer is no. All of the stores have done well. I'll tell you the little engine that could though is Fort Wayne. Fort Wayne is a relatively small community. It is not a particularly wealthy community.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

It is doing extremely well. It's even outperforming the Salem store despite the fact that its footprint is probably half of what the Salem store is. So yes, it's there's a lot of factors with each store. But overall, the performance is extremely encouraging. And it's encouraging not just for our retail stores, it's encouraging for what we can do with premier dealers, it's encouraging for what we should be able to do at Sportsman's Warehouse. It's telling us that this model works.

Jon Hickman
Jon Hickman
MD - Equity Research at Ladenburg Thalmann

Okay. Hey, thanks. That's it for me.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Thanks, Thank

Operator

you. At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Ganz for his closing remarks.

Bryan Ganz
Bryan Ganz
CEO, President & Director at Byrna Technologies

Daryl, thank you very much. And I just want to thank all of our investors and customers for their support. And we will keep you apprised of our progress. Thank you very much.

Operator

Thank you for joining us today for Verna's fiscal second quarter twenty twenty five conference call. You may now disconnect.

Executives
    • Bryan Ganz
      Bryan Ganz
      CEO, President & Director
    • Lauri Kearnes
      Lauri Kearnes
      CFO
Analysts
    • Matthew Koranda
      MD & Senior Research Analyst at Roth Capital Partners, LLC
    • Jeff Van Sinderen
      Senior Analyst at B. Riley & Co
    • Jon Hickman
      MD - Equity Research at Ladenburg Thalmann
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